Just as our culture falsely draws a sharp line between ethics and business, it also draws a sharp line between life and business. I have written elsewhere how Hollywood, for example, cannot bear to tell stories about the workplace, which it finds to be a dreary place completely separated from life. For more than a century already--really since the industrial revolution-- historians, sociologists, philosophers and politicians have all been analyzing how size, automation and the concentration of capital lead to the alienation of workers from their employers and from the enterprise itself.
Kim Stanley Robinson is a science fiction writer whose trilogy, Three Californias, gives alternate views of the American future: one post-nuclear, one dystopian, one utopian. The last of the three envisions a world of small democratic capitalisms, in which, for example, I might wake up one morning and decide that what I really want to do for a living is build houses. So I join the crew down the road, who are glad to have me, and spend the next few weeks building houses; maybe after that I will decide to build sailboats for a while, work in the town's communal cornfield, or assist the town doctor. The people in Robinson's imagined community are all harmoniously interwoven, so that all political and business decisions are made communally.
An image of commercial life very similar to Robinson's emerges from passages of Hilaire Belloc's classic 1913 book, The Servile State. Belloc, a British politician whose work is mainly remembered by libertarians and conservatives opposed to big government, was an eccentric whose views cannot so easily be categorized. In his opinion, the concentration of capital and worker alienation was not a necessary side effect of the industrial revolution, but a historical accident due to the fact that a few families in Britain had already grabbed most of the wealth centuries before. Belloc believed that the golden age of commerce had already occurred, in the late middle ages, when serfdom had largely decayed and been replaced by a system of independent agriculturalists and laborers, owning small amounts of property, and protected by guilds. Belloc charts a gradual process of the dispossession of small property holders into propertyless laborers completely dependent upon capitalists for their daily bread. From there, Belloc only sees two possible roads:
Modern capitalism involves the concentration of ownership in a very few people. It is practical and easily accomplished for the state to purchase or nationalize what they own. It is far less practical to cause the distribution of property to a larger number of small holders.
Belloc makes the familiar point that we can point to past times when the distributive state succeeded, but cannot successfully find a time in history when collectivism worked. He believes it is an impossible dream, perpetrated by idealists and autocrats. On the road to collectivism, you inevitably wind up with slavery (where he also believes modern capitalism is tending, on its own.) Instead of a few private plutocrats owning everything, you have a few state officials holding the property "in trust". But the "proletariat", who in the Marxian dream are the owners of the means of production, have become nothing but slaves, with no property of their own to secure them, forced to work in the professions chosen by, and at the rates approved by, the collectivist bureaucrats.
Belloc's image of the "distributive state" maps closely to the American dream, in which a substantial portion of the population is middle class, has some retirement money saved, owns a house, etc. He regards capitalism, however, as being a destroyer of the distributive state. He traces a disparity similar to the procedural/substantive distinction between capitalism and democracy I made in a recent essay. There I said that democracy is a long term process designed to ensure equality; capitalism is a short term effort to gain material superiority. When the two clash, as they inevitably will, democracy always loses. Our culture, with its strange dual reverence and hatred for business, seems to regard it as a superior plane of existence, bound by its own rules which are not that of the democratic world. When business overrules democracy, we are not bothered; when democracy intervenes in business, we typically break out in a sweat.
The distributive state, as represented in the lovely rural setting portrayed by Robinson, is a very appealing idea, but neither Belloc nor Robinson tell us how to get there from here. We are like doctors, trying to choose between an invasive procedure that may kill the patient and a medicinal treatment which may not save him. The minute we make laws intervening in the way businessmen should behave--and neither Belloc nor Friedrich Hayek, another favorite of the libertarians, are really saying that we should have no such laws at all--we risk setting ourselves on the road to collectivism. But if we make no such laws, greedy, short-sighted businessmen disenfranchise us anyway.
Writing about morality is an exercise in the ought, not the is, and it is a very pat answer to say that capitalists ought to respect workers. But, as I have said so many times, problems should be solved as far upstream as possible, and that river begins in the human heart. Most of our stumbling throughout history (which Gibbon defined as the record of human folly and misfortune) is derived from the fact that humans, as a group, just won't behave the way they "should". All projects for laws are based on the concept that, if we won't do the right thing, we can collectively force ourselves to. I am a believer in government and in laws, so please do not construe this as a statement that they are worthless; but no law ever legislated something better than it could have been legislated by the heart, and almost every law is based on the heart's failure to legislate.
In that rather distancing context, here is my thought: the principle of "maximizing shareholder value" which we heard so much about in the '80's, as leveraged buy-outs resulted in companies being broken up for scrap, is a frighteningly selfish concept. It assumes that only the shareholders are important, and that no-one else really matters. Another way of phrasing the same thought, with a conservative political spin: capitalists build America, create the products and services we covet, and create jobs which we need to make our own livelihood. Capitalists will be deterred from serving their vital role if we place too many restrictions upon them. Forcing them by law to take other motives than their own desire for increase into account backfires, because then they will no longer want to create products and services and increase employment.
It is true that businessmen may choose not to found or grow businesses in an environment of too much red tape; I would not want to myself. But it doesn't logically follow that business is therefore exempt from any of the norms of the community; nobody else is. To pick just one example, many of the same people who would preach the above-summarized conservative business sermon, also become completely enraged at the prospect of immigrants to this country who do not wish to learn English. Why? "Because if they want to come here, they should play by our rules." But then, on the same theory, why can't a community tell a business not to enter unless it plans to keep its promises? Why is it acceptable in the spirit of free enterprise to make a community dependent on a single enterprise, then abandon it when "shareholder value" dictates? I am not arguing here that we must always substitute legal for moral rules, but why don't we at least see a mass layoff typically as a shockingly immoral act?
