The 4th of Gandhi’s Seven Social Sins: Commerce without Morality.

Several years ago, a movie was made called “The Corporation.”   It is a documentary film written by Joel Bakan, and directed by Mark Achbar and Jennifer Abbott. The film examines the modern-day corporation.   It considers its legal status as a class of person and evaluates its behavior towards society and the world at large as a psychiatrist might evaluate an ordinary person. The films thesis is explored through numerous examples and interviews.  Bakan wrote the book, “The Corporation: The Pathological Pursuit of Profit and Power,” during the filming of the documentary.  I highly recommend this film.  I have shown it in many of my classes and used numerous excerpts from the film to illustrate key points about corporate behavior and the history of the corporate concept.  If you are interested in watching the film, you can do so on YouTube at:  http://www.youtube.com/watch?v=Y888wVY5hzw

Most people do not realize it but the modern corporation and rules governing its behavior were not developed until the middle of the 19th century.  True, there were charters and rules governing businesses since the middle ages, but corporate law as we know it today is only about 150 or so years old.  The main point of the film is that despite not being human beings, corporations, as far as the law is concerned, have many of the same rights and responsibilities as people do.  Corporations can exercise human rights against individuals and the state,and they can themselves be responsible for human rights violations. 

However, while people have hearts, emotions, feelings and consciences, corporations do not.  While human behavior and codes of conduct have been developing since the Stone Age, the codes of conduct for corporations are practically non-existent.  Witness how Enron subverted their entire ethics process to allow the company to pursue almost unlimited degrees of immoral and unethical behavior.  In most corporations, the ethics statements are followed only when convenient and never if they conflict with the prime directive: “Make Money.”   Business schools may teach one class on ethics but seldom do students come away with any true sense that there must be an underlying morality to commerce.  Most students yawn their way through ethics since experience has already shown them that business ethics are expendable.  Noted economist Milton Friedman is famous for his criticism of business ethics and social responsibility for corporations.  According to Christine Travis, Friedman makes two key points in favor of his theory.  The first is that there is no uncontroversial morality.   Business owners are not ethicists and thus are not equipped to make ethical decisions.  Secondly, Friedman argues that maximizing long term self-interests will actually bring out the greater good.  (See Travis’s paper Philosophy: Summary and Explanation of Milton Friedman’s Stockholder Theory” for more depth on Friedman’s perspective.)

It is easy to see that Friedman’s theory has nuances which are valid but that there are gaps in his reasoning that allow too wide latitude of behavior.   If we argue that entrepreneurs, managers and business owners are not ethicists, we may as well allow that most people are not ethicists.  True, there is wide interpretation of what is moral and what is immoral but the same can be said for any system of morality and standards. Nevertheless, we would not want our children to grow up believing that because they were not ethicists they could discard any standards of behavior.  The proof of any theory may be in the pudding.  In this case, we can see the results of 100 years of corporate behavior and I suspect that the results do not portray business people in a very favorable light.  In fact, in terms of most admired and least admired professions, business people usually find themselves ranked among the “sleaziest professions.

20 Sleaziest Ways To Make a Living (http://scientificmarketingandadvertising.com/marketing-articles-least-admired-professions.html)

  1. Drug Dealer (0.61)
  2. Crime Boss (0.99)
  3. TV Evangelist (1.19)
  4. Prostitute (1.24)
  5. Street Peddler (1.45)
  6. Local Politician (1.52)
  7. Congressman (1.58)
  8. Car Salesman (1.59)
  9. Rock Star (1.72)
  10. Insurance Salesman (1.76)
  11. Union Leader (1.89)
  12. Wall Street Executive (1.92)
  13. Real Estate Agent (1.92)
  14. TV Executive (1.94)
  15. Oil Company Executive (1.94)
  16. Lawyer (1.97)
  17. Soap Opera Star (2.00)
  18. Movie Star (2.00)
  19. Broker (2.00)
  20. Prison Guard (2.02)

Real Estate Agent, Wall Street Executive, TV Executive and Oil Company Executive all rank in the list of twenty least admired professions.   If you go to the link above you can also find the 20 most admired professions. There is not one business occupation in the list of 20 most admired.  The article that this list is drawn from explores the question of “What can we learn from this list?”  The answers seems to support the thesis developed by Bakan that businesses do not have an incentive for morality and thus giving them “rights” as human beings poses a threat to our society. 

