We should all take time to consider the dangers of “management fundamentalism” and the dangers it brings.

Photo by Ramy Majouji, Wikimedia Commons

Writing in the British newspaper, The Observer, on Sunday March 23rd, 2008, Business Editor Simon Caulkin pointed to “management fundamentalism” as the primary culprit for the current financial and economic woes afflicting the global economy.

His article’s title, Capitalism’s too important to be left to capitalists, lambasts the business thinking of today — especially that pioneered in the United States — as “a system with no commitment, trust or long-term relationships.”

Caulkin says:

It is not just that ‘Wall Street is predicated on greed’, in the phrase of a former Bear Stearns director last week. ‘Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible,’ obligingly warned Milton Friedman, the patron saint of market fundamentalism.

The duty of managers

Is the only duty of managers “to make as much money for their stockholders as possible?” That seems a dangerous path to follow, if taken at face value. Aside from a convenient denial of any kind of responsibility to society as a whole (of which all businesses are surely part), it implies that just about any action is acceptable — even praiseworthy — that results in profits for shareholders.

Certainly, some managers act as if this is their doctrine. The obsession with “stakeholder value” ought really to be termed “shareholder value,” since other stakeholders in an enterprise (employees, suppliers, the local community) are given scant consideration compared with the Wall Street traders who buy and sell the stock for their own gain.

Is amoral leadership acceptable?

At best, such an approach is amoral: unconcerned with any ethical or moral questions. At worst, as we have seen repeated in recent years, it becomes immoral and degenerates into crime and dishonesty in pursuit of still larger profits.

If you can make the business more profitable by throwing local people out of work, sending jobs overseas, manipulating the accounts, and engaging in all kinds of sharp practice, management fundamentalism would not appear to stand in your way. Its basis is the claim that everyone should have the freedom to put their own self-interest before the interests of others.

A convenient idea

Perhaps it is no co-incidence that the once-idolized former head of the Federal reserve, Alan Greenspan, was known to be an admirer of Russian-born novelist and philosopher Ayn Rand, whose ‘Objectivist’ movement held that the only moral social system is laissez-faire capitalism.

Rand thought selfishness a virtue and wanted all property to be privately owned, with the state entirely separated from economics. Indeed, it’s hard to see what purpose a state had, in her view. Far from helping to balance competing demands and protect the weak against exploitation by the strong, the state should keep out of any ‘interference’ with people’s freedom to do whatever they thought to be in their own interests — economically or otherwise.

The convenience of this philosophy is clear. Instead of having to wrestle with tough issues of right and wrong, the leaders and managers who take on this approach can set all that aside and deal only with the relative effectiveness of choices in producing financial returns. And, if the rich and powerful take the lion’s share of the nation’s wealth, that is what freedom means. The poor are poor because they either choose to be so, or lack the energy and determination to improve their lot in life.

Detachment may not work

It’s obvious that ideas such as these take ‘freedom’ to an extreme and leave little space for humanity or compassion, favoring those who grab want they want, usually by taking large risks with other people’s money.

But I wonder if there isn’t an extra drawback to amoral management; one that doesn’t simply involve the ‘moral hazard’ of allowing the wider economy to be put at risk by the greed of a few — or the fact that you cannot live without the assistance of others and to be fully ‘free’ and selfish is only possible for hermits and those willing to give up society’s benefits as well as its obligations.

Maybe some of the stress and anxiety endemic to much of modern working life comes, not just from long hours and constant pressure to ‘perform,’ but from the inner knowledge that your actions will cause hurt to others? A few people may be hard enough to ignore any pain their actions inflict, but I suspect they are the exception. For the rest, closing your eyes to the harm you do won’t make it go away; nor free you from the nagging knowledge that your time on this earth may not have been a positive factor in events.

Which is to blame: individuals or the system they must work under?

It’s undeniably tempting to focus criticism on the people who run our enterprises: the CEOs and other top dogs whose fantastic earnings epitomize both selfishness and greed; tempting, but hardly helpful.

If all it would take to sweep away our economic problems and financial crises was to curb or replace a few thousand wealthy individual managers, there would be no reason to hesitate. Sadly, these people are, in many ways, as much the victims of a corrupted system as the ordinary people whose lives they sometimes ruin.

We have allowed approaches to business to flourish that are themselves based entirely on greed and the freedom of the strong to exploit and fleece the weak. If such systems demand similarly amoral behavior from the managers within them, that is unsurprising.

Some questions to ponder

• If you assume, as I do, that most people are fundamentally decent, what is the effect on them of having to work within an economic system that demands that they lie to, exploit, and manipulate their fellows for the benefit of the owners? Is this contributing to stress and burnout?
• Since all business is ultimately based on a degree of trust (credit, especially), are we seeing not a ‘credit crunch’ but a catastrophic failure of trust? If no one trusts other businesses enough to lend them money, the system of capitalism itself must collapse. How can sufficient trust be restored without demanding that corporations act according to agreed standards of honesty — even if that means limiting their freedom to do what seems in their own, albeit short-term, interests?
• If amorality coincides with a lust for immediate gratification — as it surely does today — is it possible that corporations and individuals may mistake their best interests, focusing on short-term gain in ways that harm their long-term welfare? Should we stand back and let them ruin themselves in this way, even if many innocent people are also hurt in the process?
• In a nation so avowedly ‘moral’ as the United States, how has business come to be exempt from the moral and ethical standards expected of individuals? Can corporate morality set itself different standards than those that apply to individuals?
• What are your own ethical values and standards? How far are you willing to compromise them for monetary gain or advancement? Have to thought about this carefully, or are you simply shutting your eyes to the problem? Will you be able to live with what you might be called upon to do?

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