by Gasper F. Lo Biondo, S.J., [Innovation and Transfer, The Small Enterprise
Development Newsletter for Project Managers of Catholic
Relief Services, the Official Relief and Development Agency of the United States
Catholic Conference.] Serious discussion about microenterprise development and the common good is one of
the great challenges facing Churchsponsored agencies that
serve the poorest of the poor. As microenterprise finance and development programs
proliferate around the world, corresponding discussions about the technical aspects and
institutional arrangements are also evolving. Yet, the ethical side of these discussions
is lagging. Ethical discussions lag because program designers and
practitioners of microenterprise development programs limit their consideration of
ethical questions to what they garner from existing performance indicators and social
impact studies. When these performance indicators and social impact studies become the
sole criterion for designing and managing microenterprise development programs for the
common good, they miss a more inclusive focus on the moral dimensions of human decisions
and actions. The ethical value of technical operations becomes equal to their social
consequences, rather than to the moral quality of the individual's decision. Consequently,
discussions about microenterprise development and the common good remain limited to a
social ethic that may or may not pertain to the individual ethic. Few studies pay attention to the role of individuals who
seek the good. This makes it difficult to establish a relationship between ethical
questions which individuals face and the efficient use of the technical tools of good
business and finance. In this scenario, those who provide technical assistance and
training may assume that "Anything goes!" as long as it succeeds in the
marketplace. Such an approach even may assume that success in the marketplace is not
compatible with individual ethical conduct in the world of microbusiness: participants
must become greedy, individualistic, and predatorial, in order to become financially
selfsufficient microentrepreneurs. This may lead people to believe that the very
nature of microenterprise finance programs prevents them from helping to build a morally
good society. The Need for an Individual Ethic How can povertylending programs provide financial
services and training that foster "a social ethic that situates individual choices
within consideration of the common good?" [Woodstock Seminar
in Business Ethics, Ethical Considerations in the Business Aspects of Health
Care (Georgetown University Press, 1995), p. xiv] How can
microenterprise development relate to the common good and include a discussion of
ethical choices of individual microentrepreneurs? How can poverty lending programs move
beyond the question of empowerment and toward the broader question of what kind of
empowerment? One way to address these central and challenging questions
is to consider the ethical dimension of the ongoing cultural dialogue between donors in
the United States and participants in developing countries within the area of
microenterprise development. An unprecedented variety of local cultures are opening
their doors to significant amounts of startup and working capital from private
international agencies. As working capital becomes more accessible through credit and
savings programs, local borrowers confront a new set of alternatives. Participants must
now weigh their religious beliefs, their cultural attitudes, whatever they cherish with
marketoriented entrepreneurial decisions such as how much to save or invest, what to
sell or produce, and where to sell. In order to deal intelligently with these choices,
individuals have to clarify their old set of values and beliefs within the new and
changing environment. The difficulties they experience in making the right choices among
these alternatives reflect their new ethical "dilemmas." As people confront these dilemmas, their personal values
change: the new information and skills an individual gathers by participating in a
microenterprise program leads him/her to begin reordering his/her priorities. If the
individual and common good are to be realized, this reordering process requires the
broadening of the horizon of one's awareness of freedom and responsibility, or moral
consciousness. When a human being stays attentive to new information and data, faces all
the right questions, and understands the information and data, he/she can reorder
priorities that are based on a moral judgment that is autonomous, responsible, and free
(Lonergan, Topics in Education, 1993, pp. 3638). This moral judgment allows one
to value most what is worthwhile for oneself and for the common good. Moreover, it
underpins a new kind of microenterprise development. If this knew kind of microenterprise development is to
take place in relation to the common good, local programs face the task of providing a
learning environment that allows people to acknowledge and deal with the dilemmas they
face. This environment must foster healthy moral consciousness that compels individuals to
raise questions involving social and individual ethics. They do so by situating individual
choices within consideration of the common good of their own local cultures. Neither the efficiency of technical operations nor
institutional development serve as sufficient touchstones for this kind of ethical
discussion. A sounder basis for reflecting on the ethical dimension of human conduct
across cultures is one that involves the human decisionmaking process. Reflection by
people on their ordinary decisions opens the door to both the intellectual and the
affective aspects of decisionmaking. This reflection allows both head and heart to play
a role in responding to dilemmas that arise from competing values at every level of moral
consciousness (vital, social and economic, personal, cultural, religious levels of moral
consciousness). Microenterprise development participants must reflect
upon their every day enterprise and economic dilemmas at each level of moral
consciousness. In enterprise decisions, ethical dilemmas reflect situations in which there
appears to be a choice between equally unsatisfying economic alternatives. To cope with
these kinds of dilemmas, financially successful microentrepreneurs' decisions require an
understanding of competing economic values. In order to understand competing economic values,
microentrepreneurs need to comprehend the value of foregone alternative action.
