Hong Kong was always different than other colonies. It began in 1842 as a minor trading post, surrounded by empty territory. Like the United States, most of Hong Kong’s citizens were drawn there for freedom and opportunity. As Milton Friedman noted, after WWII Britain allowed Hong Kong to pursue a classical liberal, free market policy. Even during its own dalliance with socialism, Britain allowed capital to move freely in Hong Kong. Taxes were kept low and there were no exchange or trade restrictions. The results were spectacular. Despite absorbing millions of impoverished refugees, Hong Kong’s per capita income rose from about a quarter of Britain’s to more than a third larger in just four decades.

In 1984 Margaret Thatcher’s UK signed an agreement with China that promised to continue Hong Kong’s unique role for another 50 years. Post-colonial Hong Kong became a free city inside China, with its own laws, democratic legislature and independent judiciary. It kept its free market economy, its low rate tax system, and its separate, convertible currency. China traded a negligible dilution of its sovereignty for the enormous benefits it derives from a free Hong Kong. It calls this arrangement "One Country, Two Systems."

With billions of people still trapped in poverty today, why shouldn’t we build new Hong Kongs? Why shouldn’t other developing countries and regions have vibrant outposts of freedom like Hong Kong?

The United States should create a Free Cities Program that would build treaty-based "Hong Kongs" in countries that genuinely want democracy, prosperity and a way to outflank corruption. These new Cities would be joint ventures between the United States, an international financial institution like the World Bank, and the host governments. The U.S. would negotiate 50-year bilateral treaties with the host countries, authorizing the joint venture to purchase undeveloped plots the size of Hong Kong, establish property registries, and institute a complete set of Western freedoms and responsibilities.

Treaty-based Free Cities would offer democracy, low taxes, rule of law, limited government, reliable prosecution of corruption, freedom of faith, speech and press, multiethnic meritocracy, and free trade. They would exemplify free market globalization, rather than the economic exploitation of protectionist colonial mercantilism. Like Hong Kong, these tiny places would become safe havens for investors and entrepreneurs. They’d allow citizens to raise capital, attract the skills they need from abroad, and create thousands of new jobs where there are none today.

This strategy would be inexpensive, yet philosophically revolutionary. In a Free City development wouldn’t be a problem at all. Investors and workers will absolutely flock to places where there is freedom, secure property rights and the rule of law—thereby reversing the brain drain that hobbles every developing country.

The joint venture would only have to build the Free Cities’ public infrastructure, and that would be financed by resale of City land, City taxes and bonds. The global private sector would gladly develop everything else because they’d be able to reap the rewards of their own enterprise.

The people attracted to Free Cities would become stakeholders who would resist aggressively any interference with their freedoms, as the citizens of Hong Kong have. And the host country’s ruling elite would learn quickly, as China’s did, that they can earn much more from their Free City than they’d ever be able to pocket from foreign aid or "squeeze."

This strategy could change the focus of America’s official development programs from government-to-government to people-to-people. Free Cities would mobilize the private sector, NGOs and the faith community, to build first world economies in destitute places. In the process, it could stimulate a profound new American engagement with the poor of the world.

A Free Cities program would appeal powerfully to the idealism and generosity of the American people—and to the friends of freedom around the world. It would put the U.S. on the offensive in the worldwide war of ideas. And it would put dictators, kleptocrats, and terrorists on the defensive.

The world needs at least a dozen new Hong Kongs. The United States should lead the way and begin building Free Cities in Eastern Europe, Africa, Latin America, and Asia in the next five years.

Ken Hagerty is Chairman and Founder of the Global Venture Investors Foundation; Theodore Roosevelt Malloch is Chairman and Founder of the Spiritual Enterprise Institute

The modern market economy has, with some notable exceptions, from the time of Rousseau and Marx down to the present been largely defined by its ignorant adversaries. They see only the bad and attribute every conceivable evil to it. The defenders of the market economy in the discipline of economics often see only a soulless process in which it no longer makes sense to raise questions about right and wrong. Curiously, the first great and positive account of the modern market economy given by Adam Smith comprehended the larger cultural context within which markets operate. What Theodore Malloch gives us in Spiritual Enterprise is a sustained account of the role of faith in the leadership and operation of a successful business and the necessity of spiritual capital for a healthy market. He writes in the tradition of Max Weber, Michael Novak, Wilhelm Röpke, and Deidre McCloskey.

Expanding Putnam’s concept of social capital, Malloch defines spiritual capital as “the fund of beliefs, examples and commitments that are transmitted from generation to generation through a religious tradition, and which attach people to the transcendent source of human happiness.” (pp. 11-12). Malloch maintains that it is not possible to understand the economic success of the market economy without understanding the religious and moral culture which undergirds it. He would dismiss the claims of Daniel Bell in the “Cultural contradictions of Capitalism” that a market economy undermines its own original moral tradition. He offers in rebuttal a host of detailed examples from prominent business leaders of the important role that a religiously inspired ethics has played in their whole life as well as in their business. Without denying that professed non-believers can lead moral lives and business, he questions whether this can be sustained over generations. He forces us to raise the question of whether we are now living on borrowed and diminishing spiritual capital.

In our overly rational age we suffer from an intellectual hubris which refuses to recognize that there is a pre-conceptual domain (practice) that cannot be conceptualized (theory). There is a mystery at the heart of the universe that moderns refuse to countenance. This hubris has ethical implications. If practice could be conceptualized then the relationship between theory and practice can itself be explained in theoretical terms. If one could give a theoretical account of the relationship between theory and practice, then such an account would dictate what practice should be. At the heart of this hubris is the epistemological claim that once the correct theory is in place then the practical consequences or the ethical implications are entailed. Whatever qualifications are introduced, the adherents of this view believe that rules can be understood to apply themselves. This hubris is reflected in many business ethics courses in business schools, courses which are based on the claim that you can teach someone to be ethical. This hubris has had a devastating effect on ethical practice. It transforms morality into an intellectual exercise, the application of theory to practice or morality as the reflective observance of rules or ideals. Emphasis is put upon having a correct and defensible theory rather than on how to act. The ideals too quickly turn into obsessions. Inevitably moral sensibility is inhibited or even eroded in favor of an elaborate casuistry. The object seems to be to observe a rule instead of behaving in a certain concrete manner. It achieves the appearance of stability at the price of imperviousness to change. When change can no longer be resisted it occurs as a revolution rather than as an evolution.

What Malloch offers as an antidote are the traditional virtues. The moral life, then, is “not a matter of what you do but of what you are”; the task of the moralist is to “describe the virtues that we should emulate and teach our children” (p. 18). Malloch first focuses on the three theological virtues of faith, hope, and charity. His examples taken from the lives of real business leaders can only be described as inspiring. The specific virtues germane to business practice, what he calls the hard virtues, are leadership, courage, patience, perseverance, and discipline. Rather than bracketing off the hard virtues, Malloch then connects them to the soft and social virtues of justice, compassion, forgiveness, gratitude, and humility. This is not a laundry list or historical curiosity; rather it is a coherent and integrated account of how some religious traditions give transcendent meaning to the creation of wealth, how that wealth is not an end in itself but becomes the resources for human accomplishment, and how that achievement translates into socially responsible action.

