The economy needs ethics, but whose ethics?

It was back in 2009 when  Miguel D’Escoto Brockmann, the President of the United Nations General Assembly, spoke of ethics in our economy

“The anti-values of greed, individualism and exclusion should be replaced by solidarity, common good and inclusion. The objective of our economic and social activity should not be the limitless, endless, mindless accumulation of wealth in a profit-centred economy but rather a people-centred economy that guarantees human needs, human rights, and human security, as well as conserves life on earth. These should be universal values that underpin our ethical and moral responsibility.”

This was soon followed by these words from the papal encyclical, Caritas in Veritate::

‘This is not merely a matter of a “third sector”, but of a broad new composite reality embracing the private and public spheres, one which does not exclude profit, but instead considers it a means for achieving human and social ends. Whether such companies distribute dividends or not, whether their juridical structure corresponds to one or other of the established forms, becomes secondary in relation to their willingness to view profit as a means of achieving the goal of a more humane market and society’

“Striving to meet the deepest moral needs of the person also has important and beneficial repercussions at the level of economics. The economy needs ethics in order to function correctly — not any ethics whatsoever, but an ethics which is people-centred.”

The concept of people-centered economics had been pitched in 1996 to US president Bill Clinton, by a member of the steering group for the Committee to Re-Elect the President, It included this core argument :

"We are at the very beginning of a new type of society and civilization, the Information Age. Historically, this is only the third distinct age of civilization. We lived in an agricultural age for thousands of years, which gave way to the Industrial Revolution and Industrial Age during the last three hundred years. The Industrial Age is now giving way to the Information Revolution, which is giving rise to the Information Age. Understanding this, it is appropriate to be concerned with the impact this transition is having and will continue to have on the lives of all of us. In that it is a fundamental predicate of "people-centered" economic development that no person is disposable, it follows that close attention be paid to those in the waning Industrial Age who are not equipped and prepared to take active and productive roles in an Information Age. Many, in fact, are scared, angry, and deeply resentful that they are being left out, ignored, effectively disenfranchised, discarded, thrown away as human flotsam in the name of human and social progress. We have only to ask ourselves individually whether or not this is the sort of progress we want, where we accept consciously and intentionally that human progress allows for disposing of other human beings.

This is a tricky question. Except in the case of self-defense, if for any reason we answer "Yes", regardless of what that reason is, we are in effect agreeing with the proposition of disposing of human beings. Whether disposal be from deprivation or execution, the result is the same for the victim. If we agree that sometimes, for some reasons, it is acceptable and permissible to dispose of human beings, actively or passively, the next question is "Which people?" Of course I will never argue that one of them should be me, though perhaps it should be you. You respond in kind, it cannot be you, but maybe it should be me. Not only can it not be you, it also cannot be your spouse, your children, your mother or father, your friends, your neighbors, but, maybe someone else. Naturally I feel the same way. Maybe we come to an agreement that it shouldn't be either you or me, or our families and friends, that can be disposed of, but perhaps someone else. While we are debating this -- passionately and sincerely, no doubt -- a third party comes along and without warning disposes of the both of us, or our families, or our friends. And there is the trap we have fallen into, because whether or not we approve of our or our families' and friends' demise is irrelevant. It is fair because we accepted the principle of human disposability. We just didn't intend that it be us who are tossed, but if we or our families and friends die, it is in accordance with principles that we ourselves have accepted and so must live -- and die -- by."

People-Centered Economic Development put this into practice as a business for social benefit and in 2004, having established as a company limited by guarantee in the UK, directed its efforts toward a civic movement in Ukraine - the Orange Revolution.  It was there that founder Terry Hallman exposed the widespread corruption and abuse within childcare institutions with his article on 'Death Camps, For Children'

A 'Marshall Plan' for Ukraine was delivered to Ukraine's government in February 2007. then USAID and the US Senate, with it's argument for applying business directly to a wide range of social problems. The plan included a proposal for social enterprise development and investment in childcare reform, such that all children might be placed in loving family homes.

As the 'Marshall Plan' concluded:

This is a long-term permanently sustainable program, the basis for "people-centered" economic development. Core focus is always on people and their needs, with neediest people having first priority – as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine's poorest and most desperate citizens, rather than a "top-down" approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first -- not secondarily, along the way or by the way. '

Then there's the ethics of sustainability, where the primary focus often seems to be the preservation of reputation.  

