Friday, May 24, 2013

Danger due to: ethics

John Dalla Costa, the renowned business ethics writer and consultant teaches with us at the Schulich School of Business. He's also an occasional blogger at his site We love the piece he's just posted on the dangers of thinking that because you're doing ethics, you're going to be more ethical. With his permission, we're reposting it here since its a conversation we agree that needs to happen.

Are ethicists more ethical than their peers in other disciplines? It’s an interesting question. A recent study published in the journal Metaphilosophy provides a limited data point, but the news, at least if you’re an ethicist like me, is not good. Comparing how university professors engage students, the researchers found no difference between ethics professors and other faculty. Even though the ethics experts set an ideal, and acknowledged that not following through on that standard was morally wrong, in action, the experts in ethics were indistinguishable from fellow academics.

Are you surprised? I’m not. But I am distressed.

I’m not surprised, because if ethics were truly relevant, or if we really understood them to be effective, we’d be invoking them with much more frequency and rigor. Canada is knee-deep is scandals, with Senators whitewashing expense reports, the Prime Minister’s Chief of Staff paying for the white paint, and the Mayor of Toronto careening from one violation of the public trust to another. Ethics are AWOL, and no one seems to be missing them.

The same is true in business. Ethics have become IKEA-like contraptions for compliance. All the imagination and enquiry have been purposefully engineered away, so that all ethics and compliance officers need to do is follow the illustrated instructions, and assemble the pre-cut pieces.

Before Lehman Brothers and Bear Stearns imploded in 2008, I managed to download the codes for ethics and conduct from their respective websites. It turns out that they were derived from a boilerplate, following numerically identical categories, and using mostly similar jargon, with only one or two cosmetic flourishes reflecting idiosyncrasies of corporate history. It would inconceivable for these global finance behemoths (or their peers) to use Quicken to do their taxes. But that’s basically what they did for their ethics – adopting a four-page template, in the name of the Board of Directors, to set the terms and scope for their ethicality. Not surprisingly, both companies got full return on their investment.

There is a good reason why we’ve talked so little about corporate ethics since the financial crisis: most corporations had already subscribed to compliance projects pre-2007, and nothing has changed since.

I’m distressed because ethics-without-ethicality repeats the diminishment of restraint and responsibility, which led to previous market failures and economic crises.

As bad as were the deceptions perpetrated by Enron, it was much worse that these accounting lies were intentionally papered-over by its auditor, Arthur Anderson. Similarly, as irresponsible as were mortgage tactics and securitizations floated by the banks in the run up to the financial crisis, it was much worse that the ratings agencies, like Standard and Poor’s, assigned Triple AAA credit value to derivates that their own in-house experts considered junk-grade. When sentinels sell-out, when they simultaneously over-estimate their virtue and under-deliver on the promise they are entrusted to uphold, bad things happen to everyone.

In his book, Confronting Vulnerability, Jonathan Schofer reminds us that moral laws and ethical rules need continuous replenishment. His point is that, while established as bulwarks against human vulnerability and exploitation, ethics are themselves vulnerable and exploitable. We fall-back on ethics as if on auto-pilot, with such doctrinaire rigidity that we cease using any critical thinking as we apply them in life’s complex ambiguities. Or, perhaps worse, we take them for granted until they become easy take-over targets for other ambitions or motivations. Principles share with practitioners the fragility of our human finitude. The most unethical thing is often denying our personal limitations for seeing what is right, and deciding what is true.

We don’t know if this research confirms that ethicists too have ceased being reliable sentinels. But it is the question that should distress and challenge us – ethicists and non-ethicists alike.

John Dalla Costa

Photo by blind dayze. Reproduced under Creative Commons licence

Monday, May 20, 2013

The rise of Islamic politics – just another mode of global capitalism?

Ever since the Iranian revolution up until the aftermath of the Arab Spring most of us were made to believe that the advent of Islamic regimes is the ultimate rise of the common man and woman in societies previously repressed and exploited by ruthless dictators. Against entrenched élites of  crony regimes and their entourage, Islamic politics could be perceived as the overdue liberation of the impoverished masses from pseudo-nobility, military dictators or other élites, having had nothing other in mind than to line their pockets for decades and transfer their wealth to Swiss bank accounts.

It is about time to get rid of this stereotype.

Recent evidence comes from Iran, as it were the prototype of this type of regime change. Former president and revolution-veteran Ali Akbar Hashemi Rafsanjani in his attempt to re-enter political life now turns out to be a billionaire – as do many of his fellow ‘religious’ leaders. Now this may appear just a co-incidence of yet another political class not resisting the temptation once given free reign over the cookie jar.
But it is not just that: the main policies of his presidency (1989-2007) read like the script book of the Washington Consensus: liberalization of the economy, creating ‘free’ markets, privatization - Rafsanjani used the classic toolbox of what often is dubbed ‘neoliberal’ capitalism in the West. The result is rather similar, too. His policies created a new super rich upper class and made life rather tough for the vast majority of Iranians. I don’t know if there was an ‘Occupy Tehran’ camp – but the story of the 1% versus the 99% would certainly resonate there. And this after three decades of Islamic fundamentalist rule.

