As John Kay notes in the FT this morning:
The last fortnight may have been the most damaging period ever for the reputation of large British businesses. GlaxoSmithKline, the pharmaceutical group, was fined $3bn for abusive practices in marketing drugs in the US. Royal Bank of Scotland and its subsidiaries failed to process their customers' transactions. Both companies must have been relieved that Bob Diamond and Barclays successfully dominated the headlines. And these events follow BP's disaster in 2010.
It bis a staggering catalogue. And as he asks:
Conspiring to rig interest rates is probably fraudulent; failing to report the side effects of a drug is severely reprehensible but probably not illegal; cutting corners on an oil installation is negligent; systems failure in a computer system seems like bad luck. The degrees of culpability vary as do the incidents themselves. But is there a common underlying cause?
We are not interested in whether these companies made good or bad calculations. We are interested in what these incidents tell us about the values of the companies concerned. We need to be able to trust pharmaceutical companies. We expect banks to be run and populated by honest people, to keep our money safe, and to give us our money back when we need it. We want oil companies to have a strong culture of engineering professionalism and commitment to health and safety.
And from that statement of what is I think true he concludes these companies abandoned those principles in favour of earnings. As a result they put profit before principle - as those on the right of politics argue companies should. And yet that decision has in each case destroyed value.
You abandon principles at cost to value. That is now obvious to all but those who lead business , economists and those who egg both on in the right wing political narrative that idolises what they see as profit maximising market efficiency - a model that seems best able to destroy all that is good in business (and there is much that is).
The simple fact is that a new narrative for big business is needed, just as a new narrative for the state is needed, and a new narrative for both economics and tax is needed. But in each case the narrative is similar: it is that principles of trust and equity come first; that transparency and accountability reinforce those ideas and that the duty to both play fair and be seen to play fair in accordance with rules set and reinforced by a confident and empowered state, sure of its democratic mandate.
It's time that this was said, very loudly.
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The simple fact is that a new narrative for big business is needed
Or, as the FT article of 6 July you linked to made clear, an old narrative – the one upon which the old Quakers built their businesses and found that, contrary to their earliest fears that no-one would wish to deal with them as social outcasts, their businesses thrived because, unlike many around them, they followed principles of trust and equity […], transparency and accountability […] and the duty to both play fair and be seen to play fair in accordance with rules set. QED.
As has often been remarked, their business probity became diluted when they were allowed to rejoin society and go to Oxbridge, but that doesn’t alter the result of the original experiment with honesty in business.
It all comes down to our human values at the end. A society without them is doomed. Richard are you familiar with Rudolf Steiner’s views on social three-folding? In essence he argued that there are 3 spheres of human society: the sphere of culture/religion/education, the economic sphere and the sphere of rights or law and politics; and that for each of these there is a corresponding value: liberty, fraternity and equality. Sound familiar? Steiner argued that the reason Western society was going downhill was that the economic sphere today was dominating the other two and that the prevailing value manifesting in economics was not fraternity but liberty. If you note in the western media, the catch cry is often “liberty for all”. How often do we hear of brother-hood/fraternity?
That’s not so far from my logic in The Courageous State…..