BOOK REVIEW
Title: Doing Virtuous Business
Author: Theodore Roosevelt Malloch
Publisher: Thomas Nelson, Nashville, TN
Contributing Author(s): none
ISBN 13: 978-0-8499-4717-9
Digital ISBN: 0849947170
ASIN: B004P5NRSI
Library of Congress No.: 2011920506
Physical Attributes:
Price: $21.99 – 14.50 USD
Reading Time: 10-11 hours
Construction: Hardcover
No. of Pages: 169
Dimensions: 6 3/16” x 9 ¼” x ¾” thick
Weight: 335g (12 oz).
Cover Design: Dust Jacket
Illustrations: none
Maps/Inserts: None
Appendices:
Index: 5 pages
Bibliography: 4 pages
Biography: yes
Glossary: no
Other: Appendix 1: A Gallery of Virtuous Companies
Appendix 2: The numbers (comparative stock performance data)
Other books by author: Being Generous, Renewing American Culture: The Pursuit of Happiness (Conflicts and Trends in Business Ethics)
Rating 4/5
Abstract: This aim of this book is to introduce and promote the concept of spiritual enterprise. The author develops the concept of spiritual capital as a product of virtue in the context of western capitalism and Judeo-Christian culture and faith. It alternates between related case histories and a stepwise development of the case for spiritual values as the foundation for business ethics, principles and profit.
Review. The subject tackled by this book is a very important one that has classical roots in the eighteenth century writings of Adam Smith and borrows heavily from ancient writers such as Aristotle, St. Augustine and Thomas Aquinas. The author tackles a very broad and complex subject does a passable job of bringing together the complexities of ethics, culture, business and faith while making sensible order of their interrelationships. However, the end result is flawed by an awkward attempt to justify for-profit capitalism, reconcile dichotomies in competing religions that glosses over the mysteries of what is true wealth and how it is created.
Mr. Malloch is very on target in many respects. Although not a pioneer in the subjects addressed in this book, he is well versed in history, philosophy and commercial enterprise. Ostensibly writing from a Christian perspective he assumes from the very beginning that commerce is a divinely ordained vocation that is integrally necessary for the advancement of society and the individual. To this end virtue is a fundamental and necessary element of society in general and commerce specifically. In the book a convincing case is made that although it may be transferred independently of constructive devices, wealth is created by virtuous activities alone. This leads to his significant distinction between the pursuit of wealth, essentially a predatory practice and the nurturing practice of obtaining of wealth (pg. 120). (I would have used “creation” rather than “obtaining” myself). The creation of wealth is succinctly defined as what ultimately benefits people in the context of God’s will. This is a profound assertion that deserves attention and application.
The author makes a distinction between the concept of social capital (pg. 11) and financial capital. Social capital is composed of the positive attributes that participation in society imparts to and develops in human beings. This includes many things such as common language, customs, manners, morals, factual knowledge, recorded history, lawful justice, necessary infrastructure, communication and distribution networks, security and etc. Religion is credited with initiating and maintaining the necessary conditions for these things since their origins are ascribed to God and their maintenance dependent on obedience to principles He established. Financial capital, derived from monetary instruments, tangible goods and desirable services is a byproduct of the responsible use of social capital.
A third type of capital is introduced as spiritual capital, defined as “the fund of beliefs, examples, and commitments that are transmitted from generation to generation through religious tradition, and that attach people to the transcendental source of human happiness.” (pg. 18)
I also recognize the three types of capital and would add that all three may have positive (credit) and negative (debt) expressions. Furthermore I think the author could do well to recognize that the means by which capital is obtained imparts a positive or negative nature to it with a corresponding effect on society as well.
The book then introduces three models for acquiring wealth:
- mysteriously produced by magical means
- extracted from others by force
- created by God given skills and talents
The first one is typified by primitive practices such as animism and voodoo which are characterized by exorbitant sacrifices and concessions to a mysterious, often hostile spiritual realm which returns a meager and uncertain benefit to the practitioner, characteristically at great cost to them or some other party. Hence the chronic poverty and debased social order characteristic of such a culture.
