FIRM. - An organic combination of the factors of production carried out for the purpose of producing goods or rendering services in the most economical form. The term a. has as its synonym that of "enterprise"; however, a formal difference runs between the two: the a. is a technical-organizational unit, the enterprise is an economic unit. The first concerns the organization of the factors of wealth, the second, the purpose for which wealth is produced. Risk and profit refer to the enterprise more than to the a. Authors, however, often use the two terms interchangeably. The a. is customarily divided according to different criteria; thus, for example, it may be:
1) individual or collective, depending on whether a single individual or several individuals bound by a corporate tie (joint-stock company) assumes responsibility for it;
2) private or public, depending on whether it directly pursues private or public interests;
3) agricultural, industrial, commercial, transport, credit, insurance, etc., depending on the nature of the good it produces or the quality of the service it renders;
4) small, medium, large, depending on its dimensions, although in practice it is almost impossible to draw the boundaries between one and another;
5) simple or complex, depending on whether the factors of production are concentrated in a single subject (craftsmanship, owner-entrepreneurship), or are divided among several distinct subjects (workers, entrepreneurs, capitalists).
These distinctions, as is easy to observe, do not possess absolute value. They have a markedly empirical character and one may resolve into another. It is obvious, for example, that the simple a. is also individual; and therefore small and almost certainly private; although a cooperative-structured a. may also be qualified as simple rather than complex, since its members are, or can be, simultaneously capitalists, entrepreneurs, and workers.
Modern economy is distinguished, in comparison with that of the Middle Ages, by the clear prevalence of the medium and large a. in the manufacturing industries sector; while in agriculture the small a. still continues to prevail.
Among the many aspects that the modern a. (medium or large) presents, what is considered here is the one that is of greatest interest from the point of view of Christian social doctrine, namely: once the hierarchical distinction between capitalist entrepreneurs on the one hand and workers on the other has become established within the modern a., by what criterion must one abide in evaluating human labor? Leo XIII affirms: 1) that labor is not a commodity, but a conscious and free activity, inseparably joined to the person who performs it; therefore one can never demand labor that brings harm either to the body or to the spirit (encyclical Rerum novarum, no. 33); 2) that the remuneration of labor must be sufficient for a human sustenance of the worker. The reason is clear. Almost all men draw from labor the means of sustenance: remuneration therefore cannot be entirely abandoned to the play of supply and demand in the labor market, but must correspond to the requirements of life. A labor contract in which a remuneration below the vital minimum were fixed, even if stipulated by common agreement between workers and entrepreneurs, does not hold, because it proves contrary to natural justice (ibid., no. 34). v. SALARIO; 3) that between labor and capital there must be relations of collaboration; the very nature of things demands it: capital without labor remains sterile; labor without capital loses almost entirely its effectiveness (ibid., no. 15); 4) that the State, among its tasks, also has those of making its vigilant presence felt in the a., above all through wise social legislation, without hindering their life, for the purpose of protecting the sanctity of the race and defending spiritual values (ibid., no. 20). v. LEGISLAZIONE SOCIALE.
Pius XI in Quadragesimo anno reaffirms the doctrine of Leo XIII; he develops, however, certain themes of it. He teaches explicitly, in fact: 1) that in determining the wage, social justice demands that regard be had for the family responsibilities of the worker (enc. Quadragesimo anno, no. 32); 2) that in determining the wage one must take into account the conditions of the a. (ibid., no. 33); 3) that the amount of the wage must be tempered with the public economic good, which above all demands that workers be able to escape from the state of propertylessness and not be forced into involuntary unemployment (ibid., no. 34); 4) that the historical moment has arrived in which it is opportune to begin, when possible, structural changes in human relations between firms: that is, it is held that the workers must be admitted to take an active part in the life of the a., tempering the labor contract with that of partnership (ibid., no. 30).
Pius XII, in his social messages, develops this last theme a great deal. He advocates an economic-social order in which the one who works also possesses the instrument and the material of labor; and when this is not possible, because the requirements of production today still do not permit it, he not only exhorts that the labor contract be tempered with that of partnership, but teaches that this is obligatory (Radio message, September 1, 1944). And in the address to the directors of the A.C.L.I. of March 11, 1945, he likewise affirmed that the workers must be called to assume a responsibility of their own in the productive process.
From what has been briefly set forth above, it appears clear that the teaching of the pontiffs has increasingly emphasized how labor within the a. must be considered and treated as a subject and not as an object. Labor is a human activity: it therefore cannot be evaluated as a commodity; it is inseparably joined to the person who carries it out; it is therefore necessary that it be protected, especially by means of appropriate social legislation and timely controls; for almost all men it is the natural source of sustenance: its remuneration must therefore be measured with regard for the needs and requirements of the workers and of their respective families; labor and capital in production strengthen each other: between them nature demands that there prevail a relationship of well-understood and profitable collaboration; labor too, in production, stands in a relationship of preeminence with respect to capital: as far as possible the workers must be inserted into the firm organism, take an active part in its life, and the wage system be increasingly tempered by associational relations.
The pontifical teaching unfolds in the light of Revelation and of sound reason, but it is also in harmony with the historical evolution of this last century; in the contemporary age, in fact, one witnesses a progressive ascent of labor within the a.: from a simple instrument of production and object of law, it is about to become a preeminent subject of duties and rights; and it also seems that the way is already being trodden toward an overcoming of the wage system in order to arrive at the establishment of a more human and more fruitful economic-social order: Christianity, with its doctrine and its multiform influences, has certainly contributed and continues to contribute to this progressive profound transformation, even if its contribution is not always easily identifiable because it operates above all in the realms of the spirit (v. CONSIGLI DI GESTIONE; DOTTRINA SOCIALE CRISTIANA; LEGISLAZIONE SOCIALE; SALARIO).