Lawrence Kudlow urges that Malloch’s book should be read by every CEO. I could not agree more. Perhaps more than any other figure, the entrepreneur is the embodiment of the classical virtues. He is his own boss. His successes and failures are his own. He eats what he kills. He gains or loses in proportion to his ability to serve the wants and needs of those who trade with him voluntarily. In the free, capitalist economy, the entrepreneur is the motive force. The practical significance of entrepreneurship is abundantly evident. Every place of business, from the humblest storefront to the gleaming corporate campus, is testament to the existence of an entrepreneur and his vision. Despite his significance in practice, however, the entrepreneur is diminished or dismissed entirely in theory. Acknowledgement of the entrepreneur’s contribution to our civilization lags significantly among those whom Robert Nozick termed wordsmith intellectuals. We are awash in academic, journalistic, and cultural cues that deny or ignore the value of entrepreneurial activity

For roughly the middle five decades of the 20th century, the entrepreneur largely disappeared from mainstream intellectual inquiry in the discipline that should be most sensitive to the effects of his activity: economics. In the regnant neoclassical paradigm, his activities are assumed out of existence in the model of the perfectly competitive market that serves as a touchstone for much of the field’s thought. But the marginalization of the entrepreneur is most notable not in the realm of theoretical economics, but rather in that portion of the academy ostensibly devoted to practical instruction in the ways of commerce—the modern business school. Since at least the early 1960s, academic business education has viewed the entrepreneur mainly as the anachronistic forerunner to the technocratic, scientifically-trained, corporate manager. Where entrepreneurship does appear in the business curriculum, it is at the margin. Courses devoted to entrepreneurship are almost invariably elective and virtually never part of the core curriculum. It is as if entrepreneurship were a deviant form of business practice, alien to the typical, mainstream business-doing to which the core curriculum is putatively devoted. Further from the academy, public intellectuals of the middle 20th century, like John Kenneth Galbraith, filled their books and columns with tales of the entrepreneur’s virtual extinction and irrelevance in a coming economy dominated by large, state-like corporate behemoths. In popular culture, the entrepreneur suffers much the same fate as the corporate entities that are supposed to displace him. With rare exceptions, literature and film find the entrepreneur interesting (if at all) only in his capacity for predation.

What is the future of Spiritual Capital in America? Is American spiritual capital being eroded? We believe there is a natural progression from governmental bureaucratic centralization to secularism to materialism to a social-collectivist conception of human welfare. We assert that the welfare state undermines institutions (e.g., family and religion) that promote spiritual capital; militant secularism as a quasi-religion promotes a reductive conception of human nature, one that denies freedom and responsibility. We already see the results full blown in the impoverishment and implosion of the Communist empire and we are seeing the gradual evisceration of spiritual capital in Western Europe. It is time to retrieve, restate, and revitalize America’s spiritual capital. Malloch’s book is the best place to start this renewal. For not since Adam Smith himself have we witnessed so forceful a treatment on the linkage between the economy and moral reasoning.

Nicholas Capaldi
Legendre-Soulé Distinguished Chair in Business Ethics &
Director of the National Center for Business Ethics
College of Business Administration
Loyola University New Orleans
6363 St. Charles Avenue
Campus Box 15
New Orleans, LA 70118
(225) 772-6523
nick.capaldi@gmail.com
capaldi@loyno.edu
www.cba.loyno.edu/faculty/Capaldi

Hong Kong was always different than other colonies. It began in 1842 as a minor trading post, surrounded by empty territory. Like the United States, most of Hong Kong’s citizens were drawn there for freedom and opportunity. As Milton Friedman noted, after WWII Britain allowed Hong Kong to pursue a classical liberal, free market policy. Even during its own dalliance with socialism, Britain allowed capital to move freely in Hong Kong. Taxes were kept low and there were no exchange or trade restrictions. The results were spectacular. Despite absorbing millions of impoverished refugees, Hong Kong’s per capita income rose from about a quarter of Britain’s to more than a third larger in just four decades.

In 1984 Margaret Thatcher’s UK signed an agreement with China that promised to continue Hong Kong’s unique role for another 50 years. Post-colonial Hong Kong became a free city inside China, with its own laws, democratic legislature and independent judiciary. It kept its free market economy, its low rate tax system, and its separate, convertible currency. China traded a negligible dilution of its sovereignty for the enormous benefits it derives from a free Hong Kong. It calls this arrangement “One Country, Two Systems.”

With billions of people still trapped in poverty, it’s time to build new Hong Kongs. The best solution for millions of illegal entrants rushing to the U.S. is to offer them hope and opportunity in their own countries.

The United States should create a Free Cities Program that would build treaty-based “Hong Kongs” in countries that genuinely want democracy, prosperity and a way to outflank corruption. These new Cities would be joint ventures between the United States, an international financial institution like the World Bank, and the host governments. The U.S. would negotiate 50-year bilateral treaties with the host countries, authorizing the joint venture to purchase undeveloped plots the size of Hong Kong, establish property registries, and institute a complete set of Western freedoms and responsibilities.

Treaty-based Free Cities would offer democracy, low taxes, rule of law, limited government, reliable prosecution of corruption, freedom of faith, speech and press, multiethnic meritocracy, and free trade. They would exemplify free market globalization, rather than the economic exploitation of protectionist colonial mercantilism. Like Hong Kong, these tiny places would become safe havens for investors and entrepreneurs. They’d allow citizens to raise capital, attract the skills they need from abroad, and create thousands of new jobs where there are none today.

This strategy would be inexpensive, yet philosophically revolutionary. In a Free City development wouldn’t be a problem at all. Investors and workers will absolutely flock to places where there is freedom, secure property rights and the rule of law- -thereby reversing the capital flight and worker exodus that hobbles every developing country.

The joint venture would only have to build the Free Cities’ public infrastructure, and that would be financed by resale of City land, City taxes and bonds. The global private sector would gladly develop everything else because they’d be able to reap the rewards of their own enterprise.

The people attracted to Free Cities would become stakeholders who would resist aggressively any interference with their freedoms, as the citizens of Hong Kong have. And the host country’s ruling elite would learn quickly, as China’s did, that they can earn much more in their Free City than they’d ever be able to pocket from foreign aid or “squeeze.”

This strategy could change the focus of America’s foreign aid programs from government-to-government to people-to-people. Free Cities would mobilize the private sector, NGOs and the faith community, to build first world economies in destitute places. In the process, it could stimulate a profound new American engagement with the poor of the world.

A Free Cities program would appeal powerfully to the idealism and generosity of the American people—and to the friends of freedom around the world. It would put the U.S. on the offensive in the worldwide war of ideas. And it would put dictators, kleptocrats, and terrorists on the defensive.

The world needs at least a dozen new Hong Kongs. The United States should lead the way and begin building Free Cities in Latin America, Eastern Europe, Africa, and Asia in the next five years. The real answer to illegal immigration is to share the freedom and opportunity we enjoy in America with people around the world.

Ken Hagerty is President and Founder of the Global Venture Investors Foundation;
Theodore Roosevelt Malloch is Chairman and Founder of the Spiritual Enterprise Institute

Recently, the Spiritual Enterprise Institute inaugurated an annual Gallup Poll on the “Spiritual State of the Union” to examine the role of both individual and corporate spiritual commitment in American life. Although survey respondents provided their own definitions to “spirituality,” the working definition is deemed to be “sensitivity or attachment to religious values and things of the spirit rather than worldly or material interests.”

One of the most noteworthy projects undertaken by the Institute, the “Spiritual State of the Union” received a great deal of national attention when it was released last month, and reveals much about spiritual life in America today. Here are some of the most cogent Headline-catching findings:

Economic health is related to spiritual health.

Ethical issues were found most important to 50-64 aged group who attend church. Many so-called hot issues like gun laws, technology, overpopulation, education, don’t register very much or at all. Of non-economic issues, fuel oil prices are more important than anything else across all groups.

Regionally: people in the South care more about ethical/moral issues; in the East about terrorism; the Mid-West, Iraq; and far West, education.

Republicans care much more about moral decline, while Democrats care about poor leadership. Liberals are twice as unhappy about the general economy as Conservatives

Those whose faith shapes success and the spiritually committed are much more concerned about ethical/moral issues. The richer you are the better you think the economy is doing. The US economic system –capitalism- -is viewed as “basically OK.”

Our economy depends on the spiritual health of the nation.

The resounding answer is “a great deal!” – except for non-church goers.

In the South support is overwhelming for such a statement and a majority of activists and poor people believed this even more than the rich. In fact, many people have come to think that work makes the world a better place. The only disagreement is in our youngest workers who are more cynical.

Work is of value to the world.

Christians and the spiritually committed are most likely to completely agree. The poorer you are the more you agree that work is important. College graduates completely agree; the same as church goers. Republicans agree more so than Democrats but Independents agree the highest. Those in the East and West are most likely to disagree showing the existence of a coastal bias.

More than half of all Americans think being ethical will pay off economically.