The second model is found in the limited and predatory practices of enterprises which presume a fixed-sum wealth environment and aims to concentrate wealth by force or design under the control of a privileged few.
The latter model is that in which the potential for wealth creation is essentially limited only by the means to develop all available resources and those who apply their skills and talents and assume risk and responsibility are rewarded in proportion to their contribution. (I would add that need should be a factor in distributing wealth as well, though Malloch doesn’t address this point.)
The author proposes that wealth creation is the product of and hence capitalism is dependent on virtue which is manifested in three forms: cardinal, soft and hard.
Any of the three forms can become perfected virtues: those that fulfill the intent of charity.
For example thrift is a virtue when it is exercised for merely technical reasons, but is perfected when the aim is to benefit all affected persons fairly. The author sorts virtues into two general categories: soft and hard virtues. Soft virtues are
His definitions and development of these virtues is not comprehensive and some are rather vague and awkward, so I have restated them as succinctly and concretely in my own words to convey what appears to be the author’s intent.
Cardinal virtues are from which all other virtues are derived and relate to human well-being.
The cardinal virtues are:
Faith (or Hope) - trust in the existence and benevolent nature of God without proof.
Honesty – integrity, or the individual quality of being truthful, fair and open in dealing with others.
Respect – a.k.a. justice is the ability to see others as you see yourself and treat them with dignity and fairness.
Generosity – the quality of being noble and magnanimous expressed in the sharing of time, talents and resources either because of obligation or sentiment
Chastity – is a good and necessary control of sexual desires that unchecked destroys trust and perverts relationships
Thrift – prudent and judicious economy of resources
Charity or selfless love: this is the cardinal virtue where the ancient philosophers, Christian saints and modern philanthropists all agree.
Malloch correctly asserts that all other virtues derive from Charity (or selfless love) and depend on the exercise of this one to be realized. What is difficult to understand is that although he cites Aristotle, the Christian author does not quote St. Paul’s list of virtues from the fourth chapter of his letter to the church at Philippi. If he had, then the list would have included beauty and encouragement. I presume purity and chastity here are interchangeable. Incidentally, Aristotle does not endorse humility, and essential Christian virtue.
The idea of virtue as essential to capital growth is a very important insight and one that deserves more development than the book provides. The implication here is that without selfless love, the whole system, no matter how well developed in other regards, is ultimately doomed to failure.
The hard virtues are:
Servant Leadership – is not defined in the book, but described as an inherent quality in everyone that may be developed and involves both followership and a commitment to serve others. I will attempt to define it in this context as the ability to defend and impart God’s vision and inspiration to others
Perseverance – is a hard discipline that is characterized by determined and sustained effort in accomplishing a defined goal
Discipline – a three-sided virtue that requires the ability to learn, follow rules and resist temptation
Courage – the disposition to pursue a goal despite difficulties, discouragements and danger. The risk-taker, so esteemed by the author, must have this.
Patience – is a virtue with the elements of a vector, at once having the magnitude of a capacity for enduring suffering and the ability to prioritize direction to maintain the heading which is called for
The soft virtues are:
Justice – also regarded as a cardinal virtue, is the integration of success in action with friendship and right dealings with others (a very insightful and accurate observation)
Gratitude – the humble and mature attitude of acknowledging the contributions of others
Compassion – is the ability to identify with and share burdens with others
Forgiveness – a two-sided virtue that both acknowledges an offence and asserts the need to forget it
Humility – this easily recognized but difficult to define quality is well illustrated by self mastery though cooperation with others
Naturally, predatory, profit-first business practices (pg. 10) are not endorsed by the author, for he argues convincingly that such practices do not create wealth, but merely redistribute it, often unfairly and causing substantial damage in the process. He does allow that predatory business practices indirectly test and strengthen virtues like patience and forgiveness (pg. 94) but I don’t think he intended to justify such things or imply that virtue will not develop without it. Malloch rightly identifies the indifference to individual welfare (also pg. 94) that is commonly associated with capitalism as an unnecessary evil. Rather he labels it an aberration of true capitalism which seeks to provide an environment where there is a just exchange between all parties and that fosters the optimal development of resources and the use of creative talents and energy.
