Archive for the ‘adversarial ethics’ Category
Is The Customer the Enemy?
Filed under: adversarial ethics, capitalism, consumers, decision-making, ethics |
Comments (5) Earlier this week I blogged about the intersection between customer service, ethics, and public relations. I pointed out that when the occasional grouchy remark turns into a pattern of disrespect, customer service becomes a question of ethics, and — in an age of social media — a potential PR nightmare.
But this raises a bigger question about the nature of the relationship between a business and its customers. Is the relationship between buyer and seller appropriately thought of as an adversarial one or a cooperative one? Ethically, is it right for a company to think of customers as friends or foes?
There are intuitive reasons on both sides. On one hand, buyer and seller have a shared interest in ‘doing the deal.’ They typically want to do business with each other, and both benefit from the transaction. On the other hand, every dollar a buyer saves is a dollar lost from the seller’s point of view. Every buyer wants a low price and every seller wants a high price, so the conflict is built right in.
We can name at least four different approaches to arriving at an answer to this question.
We might try looking at the question from the point of view of everyday ethics: people are people, and we should treat them honestly and with respect regardless of who they are. If fairness is good, then we should promote fairness in commercial transactions, just as we do in other areas of life. And that requires that buyer and seller at least see each other as equals. They don’t have to adopt a cooperative stance, but neither should they be adversarial.
We could instead take an economic approach. From an economic point of view, the interaction between buyer and seller is best understood as a ‘mixed motive’ game. In other words, it’s a game in which the players’ respective rankings of possible outcomes partly coincide and partly diverge. Both players would rather do a deal than not do a deal, but they disagree over what the best deal would be. If you’re in such a game, you should adopt an attitude that is neither fully cooperative nor fully adversarial. Unless, of course, displaying one of those attitudes moves the deal in your direction.
Third, we might think about this from the point of view of social conventions. It may well be that in certain cultures it is traditional (and perhaps widely accepted) that buyers and sellers treat each other as adversaries. And perhaps in certain other cultures it is traditional (and expected) that buyers and sellers will treat each other in a more convivial way. There are likely even individual industries typified by one or the other of those conventions. Doctors, for instance, are trained (and incentivized) to adopt a collaborative approach to their patients. Some stock brokers have notoriously adopted an adversarial approach to their clients.
Finally, we might think of this question from the point of view of corporate strategy. In other words, whether you think of your customers as friends or enemies — whether you adopt a collaborative or instead competitive attitude to them — might be a question of what kind of company you want to be. Some companies thrive on aggressive sales tactics; others thrive on a softer, more relationship-driven approach. Seen from this point of view, there’s no single, general answer to the question. Each firm needs to answer it for itself.
Regardless of how you frame the question, and regardless of the answer you arrive at, the attitude your company adopts towards customers is bound to become well known, especially in an era in which reputation spreads via Facebook and Twitter. Seller beware!
Canada’s Big 3 Telecoms’ Opposition to Verizon? Unseemly!
The Big 3’s opposition to Verizon’s entry into the Canadian market is unseemly, like a baseball manager kicking dirt at an umpire. It may not literally be against the rules of the game, but it undermines that game’s implicit values.
Canada’s telecom giants are actively opposing the entry of American communications giant Verizon into the Canadian market. In a series of interviews and full-page ads, Bell, Rogers, and Telus have been arguing that regulators should move to prevent Verizon’s entry into the Canadian market, a move the company aims to make via its acquisition of Canadian upstart Wind Mobile. The move will give Verizon access to Canadian spectrum at preferential rates that were established to encourage small companies to enter the field. And the Big 3 don’t like it one bit.
(Interesting timing: coincidental with the announcement that Verizon, an American firm, was seeking to entry to Canada, HBC, a Canadian firm, announced that it had bought American retail icon Saks and thereby gain a foothold in the US retail market. I’m not sure Americans even noticed, let alone did they complain.)
Such opposition is, of course, understandable. Managers at Bell, Rogers, and Telus have turf to protect, and they understand their role as being to maximize return for their respective shareholders. And to be sure, advocacy — including lobbying — is a proper part of that role. But there are limits. Even those of us who understand the essential role of the profit motive in making our markets work will recognize the need to put limits on profit-seeking behaviours. Less obvious is just where to draw the line, ethically.