Economists have labeled this fundamental concept of economic reasoning "opportunity
cost." A practical grasp of opportunity cost is essential for
achieving the goal of financial selfsufficiency and is pivotal for reflection on
business and financial ethical dilemmas. The greater understanding one has of alternative
enterprise choices, the greater the possibility of prioritizing competing values in
business decisions. Unless poverty lending programs allow for this kind of integration of
economic and ethical reasoning, they end up doing a shoddy job at laying the foundations
for sustainable development. Once ethical dilemmas have risen to the fore, a program
must help develop skills that can lead to their resolution. Microentrepreneurs live in a
dynamic, changing, and open world in which the abstract principles of traditional business
ethics will not suffice. Rather, effective skills must combine financially sound
decisionmaking processes with morally sound criteria. These criteria are to be found in
the capacity of individuals to choose what is good for themselves and for the common good.
The ethical responsibility of program practitioners is to provide the social,
intellectual, affective environment that allows culturally and ethically responsible
decisions by the microentrepreneurs themselves! In order to do this, programs can build
on people's developing economic reasoning process in an environment of responsible
decisionmaking. Training programs can provide the environment for
responsible decisionmaking, and thus can foster moral development. By establishing
forums that encourage informal discussion about the dilemmas of competing
"goods," individuals can gradually seek not only "what is good for me"
but also "what is the common good." Through this basic learning process they
reach new levels of personal differentiation by which microenterprise development
becomes humanizing, empowering, and humanly sustainable. Informal adult education (popular education) represents
one training approach that can provide the environment for human and moral development. It
is particularly suited to people who are illiterate, preliterate, and/or innumerate who
tend to resolve business problems by "talking things out." The ordinary group
interaction of informal education encourages microenterprise participants to consider
the circumstantial factors affecting their decisions much more than they could in any
formal technical assistance and/or training program. Catholic Relief Services/El Salvador (CRS/ES) has begun to
implement an informal education program for microentrepreneurs called "popular
economic education (PEE)." PEE rests on the premise that the more a training program
adjusts to the requirements of strategic microenterprise decisions, the more adequately
it will meet real needs and result in sustainable microenterprise development. Thus, PEE
requires a "curriculum" that can adjust and adapt to the order and magnitude of
dilemmas that the microentrepreneurs encounter. The adjustability and adaptability of PEE lead to the
belief that it has great potential for raising the discussion of microenterprise
development and the common good to a new level. Without violating the integrity of
individuals, it can locate business dilemmas in the larger context of moral development
through reflection on human decisionmaking. The Woodstock Theological Center's NorthSouth Dialogue Program fosters policy
discussions about issues related to international development from an ethical and
theological perspective. This program seeks to balance the individual and common good in
society without sacrificing attention to hard economic decisions. Woodstock employs a
method of theological reflection and dialogue among interested and involved parties that
incorporates the ethical dimensions of decisionmaking in order to foster policy
recommendations. Woodstock has initiated a series of grassroots studies on
Microenterprise Development and the Common Good. The first was carried out in El
Salvador in collaboration with Professor Rafael Pleitez at the Universidad Centroamericana
(UCA). Entitled, Microenterprise Development in El Salvador:
Village Banking, Changing Values, and Informal Education, the study was funded by
the University of Miami NorthSouth Center, and presented at a symposium there on
February 3, 1995. The UCA published it in the MarchApril, 1995 issue of Realidad,
as El Desarrollo de la Microempresa en El Salvador. This study endeavored to provide CRS/ES with some general
