Economy & Business

The Case for Common-Good Capitalism

(Pixabay)
Dignified work, strong families, and strong communities are key to civic — and economic — well-being.

In 1891, amid the disruption of the Industrial Revolution and the rise of socialism, Pope Leo XIII wrote that the ultimate goal for any society should be to “make men better” by providing people the opportunity to attain the dignity that comes from hard work, ownership, and raising a family.

“The labor of the working class — the exercise of their skill, and the employment of their strength in the workshops of trade is indispensable,” Pope Leo argued. “Justice demands that the interests of the working classes be carefully watched over by the administration, so that they who contribute so largely to the community may themselves share in the benefits which they create.”

What makes this society possible is the rights of both workers and businesses, but also their obligations to each other. Put another way, businesses have a right to make a profit, but they also have an obligation to reinvest those profits productively for the benefit of the workers and the greater society. Similarly, workers have a right to share in the benefits of the profits they helped create.

In the economy Pope Leo described, workers and businesses are not competitors for their share of limited resources, but partners in an effort that strengthens the entire nation.

This describes the kind of economy most of us want today, as well as the economy during our nation’s most prosperous and secure moments. But it doesn’t describe the economy we actually have today.

Large corporations have become vehicles for shareholders and banks to assert claims to cash flows, rather than engines of productive innovation. Over the past 40 years, the financial sector’s share of corporate profits increased from about 10 to nearly 30 percent. The share of profits sent to shareholders increased by 300 percent. This occurred while investment of those profits back into the companies’ workers — and future — dropped 20 percent. Last year, corporations on the S&P 500 spent more than a trillion dollars buying back their own shares. These are the largest corporations in the world collectively saying, “We don’t have anything to invest in.”

This is what it looks like when, as Pope Francis warned, “finance overwhelms the real economy.”

The result has been an economy whose architecture has been rapidly transformed. Despite three years of robust economic growth, millions are unable to find dignified work; they feel forgotten and left behind. We are left with a society with which no one is happy.

These Americans are victims of an economic re-ordering that Pope Benedict described as the dominance of “largely speculative” financial flows, detached from real production.

The repercussions have extended far beyond the economy: a collapse in churchgoing and community institutions; a decline in marriage, childbirth, and life expectancy; and an increase in drug dependency, suicides, and other deaths of despair. We have condemned the next generation of Americans to be the first to enter adulthood worse off than their parents.

Diagnosing the problem is something we should be able to achieve across the political spectrum, though even that seems challenging at times. Ultimately, deciding what the government should do about it must be the core question of our politics.

We must start by rejecting the false choice our politics has offered us for almost three decades. First, our financialized economy is the result of policy choices lawmakers have made in the past. And restoring a balance between the obligations and rights of the private sector and working Americans will require the attention of lawmakers today.

What we need to do is restore common-good capitalism: a system of free enterprise wherein workers fulfill their obligation to work and enjoy the resultant benefits, and businesses enjoy their right to make a profit and reinvest enough to create high-productivity jobs, which is what I mean by dignified work for Americans.

Common-good capitalism also means recognizing that what the market determines is most efficient may not be best for America. For example, we’ve allowed ourselves to become almost completely dependent on China for rare-earth minerals and done nothing to further our ability to provide them for ourselves. That’s why I have filed legislation to support investment in this critical sector.

It is also possible to reform the Small Business Administration to reinvigorate the legacy of business innovation that delivered Americans to the Moon 50 years ago.

Common-good capitalism also means recognizing fundamental shifts in our culture.

The market may not account for the benefits our country receives from parental engagement. But common-good capitalism does. That is why I’ve worked to expand the federal per-child tax credit, as well as proposed creating an option for paid parental leave.

We must remember that our nation does not exist to serve the interests of the market; the market exists to serve our nation. And the most effective benefit the market can provide is the creation of dignified work.

Dignified work allows people to give their time, talent, and treasure to our churches, our charities, and community groups. It makes it easier to form strong families in stable communities and reinvigorates those institutions that bind us together as a people.

Because when you live with, worship with, serve with, or share a community with someone, you know him or her as a whole person. You may not agree with the person’s politics, but you have other commonalities that bind you together.

But when your neighbors are strangers, and all you know about your fellow countrymen is who they voted for, it is much easier to see them as the other.

In 1968, Robert Kennedy decried the deep cultural sickness of his era that was “discouraging initiative, paralyzing will and action, and dividing Americans from one another, by their age, their views, and by the color of their skin.”

As Kennedy did in 1968, we must accept the indivisible tie between culture and economics, so that once again we can reclaim the motto on our nation’s seal: E pluribus unum — out of many, one.

If and how we resolve this will not just define 21st-century America; it will define the century itself. Our future is not ours alone to decide. In China, we are confronted with a near-peer competitor on the global stage.

China is undertaking a patient effort to reorient the global order to reflect its values and its interests at the expense of ours — a global order in which the key industries and good jobs are based in China and controlled by them; in which the principles of freedom of religion and speech are replaced by what the Chinese call “societal harmony”; and in which the right to elect your own leaders and voice dissent is replaced by a totalitarian system that criminalizes protest and imprisons minorities.

An America in which no one is held back by his or her gender, skin color, or ethnic origin is no longer just morally right; it’s a national imperative.

For, in the words of the late sociologist Robert Bellah, the American tradition — the “transcendent goal” of our politics — renders sacred our “obligation to carry out God’s will on Earth.”

That is the task accepted by each generation before us. We are the beneficiaries of their sacrifices and achievements.

Now we must decide whether to accept the challenge of our time and author the next chapter in the story of the nation that changed the world.

Editor’s Note: This essay is adapted from a speech that Senator Rubio delivered November 5 at the Catholic University of America.

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