Business as a Calling: Work and the Examined Life.

BUSINESS is under attack again. Companies seeking to improve their productivity are criticized for laying off employees. We hear renewed calls for "corporate social responsibility" and "socially responsible investing." Profit has become a dirty word, as the free-enterprise system is besieged by people wanting it to be kinder and gentler, less concerned with the bottom line and more concerned with the bottom rung. These two fine new books argue persuasively that there is no contradiction between profit seeking and ethical responsibility, and in fact that a business that creates jobs and wealth fulfills a very important social objective.

The theologian Michael Novak and John Hood, president of the John Locke Foundation, both suggest that business has important moral responsibilities -- and that successful companies are in fact meeting them.

Michael Novak is America's wisest commentator on the delicate relations between the life of the market and the life of the soul. In his new book, he maintains that those who pursue business are called to their work just as much as the doctor or the man of the cloth. "All are trying to live fulfilled lives," he writes, "eager to mix their own identity with their work and their work with their identity. They want more satisfactions from work than money."

Those satisfactions can be obtained by working in business, and, indeed, as Novak reports, businessmen are more religious than the population as a whole. Refuting Marx's description of commerce as an impersonal "cash nexus," Novak argues that business serves as a force to bring people together. From the craftsmen who make our goods to the workers who deliver them, we are inextricably united by our business relations. As he puts it, "Commerce is the most solid, material sign of unmistakable human solidarity."

That solidarity, in his view, leads to a responsibility to uphold capitalism, because as a system of economic relations it 1) "better helps the poor escape their poverty" and 2) "is a necessary condition for the success of democracy." Novak maintains that capitalism is morally neither destructive nor neutral. Because it is so dependent on human capital, the most virtuous habits yield the most desirable results. Successful business executives practice three virtues, he writes: the virtue of creativity, the virtue of building community, and the virtue of practical realism.

One of the most provocative of Novak's chapters suggests that business has seven internal responsibilities that spring from the nature of corporate life, and seven external responsibilities that come from the religious teachings of Judaism and Christianity. Among the internal responsibilities are the obligations "to satisfy customers with goods and services of real value," to "make a reasonable return on the funds entrusted to the business corporation by its investors," and to create new wealth and new jobs. Among the external responsibilities are the obligations to "protect the political soil of liberty," to "exemplify respect for law," and "to protect the moral ecology of freedom" -- which includes resistance to the systematic corruption of a popular culture that "undermines the capacity of peoples for self-government." Novak concludes his book with the example of Andrew Carnegie, who gave away his fortune in his later years and whose essay "The Gospel of Wealth" sets forth a compelling ethic of social responsibility.

John Hood's work of business reporting is a marvelous complement to Novak's more philosophical treatment. Hood tells story after story of ways business is improving American life: bar codes that enable discount retailers to lower prices of clothing, plastic packaging that reduces the spoilage of food, pharmaceuticals that save lives and lower health-care costs, timber practices that increase the number of trees.

Take the emotionally charged issue of safety. Many people will remember the tragic 1991 fire at a North Carolina chicken-processing plant, where 25 workers died in the flames, hopelessly clawing at exit doors that management had locked from the outside. The incident was widely reported as evidence of the need for greater governmental oversight of corporate behavior, but Hood reports one crucial fact that both Congress and the media failed to note: those doors had been ordered locked by government inspectors from the Department of Agriculture.

In similar fashion throughout this meticulously researched and well-written book, Hood repeatedly stands the received wisdom on its head by showing how the incentives of market competition distribute the maximum amount of good to the maximum number of people. Hood shows that workers frequently benefit from the productivity improvements that accompany downsizing, and that, in the 1990s, the American economy offers more opportunity -- for both employment and entrepreneurship -- than ever. He points to one study that found that the average worker today has been at his job longer than someone of comparable age twenty or thirty years ago, and to another in which the overwhelming majority of Americans have said they are financially better off than the previous year every single year since the 1950s.

Of course, business leaders don't always behave ethically, writes Hood. "When businessmen kill their competitors or extort money from them at the point of a gun, we properly call them gangsters. Similarly, when corporate leaders use political contributions and lobbyists to protect themselves from competition and to obtain taxpayer subsidies, they are no longer engaged in commercial activity." Following Milton Friedman, Hood argues that any use of fraud or force (including the manipulation of government power) makes freely negotiated contracts impossible, striking at the heart of market capitalism.

These books are indispensable contributions to the literature on corporate social responsibility, and can be read profitably by any business executive seeking ethical guidance and by anyone with an interest in the moral basis of the free-enterprise system.