Debating Capitalist Moral Decay
Is the collapse of capitalism upon us? Are we facing a moral armageddon in the marketplace? Is every scandal-driven headline another sign of impending apocalypse in the world of business? You could be forgiven for thinking so, if you read enough editorials.
Just look at the opinion pieces carried by major news outlets over the last month. Eduardo Porter editorialized in the NY Times about The Spreading Scourge of Corporate Corruption. The Atlantic carried a piece called The Libor Scandal and Capitalism’s Moral Decay, by Pulitzer Prize-winner David Rohde. Even business school professors are down with the effort to convince you that the end is nigh: Bloomberg just recently featured a piece by Prof. Luigi Zingales, who went to the apparent heart of the matter by asking, Do business schools incubate criminals?
But do editorials of that sort really bring to bear any solid evidence that things in the world of business are getting worse? Not as far as I can see.
I’ve argued before that the evidence for a real moral crisis in business is pretty scarce. Headlines don’t count as evidence. And pointing to the fact that people don’t trust business is putting the cart before the horse. People have been wringing their hands about moral decay and longing for the good ol’ days at least since the time of the ancient Greeks. So as far as I can see, things may not be all that bad. I’ve even argued that we are currently enjoying a sort of golden age of business ethics. Business today is, in may ways, more accountable and better behaved than ever before in history.
But I could be wrong about that. Really, who’s to say whether things are getting better or worse? It really depends an enormous amount on what you count as improvement, and how you measure it. So let’s call it a draw, and focus on what’s really important. The question isn’t whether moral standards in business are higher or lower than they were at some point in the past. The point is whether they’re currently high enough, and assuming the answer is “no,” what to do about it.
And there’s plenty of work to do. To begin, we need to keep working to find the right balance of regulatory carrots and sticks to encourage good corporate behaviour. And we need to figure out the right corporate governance policies and structures to foster good behaviour within corporations as well. And to the extent that bad behaviour in the corporate arena — as in literally every other area of life — is unavoidable, we need to think hard about the appropriate mechanisms to mitigate and remediate the effects of such behaviour. All of this requires a good deal of humility, of course, and a willingness to tolerate, even foster, a degree of creative experimentation.
But one thing is certain. Rather than wasting time worrying about whether the world is coming to an end, our energy would be better spent figuring out how to make it better.
The Business Ethics Blog 
Yeah, I think it’s so silly how people wonder about businesses and their ethics. I mean, it’s so much fun working for nothing so that some guy can vacation in the third-world, where poverty is often pervasive, just because his name is on a few legal documents. I think it’s so funny how kids live in garbage dumps because according to the capitalist ethos, they have to “earn” their way out of poverty, or accept a nice “welfare” gift to exercise their human dignity. Plus it’s hilarious how corporations go around to countries and tell them exactly what to do on the threat of bringing in jackals if they don’t agree to huge loans or business ethics policies. I laugh about it all the time. It’s so much fun to make fun of things like that….that is, unless you happen to be one of those people or can appreciate what it would be like. But, overall, I’d say we have the best propagandists around to ensure that what many businesses do will sound really, really, moral, so in that sense, I *totally* agree with you that ethics is at an all time high when it comes to money. Hahahaha. This is so funny.
Sarcasm that is so badly off-target simply reflects badly on the writer.
By and large, people in capitalist jurisdictions live better than those in any other alternative. This indicates that the problem suffered by those in poor countries is not capitalism, but a lack thereof.
Kids “live in garbage dumps”, in part, because their jurisdictions lack sophisticated capitalism and a sturdy system of private property rules for facilitating more…capitalism.
And the “capitalist ethos” isn’t for children to “earn” their way out of poverty: it’s, rather, to live or die by your own sword, to spend your time and resources according to your own lights, which often includes generosity and whatever else free people choose to do.
Kirk:
My only qualification here would be that I don’t think we need to think of there as being a “capitalist ethos” at all. Capitalism is a tool, a mechanism, one that works well by many metrics. It doesn’t have to have any ideology attached to it. There can be many reasons to admire it — ones rooted in liberty, efficiency, innovation, etc.
Chris.
Chris, good to see you writing on this topic. While I agree that the right mix of regulatory and governance tools need to be in place and periodically reviewed to ensure good corporate behaviour, I think there is a third additional tool that is often overlooked. There are vast economic differences around the world and in our own country that impact how businesses interact with each other and treat those in the local market. Unfortunately, power (economic or otherwise) is well, powerful, which means that those with less, may receive the short end of the “ethical stick”. Some argue that the solution is agreed upon principles of business conduct for industries, associations, and professions that would then have a knock on effect for those who interact with them. I personally believe that this “soft law” model may have some merit as an incentive for good behaviour through social contract. Do you have any thoughts on this approach?
Sheerin:
Yes, I agree that there’s a role here for soft law, including especially codes promulgated by industry associations — especially if those can be given at least *some* form of enforcement, even if it’s merely the name-and-shame kind.
Chris.
I would distinguish between Wall Street and corporations. Corporations sell products and services. The abuses by Wall Street wire houses are attributable in large part to proprietary trading activity, which is not a product or service. Trading lends itself to manipulation.
I suspect you are right, Chris, that there’s no credible evidence to substantiate the claim that ethical standards are deteriorating. It seems to me that the reason such perceptions exist is because the consequences of bad business ethics, in our days, are much more significant than what they might have been 10, 20, or 30 years ago. We live in a time where scrupulous business behaviour could affect millions of customers, whereas in the past similar behaviour would have had much lesser impact.