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Companies' bastardry about more than bad apples

19 Comments
Andrew Hamilton |  06 April 2016

 

To a Catholic observer the continuing revelations about the practices of big companies have been painfully familiar.

Businessman opens suit to reveal money hidden insideThe pattern is predictable. Bad behaviour is discovered (abuse/ripping off customers, avoiding taxation). A ritual response is made: 'We have the highest standards', 'We were never told', references to 'bad apples' etc. Further investigation shows that the bad apples were known about.

The response is to launch and vigorously defend legal cases and excoriate the irresponsible media. Further examination shows that suspected bad apples have found a home in other companies. Again, assurances are given that the culture has changed. Finally a few undersized bad apples are prosecuted. Few — neither CEOs nor board members — go to jail.

And finally the government promises a cut in company tax.

Meanwhile the public becomes thoroughly irate at what they see as the bastardry, effrontery and impunity of the companies. The more genteel describe it as reputational damage.

In this climate of judgment it may come as a surprise to recognise that in churches and companies not everyone is a bad apple. Among company managers and board members many good and generous human beings are to be found. So why does such antisocial and corrupt behaviour breed there?

I believe it can be traced to an economic ideology that is widely accepted in government as well as in business. The ideology sees the driving force of the economy to lie in competitive individuals whose work is motivated by the desire for economic gain.

The national good is defined by an increased GNP and economic activity. All significant relationships that compose a business are measured by their economic value, whether that value is expressed in salaries, bonuses or wages for employees and board members, or as dividends and share value for investors.

 

"In theory this apotheosis of the competitive individual may seem benign. But in practice it can look very grubby."

 

If we see companies through that lens, every form of competitive action that is economically productive will be legitimate provided that it is not illegal. And even legislative restrictions in the market that stand in the way of economic gain will be seen as regrettable.

So although regulations must not be disobeyed, they may be circumvented by means that are not actually illegal. It can readily be understood that relatively junior employees will travel close to the legal wind in competing with others to secure bonuses and higher paid positions.

Senior executives, board members and investors will rejoice in the economic value so provided to the organisation and will ask no questions about how it is achieved.

In grand theory this apotheosis of the competitive individual may seem benign. But in practice it can look very grubby.

Its face is the expletive filled greed of the ANZ traders as they set the interbank rates, the craftiness of the CBA life insurance arm as it concocted medical standards to finesse ill people out of their future, and the sleazy company that companies and individuals keep when hiding their wealth in Panama.

Of course, the face we see is the urbane presentation of company spokespersons and lawyers. But the tune that people now hear in the mission statements, the assurance of high standards and the avowals of innocence is the song of greed. Behind the façade of corporate seriousness people now see competitive individuals scrabbling to protect their wealth.

How do good people sink to this? The answer lies in the mutation of economic ideology from the crude buccaneering spirit of doing whatever it takes to get rich into a more urbane form based in self-deception. People see themselves as competing, not only for their own economic benefit, but for that of the company in which they work.

Their identification with their company means that greed can mask itself as altruism in serving a larger good. They become the servants of their investors. Because the good of the nation is identified with its economic growth, too, they can also see themselves as faithful, profitable, servants of the nation.

As in the case of churches, identification with the company provides reason for minimising and covering up wrongdoing in the company and protecting its reputation at all costs.

The present scandals are the fruit of an economic ideology that recognises the importance of economic striving for human flourishing, but neglects its human context. The economy is the servant of national good, not its goal. Human flourishing is based on the respect for each human being, the interdependence of human beings and the natural environment, and the priority of the common good.

The common good entails ethical relationships between companies and their workers, their customers, their investors, their competitors and the whole community, which their activities touch. These provide the matrix within which they seek to be profitable. Their investors are only one of many groups to which they have responsibilities.

In conversation about economics Adam Smith's 'invisible hand' of the market is often invoked in favour of an autonomous market. It is usually forgotten that Smith was primarily an ethicist concerned to set human activity within an ethical framework. He took it for granted that those acting in the market should respect that framework.

 


Andrew HamiltonAndrew Hamilton is consulting editor of Eureka Street.

Main image: Shutterstock

 



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"I believe it can be traced to an economic ideology that is widely accepted in government as well as in business." It's widely accepted by individuals as well. Many people will only buy the cheapest - they're happy with clothes from Bangladesh, sports shoes from Indonesia, and milk at a dollar a litre - what the broader costs of those purchasing decisions are, they don't consider. It's simply an economic benefit to themselves. I'm old enough to recall that you were given models of how to grow up: these ranged from the tastefulness of the English aristocracy, the seriousness of academics, the expertise of a craftsman, the solidarity of unionists etc. A good life was rich and varied and had to be achieved. A happy goal was 'repose' - not spending half your life gadding about in airports and shopping malls trying to buy fashionable diversion. The ideals these days are celebrity, power and ostentatious wealth - postmodernism doesn't allow anyone to say "This is a better way to live because ...." Better is just any individual's judgement to make, at the moment. We have reached a really stupid place.