85% mostly agree, across the nation. The highest totals for agreement were: satisfied workers, spiritually committed, faith-based, activists and entrepreneurs. Most people still think breaking the rules is a no-no and a significant population thinks that people are always ethical.

Open expressions of religion in the workplace are encouraged or tolerated by 79% of Americans.

People are equally split on prayer and religion at work, but the trend appears to be growing as a practice.

The Protestant work ethic is still alive and well.

Hard work may offer some guarantee of ultimate success according to half of those polled, however when asked whether the strength of the US is based on business: 77% agree; 82% of Republicans vs. 71 % of Democrats.

Government regulation does more harm than good: 60 % argue.

Success in life is determined by spiritual forces: 58% agree. Government however is no longer viewed as the savior or even first agent for change and betterment.

Belief in God remains high.

82% believe in Him; but increasingly many see themselves as spiritual not necessarily religious. When asked: Does God want us to find work that suits our talents, 87% agree. Asked Does God want us to be useful to the world, 91% agree. Asked if faith equals purpose in life, 69% agreed. The least likely to agree: young, males with college degrees who infrequently go to church and have high incomes.

People with a purpose are satisfied in their work and believe their faith shapes success.

When asked are you spiritually committed: just under 65% said yes. Faith encourages development of God-given talents 65% vs. 87% of religious.

Political divisions may run deep in America but the spiritual health of the nation is viewed as critically important.

When asked: Are you happy with whom you are: 88% said basically yes. College graduates and church-goers were the happiest at 92%. 63% of all Americans found the spiritual health of the country to be very important.

People can no longer be trusted.

59% said you can’t be too careful. Trust is out the window! Distrust is highest in 18-34 age groups and in frequent church goers. 69% of the poorest income people lack any trust. Who has hope? Women who attend church and are satisfied in their jobs.

Americans are very generous people.

65% of Americans volunteer a great deal or some of the time vs 89% for the spiritually committed. There is such a thing as spiritual capital. Where do people volunteer? Church 85%; Charity 53%, School 37%. How many Dollars a year do they actually give? $100 18%; $500 30%; $1000 17%; $5000 22%.

In his executive summary of the poll, George Gallop suggests that the survey marks rapid shifts in American attitudes as well as confirmation of the critical underpinning of religious and spiritual beliefs as they relate to managing current problems, the economy and work; volunteerism and the giving of money; meaning and purpose in life; and one’s outlook to the future.

My one, personal take-away from the research is close to the mission of SEI and is good news: The 18th Century concept of a Protestant work ethic has not only survived the 20th century waves of communism, fascism, socialism, secularism, and the welfare state, but may be positioned for a resurgence.

What is China becoming? How exactly is it advancing? How are religion and spirituality now viewed in a country with a communist government and a capitalist economy? President Hu has held a number of summits over the past few years with Western leaders. They have been meetings of significant proportion, ripe with historic opportunity.

There is potentially a win-win plan that appears to be emerging, all sides willing. Arguably, nothing is more critical to the project of the 21st century than Western-Sino relations. China is now woven into the global, interdependent economy. How can formerly tense relations be so improved? Is it possible to build a new dynamic that would give both sides a boost, improve economic conditions, allow more freedoms, stabilize political relations and effect the future of the world for good? Will China step up to the task, away from the Orientalist trappings of the past and its ensnarled bureaucracies and outdated ideology?

China boasts one of the longest single unified civilizations in the world. Its 5000 year history is characterized by dramatic shifts in power between rival factions, periods of peace and prosperity when foreign ideas were assimilated and absorbed, the disintegration of empire through corruption and political subterfuge, and the cyclical rise of ambitious leaders to found each new empire. But for the last three hundred years China has more or less been asleep. The error and mistake of Mao’s disaster are all too evident today. But the sleeping dragon empire is now reemerging in a vibrant dynasty. China is attempting changes on a scale never before achieved and at break-neck speed. A new ‘harmonious’ society is the objective and today nearly everything is in a constant state called: transition.

Twenty-five years after Deng Xiaoping’s reform and opening policy allowed the West back into China, the country remains as mysterious and undiscovered as it was in the 19th century when gunboat diplomacy forced the last tottering dynasty to open up the country to trade and exploration. China’s vast population has grown from 400 million to over 1.3 billion in less than a century. This has driven a boom in consumerism most evident in the cities where advertising abounds and an entrepreneurial and materialistic China is literally, bubbling up.

There are four gigantic transformations happening in China, simultaneously. No country has ever in all of human history been involved in such dramatic change. But in this case, given China’s size, power and integration into the global economy, the risks and rewards involve the entire planet.

The four transformations or transitions are:

The West would be well prepared to comprehend and ponder each of these concurrent transformations in attempting to understand modern China.

The emerging China, surely involves combating rampant corruption, enforcement of intellectual property laws, assistance by way of expertise on reforms, an open admission that Maoism is both wrong and dead (a museum to this effect, is in the making), and realization that consumers increasingly come first in China’s emerging “harmonious society.”

This is not to suggest that there are no problems in or with China or that it magically can assume an instant superpower status; becomes our keen rival or eventual enemy. It is simply time to recognize the facts and seize the day. There are many hard questions we will ask, some of which include:

The Executive Committee of the China: In Transition project includes:

Donegality Productions LLC is a media company that develops books, films, and other cultural projects that promote human flourishing and the common good. Donegality Productions will oversee the project in partnership with Wheelhouse Productions and distribute the film and curriculum through Thomas Nelson, the leading Christian publisher.

The director, screenwriter and producer of the documentary is Randall Wallace, President of Wheelhouse Productions and producer and author of the award-winning feature film, Braveheart and many other hits, including PBS documentaries and a series for The History Channel.

The budget for the film is $2.5 million, which incorporates both a traditional and viral marketing strategy with a global audience in mind.

Outline

The following is a concept outline of the documentary. There may be slight changes in settings and locations as the script is developed and completed. But these are the four themes that are explored and illustrated in the film. Each theme will be examined by a dramatic narrative story designed to reach both an elite/intelligent and a younger generation of emerging viewers curious about China.

Outreach

The aim of this project is to reach emerging influentials both in the United States and abroad. Prior to the release of the film and companion book, we will be host town hall meetings in leading places across the United States on the thesis.

Development DVD Budget

Book and Bible

A companion book, China: In Transition, to the movie in popular style, written by the lead group but drafted by an award-winning journalist, will accompany the film documentary. The book will be aimed at a broad market with best-seller status and with deep praise expected. It will have incredible endorsements from renowned leaders.

Along side the film documentary and companion book is a new translation of the Chinese Bible. The 1909 version now in use is being redone and updated and will be ready for publication in about a years time. We have access to the Chinese translation team of scholars doing that Bible. We have had high-level discussions in China with the proper officials that suggest if we co-produced with a leading university we could co-publish it and sell it in bookstores and churches throughout all of China and of course in Asia through normal channels.

The combination of the best, thoughtful documentary on China, a companion book, and this new Bible make for a powerful group or ‘bundle’ of products that can be marketed and sold together and/or alone.

To be honest, there are only two commencements I even faintly remember; my own, in 1974, where Senator Mark Hatfield gave a confession or actually lamentation about being between a rock and a hard place in the political culture of Washington, DC; and, some 25 years later in 2002 when my oldest son, graduated from Yale. Governor Pataki of New York, whose son Teddy was in the class, offered a moving ten minute charge on courage after 9/11!

Last year at Stanford University, Apple Computer, CEO, Steve Jobs gave a short graduation address that become instantly famous and circulated widely on the internet. He told three deeply personal stories and concluded: You need to connect the dots, by staying young and staying foolish. I recommend his hip speech to you but do not think its recommendations nearly sage enough.

In a similar vein, I have three stories for you this morning but first and foremost, I want to congratulate YOU, the graduates, on a job well done. Equally important, we all should say a loud and pronounced THANK YOU to your parents, grandparents, friends and families who have provided and prayed for you in this attainment. Max Dupree, the wise, Christian CEO of the Fortune 500 furniture company, Herman Miller, who was also a college and seminary president I should add, in his book, Leadership Jazz, said: ‘Pointing the way and saying thank you is the first and last word of true leadership.” Remember that good advice. Being nice, polite and grateful is no more difficult than the opposite. In fact, doing so pays large rewards. God told us to have a joyful heart: how do you get one? It starts with praise and thanksgiving, goes through forgiveness and leads directly to servant leadership: cause and effect.

