Competition
Restrained By a Higher Good (Part 1)
The
fundamental question of management theory is: What links
individuals
together in cooperative endeavor? The answer, according to the
contemporary
management orthodoxy, is self-interest—the raw egoism of Hobbes
and Mandeville,
refurbished in chic, modern, linguistic garb. . . . All organizational
behavior
is summarized in the inelegant phrase, “What’s in it for me?”
—David
K. Hart,
“The
Sympathetic Organization”
The suggested changes to our
ownership tradition discussed in the preceding chapter are entirely structural
in nature. And although structural changes are necessary both to prevent
economic suicide and to bring our economy into harmony with our political and
social patterns, structural changes alone are not sufficient. Altering the
structure of our economy without somehow modifying the habitual patterns of
human thought and interaction would be similar to buying new computer hardware,
but running the same old virus-infected software. In essence, as individuals we
have been operating within the structures and patterns of unbridled capitalism
for so long that even if we suddenly found ourselves on a completely different
playing field, most of us would go right on behaving as the system has always
rewarded us for behaving.
There is a moral aspect to this
question of economics that we must deal with on an individual, rather than a
structural, level. Implementing a new economic structure with new rules and
restrictions would of course reward individuals for behaving in new ways, but
some behavioral patterns are quite hard to break—and you can’t legislate
everything, morality in particular. Consequently, we must develop a new
economic rationale, a moral argument, if you will, to support the types of
behavior that must accompany the necessary structural changes. This moral
argument must address two related issues: self-interest and competition.
Why
We Need a Guiding Philosophy
In The Worldly Philosophers,
Robert Heilbroner explains in some detail why we have had political, moral, and
social philosophers for millennia, but economists (or worldly philosophers)
only in the past few hundred years. There are, he says, three basic approaches
to ensuring the survival of the human race. First, society can organize itself
by tradition. In essence, people serve particular functions in society because
their fathers did, or because they are limited by their class or caste to certain
types of labor. Second, authoritarian government can ensure that tasks get done
by assigning people to do them, whether they want to or not. Neither of these
approaches to ensuring survival required any kind of economic philosophy. Only
the third alternative demanded an accompanying rationale. And this third
alternative was “an astonishing arrangement in which society assured its own
continuance by allowing each individual to do exactly as he saw fit—provided he
followed a central guiding rule. The arrangement was called the ‘market
system,’ and the rule was deceptively simple: each should do what was to his
best monetary advantage.”1
This third arrangement was not
unrelated to the social and political philosophies of classical liberalism,
suggesting that individuals were more important than the traditionally
authoritarian institutions to which they belonged. Liberty, self-rule, justice,
equality, private property, happiness—all these ideas added momentum to the
great change from traditional or command systems to a free-market economy. “No
mistake about it,” says Heilbroner, “the travail was over and the market system
had been born. The problem of survival was henceforth to be solved neither by
custom nor by command, but by the free action of profit-seeking men bound
together only by the market itself. . . . The idea [however] needed a
philosophy.”2 And philosophies abounded. Starting with Adam Smith
and continuing on to the present day, great and not so great thinkers have put
forward their ideas on how to best order and justify this new system. “Out of
the mêlée of contradictory rationalizations one thing alone stood clear:
man insisted on some sort of intellectual ordering to help him understand the
world in which he lived. The harsh and disconcerting economic world loomed ever
more important.”3
Indeed, economic matters loom
more and more important as time passes, for the simple reason that our economic
system must continually rationalize its very existence. That third alternative
requires a philosophy, a justification, because when push comes to shove it is
in conflict with the political, social, and moral philosophies of classical
liberalism, the foundation of our Western way of life. This third arrangement
for ensuring the continuance of human society is based solely upon the
principle of self-interest, a principle that, when isolated, is at odds with
the political theories, social ideals, and moral principles that have shaped
our Western world.
Self-interest, however, is too
problematic as a sole motivator of people in a community. When made the guiding
rule, when unchecked by social constraints, political intervention, or moral
concerns, monetary self-interest leads inevitably to centralized power, authoritarian
structures, and command systems. In other words, without a motive higher than
self-interest to guide or at least temper it, the third alternative inevitably
collapses back into some form of the second alternative, and the individual
ends up again at the mercy of arbitrary authority. For a while our political
system, our social objectives, and our good moral sense held this contrarious
economic motivator at bay, but in the end the strain was too great. Something
had to give, and self-interested economics had too much momentum, too much
appeal. What we need desperately today is a fourth approach, an approach that
goes beyond custom, command, and self-interest, an approach consistent with our
political, social, and moral heritage.
Republican
Disinterest
Self-interest is actually a moral
question, not just a value-neutral economic motor that is supposed to drive the
mindless machinery of the free market. Indeed, self-interest is a very
troubling moral question, for an economic system based on this principle
creates almost irresistible incentives for people to behave in patently immoral
ways.
Who would argue that we must be a
moral people in order for self-government to work? This is what some would call
a “no-brainer.” The freer we are, the greater a burden we as individual
citizens must bear in creating a society of order and justice. Republicanism,
succeeding monarchy as the dominant political system, “put an enormous burden
on individuals,” says Gordon Wood. “They were expected to suppress their private
wants and interests and develop disinterestedness—the term the eighteenth
century most often used as a synonym for civic virtue. . . . Dr. Johnson
defined disinterest as being ‘superior to regard of private advantage; not
influenced by private profit.’ We today have lost most of this older meaning.