The book asserts that faith is also a necessary prerequisite of the creation of all three types of capital. It cites many examples, but one persuasive point is that among society’s central leaders: clergy, military officers and business executives are disproportionately represented in church attendance. (Did Malloch leave out politicians for a reason?) Another assertion I do not agree with is that business is the source of virtue. God is the source of virtue and business may foster it and adapt virtue to its purposes like any other resource; but business is not the origin of virtue. The book does rightly link behavior and motives to genuine virtue. (pg. 28). For virtuous actions with selfish motives may generate financial capital, but are a poor source of spiritual capital. The classic miser is an example of this.
Another good insight from the author is the idea that virtue is ultimately integrated into a unity. This is similar to the Christian doctrine of oneness with God. The concept of unity or oneness leads directly into the practice of justice – treating people fairly because we are ultimately from the same source. This is succinctly stated in the Golden Rule and in the ideal of conforming to the will of God. Oneness and justice are related because true justice is not conformance to a written law, but respecting others as intrinsically equal to oneself and acknowledging that all originate and are connected to God.
The author also cites Aristotle in linking justice to self-control. This is very important because justice therefore becomes an internal force operating from within the person rather than an external force acting on the person. (pg. 30) That leads the obvious but blatantly ignored principle expressed by Kuyper that social justice is “not the control of society by the state, but the retreat of the state from the self-governing spheres where it is not needed.” (pg. 31)
A good example of justice is given in the case of Max DePree of Herman Miller who gave his rank and file employees a “silver parachute” like the “golden parachute” the company’s executives already had. This was not only fair to the rank and file, but had the unintended but beneficial consequence that it made the company better able to resist hostile takeovers (pg. 70). Another case where spiritual capital is shown to be an advantage is the case of Cargill, which built its business on five principles that gave it a sterling reputation that couldn’t be bought with money and proved to be a clear advantage in the commodities market (pg. 72).
It becomes a bit confusing here where, after listing soft and hard virtues, the author introduces a new category, the idea that virtues create a unity in three forms:
Cardinal – those from which all others are derived
Prudence – or those which are devoted to human well-being, and
Perfected virtues – those that operate out of charity or selfless love (pg. 33)
I think this is an unnecessary nod to the ancient philosophers, but it is another perspective that may be helpful to some. The essential point is that virtue is a continuum that must be permeated by selfless love to be complete.
I found the author’s summary of John Wesley’s and Aristotle’s “rules” informative and helpful as well as Daniel Webster’s definition of “thrift.” (pg. 40) But it is Calvin’s tradition of thrift, founded in generosity and guided by the “rule of love” that really transformed western commerce (pg. 43).
As an aside, Malloch cites the commonly held three cardinal virtues of business (pg. 44):
Creativity
Building community
Practical realism
Building on virtue, the author then advances to the subject of faith, which he defines as “knowledge of a person (God) and that presence in your life. Faith means enjoying a personal relationship with the Creator and learning to put your trust in Him” (pg. 46)
It is telling to me that the author at once declares faith (as defined above) an essential element in business and yet refers to Islam as a source of spiritual capital. This clearly tells me that the author is quite ignorant of the difference between spiritual capital derived from the Christian faith and that of religions like Islam, Hinduism and Buddhism. Therefore he has ignored or is unaware of the irreconcilable nature of spiritual collaboration with these and that religions like Islam (which deny that man can relate directly to God) and Buddhism (that even denies that the person of God exists) can sustain the faith he describes. (pg. 104)
Importantly, the author also states that faith in God leads to faith in people. (pg. 64) (The logical progression here probably needs some more development!)
The book then discussed the contrast between the whole person and the limited person at work. (pg. 59) This deals with comparing an enterprise that engages all the potential of an employee with the one that uses only a single or narrow range of functions. This is illustrated by contrasting a housekeeper working in the USA for ServiceMaster and a government employed scrub woman in the USSR. Both had the same capacity, but the former was engaged in the whole goal of the hospital to heal people while the latter was in a pointless make-work job without even the dignity of accomplishing anything. More importantly, it addresses the great benefit that comes from engaging all the present capabilities of the person and nurturing their potential for greater things later. Giving them a vision of how they fit in the great picture and providing them with the means to realize and expand their role is essential to this.
