Last year, the theological journal themelios, owned by The Gospel Coalition, published a paper asking “Do Companies Have Social Responsibilities?” The author, Dr. Gary Cundill, concludes, “Companies are not human persons that have social and environmental responsibilities; they are legal entities that have legal responsibilities. There can therefore be no useful theology of corporate social and environmental responsibility.”
I agree with Dr. Cundill’s conclusion, but he fumbled his initial question, “What are companies for?” He recalled the Business Roundtable’s purpose, “to deliver value to its stakeholders: customers, employees, suppliers, communities and shareholders.” And he discussed the Nobel Laureate Milton Friedman’s statement in Time Magazine that “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits.”
Dr. Cundill sees the problem with determining Biblical criteria for corporate responsibility as the fact that the corporation is a recent invention and isn’t a person, so the Bible is silent on the matter. But the Bible offers criteria for individuals, such as the prohibition of greed, theft, fraud and coercion. Since corporations don’t act, only people act; those prohibitions apply to the people running corporations as well.
Let me pick up Dr. Cundill’s fumble and advance the issue of the purpose of a business. Businesses are people engaged in exchanging goods and services in the marketplace. If a farmer eats only what he grows, produces what he needs and doesn’t buy anything, he is self-sufficient and not a business. Why do farmers trade with others? Because self-sufficiency is hard and impoverishing.
Farmers learned before history began that they can produce more and better goods by specializing in a few things and trading for those they don’t produce. Markets are nothing more than places where people get together to exchange goods and services. For example, a cattle rancher may concentrate on raising good beef to sell and buy clothing and shoes from a weaver and cobbler instead of trying to make them himself.
What are ranchers and cobblers trading? The common answer might be meat for shoes. But following the reasoning of the great French economist of the 19th century, Frederic Bastiat, they’re trading services. Here’s why: a family living with a clean stream running through their property would never pay for water; it is free to them. But a family living in a desert would pay to have water brought to them. The water is still free to the family with the stream; the family in the desert pays for the services of the family with water to deliver the water.
Everything God gave humanity at creation is still available and free. We merely pay for the services others rendered in getting it, making it useful and delivering it. For example, the iron God created is free, but someone must mine the ore, process it and shape it into a car for it to be useful to us. We don’t pay for the iron in our cars, we pay many people for the services they rendered in getting and working that iron into something useful to us, a car.
So, businesses exist to serve others. The market is where they meet to exchange services. In the process of exchanging services, the Bible prohibits theft, fraud, and coercion. Businesspeople must pay their workers. They can’t dilute the wine with water or use dishonest weights and measures.
Corporations are merely businesses that are large enough to produce things small businesses can’t, such as cars, trains and airplanes. Several owners pool their funds to create the corporation and hire a worker to manage it, the CEO. The CEO hires more workers to create the products. He has the same moral obligations as the owner of a family business. He must pay his workers a market wage and his suppliers a market price for their goods without fraud or theft. And he must ensure that none of his employees cheat or steal from suppliers or customers. The corporation is a type of market in which employees exchange their services for wages, which are the savings (accumulated services) of the owners. Suppliers exchange their services for those of the employees of the corporation.
The CEO must earn a profit so that the owners get repaid for their investments without cheating them. But to do that, he must make a product that other people want to buy at the market price. That requires understanding what customers want and how to please them. In summary, the purpose of a corporation is to serve others, the customers, without committing theft or fraud.
When we go to Walmart to buy a fishing rod, we do more than exchange money for the rod. We exchange the services we rendered to others, for which we received money, for the services rendered by others to make the fishing rod and transport it to us.
The Bible has a lot to say about serving others, but Ephesians 6:7-8 sums them well: “Serve wholeheartedly, as if you were serving the Lord, not people, because you know that the Lord will reward each one for whatever good they do, whether they are slave or free.”
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