Background Reading

The Pari Network on Ethical Considerations in Economics, Business, Society and the Environment

Abstract

This overview of the Pari Network on ethics in economics and business contains an outline of the various topics discussed, some longer considerations, plus proposals for practical action.

Contents

  1. Introduction
  2. Network Overview
    1. The Role of Individual Beliefs and Ethics in an organization
    2. The Role of Communities, Businesses and Organizations
    3. Spiritual Capital
    4. Security
    5. Environment and Energy
    6. Trust, Loyalty and Ethics
  3. How is change to occur?
  4. Reflections by Network Members
  5. Practical proposals
  6. Background Writings

1. Introduction

Over the past year a number of us have been holding discussions, via personal meetings and exchanges of emails and telephone calls, on a number of topics clustered around issues of ethics, trust and loyalty in business and finance, economics in a globalized word, the role that can be played by the ethical standards and spiritual beliefs of individuals within organizations, social and national tensions associated with economic inequalities, concerns about the future of the biosphere, environmental sustainability, energy reserves and production and economic issues surrounding climate change. In many ways these discussions arose out of the contributions of visitors to the Pari Center, as well as during conferences such as the Pari Roundtable on Corporate Ethics, Globalization and Economic Instabilities. A further input was provided by the discussions held in Pari and London within the context of the Templeton Foundation's Spiritual Capital project.

As a result of these exchanges we came to the realization that we have a strong and active network of individuals, with skills and interests in a variety of fields, who can benefit from a continued dialogue together, while continuing their main focus on each of their respective fields. We hope that a flourishing network will also enable some practical projects and proposals to emerge. We would also hope to organize some roundtables in Pari and elsewhere. In addition we are currently working with the Siena-based association EFA (Ethics, Finance and Environment) on an international conference Ethical Choices in Society, the Economy and the Environment to be held at a conference center near Siena in 2006.

2. Network Overview

a. The Role of Individual Beliefs and Ethics in an Organization

In what ways do an individual's beliefs and behavior influence colleagues and friends and permeate an organization and a community? In what ways do example and education transform an individual from a self seeking atomized unit into an supportive member of a community, and in what ways would this lead to a resurrection of ethical and spiritual roots? In what ways can recognition be given to the important role played by individuals with strong ethical behavior?

b. The Role of Communities, Businesses and Organizations

Can we acknowledge the ways in which communities and organizations are not only engaged in the production of material wealth but also of human values? In what ways can corporations work with such communities, not simply as a public relations exercise but for genuine mutual enrichment? How can the human dimension be enhanced? I.e. in what ways can corporations and organizations move beyond the entrenched belief that "the business of business is business" and engage in the wider dimensions of life? What are the factors that encourage or diminish the role of ethics in organizations? What are the factors that cause an individual to chose a bank, brand name, store, service or corporation? What are the relative weights of attractive financial packages against such factors as ethics, social responsibility, care for employees and a sense of loyalty?

Many areas of civil society, in the form of small groups and organizations are beginning to articulate concerns and attitudes that transcend national boundaries. Many of these are highly positive and offer hope for the future. How can these local and global initiatives be fostered? What encouragements can be given to the various economic, agricultural and energy based experiments and collectives that are being attempted in various parts of the world?

The increasing distance between rich and poor, both internationally and within certain countries can only lead to increasing instability and tension. A further cause of concern is the power of multinationals to stand outside national laws and regulations and against the weakening powers of nation states. Added to this is the failure of both nations and economic unions, such as the EU, to adopt firm stances. The globalized world is also generating cultures with no fixed beliefs, traditions or values, and societies in which personal worth is only measured in materialistic terms. It is also a world in which we are bombarded with information, yet in which little wisdom is present. How can we counter the continued erosion of social, human and spiritual values? For the first time in human history more than 50% of the world's population lives in cities, a large fraction of it without proper human rights and in a state of extreme poverty. Have we now become two distinct worlds that occupy the same space? How are such issues to be addressed?

c. Spiritual Capital

The notion of capital has been augmented by the notion of social capital – this includes, for example, the particular skills and knowledge base associated with a group or a community and the economically important relationships established between them. More recently the notion of spiritual capital has been introduced. It is a term whose meaning is still evolving and members of the network have been struggling to come to terms with its definition. Some felt it was an inherent contradiction in terms. Others felt it was acting as a social glue with significant effects on daily life.