This in itself is surprising and widely overlooked in the Western media. The Iranian revolution, together with the more recent uprisings in the ‘Arab Spring’ of 2011, had this strong whiff of a grassroots movement, driven by the disenfranchised, poor, working class, common-man-on-the-street. Much of the rhetoric of Islamic fundamentalists – from Tehran in the 1980s to Cairo or Tunis in the 2010s – sounds like left wing, anti-establishment, people driven political movements with an eye of empowering the lower and middle classes in hitherto repressed dictatorships. In reality, nothing could be further from the truth.

The best example for understanding the way Islamic fundamentalism and a capitalist ideology can be the coziest of bedfellows comes from Turkey. Founded in 1923 on the remains of the Ottoman Empire Turkey is the oldest democracy in the Muslim world. For ten years now, the country has been ruled by Recep Tayyip Erdoğan and his Islamic Fundamentalist party AKP. The Islamic aspect – while blatantly obvious in local politics - only became more visible in Turkey’s recent conflicts with Israel in the context of support for the Palestinian state. For most of his tenure though, Erdoğan was praised in the west for his economic policies. He continued the economic policies of his predecessor Özal by reducing trade and FDI barriers, liberalizing the economy, privatizing many of the large assets of the Turkish state and creating a new class of Turkish entrepreneurs, the so-called ‘Anatolian Tiger’.

Erdoğan’s base (he won his third term by nearly 50% of the popular vote) is clearly in the poorer, underdeveloped and more backward parts of Central and Eastern Turkey and the poor, fast growing neighborhoods of Turkey’s big cities. Very much what on the surface looks like a working class movement. Conspicuously though, under Erdoğan we have also seen a systematic dismantling of worker’s rights and a trade union movement deeply rooted in the 90 year tradition of a social democratic state envisigaed by Modern Turkey’s founder Atatürk. 

While Erdoğan’s Islamic ‘projects’ – from a re-instatement of headscarves in public institutions to the recent gaffe about a ban of red lipsticks for stewardesses on Turkish Airlines – have slowly garnered some attention in the West, the anti-labor inclinations of his politics have largely been under the radar. After all, they did not differentiate him too much from most other Western capitalist economies recently. Suffice to add, that Erdoğan himself and his wider family is said to have amassed a fairytale fortune over the last decade which puts him just on par with the Ayatollahs next door.

On May 1st (the European version of Labor Day) trade union rallies and demonstrations are common on in many larger European cities. This year though in Istanbul they were banned for the first time. The hard core of labor activists that still defied the ban and turned up on the city’s central Taksim Square were met by more than 4,000 police with water cannons, rubber bullets and oodles of tear gas, leaving many injured and hospitalized. Scenes, by the way, very much reminiscent of the way US authorities dealt with the Occupy protesters from New York to California.

But this is not just one isolated incident. In 2012, Turkish Airlines fired 300 employees who went on a strike opposing imminent legislation by the AKP targeted at further limiting rights to industrial action. In the built-up to a workout planned for May 15 this year one could read paternalistic messages from the company on large screens in every sales office of Turkish Airlines, encouraging workers to trust the company rather than the union. No wonder the strike went nowhere with the union complaining about intimidation and threats to workers.

There is a growing stream of work on this topic in the Academic world. Işık Özel , a professor at Sabancı University in Istanbul has done inspiring work on how contemporary political Islam is informed by pretty much the same mindset as modern capitalism. In one of her papers, she cites the mayor of Kayseri, one of the towns at the centre of the ‘Anatolian Tiger’: "To understand this town and its flourishing economy, one would have to read Max Weber!". In short, one can argue that much of what made Protestantism the ideological midwife of modern capitalism can now be applied to many contemporary streams of political Islam.

We lack the space here to explore this further. But one take-away is fairly obvious: political Islam and the rise of regimes predicated on its religious tenets is anything but an alternative path to oppose global capitalism. As much as the rhetoric seems to juxtapose this political movement against its arch-enemy, the United States as the ultimate capitalist system, the empirical proof on the ground points in a markedly opposite direction.

Islamic fundamentalism is not an alternative to global capitalism. It is exactly the same project, albeit under a different ideological cloak.
(An edited version of this blog entry was published as an Op-Ed in The Globe and Mail on June 3, 2013)

Photo by MVI , reproduced under the Creative Commons License