Archive for the ‘character’ Category
The Value of Ethical Leadership
On the occasion of the launch of the Jim Pattison Ethical Leadership Program, a new effort for which I’m the director at the Ted Rogers School of Management, I want to take some time to talk a little bit about the program and ethical leadership.
At the program we’re aiming to go beyond the “mom and apple pie” aspects of ethical leadership, to look not just at the values and skills of ethical leaders, but also at the particular institutional mechanisms that ethical leaders use to shape institutional culture and to put their vision into practice throughout business organizations.
Leaders are by their very nature fascinating people. The news is replete with stories of the victories and foibles of leaders in the worlds of business and politics and entertainment. From an ethical point of view, the decisions they make and the values to which they subscribe are disproportionately important. Not only do they make crucial decisions, but they influence the decisions of others, both directly through the instructions they give and indirectly through the examples they set and the atmosphere they foster.
So ethical leadership is a compelling issue—even among those who don’t bother to think critically about the topic. It is all too tempting to think of ethical leadership as a question only for CEOs or for top-tier executives. And while I have high hopes and high expectations of my undergrad business students, not all of them will go on to leadership positions at that level. But what I’ve been teaching my students is this: leadership is an activity that goes on at all levels of a business organization. Whether you’re leading a publishing empire or a small sales team, you face the challenges implied by the term “ethical leadership.” You are faced with not just doing the right thing, but also with helping others to do the right thing and building organizational contexts that will foster people in doing the right thing.
The question, of course, is whether a program like ours can make a difference. And I think it can. And the reason has to do with how I understand the goal of ethics education itself.
I’ve long argued that an ethics course at a business school isn’t designed to make you into an ethical person, to teach you to be good. If making you ethical was the aim, then ethics education would be either redundant or hopeless: critics are probably right to think that a basic understanding of right and wrong is either there by the time kids enter university or it isn’t.
Ethics courses should assume a basic desire to do the right thing, and focus on giving students the ability to understand the special kinds of ethical issues that arise in business, along with the tools of teamwork and leadership that let them put their ethical understanding into action.
Students don’t come to business school to be educated on how to be employees. They come to learn how to be managers, and a manager with vision is what we call a leader.
Feeding the Hand that Bites You
Filed under: adversarial ethics, advertising, awards, capitalism, character, decision-making |
Comments (1) Two stories surfaced this week about companies faced with handing out prizes to businesses whose interests were contrary to their own.
One company graciously gave credit where credit was due. The other declined to do so. Is it ethical to decline to feed the hand that bites you?
The company that declined to recognize another’s achievements was CBS, which forced subsidiary CNET to alter the results of the ‘Best of CES‘ award it gives out after the annual consumer electronics show. CNET’s editors had intended to give top honours to the Dish Network’s “Hopper”, a set-top box that allows viewers to skip commercials. As reported here, CBS has been in a legal battle with the Dish Network over the Hopper, which CBS sees as threatening its stream of ad revenue. The CBS v. Dish lawsuit was cited by CBS as the reason for withdrawing the Hopper from consideration for the CNET award.
And on the other hand: the company that went ahead and gave an award to a competitor was USA Today. The newspaper, you see, had run a contest to reward excellence in print advertising. And the winner, ironically, was Google — the search giant that is cited as one of the key reasons why print advertising is on the decline.
Because both US Today and CNET are media outlets, the most obvious question here has to do with editorial independence. Media companies are in a special situation, ethically. Most of them need to earn a living, but most of them also proclaim a public-service mission, and along with that mission goes a commitment to journalistic independence. Of course, giving out awards is closer to a news outlet’s editorial function, and editorial content has never been as cleanly divorced from commercial concerns as pure news is supposed to be. But if awards handed out by media outlets are to mean anything, they need to remain pretty independent, and meddling by a parent company is bound to cast doubt on editorial independence pretty generally. CBS’s meddling in the CNET’s award has already led one reporter, Greg Sandoval, to resign.
