Recently, I attended the Fortune magazine Brainstorm conference in Aspen, Colorado. As preparation, participants were asked to write a biref essay on an urgent problem of major scope. A few attendees specifically mentioned how much they liked this, so I am reproducing it here.

Developing a Business Ethic

Mitch Kapor

July, 2003

Developing a balanced business ethic which embraces fairness and honesty as well as profit tops my list of issues urgently deserving attention. In the post-Communist era, the capitalist system has triumphed globally. Now the system has to be saved from its own excesses.

When the mission in practice of business is to maximize the wealth of management and sophisticated investors, it creates a climate which rewards greed and deception and makes the egregious behavior of an Enron or Worldcom inevitable, It also undermines the overall legitimacy of private enterprise as a system. We cannot afford this.

Wealth created by the plundering of natural resources, exploitation of labor in lesser-developed nations, and unfair competition, regardless of where it occurs, amounts to theft. It deepens the divisions between rich and poor and between more- and less-developed countries; it creates the seeds of dissent around which extremist movements coalesce.

We should judge business not only by short-term financial performance, but by environmental impact, treatment of employees and community responsibility. Business strategies must commit, not pay lip service, to values consistent with broader desired outcomes. Society must hold business responsible for these values.

The dotcom bubble was fueled by the greed of the average investor, staffed by the young educated, professionals trying to retire by 30, manipulated by investment bankers, and funded by venture capitalists with money from prestigious university endowments and state pension funds, whose managers only care about getting the highest returns. As citizens and consumers who benefit from the system none of us cannot exempt ourselves from its critique.

My son, a high school senior, recently observed that students planning business careers seem most interested in doing whatever they can get away with. Kindergarten values -- play nicely with others, don't take more than your share - don't graduate high school, much less find a place in business, and college economics -- Adam Smith's invisible hand -- provides the intellectual justification for the naked pursuit of self-interest.

The problem is that the world suffers, as well as benefits, from being organized around privately owned enterprises and global profit. Billions are doing well, yet billions more are still starving, suffering, and dying needlessly, and we are killing the planet on which we depend in the process.

The methods of business, with their emphasis on effectiveness, efficiency, and accountability, are potent. Without anchoring values, we get the lawless mafia capitalism of Russia of the 1990's. The Eastern European countries with traditions of civil society such as rule of law to draw upon have made the transition to Western economies more quickly and smoothly.

Business today is offered as a role model for improving government, reforming education, and being the yardstick to measure non-profit organizations. Isn't it time we begin to understand the possibilities and practice of capitalism which is not red in tooth and claw?

-- MitchKapor - 03 Aug 2003