Capitalism without ethical concern for others is a disastrous confluence, writes Public Agenda co-founder Dan Yankelovich in his new blog.
Equality of opportunity is shrinking, and there is a growing national consensus that we must reverse this trend. Both political parties, as well as the public at large, share a reasonably sound understanding that distortions in our economy have led to stagnant wages for middle- and lower-income Americans with greater concentrations of wealth at the top.
A global economy that makes it profitable for American companies to export jobs to lower wage nations, technological advances that permit companies to replace workers with machines, high rates of unemployment that rob workers of bargaining power -- these are some of the main economic forces that create the inequality of opportunity eroding our social contract and driving American society into a hole. Now that we understand them, we are likely to move toward remedying the economic problems they create for us.
Unfortunately, we do not yet have an equally sound understanding of the non-economic forces exacerbating these problems. Economies don’t operate in a vacuum; their strengths and weaknesses depend on the larger political and ethical contexts of the society of which they are a part. That is why capitalism is so different in China, Russia, Brazil and Turkey than in the United States and its closest allies.
This is a truth that the founders of capitalism, like Adam Smith, recognized. Smith distinguished between enlightened and un-enlightened capitalism. Capitalism is enlightened when those who practice it bring to bear an ethical concern for others. Smith labeled this concern “moral sympathy,” which he believed to be hard-wired into our human nature.
Two centuries later we use different language but the ethical context is the same. Our giant corporations are expected to care for all of their constituents --employees, customers, shareholders, suppliers and the larger community in which they operate. This form of caring is referred to as an ethic of stewardship: a company’s top executives regard themselves as stewards of an enterprise that serves many others.
Without such an ethic, companies and individuals become exploitative; they abuse their great power for short-term gain at the expense of those they purportedly serve. Our great financial institutions, our most trusted banks and investment companies, were caught in this frenzy of uncaring, unethical, short-term, manipulative thinking that led to the Great Recession of 2007-8. It was this sort of behavior that memorably caused Goldman, Sachs to be compared to a giant vampire squid squeezing the life out of everything it touched.
No wonder our great nation now finds itself in a hole: the structural changes in our form of capitalism coincide with a marked deterioration in our social ethic of caring for others. A disastrous confluence.
The "ethics of stewardship" requires an evolved cognition, at least to the adolescent stage of development (Piaget's Stage 4). I suspect that some corporate decision makers suffer from arrested cognitive development and may not have advanced beyond Stage 2 or 3.