Uncertainty, Diversity and The Common Good

Changing Norms and New Leadership Paradigms

Stefan Gröschl

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317005469
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Unternehmensführung

Because of a management model emphasizing standardization and a one-size-fits-all approach, the previous good health of firms depended on economic performance and maximizing shareholder value. The enduring financial crisis and the ensuing leadership void have forced us all to reconsider the rules of the game and to take into account economic and social factors, in order to address the needs of an unpredictable world. In Uncertainty, Diversity and The Common Good, contributors from leading academic institutions around the World discuss different models of socially responsible global leadership. Their perspectives embrace philosophy; sociology; psychology; ecological and environmental economics; management; and entrepreneurship. Together they explore unpredictability and how being responsible for social as well as economic outcomes requires intelligences that enable managers to adapt and to develop a sustainable, lasting and consistent managerial approach. Working with local communities, integrating minorities, and redistributing wealth, they say, requires a new model of socially responsible leadership that brings together dimensions that are incompatible within existing paradigms. This book indicates what new paradigms might look like, with particular regard to the issue of diversity as an asset with which to confront uncertainty. Case studies tell of leaders working with diversity to create social change and new visions of leadership that are impacting social and cultural norms. This leads to discussion of the nature and diversity of leadership itself which will be helpful to academic researchers and higher level students, as well as policy makers and practitioners.

PART I Conceptualizing the Common Good

CHAPTER 1 Business and the Common Good: Some Fundamental Issues

LAURENT BIBARD

Introduction

Observing that globalization leads to hyper competition is quite trivial. Observing that competition leads to companies making decisions which potentially endanger the notion of the common good becomes trivial as well. After years of the belief that capitalism had overcome all possible internal as well as external contradictions, the question of the extent to which companies – private companies – contribute or damage the common good again looms ahead. The renewal of the questioning has been prepared by the emergence of ethics, sustainability and corporate social responsibility (CSR) topics in business. As a result, nobody can look indifferently at these topics anymore.

Nevertheless, a second preoccupying issue looms ahead. The question of what the common good consists of cannot be avoided. As states are submitted to financial evaluations, as a tendency of making war for scarce resources intensifies, as energy and water are dangerously less and less available, the way of conceptualizing ‘common good’ becomes no longer evident.

Strangely enough, companies and people’s private interest – which no doubt contribute to the resource scarcity that is a function of human desires – contribute to a situation where the notion of ‘common good’ is objectively in question. In other words, the dynamic which endangers the notion of common good, simultaneously makes the notion of common good uncertain if not dubious. One could expect that the dangers provoked by the uncontrolled increase of mercenary behaviour would favour a parallel defence of a common good and public values, such as the defence of ethics, sustainability and CSR. This is only partially true. Another consequence of the increasingly taken-for-granted legitimacy of private interests is a similarly taken-for-granted carelessness about the notion of a possible shared fundamental interest in a ‘common good’. In practice, people lack more and more education about the possibility and relevance of a defence of such a notion. Some of them try to defend the theoretical and practical relevance of the notion and its aim.

As in management, it is necessary to take some distance to evaluate how best to tackle the problem. I do so by: 1) starting from a brief glance at economics since the seventies, 2) making a detour through the birth of modern economics as such, 3) enlarging definitively the scope of our questioning through a philosophical enquiry about the notion of ‘common good’.

I. On the Recent History of Economics and Management: The Legitimacy of Profit-making

Three main reasons may be identified as the origin of the current taken-for-granted legitimacy of profit-making: The first is the continuously deepening economic crisis since 1973. The second is the fall of the communist regime and the end of the Cold War, and the third is a theoretical statement on profit-making legitimacy. Before giving these reasons, it is worth underscoring the fundamental legitimacy of profit-making considered apart from its current dominant increase as alluded to in our introduction. Such a fundamental legitimacy may be put the following way: The objective of people taking care of poor people should never be that everybody becomes poor. It should be to enrich everybody. In other words, it is not by getting poorer that people may possibly contribute to others’ enrichment. Even considering an increasing scarcity of worldwide resources, the means for a worldwide stabilized economy do not depend on a general impoverishment. At any rate, the question of what being rich and poor means needs to be discussed.