I think there are several reasons why we do not. The most important is the one I keep harping on: we uncritically regard business as functioning by rules of its own that precede our everyday morality in importance. When a company lays off hundreds of workers not because it is at death's door, but because it wants to redeploy its business elsewhere--or replace them with Mexican or third world workers working for dollars a day--the investment world typically applauds the decision and its stock price goes up. This confirms a perception that there is, and should be, a chasm between management and labor, with everyone out for himself; that management appropriately regards labor not as a collection of human beings, but of objects manipulated solely for "shareholder value"; and that the world of shareholders salutes decisions crushing and breaking these objects if it will result in the company earning a penny or two more a share.
A related excuse is the one we apply to make a virtue of necessity: if I "have" to do something to survive, then it must be the "right" thing to do. But we stop short of using this approach to honor the shipwreck survivor who kills and eats his companion in the lifeboat. The only distinction between the lifeboat killer and the company which lays off 4000 people is the number of victims. Even if the company "had" to lay its workers off in order to avoid bankruptcy, this cost benefit analysis is no diferent than the one engaged in by the survivors in the lifeboat. Under certain circumstances, a layoff may be the "right" thing to do from a practical, economic or legal standpoint, but that doesn't cleanse the action morally; like the lifeboat survivors, the management of a company which has just had a mass layoff would be more human, more recognizable, if they believed they had just done a horrible thing in order to survive.
If we recognized layoffs and other derogatory or manipulative actions as immoral, there would be fewer of them. I am very lucky in a lot of ways, but one of them is to work in a company which has never had a layoff in 24 years. We have gotten out of lines of business before, but we have always managed to redeploy people rather than fire them. Almost any company could do the same, if there were some real moral consequences of a layoff and if it simply spent a little more money. If I can make ten dollars respecting human beings and twenty treating them as cattle, I ought to want to make ten.
My company now employs almost 900 people, and about 40 of those jobs exist because I thought them up and went out and hired the people to fill them. I think this is by far the best and most lasting thing I have ever done, though far from the most visible. There is a powerful satisfaction in knowing that you have offered someone the opportunity to get their livelihood. By so doing, you contract a moral responsibility. A moment before, your responsibility to Jane Smith was the abstract responsibility you bear to any other member of the community. But once someone works for you, you have contracted some very specific obligations on which you can never go back. Some of these (just to make clear I am not talking welfare here) are based on reciprocity; obviously, the foundation of an employment relationship is an exchange of money for services. If the services are not performed acceptably, the relationship need not continue. But I have other obligations not based on reciprocity but on humanity: for example, even though you lie to me, I will tell you the truth. If you cheat me, I will fire you, but I will not cheat you. We may end our working relationship, but I will never stop regarding you as a human being to whom I am linked in a community and by a series of obligations.
I have had to fire people, but I always communicated the nature of the problem, made suggestions as to how to resolve it, and gave the individual time and help. And I was always truthful about the reasons someone is being fired. Because a business is a community, loyalty to one another is more important than perfection. Everyone gets to make mistakes, as human beings do, as long as they are made in good faith.
If you do not work out in one role, I will offer you another. At the end of the day, I do not want to feel that I missed any opportunity to help you to become successful. If we must part company, we will do so "straight", with every avenue explored.
A succcessful business, like any other community, is a alchemical concoction. You can empirically watch it succeed much more easily than you can derive, or recreate, the formula. The best book ever written about managing software developers, Peopleware, talks of the worker who plays no very clear role on the project: she doesn't actually develop code, nor is she the architect, nor does she "manage" the project in any visible sense. She is a catalyst, and when she is on the team, things get done, though you are not certain why. For this reason, you should not pull any thread out impulsively from your company's fabric, for you may unravel the whole thing as a result.
An element of the employer's responsibility is to create the opportunity for independence for the employee. In my industry, there are two very similar businessmen who offer a similar service. One runs a small shop and has trouble keeping employees, while the other is at the helm of a $360 million business. A major difference between the two is that the first man was unwilling to give stock to his employees, while the second saw the benefit in sharing the equity. More often than we see, the morally correct decision in business often happens to be the strategic one as well.
Seen this way, the ethical concept of business--employees are human beings, employers are responsible to them, and anything which promotes their independence is good for the business in the long run--coincides very nicely with Belloc's view of the distributive state. It is the distributive state in small, created by private rather than governmental action.
In fact, there are four constituencies which must be considered in the management of any business: the owners, the employees, the customers, and the public. There is a universe of business opportunities which do not involve skinning and eating the employees, blowing up the customers or polluting the public. In fact, the businessman deserving of most respect is the "servant leader", the one who knows that he will do well by putting himself last. We grant immense respect to the religious, political or military leader who follows this precept; why not the businessman?
Another way of looking at business is that many businesses are only profitable if we ignore the costs which are paid by other people. A most dramatic example: the asbestos business ceased to exist when it was finally required to pay the costs of the illnesses it created. The strange lens through which we regard business, the principle that it is an "older brother" of democracy free from any rules, usually dictates that third party costs of business activities are either officially ignored, left to rest on the affected individuals themselves, or are paid by the taxpayers. The recent hypocritical revolt by the Contract Republican Congress against unfunded mandates conveniently ignored the fact that most such mandates (forcing us to pay costs of activities we don't agree with) are imposed by business, not government.
Like any other member of a human community, businessmen should take responsibility for their choices. The first step is to stop kidding ourselves and acknowledge all the consequences and costs of business decisions. Once we know what we are really dealing with, we can fashion ways to solve problems, or can avoid causing them in the first place. As long as we are blind, we must stumble. I am not arguing that business should be welfare, only that Western civilization took a strange misstep whe it first considered that liberty was best guaranteed by allowing the owners to be more important than everyone else in the relationship.