Russell 06 April 2016

Actually Andrew, it's been my experience that most of the people who work for large businesses are ethical in doing their job and striving to do well. The pro ons seem to arise when individual rewards are linked to individual performance in ways that are not perceived as reasonable by the common person. CEO bonuses for profit or share price outcomes, and huge commissions for sales persons, come to mind as examples because they focus the mind on the pursuit of one's own 'good' rather than the good of the organisation or that of the community in which it operates.

Ginger Meggs 06 April 2016

Bravo, bravo. This is brilliant. That short, one-sentence third paragraph hits like a sledgehammer and alerts the reader that here is someone who is angry and won't take it any more. Wonderful to see such a savaging expressed in polite prose. Maintain that rage, Fr Hamilton.

Frank 07 April 2016

And even the present media whistle-blowing crusade is questionable in its methods. The Suddeutches Zeitung and the Guardian both admit that they used two screening filters in identifying which of the huge number of cases they would pursue in detail - countries and named individuals on lists of economic sanctions, and suspected criminal names' lists. So, surprise surprise, which countries dominate the investigation lists? Russia, China, Iran , Nirth Korea .... All countries listed in US, EU and related 'coalitions of the willing' lists of current non-UN sanctions. , i.e. economic sanctions imposed by the US and its allies but not authorised by the UNSC on which Russia and China hold permanent veto rights. So the investigation starts as a well-funded and resourced Neo-Cold War game, with Putin's sinister visage seen on almost every newspaper front page. Meanwhile, major US corporations - which of course do not get onto US govt sanctions lists, being US companies - sail though, at least so far, squeaky clean. And Obama can sermonise to the world about the evils of international tax evasion. Throw in poor little Iceland and a few senile British peers, and Cameron's father, for a bit of 'balance', and there is the list of culprits, a readymade Neo-Cold War weapon.

Tony kevin 07 April 2016

Chuckle! Get with the jargon, Andrew. It's not "regulations" but "red tape" that's the problem. In reality, all of us are the problem some of the time. Sure, some are better than others, but there's tarnish on all the silverware at some stage.

David Healy 07 April 2016

Thank you Andrew, that's very clear summary of the situation. The sad thing about all this is that the correlation between wealth and happiness is virtually zero.

brian finlayson 07 April 2016

The promotion of "Competition" as the driver of economic development seems to have arisen from a limited understanding of Evolution as the "Survival of the Fittest". In fact, a lot of evolutionary survival is due to Cooperation and Sharing; in other words, "the common good". Following the competition gospel, we have ignored the common good, we have privatised, we have limited regulation and oversight. We sink to the lower boundary of what is legal rather than rise to the ethical. I despair that we will ever find our way back.

Peter Horan 07 April 2016

I must say, when I heard the details of this leak I was excited - but I still haven't heard anything that we all didn't already know. We all know why some/many companies set up bases in tax havens, and we all know it's legal. The fact that someone wants privacy doesn't mean they're doing anything corrupt or illegal. But maybe some of the correlations or patterns in this leak (which was probably more of a hack), will prompt politicians to reform their tax systems to raise revenue for government services - but I doubt it!

AURELIUS 07 April 2016

I might add to Andrew's perceptive analysis that neoliberalism is based on the Hayekian myth that markets are 'spontaneous orders'. The myth ignores the fact that markets presuppose the social solidarity of the societies in which they operate. That solidarity - and thus democracy itself - is undermined when that myth is taken to license unbridled greed and the market practices to which it gives rise. The hideousness of the threat posed by such practices to democratic societies is exposed in recent exposes on the banks, Unaoil and Mossack Fonseca. The threat to the very survival of non-democratic societies hardly bears contemplation.

Michael Leahy 07 April 2016

How much better it would be if legally we could get responsibility to the broader community ahead of responsibility to shareholders as the first aim of company directors? Also, outlawing incentive and bonus payments.

Richard maddever 07 April 2016

One study of psychopathic behaviour showed that people normally seen as normal, decent, above law also exhibit psychopathic traits. And the study justified that in some cases this was good, because if you had a family to fend for, you could be justified for being a psychopath on their behalf. I also see what you talk about as an extension of tribal behaviour in another form. I personally disagree, because we are no longer hunter-gatherers.

