Wednesday, September 26, 2012

Ethics in a Bottle
In my last blog I listed a number of statements and underlying attitudes I encountered while working in the business world. Here I would like to take a closer look at one of them and evaluate its veracity and possible transformation.

The assertion that “there is no ethics in the business world” is both an observation as also an assumption. As an observation it reflects a simple “is”: personal experiences I shared with you in past postings revealed that human needs are indeed frequently placed behind the short-term imperative of a corporation to post profits and maximize shareholder wealth. In a world where organizational survival is dictated by the mere string of numbers that are published on a monthly or quarterly basis and not by the reality of the personal stories of the involved stakeholders, it is only logical that there will – push come to shove – be an inherent bias and managerial recompense to sacrifice human “ethics” for the sake of the ethic of maximizing profitability. Therefore, there is a certain amount of veracity to this statement as an observation, provided one defines “ethics” as placing the well-being of human beings in the center of our moral considerations.
As an assumption, on the other hand, this statement implies a normative “should”: there should not be any ethical considerations that impede the profitability and shareholder wealth. An individual who once shared this view with me in an unabashed manner revealed also that he made a clear cut distinction between how he valued, and consequently then treated, people in his private circles such as friends and family, and how he did so in his work dealings. This type of an attitude I have come to label “ethics in a bottle”: it is a form of moral compartmentalization where at times radically different standards apply in different types of social contexts. Now, it is naïve to think that we as human beings can ever completely transcend moral compartmentalization (for example, we will continue to be more inclined to help a personal friend in distress, rather than an anonymous individual at the other end of the world, all other things being equivalent). Nonetheless, it is legitimate to question if such a strict demarcation line should be drawn between the personal and professional worlds.

The problem with moral compartmentalization in our economic dealings is that under the guise of “professionalism” almost anything can be justified. Professional organizations and corporations, particularly publically traded ones subject to short-term shareholder wealth maximization, have gone to great lengths to legitimize their institutionalized norms to conform to the prerogatives of profitability or the stock markets. Under the guise of “accreditations”, “codes of professional conduct”, “best practices” and the likes, professional organizations and corporations have created sophisticated constructs to make employees, clients and the public think and feel as if they were upholding the highest of moral standards.
For the professional, the rationale then is often, “if it meets the highest standards of professional codes of conduct, well, than it must be ok for me to do.”

Well, no. Simply because something meets the standards or regulations of a certain corporation, industry or profession, does not make it morally palatable in a larger context. For example, nowhere in the Certified Financial Advisors (CFA) Code of Ethics ( is there any mention or consideration of the secondary ramifications of certain investment tools or choices. Yes, we find the statement that the advisors must “Place the integrity of the investment profession and the interests of clients above their own personal interests.” (As recent scandals, however, illustrate that this rule was nevertheless frequently ignored.). But what about the fact, for example, that speculating in mercantile exchanges can abruptly drive up the price of certain commodities like corn, wheat or rice beyond the capacity of people in third world countries to pay for? Or take the code of conduct in private banking, for example, of Singapore ( The transfer of large amounts of wealth of high net worth individuals from poor, developing countries into international tax havens such as Singapore, the Cayman Islands or Switzerland, while certainly in the interests of the client, deprives these countries of these sorely needed resources. While there is mention of money laundering and terrorism, nowhere in its code of conduct is there any consideration of this wider moral dimension of the professional’s actions.
However, since a financial advisor’s or private banker’s circle of professional responsibility is defined only in a very narrow manner driven by the client’s (and the advisor’s or bank’s) interests, both the financial professional and their clients indirectly partake in the creation of human poverty, and that with a clear conscience, extracted as they are of further responsibility by the professional code of conduct they are adhering to (and often also legitimized by Milton Freedman’s position that these ethical consideration is not the purview of the business community, but of the regulatory agencies of countries). This divorce of responsibility of one’s personal, professional activities and the wider social ramifications represents one of the major challenges facing our current status quo in how we structure and manage our economic activities.

What we consequently have is “ethics in a bottle” and by extension, if you will, a form of the “banality of evil”. It’s time for professionals to take the ethics out of the bottle and permit it to imbue all domains of human lives, not just the ones of one’s family, friends, corporation or business clients.