One important strain of thought on the topic, grounded in the work of University of Toronto philosopher Joseph Heath and others, says that managers should use as their ethical touchstone their implicit commitment to the values that underpin market efficiency. Key among those values is a commitment to encouraging competition. A true capitalist, this line of reasoning goes, wants to make a profit by beating the competition — by providing better service at a better price — rather than by reducing competition.
It’s worth pointing out that the debate here is already being framed in terms of ethics: the Big 3 claim it is unfair to allow Verizon in on what it considers favoured terms. Their critics, of course, will say that the preferential treatment that Verizon will gain at an upcoming auction of spectrum, through its acquisition of Wind, is being offered precisely on fairness grounds: barriers to entry are huge in mobile telecom, and making spectrum more affordable helps level the playing field. There are decent arguments on both sides, both rooted in an appeal to the ethical value of fairness.
The ‘market values’ argument cuts through the apparent ethical impasse, here. Managers at Bell, Rogers, and Telus are not just anyone: they are participants in a socially-important game called “the market.” In the market, we allow a certain amount of rough play, including behaviours what would generally be thought improper in polite society. Corporate managers can (indeed, should) fire under-performing employees, even if that dashes employees’ dreams. And they should innovate and strive for efficiency, even if that puts competitors out of business. But one of the things they can’t do, ethically, is seek to limit market competition.
To be sure, it’s a rule that is more honoured in the breach than in the observance. Much of modern management practice is aimed at finding niches where companies can operate with minimal competition. So it’s not surprising that managers at the Big 3 are desperate to keep Verizon out of the pool. But they need to recognize that, in doing so, they don’t have an ethical leg to stand on.
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Related reading:
- “Moving Beyond Market Failure: When the Failure is Government’s” by Peter Jaworski
- “Market Failure or Government Failure? A Response to Jaworski” by Joseph Heath
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.
NHL Lockout and the Ethics of Labour Disputes
Filed under: accountability, adversarial ethics, capitalism, compensation, justice, sports, stakeholders, unions, wages |
Comments (4) When the rich and powerful butt heads, are they obligated to look out for the little guy?
The NHL lockout may be over, but its impact is far from forgotten. Or even clear. And the impact goes far beyond the loss of income to the NHL, its member teams and its players.
The end of the dispute may mean little to the economy as a whole, but to one portion of the economy — the portion that depends for its livelihood on the actual playing of hockey games — it means everything. The economic loss to Canada as a whole as a result of the loss of half a season of hockey may amount to less than 0.05 per cent of GDP, but the impact was felt disproportionately by the thousands of businesses and individuals that depend for their livelihood on the NHL and its players. For every Sidney Crosby or Daniel Alfredsson making millions on the ice, there is an entire ecosystem of managers, announcers, hotdog vendors, and Zamboni drivers who only have jobs because hockey is being played.
The lockout resulted, in other words, in a lot of so-called ‘collateral damage.’ Some teams had to lay off staff (in some cases, that meant hundreds of employees per team) and many businesses — from sports bars to the guy selling hotdogs outside the arena — saw business dip or even bottom out entirely.
Of course, this is true in almost any labour dispute. When auto assembly-line workers go on strike, workers at companies that manufacture parts for those assembly lines may see hard times as a result. But as many have pointed out, the dispute between the NHLPA and the NHL was a dispute between millionaires and billionaires, which gives the whole thing a distinctly different feel.
Whether the 113-day dispute was worthwhile to either the players or the league — whether either side gained more than it lost — is for them to decide. The relevant ethics question, here, is what part the financial fate of these innocent bystanders should have played in the decision making of the two parties to this dispute, namely the NHL and the National Hockey League Players’ Association (NHLPA). Should the league and players have felt any obligation to end the dispute early, in order to limit financial collateral damage?
It is tempting to cast this question as a matter of what economists call ‘externalities.’ Externalities are the effects that an economic transaction has on non-consenting bystanders. Pollution and noise are standard examples. And both economic theory and ethical theory agree that externalities are a bad thing. It is typically both inefficient and unfair if significant costs are foisted on innocent bystanders.
