Ask More of Business

Asking More Commentary: Perspectives from Mendoza College of Business

Commentary Post - Tonia Murphy

The Pope and Pay

October 19, 2009

Law plays a critical role in compelling a standard of decency and fair play in business.  Witness, for example, the importance of federal statutes and regulations on the environment, fair labor practices and fair advertising practices, as well as state laws on product liability.  It’s imperative that the law develops and changes, based on the hard lessons of experience.  We have seen and will continue to see such adjustments.  Exactly what modifications should be made to banking and securities laws is a matter of great current debate. 

But there are some matters that the law is not well-suited to address.  For example, would it be advisable for the law to play an expanded role in setting “fair” compensation across the pay scale, or at least at the high end?  Some have advocated efforts in that direction.  And perhaps there’s moral appeal to such efforts.  But what entity or individual is better situated than the market to determine suitable, fair salaries?  A bureaucrat or review board in Washington?  Or in the state capitol?  Even if such “fair salaries” for all could be mandated, would we want that additional layer of bureaucracy?  A move further away from the concept of free enterprise?  What would be the unintended consequences of such regulation?   

While I would argue against further legal mandates on pay, I recognize the moral aspects of pay (and other) business decisions.  I frequently remind my Business Law students that compliance with the law may not be enough.  They should consider the ethics of their business decisions. 

Mendoza College students are not left to make ethical decisions in a vacuum.  MBA students take a two-credit required course in Foundations of Ethical Business Conduct.  Undergraduates take required courses in business ethics, philosophy, and theology.  In the introductory Business Law course this academic year, undergraduate students are reading portions of Pope Benedict XVI’s latest encyclical, Caritas in Veritate, which speaks to the moral responsibilities of businesspeople.

In that encyclical, Benedict writes particularly of companies’ obligations to their workers and other stakeholders.  He notes more generally:

The Church's social doctrine has always maintained that justice must be applied to every phase of economic activity, because this is always concerned with man and his needs. Locating resources, financing, production, consumption and all the other phases in the economic cycle inevitably have moral implications. Thus every economic decision has a moral consequence. (No. 37)

Catholic social teaching, accordingly, asks more of employers.  It challenges them to pay a just wage.  In the Business Law course at Notre Dame, we’ve asked our students to take up that challenge.