Only very recently Matthew Taylor of the RSA blogged on the subject of ethics in business. Just last week he also chaired a Baclays Debate between two individuals with different perspectives on applying business for social benefit. These were John Elkington making the case for CSR with Mark Kramer as advocate for 'Creating Shared Value'.  

As some may know, this same debate with the same people was featured 3 years ago when it was hosted by Guardian Sustainable Business. John Elkington's primary concern at the time was that "Shared Value" would elbow "Sustainablity" aside.  (remember the P-CED core argument)

There was no problem however in elbowing others aside as I discovered when I shared the argument for a rethink of capitalism from the 'Marshall Plan'. I took care npt to share any links, being aware of editor Jo Confino's earlier hostility to our work on Economics For Ecology.

“Enterprise is any organizational activity aimed at a specific output or outcome. Once the output or outcome – the primary objective – is clear, an organization operating to fulfill the objective is by definition an enterprise. Business is the most prominent example of enterprise. A business plan, or organizational map, provides a reference regarding how an organizational scheme will operate to produce a specific outcome: provision of products or services in a way to create profit. Profit in turn is measured numerically in terms of monetary gains, the “bottom line.”

This is the function of classic capitalism, which has proven to be the most powerful economic engine ever devised.

An inherent assumption about capitalism is that profit is defined only in terms of monetary gain. This assumption is virtually unquestioned in most of the world. However, it is not a valid assumption. Business enterprise, capitalism, must be measured in terms of monetary profit. That rule is not arguable. A business enterprise must make monetary profit, or it will merely cease to exist. That is an absolute requirement. But it does not follow that this must necessarily be the final bottom line and the sole aim of the enterprise. How this profit is used is another question. It is commonly assumed that profit will enrich enterprise owners and investors, which in turn gives them incentive to participate financially in the enterprise to start with.

That, however, is not the only possible outcome for use of profits. Profits can be directly applied to help resolve a broad range of social problems: poverty relief, improving childcare, seeding scientific research for nationwide economic advancement, improving communications infrastructure and accessibility, for examples – the target objectives of this particular project plan. The same financial discipline required of any conventional for-profit business can be applied to projects with the primary aim of improving socioeconomic conditions. Profitability provides money needed to be self-sustaining for the purpose of achieving social and economic objectives such as benefit of a nation’s poorest, neediest people. In which case, the enterprise is a social enterprise.

In this case, for the project now being proposed, it is constructed precisely along these lines. Childcare reform as outlined above will pay for itself in reduced costs to the state. It will need investment for about five years in order to cover the cost of running two programs in parallel: the existing, extremely problematic state childcare scheme, and the new program needed to replace it for the purpose of giving children a decent life. The old program will be phased out as the new program is phased in. After this phase transition is complete, the state will from that time forward pay out less money for state childcare. Children will have a better life, and will be more likely to become healthy, productive assets to the nation rather than liabilities with diminished human development, diminished education, and the message that they are not important – the basis for serious trouble. There is no need whatsoever to give these children less than a good quality of life as they grow and mature. The only problem is reorganization of existing resources.”

The contribution above was removed with a statement suggesting it violated discussion policy.

Concerned mainly about local vested economic interest, we protected our work with both copyright and a Creative Commons licence.  

As I soon discovered, what we'd shared by example, was gaining traction in business thinking under several new banners, including John Elkington's Breakthrough Capitalism.  

 

 

Then there was Paul Polman of Unilever. Again a call for ethics with Where Our Moral Compass Meets the Bottom Line:

"When people talk about new forms of capitalism, this is what I have in mind: companies that show, in all transparency, that they are contributing to society, now and for many generations to come. Not taking from it.

It is nothing less than a new business model. One that focuses on the long term. One that sees business as part of society, not separate from it. One where companies seek to address the big social and environmental issues that threaten social stability. One where the needs of citizens and communities carry the same weight as the demands of shareholders."

The major consequence of elbowing people-centered economics out of the way was first and foremost the children who suffered most, then the social uprising that turned into an international crisis.

Is this the kind of ethics we need for a new economy?

Today it's no surprise to find that another 'Marshall Plan' initiative includes the participation of Lords Mandelson MacDonald and Risby. It was Lord Risby in his role of CEO for the British Ukrainian Association who was introduced to ours in 2007

Meanwhile Paul Polman has joined a group of business leaders offering to help establish peace in Ukraine, in any way they can. 

Returning to the Vatican: "We need a conversation which includes everyone, since the environmental challenge we are undergoing, and its human roots, concern and affect us all."  Pope Francis writes in his recent encyclical. Clearly there are many who don't want this kind of inclusion.