Bernardo M. Villegas
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Humanizing Capitalism Through Family Enterprises

           Leonardo Di Caprio has added another nail to the coffin of unbridled capitalism by starring in a film depicting a real-life character in "The Wolf of Wall Street."  The person he portrays is the incarnation of everything that is evil in free market capitalism that recognizes no moral bounds.  Pope Francis in his recent Apostolic Exhortation "The Gospel of Joy" actually adds another expletive to describe this inhuman system:  murderous.  In Paragraph 53 of the document, he writes:  "Just as the commandment 'Thou shalt not kill' sets a clear limit in order to safeguard the value of human life, today we also have to say 'thou shalt not' to an economy  of exclusion and inequality.  Such an economy kills.  How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?  This is a case of exclusion.  Can we continue to stand by when food is thrown away while people are starving?  This is a case of inequality.  Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless.  As a consequence, masses of people find themselves excluded and marginalized:  without work, without possibilities, without any means of escape."

          It is obvious that the Pope is not making a blanket condemnation of all economic systems based on the freedom of economic initiative which needs a minimum of free markets, without denying the indispensable role of the State to promote the common good.  What he is criticizing is a way of thinking and acting that denies the primacy of the human person, the refusal to define the common good as a social order which enables every single human being to attain his fullest or integral development as a person.  He clearly traces the worrisome multiplication of "wolves of Wall Street" to a moral crisis: "One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies.  The current financial crisis can make us overlook the fact that it originated in a profound human crisis:  the denial of the primacy of the human person!  We have created new idols.  The worship of the ancient golden calf (cf Ex 32: 1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone:  consumption."

          I maintain that one way of restoring humanity to capitalism is the encouragement of more family-based enterprises.  In a thoroughly research-based publication entitled "Family Values and Value Creation:  the Fostering of Enduring Values Within Family-Owned Businesses," a group of business professors from Europe and the U.S., led by Josep Tapies of the IESE Business School and John Ward of the Kellogg School of Management, described the role of family businesses in society and their impact on economic growth, investment and job creation, both in advanced and in emerging economies.  As Dean Jordi Canals of the IESE Business School wrote in the Preface to the book:  "Many family businesses have shown over the years that companies do not need to be single-minded about objectives.  They know that economic performance is important but the long-term survival of the firm also needs to take into account people's commitment and customer loyalty.  Today, many companies and their senior leaders want to be recognized as good social actors promoting not only economic progress but the well-being of the communities in which they operate.  These are areas in which family businesses have excelled over the years."

          As John Ward wrote in the introduction to the book. "...a close examination of the successful examples in the popular book 'Built to Last' shows a disproportionate number of family firms.  And the family firms in that study have stronger cultures than the successful non-family firms.  Moreover, what my studies show is that the values at the foundation of the culture of family firms are different.  Examining the values statements of family firms and non-family firms shows interesting patterns.  The values of family firms are more human, more emotional, more fundamental.  The values expressed in values statements of non-family firms are more transactional, more impersonal, more driven by outcomes.  I believe this difference is instrumental in the stronger (humanistic) cultures found in family firms."  For these reasons, I am convinced that we have to encourage the establishment and preservation of family firms all over Asia to ensure that the new epicenter of economic growth will evolve a more human form of the market economy.  For comments, my email address is bernardo.villegas@uap.asia