SHANA MARIA VERGHIS 07 April 2016

Maintain the rage indeed! but my favourite sentence is 'It's face is the expletive filled greed of the ANZ traders as they set the interbank rates, the craftiness of the CBA life insurance arm as it concocted medical standards to finesse ill people out of their future, and the sleazy company that companies and individuals keep when hiding their wealth in Panama'. Nice one Andrew!, but don't forget the privatization & monopolization of the welfare of the poor and most vulnerable now, benefits only the largest charities & offshore companies with huge salaried CEO's & boards with tax exemption too, while the poor just get poorer. All reminds me of old Leonard Cohen's 'Everybody Knows'.... Everybody knows the fight was fixed The poor stay poor, the rich get rich That's how it goes Everybody knows Everybody knows that the boat is leaking Everybody knows that the captain lied Everybody knows the deal is rotten Old Black Joe's still pickin' cotton For your ribbons and bows And everybody knows .... Vive la revolution Andrew!

Marianne Hamilton 07 April 2016

Friedrich Nietzsche wrote in 1911about just the behaviour we are seeing from the wealthy class. "...what gives rise to all this?It is not real want - for their existence is by no means precarious...butr theyare urged on day and night by a terrible impatience at seeing their wealth pile up so slowly,and by an equally terrible longing and love for those heaps of gold...What was once done "for the love of God" is now done for the love of money, ie. for the love of that which at present affords us the highest feeling of power and a good conscience." When will the churches have the courage to name this as idolatry?

Rod Horsfield 07 April 2016

In an earlier post I suggested that a significant part of the cause of this problem was the corrupting effect of linking individual rewards to individual performance. There is an interesting interview by Michelle Grattan on The Conversation website where sh interviews Senator Whish-Wilson, a former senior banker turned Green senator in which he makes this very point. The whole interview is well worth hearing, Sorry about the length of the URL ! https://theconversation.com/politics-podcast-peter-whish-wilson-on-the-need-for-a-royal-commission-into-banks-57426?utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20for%20April%208%202016%20-%204629&utm_content=Latest%20from%20The%20Conversation%20for%20April%208%202016%20-%204629+CID_2098041515dfd3c6b8b92f91daf467d3&utm_source=campaign_monitor&utm_term=Politics%20podcast%20Peter%20Whish-Wilson%20on%20the%20need%20for%20a%20royal%20commission%20into%20banks

Ginger Meggs 08 April 2016

I think you just named it, Rod.

AURELIUS 08 April 2016

Andrew , Your utter slaying of these corrupt 'Giants' & the injustice they create is music to the ears of Enneagram " 8's " , such as I . I guess I can continue to pray that some day I aquire the graciousness you apply to such slaying . Regards John

john kersh 09 April 2016

The Shareholder Primacy or equivalent means the people and the environment HAVE to come off second best because it is the legal duty of those who run businesses to maximise the wealth of shareholders. We people lose to the money god, again! Further, a 2012 Guardian article says: "Milton Friedman said that corporate officials had no other social responsibility than to make as much money as possible for shareholders, and that is what the business schools and university departments have been teaching ever since. So that is how the world now works. The world ā€“ business leaders, politicians, academics, and even the people in the street ā€“ have come to believe that it is the legal duty of those who run businesses to maximise the wealth of shareholders, and to hell with everything else." Money is a man made concept and these days it is made from "thin air" through so called Quantitative Easing. We depend on Nature, and we can't eat man made money. Let's make a clean Earth the priority. Bob Hinkley wrote in 2002 that Corporate Law could be changed to include "... but not at the expense of the environment, human rights, the public safety, the communities in which the corporation operates or the dignity of its employees." My will is that Corporationā€™s Primary Duty is to make the planet as beautiful as possible, and support human life and the environment above everything else. Clement Clarke http://www.commondreams.org/views02/0119-04.htm https://en.wikipedia.org/wiki/Shareholder_primacy http://www.theguardian.com/sustainable-business/short-termism-shareholder-long-term-leadership

Clement Clarke 11 April 2016

" . . . celebrity, power and ostentatious wealth." Indeed, a formidable triad of contemporary vices - but was it ever other, Russell? The temptations of Jesus in the Gospel would suggest not, though I agree postmodernism's sophistry and subjectivising of morality, coupled with economic rationalism, has compounded today's social and economic injustices, jeopardising society itself.

John 18 April 2016

Thank your for your article Andrew. Bad behaviour is discovered (abuse). A ritual response is made: 'We have the highest standards', 'We were never told', references to 'bad apples' etc. Further investigation shows that the bad apples were known about. Sadly, does this statement sound like those spoke by our leaders, Bishops and executives in the Catholic Church? Our most trusted faith based institutions are supposed to be squeaky clean, honourable, responsible and leaders in a civil society. But they are now deemed no longer trust worthy. The law abiding, responsible, respectful and trusted Catholics who exposed the abuse are alienated from their church. They have lost their jobs and their reputations destroyed. The ripple of abuse has moved through many circles, business, education, health and communities. As my taxi driver said to me today in reference to the Catholic clergy abuse...'there is no one left to trust!'

Trust lost in Australia's major institutions 19 April 2016

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