Marx is back

Well, this headline only works if Marx was ever gone, if you know what I mean. But no, now he is literally back, and this in no less a becoming space than on the new edition of Mastercard issued by the German savings bank Sparkasse Chemnitz. And this by popular demand, no less. Customers in this East German city were asked to vote on what motive they would like to see on their credit cards – and Karl Marx won hands down!

Now, we have to be correct here. Technically, it is not Marx the philosopher who was voted in. The bank’s customer’s in Chemnitz (for 40 years under communist rule it was actually called ‘Karl-Marx-Stadt’) were given a choice of the city’s landmarks, and the humongous Karl Marx sculpture - that survived the zeal to eradicate the GDR legacy - won the competition. It is impressive; I had a chance to check it out last Christmas (see the picture below).

So here we are, Marx on a Mastercard. For many this is just hilarious, for some it’s a sad sign of how capitalism has now even commoditized and incorporated the very symbol of its critique. For me personally, Marx on a Mastercard is nothing short of a neat symbol that maybe Marx’s real contribution to the world gets slowly appreciated.

Apart from a few intellectuals who wear the brand of being a Marxist on their sleeves, after the fall of the iron curtain Marx was considered by most people as being disposed of to where he belongs: the scrap yard of history.

I am not a Marxist and my education did not give me a chance to study Marx in too much detail. The more though I become acquainted with his thinking I find that Marx today is more relevant and important than ever before. Francis Fukuyama (‘The end of history’) and all those other, mostly conservative, thinkers who gleefully touted the demise of Marx after the collapse of Communism in Eastern Europe in my view were seriously misguided. In fact I happen to believe that the true ‘Marxists’, the people who act like Marx predicted capitalism would make people to behave, are actually in the conservative end, or right wing, of the political spectrum.

An anecdote to this effect from the country of today’s Marx-tercard: in the run-up to Germany’s first election after the reunification in 1990 the opposition leader Oscar Lafontaine called the incumbent Chancellor Kohl ‘the last surviving Marxist’. Why? Kohl believed that the country could only be unified if it got a common currency immediately. Unifying a country for the political right in Germany at the time was all about creating common economic conditions. Exactly this is the core of Marx’ analysis: in a capitalist society the only dimension which governs all social relationships is the economic level. The Left at the time in Germany though saw very clearly what we know now: to unify a nation split apart for 40 years in very different circumstances a host of other policies would be more important than just the economic level.

Here is why I think the people who voted Karl Marx the Millennium’s ‘Greatest Thinker’ in a BBC poll a decade ago were bang on the money: Marx was one of – maybe even the first –political philosopher who understood that modern capitalism, if allowed to prosper and dominate, will render the economic relations between members of a society as the most important and ultimately the only bond that keeps a community together. What keeps a society together in his view are purely the economic ties between the individual actors. For us today that maybe sounds a bit trivial. But at the time of him writing this it was truly a revolutionary thesis – and the fact that we consider this to be so normal just goes to show how correct Marx’ analysis was.

Communism in some ways is a footnote to Marx’s work, I sometimes think. If ownership of the means of production (i.e. capital) is the main bond of a society, a fair society would be like one where this ownership is evenly distributed. Communism did not work because his analysis of human beings as purely economic actors of course is a bit limited. But he came to this conclusion by analyzing the then emergent system of capitalism – and in our current capitalist system we just see how right he was.

His main legacy then is still powerful and visible today though. If Marx were to rise from the dead today I would venture the guess that the places where he would find himself most well understood would be the modern business school. He would not necessarily like what he hears, but he would have no problem to get the language and rationale of the place. Just take the model of the firm as an example: business school orthodoxy still is that firms are purely economic actors and that the only way to explain and to run them is by focusing on economic relations. The core tenets of Agency Theory as the dominating theoretical framework in business schools conceptualize human beings just along these lines: little predators whose only interest in life is the maximization of their economic goals.

The fairly new areas of CSR/Business Ethics/Sustainability etc. have entered the business school agenda just because it has become so blatantly obvious that businesses have other impacts and goals – for better or for worse – than just those economic ones. But even if we look at the CSR literature – the vast majority of it is still focusing on the ‘business case’ for CSR; if you want to do a good job in an MBA class on CSR you have to sell it as a means to sell more stuff, or to reduce cost, or at least as a way to manage risks. In other words, the only ‘correct’ way to be socially responsible is when it actually makes economic sense.

