Virtue's Role in Today's Business World
NEW YORK, 26 JUNE 2004 (ZENIT)With ethics scandals still fresh in many
countries, a couple of recent books examine what role morality can play in
avoiding such problems. What the business world should do, says Alejo José
G. Sison, professor of business ethics at the University of Navarra,
Spain, is to give a higher priority to moral factors.
In his 2003 book, "The Moral Capital of Leaders: Why Virtue Matters,"
Sison observes that in the Enron scandals, for example, "no amount of
human, intellectual or social capital could make up for the lack of moral
capital among workers for the long-term success of the enterprise."
Sison defines moral capital "as excellence of character, or the possession
and practice of a host of virtues appropriate for a human being within a
particular sociocultural context." Or, in a word
—
integrity. Unlike other skills that a person can develop and that perfect
someone in a particular capacity, moral capital perfects the human being
as a whole person. "Moral capital is what makes a person good as a human
being," Sison writes.
As to what moral capital consists in, Sison bases himself on Aristotle,
and in particular, on the development of virtue laid out in the
Nicomachean Ethics. It is common these days to talk about values, he
observes, but moral capital is more than a superficial commitment to
values. "Rather, as excellence of character, moral capital depends
primarily on cultivating the right habits or virtues."
In practice, this moral capital is built up by means of our actions, which
then develop into permanent habits. The habits, in turn, configure our
character and our life. In business terms, good actions give us a return
similar to what we earn in the simple interest accrued to money deposited
in a bank. Habits are a payoff similar to compound interest, in which we
receive a return not only on the sum deposited, but also on the
accumulated interest payments made in the past.
Sison explains that virtue can benefit a firm by means of the positive
influence virtuous workers exert on corporate culture. Virtuous workers
not only diminish the legal and financial liabilities that stem from
corporate wrongdoing. They also tend to work better, thus contributing
more to a company.
In fact, we need to pay more attention to the human factor in examining
economic production, argues Sison. "Without the work of people, neither
the most cutting-edge technology nor any amount of accumulated wealth or
property will ever produce a significant improvement in human welfare."
The book concludes with some ideas on how firms can promote the formation
of moral capital among its workers.
—
Fostering the right actions by practicing the virtue of justice,
understood as adherence to the law.
—
Investing in proper personal habits and corporate procedures by practicing
the virtue of moderation in controlling the desire for immediate
gratification.
—
Fostering an upright character and corporate culture by practicing the
virtue of courage. This sustains long-term worthwhile projects despite
difficulties.
—
Cultivating the proper lifestyle and corporate history by practicing the
virtue of prudence, which disposes one to do what is good here and now,
without losing view of the end goal.
Compatible with Christianity?
Morality and the business world was also examined in "Is the Market
Moral?" The 2004 book comprises a series of dialogues between Rebecca
Blank, professor of economics at the University of Michigan and a member
of the Council of Economic Advisers during the first Bush administration
and also under President Bill Clinton, and William McGurn, chief editorial
writer for the Wall Street Journal.
Blank comes from a Protestant background and is a member of the United
Church of Christ. She describes herself as a "card-carrying mainstream
economist." McGurn is a Catholic and an ardent defender of the free
market.
Both of them agree on the advantages of market capitalism as an economic
system, but differ on how best to ensure a market that adheres to moral
principles. Blank asks: "If we accept an economic model that assumes that
appropriate choices are made when individuals are self-interested,
individualistic, and focused on the acquisition of more things, is doing
so a validation of our worst natures and a turning away from Christian
attributes?"
Blank explains that Christianity offers some elements that are in contrast
to the market model of behavior: the value of community and of others; a
more-moderate emphasis on the accumulation of material goods; an
appreciation for the moral differences of various choices; and a concern
for the poor.
Balancing market demands and Christian beliefs in the workplace often
places people in difficult situations, Blank notes. An important element
in helping to do this are the regulatory mechanisms established by
governments, she argues. Governments can both limit the activity of
markets (for example, not permitting child labor) and redistribute
resources between groups.
Free market defended
McGurn argues in favor of markets, defending them as the best way to help
resolve poverty. He also wishes that churches and clerics would inform
their criticisms of the market with a greater degree of economic literacy
and show a greater appreciation for the benefits of the market economy.
Markets, he adds, should be defined "as the relationships and networks
between and among human beings rather than just the goods and services
that are transacted." Differing from the normal economic approach, McGurn
bases his view on the view of human labor in John Paul II's encyclical "Laborem
Exercens." The Pope argues for a concept of human work that involves the
essence of human beings, carried out in an economy that is not just about
individual performance, but is more about relationships, McGurn observes.
In the wake of so many recent scandals, McGurn asks how can we develop
moral limits to markets without damaging their efficiency. He is much less
keen than Blank on government intervention via regulation. More important,
he argues, is the role of culture. He maintains that John Paul II's
encyclicals have stressed the importance of forming a healthy culture in
which virtue is cultivated, much more than in resolving problems through
imposing laws.
In a reply to McGurn, Blank says she does not believe "that the cultural
forces that shape markets can be so easily separated from the market
itself." Rather than just relying on the virtuous behavior of individuals,
society needs to ensure that this virtue is "embedded within the structure
of economic institutions." And that takes government intervention, Blank
insists.
McGurn, in turn, says he is not a libertarian and he acknowledges that the
market requires certain virtues. But instead of having government as a
check on markets, he argues that culture offers a better alternative. "Law
works best when it ratifies some social consensus," McGurn writes. "It
works least well when it tries to impose such a consensus."
Culture, he explains, "not only supplies the context within which markets
operate, it also provides the institutions and values that no market can
survive without." McGurn also maintains that we need to pay more attention
to the social virtues required in a free market. He places special
emphasis on subsidiarity and solidarity.
Opinions will continue to differ over how to best achieve a market that is
more moral. What is undeniable is that virtue plays a vital part in this
task.
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