Another good contrast that is made is the distinction between what is of the spirit and political correctness. (pg. 135 and 136). Corporate social responsibility (or CSR) is formulated on and driven by regulations, norms and social pressures and often motivated by profit that comes from a positive image, and is not necessarily aligned with God’s purposes. Political correctness is even less linked to spiritual enterprise since it is largely driven by aggressive activists and can be inimical both to commerce and healthy social order.
I liked and endorse what the author wrote next. He stated that profitability comes from doing what is right. (pg. 61) I’ve been working as a professional for 25 years and still am waiting for an employer that applies this; but I believe it is very true. This, and servant leadership (pg. 69) are two concepts that truly deserve their day! These concepts align well with what Jesus taught. However, this begs the question of why such efforts are not more universally successful. The author implies that unethical business and government practices unfairly inhibit this, but does not address the subject more than superficially.
Another good point is made by the clarification between stakeholder and shareholder. Stakeholders a merely those persons and entities that affect or are affected by the commercial activity. Shareholders are those who have resources invested in the enterprise and share the risk. Malloch takes care to show that while both deserve consideration, the stockholders more so because they contribute more. I would qualify this by stating that any stakeholder that would suffer significant harm or loss is also entitled to serious consideration even if they aren’t vested in the enterprise. (pg. 137)
There is also a necessary balance described between work, family and community that the real estate company, CNL, provides a good example of. (pg. 107)
The logical develop to this point leads to an obvious conclusion that an enterprise (commercial or governmental) that operates on purely secular principles is incapable both of inhibiting corruption and of maintaining order. This is because without the growth of spiritual capital, the effort to do this and other essential activities depletes existing spiritual capital without adequate replacement. Other capital is expended to meet the needs, but it is not a practical substitute and therefore becomes increasingly costly. The end result is tyranny as people are forced into unnatural roles and struggle to find the spiritual capital they need but is denied them. (pg. 140)
The author seems ambivalent about Wal-Mart, at once praising the success of their business model and their strong corporate culture while decrying their effect on small business and the low-end wage earner. He could also have addressed Wal-Marts destructive influence on suppliers and competing small businesses. Though he compares Wal-Mart and Costco in Appendix 2, he does not do so in the body of the text. This is incongruous to me since Costco does fit the model proposed by this book better than Wal-Mart and also outperforms Wal-Mart in terms of profitability.
Similarly, the book omits mention of a classic case of the principles it espouse, the story of Ikea. This example would be particularly appropriate as an example of how an institution preserves the spirit and intent of it’s founder. The founder of Ikea went to considerable effort to create the legal framework whereby Ikea would continue to operate on the same basis as it was founded. That it continues to do so after the founder has passed control onto new leadership is and important counterpoint to Wal-Mart which had departed radically from Sam Walton’s leadership style with predictable consequences.
One issue I have with the book is that it devotes very little discussion to the nature and consequences of predatory business practices.
In this book I discovered a concept that resonated well with my own observations. It is the need for spiritual care teams. (pg. 106) This is the idea that an organization can benefit from and better serve their suppliers and customers through attending to their spiritual needs and fostering a positive spiritual climate in the working environment. In this case he cites the example of Providence Health Care which not only provides the teams to patients, residents and staff, but makes space available for prayer and publishes as weekly reflection on the teachings of Jesus.
I do disagree with his assertion that the workplace is not a place to proselytize (106). Surely those proselytizing for undesirable groups should be restrained, but why not tell others about what is right and good? Much benefit has come out of allowing vetted Christian clergy to witness and minister to the dying and destitute. The will also benefit the merely harassed and stressed as well.
Another point on which I disagree the unfounded assertion that business is a source of virtue. The source of all true virtues is God and is given by Him and developed through a relationship with Him or, less perfectly, through emulating His qualities. Business is the intentional and directed creation of an environment to foster the transformation of labor, raw materials and utilities into marketable goods and services. Business uses whatever means advances this end it finds most advantageous within the limitations imposed on it. All this really is is a distortion of charity for profit. Pure charity is where all parties involved receive those goods and services they need and contribute willingly and unreservedly those resources, skills and capabilities they possess. Ideally, this creates a balanced synergy that produces an excess of benefit for all, the purpose of which is to advance society in general and the individual in particular. Capitalism seeks to maximize the extraction of benefit from this transaction in a fungible form, typically in financial instruments like money. Contemporary business exploits an imbalance created by the unnatural but prevalent selfishness in society to drive the system to favor the creation of monetary wealth, often at the expense of spiritual wealth.