Here are my three short stories for your guidance. The first one took place in Europe nearly five hundred years ago; it involved our ancestors in the Protestant Reformation. Both Luther and Calvin used the word vocation or calling from Berufung in German with reference to someone calling or addressing one, vocally. The one who called was the living God. Their view was different than the prevailing medieval sense of a restricted calling of a person to leave their work and enter a monastic way of life or holy office. The Reformers held that Christ’s crucifixion and resurrection from the dead was a total victory that included the salvation of both life and nature. Natural work was already sanctified, made holy, and did not require prior or additional sanctification dispensed by a church or through sacraments. Since then, everywhere human beings stand and live Coram Deo, directly before the face of the living God who summons them to serve Him and their neighbors by doing what they do: as farmers, craftsmen, kings, housewives or merchants. Daily work itself became a vocation; it needed no further spiritual dimension.

Tie this to the doctrine of the sovereignty of God. It is critical for understanding of role of the Christian –you graduates — in the world. The question I put to you is this: does this sovereignty relate to soteriology as well as your individual salvation? Or has God’s sovereignty been slowly shoved to the margins and effectively privatized? If linked to creation it has wide implication. The biblical phrase, "Christ is Lord of All" means more than lordship of narrow individual behavior or for one hour on Sunday morning in a church pew. The phrase has a cultural mandate also impelling action in society and in the economy. The possibilities are manifold, all with an option to serve God or to bend to another manmade idol. Faithful stewardship is careful administration of what has been entrusted to you by someone else who is higher than yourself. In Aristotle the "oeconomia" which translates as stewardship did not have to do with some separate category of ethics that can or cannot be related to real life decisions. It had to do with the whole character of the actor. We have removed this normative element.

The question of this story of old for you gathered here is simply: what is your calling? Listen … even now for the quiet voice of Him who made and sustains you. And then pick up your nets and have the courage to follow Him wherever it takes you. If you need encouragement I suggest you read N.T. Wright’s new book, Simply Christian. He supplies a focused view of the meaning of Easter:” When Jesus emerged from the tomb, justice, spirituality, relationship and beauty rose with him. Something happened in and through Jesus, as a result of which the world is a different place, a place where heaven and earth have been joined forever. God’s future has arrived in the present.”

While you may think you have finished your education today or that you now posses a terminal degree, I have to tell you that nothing could be further from the truth. You see the global economy that we compete in and the very nature of free enterprise and competition mean that you all will have to become what I call, “perpetual learners”. Because the minute you stop learning, you die. I do not want to leave you with an impression that this is just mad activity, memorizing more facts or cramming for more tests as cogs caught up in the hustle and bustle of modern life as we know it. Josef Pieper once wrote an elegant work that suggested that leisure is nothing less than “an attitude of mind and a condition of the soul that fosters a capacity to perceive the reality of the world. “He demonstrated that leisure has been, and always will be, the first foundation of any culture and he observed,” in our bourgeois Western world total labor has too often vanquished leisure. Unless you regain the art of silence and insight, the ability for non-activity, unless you substitute true leisure for our hectic amusements, we will destroy our culture, its collected wisdom – and ourselves.” So graduates, continue to set time apart for thinking, for praying and for re-creation. Be perpetual learners!

My second story began a number of years ago on a beautiful and balmy, tranquil spring day as we flew into the Bahamas and went through the gates of the private Lyford Cay Club. My heart raced as I was about to encounter the world’s greatest investor for the first time. I was not there, as so many before me had trekked, to gain some useful perspective on the market or to discover which global companies to invest in. My conversation was even more profound. Over time, I was privileged to have many conversations with him and to embark on a friendship that turned into a challenge.

Sir John Templeton was a humble, yet penetrating soul. His gaze was truly like that of a sage, of a person both entirely other-worldly and so infused with spiritual information that he exuded, well—joy. He enjoined me in a direct yet simple challenge: to demonstrate how enterprises and the entrepreneurs who started them are guided by a spiritual force rooted in faith. I took up his challenge and with his generous support and my own endowment, founded the Spiritual Enterprise Institute.

What challenges you? What do you want to be remembered for when all is said and done? Do not fall prey to the temptations of material life, of work as toil or living without a purpose. Make yours a purpose-driven life. Make a difference not just for yourself but for a Kingdom that lasts for eternity. It may not make you popular, rich or famous—that was never promised. As C.S. Lewis put it in his tale of Narnia, captured now in film, “He doesn’t like being tied down—of course he has other countries to attend to. It’s quite all right. He often drops in. Only you mustn’t press him. He’s wild, you know. Aslan is not like a tame lion.” Aided by that wise and magnificent lion, the children lead Narnia into a spectacular climactic battle to be free of the wicked witch’s glacial powers forever!

You have achieved a personal milepost today but, my friends rarely do you achieve results entirely from your own effort. You, like I, will or have been blessed in this life with loving parents, a helpful spouse, many friends, wonderful children and a community of persons, a network of colleagues and supporters, a free country, the list goes on and on — all who have both believed and invested in you. For this, be eternally grateful and fully acknowledge that no person is an island nor are they formed of their own being. We are works in progress and God has designed meaning in it all. He is working those purposes out throughout the ages, even here and now. Be willing to play your part in His story.

Neither is a life entirely one’s own product. Rather it is shaped by the tides of the times and one’s own background, experiences, and mentors. Having been reared in an observant home and raised in the cradle of Reformed faith, I was never outside of belief. My intellectual pedigree, interdisciplinary training and a life of real world work led me to undertake the tasks I have been given. As an academic, who early on became a “recovering academic”, I was perhaps fortunate to leave the ivory tower to join the blood, sweat and tears of the active life. Wherever I have been involved, in politics, investment banking then diplomacy, and for nearly the last two decades as a strategist in the corporate world, I have tried, often failed, and tried again, to be a Christian. From Davos to Aspen I have had the good fortune to interact with and to come to know senior business people, keen on inventing the future. I have come to know them and their companies, intimately and to advise them while peering into their souls. What have you been challenged to do? When they read your obituary sixty or seventy years hence: what will your lasting contribution be?

My final act; I grew up singing old and new hymns. The songs I most recall, include the likes of Hide it under a Bushel, No, Jesus Loves Me, and Deep and Wide. For me, faith was and remains the ultimate purpose for living and serving. Each summer my family would travel from the heat and humidity of the inner city to vacation at a camp in the Adirondack Mountains, on what is literally, Lake Pleasant. The image still reverberates in my over-educated mind especially on sleepless nights. It was as cool, calm and refreshing a place as is a heavenly breeze. That is because it likely was. It was a religiously inspired but nondenominational setting. They called us gospel volunteers—as if we were free and roving ambassadors for Christ. I guess I still am. I recall my last summer there, then as a counselor. Every Sunday morning at chapel, set high on a hill overlooking that ever pleasant lake, we would march in carrying about a hundred different flags. They were from nearly every country around the globe — from America to Zimbabwe. As they paraded forward to the stage the orchestra would play and the ebullient choir would sing in the loudest and most melodious voices I have ever heard, Crown Him with Many Crowns… Thy praise and glory shall not fail for all eternity.

My prayer for you as graduates today is that you too will have your Lake Pleasant, as a reservoir of strength; and that you will remember this special place of higher education, the character and friendships formed here, so that you can give all the Glory to God. Because in the end, life is a calling, and taking on your challenge is a nothing more than a long doxology; from Him all blessings flow and to Him they shall return.

Hold on! We need to answer these charges head on with the bold idea that the creation of wealth by virtuous means is the most important thing we can do for ourselves and for others.

The downfalls of WorldCom, Enron, Adelphia, Tyco, and other once high-flying companies like Bear Stearns have flooded newspapers, television screens and courtrooms around the country with important, and often difficult, questions about the ethics of business – or the consequences of their troubling absence. From inventors to investors, venture capitalists to investment bankers, and employees to managers, people inside America’s businesses are all too aware of the need for better corporate governance, for more accountability and transparency.