So putting Marx on a Mastercard is actually not so bad a place. Ask an (illegal) immigrant in Europe or North America how important it is to have a credit card: it establishes an economic relation, for sure. But that relation is so important as it is a basis for all other aspects of being a membership in today’s society. A credit card – especially in the age of the internet – is one of the most vital links to membership in the wider community; an economic relationship which crucially shapes all the other social, political or otherwise defined relationships in society. So Karl Marx fiercely staring at us from the Mastercard of the Sparkasse Chemnitz maybe just wants to tell us: ‘I told you so!’

DM

The problem of virtual water

Today we have a guest blog from Jane-Fiona Cumming, A Director at Article 13, on the emerging corporate responsibility issue of 'virtual water'.  

Is water the emerging big issue? It certainly should be, writes Jane-Fiona Cumming. Currently 25% of the world’s population is living in an area of water stress. The combined effects of population growth, increasing urbanisation, and the impact of climate change on upstream resources in areas across the globe will almost certainly ensure that the situation only gets worse.

And it is true that water is making its way up the sustainable development agenda. Millennium Development Goal Target 7.C calls for a commitment to ‘halve, by 2015, the proportion of the population without sustainable access to safe drinking water and basic sanitation’. Water is also one of the key issues for the UN’s upcoming Rio+20 conference.

Despite this, there remains a disconnect between attitudes and behaviours in water-rich areas and the problems in water-poor areas. (Although it should be said that a number of large multinationals whose operations straddle both types of region are taking their consolidated responsibilities seriously.)

One of the problems is that while there are parallels between carbon and water as sustainable development issues – the concept of water footprinting, for example, is gaining traction – there are significant differences. To put it bluntly, on a global scale, consuming less water in a ‘wet’ region does not add to the available resources in a ‘dry’ region.

However, while the big issues are on the agenda for debate, at Rio +20 for example, perhaps we should move our focus to what is called ‘virtual’ or ‘embedded’ water.  Examples of moving virtual water abound. Just take the case of tomatoes exported from a water-poor area to retail shelves in a water-rich area.

One behaviour change that could create a unity of purpose, from individuals through to multi-national companies, is to be aware of where products come from and to make active choices about how we use or value embedded water products from water-poor regions. A type of ‘fair water’ trade, in which products that use embedded water have higher prices that help to make contributions to the local community in addressing water issues (including sanitation) could link the issues together.

What is certain is that, at every level, there is a need for real transparency and joined-up innovative thinking in our management of a finite, collective resource that every human life depends on. Initiatives may be hosepipe bans or the mending of leaking mains pipes; charity-based water products and promotions that divert funds to water projects in drought-susceptible areas, or commercial initiatives that reduce the need for industrial and agricultural water extraction; the movement of virtual water or supra-national mediation aimed at the avoidance of potential ‘water wars’.

This means that the link between changing attitudes and changing behaviours is not a straightforward one.  Whether at an individual, organisational or governmental level, we need to be clear about what kind of behavioural change we want to effect. And that calls for some smart thinking, some honest debating and real transparency about the issue of embedded water.

This post originally appeared on the Radical Shift blog. Photo by David Cohen 

Is selling human organs really so unethical?

Earlier this week, the World Health Organization (WHO) reported on the rise in the illegal trade in human organs. The WHO estimates that more than 10,000 black market operations involving purchased human organs are now carried out every year. There are serious ethical and medical concerns associated with the practice. Sellers risk being exploited, buyers may be victims of scams, and both parties face far higher risks of medical complications due to the lack of proper medical care.

The problem is though, although the commercial trade in organs is in many respects morally repugnant, many of the problems associated with the illegal trade in organs are actually directly a result of its illegality. Backstreet operations, black market trading - these are the critical risk factors here, not its dubious moral status. Plus, for all the important concerns about the problem of poor people being exploited to sell their organs to the rich, it is important not to mix up what are two different ethical issues here - one about exploitation of organ sellers and one about whether the commercial trade in organs is something that is acceptable in society at all. Both of these are worth examining in a little more detail.