The term "spiritual" itself has given rise to debate as how closely it should be identified with a religious connotation and to what extent atheists and agnostics all share a sense of being part of something much greater than their own individual lives. How then does this "spiritual" element play itself out within the lives of those involved in business and finance? Does it enter fully into their lives or is it an aspect reserved for home life or periods of worship?

On the other hand we are all material beings and any sense of spiritual capital has to be drawn out of everyday life; that is through work, play, community and relationships. Out of this ground can emerge a sense of self worth, dignity, and value which will nourish the spiritual. Take these away and the spiritual has nothing to draw from. To cultivate spiritual capital in our modern world we must consider the sense of 'dignity' we afford to individuals' lives and work. Achieving this requires a paradigm shift in the ways we measure success and see ourselves in a relation to those around us.

d. Security

Our global world appears far less secure than it did at the end of the twentieth century. The threat of mutually assured destruction had a deterrent effect during the cold war and with the dismantling of the Soviet Union the prospect of a nuclear holocaust diminished. However, the use of small nuclear weapons is now considered as tactically permissible under certain conditions. In addition to that, biological weapons against humans and against the food supply have become more sophisticated and we now face a new generation of nanotechnology weapons. These new generations of weapons do not require large budgets or teams of scientists to construct. They are within the means of small nations and terrorist groups.

The general lack of understanding on the part of the First World about the roots and values, goals and philosophies of terrorist organizations also does not bode well for the future.

e. Environment and Energy

Serious concerns are being expressed about the availability of oil supplies into the medium future and the political tensions generated by decreasing energy reserves concentrated in certain parts of the world. Considerations of energy use are also related to issues of global warming, which appear far more serious than hitherto considered. These include not only increasing temperatures, but rising sea levels that threaten coastal cities, a possible flipping of the Gulf Stream and disruption of rainfall patterns that could cause serious drought and consequent famine in vast areas of the world. All or any of these consequences would have profound economic impacts.

Ironically, as Walter Anderson points out in his book, "All Connected Now", that while concerns about damage to the ozone layer led to wide international and industrial agreements, issues around climate change have only acted to heighten the divisions and dislocations that already existed between nations, industries and pressure groups. The environmentalist George Monbiot, for his part, suggests that we are in a state of "collective denial" over the seriousness of the threats that face us.

A variety of alternative (renewable) energy sources are been explored and tapped, but none of these can fully replace fossil fuels in the short and medium term. Heavy reliance on nuclear power is also proposed, but that brings with it the problems of security and long-term disposal. It is not even clear that a combination of nuclear, renewable and remaining fossil fuels would be sufficient to maintain industrialized nations at their present standards and at the same time allow for the growth of nations such as China. Indeed, it may be necessary for us all to engage in a radical rethinking of our modern world.

Serious concern arises around many aspects of the human impact on the biosphere. The consequences of the spread of genetically modified organisms are still very uncertain. Biodiversity is rapidly decreasing. Fish are disappearing from the oceans. Virgin forests are under attack all over the planet. Disposing of the massive waste generated by a culture bent on unlimited growth is a major nightmare, and there is hardly anywhere in the world untouched by plastic pollution. In many ways we deal with our environment, whose intricate network of life forms is the result of billions of years of evolution, as if it were all there for our consumption, and we were the last generation having a right to enjoy it.

f. Trust, Loyalty and Ethics

Those members of the network who have been involved in the world of business have noted how, at the start of their careers, a much greater emphasis was placed on trust, honesty and loyalty, while these values have become increasingly eroded in recently years. In so many cases trust is absent and the mutual loyalty between retailer, supplier and consumer is compromised. Scientific studies of self organizing systems and ecologies indicate that those that survive over long periods rely upon rich interconnections of feedback loops. It is possible that these insights could be applied in a metaphoric way to human systems whose stability relies mutual cooperation, respect of competition and transparency. That is, in systems in which each player not only seeks to protect their own interests but contributes to the wellbeing of the whole. Such characteristics would also be present in any successful economic and social systems.

We have also evolved as societies to include such values as ethics, trust loyalty and even beauty, love and meaning, etc. When these principles become eroded it is difficult to see how a sustainable market place can survive, one that provides benefits and enrichment for all. On the other hand it is difficult to see how principles of "trust" could be legislated. Our discussions repeatedly returned to point a., the importance of the ethical individual in such an environment.

For example on what grounds do people chose a bank – because of its ethical dealings, attitude to the environment, social responsibility or low service charges? What makes a person a good customer? What does spirituality mean to a customer? How do you create an organization with spiritual roots?