But from what sources do the virtues that inform such good behavior arise? And why are they so essential to the modern economy we have come to depend on for our creative freedom and our prosperity? Many people have real anxiety about virtue – particularly as it pertains to business – because it is a concept that is increasingly absent from our public vocabulary. Today, the general public holds corporate CEOs in lower esteem than at any time in history, ranking them below lawyers and politicians. Because of the crimes and scandals perpetuated by some company officials, people are rightly disillusioned, even disgusted, by what they glimpse of corporate America’s goals and the nefarious means with which it seeks to achieve them.

Perhaps, profit-only companies are, in fact, parasitic, and they damage the economy at large with their limited and self-focused view of their role in the marketplace. But companies that commit themselves to a more holistic core mission and are steeped in spiritual capital rooted in virtue, succeed not only in righting wrongs but in creating genuine personal and social progress, while also succeeding in generating strong profits. The moral outrage that people feel in response to the past decade of scandal and the past year of deceit is indeed entirely legitimate, and it leads to compelling questions about the true purpose of business and the virtues that are necessary to sustain it and a free economy.

It is characteristic of the age in which we live to see the moral life as a matter of following rules or dictated principles, often enforced by regulations and enforced by faceless bureaucrats. Ancients seldom referred to such rules or principles and there were no bureaucrats. For them the moral life was not a matter of what you do but of what you are. The fundamental notion was not duty but virtue. And the task of the leader was to describe the virtues that we should emulate and teach to our children and peers.

We achieve the condition of happiness and respectability only through the practice and discipline of the virtues. We teach our children to be courageous, wise, just and temperate because we know that this will make them respected by their fellows, secure in their decisions, and able to take full responsibility for their lives. Success in business is similar. Success is not an accident or matter of luck. The crooks usually, in time get caught. We prepare for business success by acquiring virtues—dispositions that help us to take risks, to make decisions, to take responsibilities for our actions, and to accept wise advise and correction. These virtues are the most important part of our human capital. We do not invent them for ourselves. Instead they grow organically over time, through history, tradition and experience. Everyone knows that the best and lasting companies breed virtuous corporate cultures.

The three theological virtues (faith, hope, and charity) and the hard virtues (leadership, courage, patience, perseverance, and discipline) need to be combined with the soft virtues (forgiveness, gratitude, and humility). Only by returning to the question of ethical norms—things which people must possess before they go to market to compete can we regain our way and have some sense again of a moral compass. These are the indispensable supports, which preserve both the market and competition from degeneration.

Business is the real test of the moral life, and those who engage in it are putting themselves in a position where trust in goodness, whether from God or nature’s laws, is the surest guarantee of success. The immediate result is the shaping of the human character, which in turn transforms culture—national as well as corporate. Vices lose their attraction and virtues become easier as spiritual discipline exerts its hold over the human personality.

Business is all about the creation of wealth and that requires capital investment. I believe the most essential part of that investment is the spiritual capital with which enterprise begins, then flowers and bears fruit – talents creating and sustaining still more talents, and all of us thriving in a vital bond.

It is time to renew our spiritual capital by living the virtues in the business sphere and in specific enterprises. For only in so doing will companies realize an incomparable source of the certainties that they will need in order to succeed in the highly competitive and interconnected international commerce that we have come to experience. In so doing we will be able to sort out the good from the bad and to foster freedom and responsibility.

Theodore Roosevelt Malloch, is the author of Spiritual Enterprise: Doing Virtuous Business, recently published by Encounter Books, 2008. Hearst Media Syndicate.

There is a rather complex economic relationship between debt, inflation and the money supply. Suffice it to say that the store of money in any nations’ economy is based on that state’s ability to guarantee and make repayment of its debts. Countries, states, municipalities, companies, or persons who fail to do so pay the consequences: they pay higher interest rates or cannot borrow any longer and have to workout their situations through protracted legal negotiations and even foreclosure. The ratings of institutions, companies and even individuals nowadays affect the cost of borrowing and depend on what is termed “creditworthiness”. Short of bankruptcy, debt is not typically forgiven. You may recall in the 1980s third world debt became problematic and reached a level and scale that prompted many, including developed country governments and notable economists, to urge that we (and the global financial institutions) cancel debt obligations of the poorest of countries. Such policies were seen as a way to restore equity and improve relationships with developing countries that borrowed too much and were unable to meet their original obligations. But ‘workouts’ as they are known are always messy — whether they involve sovereigns or families that lose jobs or are caught in the newfangled subprime housing situation.

Over the long course of history but especially in modern times, debt has been a useful way to grow economies because it allows people and companies (even small ones as in micro-lending) to do things they would not otherwise be able to do. Companies use various debt instruments to leverage the investments in their assets. However excesses in debt accumulation have been blamed for exacerbating economic problems and damaging both firms and individuals in a culture where debt has become far too easy to secure and is often based on instant gratification of wants, not needs. A culture of debt has grown up where we used instead to practice both personal and public thrift.

There are many arguments against debt. Islam forbids lending with interest even today. The Catholic Church only allowed it since 1822 and the Torah states all debts should be erased every seven years. But markets are in part sustained by debt and they typically win out over dogma.

Debt does increase over time and if not repaid the level of interest can be heavy, even onerous. ‘Usury’ (above reasonable interest rates for the risk assumed) has been a long-standing moral issue in just about every culture around the globe. Debt bondage or indentured servants remain present in many settings outside the West. Peonage may be over in the US proper but it still exists elsewhere in the world in this 21st century. Yet some Americans seem unable ever to get out from under their plaguing debt, racking up more and more as life unfolds. We have an atrocious savings rate and the societal emphasis has shifted to material accumulation and away from delayed gratification.

Debt is neither a good or bad thing in and of itself. It can be useful when done in moderation and with a fair scheme for repayment. Today the debt industry is a large and growing one in global capital markets. Debt underwriting continues to grow and has totaled over $6 trillion a year in the most recent years. Debt continues to fuel economic growth but in recessionary periods it is obviously more difficult to repay past debts. Debt, like many things is best when ‘your eyes are not bigger than your stomach’. Or as one of my more crass hedge fund manager friends put it, “ If you can fly it, float it or *&#$ it, lease it.” How much stuff do you need anyway, since to date no one has yet invented a way to take it with him or her, after death?

In reality gambling generates more than $20 billion a year in taxes and lottery revenues for state budgets, according to industry estimates that don’t even include fees from Native American-run casinos. Just as America’s poor gamble away money they are getting pay advances on, our government has gambled on the funding of school programs on the bet that gamblers will keep giving them those billions each year. How can a government expect its citizens to respect personal debts when it is leading the charge in racking up its’ own debt? $9 trillion, last time I checked. http://www.treasurydirect.gov/

The annual deficit is this year’s spending minus this year’s income. If the general fund spends $900B with income of $600B in one year, the annual deficit is $300B. That makes the national debt go up by exactly $300B. And all that debt has to be financed! The annual deficit is how much the debt increases each year. If someone ran a household like that they would not have a very good credit score … unless they were able to print money in the basement, which is what our government literally does to repay its growing (foreign) debt. Other countries, China, Japan and the Middle East hold more and more of American paper. Is that a good thing? For how long can it go on?

So you could ask the question: should this same government now significantly increase its debt further to help the Americans who were given the privilege to borrow from it? And should they also write-off their interest as a tax deductible expense, which never made sense in the first place – thereby encouraging people through taxation to buy houses that they had no right buying in the first place? Can I have a tax-deductible interest only loan, please! The larger the loan, the better, with subsidies on top. There are two answers, one is, why not? It seems like the government has already chosen the path of borrowing until severe consequences set in but before then sweep critics under the rug and pretend like you have a clean house. The second answer would be to do what the financial markets are doing right now and tell these people to delever, just like the credit card companies and other debt collectors do when they face overexposure to a non- creditworthy client.