Setting aside the media ethics angle, we might appeal to basic principles of fairness. If you hold a contest, then all eligible contestants deserve a fair shake. If you don’t want to allow your enemies to compete, it’s probably fair if you state that transparently up front. But, other things being equal, everyone deserves an equitable opportunity to compete and win. That’s basic ethics.
Then again, it’s worth reminding ourselves that business is fundamentally adversarial, and the rules that apply in adversarial domains just aren’t going to be the same as those that apply in cozier sorts of interaction. So, in the present case, we might say that the need to observe basic fairness in the treatment of contestants is legitimately overridden by the right not to harm your own interests by advertising a competitor’s product.
But the right to protect your company’s interests needs to be balanced against the kind of signal you send when you take a stand or announce a policy in this regard. What has CBS told us about itself as a company? What kind of outfit has USA Today shown itself to be? This isn’t just a matter of PR; it’s a matter of who CBS and USA Today are as companies. In many respects, you are what you are perceived to be, and what you are perceived to be reflects the actions you take in public.
Lance Armstrong: How the Mighty (Book) Has Fallen
Filed under: books, character, competition, corruption, pharma, scandal, sports, values |
Comments (2) 
Lance Armstrong: It’s Not About the Bike.
The picture above is one I took, of a box of free books a neighbour of mine left outside on the sidewalk. When I ran by one recent Saturday afternoon, only one book remained: Armstrong’s book. Funny but sad, I thought. When I passed again roughly 24 hours later, the box looked exactly the same: just one book, unwanted even for free. I snapped a picture.
(Another perspective on the book’s value: Amazon is still selling the book, for about $11, though you can also buy a used copy via Amazon for just a penny — in other words, for the cost of shipping it.)
The book, as you can surmise from reading any of a number of reviews, tells the story of Armstrong’s rise to prominence in cycling, his battle with and ultimately triumph over cancer, through to his victory at the 1999 Tour de France. It is, in short, the story that made him a hero to so many.
We are now all but certain that Armstrong’s meteoric rise to the pinnacle of the cycling world was aided by pharmaceuticals, a sophisticated and rigorous doping program that he not only stuck to but bullied his teammates into adopting. Should he still be regarded as a hero in any sense? And is his book still worth reading? We all know now that the book left out crucial details, but as far as I’ve heard there’s no reason to doubt the basics: he had cancer, he had surgery, he “beat” the cancer, he trained hard, he won the Tour de France. So the basics of the hero story remain as valid today as they were when the book came out over ten years ago. So why is the book now effectively — literally! — consigned to the trash-heap?
For some, the explanation might be simple personal disillusionment. When a hero falls, he falls really hard. So some who previously lionized Armstrong may not want even to think back upon what they now see as their own naiveté. Others may not want to be ‘inspired’ by someone they see as a liar: perhaps they just don’t want to listen to life lessons and inspiring stories, no matter how useful, told by someone who cheated and then lied about it.
The best answer, I think, lies in the loss of trust. Armstrong’s message was one of hope and courage, and it can only really bring hope and courage to the reader if the reader trusts Armstrong’s words. Armstrong’s message was like that of the kind, experienced physician in whom the cancer patient puts his or her faith. “We’re going to take good care of you,” says the physician. Armstrong’s message: You too can triumph over adversity. Neither messenger can guarantee results: surviving cancer is much more a matter of luck, and good medical care, than it is of gutsy determination. But the other half of the message — the reassurance, the comfort, the message of hope — requires that the patient put their faith in the messenger. And that is the part of his own message that Armstrong so effectively killed.
Ethics Lessons from Toronto Mayor’s Ouster from Office
Filed under: accountability, character, codes of ethics, conflict of interest, corruption, governance, government, leadership, pollution, taxpayers, values |
Comments (1) Toronto Mayor Rob Ford has been found guilty of violating the Municipal Conflict of Interest Act, and will be removed from office. The much-anticipated court decision was handed down this morning.