Manuel Heer Dawson

Tuesday, September 18, 2012

How Economic Individualism leads to Anarchy. And a possible Way Out

In Thomas Hobbes’ (1588-1679) prominent state of nature every individual fights against all other individuals. Each individual does so to survive: When I kill my neighbor he can no more steal my belongings or kill me, I am consequently safer now. Hobbes’ state of nature is an individualism-based condition of anarchy: Neither laws nor governments nor any form of contracts exist. His ultimate objective is to find ways to leave or avoid this condition.
The individualistic concept was new then and characterizes many schools of thought in the modern period. Among others, the neoclassical theories in economic sciences of the 20th century generally rely on the methodological individualism. Each individual aims to rationally maximize its utility accordingly.
Through neoliberal politics these theories were implemented in many countries in the last 30 years: The transfer of theoretical concepts like the methodological individualism was essentially (although not exclusively) transferred and supported by such politics into the real world. Today, they structure to large parts the perception of how the economy functions and what it is in reality. This thinking is also based on competition because others are understood as (potential) competitors. The assumption of this politics of deregulation was that market-ruled competition alone establishes the most effective and efficient solutions.
Yet, individualism (as also competition) is not bad per se. Every one of us is an individual and it is nothing else than self-evident that individual rights need to be protected. But, the methodological individualism as the one of economic provenience was implemented at the cost of the community. In Switzerland e.g. voluntary community work is strongly decreasing (e.g. there are less football coaches for children). People are too busy with their individual job career and want to score (financially) in their personal competitive game.
The strong individualism of today may be seen as a kind of a global state of nature. Some examples: The exploitation of workers and local communities by transnational corporations is fostered by political deregulation and missing cooperative global governance structures: Responsibility is left often to individual managers; because of removing or not establishing regulation it is often made easy for managers of firms to enrich themselves excessively. Conversely, single individuals can trigger shitstorms against firms by posting individually declared violations of political correctness in the social media. And, as mentioned, voluntary community work is decreasing. The neoliberal politics of deregulation thus led at least partly to conditions which for Hobbes were imperative to leave in place.
A possible way to balance the corrosive consequences of such overreaching (economic) individualism on communities is that we, the civil society, begin rebuilding voluntary, non-market based cooperation between us citizens. A stronger togetherness between neighbors and friends etc. can foster the creation of values that provide a whole society meaning and vision. The economy can rediscover its role in and for society by cooperating more seriously with and for stakeholders.
Of course humans are competition-oriented individuals but they are also cooperative and social beings needing mutual value and meanings. The sociologist Richard Sennett and communitarianists often write about the importance of cooperation and togetherness in civil societies. And the stakeholder theory explains the advantages and appropriateness of an economy understanding itself more as a part of society and related to stakeholders.
Claude Meier

Wednesday, September 5, 2012

Awareness and simplification: The KONY 2012 campaign

To increase the awareness level of a message, advertisers and campaign managers know well about the psychological effects of simplifying matters on people’s attention. Short communications are persuasive and affect people’s readiness to engage in different kind of actions. However, short communications have to simplify complex topics an may lead to the problem of not taking into account the entirety of a complex problem, for example by focusing only on a specific relationship among many affected interest groups. To avoid a misleading reduction of complex issues, I argue that the intention to increase the level of people’s awareness by simplifying communications should be accompanied by a careful consideration of the corresponding impacts in a more fine-grained stakeholder network. An insightful example is the viral campaign KONY 2012, which entered the social media in early March 2012.
The core of the KONY 2012 campaign is a short film created by the non-profit organization Invisible Children, Inc. The film documents the brutal abduction and cruel abuse of children by Joseph Kony and his Lord’s Resistance Army (LRA) to use them as child soldiers in an ongoing conflict in northern Uganda. The LRA is a guerilla group and its leader, Joseph Kony, was indicted for war crimes and crimes against humanity by the International Criminal Court in 2005, but still has evaded capture.
The KONY 2012 short film spread virally in the World Wide Web, mainly through social media channels like YouTube, Vimeo, Facebook and Twitter. Within a month the clip had been viewed more than 90 million times and the social media campaign raised a tremendous awareness all over the world. Celebrities and politicians started to support the concerns of Invisible Children, Inc. to bring Joseph Kony to justice.
However, criticism about simplifying the complex conflict in northern Uganda arose shortly after the film’s release. Invisible Children, Inc. was accused of providing a black-and-white picture of the situation and of manipulating the public opinion. For example, the film suggests that violence in northern Uganda will come to an end and the abducted children will be able to return to their families as soon as Joseph Kony would be captured. Of course, Kony is a dangerous and cruel individual and bringing him to justice would be important. But reducing the problems in northern Uganda to the faith of Joseph Kony is deceptive. The history of the conflict is far more complex and includes many other interest groups like, for example, the Ugandan army and government, of which many seem highly suspicious too. Further, the film neglects the fact that most LRA forces, including Joseph Kony, fled northern Uganda in 2006 to be dispersed now across three neighboring countries.
As the example of KONY 2012 shows, awareness and simplification have to be balanced so that creators of social media campaigns are able to achieve their objectives and at the same time meet their responsibility towards other stakeholder groups affected by complex problems. The narrow spotlight on Joseph Kony led Invisible Children, Inc. to donate funds to support military action for capturing the LRA leader. But what about the rehabilitation and reintegration of former child soldiers as another affected interest group?