Capitalism's Moral Crisis?

Caviar on toast points

The Washington Post writes on the current meeting in Davos Switzerland of billionaires, oligarchs, kleptocrats and other titans of business and commerce, e.g., some of the best people the president works with who are not in jail or under indictment. Even the president will pop in today for a quick whatever he wants to do there. The WaPo notes that this year's meeting seems to have an unusual concern attached to it -- the morality of capitalism is under scrutiny. Past Davos soirees and caviar on toast points have been celebrations of, as WaPo puts it, “an almost Promethean belief in the virtues of liberalism and globalization, anchored in a conviction that heads of companies can become capable and even moral custodians of the common good.”

Wait, what? Moral custodians of the common good??? Something is definitely seriously amiss in Davos this year. WaPo writes:

“Financial crises, surging nationalist populism in the West, China’s intensifying authoritarianism and the steady toll of climate change have convinced many that there’s nothing inexorable about liberal progress. A new global opinion poll of tens of thousands of people found that more than 50 percent of those surveyed now think capitalism does “more harm than good.” 

Klaus Schwab, the forum’s octogenarian founder and executive chairman, is convinced that the current moment needs more Davos, not less. In the run-up to this week’s meetings, he announced a new “Davos manifesto,” calling on companies to “pay their fair share of taxes, show zero tolerance for corruption, uphold human rights throughout their global supply chains, and advocate for a competitive level playing field.” Such an ethos, Schwab contends, will go a long way to redressing the world’s inequities and may help governments meet the climate targets set by the 2015 Paris agreement. 

“Business leaders now have an incredible opportunity,” Schwab wrote in a column published last month. “By giving stakeholder capitalism concrete meaning, they can move beyond their legal obligations and uphold their duty to society. 

In a study timed in conjunction with the World Economic Forum, Oxfam found the world’s billionaires control more wealth than 4.6 billion people, or 60 percent of humanity. “Another year, another indication that the inequality crisis is spiraling out of control. And despite repeated warnings about inequality, governments have not reversed its course,” said Paul O’Brien of Oxfam America in an emailed statement. ‘Some governments, especially the U.S., are actually exacerbating inequality by cutting taxes for the richest and for corporations while slashing public services and safety nets — such as health care and education — that actually fight inequality.’”

The morality of business seems to be a concern that is slowly creeping into the minds of at least some business people. A few months ago, some CEOs in the Business Roundtable group signed a non-binding statement of corporate principles[1] that at least paid lip service to concerns other than profit, e.g., concern for employees and customers, whatever that means. It was aspirational and vague, but it was at least something. Sort of. Maybe.

Anyway, something seems to be amiss in the stronghold of capitalism and amoral market thinking. Whether the unsease will translate into something significantly different remains unknowable. But if past performance is any predictor future activities, not much is going to change. Companies will continue to lobby to not pay taxes. They will continue to lobby to privatize and trickle profits up to owners, while socializing costs, risks and human and environmental damage. And, in terms of moral politics, Facebook will probably continue to resist calls to shut down politicians who use Facebook to lie to and deceive the public. Facebook asserts lying to the public is good because it is based “on the principle that people should be able to hear from those who wish to lead them, warts and all, and that what they say should be scrutinized and debated in public.”

Actually the principle that demands lies to be allowed is profit, i.e., if Facebook shuts lying politicians down as they spread their hate and poison, Facebook might get regulated. Or far worse, taxed. As the Business Roundtable folks say, their core principles still includes generating long-term value for shareholders. Therein lies the real, enduring corporate moral value -- money talks and everything else walks.



Footnote:
1. Here’s the core of the Business Roundtable corporate purpose statement:
“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to:

•  Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations. 
• Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect. 
• Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions. 
• Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses. 
• Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.

The last point is probably something that will remain the top priority.