Some 2,500 world leaders gathered once again in Davos, Switzerland to discuss, among other things, how to attain a sustainable recovery from the Great Recession of 2008 to 2009. There were debates on President Obama's proposed Volcker's Rule, that is, how to introduce regulations to prevent the biggest banks from growing and how to force them to shed hedge funds, private equity and proprietary trading activities. The three big issues addressed were how to ensure lasting and balanced growth; when to start tightening monetary and fiscal policies; and whether global coordination is needed and possible.

Unfortunately, there was no sufficient effort and time devoted to rethinking, redesigning, and rebuilding the dominant system of capitalism that has now embraced the whole world, including former communist countries like Russia and China. Unless the philosophical foundations of the free enterprise system are rethought and redesigned, there is no way the present market-based economies can be rebuilt to guarantee long-term sustainable development or what has been called integral human development, which is development for all men and for the whole man.

The first requirement is to rethink the way Adam Smith has been misinterpreted by economists and business people for at least the last fifty years. According to the conventional wisdom prevalent during the last half of the 20th Century, Adam Smith conceived of an amoral economic society in which impersonal forces of the market and competition will guarantee welfare for everyone in the economy.

Because free markets were assumed to be self-regulating through some kind of “invisible hand”, there was no need for human beings to be virtuous for the economy to function well. This assumption was farthest from the mind of Adam Smith, whose book "The Theory of Moral Sentiments" emphasized the need for such virtues as integrity, trustworthiness, prudence and justice for the economy to function well.

We must make sure that those who go into business must be among the human beings who are most trustworthy, prudent, just and charitable. Unless a society is able to foster these human virtues among the majority of the captains of industry, no amount of regulation will present future crises similar to or worse than what we have just experienced. The framework for rethinking and redesigning the present model of capitalism, especially in the two most important economies in the world today--the U.S. and China--is found in the recent encyclical of Pope Benedict XVI, Charity in Truth.

"Caritas in veritate" is the principle around which the Church's social doctrine turns, a principle that takes on practical form in the criteria that govern moral action. The Pope proposes two of these in particular, of special relevance to the commitment to development in an increasingly globalized society: justice and the common good. He first shows the intimate relationship between justice and charity: "Charity goes beyond justice, because to love is to give, to offer what is 'mine' to the other but it never lacks justice, which prompts us to give the other what is 'his', what is due to him by reason of his being or his acting. I cannot 'give' what is mine to the other, without first giving him what pertain to him in justice If we love others with charity, then first of all we are just towards them. Not only is justice not extraneous to charity, not only is it not an alternative or parallel path or charity: justice is inseparable form charity and intrinsic to it."

Then the other indispensable concept for rethinking and redesigning the present capitalistic system is the common good: "To love someone is to desire that person's good and to take effective steps to secure it. Besides the good of the individual, there is a good that is linked to living in society: the common good. It is the good of 'all of us' made up of individuals, families and intermediate groups who together constitute society. It is a good that is sought not for its own sake, but for the people who belong to the social community and who can only really and effectively pursue their good within it. To desire the common good and strive towards it is a requirement of justice and charity. To take a stand for the common good is on the one hand to be solicitous for, and on the other hand to avail oneself of, that complex of institutions that give structure to the life of society, juridically, civilly, politically and culturally, making it the polis, or 'city.' The more we strive to secure a common good corresponding to the real needs of our neighbors, the more effectively we love them.'

Unless entrepreneurs, corporate executives, bankers and other participants in a market economy live these principles of human existence in a society, no amount of finetuning the present free enterprise system can prevent the abuses that led to the present crisis. We all have to be more demanding of the people who run our business enterprises in the same way that we are requiring that our government leaders possess the virtues of integrity and concern for the common good. For comments, my email address is bvillegas@uap.edu.ph.