But economic theory, at least, doesn’t typically count the income effects of competitive behaviour as “real” externalities. If I outbid you in an auction, your interests have been harmed but not in a way that results in either economic inefficiency or real injustice. If I invent a better mousetrap and put makers of lesser products out of business, the result is ‘frictional’ unemployment but also long-term social gain. And during a labour dispute, money not being spent on hockey-arena hotdogs or Zamboni-driver wages are surely being spent on something else: one man’s loss is another’s gain.
But while not technically unfair, the outcome for bystanders is certainly unfortunate, a bad thing by almost any measure even if not the result of wrongful behaviour. And when the dispute at hand is between millionaires and billionaires, it’s worth asking at least whether the rich don’t have some duty, some social obligation, to take better care of those less fortunate.
Once upon a time, the rich and powerful cleaved to the notion of ‘noblesse oblige,’ the idea that with wealth and power come responsibility. Of course, even if the team owners and the players took such social obligations seriously, that doesn’t necessarily mean the dispute would have ended earlier. An obligation to look out for the little guy doesn’t mean an obligation to throw in the towel. But the notion of social responsibility, not to say humility, might well have done something to reduce the length, and impact, of what many regard to have been a pointless conflict in the first place.
Lance Armstrong and the Ethics of Competition
Filed under: adversarial ethics, compliance, corruption, excuses, scandal, sports, white collar crime |
Leave a comment On Wednesday, The United States Anti-Doping Agency (USADA) released a small mountain’s worth of evidence against champion cyclist Lance Armstrong. Not surprisingly, comparisons to corruption in the world of business were not far behind. On Twitter, a number of wags referred to Armstrong as the “Bernie Madoff of cycling,” or variants on that.
The comparison with Madoff is unsurprising. In both cases, you have wrongdoing of impressive scope. In both cases, the wrongdoing was truly brazen, going on right under the noses of regulators. In both cases, you can’t escape the feeling that someone should have been able to figure it all out sooner. And in both cases, you see the eventual fall of a man who was a hero to many.
But the comparison is also off-target in important ways.
For one thing, the USADA’s account of things suggest that Armstrong was not just a cheat, but a ringleader. While others may have been complicit in Madoff’s scheme, there’s no suggestion that he engaged in organized, cynical bullying to push others into wrongdoing the way Armstrong apparently did. Armstrong is accused of having used his position of leadership to coerce others into cheating too.
The bigger difference, though, has to do with differences in the nature of the competitive contexts in which Armstrong and Madoff were each embroiled. Madoff was a stockbroker and investment advisor. It is a job in which an honest person can find success. For all the talk of Wall Street being a place where crooks thrive, there’s no indication that an investment advisor has to be a crook just to survive or to do his or her job effectively. And even if it were the case that cooking the books was somehow normal, something “everyone was doing,” that fact would do absolutely nothing to justify Madoff’s ponzi scheme. It’s not something that, in any sense, Madoff had to do.
Armstrong, on the other hand, was a cyclist competing at elite levels, during an era in which, by all accounts, doping was absolutely rampant. And in such a setting, it does at least arguably matter that “everybody does it.” It is an unfortunate fact that in the world Armstrong competed in, for every individual cyclist doping was a necessary evil, a way of keeping the playing field level. Any cyclist not engaging in doping was effectively relegating himself to the back of the pack. That’s not an excuse, but it’s an accurate description of the facts of the case.
So doping was, in a sense, non-optional for the elite cyclist trying to do his job properly, because after all his job is to try to win. And during the era in question, doping was apparently “allowed” under the unwritten rules of the cycling game. It was embedded in the social norms of the relevant group. It was, in other words, a collective problem. Regrettable, to be sure, but the sort of problem that is devilishly hard to solve, and against which individual integrity is absolutely impotent to solve it.
In this sense, doping is much more like bribery than like a ponzi scheme. Where bribery is rampant, it may literally be true that a company cannot compete without engaging in that kind of corrupt behaviour. But bribery, like doping, is an arms race that no one can be sure of winning. And the damage it does is significant. Like doping, it exposes competitors to all sorts of dangers. And when such behaviour is exposed — as in the case of Walmart Mexico earlier this year — the result is not just scandal, but a loss of confidence in the integrity of the game itself.