guidelines for designing and implementing its nascent PEE program. To arrive at these
guidelines, a research design was created to gather data on the strategic enterprise
decisions of participants in the CRS/ES microenterprise development program. This data
will serve as the basis for further reflection and discussion by those who design PEE for
the empowerment of microentrepreneurs through their own moral development. The CRS/ES village banking methodology distinguishes three
levels of borrowing groups. Each group has progressively higher entry levels for borrowing
and saving, and a series of credit cycles which offer stepped access to progressively
higher levels of financial risk and return:
One hundred and twelve semistructured interviews in
eight different parts of the country provided the qualitative data for the report. A
survey questionnaire consisting of fiftythree questions provided quantitative data for
providing recommendations. Thirtythree of the 337 groupings of village banks around the
country participated in the survey. Of the one hundred and eightyfive
microentrepreneurs surveyed, 92.3% were women. The interview and survey questions were
geared toward decisions involving a practical grasp of the concept of opportunity cost,
reinvestment priorities, and factors which microentrepreneurs take into consideration in
the sale of their products. The opportunity cost index served as the indicator for the
level of the economic logic microentrepreneurs use to make their key business decisions.
This index helped gauge if individuals were using logic that would eventually lead to
selfsufficiency. A second index measured income growth and the third measured
reinvestment. These indices also helped determine the level of economic logic members used
for strategic business decisions. The study found statistically significant associations
between:
From these associations, the Woodstock study recommended
that PEE establish modules on different topics and at different developmental levels that
can adjust to the circumstances of strategic microenterprise decisions. These modules
could then be used in the order that the local circumstances demand. The findings and recommendations of this study provide a
sound empirical basis on which to integrate PEE, ethical decisionmaking, and thus
consideration of the common good. They illustrate how learning, decisionmaking, and
changing values relate to one another. As values continue to change, they suggest that
microenterprise programs of churchsponsored agencies can potentially contribute a
healthy new dimension to microenterprise development. This potential can be realized
when informal education is designed to respond to changing values, not of static ethical
principles or of exclusively technical criteria. In its most practical sense the study
suggests that when PEE programs match the progressive nature of cycles with the
participants' cumulative practical knowledge, they can establish a matrix to present
training themes critical to earlier cycles. The CRS village banking program methodology lends itself
to the possibility of training procedures that provide participants with the kind of value
formation that is true to the tradition of Catholic Social Teaching. These training
procedures can integrate instruction in human values with technical operations rather than
separate them. Local promoters serve as the critical communicators of
this type of training. They bridge the gap between program designers and participants in
the CRS povertylending programs. They embody personally the tradition of Catholic Social
Teaching by they way they, as well as the participants, seek the common good. The following questions can serve as the basis for
promoters to facilitate the reflection of microentrepreneurs on their own ethical
decisionmaking. They serve as an approach for the promoter and as a reflection process
for the microentrepreneurs as they stress the integration of training in "human
values" (honesty, civility, etc.) and "technical skills" (keeping accounts,
administering business, marketing, etc.). They also nurture the individual and social
dimensions of microenterprise ethics by facilitating individual and group reflection on
how microentrepreneurs behave individually and how they work within their own
society. By asking the following questions, promoters can facilitate the exercise of ever
fuller freedom and responsibility of microentrepreneurs in their financial and business
transactions.
