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P H I L O S O P H Y F O R B U S I N E S S ISSN 2043-0736
http://klempner.freeshell.org/businesspathways/
Issue number 25
6th January 2006
CONTENTS
I. 'The Cry for Ethical Leadership' by Nathan Harter
II. 'A Revised view of Junk Morality' by Andre Vieira
III. 'The Business of Holding or Folding: or, How to Run a Successful
Enterprise' by Michael Levy
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EDITOR'S NOTE
In business ethics, 'ethical codes' are seen as the answer to all conflicts of
duty. The problem is, no-one can agree what these codes should be. This problem
effects not only business but society at large. Nathan Harter argues that the
very idea of seeking ethical leadership in any ideal or theory or individual is
misconceived. We have to acknowledge that 'it is our destiny to live within a
tension, among contradictory values, on our way toward an uncertain future.'
In the last issue of Philosophy for Business, Peter Raabe argued that it is
immoral for corporation to manufacture and sell inferior quality merchandise.
The problem, as Andre Vieira points out, is that a corporation as a legal
entity has no goal other than to maximise shareholder value. The solution can
only come through pressure from non-government organizations and customers
themselves, by making the price in profit and loss terms of ignoring customers
interests sufficiently high.
Entrepreneurs are prone to the ever-present risk of overreaching themselves.
Michael Levy offers some deceptively simple and homely advice which would save
many a business venture from disaster. The emotions of fear and greed are the
chief culprits, while self-control and fair dealing are the ultimate keys to
business success.
Geoffrey Klempner
-=-
I. 'THE CRY FOR ETHICAL LEADERSHIP' BY NATHAN HARTER
A. Our predicament
The cry for ethical leadership is a response to the perception that something
is wrong. People have no reason to cry out when everything is fine. Even when
something is wrong, people have no reason to cry out when a remedy lies close
at hand. You call for a band-aid only when you have none in your hand. The cry
for ethical leadership is evidence that many of us sense that something is
wrong, yet we do not know what to do.
This experience sends us in search of answers, which in this case reveals that
we have plenty to choose from. It will not be necessary to invent ethical
leadership ex nihilo. Our predicament is different. We uncover too many
answers, too many different ways to respond. How do we know which answer is the
best: Judeo-Christian, Moslem, Hindu, Deontological, Utilitarian? Even if we are
not personally bewildered by the choices and know perfectly well what to
believe, we also know that other people make different choices. Some of these
choices are incompatible with our own. We live in a pluralistic society, where
reasonable people disagree. What are we to do about the apparent lack of a
shared authority on such questions? That would seem to be the threshold
question.
We live in a pluralistic society at a time when our differences are magnified
by the access we have by means of travel and the media. We are not isolated.
Organizations operate in a global environment and straddle cultures. We have
become aware of multiple religious traditions, even if our knowledge is
superficial. We know, for example, that Christians are divided among themselves
on many issues of the day. We are increasingly cautioned not to think of Islam
as a monolith, as though all devout Moslems endorse the practice of Moslem
terrorists. And for centuries, philosophers have conducted a search for one,
universal, non-sectarian ethic, though in vain. As a result of these pressures,
we all turn in different directions.
Where do people look? One finds already plenty of books on ethics. That is not
the problem. There are trainers and gurus. More and more schools are adopting
character-building curricula, partly in response to the perception of parents
that it would be better to teach their children at home, away from the
relativistic values of public education and away from the kids who would
corrupt them or shoot them outright in the classroom. Churches still offer
Sunday School. The persons and institutions we look to for moral authority,
however, cannot agree among themselves. We have tried religion, education, and
government. For about a hundred years, we relied on psychologists, represented
lately by televised talk show therapists.
In this ethical disarray, upsetting as it is, we also suspect that a number of
people are using the confusion as cover to do wrong and, when confronted,
justify their behavior. Unscrupulous people frequently take advantage of
confusion. Making the situation worse, as everyone knows, are the persons with
moral authority who let us down, who betray our trust. We hear stories about
crooked televangelists, radical college professors, slimy politicians, and
shoddy journalists. We get thrown back, in other words, away from the notion
there is such a thing as a moral authority. We tend to give up on ever finding
the one person or the one institution that can answer the problem that prompted
us to cry for ethical leadership in the first place. Nonetheless, we do cry out
for someone to step forward.
