Author: CRT Admin

I just ran across a letter of June 28, 1985 – 40 years ago – which led to the foundation of the Caux Round Table.  The letter was sent by Frits Philips, former chairman of Philips, in Japan and a leader of Moral Re-Armament, an NGO advocating cross-culture value alignments and headquartered in Caux, Switzerland, to Mr. Yukihisa Fujita of Moral Re-Armament Japan.

Here is the letter:

The article, which Philips referred to, was a report of the Philips Electronics Company on “unfair” Japanese business practices.  It was as if Donald Trump had written it.  The Dutch reporter wrote after reading the report: “Japan is busy disrupting the international economy. Japan is lusting for world power.”

The accusation was that Japanese Zaibatsu industrial groups, coordinating with the Ministry of Trade and Industry, set out to crush competition in the making and selling of high value electronics.  Horrors!  A group of Japanese companies set out in the U.S. to break through into the American market for televisions by making and selling a color television that cost only $400.

Then, it was alleged, the alliance of Japanese companies used the profits from the sale of color televisions to subsidize the production of video cassette recorders to sell them abroad at a low price.  Thus, when Philips came out with a superior quality video cassette recorder, Japanese companies had 95% of the world market.

Having gained a virtual monopoly in the field of consumer electronics, the Philips report alleged that Japanese companies were getting ready to give a “neck chop” to their European competitors by setting product standards, selling at a cheap price and marketing their products.  The Japanese were also scheming to take American market share in the emerging product category of “professional electronics – monitors, telephone systems, copiers, home and personal computers.”

Their tactic was to subvert competitors with cheap prices.  First in components, then in high-grade sub-systems and finally, with the whole apparatus.  “The Japanese don’t mind foregoing profits for a while, provided that they can earn twice as much later on.”

Japan put difficulties in the way of permitting American companies to sell in Japan.  Japanese companies were financed up to 80 % or 90% of their total capital with low interest loans.

The Philip’s report considered increasing tariffs on imported Japanese electronics, noting that an import duty of 19% on compact disc players has given Philips room to become one of the largest makers of these machines in the world.  But Philips took losses up front on the manufacture and sale of CD players in order to gain market share.

Frits Philips and Yukihisa Fujita, with support from Moral Re-Armament, then convened the first meeting of what would become the Caux Round Table at Mountain House in Caux, Switzerland, in 1986 to discuss better rules and practices for international competition in free markets in all countries.

The Economist, in its June 14^th issue, put national industrial policy – such as President Trump’s big, beautiful plan to revive American manufacturing (and by so-doing) Make America Great Again – in a different, more dyspeptic frame of analysis.

The magazine reported:

Politicians hope that boosting manufacturing means decent employment for workers without university degrees or, in developing countries, who have migrated from the countryside.  But factory work has become highly automated.  Globally, it provides 20m, or 6%, fewer jobs than in 2013, even as output has increased 5% by value.

Many of the good jobs created by today’s production lines are for technicians and engineers, not lunch-pail Joes.  Less than a third of American manufacturing jobs today are production roles carried out by workers without a degree.

By one estimate, bringing home enough manufacturing to close America’s trade deficit would create only enough new production jobs to account for an extra 1% of the workforce. Manufacturing no longer pays those without a degree more than other comparable jobs in industries such as construction.  As productivity growth is lower in manufacturing than it is in service work, wage growth is likely to be disappointing, too.

Another misconception is that manufacturing is essential for economic growth.  India’s manufacturing output, as a share of GDP, languishes about ten percentage points below Mr. Modi’s target of 25%.  But that has not stopped India’s economy growing at an impressive rate. In the past few years, China has struggled to meet its growth targets, even as its manufacturers have come to dominate entire sectors, such as renewable energy and electric vehicles.

As our modes of production change and with AI yet to release its full potentials in our economies, should we rethink the benefits of trying, yet again, to out-think markets by turning to managers and implementing their plans?

Last week, I was in Rome for the annual meeting of the Papal Foundation Centesimus Annus, which advocates Catholic social teachings on business, finance and the economy.  The Caux Round Table Principles for Business of 1994 were, in part, derived directly from Pope John Paul II’s 1991 encyclical, Centesimus Annus.  That encyclical was written to recall and extend the 1891 encyclical of Pope Leo XIII, Rerum Novarum.  Pope Leo XIV has noted his choice of name as intentionally directed to recall the contributions of Pope Leo XIII to Catholic social teachings in the modern era of industrialization as the economic foundation for modern humanity.  Pope Leo XIV must now propose his reflections for a post-industrial global economic order and soon, AI-driven wealth creation.

On coming to the Caux Round Table, I, for the first time, read Papal encyclicals, thanks to the mentorship of Jean-Loup Dherse, an author of our principles for business.  Though raised a Protestant, I immediately appreciated the quality of the thoughts and arguments presented by the Popes in their social teachings, the skill in articulation of how values and the ups and downs of life intersect and could intersect if we would but pay closer attention to ourselves and others. Many passages and sections reminded me of the best U.S. Supreme Court opinions of Chief Justice John Marshall, written 200 years ago.

Last Saturday morning, Pope Leo XIV graciously met with our participants.  I found him most at ease and seemingly assured in the execution of his responsibility to provide thoughtful guidance to all who will listen.  He framed his thinking for the work of all of us who care “to raise a standard to which the wise and the honest may repair.”

