Is ethical capitalism possible?
By Devin T Stewart
I was scheduled to deliver a keynote speech next month to more than 1,000
business executives on the topic of whether ethical capitalism is possible. The
event organizers, a Tokyo-based consultancy that specializes in corporate
social responsibility, had the foresight to pose this question last autumn.
Ironically, the intervening events of the global economic downturn - caused by
misguided incentives, greed, and moral lapses - forced the company to cancel
the event.
For me, this recession has been defined by frustrating paradoxes. Easy money,
overcapacity, and reckless consumption are what got us into this mess, yet
governments must react by lowering interest rates and pushing through enormous
fiscal stimulus packages with the hope that the housing, retail, and investment
markets won't fall much more. Similarly, long-term sensible investments in
clean energy and social welfare are hindered by falling oil prices, a lack of
funding, and fresh anxiety about corporate bottom lines.
From these developments, one could conclude that the global economic system is
inherently flawed, that it is unethical and doomed to destroy itself. In fact,
what is critically needed is moderation, a middle ground between total freedom
and principled action. The incoming administration of President Barack Obama
calls it "smart policies." The alternative is protectionism, a rolling back of
the open global economy, and political if not armed conflict.
Instilling the practice of ethical capitalism is possible and practical.
Consumers increasingly demand products that coincide with their moral
awareness. Likewise, politicians are under pressure to implement policies that
mitigate the stresses of globalization. These forces can come together to
produce products that are recycled, carbon neutral, free range, or fair trade,
and policies that battle climate change, poverty, and global diseases.
Non-action is highly risky. Looking at climate change alone, the possible
long-term risks include a shift in arable land; sharpening competition for
energy resources; and the emergence of climate change refugees from island
nations or low-lying areas, who may carry with them or engender political
violence and unrest, even terrorism. Given that carbon emissions are primarily
related to business activities, how can business models become more
sustainable?
Global human civilization has all the moral tools it needs. As Peter David
Pedersen of E-Square has noted, we neither have the time nor the need for
another ideology or "ism". Ethical principles that emphasize reciprocal rights
and responsibilities have long characterized human societies. The Golden Rule
is a feature of more than 100 world religious and cultural canons - "Do unto
others as you would have them do unto you."
The ancient Egyptians and Greeks alike pointed to the moral worth of not doing
to your neighbor "what you would take ill from him". The Golden Rule is found
in both the Old and the New Testament, with the great commandment found in
Leviticus: "Love thy neighbor as thyself". For Islam, the Golden Rule was
offered in the last sermon of Muhammad: "Hurt no one so that no one may hurt
you."
Variations and extensions of the principle are also found in Buddhism,
Hinduism, Taoism and Jainism. For many of these Eastern faiths, the Golden Rule
extends beyond one's fellow man to encompass all creatures, because sentience
exists in a spectrum. The original interpretation of humankind's relationship
with nature was that of stewardship, as outlined in the Old Testament and
Hebrew Scriptures.
If the Golden Rule acts to codify one's rights and responsibilities toward
others, the principle of the Golden Mean helps them to be achieved. As a key
concept in Chinese, Greek, and Indian philosophy, the Golden Mean emphasizes
tolerance, moderation, and pluralism. Aristotle's maxim "nothing in excess" and
Confucius's idea of equilibrium speak to modern concepts of sustainable living.
In the 1980s, the Brundtland Commission, chaired by former Norwegian prime
minister Gro Harlem Brundtland, presented sustainability as an integration of
economic, social, and environmental spheres to meet the needs of the present
without compromising the ability of future generations to meet their own needs.
This is simply a special case of the Golden Rule: Do unto future generations as
you would have them do unto you.
Encompassed in this definition are not only the traditional relations of
sustainability to energy, natural resources, and emissions, but also a notion
of sustainability that is extended to community relations, working conditions,
and succession planning. If heeded, these basic ethical principles require
individuals to consider the consequences of their actions, as they apply not
only to their peers but also to their environments.
Today there are promising signs of a more ethically minded business culture.
Many businesses are shifting away from narrow, profit-driven models to models
with a greater focus on environmental and social issues. Corporate social
responsibility, although not a new concept, is gaining currency in the
mainstream marketplace, as governments, consumers, and shareholders demand
better products and conduct from companies.
Corporate social responsibility and its financial counterpart socially
responsible investing have risen substantially as a concern for global
executives. These two fields, devoted to the creation of an ethical and
sustainable business mode, encompass within them everything from funding local
community projects to securing employee benefits in the workplace, reducing
poverty, and preserving the health of the environment.
Part of the reason for this shift is that companies are being held to account
by their constituents. The reach of the Internet has produced ready access to
information and a new means of voicing objections and suggestions. With the
ease of new technology and a more resolute brand of activism, stakeholders are
better able to create open lines of communication to corporate management
circles, forming the grassroots campaigns of the new millennia.
These concerns about redirecting capitalism toward the public good are
perennial. In 1909, Herbert Croly, one of the founders of the New Republic,
published The Promise of American Life. His book, which influenced
presidents Theodore Roosevelt, Woodrow Wilson, and Franklin Roosevelt, pointed
to the need for a stronger central government to check greed, corruption, and
unfair distribution of wealth.
In the interconnected global community of today, organizations and individuals
are banding together across cultural and geographic divides to solve common
problems. They are voicing the need for a renewed and moderate normative
framework that will define the way humans live and interact in the 21st
century.
In anticipation of the February event in Tokyo, I asked United Nations Special
Representative John Ruggie whether ethical capitalism is possible. "Well,
sure," he said with a grimace. But it won't occur unless policies and
regulations provide the right incentives, he said. The role of ethics is in
shaping those regulatory regimes.
The Barack Obama administration has a big job ahead in reminding the American
people of their ethical roots. During his inauguration speech, Obama said that
although we all face new challenges, core ethical principles, like honesty,
loyalty, and fair play, are "old" and "true". Fortunately, and again
paradoxically, the new president also knows that a crisis is not to be wasted.
Daniel Schuurman and Abigail Paris contributed to this essay, which is dedicated
to the team at E-Square Inc.
Devin T Stewart is director of the Global Policy Innovations program at
the Carnegie Council for Ethics in International Affairs.
(Published with permission of the
Global Policy Innovations program at the Carnegie Council for Ethics in
International Affairs.
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