The cry for ethical leadership sounds like a cry of wounded faith. We are
uncertain now. We are tempted to despair. There are too many theories and not
enough living models. All leaders are flawed. We become skeptical at the very
time we are most desperate. Perhaps the cry for ethical leadership is not the
beginning of a search for answers. Maybe it is the last yelp before completely
giving up, the sound idealism makes when it has been punctured.
If the foregoing section adequately describes the predicament, then what are
our options? We could urge once again a familiar code, in the teeth of existing
pluralism. We can continue to seek a new code that everybody will like. Or we
can simply give up and quit looking for answers. This paper suggests an
alternative way of thinking about the problem altogether.
B. Three exemplary scholars
In order to give credit where credit is due, this paper relies on the work of
three exemplary scholars -- philosophers who witnessed some of the twentieth
century's most egregious lapses into unethical behavior. Isaiah Berlin had a
lifelong interest in the deadening work of the Soviet Union back in the land of
his birth, in Russia. Out of Austria, Eric Voegelin fled the Gestapo after
writing critiques of its racism. And Jan Patocka, a Czech dissident, died
during interrogation conducted by the communist regime. In each case,
separately from one another (so far as we know), these philosophers asked most
urgently the same question about our predicament that we have raised in this
paper, and in each case they came to a similar answer. Each of them suggested
an alternative way of thinking about the problem.
1. Isaiah Berlin argued repeatedly for a position we can refer to as ethical
pluralism, which holds that ultimate values (or human goods) are not only
diverse, but incompatible, contradictory, incomparable, and incommensurable.
The ideal of harmonizing them completely is incoherent. Not only do
circumstances make it difficult, if not impossible, to achieve all of our
desired ends, such as freedom and equality, but these are conceptually
incompatible. No matter what we do, no matter how fortuitous our circumstances,
we cannot meet all of our aspirations, because to the extent we satisfy one, we
often frustrate another. Thus, it is no wonder we have been unable to find a
leader who will do it all and somehow unify us in a completely ethical
organization, because such a thing is simply inconceivable. We are asking for
something that makes no sense.
Having said this, Berlin also believed that people need to believe that they
could harmonize their lives -- their private lives as well as their public
lives -- so that it might be possible to make right decisions. It is important
to feel this way. Alas, in the words of Ronald Dworkin, "we know that
nothing... we do is right because, whatever we do, we do something wrong."
(2001, p. 81) That is just the way it is. Nevertheless, we should probably try
to avoid desperation and extremes of suffering. The way to do that is to reject
noble abstractions such as justice and progress in whose name the worst violence
has been justified. We have a tendency, in order to harmonize our lives, to pick
some abstraction as the overarching principle for all else, so that as we
encounter the inevitable conflicts inherent in reality, we resort to violence
through some misbegotten desire to champion something, rather than nothing. We
become fanatics, with a fanaticism redolent of desperation.
It follows that an ethical leader would be less a swashbuckling hero in defense
of good ethics (whatever that is) than he or she would be a sober realist, open
to compromise and endless improvisation.
2. Eric Voegelin made a similar argument, which is that the cry for ethical
leadership originates from the experience of disorder. We want order to be
restored. This is perfectly reasonable. Good hearted people can go wrong,
however, when they conclude that the restoration of order is somehow up to them
-- all they require is the right proposition, plan, or ethical theory. They go
in search of the one universal, indisputable basis for action. They try to
escape the tension of their existence, along with all of the messiness that
implies, when in fact their tension is inescapable. The search for a solution
can be thought of as an evasion of reality.
Does this mean that Voegelin was a relativist (or worse)? After decades of
exhaustive research, he concluded that all communities engage in something he
called a search for the ground of existence. It is the search that is constant.
People represent their findings with symbols of all types, from obelisks to
tracts of philosophy, none of which adequately captures the divine ground of
existence. Over and over, human beings have sought the divine ground of
existence, and once they settle on a representation, they close themselves from
the search, believing they have figured it all out. They haven't.