The effective use of these kinds of questions implies that
the various functions carried out by program personnel have to achieve some degree of
integration in relation to participants. Those responsible for the analysis of program
data, the delivery of credit and technical assistance, and training and education would
need to work together at some level. The degree of integration they achieve, while
maintaining their separate functions, requires them to take seriously the kind of
information that the above questions generate. By itself, even this kind of institutional development can
only be the occasion for improved ethical discussion. In a worldwide institution that is
sponsored by the Catholic Church, the basis for relating microenterprise development and
the common good is ultimately a theological reflection. An understanding of the world that
is based on the experience of faith means that those who have final responsibility for
field programs go a step further and engage in theological reflection. In order to reap the fuller fruit of Catholic social
teaching in the pursuit of the common good, microenterprise programs would profit by
reflecting on the theological underpinnings of the CRS approach to "poverty
lending." The Church's perspective on human work in the world has taken a new turn
since Vatican II: we approach our work as people with a vocation. Those who are called to
create material wealth as entrepreneurs are invited to a new self understanding because
they have a specific vocation in the world of business. They are co-creators, made in the
image of a God who is at work in creation. When the ultimate goal of a microenterprise program is
the fostering of this kind of vocation, the quality of reflection by those responsible for
programs is enhanced. Viewing participants in poverty lending programs as
"labor" no longer suffices. Likewise an individual ethic based on just wages in
return for responsible wage labor no longer suffices. The "vocation" approach
means that participants have the "responsibility for managing capital." When
applied to the formation of microentrepreneurs for the common good, this notion of
vocation evokes a sense that each participant is being called to and entrusted with the
means for developing the civil society in some new and creative way. Programs that build on an accumulation of common
experience of decisionmaking around the world can provide a new common understanding
that gives ethical values a central place in the learning process. With a spirituality
that is rooted deeply in Catholic social teaching, they contribute to a social ethic that
fits the demands of today's world. They give perspective to the individual choices of
microentrepreneurs within the consideration of the common good from the global
perspective of the human community while allowing for local cultural differences. Gasper Lo Biondo, S.J., is a Senior Fellow,
Woodstock Theological Center. As the North-South Dialogue continues, he
is interested in any feedback, commentaries, or responses on this article.
You can contact him by e-mail.
Senior Fellow, Woodstock Theological Center
Innovation and Transfer, vol. 4, no. 2, July
1995
Copyright © 1995 by Catholic Relief Services--USCC
All Rights Reserved
Ethical dilemmas and changing values
Economic Values and Opportunity Cost
Ethical Responsibility Nurtured by Informal Education
The Woodstock Microenterprise Study
Results and Recommendations of Woodstock Study
This would justify the way in which CRS/ES has differentiated village banks into three
groups. Assuming that sustainable development grows out of the development of human
capital through increased practical grasp of basic economic logic, whatever fosters the
use of this kind of logic will also contribute to a more effective delivery method. The
Woodstock study concluded that CRS/ES could design PEE to fit these groupings and that
these groupings might serve as the basis for individual moral development.
The Woodstock study recommended that designers of training programs establish a PEE matrix
that relates the progressive nature of credit cycles to the cumulative nature of the
participants' practical knowledge. This matrix would establish and administer training
themes critical to earlier cycles, during those cycles.
The Woodstock study recommended that designers of PEE build on the level of economic
rationality that already shows itself to be operative in the decisionmaking of
participants. The design of PEE might incorporate exercises in which the groups reflect on
some of the successful and failed decisions that they have made. Tools for this reflection
would include explicit reference to basic elements of economic rationality as embodied in
the practical grasp of opportunity cost.
The basic elements of opportunity costs are present in strategic enterprise decisions,
comparisons of costs and benefits, and the corresponding decision regarding the allocation
of resources. Strategic decisions that relate to these costs can be financial, productive,
administrative, and commercial.
Questions for Field Personnel
Theological Reflection on Microenterprise and Common Good
Conclusion
See also: