Human Finitude and Specialized Production: A Christian-Realist Rationale for Business Enterprises (Essay‪)‬

Modern economies rely on firms to produce most of the goods and services that people use. There have been organizations that specialize in the production of goods and services for centuries, but many modern business firms differ substantively from earlier production organizations. The modern business firm is often very large and complex, employing a hierarchy that resembles that of governments and utilizing a corporate form of ownership. This is quite different from crafts production by guilds in preindustrial Europe or even the pin factory cited in Adam Smith's 1776 An Inquiry into the Nature and Causes of the Wealth of Nations. How are Christians to think about business and the for-profit enterprises that produce most of the goods and services provided today? Why is the instinctive reaction on the part of so many Christians at the mention of big business or profits a negative one? We begin this discussion with an exploration of why there are these large, for-profit organizations that specialize in the production of goods that other people will use or consume. Such organizations do not have to be the type of business firm ubiquitous in modern economies; they could be government-owned and operated concerns, or communes, or cooperatives, or non-profit organizations. We argue that human finitude is the root cause of the existence of such organizations. Though at first glance, one might think that human finitude would lead to small, easily controlled institutions of production rather than large, complex organizations, in fact just the opposite has occurred. Human finitude leads to specialization in production: This finitude implies that we cannot be self-sufficient because we cannot know how to do everything. Adam Smith showed us long ago, and time continues to prove, that specialization of labor is productive, but specialization of labor ultimately involves specialized knowledge. Human beings must find ways to generate, maintain, transmit, and use the specialized knowledge needed for production and distribution. Further, the existence of specialization implies the need for coordination among the activities of producers and consumers in addition to the coordination of people and groups within the organizations of production.