THE ETHICAL CAPITALIST - PART 1

Capitalism is an economic system fraught with many problems, but it’s the system in which we work, so we should learn to make it the best that we can. To many people today “Ethical Capitalism” seems like an oxymoron. In the 2003 movie The Corporation, Mark Achbar and Jennifer Abbot point out that a corporation acts like a psychopathic person with no regard for ethics unless constrained by consequences. It’s absolutely true that if a corporation acts like a person then it acts much more like a person without a functioning moral compass than one with such a compass. You might think that this line of thinking means that we are locked into a paradigm in which these psychopathic corporations will inevitably commit misdeeds because of their nature.

I don’t believe this is true. In fact, I think that we are in a very exciting time, the dawn of the Ethical Capitalist. I know that you are likely reading this with great skepticism, but I hope that, with a little patience, I can convince you that the future of morality in capitalism is brighter than the present.

Before I delve into why I think capitalism is headed down the path that it is, I want to point out an experiment on human nature by Dan Ariely, author of “The Honest Truth About Dishonesty: How We Lie to Everyone - Especially Ourselves”. Ariely did a series of experiments on how people perceive the ethics associated with an action. In one experiment Ariely placed either six packs of Coca-Colas or paper plates with six $1 bills in numerous communal refrigerators throughout MIT. Within 72 hours, all of the Cokes were gone, but none of the students had touched the money. Ariely suggested that a one-step removal from money was a more easily morally justifiable act than the theft of money directly. It’s important to note that Ariely does not make the claim that the students committed an act that was unethical, only how they perceived the act.

Are you able to put yourself in the shoes of one of the MIT students? Can you imagine thinking about taking one of the $1 bills? What about a can of Coke? Do you feel like there is really no harm in taking the Coke, but the $1 bills make you uncomfortable? It’s strange that our moral compass, in most cases, doesn’t give a second thought to the drinks. Ariely states that dealing with legal tender indirectly, say through electronic transactions, causes the same kind of one-step removal as with the cans of Coca-Cola. As business moves toward an increasingly electronic system, our individual moral compasses have a tougher time distinguishing right from wrong.

The limited liability corporation functions in much the same way. A group of shareholders create a corporation and then act through that corporation as a business. The shareholders do not act directly in terms of the business, which removes them yet another step from any tangible transaction. Being so far removed from the effects it causes, the corporation does indeed act very much like a psychopath. But psychopathy does not necessarily imply immorality, unless you are on television of course.

A psychopath will react to consequences and can, in that way, emulate moral behavior. So with the right set of incentives and deterrents, a psychopath can act in the same way as a moral agent without any sense of morality. It stands to reason that the same applies to corporations.

The knee-jerk reaction to the preceding paragraph is that this set of incentives and deterrents must be created through an impartial regulatory body of some sort. The truth about impartial regulatory bodies is that they are never impartial and function in very much the same way as the limited liability corporation. In order to work, the incentives and deterrents need to come from within the business and its consumers.

In 1988, Noam Chomsky and Edward Herman wrote “Manufacturing Consent: The Political Economy of the Mass Media” which counters my last point. Chomsky and Herman make the case that the powerful can essentially manufacture the consent of the public at large to do any action they deem advantageous. This system would encompass government and corporations as the orchestrators while consumers and voters are the targets.

Basically we are living in a system of psychopathic corporations that manufacture consent to do whatever they please, oh and by the way, the government is in on it so you can’t really expect them to help. Seems like the capitalist system is doomed. But I believe something has changed.

The balance of power is slowly shifting away from corporations and regulatory bodies and toward the consumer and voter. The reason this is happening, and at an increasing pace, is because of the decentralization of media and research. Censorship is becoming increasingly difficult as consumers and voters can find a wealth of information about almost any corporation that they deal with. And if it can’t be found today, you can rest assured that someone will uncover it in the near future.

Websites like Wikileaks.org, Pandodaily.com, Wikipedia.org and Snopes.com are all dedicated to finding out the truth behind the stories in the media and PR campaigns today, with each having different methodology and motivations behind it. Manufacturing consent is not as easy as it once was, and it will continue to become more difficult, as the population that is seeking to expose immoral acts continues to grow. This population is also educating itself on public relations techniques and is becoming aware of their use faster than corporations and governments can develop new ones.

In this emerging environment, acts that are seen to harm society will be punished with the lack of business, and businesses will be forced to act in accordance with societal demands to win business. These capitalist agents will adapt to this new environment, and will tend toward ethical behavior as set by societal norms. Thus the Ethical Capitalist is born.

At this point you might think this is just a thought experiment. It’s true that the Ethical Capitalist is still in its infancy, but there are some contenders in industry already - let’s call them proto-Ethical Capitalists. These agents will serve as the foundation for the future of their respective industries.

In subsequent posts I will explore some examples of these proto-Ethical Capitalists and I will address some common rebuttals to this position.  

If you have your own rebuttal or example, please comment or write me!