Now, just because we can never completely capture the divine ground in our
symbolizations, this is no proof that it does not exist. We must simply remain
open to it. Seen in this light, the cry for ethical leadership tells us that
our current symbolizations do not work. We are not satisfied with our
characterizations. We know that something is not quite right. This gives us an
opportunity to renew that search for the ground. Only we must beware not to let
our need close around an answer that, in the words of Voegelin, "relegates all
previous truth to the status of pseudos, of lie." (1990, p. 125)
At one point, Voegelin wrote that "[m]ost of the problems you have to handle
are common sense problems on the pragmatic level within contexts about which
you perfectly well know what pragmatically can be done." (2000, p. 250) At such
times, we probably do not need a leader, ethical or otherwise.
3. Jan Patocka faced a set of problems that were anything but simple, common
sense, or pragmatic. He spoke to a community that felt alienated from its
European identity while at the same time extricating itself from any
affiliation with the Soviet Union. They lived in danger, hoping for something
they expected to find in the West. His students looked to Europe with chagrin.
They found either inflexible dogma, replete with petty absolutes, or widespread
relativism, if not complete indifference to questions of ethics. Did they really
want to reclaim their European heritage if it results in that stark choice?
The old professor assured them that the authentic position of the West had
become muddled. What they saw were people with a shattered faith, either
desolate and demoralized or clinging to whatever shards they could retrieve.
Patocka took them back behind the crisis to an originating condition, in which
the West enjoyed a sense of meaning. As with Voegelin, he asserted that meaning
is present only in the search. His students were to regard meaning as a way, not
a destination, and by doing so, they would be prepared for the likely moment
when their faith will be shaken -- shaken by logic, shaken by circumstance,
shaken by fear. It is our glory to live without certainty and still make our
way through life.
Patocka noted that words -- and systems built of words -- tend to substitute
for thinking. Words and their systems congeal in the mind, as fixed beliefs,
yet experience tells us that life moves, changes, develops, and shifts. We are
creatures en route. At any given moment, we occupy a particular standpoint, a
perspective, not a final or comprehending point of view. We might have words
for what we mean, but words are placeholders, abstractions without sufficient
content, mysteries. Experience discloses that we must resume the search, pick
up our bags and go.
Are we reduced to blind wandering, without direction? No wonder we seek ethical
leaders to point the way. But that is precisely the problem, according to
Patocka, because the way to move is to gather up the strands of one's life --
one's passions, memories, appetites, and insights -- and bind them into a
single thing, namely a purpose. And only you can do that. No other person in
the guise of being an ethical leader can do this for you. That would be
inauthentic. Instead, we are to take responsibility for our lives, disciplining
all of it to some purpose.
You might ask whether Patocka has committed the same mistake he accused us in
the West of making, namely reifying some one thing and fixing it artificially
as our goal. The answer is no. That purpose, whatever it is, comes into focus
over time. It is not a clear, unwavering principle. Rather, it is more of a
direction that through trial and error we come to recognize. We become attuned
more to the method, whether we call it critical thinking, dialectics, or
conversation, because in that way, we grope forward. Each assertion, each
position, each concrete objective is part of an exchange, going back and forth
in response to a changing reality.
To think that one has ended the conversation by having the last word is to quit
caring for the soul, stopping short, truncating a necessary process. The West
had been characterized in the past by the sense that we always need further
reflection, new ideas, wider participation, different perspectives. Marxism had
closed that off. In the 1970's, the West had abandoned this hard road as well,
polarizing into two camps: those who thought they had found the exhaustive
truth and those who did not believe there even was such a thing. Patocka was
trying to convince his students that the best path for them was to recover the
original purpose of the West, and in his life he exhibited what it might mean
to do this, persisting after retirement in his conversation at people's homes
and by a macabre twist coming to his death during interrogation, talking with
his murderous enemies, trying even there to care for the soul.
C. Implications for us
One of the things we can take away from these venerable philosophers is
validation that the cry for ethical leadership is real, it is understandable.
We are justified in noticing that something is not right. We should sense the
predicament. By doing so, we acknowledge our condition. This recognition should
give us anxiety, which is actually a valid response to uncertainty, but it
should also open us to renew the search for the ground of our existence, to
continue the pilgrimage of humanity toward our lives' meaning.