What happens what you buy something with your credit card that you can’t afford but is ‘within’ your credit limit of say 25k? You default on your credit card bill (after some harassing calls and threats) and unfortunately can’t buy anything for a long while and sometimes the stuff you bought actually gets repossessed. Why shouldn’t leveraging yourself up in a house loan be any different? You can be for the forgiveness of sins, but loans are not sins, they are contracts. The American Dream (warped from ‘owning a place to live’ to ‘getting rich by owning no equity in a house but paying interest until you can sell the house for a profit’). Unfortunately, that has now become more like the American Nightmare for millions of families. So perhaps, we should borrow more from Social Security to fund something we can’t afford in the first place? Another war or maybe developing a newer space station called Noah’s Ark II, where we could shoot two of every mammal on earth to live on Mars may be in the offing? Both would probably incur the same amount of debt that we never intend to pay off if one wanted to be cynical. My point is we are in a shambles because both public and private thrift have been squandered and exchanged for a hollow but costly fool’s gold.

In Christianity the fact of debt has at times outstripped its evils. On television even today some preachers rail against debt altogether, including for home or church mortgages. But in truth the Bible neither expressly forbids nor allows the borrowing of money. Wisdom down the ages suggests debt should be entered into sparingly and in good faith. Paul’s charge in Romans is a reminder of God’s distaste for all forms of debt not paid in a timely manner. All of us are debtors, as the Lord’s Prayer forcefully reminds us and we need forgiveness and God’s grace – for ourselves, and all those around us. The biblical example certainly allows for charging interest (Matt. 25 and Proverbs 28 both). At the same time the ancient law also allowed for mercy in forgiving interest. Christ’s own parables (in Matt. 10 and 18) perhaps most instructively give this advice to His followers: “Freely you have received, freely give.” My best advice is to live within your means, save and take (little) debt, use it, but don’t let it use or ruin you and yours.

Dr. Theodore Roosevelt Malloch is the author of the newly released book, Spiritual Enterprise: Doing Virtuous Business, Encounter Books, 2008. He is founder and Chairman of the Spiritual Enterprise Institute. He has been a global strategist, ambassador, Wall Streeter, and has been involved in politics and economic policy at the US Senate, US State Department, and the United Nations.

To be sure, there has been a bountiful supply of robber barons and rascals to fuel this characterization, (Ponzi schemes, Geeko’s greed, Barbarians at the gate, and accounting errors or were they fabrications) and we can stipulate that sufficient numbers of rapacious businesspersons will always exist to allow the characterization to live on, in the headlines, at least. I only need mention the names Enron, WorldCom, Tyco – you get the point. If we add in the now too familiar faces from the global economic debacle, indeed financial meltdown of the past two years, the list is considerably longer.

But is the dominant negative business narrative truly accurate? Is there not a remarkable disconnect between it and the innumerable largely positive and mutually beneficial experiences that we all have every day and every week in most countries with a great variety of businesses, large, medium and small? Most of us know that most businesses generally provide good-quality goods and services for which we are quite willing to pay what we end up paying. In most cases most of us also work for or with these same firms. And we also know that most businesses will go to considerable lengths, and beyond, to retain us as happy, returning, even so-called, ‘loyal’ customers.

So which is it? Is free-enterprise capitalism inherently (i.e., essentially) selfish, predatory and rapacious, or not? For those who still believe in logic, this question presents a clear decision mechanism. If business on the free-enterprise capitalist model is inherently rapacious, predatory and selfish, then any businesses built on contrary models (models of service, good will, community responsibility, etc.) must be severely disadvantaged in their competition to survive. This would be the test: Is it possible for a significant number of successful businesses to be organized on models that are contrary to the negative business narrative, the one that dominates the headlines of the media in order to sell papers and make news? If so, then the negative business narrative is itself false. Selfishness and rapaciousness are not inherent in free enterprise capitalism, and we can confidently and fruitfully teach and practice to a richer, better, even spiritually inspired model.

In light of this challenge, it is highly encouraging to encounter the evidence I laid out in my recent book, Spiritual Enterprise: Doing Virtuous Business. What a strange title people say. ‘Spirituality and business’ in the same sentence. Is it not a mistake? An oxymoron? Is it even relevant in our agnostic age? This slim book is aimed at a general audience, but do not be misled. Many corner-office executives have certainly profitably read it, and more should, but it may also likely provoke its share of scholarly studies. Achieving either one of these objectives is rare enough, but I hope this book will actually do both because we must work at (1) demonstrating that virtuous leadership leads to business success; and also, (2) help everyone see how to recover the vision of free enterprise capitalism as wholly consistent with spiritual depth and moral commitment. There is plenty here for both the business practitioner and the business-management theorist/political economist. I was thankful to have Larry Kudlow from CNBC the leading business television show and a convert to Catholicism say, “Every CEO should read this book and regain the moral energy to lead both their firms and the global economy.” No less than the leading professor of business ethics (at a major Catholic University, I should add) added, “ Not since Adam Smith himself have we witnessed so forceful a treatment on the linkage between the economy and moral reasoning as we find in Spiritual Enterprise”.

I was motivated to write this book to counter the negative business narrative, while encouraging those in business to develop their spiritual understanding of their ‘calling’ (an important religious concept now nearly entirely lost) and practice as businesspersons. I believe that defenders of capitalism have tended to miss this all important spiritual dimension. So I try to display the spiritual dimension powerfully by introducing the classical concept of virtue (a virtue is a habit of excellence that makes one a better person for possessing that habit). I introduce the virtues (including faith, hope, charity, courage, perseverance, discipline, compassion, humility, and more), and then copiously illustrate each one with extended stories and biographical vignettes of successful leaders of businesses and enterprises whose leadership has strongly exhibited the virtue in question. Hopefully, I successfully make the case that virtuous leadership creates a strong, focused organization, one that is not only financially successful, but also ethical and good. Many readers have written to me, ardent advocates of virtue ethics from within the discipline of philosophy, as well as heads of great and good companies, finding this application of the virtues to leadership and business management a significant and positive development. I conclude the book with a concise spreadsheet showing that operating major businesses in conspicuously virtuous ways is entirely compatible with flourishing enterprises, and in many cases, with businesses that either dominate their competitors, out-perform the S&P 500 Index (by 20%), or both. This readable book has it all—ideas, practical guidance, and compelling numbers.

In showcasing the virtues at the heart of leadership practice, I am certainly doing something new and fresh, providing a strong basis in personal character for the success of spiritually attuned businesses. But even so, this approach is only a natural development from the values-oriented approach to leadership that is, at this point, well entrenched in leadership thinking and in the best business schools, as seen in such standard texts as Kouzes and Posner’s The Leadership Challenge. Of Kouzes and Posner’s list of 20 most-admired characteristics in leaders, fully half are bona fide virtues, and more generally, most good values are either virtues themselves (such as honesty) or close cousins to virtues (as in commitment, which upon analysis often seems to be a composite of the virtues of perseverance, discipline, and loyalty). My approach is also highly amenable to, and foundational to, other well established understandings of business and leadership. These include those deriving from specific religious traditions, classically exemplified by Michael Novak’s gem, Business as a Calling: Work and the Examined Life, the servant-leadership movement initiated by the work of Robert K. Greenleaf, and Max De Pree’s leadership work that straddles both of the above.

This fresh focus on virtue is foundational to all other approaches to enterprise leadership, including all of these excellent books I just mentioned, because it shows leaders how to develop the personal character to ably lead their institutions in reaching those destinations. Two distinguishing marks of virtue-oriented thinking are (1) the recognition that the best plans, ideas, or rules are worth little unless one possesses the personal character necessary to see them through, and, (2) personal character ultimately consists of habits of life, habits of the soul, which equip one to conduct a morally successful life, a life worthy of the richest notion of honor. This terribly important distinction is reflected in the basic organization of my book. Other management and leadership books are organized around themes of business management and leadership—that is, themes of how the manager or leader should function, the kinds of emphases he/she should have, the kinds of actions he/she should take, etc. In contrast, I organized this book around various virtues—habits of life that make for success, showing how successful leaders have built enterprises upon them. Often, I have found the issue with an enterprise leader is not what should be done, but rather on how to become the kind of person who can do what should be done. In addressing the virtues, it is I believe necessary to go to the foundations. What kind of person should one be as one leads this enterprise? What kind of enterprise shall this be? Here, the turn to virtues is essential.