First off, lets bracket for a moment the problem of exploitation and just consider the ethics of commercial organ trading. Sure, we know the practice has been made illegal in almost every country - but is selling human organs really so bad? One major issue that we have to consider here is that, like it or not, the sale of human organs saves lives. Donations of organs from the deceased are simply too limited to meet demand almost everywhere. In the US, more than 100,000 people are currently waiting for organ donations.  In China ,it is estimated that a million people are currently in need of a kidney ... yet last year only something like 5000 actually received one. Most countries are facing a severe supply problem. So from a simple societal cost-benefit perspective, then,  providing the seller stays in relatively good health, and the buyer is able to live longer or better than they would have otherwise, the benefits would appear to exceed the costs. Without sufficient supply from other sources, commercial organ trade can make society as a whole better off.

That is not to deny that there are indeed very significant costs that have to be borne by the seller here in terms of potential health risks. Even if society can be shown to benefit in aggregate, not everyone benefits equally. After all, the seller is potentially putting their own life at risk here. But if we can  imagine a situation where the seller is provided with suitable safeguards to minimise these risks - through a guaranteed level of decent medical care for example - then the cost-benefit argument could certainly prevail. In fact, that is precisely why we do often permit some forms of voluntary non-paid donation: under the right conditions,  live organ donation can make a net positive benefit to society. In principle, that cost-benefit equation should not be materially changed by introducing a commercial transaction ... except of course we have thrown some actual financial costs and benefits into the mix.

To be sure, few of us are comfortable with the idea of selling organs for money. For critics, it only makes sense from a cost-benefit point of view if we ignore the more ambiguous costs involved, such as the loss of basic humanity involved in such an act. Simply put, it is not something we want to accept in a civilized society. A similar argument is also raised in relation to other "unacceptable" practices, such as euthanasia, prostitution and drug use. Legalization might well create benefits, minimize harms, or simply enable greater personal freedoms, but the law also has to codify the principles of  human society that we want to establish and live up to. And commercial trade in live organs, so the argument goes,  is against those basic principles.

Let's be clear though: those principles come at a cost - the cost of human lives. People are literally dying waiting for suitable organ donors. At a time when the illegal trade is actually growing, shouldn't we be revisiting the question of whether the commercial organ trade is really so unacceptable that it's worth letting people die for our principles? Isn't it time we asked whether the legal prohibition route is actually working?

The exploitation question is a different but no less important question. The prospect of the most disadvantaged in society selling their own body parts just to get by assaults our most basic principles of human dignity. Obviously we need to tackle poverty itself in a more concerted fashion to get to the heart of this problem. But in the meantime, the big question we have to ask is whether the decision to make the commercial trade in organs illegal is actually benefiting or further exacerbating the exploitation of the poor?

Regardless of its legal status, people will continue to do whatever they can to escape poverty, and for the truly desperate, their organs may be their most valuable asset. Pushing such people into the hands of criminals and unlicensed medical practitioners, however, is a recipe for adding yet more exploitation onto an already unfair situation.

Legalization by itself would not solve the problem.  But if we were to accept that, in principle at least, the trade in human organs might be socially acceptable, the real question then becomes: how could we do it in a responsible way so that people do not get exploited?

There's no easy answer to this, but it is possible to conceive of a tightly regulated system that could eliminate most if not all of the worst forms of exploitation. Price controls for organ donations, strict rules for participation as donors and recipients, mandatory counseling for prospective donors, enforcement of medical follow-up, quality control checks, a transparent system to ensure clear organ provenance - these are the kind of arrangements that a serious regulator might want to put in place.

Many governments probably won't have the will or the capability to do this effectively, and it's hardly a very encouraging sign that the only country currently operating a legalized system is that great bastion of freedom and security, Iran. But a few years ago the Singaporean Government was apparently also considering the issue, although nothing seems to have come of it. Who's to say that China wont be the next, especially given that they are currently operating a widely condemned practice of harvesting organs from executed prisoners. A voluntary system could hardly be more controversial. But who these days would really be brave enough to advocate legalization given the international consensus against the trade? Maybe it's time for those on the intermiable organ waiting lists to start getting organized.

 Photo by Lasse-san. Reproduced under Creative Commons Licence

Formula One Needs a New Formula

The topic of the ethics of sports (see last week's blog) does not want to disappear from the news. Reading this weekend’s news about the death of a protestor during the Formula One race in Bahrain will raise eyebrows with any CSR (Corporate Social Reponsibility) Expert. Now it’s even Formula One, that has to answer questions of social responsibility.

