Economics: North America & EU: Stewardship ethics for business today

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"Can profits and ethics coexist?," that's the question Rushworth Kidder
poses in reviewing a new book on business economics understood as an ethical discipline in the daily practice / vocation of businesspeople Christian Science Monitor (Jul 18,2k6). Profit with Honor: The New Stage of Market Capitalism by Daniel Yankelovich (Yale University Press; 189 pp., $24).

Today, says Yankelovich, a "third wave of mistrust of business and other institutions," following two earlier waves around the time of the Great Depression and again in the late 1960s, is upon us at least in North America.

Yankelovich argues that the current mistrust, while fed by scandals at Enron, Tyco, WorldCom, and elsewhere, springs from a convergence of three deeper trends:

• The deregulation of the 1980s and 1990s that "transformed the gatekeepers - the accounting firms, the investment bankers, the business law firms, the regulatory agencies - into enablers." • The excesses of CEO pay, which tied it to "the vagaries of the stock market" and "sorely tempted" CEOs to "take questionable shortcuts, or even cheat." • The importing into business of bad cultural norms that include winning at all costs and gaming the system.

Fighting such trends with laws and compliance structures isn't enough. "If you want positive results," he writes, "you need to give people a positive basis for trust and respect and an ethical vision to live by, not merely severe punishment for misdeeds."

R+t now, I'd bet you're thinking what I'm thinking and it turns out I'm thinking what reviewer Kidder is thinking: "But how?"

Principium Consumers Hub

Recently a reformational philosopher-economist wrote on Thinknet out of the Dooyweerd Centre at Redeemer University that he had a certain unease with outfits like Live 8, Make Poverty History and the Micah Challenge. They're good on making demands of govts, but they don't do any concrete work of a business kind, a business kind that is different from the prevailing kind's so as to show a model and offer a vocation to young people who want to create enterprises that can produce good things and services differently, without excess of profits but with stable return on investment and gifts. Yes, I would argue that such a real alternative way of enterprizing would merit not only investments but also gifts from those who weren't looking for a return but a place to put accumulated capital to work that wouldn't be pissed down the down the drain of CEO mammoth salaries and bonuses, prestige advertizing campaigns that notified no potential customer of a good product ready for purchase, bad products like (where shall I start) luxury autos and gas-guzzlers at that.

Unlike many laments about corporate malfeasance that are awash with diagnoses but scant on prescriptions, this book steers directly toward a concept that Yankelovich describes as "stewardship ethics." He sees it as "a new stage of enlightened self-interest" that brings social norms together with business imperatives, focuses on community, and "emphasizes the conscious effort required to reconcile profitability with social good."

Yankelovich locates his concept between two popular but (in his view) flawed theories about business ethics. One is a laissez-faire approach that assumes "all reasonably honest ways of making profit somehow serve the public good" with no additional ethical imperatives required. The other is a corporate social responsibility approach. Arising from the nonprofit sector, this theory finds profitmaking suspect, and seeks to burden business with the correction of social ills unrelated to its core objectives.

This brings us to the core issue of practicality in the Yankelovich program. And for the reviewer as for the book's author, that brings us to today's captains of business:

Will hard-driving executives buy into stewardship ethics? Here he draws two strong arguments from his own work over the years.

The first concerns executive pay. He divides compensation into two pieces: "the wealth needed to provide a CEO with financial security and a high-status lifestyle, and the wealth desired mainly for scorekeeping purposes ('my bonus is bigger than yours')." His own research has convinced him that baby boomers - who make up the bulk of today's CEOs - desire more than money. He finds them "hungry for recognition and for the conviction that they are leaving a valued legacy for the future." If that hunger can replace the "scorekeeping" part of executive compensation - and Yankelovich thinks it can - then stewardship ethics may well be attractive to the CEO.

The second argument concerns our culture's broad social norms. "The good news is that the larger culture is ready for less self-centered, more-communal-minded values," he writes.

My own interest is not so much in today's top-of-the-heap executives. Were I interested in the older sets, I'd be more curious about the various hardcore evangelical and pentecostal business networks, faith&business movements, mostly Christian I've been presumming, but also with some Judaic voices like that of Orthodox Rabbi Daniel Lapin (who had connections with Jack Abramoff, a fellow Orthodox Jew, for whom Lapin's teachings didn't seem to do much good - just as the Christian execs at Enron and World.com didn't get much good out of the likes of Business Reforme magazine and ChristianBusiness.net -- the latter being BR's rebrand these days (a name which of course can be shed as soon as scandal hits the outfit). I see a lot of Evangelicalism, a lot of Pentecostalism, and a lot of Judaic Orthodoxy in these sources - but very little of a renewing vision for the inner reformation of business structures, organizations, institutions, companies, firms, corporations, etc. Just the same old same-old, with a lot of gooey religiosity jazz. Too bad. We need a global movement of business for human good, and not the self-interest of owners, investors, employers, employees and their families only. How to satisfy the needs and drive to succeed which ferments, and could do so, in all these busienss-involved people (that could be each one of us) and at the same time build up a different pattern of doing business in the world that powerfully trend it toward the well-being of a starving population, unskilled, homeless, migrant - in so many places.

To get more local: It's this phenom that presses America's borders. It's this phenom that shouts out for investment in good business in Mexico, that leaves wages, salaries and capital remaining in Mexico to provide rise-out-of-poverty jobs there, to build an economy from which all there will benefit.

I have to be careful I don't let utopian rhetoric run away with my vision-talk; because I want a practical, workable, step-at-a-time vision that will become articulate in economic challenges to young people who will study and act entrepreneurially for a new way of making a God-blessed dollar, of benefit to the whole society, at home and abroad, locally and globally. At the same time, I have no illusion that hunger, displacement, strife rising in poverty are the fate of the world for at least a long time to come. The problems are vastly structural, and the demographic realities of populations exanding without any hope of secular relief from childhood to old age are far too real.

In the hands of a less trusted author, either argument would require at least a chapter of charts, graphs, and quotations. Who but Dan Yankelovich can talk so briefly about baby-boomer longings or civil-society norms - and be so readily believed? If you hunger for scholarly detail, "Profit with Honor" may not satisfy you. But if you suspect that what's most needed today is a new vision for corporate ethics, this book makes perfect sense.

-- Politicarp