The Ethics of Changing the Rules of the Game
Filed under: adversarial ethics, competition, entertainment, regulations, sports |
Comments (1) 
We all agree on the need to play by the rules of the game. But what do we do when the rules need changing? Under what circumstances should the rules be changed? What should the process be? What are the rules of the game with regard to changing the rules of the game?
These kinds of questions arise in any competitive, rule-governed domain, whether organized sport or politics or the world of business. In sport, the rules in question are the ones established by various leagues. In politics, the rules are legislative and sometimes constitutional. In business, the rules in question are the ones established by government regulators.
Last week, McGill philosopher Daniel Weinstock gave a talk on this topic, in a Business Ethics Speakers’ series that I host at the Ted Rogers School of Management. His talk was called, “Should business dictate the business of rule change in sport?” He was taking aim at the suspicion on the part of many sports fans that rule changes are sometimes effected by for-profit professional leagues for mere financial reasons that have nothing to do with the spirit of the game.
Along the way, Weinstock suggested that if you look at the patterns of rule changes in professional sport, you see that there are basically four kinds of reasons given to justify such changes. They are:
1) Increasing safety;
2) Closing loopholes in existing rules;
3) Increasing entertainment value of the game;
4) Improving the precision of adjudication by referees.
Sports fans will find it easy to think of examples of rules being changed by various professional leagues for just the reasons cited. But Weinstock’s framework can also be applied usefully to the broader question of how and when rules are changed in rule-governed domains more generally.
Weinstock’s first category is easy to apply to business: there are plenty of occupational health and safety regulations and consumer protection legislation that fall under this heading. Rule changes that fit the second category — loopholes — are also plentiful. The third category, entertainment, seems out of place at first glance. But think of it this way: Weinstock is basically referring to rule changes that are aimed at keeping the game productive, making sure it continues to produce the ‘good’ it is intended to produce. Seen this way, any regulatory change intended to promote efficiency or competition fits something akin to Weinstock’s third category.
Finally, there’s the fourth category, which has to do with improving the accuracy of referees. In regulatory terms, this includes rule changes that make it easier for regulators to do their jobs, including record-keeping and disclosure requirements of all kinds.
Are these the only valid reasons for effecting regulatory changes in the world of business? Probably not. But using something like Weinstock’s framework as a lens gives us a good start at making sense of the overall pattern of regulatory requirements to which business is subject. Not all rules are good ones, but neither are they arbitrary. Seeing the patterns is the first step towards sorting the good from the bad.
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.
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.
Hockey’s Ken Dryden on Business Ethics
OK, so hockey legend Ken Dryden’s recent editorial, “The anatomy of three hits”, technically wasn’t about business ethics, but about the ethics of that business known as “hockey.” But you could essentially take the entire essay, substitute suitable examples from the history of business ethics, and the fundamental lessons would be the same.
Dryden’s basic point is about the nature of adversarial contexts. Hockey, like commerce, is a fundamentally adversarial context that also happens to be socially beneficial. That is, the rest of society benefits from the fact that both hockey players and business executives regard the other team as “the enemy,” and try their best to outdo them. Try, that is, within certain limits.
The hockey player, you see, is, like the business executive, subject to a strong duty of loyalty. The hockey player has a duty of loyalty to his team. The executive has a duty of loyalty to the corporation. But in both cases loyalty has its limits. Even the toughest of hockey’s tough guys know that.
These few sentences of Dryden’s, about tough-but-fair hockey players, sum up everything you need to know about the honourable business executive:
Players commit themselves to their teammates and to their teams. It’s what they love about their teammates, and what their teammates love about them. It’s what the fans love about them too. If these players are asked to do more, they will do more. Yet something keeps them from committing to what they shouldn’t commit.
That “something” is this: an understanding that despite the adversarial context in which they play, they are still human beings, as are their opponents.
Or at least, says Dryden, that’s how things generally have been in the world of professional hockey. But there are worrisome signs, of late, that the frequency and severity of dirty hits is ramping up. Here, the analogy continues: many people believe that bad behaviour in business is on the rise. Is there a role for enforcement here, to push behaviour back into line? Sure, says Dryden, but such external incentives can only go so far. What’s essential, then, both in hockey and in business, is that the players understand, and internalize, a basic respect for each other, and for the game.
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