What we have to avoid is an impatient leap to closure, to some kind of
permanent resolution, whether that resolution takes the form of a magic
incantation or some human savior riding in on a white horse. It is our destiny
to live within a tension, among contradictory values, on our way toward an
uncertain future. What we have to do is not find some kind of weapon to compel
the rest of the world to behave. That is the creed of a Robespierre who spoke
of "virtue and its emanation, terror." Rather, we must discern our life's
purpose and pursue it, inviting all we meet to join us. Ethics programs, codes,
training, and practices that interfere with this direction deserve closer
scrutiny.
As we go on our way, we will probably find that we are ourselves ethical
leaders.
BIBLIOGRAPHY
Kohak, E. (1989). Jan Patocka: Philosophy & selected writings. Chicago: The
University of Chicago Press.
Lilla, M., Dworkin, R., & R. Silvers (Ed.). (2001). The legacy of Isaiah
Berlin. New York: NYRB.
Patocka, J. (1996). Heretical essays in the philosophy of history (E. Kohak,
Trans.). Chicago: Open Court.
Patocka, J. (2002). Plato and Europe (P. Lom, Trans.). Stanford: Stanford
University Press.
Tucker, A. (2000). The philosophy and politics of Czech dissidence from Patocka
to Havel [Pitt Series in Russian and East European Studies]. Pittsburgh:
University of Pittsburgh Press.
Voegelin, E. ÒIn search of the ground.Ó In Sandoz, E. (Ed.). (2000). Collected
works (vol. 11; chap. 14). Columbia, MO: University of Missouri Press.
(Original work published 1980)
Voegelin, E. ÒReason: The classic experience.Ó In Sandoz, E. (Ed.). (1990).
Collected works (vol. 12; chap. 10). Baton Rouge: Louisiana State University
Press. (Original work published 1974)
Voegelin, E. ÒOn Hegel.Ó In Sandoz, E. (Ed.). (1990). Collected works (vol. 12;
chap. 8). Baton Rouge: Louisiana State University Press. (Original work
published 1971)
Voegelin, E. ÒEquivalences of experience and symbolization in history.Ó In
Sandoz, E. (Ed.). (1990). Collected works (vol. 12; chap. 5). Baton Rouge:
Louisiana State University Press. (Original work published 1970)
Voegelin, E. (1987). Order and history: In search of order (vol. 5). Baton
Rouge: Louisiana State University Press.
(c) Nathan Harter 2006
Associate Professor
Organizational Leadership
Purdue University
E-mail: nharter@purdue.edu
-=-
II. 'A REVISED VIEW OF JUNK MORALITY' BY ANDRE VIEIRA
Foreword
The following text discusses the essay published in issue 24 of Philosophy of
Business by Peter Raabe. While I much enjoyed reading Dr Raabe's essay on the
'Ethics of manufacturing and selling inferior quality merchandise' I cannot
refrain from expressing my disagreement with the premises of his arguments.
Furthermore the examples used to illustrate are not credible and seem to
disregard a lot of other more credible alternate scenarios.
The Issue of Morality of a Corporation
To talk about corporations as moral entities is not correct, not in the
strictest sense. To start with a corporation has legal status, i.e. it exists
as an entity, at it's moral core are it's values and they are expressed legally
in it's mandate which is to maximize profits, thus increasing shareholder value.
Even though it is not the sexiest of moral values it is its raison d'etre,
without it it would not exist. So a moral company which obeys its legal mandate
has an obligation to create financial value to those that injected capital into
it. The corporation's decisions then are based on the moral scale of
'anticipated earning', and of course 'the difficulty with the corporate entity
is that it has a dynamic that doesn't take into account the concerns of
flesh-and-blood human people who form the world in which it exists'[1].
When we discuss corporations we must keep in mind the alternate reality into
which they make their decisions.
When one applies Dr Raabe's moral principle to a corporation's 'alternate
reality' the premises do not hold, for let us analyse:
When you intentionally say or do something that harms
another person, then you are being immoral.