In itself this comes surprisingly late. As a sport, Formula One is not the environmentally friendliest sport. With 527 million viewers global television audience in 2010 it is one of the most powerful advertising platform for global brands making sure that even in the remotest hut in Indonesia or the poorest village in Tanzania consumers receive due induction the world of global (Western) brands.

But be it is it may, Formula One is certainly a business success. Taken from modest beginnings in the 1970s by its current President and CEO Bernie Ecclestone Formula One is now a multibillion dollar industry. Run by – and for – ‘petrol heads’ the company has never been exposed too heavily to demands for wider social responsibility. On its website you find nothing on CSR (and the like), something however insincere you will find most certainly on most multinationals of this size and world status.

The more exciting it is to see that a company which so far has never felt any exposure to live up to societal demands beyond its bare business deliveries has moved into the limelight of expectations beyond its core function.  What happened to Formula One this weekend in some ways is not new, but it reiterates three fundamental lessons which companies such as Shell, Nike or Google had to learn the hard way  years ago.

Lesson 1: Size matters. Just by sheer dominance in the racing sport, the size of the customer base (i.e. TV audiences), as well as the scope and scale of its global visibility have exposed Formula One to a much larger set of expectations. This has incidentally nothing to do with the legitimacy of those expectations (see below on this issue). It is just a simple fact of the CSR trajectory of companies, that just by dint of their sheer size they enter this space. Ecclestone might want to compare notes with Apple on this issue. Their troubles with human rights and labor conditions in their Chinese supply chain only rose to prominence at the time the company became one of the biggest players in term of market capitalization. In some ways, those companies just face a flip side of their admirable success in the marketplace.

Lesson 2: Global communication channels are not a one way street. Formula One thrives on its global visibility and presence. You have to give this to Bernie: the way he moved the business in four decades is hugely impressive. The small problem here though is: If you want millions to watch your product, in the age of the internet global visibility is not a one way street. People talk back. And they use your visibility to be part of the story. The protestors in Bahrain during the ‘Arab Spring’ had some exposure on global media during the earlier riots. But a brand such as Formula One of course provides an unique visibility to their issues which is just too effective to be missed. The ‘one way street’ metaphor not only works the way that people may ‘talk back’ but also in the way that if you employ the leverage of modern media, you can’t just control that it is only you who uses these conduits.

Lesson 3: If you are a Western brand doing business in a opressive political environment, the more successful you are, the more likely you will be used as a conduit for people’s political aspirations. Now this leads to the question whether the ‘piggybacking’ of protestors on the race in Bahrain is legitimate. In other words, is Ecclestone right when he says that the protests ‘have nothing to do with us’? Is a Formula One race just this apolitical, neutral sports event? Well, the most unequivocal answer to this came from the Al Khalifa Family itself, the authoritarian regime of Bahrain: in the built-up to the event they ran posters all over the place with the slogan "UniF1ed – One Nation in Celebration". This  was a quite undisguised use of Formula One to bolster their claim to have taken steps to improve conditions for their people since the first demonstrations last year caused the cancellation of the 2011 grand prix. Certainly Bahrain’s dictators got the message that Formula One can be used as a conduit of a political message - so why not people with different political opinions? Sports and politics are strange, but well groomed bedfellows. So Ecclestone has to do his homework here, and be it only for the protection of his global brand. This is even more a problem in the future as he has already moved into China and Russia, and is planning to expand into Abu Dhabi, Vietnam or Ukraine in the future.

Formula One needs an approach to CSR. What we saw this weekend was a dismal performance. And we are just talking good business strategy here. When people die; when journalists are restricted or even denied entry to the country; when the whole world watches the rules of fair play, fair competition and due process just being applied on the race course; when the personal safety of athletes is jeopardized (as in the case of team Force India) – a company has to act. Bernie’s reactive and – candidly – stupid and ignorant attitude will make things worse. He has to activate the same savvy and strategic thinking which made his company move into this public space to master the new challenges to which this very success has now exposed Formula One. 

Photos by Stu Seeger and Jaffa The Cake, reproduced under the Creative Commons License.

Who will be the business ethics winners and losers at the London Olympics?