What is wrong about capitalism is that money is fungible to the extreme in that while wealth is created solely by beneficial activity, money may be used to advance destructive activity such as unjust war, pornography, the illicit drug trade, sexual exploitation, political corruption and etc. What is further wrong about contemporary business is that it is distorted to favor the capitalist over the laborer and becomes exploitive. The laborer must give so much for so little to meet the demands placed on them that their quality of life degrades to the level where normal family relationships and personal growth are impossible, physical and mental health is compromised, advancing education is constrained and ultimately crime or compromised ethics becomes necessary for survival. It is clear that Malloch has the intent of balancing the need of the supplier and the customer as a goal of ethical business. However, until the problems of inequitable distribution of benefit and the potential misuse of wealth is solved, business will remain an open door to abuse and exploitation.
Some virtue is naturally inherent in people as God created them. The rest is created through training, discipline, exercise and encouragement. Businesses do foster the creation of virtue by employing these methods, but they typically do so out of necessity, not because of some inherent quality in business.
While I depart from the author on the subject of letting business be a place to disciple people in spiritual principles, I do agree wit Mr. Murdoch that gratitude is a potent vehicle for inspiring workers, suppliers and customers alike. (pg. 110) I’ve personally observed CEOs who showed little gratitude for the benefits they received from workers and suppliers, and seen how it undermines profitability and productivity. This was masked by the healthy profits already being generated, but more and better are waiting for the CEO who learns to effectively employ this. The downside is that gratitude applied inexpertly can undermine authority, which may be why some leaders are afraid to exercise it. This idea is developed further in the realization that spiritual capital comes from God though divine knowledge and is intimately connected with being thankful (pg. 130). Realizing this should lead to wise investment (pg. 133). Disappointingly, the author does not take the next logical step and make an appeal for organized dis-investment in wrong principled enterprises.
A very key point is made that there needs to be a balance between the Golden Rule and “nature’s law” or the “law of commerce.” That is, a business needs to stay in business so it can serve its customers and employees. Without apparently really appreciating the value of the example, Murdoch cites the story of a factory owner who continued to pay his employee’s wages while the plant was closed for repairs following a devastating fire. The business ended up closing because of the financial string this charity put on it. Murdoch labels this man and his business a martyr for the ideal putting other first, when in reality it’s more a case of bad charity. Unemployment and other insurance exists for such cases, and it would have been better to invest in training or real charity at a sustainable level so that the factory would survive and continue to offer employment.
The example of eHarmony getting its start through a Christian ministry and then dropping the exclusively Christian focus it touted in the book as an example how a spiritual origin can be beneficial. But it ignores the point that when a company uses the church to launch itself, it has an obligation to remain committed to the spirit that birthed it. Becoming a vehicle for other religions and philosophies betrays the resources and other support drawn from the body of Christ. I think this helps to illustrate the fundamental flaw of this book. He author claims to be a Christian, but, especially in the repeated citations of the example of Rumi Vergee, shows great zeal for anything spiritual whether it’s Christian, Hindu, Muslim or other. While the author is clearly well read and fairly experienced in international business, this non-selective approach betrays his profound ignorance of the source of spiritual capital. I expect the ultimate example of Mr. Verge will be something of an embarrassment to the author and undermine the premises of this book.