Regrettably, this is unlikely the end of the story. Ford had announced, prior to the decision, his intention to run again should the judge remove him from office. The judge had the option to include, as part of Ford’s sentence, a prohibition on running again, but opted not to do so.
Ford has plenty of detractors. Some don’t like his politics. Some question his aptitude for the job of mayor of Canada’s largest city. Others worry about his being implicated not just in one but in a string of conflict of interest violations. But he also has plenty of defenders — after all, there are an awful lot of people out there who voted for him, and many of them are sticking to their guns on that choice. So the debate will rage. Plenty of ink is sure to be spilled in by both camps in the wake of this decision. I’ll limit myself here to just two quick points. One is about leadership, and the other is about governance.
First, leadership. Whatever your views of Ford, and whatever your views about the severity of his breach of the Conflict of Interest Act, you pretty much have to agree that Ford demonstrated a disappointing lack of leadership ethics, here. Yes (as his lawyer pointed out) people do make mistakes, and even a mayor can be forgiven for an incidental breach of a rule now and then. But what’s particularly worrisome here is that Ford, who by all rights ought to be the guy who leads Council in understanding its ethical obligations, seems to be utterly clueless about them. And he doesn’t seem terribly worried about that, either. According to a report of the court proceedings, Ford “testified he never read the Conflict of Interest Act or the councillor orientation handbook. Nor did he attend councillor training sessions that covered conflicts of interest.”
My second point has to do with governance. As Marcus Gee pointed out in the Globe and Mail recently, bumping Ford from office might be a case of ‘out of the frying pan, into the fire.’ Turmoil is likely to ensue. Council is now faced with the choice of having someone else — someone not elected to be mayor — serve out the rest of Ford’s term, or spending several million dollars of taxpayer money to hold another election. The result of turfing Ford seems especially troubling when we compare Ford’s ethical cluelessness with the out-and-out corruption that has brought down mayors in other major cities.
But what was the alternative? A judge has no choice but to call ‘em like he sees ‘em. Ford violated important rules, and those rules say he should be removed from office. Note that the judge in this case would have had the same range of sentencing options if the dollar amount at the heart of this case had been $3.15 rather than $3,150. A more sane system would perhaps allow for a broader range of penalties. Examples could be found in other systems and at other levels of government. A fine? Censure? Limitation of future mayoral discretion? Mandatory ethics training? I don’t know the answer. But a governance system that allows a political leader to blunder this way and then throws a city into turmoil is not a good system. Principles matter, but so does the way we implement them.
Petraeus, Moralizing, & Leadership Obligations
This past Friday, David Petraeus, a retired 4-star general in the US Army resigned from his position as Director of the Central Intelligence Agency. He resigned because evidence had surfaced that he had had an extramarital affair.
On the surface, of course, this is just another example of a powerful man succumbing, as all too many seem to do, to the all too common temptation to betray his marital commitments. And, again on the surface, it raises questions about whether private foibles are sufficient reason to think a man unfit for public office. Petraeus himself, in his letter of resignation to President Obama, said he had shown “extremely poor judgment.” The question that always arises — remember Clinton/Lewinski? — is whether poor judgment in personal matters necessarily implied poor judgment in public matters, or whether instead the scandal really just amounts to a puerile bit of titillation.
But the fact is that Petraeus is not just another man, and not even just another man in a leadership position. He was, until November 9th, Director of the CIA, the most important intelligence organization on the planet. He was, in other words, one of the world’s most desirable candidates for blackmail. And so any transgression that could serve as fodder for blackmail is immediately amplified in magnitude. Clearly, marital infidelity is pretty high on that list. Someone in a position like the one Petraeus had has to stay squeaky clean, not for moralistic reasons, but for national security reasons.
And the seedier details that have been emerging seem to bear this worry out, at least to some extent. The woman with whom Petraeus is said to have had the affair, Paula Broadwell, is now said to have sent threatening letters to another woman who she saw as a rival for the general’s affections. That’s not to say that anything like blackmail was in the offing. But it suggests that the Petraeus/Broadwell affair had dark edges to it beyond your standard tale of marital infidelity.