1) A CONTINUOUSLY DEEPENING ECONOMIC CRISIS

The consideration of the economic crisis depends on two circumstances which make quite uncertain our understanding of it: The so-called crisis started due to a petrol cost increase, which endangered the Western countries stability. The contemporary worldwide economic crisis was originally a Western crisis, provoked by a (geo-) political decision. Second, the crisis was all the more significant in that it followed a quite ‘naïve’ long-lasting growth period.

The emergence of a worldwide economic crisis which has lasted since the 1970s depended on a previous naïve sentiment that economics could grow without limits. Such a naïvety was of course conditioned by the growth duration. Any stable situation creates its own evidence and tacitly admitted paradigms. The Western understanding of its economical, political and moral legitimacy predominantly depended on its success and domination.

Such a taken-for-granted understanding was intensified by the sentiment of legitimacy provoked by the Cold War. Having an enemy always reinforces the sentiment of being right. Being right ‘against’ is much stronger than being right for the sake of being right. The question of what ‘being right for the sake of being right’ means is certainly quite difficult to answer. This would mean answering to the question of what does this ‘natural right’ consists of.

Be that as it may, the enormous surprise caused by the petrol prices certainly created the conditions for a loss of naïvety. Since this political decision, the world would never remain the same as it had previously – as it used to be depending on the point of view of the most important Western country, the United States of America. The very moment when Western countries lost their peace, a possibility of awareness appeared.

2) THE END OF THE COLD WAR

This possibility was nevertheless lost quite soon. The end of the Cold War contributed to an even more deepened naïvety. The collapse of the most powerful and unique enemy of the West, the Soviet Union regime, overwhelmingly evidenced the triumph of Western values, rights and relevance. One way or another, people more or less consciously – and most often rather unconsciously – integrated the taken for granted legitimacy of the capitalist/Western system – despite the radical crisis intensification. A bit less than 20 years after the Berlin Wall fell, the 2008 financial crisis made clear that nothing fundamental had been solved by and through the end of the Cold War sometimes understood as the End of History (Fukuyama 1992). In other words, history was not over. In fact, something else had been preparing, which would certainly open again the doors of an uncertain future. Such a reopening was announced on September 11, 2001.

3) A THEORETICAL STATEMENT ON PROFIT-MAKING

Let us take some distance from the facts and turbulences of history. A statement of outstanding importance was published in the New York Times in 1970. This statement came from the economist Milton Friedman, stating: ‘The Social Responsibility of Business Is To Increase Its Profit.’ Surely Friedman’s argument is at least partially – if not absolutely – right. The first fundamental and inevitable sustainability people must aim at is the corporate one, if they are to support environmental, social and political sustainability. As long as the worldwide system remains a capitalist one, the first duty of corporations is to last as long they can. The duty of society is then to observe their sustainability, and to ratify their failure when they go bankrupt – that is all. At any rate, corporations are necessary for producing services and goods, and it is an inescapable fact that they are the most important, if not the most decisive, global economic actors. Considered in this perspective, their minimum social responsibility is to increase their profit.

The Friedman statement nevertheless provokes a kind of a confusion due to the understanding it imposes on economics. The clear separation between economics and politics and the dominant support of a profit-oriented economy radically favours an indifferent if not cynical behaviour towards the notion of a possible common good. Politicians are accountable for their actions – for their intentions and for the consequences of their actions. Politicians are the ones to make a possible common good relevant and effective. Businessmen could legitimately not care less about politics.

This might be theoretically true. Grounded on an orthodox theoretical understanding of economics, the subsequent clear separation of economics and politics conforms to a necessary clarity concerning the distinction between private and public interests. If humans are to defend the notion and reality of private property, they need to separate clearly economics from politics and vice-versa.