To those who are gifted with spiritual discernment, it’s clear that while Islamic, Hindu, Buddhist and other religions have the same kind of spirits, they are not of the same spirit and these spirits are ultimately incompatible with each other. Individuals may overcome their differences for the sake of making a profit, but no institution can incorporate the differing religions successfully long term. What Murdoch completely misses is that Christianity is unique among all religions in that it alone worships the true God, through faith in Jesus Christ has the Holy Spirit with the gifts He imparts and that makes ones with God possible.. Any institution that tries to combine these religions incorporates structural conflicts which ultimately doom it to failure. Either one spirit will dominate, or the inevitable tensions created by irreconcilable differences between the religions will destroy the enterprise. Mr. Murdoch may be a believer, but he is more a disciple of Aristotle than of St. Paul. A prime example of this is the nature of God as held by these religions: Hinduism espouses a multiplicity of gods, Islam one god which has no direct relations with mankind, Buddhism denies that god exists and only Christianity asserts monotheism with mankind fully at one with God while retaining individual identities. Even Sufism, which allows that man may relate directly to god denies Christ, who is the only way to realize that.
Even so, there still remain other good points made in the book. One of those that resonate well with my heart is the idea that virtue is acquired for spiritual growth rather than profit (pg. 114) Of these, courage is essential for success and must come from a response to external needs (to make the world better) rather than internal need (to benefit oneself).
A rare and beautiful insight is Murdoch’s explanation of what an institutional spirit is (pg. 122). Indeed, a legal entity can have a real spirit, and in that sense, a life of its own. This is an interesting concept where an institution may have a spirit that, while not eternal, can live as long as the entity which embodies it lasts. That spirit can even pervade the very people that work there. Which is why great care must be taken for Christians to engage themselves only with those enterprises and institutions where the spiritual principles are congruent with their own. It is also has a potential for great evil when an institutional spirit is created with wrong intentions an without virtuous principles. The case history of Ikea is a potentially good example for this in that it was systematically attacked by other competitors with clear intent to destroy the firm and prevent its business model from succeeding and challenging their exploitive practices.
Another good point made is the distinction between obtaining wealth (by spiritual enterprise) and pursuing it (by focusing only on financial profit alone (pg. 120). A related point is made that businesses should also not pander to political correctness (pg. 136). A salient point is made that accommodating political correctness may bring short terms gains, but leads to society in general and the business in particular being saddled with unjust and unreasonable demands which will conflict with both obtaining profit and developing spiritual capital.
Something else that needs to be addressed better is the dichotomy of desiring both community and independence. The author does not reconcile these well, but this is essential to creating the ideal enterprise which balances the advantages of the power of corporate structure with the need to preserve the identity and meet the needs of the individual and the unique benefits they contribute. This becomes more important in the global economy where individuals can become nearly invisible in the sheer scale of corporate activities (pg. 132).
Almost in passing the author describes how purely secular principles naturally lead inevitably to tyranny and cites China as a case in point and more the worse since it defies the necessary rule of law that ethical business must have to operate.
Overall, this is a very good book that tackles a deserving subject. It falls short because it tried to grasp a much broader scope than the material in the book can sustain. It fails most notably by making no distinction between different kinds of spiritual capital and is blind to the structural conflicts they will cause if not dealt with. A glaring omission is that the book does not deal with the obvious problem that principle driven enterprises are quite vulnerable, especially in the formative stages, to hostile actions by competitors who recognize the threat they pose to their dominance in business. There are no remedies proposed for the unfair advantage that such things as official bribery, corporate espionage and worker exploitation gives to unethical enterprise. If this subject had been dealt with, it should have covered the necessity for spiritual enterprises to protect and advance their own kind. There should also be an appeal to local, state and national governments to recognize the value of spiritual enterprise and protect and promote it was well as support further formal study and testing of the subject.
If I had written such a book, I would have concluded with an appeal to the Christian church to actively encourage and foster such enterprises, and the latter to provide financially for the church. I would also have issued a warning of the real harm done to principled institutions when government forces them to accommodate by law unethical practices such a abortion, homosexuality and unmarried domestic partners. If the book had been written solely from a Christian perspective, I could endorse it. Because it unreservedly accommodates Islam and its kind, the book is seriously flawed. This is a great disappointment and the author could do better.
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Abstract: This aim of this book is to introduce and promote the concept of spiritual enterprise. The author develops the concept of spiritual capital as a product of virtue in the context of western capitalism and Judeo-Christian culture and faith. It alternates between related case histories and a stepwise development of the case for spiritual values as the foundation for business ethics, principles and profit.
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