Spiritual enterprise begins boldly at the most important point, one that could be considered highly controversial within the world of business. I forthrightly affirm from the ‘get-go’ that we are spiritual beings, and that this dimension does (or ought to) color all that we do, including our business. I refer to this principal dimension of our lives by coining the exciting concept of ‘spiritual capital’, which I explain as being analogous to the concepts of social capital and human capital. Social capital is “the accumulated social resources inherited by each new generation from its predecessor”, including “customs, language, manners and morals—in short, all the practices that are taught to us by our parents in order to make us fit members of society” (5). Human capital, consists of the “skills, experience and knowledge, embodied in human beings,” that play an “indispensable part in the generation of profit”.

Analogous to these, I briefly define spiritual capital as “the fund of beliefs, examples and commitments that are transmitted from generation to generation through a religious tradition, and which attach people to the transcendental source of human happiness”. Amplifying this, I think:

We are moral beings, in all the ways that Adam Smith describes. But we are also spiritual beings. We seek out the transcendental source of our values. We join with others in acts of worship and prayer. Through spiritual discipline, habit and exercise, we absorb the legacy of spiritual knowledge that is contained in a religious tradition.

While social capital derives from social interactions, I note a different source for spiritual capital:

It comes from another relation altogether than the relations in human society: the relation with God. The reaching out towards God through worship, prayer, devotion and pious observance are a specific kind of discipline, which is not the discipline of human society. It involves an act of metaphysical submission, a bowing down of the whole spirit to a power that lies beyond the work of our perception. (119)

What I am attempting to do then is to begin to show how spiritual capital connects with our conduct in our professional environments, and this shows how serious many are about putting one’s business on a spiritual basis, as has been modeled by among others, Truett Cathy with Chick-fil-A, Max De Pree with Herman Miller, and many (well thousands to be honest) more:

This posture of spiritual reception, whereby the individual opens his heart to an otherworldly form of obedience, is the core of piety, and it provides unique forms of practical knowledge—for example, the knowledge of what to do and how to behave in circumstances where the existing writ of social mores does not run. The knowledge of how to forgive someone who has tried to destroy you, the knowledge of how to ask forgiveness for your own recognized faults. It also begins with thankful praise and leads to humility and gratitude. As Max De Pree once said, the first and last word of leadership is thanks. It both sets the direction and motivates.

I build on the leader’s commitment to spiritual capital and virtues and show how it can extend to the enterprise itself. When a leader of character similarly establishes his or her enterprise on a virtuous characteristic, that virtue makes a tangible impact on the entire organization, earning it genuine respect (honor) in the firm and in the community. It becomes the kind of business to which people are drawn. I describe how the virtue of faith plays out in the corporate life of so many companies such as Interstate Battery System of America, a highly successful business:

The top leadership shares a vibrant faith, which it openly and courageously shares. That faith colors decision-making and the way that business is conducted: honestly and in trust, towards the goal of serving God.

Exactly like St. Paul’s fruits of the spirit, the fruits of spiritual capital, are the virtues. I take readers on a tour of thirteen virtues, and for an applied book such as his, I serve as a tour guide—good introductions at all stops, plenty of inspiring stories, but not too long at any one place. These presentations of the virtues are intended to be very clear and winsome; we see why each virtue makes one a better person, and a better leader, for possessing that habit of the soul. And the stories I found and tell! They are innumerable, real, and extremely powerful. Actually, they only seem innumerable—over sixty extended business and enterprise leadership stories in the short book, illustrating the virtues (or their absence). Most of the real life stories concern Christian leaders of every stripe, denomination and tradition, but I believe that most religions (at least the significant religious traditions) possess significant spiritual capital to bequeath to their followers, and accordingly I recount several stories of the virtuous leadership of businesspersons from other religious traditions. In classic virtue-ethics fashion, the stories are the heart of the message, and they certainly deliver the case. They also reveal what I hope is a grasp of the scope and essence of contemporary business and economics.

Necessarily I dwell longest on the theological virtues of faith, hope, and love, because they are the basis of the spiritually attuned life, and business. And it is inspiring, indeed, I would say to see how many devout Christians have courageously made their faith a key part of their organizations’ values and business systems. Next, I introduce what I call the “hard” virtues, the virtues that we would identify as being more masculine in tone: leadership, courage, patience, perseverance, and discipline, the virtues that, to be blunt, help you get the job done. Last, I take us through the “soft” virtues, the virtues that are more readily identified as being “softer and more feminine,” the virtues of justice, compassion, forgiveness, gratitude, and humility. I readily acknowledge that we are apt to look at these as “stay-at-home virtues,” which is exactly what the leftist critics of the capitalist system say, that these softer virtues have no place in the system of business under free enterprise capitalism. But the evidence in my research constitutes a substantial refutation of the critics.

In wrapping up this quick look at my treatment of the virtues, it will be good to hear directly on one of the soft virtues, gratitude. Note how, in this passage, I not only analyze the relationship of which the virtue is a part, I clearly detail how this attitude impacts the business environment:

. . . [T]he response to a gift is not resentment but gratitude, by which is meant a “going out” to meet the giver, a reciprocal offer of the self and its fund of goodwill. We are not demeaned by gratitude but raised by it to a condition of equality with the giver. We are saying to the one who bestows a gift on us, ‘I too would give, if I could, and meanwhile I give what I can to you.’ In the context of business, such an attitude, far from displaying weakness, is a source of strength: it fosters an open and honest approach to others—whether allies or competitors—and imbues the day-to-day operation of a business with a lightness and cheerfulness that help to release the potential of the workforce.

In this passage, and in countless others in the book, I try and reveal a powerful blend of practical wisdom and business insight.

There are, of course, some “notes” (to use the theatre term) that others have offered to improve the next edition of the book (already in its third printing and now being translated into French and Chinese), of which I will mention three. First, for all the brilliant research work accomplished on the concept of spiritual capital, some think we still need to work out the relationship of spiritual capital (and, therefore, of religion) with the virtues. This is not just an issue of academic completeness. I am well aware that virtue ethics has flourished in cultural traditions that are relatively impoverished in spiritual terms (for example, the Homeric ancient Greek civilization). Further, as I myself would agree one can be virtuous without being religious, and religious without being particularly virtuous. So how do higher levels of spiritual “tuning” tend to lead to higher levels of virtue? The answer I think is two-part, of which the second at least is implicit in the quotations I already cited. First, when the God whom one worships is truly great and good (as in the God of Judaism and Christianity), the corresponding standards of character to which the believer is called are greater (no one ever accused Zeus of being all-loving and merciful!). Second, the relationship of worshipful submission to a great and good God opens up in the believer the spiritual/psychological/theological space (freedom from worship of one’s own ego) to develop the whole range of subtler virtues (the theological virtues and the “soft” virtues), which are less frequently promoted in the ethical traditions outside of the world of Judeo-Christian thought and religious community.

Second, since at least the time of St. Thomas Aquinas, virtue ethicists have noted a distinction between primary and secondary virtues. The former (honesty, faith, justice, and gratitude, etc.) are virtues which always make one a better person for possessing them, regardless of other dimensions of one’s character, while the latter (courage, loyalty, perseverance, discipline, etc.) make one overall a more excellent person only, if one also possesses primary virtues in good and ample measure. For a negative example of this, consider that a CPA who is disciplined, perseverant, and loyal to his CEO whom he knows to be unscrupulous is overall a more dangerous person to society than if he were undisciplined, lazy, and rather disloyal to his unscrupulous boss. Ultimately, as Plato indirectly showed in The Republic, there is indeed a hierarchy of virtues. A truly excellent person needs to possess (more or less) all of the virtues, but that does not mean that all the virtues are of equal priority.