Such a separation may be theoretically solid. Kant nevertheless quite emphatically stated that what may be true in theory does not necessarily apply in practice: The statement is but evident (Kant 1970). What as a researcher Milton Friedman made public is a theoretical statement; one which was published in a highly important American mass media – a highly important American newspaper distributed worldwide. The Friedman statement had at least slight practical consequences. These practical consequences may be summed up by saying that most businessmen were ready to hear that their unique social responsibility was to increase their profit. They were ready to limit their responsibility to their egoistic interest. Since the Friedman statement, businessmen and businesswomen would aim at increasing their profit exclusively, on the basis of an outstanding scholar’s benediction. Before I go further, let us ask to what extent scholars should question the relevance of a publication before making public their statements. The answer to this question can certainly not be a naïve one.

II. On the Origins of Modern Economics

Were we to understand globalization in a relevant way, we should for now on get rid of the very first possible interpretation of it: Western culture spreading worldwide. This interpretation was certainly true for a while – perhaps as long as a few centuries. Yet globalization must now be understood as a tension between Western culture and the ‘others’, if not more radically as a tension between some principles and attitudes respectively grounded on the assumption that humans can do everything in this world, and on the other hand, that they cannot; ‘doing everything’ here means having the world under control, for the sake of humanity. Such an assumption must be traced back to the emergence of the European humanist paradigm. The European humanism is understandable as the decision to take control of ‘nature’ instead of ‘God’, for the very sake of human life (Bibard 2005). Humanism became an at least partially worldwide basis for the current globalization dynamic for two main reasons: 1) It was initially politically driven, as exemplified by colonization, and 2) It contained deep human or universal roots which made it somewhat fascinating for people confronted by it with respect to science and technologies.1 One of the aspects of it which grounds the contemporary liberal approach of humans is the related political philosophy. In other words, the current understanding and shaping of economic life is, for now, grounded on some fundamental philosophical assumptions concerning humans’ political or collective life. This is particularly the case for Friedman’s statement on CSR.

An ancient understanding of economics made it basically dependent on the family life. The etymology of ‘economy’ (oiko-nomos), traces back to the household, traditionally mastered by women. Economics are naturally no longer limited to such an understanding. But a specific radical change occurred during the so-called ‘Renaissance’ and the period surrounding it, when new bases for the understanding of politics were made clear. These bases were particularly made clear by the philosopher Thomas Hobbes, who presented his understanding of politics at least in two books, De Cive and Leviathan (Hobbes 1982, 1985).

Regarding the latter text in particular, what Hobbes makes clear on politics is the following: Humans do not spontaneously live together, or collectively. Rather, they live as individuals, isolated or separated from each other, and they long for goods and resources. Such a life is deeply conditioned by fear and desire – the fear of a violent death and the desire for a long and peaceful life – admittedly reproduced. As humans sooner or later aim at the same means (food, females, land and so on2), they sooner or later fight for life, fighting against scarcity (Hobbes 1985), but as well fighting for recognition. Humans are full of ‘vanity’, they want to be recognized by other humans depending on the way they understand themselves (Hobbes 1985). Sooner or later, humans become aware of the general war which characterizes their spontaneous world. The ‘natural state’ of humanity is a state of a kind of ‘civil’ war – apart from the fact that any ‘civil’ state does not exist. The ‘natural’ humans’ state is but a violent existence, based on everyone’s right if not duty to live, and to defend himself/herself for that unique purpose – the mere struggle for life.

Added to them being full of desire, fear and vanity, humans are rational (Hobbes 1985). They sooner or later have the sentiment that they should get rid of a continuously fighting life. Not only is such a life dangerous, but it is as well radically uncertain, and last but not least, it represents a huge waste of time. They decide to delegate their right and strength for defence to a unique entity – the ‘Leviathan’, which will become the modern ‘State’, defined by the very monopoly of the use of violence. The Leviathan is defined as the only entity, structure, human or assembly of humans entitled to define as well as to apply the rules dedicated to a collectively secure and peaceful life. The fundamental convention made by humans in order to dispose of the necessity to fight in order to live defines the first and original ‘social contract’.