Let’s take a second to see what the Gandhi Institute says about Commerce without Morality: 

As in wealth without work we indulge in commerce without morality to make more money by any means possible. Price gouging, palming off inferior products, cheating and making false claims are a few of the obvious ways in which we indulge in commerce without morality. There are also thousands of other ways in which we do immoral or unethical business. When profit-making becomes the most important aspect of business, morals and ethics usually go overboard. We cut benefits and even salaries of employees. If possible we employ “slave” labor, like the sweat shops and migrant farm workers in New York and California where workers are thoroughly exploited. Profit supersedes the needs of people. When business is unable to deal with labor it begins to mechanize. Mechanization, it is claimed, increases efficiency, but in reality it is instituted simply to make more money. Alternate jobs may be created for a few. Others will fall by the wayside and languish. Who cares? People don’t matter, profits do. In more sophisticated language what we are really saying is that those who cannot keep up with the technological changes and exigencies of the times do not deserve to live–a concept on which Hitler built the Nazi Party. If society does not care for such people, can we blame them if they become criminals?

One of the key points that I glean from the Gandhi Institute is that Gandhi was against “Profit superseding the needs of people.”  Friedman would argue from the enlightened self-interest perspective that they are the same.  If the corporation takes care of profit, it takes care of people by creating jobs and value for the society.  The proof of value creation is evidenced by the fact that only corporations that make a profit survive.  People are free to choose where and what they spend their money on.  Thus if they support Corporation X over Corporation Y, it is because they perceive more value for their money in doing so.  This argument would have more merit if people had access to perfect information and were perfectly rationale.  However, since people are often deceived and given erroneous information and since Madison Avenue has built up numerous ways to convince people to spend money against their best interests, Friedman’s argument is perpetually, inevitable and indubitably doomed to failure. 

The primary force that protects human existence and all of humankind has been and always will be moral behavior. No amount of police, regulations, lawyers, prisons or inspectors will ever be enough to replace the moral force of human conscience and caring for other human beings.  Corporations have no incentives or mechanism to be kind to anyone unless it somehow provides a path to increased profits.  On the numerous occasions when this is not possible, profit trumps concern for employees, concern for the country, concern for the environment and concern the future of humanity.  The proof of what I am saying has been demonstrated time and time again.  You have only to pick up the morning paper to see yet another example of short-term corporate thinking and focus on greed above the well-being of any other factor.

Just to test my own hypothesis, I turned to CNN Money.  What did the headlines show today?  A list of The Top Twenty Most Profitable corporations in the world!  Would it surprise anyone to find that out of the top ten, there were four oil companies?   The price of gas keeps going up, but our dependency on the gasoline engine driven by the greed of the oil companies insures that there is still a steady stream of profits to the largest oil companies.  Whose well-being is being served by the outlandish incentives that continue to drive the oil industry?  Is the oil industry an example of “corporate morality?”  I doubt few would say yes to this question. 

To conclude, Gandhi believes that Commerce without Morality is a sin or social blunder.  I think it has shown itself to be an unmitigated social evil.  Our present laws do not provide an adequate solution to this problem.  A corporation is not a human being and should not be treated as a human being.  It is time we rethink the laws developed in the 19th century to govern corporate behavior.  It is time to put human well-being as the primary directive for all corporations and not the making of profit.  We cannot be blamed for putting the cart before the horse because we have never really attached the horse to the cart.  There is no mandate for a corporation to be either moral or ethical.  Any statements to the contrary are simply straws in the wind. When the accountants look at the ledgers, profit trumps every other card in the corporation.   Can you imagine if we simply judged people by the same standard?  Those people who made the most money were rated as the most well-adjusted and socially responsible people.  Is this what we want our culture and society to be remembered for?  Simply how much money we made!  I think our Founding Fathers would roll over in their graves at the thought. 

Ok, time for questions:

Do you think the Oil Industry is guided by a set of moral or ethical codes? Should it be?  Do you think corporations have an incentive for ethical behavior?  If so, I would love to hear your comments on this question either way.  Do you think we can change our corporate law to make them more responsible? Should we?  Why or why not?  Would you want the caption on your grave stone “I made a lot of money?”

Life is just beginning.

 

1 Comment (+add yours?)

  1. Guy
    Mar 06, 2014 @ 13:50:16

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    Reply

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