You can read his remarks here.

The Pontiff’s thoughts also apply to the work of the Caux Round Table.

Some 20 years ago, when I wrote my book, Moral Capitalism, to provide a thoughtful framework to vindicate the importance of the Caux Round Table Principles for Business, I brought forward a tension between the capitalism promoted by Adam Smith and the capitalism promoted by Herbert Spencer.

In 1851, Spencer wrote Social Statics to present human nature as self-centered, without a moral compass.  Smith, on the other hand, had written a book of moral philosophy, The Theory of Moral Sentiments, which universalized to all persons an inborn capacity for seeking and acting on constructive, wealth-creating, social connectivity.

Smith’s capitalism, therefore, was synergistic and symbiotic, ending towards a balanced dynamic equilibrium and win/win transactions.

Spencer’s capitalism was more a dog-eat-dog struggle, driven by instincts of endless self-seeking, where only the fit prospered and the devil take the hindmost.  Spencer aligned with the political views of Thomas Hobbes on the nature of us being, at best, a grim scenario, where life is “solitary, poor, nasty, brutish and short.”  Spencer presumed that since we descended from the great apes, we retain their self-referential animalism and lack of conscience and that we, too, followed the law of nature that either kill or be killed, eat or be eaten.

Later in the 19^th century, Spencer’s approach was given the name “social Darwinism.”  This, though, was an unkind misuse of Darwin’s thinking about human nature.  Darwin, in fact, wrote a book, The Descent of Man, which was closer to Smith’s thinking.  Darwin argued that humanity was an evolutionary step beyond animality, where regard for others, a capacity for rational thought and language and a sophisticated and reciprocal socialization gave us moral sentiments and a capacity for collaboration.

But in presenting the Spencerian alternative to Smith, I aligned it with Hobbes’ thinking and called it “brute capitalism.”

I attach here chapter 3 on brute capitalism from my book.

The timely question is whether or not Donald Trump is a brute capitalist.  If he is, his policies will be out of sync with what is best for America and the world.

This past Tuesday, in an editorial, the Wall Street Journal said of Trump: “Mr. Trump thinks he can bully everyone into submission, but he can’t bully Adam Smith, who deals in reality.  Markets know that tariffs are taxes and taxes are anti-growth.”

Trump’s win/lose understanding of globalization and international trade and markets seems to adopt Spencer’s understanding of the human condition.

Consider Trump’s remarks on “Liberation Day,” when he proposed to throw off the shackles which foreigners had used to “rip off” Americans.  Were they not win/lose, beggar your neighbor, don’t give the suckers an even break?

He said:

“For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike.  American steelworkers, auto workers, farmers and skilled craftsmen, we have a lot of them here with us today.  They really suffered gravely.  They watched in anguish as foreign leaders have stolen our jobs, foreign cheaters have ransacked our factories and foreign scavengers have torn apart our once beautiful American dream. … Our country and its taxpayers have been ripped off for more than 50 years, but it is not going to happen anymore.  It’s not going to happen.  In a few moments, I will sign an historic executive order instituting reciprocal tariffs on countries throughout the world, reciprocal.  That means they do it to us and we do it to them, very simple, can’t get any simpler than that.  This is one of the most important days, in my opinion, in American history.  It’s our declaration of economic independence.  For years, hardworking American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense, but now it’s our turn to prosper.”

This is win/lose thinking, as Spencer would validate as quintessentially human.  Kind of brutish, don’t you think?

Jamelle Bouie recently wrote in the New York Times his own take on Trump as a brute capitalist:

He did not reason himself into his preoccupation with tariffs and can neither reason nor speak coherently about them.  There is no grand plan or strategic vision, no matter what his advisers claim — only the impulsive actions of a mad king, untethered from any responsibility to the nation or its people.  For as much as the president’s apologists would like us to believe otherwise, Trump’s tariffs are not a policy as we traditionally understand it.  What they are is an instantiation of his psyche: a concrete expression of his zero-sum worldview.

The fundamental truth of Donald Trump is that he apparently cannot conceive of any relationship between individuals, peoples or states as anything other than a status game, a competition for dominance.  His long history of scams and hostile litigation — not to mention his frequent refusal to pay contractors, lawyers, brokers and other people who were working for him — is evidence enough of the reality that a deal with Trump is less an agreement between equals than an opportunity for Trump to abuse and exploit the other party for his own benefit. For Trump, there is no such thing as a mutually beneficial relationship or a positive-sum outcome.  In every interaction, no matter how trivial or insignificant, someone has to win and someone has to lose.  And Trump, as we all know, is a winner.

The passing of Pope Francis is a great loss for humanity and in our own small sphere, for the Caux Round Table, as well.

The Pope gave his very personal endorsement to our study of the covenants of the Prophet Muhammad to respect and protect Christians – a work which has much promise for a more peaceful future for humankind, not only in the Middle East and Africa, but as spiritual leadership for all of us when we think about others of different faiths and ethnic origins.

I copy his letters to us here:

For the sake of all of us, I hope that the collective wisdom of his Roman Catholic Church will bring forth a successor with his faithfulness, humanity and ability to reach beneath the surface of our human self-mortifications to draw forth “the better angels of our natures.”