Marco Rubio’s ‘Common Good Capitalism’ is admirable, but it has a few flaws

Marco Rubio (Getty)

The former presidential candidate believes Catholic social teaching can help heal the nation’s divisions

Marco Rubio, the 48-year-old Republican senator from Florida and former presidential candidate, has delivered a major policy address yesterday at the Catholic University of America in Washington, DC, in which he drew heavily on themes from Catholic social thought, to propose answers to the nation’s dividedness and pessimism.

We live now in a country, he said, “in which over 70 per cent of Americans believe their fellow countrymen on the opposing side of politics aren’t just wrong, they are a threat to the country.”

His goal, he said, in proposing what he called “Common Good Capitalism” was not to contrive some Third Way between capitalism and socialism, or to outline some new brand of post-Trump Republicanism, but rather to come to the aid of his country out of piety. He feared that the “American exceptionalism” from which he benefitted as the child of Cuban immigrants, was now in grave danger of being lost.

“I am feeling old in here,” he was overheard saying, as he walked in and gazed over the standing-room-only crowd of 400 students at the Busch School of Business. Dean Andrew Abela in his introduction highlighted the importance of the venue: “as the university is the bishops’ university, so the business school is the bishops’ business school in America.”

As suited a student crowd, Rubio’s address was well seasoned with humor. He opened by saying that he learned a lot from social media’s reaction against Attorney General Barr’s speech at Notre Dame a few weeks ago. He thought he should avoid declaring explicitly his allegiance to Catholic social thought, because critics on the internet would think he was bent on instituting a religious theocracy. So, instead, he would be citing the thought of the 19th-century Italian social theorist named Vicenzo Pecci. It was this man’s writings from whom he had learned the most.

Well actually Vicenzo Pecci was Pope Leo XIII, Rubio revealed, smiling. But he had made his point: the provenance of a principle does not matter so long as it is compelling, helpful, and true.

Rubio repeated throughout his address a central insight from Leo’s founding encyclical of Catholic social thought, Rerum Novarum: that businesses and workers are not in competition with each other but are meant to cooperate in a win-win partnership. “Businesses have a right to make a profit. And workers have a right to share in the benefits of the profits their work helped create” – this was Rubio’s attractive formulation. The Left in the US tends to downplay or deny the first half of that formulation, he pointed out, while the Right downplays the second.

Another formula which he emphasized repeatedly was that workers have an obligation to work, but they cannot meet that obligation unless businesses, and society as a whole, take care to create stable jobs with dignity. According to Leo XIII, Rubio said, “the ultimate goal for any society should be to ‘make men better’, by providing regular people the opportunity to attain the dignity that comes from hard work, ownership, and raising a family.”

“Free enterprise made America the most prosperous nation in human history,” he said, “But that prosperity wasn’t just about businesses making a profit; it was also about the creation and availability of dignified work.”

Yes, one can see a certain secularization of Leo’s thought in such interpretations, perhaps inevitable in a politician’s thought. For Leo, rather, the goal of society is to make persons virtuous, to enable them to seek holiness easily and attain heaven.

Also, there seemed a persistent neglect of the role of virtue throughout Rubio’s speech. A student brought this up in the question-and-answer. “You say that people need dignified work so that they can support a family, but,” he asked, “don’t people need to be committed to each other in marriage first for there to be a family?” Rubio seemed unprepared to discuss the role of virtue, or better types of education for social unity.

It’s well and good, too, to pine after the days in the 1950s when Americans could support a family with a stable, lifelong job, consisting of “dignified work” with a manufacturing interest or corporation.

But what about today? In the 1950s technology was developing so slowly that a “generation” for a new product was about 20 years. Now it’s closer to three years. Also, the 1950s was a time of extraordinary prosperity in the US because major competitors had been bombed into oblivion by a major war. Is it realistic to seek like stability now?

Rubio agreed that there was no question of going back to the past but of “retrofitting,” he said, new ideas to the framework of structures that used to serve us well. However, the bulk of his speech was devoted not to proposing such solutions but to diagnosing the problem. He echoed the sense commonly shared today that global financial markets are “overwhelming the real economy.”

Also, he said, businesses were pursuing efficiencies, in practices such as outsourcing jobs, when it was often important to choose the interest of the nation over efficiency. But was this choice of the good over the useful to be compelled by regulation, one wanted to know? Rubio’s instincts seemed to move in the direction of tax incentives and exhortation.

The main target of his attack, although not named, was the widely adopted “shareholder theory” of corporate management made famous by Milton Friedman. This is the normative claim that, as the shareholders of a business are its owners, and management serves owners, the sole goal of management should be to maximize shareholder value – then leave it up to the shareholders to use their profits, if they wish, for laudable social goals. The managers themselves should care for nothing other than increasing the share price. According to Rubio, this theory has kept companies from reinvesting profits in the workers, who helped create those profits, and in communities.

Rubio was famous (or infamous) for saying during his run for President that the nation needed fewer philosophers and more plumbers and welders. He now jokes that he would soften that assertion, as he has become more philosophical himself. But perhaps not philosophical enough. A serious shortcoming of his address was that it did not name or systematically refute the theories he was grappling with. He never mentioned Friedman or the theory of shareholder value. He did not say how his theory of “Common Good Capitalism” differed from so-called “stakeholder theory.” He did not even say what he meant by a “common good.”

The best refutation of Friedman’s principle is found in Catholic social thought under the heading, “the universal destination of goods.” The principle actually comes from Book II of Aristotle’s politics, and so one may cite it freely without the risk of being considered a theocrat. It states that in a good society property is owned privately, but that, as no property ultimately is solely one’s own, the use of that property should always be direct to the good of others and the common good. Friedman says rightly that a company’s managers have purely a fiduciary responsibility, and yet not solely to the owners. Similarly, the owners have a fiduciary responsibility as well, often to others, but ultimately to God. Thus, all the way up and down the line, form the lowliest worker to the owner with the highest net worth, the capital invested in the company must be regarded as for common benefit and used with that purpose in view. But, again, Rubio never identified this principle so essential to his policies.

And yet in a broader context these are small quibbles. Something is wrong in our society. We all know that. The worldwide movements of populism and nationalism show it. It’s more than prudent to turn to Catholic social thought for a diagnosis and for finding ways out. Each will do this in the manner appropriate to his state and expertise. And Marco Rubio has done so particularly well. What he said in his address was a very good starting point. In doing so he both honored Vicenzo Pecci and served his country with true piety.

You may see so for yourself by reading his address here.

Michael Pakaluk is Ordinary Professor of Ethics and Social Thought at the Busch School of Business in The Catholic University of America. He lives with his wife, Catherine, a Professor of Economics at the School, with their eight children in Hyattsville, Maryland