Peter Raabe 'Junk Morality', Issue 24, Philosophy for
Business
When we analyze this principle with the core moral values of shareholder value
and using the method of calculating 'anticipated earnings' in our decision
making process, we have to adjust the phrase to meet these new set of moral
principles and so we would rewrite the previous quotation for the subject
corporation like the following:
When you intentionally say or do something that harms the
company's shareholder value, then you are being immoral.
And so given its simplistic core values, we substitute for the notion of others
a more self-centered view of reality where all else is externalities, and
convert the concept of harm in the core value into a measurable 'impact on
earnings'. With this simplistic moral framework of the corporation in place we
ask ourselves the following questions in an attempt to test the model for
consistency:
If companies want profits why then do we get good and bad
products, shouldn't they all be good products?
To answer the question we should clarify the concepts behind of good and bad.
We can apply the word 'good' to a product if it is well manufactured, if it has
quality. Quality is a much studied subject that analyses the manufacturing
processes. On the other hand we can also apply this notion of good from a
merely psychological point of view, because consumers like it, they vote for it
by buying the product making it a 'good' product to buy because it is popular.
To try to answer the question left above unanswered I will go back to an issue
raised by Dr Raabe which I find very significant indeed: why do companies
having the choice of making good products, instead create inferior items? To
answer this and in an attempt to inch closer to an answer I would have to say
that there are three things that are relevant to making a quality product:
First is access to quality material. Second is competency
in the craft; as we know not all operations have the same
technical abilities. And third is strategy.
Strategy tells me where the corporation is trying to go with its actions, it
serves as the compass for corporations, it might want to flood the market with
cheap reproductions of a good quality well known product, or endeavour to
create a design piece.
As a good example we can look at the IKEA Corporation where their business
model is to offer the best quality furniture, the best design, for the cheapest
price possible.
To answer my own question: Companies often don't have either the means or the
willingness to present the best possible product. So far we've looked at the
manufacturing end of the equation. Dr Raabe mentioned the 'store in our
neighbourhood that sells items costing less than a dollar' which leads us to
focus on the outlet or delivery of the products, so our question is:
Why do merchants offer clients cheap and sub-standard
merchandise?
Before I attempt to answer that question, let me just make a remark on the
world phenomena of the cheap corner stores, they used to be called here in
Portugal the 'loja dos trezentos' which means the three hundred escudos stores,
nowadays they have converted to the Euro and half stores. From my observations
after being forced by my girlfriend to accompany her to these shops, most have
low quality products that look like normal products for a fraction of the price
of the original, but some have some good products and still cheap. Why?
What I infer is that since price is often a product of volume of sales, once
manufacturers and shop owners resolve the issue of attaining a certain volume
they then start worrying a bit more on quality and durability. To answer my own
question, the merchant has found that by having a look-a-like product at very
reduced prices, people will invariably buy it. The result is that they can buy
a lot more products in each visit, and the merchant obtains increased volume to
his operation and creates value which is his objective. Ultimately he sells
because he has a market.
Let's review what has been put forward so far:
First, corporate morality at its core has the sole
objective of increasing shareholder value.
Second, good quality products depend upon a series of
elements such as: quality materials, competency and
know-how, strategic driven quality control efforts.
Third, there is a market for cheap, low quality items that
get sold in large volumes.
We soon realise that all of these three factors are out of the sphere of
influence of the individual consumer, and so we must focus our attention on a
way to take the issue out of the corporate arena, which has been shown as not
having the consumer's best interest as their main goal, and instead bring it to
the consumer whose aim is to buy the best product, for the lowest product and
with the broadest assurance of quality and durability.
Ultimately the consumer is responsible for casting the votes which dictate the
fate of products being labelled 'good' or 'bad'. By buying you are choosing.
But apart from this the buyer should also resort to two other allies in
consumer protection: government agencies and NGOs, where the consumer should
offer them feedback which will allow them to put pressure on companies through
the implementation of standards of quality for products and to fine shops that
sell sub-standard products.
We can't bring human values into the corporation core, but we can indirectly
convert those values into negative incentives where transgression carries its
price which will add to costs and reduce the value of the company. The thing we
have to know is that a corporation will always do a cost-benefit analysis and if
paying a fine is less than inundating our shops with sub-standard products, it
will really all depend on the bottom line.