3. How is change to occur?

Controls, regulations and international agreements may help to add a level of stability but by themselves are not sufficient. What is required is a much higher level of mutual trust and responsibility. In other words, a sustainable economic future requires the presence of groups and individuals with strong ethical beliefs.

There are good people, people with a strong ethical sense, spiritual people everywhere, in all cultures and in all religious groups. Can they be helped to recognize each other, to meet, to connect, to create positive bonds across state boundaries, clan divides, religious divides? Can we imagine a spiritual polis like a life-affirming web across the planet? Maybe that was the original ideal of Masonry. But it would have to be a complex, fractal group, not an institution. Electronic communication could greatly facilitate this.

Maybe the leading theme could be 'weaving webs'. Webs of connection across horizontal and vertical divides. Spiritually minded people connecting to think and act about the world. And supporting each other. Across state and religious boundaries, but also religious and lay people, scientists and lay people, businesspeople and artists, etc. This suggests another meaning of "spiritual capital": spiritual capital, in the sense of "spiritual wealth", is the degree of spiritual connectedness, the density of spiritual webs in a community.

Thinking in these terms in the context of globalization implies a good deal of awareness of one's own cultural prejudices. It implies the ability to suspend truth judgments and absolute value judgments and adopt a constructionist stance, a multiple-perspective view of the reality we share. That applies to spirituality as well as to social, economic and ecological realities. There will not be one definition of spirituality. Only a shared sense, fluid and 'fractal', of what all the people that recognize each other as 'spiritual' or 'ethical' have in common.

4. Reflections by Network Members

A key issue is how to find ways of transforming discussions and exchanges of ideas into something practical and something that could have a transformative effect both in small and local ways and on a larger scale. Below are some preliminary suggestions.

Loyalty

Carry out an investigation into why customers chose to do business with a bank, store, corporation or brand name? What factors militate for and against loyalty and ethical behavior.

What are customers concerned about? Ecological damage, social damage, issues about the third world, corporate social responsibility, how does a company treat the community? Concerns about manufacture, quality, supply and reliability of goods?

A T-shirt can sell from £2 to £22 with an average of £8. Why would people pay more than £8? How important is the designer label? Or issues about child labor? How do these differ amongst different social classes?

In the past many companies grew over months and years and established lines of trust. But today, with the internet and the new markets, things move much faster. Once people had strong brand loyalty and were even willing to pay more. But today some will take up a salesman's time to explain various brands and then go home and buy from the internet or a warehouse. They behave less ethically.

What motivates employees to stay loyal to a particular company? Maybe it is more important to be happy working for a business, rather then the size of the wage. Maybe also customers like doing business with such companies.

Recognition

The network believes that individuals with strong moral, ethical or spiritual principles in businesses, corporations and organizations can exercise an enormous influence on those around them and even change the direction of their organization. In what ways can the contributions of such individuals be recognized by an independent body – both within the business community and among the general public – e.g. some sort of award, press release, dinner?

Passing on Experience

Those with a lifetime in business and the market place may wish to make their experiences known to young entrepreneurs including such issues as – their own experience and exercise of ethics, the role of trust, loyalty and respect, their sense of participating in something that is larger than themselves. The pitfalls and warning signs along the path. The relative values of financial rewards versus inner satisfaction and contribution to the public good. This could be done via a series of videotaped interviews.

Nodes and Satellites

One of our next steps will be the creation of a series of nodes and satellites around specific issues with individuals working together and reporting back to the main network.

5. Practical Proposals

A variety of examples and practical proposals will be added in the coming months.

6. Background Writings

Exercise of Power (Shantena)

Consider money as congealed energy (or power) that exists in a highly abstract form. The issue of how to handle money then ultimately boils down to what kind of consciousness we bring to handling energy or power in general. On one hand this is a strong argument for the approach that all issues about "capital" are ultimately "spiritual", so that it is very natural to ask about the spiritual aspect of capital. There is no meaningful way to handle ethical concerns in economics except in a spiritual perspective. On the other hand the equation "handling money = handling power" does not forebode well for scenarios about the future. Humans do not seem to have significantly progressed in handling power in a conscious way.