Beyond all its possible nuances, the modern understanding of political life is grounded on the notion of a previous and constitutive ‘social contract’. Such an understanding of the roots of political life has a wide range of consequences among which are the following ones:

1. The notion of ‘natural state’ is actually an artefact: No philosopher ever pretended such a human condition ever existed empirically.

2. The notion nevertheless makes room for an anthropology which includes as its core content the modern understanding of rationality. This modern understanding is actually an economical one.

3. The economical understanding of human rationality does not necessarily involve a notion of any common good for the sake of a common good as such.

4. The modern understanding of politics based on the artefact of ‘natural state’ is future-oriented.

5. The current issues on the tension between business and common good may radically result from such an understanding.

Let us consider briefly these points.

1. THE ‘NATURAL STATE’ NOTION IS AN ARTEFACT

When describing the human ‘natural state’, Hobbes makes clear that he considers humans as individuals, equal to each other, free, and rational. Contrary to what occurred in the former Aristotelian understanding of politics which Hobbes opposes, humans are not any more supposed to relate to each other through various so-called ‘natural’ bounds.3 In Hobbes’s perspective, humans are considered independently of their physical features, for example independent of their sex, ethnic group and age. This is of course not made that clear in Hobbes’s writings. It is nevertheless the fundamental Hobbes assumption, which is particularly visible when Hobbes argues about humans’ ‘natural’ equality (Hobbes 1985). Let us keep in mind the main stake of Hobbes’s assumption: Getting rid of ‘nature’. Hobbes talks all the more of a supposed ‘state of nature’, or ‘natural state’, that the ‘state’ he depicts as being the original one is radically at odds with an intuitive spontaneous understanding of humans. Would humans be spontaneously rational, equal and free individuals, there would be no need for any political organization for their collective existence. ‘Anarchy’ understood as a ‘gods’ democracy’ on Rousseau point of view,4 would immediately be possible.

2. ON RATIONALITY AND ECONOMICS

The dynamics through which humans shift from the so-called initial ‘natural state’ to ‘society’ or to the ‘social contract’ is based on a universally shared individual rational choice. Rationality is at first concerned as driving the sentiment that life is too costly: defending one’s interests is too much of a burden for individuals who spend their whole life struggling for the sake of sustainability and fleeing from violent death. The possibility to delegate one’s rights to live – and subsequently one’s duty to defend oneself – to a third, impartial and disinterested judge, which would play the role of the Leviathan, is based on a calculation. This calculation results from a comparison of delegation versus the related costs of a spontaneously given ‘natural’ life. Rationality is involved as soon as individuals are supposed to understand that they can, at any rate, make the choice of delegating their power to a third judge if everybody does the same. Would an individual make such a choice remaining the only one in doing so, or someone among some others, the others would sooner or later submit if not enslave them. A necessary condition for a possible social contract is that everybody makes it at once.

The individual’s self-understanding is at the root of any economical calculation. Hobbes grounds his understanding of politics on a new understanding of humans’ ‘rationality’, envisaged in the context of his previous notion of the ‘natural state’. ‘Rationality’ had previously been approached on the basis of theology, as the human capacity to understand the whole – and ultimately ‘God’. Rationality will from now on be approached on the basis of an individual self-interest. Politics will definitely b...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Contents
• List of Figures
• List of Tables
• About the Editor
• About the Contributors
• Foreword
• Introduction
• Part I Conceptualizing the Common Good
• Part II Conceptualizing Global Leadership and Social Responsibility
• Part III Cases of Global and Social Leadership
• Part IV Stakeholders of Corporate Leadership
• Part V The Role of Educators
• Concluding Remarks
• Index