FOOTNOTE
1. Robert Monks Interviewed by Joel Bakan in 'The Corporation' Constable 2005
(c) Andre Vieira 2006
E-mail: acvieira@gmail.com
-=-
III. 'THE BUSINESS OF HOLDING OR FOLDING: OR, HOW TO RUN A SUCCESSFUL
ENTERPRISE' BY MICHAEL LEVY
Poker has become a national mania in the USA. Prize money is fast heading
towards tens of millions of dollars in major world tournaments. Every young and
old gambler wants to become the next poker superstar. With major TV coverage it
is no surprise that it is so popular, but it is not only the prize money that
is the lure. There is also instant stardom with corporate sponsorships.
It seems it is the easy route to fame and fortune. However, far more people
will go broke than the few who will become millionaires. Even so, I do
recommend people should watch a few poker games on TV, to examine the emotions
of fear and greed close up and personal. It can be super training for
pinpointing some of the basic requirements for managing a successful business.
Every successful businessperson acknowledges running a business requires the
skills of knowing when to hold 'em and when to fold 'em. In other words, when
to stand your ground to fight and when to surrender to greater forces when the
odds of winning are slim to none. From my experience of running a successful
business for twenty-six years, ( I retired aged forty-six) it is best to walk
away from deals where the risk outweighs the rewards.
One of the top corporate businessmen in Japan once remarked that he would chew
the deal and try to swallow it. If it did not digest easily, he would spit it
out and start over again in a different direction. There are plenty of
opportunities for the observant eye to spot. However, if a person gets
stubborn, then becomes stuck on one idea, they may go broke before the business
has a chance to blossom and bear fruit.
It is never a good idea to put all the eggs into one basket because if you drop
the basket, you will only be left with scrabbled eggs and who wants to dine out
on that every night?
Conducting a business should be a fun game. If there is too much debt, the fun
will come to an abrupt halt and it becomes a serious game of keeping up the
interest payments. That is a great way of making the finance companies rich and
an even better way of scratching out a living before going broke. It is far
better to start small, work harder and longer than the competition and keep
debt to an absolute minimum. In fact if you set high standards for yourself
there will be no need to compare yourself with the competition, for you will
become a leader that the herd needs to follow.
Keeping your powder dry until it's time to explode it, will reap great rewards.
Some people will tell you that lady luck has a hand in every deal. To some
extent that may be true. I believe we all make our own luck by the way we
think. Therefore, if you wait your moments of when to press your luck, you will
clean up big pots of gold deals at the appropriate moments.
Time is on your side, for in every business there are various cycles of highs
and lows. With experience you will be able to sense each cycle momentum. That's
what sorts the winners from the losers.
When things turn sour in a recession, you will know to pull in the horns and
keep the expenses as low as possible. That is when liquid companies who are
debt free will pick up the best deals because cash becomes king.
As with poker, the one who holds the most money calls the tune and plays from a
position of power. Now you may think the power of money and being the king at
the top table is enough. If you do think that way, it will not be long before
you are broke again, wondering where you went wrong.
They say pride comes before a fall. Getting to the top is only the beginning of
being successful because you need to learn how to stay there. There will always
be plenty of hungry hounds snapping at your heels, trying to take the bread out
of your mouth.
One of the best lessons anyone can learn is to be unpretentious and caring when
you are a success. Try to help other people to be a success in their businesses.
That is the way to make real friends in the commercial world. Be charitable, be
kind, be the type of person kids will use as a role model.
Your own credibility is your biggest asset. There can be no substitute for
performing your activities in an honest and honorable manner, in every deal you
execute. When people learn you can be trusted, it will become virtually
inconceivable to fail, if you do not overstretch your resources.
Money can be won or lost in many deals. Nonetheless, if you come out on top,
more times, than you lose, you will continue to grow your assets, whilst the
herd stands in the wings applauding your great performance of knowing when to
hold and when to fold.
(c) Michael Levy 2006
E-mail: MIKMIKL@aol.com
Web site: http://www.pointoflife.com
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