There will surely be, in the coming weeks and months of analysis of this matter, plenty of talk about the demands of leadership and the character and integrity it requires. But what leadership at the highest level really requires is not just character, but an acute awareness of your own weaknesses — including weaknesses you share with the rest of the human population — and the ability to foresee and forestall the risks the flow from those.
Ethics on Wall Street: Hate the Player, Not the Game!
Filed under: accountability, adversarial ethics, capitalism, CEOs, character, compliance, corporations, corruption, employees, ethics, insider trading, white collar crime |
Comments (8) A recent survey of Wall Street executives paints a bleak picture of the moral tone of a central part of our economic system.
According to the survey (conducted for Labaton Sucharow LLP), 24 percent of respondents believe that financial professionals need to engage in unethical behaviour in order to get ahead. 26 percent report having observed some form of wrongdoing, and 16 percent suggested that they would engage in insider trading if they thought they could get away with it.
Two points are worth making, here.
First, some perspective. Far from alarming, I think the number produced by this survey are relatively encouraging. Indeed, the numbers are so encouraging that I can’t help but suspect unethical attitudes and behaviours were seriously underreported by respondents. Only 26 percent had seen something unethical? Seriously? That seems unlikely. And the fact that only 16 percent said they would engage in insider trading is also relatively benign. There are, after all, people who believe that insider trading isn’t unethical at all, and shouldn’t be illegal. They argue that insider trading just helps make public information that shouldn’t be private in the first place. I don’t think that point of view hold water, but the fact that it’s put forward with a straight face makes it pretty unsurprising that a small handful of Wall Street types are going to cling to the notion.
Second, a survey like this highlights the difference between our ethical evaluation of capitalists, on one hand, and our ethical evaluation of capitalism, on the other. One of the major virtues of the capitalist system is that it is supposed to be able to produce good outcomes even if participants aren’t always squeaky clean. In no way does it assume that all the players will be of the highest virtue. Adam Smith himself took a pretty dim view of businessmen. In The Wealth of Nations, Smith wrote:
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public.”
And yet despite his dim view of capitalists, Smith remained a great fan of capitalism — or rather (since the term “capitalism” hadn’t been coined yet) a fan of what he referred to as “a system of natural liberty.” The lesson here is that evidence (such as it is) of low moral standards on Wall Street shouldn’t make us panic. Perhaps it should make us shrug, and say, “Such is human nature.” The challenge is to devise systems that take the crooked timber of humanity and mould it in constructive ways. Governments need to take corporate motives as they are and devise regulations that encourage appropriate behaviour. And executives need to take the motives of their employees as they are and devise corporate structures — hierarchies, teams, incentive plans — that motivate those employees in constructive ways. In both cases, while the players should of course look inward at what motivates them, the rest of us should focus not on the players, but on the game.
Sandusky’s Lawyer & Business Ethics
Filed under: adversarial ethics, character, crime, economics, professionalism |
Comments (18) Just like a defence lawyer in a criminal trial, a CEO has a specific goal to achieve. The CEO’s goal is to turn a profit, and it’s a goal rooted as much a duty to society as it is a duty to shareholders. And, importantly, when it comes to both defence lawyers and CEOs, you don’t have to agree with their goals in order to value the role they play in the larger system.
The trial of former football coach Jerry Sandusky illustrates what I’m talking about.
Jerry Sandusky’s lawyer has an unenviable job. His job is to defend—vigorously and wholeheartedly—a man that pretty much everyone else has already assumed is guilty.
Joseph Amendola, lead defence lawyer for Sandusky, has taken on the task of defending the former Pennsylvania State University assistant football coach against 52 charges of child sexual abuse. In the minds of many, this makes Amendola only slightly less worthy of scorn than his client. After all, how can anyone seriously defend a man against whom there is so much compelling evidence?