Corporate involvement in the Olympic Games continues to expand in size and significance. This year, the 2012 London Olympics will boast sponsorship on hundreds of millions of dollars in corporate sponsorship and tie-ins. But as the corporate money flooding into the Games increases, so too do the attendant ethical risks. For all the advantages of being associated with one of the world's greatest and most watched sporting events, it also puts you at the mercy of activists and other critics ready to use the Games' huge pulling power to target big brands. Adidas, BP, Dow Chemical, McDonald's and Rio Tinto are all currently in the firing line regarding their involvement in the London Games. So the big question for the companies is: come closing ceremony time, who are going to be seen as the ethics winners and who will be the ethics losers?

 Four years ago, the 2008 Beijing Olympics also brought to the fore some major ethical risks for the Games' sponsors, mainly because of the potential for being tarnished with the human rights and environmental pollution problems facing hosts China. This time around, it is less the hosts than the companies themselves, accused of anything from using their sponsorship to greenwash their more unsavory practices (BP, Dow), to corrupting the ideals of the Games (McDonald's), and exploiting sweatshop labor to produce official Games sportswear (adidas).

The most tangible of these criticisms regards the sweatshop allegations. Over the years, adidas has worked hard on its ethical supply chain practices, and was one of the forces behind the Sustainable Apparel Coalition initiative. But having already dropped off one list of the most ethical companies this year, the accusations of poor labor practice in the factories producing the official kit for the Great Britain Olympic team will no doubt strike a significant reputational blow to the company.

Let's be clear here. It's unlikely that adidas is actually an outlier amongst apparel companies. A decent investigation into pretty much any global brand's supply chain could probably surface some major failures to live up to their impressive sounding codes. Not because they don't want to meet their commitments, but because there are always going to be suppliers that cut corners given the low cost, high flexibility model of production foisted onto them by the big brands. Adidas becomes a useful target though because of it's high profile in the Olympics. That's the risk that comes with the territory these days. Nike got it right 4 years ago when they published their special report on their Chinese operations months before the Olympics took place thereby taking any sting out of any likely exposé.

As for the so-called green washers, they also shouldn't be too surprised about the controversy they have sparked. BP as an official "sustainability partner" for the Olympics? Wouldn't it make sense to get your sustainability reputation back before wrapping yourself in such a cloak? Maybe they think that at rock bottom the only way you can go is up. But public trust needs careful nurturing if you are going to restore it after a major catastrophe. Not symbolic gestures.

If anybody should know how hard it is to rebuild public trust, it's one of the other Olympics sponsors currently in at the losing end of the PR battle, Dow Chemical. The beef with Dow goes back to 1984, and to a company that they didn't even acquire until 2001, Union Carbide. That the compensation question for Union Carbide's role in the Bhopal tragedy should still be rumbling on is testament to the importance of dealing effectively with legacy ethics issues. Here we are nearly 30 years later with Dow's banner role in the Games being the subject of front page news in India, the UK and elsewhere.

There's already been a high profile resignation from the watchdog supposed to monitor the sustainability of the 2012 Games as a result of the company's sponsorship deal, whilst over in India, the Government itself has now launched a diplomatic offensive against the company after it failed to persuade the London Olympics Committee to drop the firm as a sponsor. There has even been talk of a national boycott of the Games by India, but this currently looks unlikely. 

Let's get this one clear too though. Dow is no evil corporate monster, and has been doing some fine work in the sustainability space. But it does have a legacy problem still to deal with. And until it reaches a more easy relationship with key opinion formers in India (which, frankly seems unlikely in the near future given all that has happened ..... and when the response of the CEO to the current troubles is that any opposition to their sponsorship is "beyond belief"), it should just steer clear of huge global events like the Olympics. Any PR firm worth it's salt should know that. The $10m sponsorship money could have been spent in much more effective ways. Why take the risk of stirring up old problems - and more than that, give them a global airing - when you don't need to? Hubris, insensitivity, poor research, or just bad PR? It would be interesting to find out.

The bottom line is that the Olympics offers great opportunities for corporations to connect with a global audience. But those opportunities do not come risk free. Companies need to have their reputations in their best possible condition before they take such a plunge. And they need to have the PR department, the CSR team, risk management, and the senior leadership working together from the get go to minimize any damage.  Just ask any Olympic athlete. Winning at the Games is all about preparation, dedication, commitment, and having the right team in place to get you there. Business should be no different.

Photo by the|G|™. Reproduced under Creative Commons Licence

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