Third, there are some questions over whether we should consider leadership to be a virtue, which I do. The power of virtue ethics in guiding and improving one’s life lies in focusing on discrete, simple (as in non-complex) habits of the soul which can be become the object of training/formation and growth (perseverance—do not quit; discipline—do not give in to one’s temptations; honesty—do not take what seems to be the easy road by lying, etc.). Leadership may be too complex (and possibly mysterious), including skills and personality traits, to strictly be considered a virtue. There can be honest debate over this. I actually believe it has become a platitude to say that success requires leadership, and in many ways the platitude is destructive since it seems to imply that success depends not on you but on somebody else—‘the leader’ who will step in and ultimately take charge of things. Such a command and control view gets you off the hook and free of responsibility. In speaking of leadership as a virtue what I try to do is not say that it lies outside the person whom it benefits. We are saying that it is a quality contained potentially in all of us, a quality that can be developed, nurtured and realized, so that each of us is able to lead himself and others to his goal. That means the leader is also a good follower. He or she is able to take and give advice, to receive and offer help, to join with others without subduing or alienating them, and thereby to accomplish more than any one can alone. Most companies even LLPs or SMEs by definition involve a number of persons and leadership is in that sense a critical virtue.

What I hope to have argued here and in my text — has indeed shown that business is a spiritual enterprise. Virtue endures and spreads because it is sustained by and through faith. The spiritual capital built up by previous generations can be borrowed and invested by others who do not have the faith to renew it, though at some point it surely must be renewed. This renewal of spiritual capital in the business sphere and its specific enterprises is what faith-guided companies achieve. In the new conditions created by the global economy, the information revolution and the growth of smart technologies, it is more than ever necessary for companies to be guided by their rich spiritual inheritance, as spiritual enterprises. We have been taught a necessary and punishing lesson in this current financial crisis, become a moral crisis of that very fact. For only in so doing will each of us and our enterprises realize an incomparable source of the certainties that we need in order to succeed in the highly competitive and interconnected international commerce that we have come to experience and expect more and more in this still emerging 21st century.

Theodore Roosevelt Malloch
Luncheon Presentation
October 27, 2009
Carnegie Hotel
Johnson City, TN

Freedom of religion and economies actually go together, like—well you fill in the blank. One is not possible without the other because they emanate from the same source. They not only gravitate in a similar and related direction but they originate from the same basic truths. As two sides of the same coin we are finding in the 21st century a new fact: nations and economies that witness religious liberty have greater economic freedom and the opposite, namely, countries with the most economic freedom also engender more religious liberty and democracy. The reason for this can be summed up in a single word, and that word is, competition.

Freedom of religion in the Western tradition and evidenced in Western nation-states is generally considered to be a fundamental right. As such, it is underscored by a guarantee of respective sovereign governments to allow the freedom of belief for individuals, including women and children, as well as the freedom of worship for all persons and groups. Logically, freedom of religion also includes the freedom not to follow any religion at all.

In the 1948 Universal Declaration of Human Right freedom of religion is defined as “Everyone, including women and children, have the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief, and freedom, either alone or in community with others and in public or private, to manifest his religion or belief in teaching, practice, worship, and observance.”

This definition makes it abundantly clear that freedom of religion is a legal concept related but not completely identical with toleration, diversity, or the separation of church and state. Indeed, throughout history even for states that allowed for freedom of religion that theoretical freedom was often abrogated or limited and included such acts as punitive taxation, repressive social legislation, or even political disenfranchisement.

In the last three decades the concept of economic freedom has grown out of the writings of notable, mosly neo-classical econmists. The agreed cornerstones of economic freedom are: personal choice rather than collective action; voluntary exchange coordinated by markets rather than allocation via the political process; freedom to enter and compete in markets; and protection of persons and their property from aggression or harm by others.

While there is much debate on which precise policies promote economic freedom most, there is more or less agreement that the size, expenditures, and taxes of government, and the right to enterprise formation along with the legal structure and security of property rights are most essential to its flourishing. Access to sound money and transparent capital markets, freedom to trade internationally and minimal regulation of credit, labor, and business, also count a great deal.

The nation-states / economies with the most economic freedom, witness individuals that are free to work, produce, consume, and invest in the way they please, and their freedom is both protected by the state and unconstrained by it. In locations of economic freedom which can be measured and scaled, there are free public and private companies, in other words, enterprises that flourish as a result of the protection of both the rule of law and enforced codes of business. Business law and capital market access are twin pillars that allow entrepreneurs the freedom to start businesses, merge businesses and sell businesses in freedom and without political interference or undue regulation.

Now the question must be broached because the data assebled is obvious for all to see: Why do those countries with the greatest degree of religious liberty also exhibit the greatest measure of economic freedom? Further still, those same places give rise to and apparently encourage entrepreneurs who benefit themselves, their companies, employees, shareholders, consumers, stakeholders and the entire community by growing enterprises as engines of development from which all benefit.

Why, we must ask is this the case; and why are we so blinded to acknowledge these facts? The corollary, namely that religious liberty begets economic freedom is now provable. If we desire more economic freedom we need to begin by insuring religious liberty. If you want economic growth and development we need to tolerate and permit religious groups and persons to do as they chose. Competition for religious activity is as healthy as for economic activity. Those states that fail to allow economic freedom are universally those that do not permit religious liberty. And likewise, those that fail to encourage religious liberty often, almost always it turns out, fail to give rise to economies of prosperity with economic freedom. Some countries may have mineral or other wealth or large productive workforces but they cannot sustain their economic growth. Why? It circles back to the link between religious and economic freedom.
Spiritual capital is in a sense is the missing link. Lord Keynes, it is said, once remarked that for centuries we had kept religion and business in “different compartments of the soul”. By breaking those divisions apart and seeing their connection we overcome one of the dilemmas of modernity. For economic growth to take place, capital is necessary. Money buys tools, pays labor, and builds infrastructure. Obviously, to this is added human capital, mostly in the form of education and personal betterment. But for countries / economies to make efficient use of their reserves, spiritual capital is also required.

Like all forms of capital its formation depends on delayed gratification, why else have capital. Future benefit is thereby weighed against immediate consumption. In the same way money capital accumulates in savings accounts and investments, so too spiritual capital is built up, over time through habits of the heart and realized in mediating structures, such as families, churches and religious institutions, social groups, schools and in the wider culture. In that sense, when critics complain about the lack or unequal distribution of capital in the modern world they too often forget that spiritual capital is as imporant as other forms of capital to restore communities or build nations. Here ia a truism that has become more apparent as secularization theories and modernization models have fallen by the wayside or been overcome or contradicted by factual reality: freedom and responsibilty lead to capital formation. Sense of purpose, moral purpose, primarily established by and in religious freedom gives rise to economic freedom and the formation of every kind of capital.

In the West an understanding of natural law has evolved from Aristotle’s notion of private property to Grotius, on to Locke’s trinity of life, liberty and estates, to the Scottish Enlgthenment’s described moral sense tied to benevolence and self-love and the right to contract with others. In Smith, the desire to engage in mutually beneficial voluntary exchange of private property is viewed as an innate propensity of man. Modern commerce in that sense then grew out of this rich religious tradition and is sustained by it in a spirit and morality of democratic capitalism. In the 21st century the abiding question may well be for an integrated global economy and a world of increasingly democratic political systems: does your religious liberty match your economic freedom and vice versa? If not, why not? And if so, how so? Closed religious systems foul economic development and stunt growth. Closed economic systems are unkind or worse to religious sentiments and practice. You need both to sustain human flourishing.

The analysis of this set of new comprehensive data demonstrates that the countries with the least religious liberty also suffer the worst economic freedoms and are lacking in political rights. Who are they? Let’s name names: Burma, China-Tibet, Eritrea, Iran, Iraq, Maldives, North Korea, Saudi Arabia, Sudan, Turkmenistan, and Uzbekistan come in as the worst of the worst. But following not far behind are: Afghanistan, Bangladesh, Belarus, China, Cuba, Mauritania, Pakistan, Palestine, and Vietnam. For country specifics read the national surveys in greater detail in our book, Religious Freedom Around the World published in 2008.

When you look at religious freedom and economic freedom in comparison to civil liberties ratings a number of countries pop out as especially problematic and include: Bangladesh, India, Maldives, Serbia, and Turkey. When compared to overall religious libery ratings, another country sticks out as far worse, Kosovo.
So what are the implications, then?

Dr. Theodore Roosevelt Malloch, Founder and Chairman, Spiritual Enterprise Institute