Increasing Trust and Exercising Right Action (Shantena)

We would like to bring about a much higher level of trust and responsibility in the economy on a global scale. But who is the actor for this? Marx would have said: the proletariat, because they are the ones who suffer from the present state of affairs, they have nothing to lose except their chains. Those societies who attempted to follow Marx discovered that the practice was far from simple. Centralized control sends things spiraling off in unexpected directions and generates abuse of power from bureaucrats. How can the consciousness of economic actors grow to a level where the ultimate good of all (including – ultimately! – themselves) takes precedence over some immediate desired goal?

Will it be necessary to collide with a fundamental dogma of traditional capitalism, i.e. the assumption that economic self interest is healthy, that individuals who act for their own good will automatically do good for the whole of society? Certainly it is appealing to persuade people to act for their own perceived good.

Variety of moral theories

In traditional societies people relied upon a religious or philosophical tradition as the basis for ethical behavior. Yet when we look at philosophy, it does not give us hard and fast answers , only a series of choices. In the European tradition, Socrates believed that no one would knowingly do wrong; for Aristotle moral behavior was not an abstraction but something that is naturally learned as we become good citizens; for Aquinas happiness and fulfillment lay in virtue and obeying the natural law; for Hobbs humans were essentially amoral but formed a social contract for mutual gain and protection – an assumption not born out by the study of primates, who are primarily cooperative. Then there were the arguments of the Utilitarians such as Mill and Bentham who argued for the greatest good, or happiness, for the greatest number, an argument which has recently been revisited by the economist Lord Layard.

How are we to negotiate through this maze of moral theories, particularly in a period where cultural relativism holds sway? Probably on a collective level, to "humanity in general", it is quite clear that many of our economic actions are bad for ourselves and for other forms of life. So what balance is possible between the voice of the collective and that of the individual? And how is the collective going to express its voice? Who embodies it?

The Role of Complexity (Illy)

Complexity is the mother of freedom, creativity and uncertainty. The uncertainty inherent in a complex world cannot be reduced by taming nature's forces but by decreasing the uncertainty associated with our behavior. The role of ethics is to help to foresee the future actions of human beings.

The free market activity is based on trust, mutual respect and honesty, a heritage of the Judeo-Christian Religion. We cannot imagine a market in which nobody trusts his neighbor. The efficiency of the free market depends on the proper functioning of competition, a selective tool conferred to the consumers, that by choosing their preferences, decide who will stay and who will exit the arena. Corruption, cronyism and monopolies, deprive consumers of their right to select and create the prerequisite to destroy the most powerful system for wealth production that exists. Underdevelopment is usually the consequence of a lack of understanding the ethical relationship between freedom and wealth generation in the market.

For globalization to function it requires a common ethical foundation. Unfortunately we have many ethics in the world and many other different attitudes. We can suppose that in the medium term the Western ethic will show its power (if we are not loosing it in the meantime) and become universal, but I think it would be useful to remember that the positive effect that we expect from globalization can only become a reality if a common ethical base can be found.

Conflict of Codes (Shantena)

During the course of history some types of selfish behavior on the part of individuals and groups have gradually become ostracized in legal and moral ways. Likewise a certain degree of responsibility toward humanity in general is generally assumed in the modern world.

Yet the dynamics of economics (and to a large extent of politics) are still based on the pursuit of the selfish interest of an individual or a group, and on the assumption that the pursuit of individual gain will automatically benefit the collective. Yet the survival of the planet and the health of societies is not necessarily guaranteed by the free-ranging pursuit of the economic benefit of individuals and corporations.

How can this 'primitive' aspect of the economic system be overcome without falling into the well-known distortions of state ownership, centralized political control, etc.?

The power of money can be converted into the manipulation of the media and the exercise of political power. How can the ideals of democracy be preserved in the face of the concentrated political power in the hands of the wealthy? How does it effect the relationship between rich and poor countries? How is an 'agora' possible for six billion people? How are wise decisions to be achieved across cultural, ethical, religious differences?

Spiritual Diversity (Siraj)

The sheer diversity of modern society is putting old notions of spiritual value under great strain. That one man's spiritual freedom may be another's prison or pain is now being brought together into a common shared space. We need to configure new ways to articulate what holds us together which is a measure of a common workable spiritual capital. The established religions are both a vital key and an obstacle, no belief system today can be relevant by just addressing its own internal philosophy and history.

Modern media make us the direct witnesses to the problems of humanity around the planet. To a certain extent we can diagnose the problems that face us but lack the mechanisms for positive and creative change. The very mechanisms that show us the truth about life today also disable us from feeling that we can be active agents. This contradiction of modern life wrecks terrible havoc on each individual spirit.