Abstract
The purpose of this chapter is to take a fresh look at the concept of wealth creation that is urgently needed, given the huge gap between the global importance of wealth creation and the attention paid to it. It is argued that its notion we encounter is often very simple (as in “making money”) or extremely vague (as in “adding value”). In the first part the need for a fresh look is highlighted by pointing to three concerns about globalization and the roles and responsibilities of corporations. In the second part a rich concept of wealth creation is developed that includes physical, financial, human, and social capital, encompasses private and public wealth, accounts for its production and distribution, recognizes its material and spiritual side, and places wealth in the time horizon of sustainability. Moreover, creating (wealth) as “making something new and better” is distinguished from possessing and acquiring, and different motivations required for wealth creation are explored. The third part discusses several challenges of this rich concept for the understanding of business ethics.
“Making money” can be destroying wealth while creating wealth can be losing money.
A thorough understanding of wealth creation enables us to sharpen our economic critique of fashionable and short-sighted management recipes and to bring the power of ethics to bear where it matters most.
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Notes
- 1.
On a personal note, I may add my exposure to and my interest in the question of wealth creation, having taught and done research in China for many years.
“To be rich is glorious,” a famous saying attributed to Deng Xiaoping in the mid 1980s (see note 2), marked a radical change of attitude towards wealth and prosperity, one that came to constitute a core value of the moral foundation for China’s economic reform and open-door policy. It has been embraced by millions and millions of Chinese and proved, overall, to be quite successful. I personally have been fortunate, since 1994, to observe and study the remarkable economic development in China and particularly in Shanghai, to seek possible lessons applicable to other parts of the globe and to reconsider my own views with regard to poverty and wealth and business responsibility.
These Chinese challenges are in stark contrast to what I had experienced before my involvement with China and in other regions of the world. Highly motivated by an eye-opening trip to India in summer 1970, I wanted to complement my education in theology with studies in economics, especially on poverty and income inequality. My focus was clearly on the poor, not the rich. How could the rich be “glorious” when, as Jesus said, “it is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God” (Luke 18: 25)? Although living in Europe, I was strongly influenced by the Latin American theology of liberation, the preferential option for the poor, and the debate on the pastoral letter Economic Justice for All of the U.S. Catholic bishops (Enderle, 2002b). To fight against poverty made sense. Jesus’ saying that “you always have the poor with you” never meant to me to accept the fact of poverty in resignation and to give up the hope to essentially eradicate poverty. Thus I wrote my “habilitation” (Enderle, 1987) in business ethics on economic and ethical aspects of poverty in Switzerland and, by doing so, discovered how poverty research can open up a wide range of perspectives that are also of great relevance to business and economic ethics in general (see Enderle, 1991). But at that time I didn’t realize the importance of the creation of wealth.
In the 1990s I was increasingly exposed to two very different types of continental experiences. I couldn’t help comparing them on a continuous basis, although such comparisons are certainly incomplete and somewhat biased and unfair. My connections to and activities in Latin America, and particularly my involvement in the long preparation of the World Congress of Business, Economics, and Ethics in São Paulo (2000), helped me to understand more deeply the ethical challenges of business ethics on that continent and the presence of Catholicism in its multiple forms (see Enderle, 2003). My trips to East Asian countries and my studies of some of their core ethical issues opened my Western eyes to a very new and highly complex reality with which I still have difficulty coming to grips (see Enderle, 1995; Lu and Enderle, 2006).
In juxtaposing and comparing those countries’ experiences, I’m beginning to understand how important a proper concept of and a determined focus on wealth creation are precisely for addressing the issues of poverty and inequality of income and wealth. Furthermore, these vital problems cannot be dealt with in a purely technical and value-free manner. Culture and religion obviously matter and their impact, for better or worse, needs to be investigated and evaluated.
- 2.
Remark about the saying “to be rich is glorious”: This saying (“zhi fù guāng róng”), actually, was neither directly uttered nor denied by Deng Xiaoping. A journalist asked the leader in an interview on September 2, 1986: “How would Mao Zedong see the current situation?" and proposed the answer that remained uncontested by Deng Xiaoping: "In such a way as the current leaders maintain that to be rich is glorious.… “ (Deng Xiaoping’s Selected Works in Chinese, vol. 3, Beijing: People’s Publishing House, 1993, p. 174). I acknowledge my gratitude to Xiaohe Lu for this information.
- 3.
One might ask whether this innovative spirit leading to wealth creation is one or even the essential feature of capitalism? Different scholars offer a variety of answers. David Landes argues that it was already in the Europe of the Middle Ages when the division of labor and widening of the market encouraged technological innovation (Landes, 1999, p. 45). For the peculiarly European cultivation of invention, as distinct from the Chinese attitude, he stresses the importance of the market. “Enterprise was free in Europe. Innovation worked and paid, and rulers and vested interests were limited in their ability to prevent or discourage innovation. Success bred imitation and emulation; also a sense of power that would in the long run raise men almost to the level of gods” (p. 59).
For Michael Novak, the innovative spirit becomes the hallmark of capitalism. Criticizing Max Weber who holds “economic rationality” to be the essence of capitalism and drawing on Hayek, Schumpeter, Kirzner and others, Novak states: “The heart of capitalism … lies in discovery, innovation, and invention. Its fundamental activity is insight into what needs to be done to provide a new good or service. The distinctive materials of capitalism are not numbers already assembled for calculation by the logic of the past. On the contrary, its distinctive materials are new possibilities glimpsed by surprise through enterprising imagination” (Novak, 1993, p. 10).
- 4.
An interesting attempt to take nature into account has been made in the report to the Club of Rome by Wouter Van Dieren (1995).
- 5.
- 6.
With the benefit of hindsight we wouldn’t qualify Enron as a company that created enormous wealth in the late 1990s despite its spectacular published financial results: its operating results, for instance, increased from $515 million in 1997 to $698 million in 1998, $957 million in 1999, and $1.266 billion in 2000. The bankruptcy filing lists $31.2 billion of debt, later revised to $40 billion and the asset values estimated at $62 billion in the Chapter 11 filing were later revised to $38 billion (Tonge et al., 2003, p. 5).
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Enderle, G. (2010). A Rich Concept of Wealth Creation Beyond Profit Maximization and Adding Value. In: Moore, G. (eds) Fairness in International Trade. The International Society of Business, Economics, and Ethics Book Series, vol 1. Springer, Dordrecht. https://doi.org/10.1007/978-90-481-8840-6_2
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