The catch here is that we cannot evaluate the ethics of a defence lawyer without looking at the bigger picture, and the bigger picture is the adversarial system within which the defence lawyer operates. Amendola isn’t just some guy defending a child molester; he’s a defence attorney playing his part in a system that places very specific ethical obligations on defence attorneys.
The point here isn’t really about the legal system. The point is that the people who play a role in a system don’t necessarily have to pursue the goals of the system directly. In fact, in some cases that would be downright counter-productive. Let’s assume, for example, that the goal of the criminal justice system is precisely what the name implies: justice. The fact that justice is the goal of the system absolutely doesn’t imply that every participant in the system has to pursue justice. Compare: a football team’s objective is to get the football into the opponent’s end-zone. But that doesn’t mean that every member of the team is trying to get the ball across that line. An Offensive Guard who focused on moving the ball would be failing at his job: his job is, pure and simple, to protect the quarterback.
What’s important in any complex institution—football team, system of justice, or a market — is that every ‘player’ do his part. Then if the institution is designed reasonably well, the sum total of the actions of various ‘players’ will result in the system that performs well as a whole. If all the players on a football team do their jobs well, the ball moves forward toward the end zone. If all the lawyers in a system of criminal justice do their jobs well, then more often than not the guilty will be punished and the innocent will go free.
So, Amendola is duty-bound to make Sandusky’s interests his first priority. But the reason is not that Sandusky deserves it. The reason is that the system as a whole requires it. The adversarial legal system can only have any hope of rendering justice if the parts of the system diligently play their roles.
The exact same principle applies to the profit-seeking behaviour of CEOs. As Joseph Heath points out in his scholarly work on this topic, the profit-seeking behaviour of companies is an essential element of the pricing function of the Market. When companies pursue profits in a competitive environment, it helps drive prices toward market-clearing levels. This helps ensure that supply of and demand for a given product settle at the socially-optimal level. So it is important, not just to shareholders but to society as a whole, that companies pursue profits. That is how companies and their CEOs play their role in producing the social benefits that flow from the market.
Of course, in the case of both defence lawyers and corporate executives, the obligation to pursue partisan goals is not unlimited. There are certain things you cannot do as a defence lawyer—suborning perjury, for example, or tampering with evidence. Such behaviour would reliably subvert the goals of the system. Similarly, there are things that an executive must not do in pursuit of profits. Figuring out which things those are—what the limits are on competitive behaviour in an adversarial market—is the very heart of business ethics.
Did Apple’s CEO Forego $75 million as a Matter of Principle?
There’s tone at the top, and then there’s tone at the top of the top. And when it comes to defining “top,” it’s hard to beat being the highest-paid CEO in the world, leading the most valuable company in the world. The man who occupies that post, of course, is Apple Inc.’s Tim Cook.
And recently, Cook made a pretty big move that might well do something to set the tone among high-end CEO’s. According to SEC filings, Cook reportedly has opted to take a pass on dividends he could have collected on over a million unvested shares. In total, that amounts to passing up about $75 million. Not that this is exactly going to leave Cook in the poorhouse — he’s paid a mind-boggling amount of money for the task of trying to fill Steve Jobs’s shoes. But still, it’s not trivial either. What should we make of it?
There are a couple of ways to think about this.
One has to do with shareholder confidence. Some have suggested that the decision is designed to show that Apple’s recent decision to pay a dividend wasn’t intended to benefit Cook himself. It is good for the investing public to know that the company is making decisions about things like dividends with the the best interest of shareholders in mind, rather than the best interests of the CEO. But then, Apple isn’t exactly suffering a crisis of shareholder confidence. If boosting the image of the company’s leadership is what you’re looking for, this might just be overkill.
