Corporate Morality
VIEWPOINT
by Michael Novak
The business corporation is the strategically central institution of social justice. If the business corporation fails to meet its moral responsibilities, the odds against the rest of society doing so shrink to next to zero. Take one obvious example: The business corporation is strategically central to the creation of new wealth and new industries and new jobs; no other institution even comes close. The workers of a corporation depend on its success for their jobs, their career opportunities, their job training, their pensions, and their health care,even their friendships. When women and men enjoy their work, grow as human beings in it, prosper from it, they are happier in the rest of their lives.
On the other side, when corporations go badly, human misery increases. If human conditions at work are poor, the rest of life tends to sour with it.
That’s why building a good corporation is a noble human calling. It is a calling heavily weighted with moral obligations.
In the matter of corporate responsibility, the stakes are high: the liberation of the poor through jobs and the creation of new wealth; the success of democracy and human rights (as we learned in Eastern Europe, people are not satisfied with democracy if all it means is voting every two years, while their daily economic condition does not improve); and the project of building civil society,that network of artistic creativity, good works, and medical research that self-governing citizens choose to initiate by and for themselves. The corporation is the main creator of the wealth that makes the works of civil society achievable.
The poor, democracy and human rights, civil society,these are big issues, and all these important projects have now been injured by corporate scandals. And so my second point: moral scandals in corporate life,especially by corporate leaders,are huge evils. They are trebly evil.
One disgusting example was recently reported: A CEO installed a $6,000 shower curtain in his private home, allegedly at company expense. If that story is true, that was not only an evil harming one man, his reputation, and his company. It was twice evil because in the same act he humiliated all the good and decent CEOs in the nation, and dragged them all into ridicule. It was three times evil because his stupidity gave ammunition to the classical enemies of the free economy, at a time when the poor of the world depend on the spreading and the growth of the free economy. In his moral carelessness, he did enormous damage to causes far larger than himself.
The third point to make is far briefer: Corporate responsibility can be backed up by good law, but it cannot be completed by law alone. The law necessarily rides along behind breakthroughs in technology and invention. The law often arrives,as in this past year,after the damage has been done, in time to put up some monuments.
Between the cutting edge of change and the slow course of the law must come something else: character and conscience. “There are many things which the law permits them to do which the religion of the Americans forbids them to do,” the great scholar Alexis de Tocqueville wrote in 1835. Things must be so in a free society, which wishes also to be a decent society. Humans must decide how to use their freedom. Conscience has to fill the gap between breakthroughs in technological possibility and the later-arriving decisions of the law. Persons of character know limits; there are things they will not do, no matter what, and no matter what other people are doing.
In recent years, too many folk have tried “thinking outside the box,” “breaking out of old paradigms,” “making new rules.” Well, that might be a good thing to do in technological inquiries. But it’s a fatal mistake in ethics. For technology may change, but the human need for honesty, trust, and the firm rule never to use other people as means, only as ends, doesn’t change. When the American people can’t trust a company’s financial report, they won’t invest in that company. It’s as simple as that. You may not be able to see “trust,” but it’s as real as a huge loss on the stock market. In the daily life of a capitalist system, things of the spirit,like trust,are more real than money. When they are missing, money itself loses its value.
Fourth, for too many years, economics textbooks and business schools and the public media have been far better at talking about material things,about the bottom line,than about character, and trust, and honesty.
Besides the ecology of the natural world there is also a moral ecology, a moral environment. For 100 years, we have neglected this whole nation’s moral ecology. We need to rebuild this ecology all through society. This task is done by emphasizing high morals in every realm, through stories of good and evil, and tales of moral heroes and villains. We need to talk about high morals day-in and day-out, encourage one another, rebuke one another.
Max Weber was partly right, you know, about “the Protestant ethic.” You don’t have to be Protestant to practice it. But there is an ethic that lies behind capitalism, and in the real world it has to be practiced. The system simply will not work without it.
Novak is a noted author and the George Frederick Jewett Scholar at the American Enterprise Institute. He will be the keynote speaker at the Marywood Conference on Business Ethics and Morality in Orange on May 14; for information call (714) 282-3101. This article is excerpted from his address to the President’s Economic Forum in Waco, Texas last August.
