A succession of global economic crises provoked by a dysfunctional financial sector, national as well as regional co-dependencies of debt and currencies fluctuations have demonstrated that we cannot count on the invisible hand to steer markets. They no longer behave as they should. A call for a new form of capitalism replacing the neo-classic approach has highlighted alternatives such as conscious capitalism.
The underlying question is one of trust. We don’t trust the systems we have built, we know that we cannot create what is best for the world within the existing structures, and we are afraid of stepping outside of the existing boundaries of what is known and established. We don’t trust in our own ability to create. Futurist[1] and systemic thinkers have demonstrated to what degree we are unable to develop solutions while at the same time recognizing all unintended consequences of such solutions. While it is questionable if the current financial system was created without an understanding of the extent of its implications[2], it is safe to assume that in an increasingly complex world, we will be less and less able to foresee the consequences of the actions we will take. We have entered into a mode of experimentation, yet we have not admitted this and continue pretending what we do is responsible action.
What we need is to assume a different state of mind. The French expression “état d’esprit” reflects this better, a state of Spirit rather than a state of (mental) mind. A state in which we are connected with the world, where we are in resonance with the world, so that we can create from within that source of unlimited potential, what is right for the large good. Everything we were taught and told has resulted in a fundamental disconnection from this Source, resulting in a situation where we – the most evolved race on the planet – feel like victims caught in overwhelmingly powerful and complex system within which we at best survive. It is us who have created these systems and it is us who will need to adapt or replace these systems to create something that is adequate for all living members of our planet. There are some major obstacles on this path, power, survival instincts and fear not the least of them, yet unless we – as a human race – overcome these, we will continue co-creating a world that serves only a very small minority, while destroying our habitat and creating suffering for a large majority of our fellow global citizens.
Conscious capitalism is one of many expression of such an elevated state of Spirit. It redefines the role of business beyond serving solely the shareholders as defined in the agency theory and Friedman’s claim that “the business of business is business”. It expands business’ role to serve society and the planet by embracing a more holistic and balanced responsibility towards all stakeholders. Supporting this claim, some demand that organizations become “a human community of belonging”[3].
[1] Joel Baker: “The implication wheel”
[2] Charles H. Ferguson: “The inside job”, documentary film, 2010
[3] Dr. Roger Steare, Case Business School, London
August 26, 2011 at 3:57 pm
Last week Dr. Muff addressed the macro view of sustainability – the world eco system and how we all need to become more aware and more active in preserving and sustaining this precious resource.
This week, Dr. Muff is moving towards the micro view of sustainability involving the actions of firms and individuals. Dr. Muff’s points are not only valid concerning the issue of trust, but are at the center of all human interactions. From Plato, Socrates, Aristotle, Plutarch, to Cicero, we see the same issues regarding human behavior taking the stage front and center.
Abraham Maslow (1998) in his ‘Hierarchy of Needs Satisfaction’ model provides valuable insight regarding human behavior. In this model Maslow indicates that ‘desirable’ behavior will often change depending on where one sits on his/her ‘Needs Satisfaction’ scale. That is, at the lowest levels where Maslow addresses needs such as: security, survival, safety, shelter, hunger, thirst, etc., behavior may be significantly different than if we are economically and emotionally secure. Maslow also indicates that human behavior may change as one rises or drops on his ‘Needs Satisfaction’ scale. For instance, if I have not eaten in 2 weeks and Bob has a sandwich on his desk, I will likely try and take Bob’s sandwich even though I may know such action is wrong (I am stealing something without asking permission or paying for the item because survival to me is the issue and is driving my behavior).
What is known from biochemistry (Hadley, 2007) is that as one is threatened or one perceives threats, the hypothalamus and endocrine systems become more active. That is, the logical brain may begin to have less control over our actions because of this ‘threat response’ – a biochemical reaction to real or perceived threats.
Such biochemistry may signal why it is easier to see how someone else should behave regarding the all important issues of morals and ethics when facing a dilemma, and why this becomes less clear when we specifically and individually are faced with the same moral or ethical dilemma (we are now personally threatened).
This same behavior – threat / response, may be at the center of management actions in the many situations we have all seen of mal corporate behavior – a breach of trust – over the years. In fact, this issue is at the heart of the ‘Fraud Triangle’ where incentives or pressures to take certain actions override the managers’ moral compasses (Cressey, 1973, AICPA, 2002).
Studies have indicated that children with a solid ethical and moral upbringing often better react to threats as we would like all to act. Such upbringings may in fact reinforce the biochemistry of such children to react in more desired fashions when older.
Dr. Muff and the great thinkers are correct; trust is the most basic of all desirable human characteristics because each knows where the other stands. Now we all need to better understand what the drivers of trust are, and how to bring about desirable human behavior regarding trust across all societies, institutions, and individuals.
References
Cressey, D. (1973). Other People’s Money: A Study in the Social Psychology of Embezzlement. Montclair, N.J.: Patterson Smith, 1973. Codified in the AICPA’s Statement on Auditing Standards (SAS) 99: Consideration of Fraud in a Financial Statement Audit.
Hadley M. and Levine J. (2007). Endocrinology. 6th Ed. Pearson Prentice Hall.
Maslow, A. (1998). Toward a Psychology of Being, 3rd Edition, Wiley.