But there’s another way to think of this, and that has to do with the good old-fashioned notion of honour. Call me a hopeless romantic, but I like to think that Cook’s decision might have something to do, as an unnamed source told the Telegraph, with setting an example for his fellow CEOs. Executive compensation has been in the spotlight almost continually for the last couple of years, and has even been the focal point of shareholder revolts. Maybe this is Cook’s way of saying, look, a high-end CEO doesn’t always have to squeeze every penny he can out of the company. And it’s entirely plausible, I think, that someone like Cook might make that decision — and send that signal — as a matter of principle.
“Honour” is the right moral category, here, because foregoing the cash is not something Cook is ethically obligated to do. He is fully within his rights, both legally and ethically, to take the dividend like other shareholders. But there’s arguably something good, something admirable, about attempting to shift the tone among high-end CEOs this way. It’s one thing to say that CEOs are overpaid. It’s quite another to set an example.
Will Cook’s move have any impact? Who knows. But it does seem like one more interesting attempt by the folks in Cupertino to get someone to “Think Different.”
Capitalism and Bad Behaviour
Filed under: adversarial ethics, capitalism, character, competition, trust |
Comments (2) Contrary to what you have heard, there is nothing immoral about capitalism.
A couple of weeks back, the New York Times published a truly scandalous opinion piece by essayist William Deresiewicz with the provocative title, Capitalists and Other Psychopaths. The views expressed in the piece are not just false, but dangerous.
The central claim of Deresiewicz’s essay is that “capitalism is predicated on bad behavior.” This claim is entirely untrue. Capitalism in no way requires bad behaviour. Indeed, to function even moderately well, capitalist markets rely on a general pattern of basic goodwill and honesty of its participants. Commerce of any kind requires trust, and trust is predicated on the expectation that the other person is going to follow some basic rules of decent behaviour. The niceties of the rules that ought to govern business are up for debate, the basic need for some sort of rules is not. Capitalism, in other words, presumes ethics.
Deresiewicz is right of course that bad behaviour does go on within capitalist systems. That’s not exactly a news flash. Nor is it unique to capitalism. There’s no evidence that either feudalism or communism magically turns humans into selfless and cooperative purveyors of peace, love and understanding.
The beauty of a free market, as Adam Smith taught us, is that it can generate benefits even even among mean-spirited. The taxi driver who took me to the airport this morning doesn’t have to like me, and he doesn’t have to be a particularly lovely human being. All that’s necessary, in order for me to get to the airport, is that he wants to make a living. But in no way does capitalism require that people be vicious or even indifferent to each other’s fates. As Nobel laureate Ronald Coase put it, “The great advantage of the market is that it is able to use the strength of self-interest to offset the weakness and partiality of benevolence.” We are limited in our sympathies for others. The good news is that, in the marketplace, our commitment to our own welfare, and the welfare of those we hold dear, inspires a great deal of creative and industrious activity that has as its very useful side-effect the provision of benefits to others.
Deresiewicz’s essay also takes a particularly gratuitous pot-shot at business school education. “I always found the notion of a business school amusing,” he writes. “What kinds of courses do they offer? Robbing Widows and Orphans? Grinding the Faces of the Poor?” This may be a joke, but it’s a baffling one. Is business management really so trivial a task that it couldn’t possibly require any advanced training? (The old-guard communists thought so, and look where it got them.) Say what you will about business schools, there’s little doubt that the better ones, at least, teach a serious and difficult curriculum. Deresiewicz’s slam here is also terribly and unnecessarily insulting to millions of business school graduates who work diligently and honestly to produce a bewildering array of goods and services. Yes yes, we all know about Ken Lay and Bernie Madoff. Those men deserve, and have already received, ample criticism. But why impugn the honesty and integrity of every single executive, mid-level manager and accountant along the way?
The key to understanding Deresiewicz’s error is to see that he thinks ethics should be exactly the same in all situations. Not just present, but the same. The virtues of the marketplace, he suggests, should be the same as those of the Christian bible. The norms we apply to commercial exchange, he suggests, should also be (or include?) those of civic life. But does anyone really believe that? If a company rips you off should you really “turn the other cheek,” in good Christian fashion? Should Apple and Dell really debate the qualities of their competing products and then have us all vote for the one winning product that we will then all buy? To expect the same behaviour in the market as in a townhall meeting makes about as much sense as to expect people to behave on a football field the same way they do in a church pew.