Even some educated people now use ‘disinterested’ as a synonym for
‘uninterested,’ meaning indifferent or unconcerned.” Disinterest, however, is
actually the exact opposite of self-interest.
“Republics,” Wood continues,
“demanded far more morally from their citizens than monarchies did of their
subjects. In monarchies each man’s desire to do what was right in his own eyes
could be restrained by fear or force.” In republics, the only effective
restraint on self-interest and private gratification is the sense among
citizens that they must often sacrifice personal advantage for the public
welfare. It is indeed ironic that self-interest—the one force that Wood
identifies as needing to be restrained if a republic is to hold together—is the
only force that traditional economic theory proposes as a social
adhesive. This is not only a highly illogical thesis; it is also a disturbingly
immoral philosophy.
What we have in modern America,
then, is a form of government that requires a disinterested citizenry and an
economic system founded on the principle of self-interest—a perfect mismatch.
And, unfortunately, the economy is in control. To correct this problem, as I
have already suggested, we cannot merely tell people to become disinterested.
All the incentives in the present system encourage the exact opposite behavior.
What we need is a fundamental change in the structure of the economy, so that
our economic system actually encourages disinterested action. But we also need
a higher ideal than self-interest to bind us together, for self-interest, even
though it does cause us to “do business” with one another, also creates too
many impediments to true economic and societal health.
Lip Service
The escalating height and
frequency of the hurdles economic America requires companies to jump if they
want to stay in the race puts immense pressure on them to increase their
productivity and develop innovative new technologies. A very natural
consequence of this pressure, within a system that enshrines self-interest, is
for companies to become, over time, increasingly and hostilely competitive.
American companies have always felt the need for, even thrived on, fierce
competition, but as the growth spiral steepens and accelerates, making it
harder for companies to climb to the next level, their perceived need to
compete will intensify dramatically. In our twentieth-century mercenary
marketplace you either eat or get eaten. Consequently, most companies nowadays
focus primarily on beating their competitors and enlarging their bottom
lines, rather than providing a service to society.
I used to ask the students in my
management classes at the university, just to keep a finger on the pulse of
their attitudes and misconceptions, what the purpose of a business is. I always
asked this out of the blue, without any sort of preamble to bias their replies.
And without exception, their first answer was, “To make a profit.” Rarely, even
when I dug a little deeper, did they bring up the radical notion that
businesses exist to provide a service to society. These were juniors and
seniors in the business curriculum, and they had learned their lessons well.
They were prepared for life in corporate America, or, as they called it, “the
real world.” This “real world,” however, is anything but real. It is both
inconsistent with the values of the American Dream and inherently illogical.
I remember reading the account of
one business consultant who asked a group of high-level executives the same
question. Their answer was identical to that of my students. They said their
businesses existed to make a profit. This wise consultant then asked them how
their drug and prostitution operations were doing. The executives were, of
course, astonished at this request. “I just assumed,” he answered, “if you were
in business to make money, that you’d be involved in the most profitable kind
of business.” To bypass the best opportunities would be both inefficient and
contrary to the stated purpose of their companies. These executives suddenly
understood that their business activities were restricted by deeper purposes
that they had perhaps not yet fathomed. And so it is with almost all companies.
Businesses today, for the most
part, are so caught up in beating the competition, expanding their operations,
and making a profit that they are either oblivious to or, at best, pay lip
service to the idea of serving society. They are anything but disinterested.
Corporate mission statements and hordes of management gurus notwithstanding,
businesses have become ends unto themselves rather than instruments for
achieving a greater societal good. And their recruits from the business schools
already know which side their bread’s buttered on.
The problem with this acute
management myopia is that on the practical, everyday side of the ledger the
larger question of economics is ignored, thus focusing all the attention and
resources of corporate America on the grand ideal of making a buck. The direct
consequences of corporate America’s shortsightedness and misdirected energies
are not trivial.
Because businesses and other
institutions are not knit together in common purpose by an openly acknowledged
concern for the greater good of society, but operate primarily on the principles
of self-interest and self-perpetuation, the competitive climate in America has
become one of hostility and aggression rather than cooperation and fair play.
Because of this prevailing climate, modern businesses and business people are
necessarily caught up in a brutal fight for survival. They must not only
survive the inherent illogic of the system, but they must also survive head-on
confrontations with competitors who wouldn’t blink an eye at putting them in
their economic grave.
Survival is what twentieth-century
American capitalism is all about, not service, not quality, not human
development. Companies focus on quality, not for quality’s sake, but in order
to survive. They emphasize service, not for the customer’s sake, but to
increase market share. They create more humane workplaces, not because of their
belief that workers in a free society deserve to more fully develop and
express their talents and ingenuity, but because they can no longer compete in
today’s demanding marketplace without intelligent, motivated, highly trained
workers. At the bottom of American capitalism is the competition for
survival—survival of the fittest. And as Abraham Maslow points out, when our
survival is threatened, we are simply incapable of paying attention to higher needs
and concerns.
_________________
1.
Robert L. Heilbroner,
The Worldly Philosophers: The Lives, Times, and Ideas of the Great Economic
Thinkers, 6th ed. (New York: Simon & Schuster, 1986), 20–21.
2.
Heilbroner, Worldly Philosophers, 38.
3.
Heilbroner, Worldly Philosophers, 41.
4.
Gordon S. Wood, The Radicalism of the American Revolution (New York:
Knopf, 1991), 104–5.
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