It goes without saying that Deresiewicz is not alone in his misunderstanding of the fundamentals of capitalism. But his misunderstanding is especially fundamental, and especially corrosive. The really troubling thing about Deresiewicz critique is that it suggests that there’s nothing about capitalism worth saving. If capitalism is intrinsically unethical — if it has the immorality baked right in — then why try to fix it? Why try to make things work better? We all might as well just settle in and enjoy our smug cynicism. Because like a lot of really trenchant critics, Deresiewicz offers us no alternative.
Why the Wal-Mart Bribery Scandal Doesn’t Really Matter
The recent allegations of bribery at Walmart de Mexico are, if true, a damning indictment of a significant handful of senior executives. But they tell us little about the company as a whole, and even less about capitalism.
One of the most pervasive, and least endearing, characteristics of human beings is our tendency to project instances of failure on the part of one or a few individuals onto entire groups or institutions, and to use such individual failures as evidence confirming deep, dark suspicions to which we are already committed. The nationalist and racist versions of this pattern are too familiar to need description. But this tendency plays a role in our evaluation of various corporations, too.
This is precisely the risk with regard to the recent Wal-Mart bribery scandal.
Many critics of Wal-Mart, or of the corporate world more generally, are, I suspect, secretly or not so secretly pleased at the revelation that executives at the highest levels of the company are (allegedly) implicated in this scandal. It supports, after all, a thesis that critics believed all along. It proves, doesn’t it, that the company is rotten to the core. And perhaps it even proves, or at least adds substantial weight to the thesis, that capitalism itself is inherently evil. After all, we now see credible allegations that the most senior executives at one of the world’s biggest companies — that very paragon of ruthless efficiency and expansionary capitalistic zeal — were engaged in a practice so thoroughly discredited that it is illegal even in places where, unfortunately, it is still common.
It’s a tempting conclusion, but also a very bad mistake.
First, it’s a mistake because the (alleged) behaviour of Eduardo Castro-Wright (president of Walmart de Mexico during the events in question), Mike Duke (CEO of Walmart Stores, Inc.), and other top executives tells you nothing about the other 2.2 million people who work there. It tells you nothing about the character of the people who stock the shelves and work the cash registers. And it certainly tells you nothing about the sincerity of the people hard at work to implement the company’s ambitious sustainability and CSR goals. Nor do the recent revelations help with the big question about Walmart’s overall impact. Some people hate Walmart; others literally think the company deserves a Nobel Peace Prize. The corrupt actions of a handful of executives tell us nothing about whether the company is, on net, a force for good or evil. Walmart serves as a go-between, joining poor factory workers in Asia with (mostly) poor consumers in North America. It improves lives at both ends, while notoriously squeezing the middle-man. Whether that is on balance a good thing has nothing to do with who bribed whom to do what.
Nor do the recent accusations tell us anything, factually or ethically, about capitalism itself. Bribery isn’t a feature of capitalism; rather, it is anti-capitalistic, the very opposite of proper, competitive, capitalist behaviour. The accusations, if true, don’t prove that capitalism is inherently corrupt, but merely that a handful of executives at one particular company were corrupt.
Not to be clear: none of this is exculpatory, nor is it intended to trivialize the very significant impact that this scandal might have on Walmart, its employees, and its suppliers. None of what I’ve said above excuses the reprehensible behaviour that seems to have gone on at the world’s biggest retailer. That behaviour violated fundamental moral principles. It violated the law. It violated the company’s own standards of ethics. It violated the fundamentals of capitalism. But we must not confuse the actions of individuals, even highly-placed individuals, with the virtues or vices of entire organizations or of the market itself.
