Toward a New Market Ethos

It is commonplace for large corporations to retain ethics officers, engage in social and environmental works such as corporate philanthropy, and advertise and publish socially responsible deeds in glossy corporate citizenship, corporate social responsibility, and sustainability reports. Yet, it is questionable whether and to what degree voluntarily assumed responsibilities on the parts of businesspeople can either rectify wrongs wrought through business or leverage business with ethical efficacy for the sake of a greater good. Additionally, disputes about the nature, import, value, and justice of the political-economic terrain in which business operates both influence one’s view about if/how business is to solve problems and reveal more fundamental questions about ethics, markets, and society. What is the essence of a market, what must and can it include, and what is its ultimate purpose? What market ethos fosters a good society?

Let us begin by considering key historical trends antecedent to these questions within the Western context primarily responsible for developing, articulating, advocating, and disseminating the practice and ideology of a free enterprise system. In so doing, we gain a better understanding of the origins and nature of today’s prevailing market ethos, savor a flavor for the possible, and draw inspiration for envisioning trajectories into the future. We will then consider how ideologies from both the right and the left tend to view the relationship between ethics and wealth in business. Finally, we will observe how current trends point us toward new conceptions of markets and expand the horizons for a political economy of the future.

Shifting views on the purpose of markets and the role of ethics

Historically and cross-culturally, the market has been regarded as a subset of the larger society. For example, in Ancient Athens, economics, oikonomia, which designated the art of household management, and all activities we would today regard as business (artisanship, trade, and retail) occupied a low, albeit necessary, function within the broader and more dignified sphere of the polis, or city state.[i] Politics encompassed economics. Today, the inverse relationship predominates globally. The state increasingly has become subsumed by the market, and business values animate the discourse on justice. One might even say that business or economic considerations have co-opted other values, as when democracy gets reduced to “voting with one’s dollars”, college students become “customers”, and the very term value itself comes to refer strictly to monetary return. In the end, wealth and power overtake justice, shallow consumer satisfaction trumps equity or fairness, and efficiency preempts morality. It is within this context that we pose questions about market ethos.

In The Theory of Moral Sentiments, Adam Smith argued that certain values were necessary to maintain a flourishing society. Selfishness alone would not guarantee a well-functioning and desirable society.[ii] The 19th century industrialists, most notably Andrew Carnegie, championed personal moral character and rugged individualism as the chief moral animators of a productive capitalism.[iii] Personal responsibility laid the bedrock of a prosperous society. Before business ethics became a popular discipline, ethics in business meant following the law, refraining from fraud and deception, respecting property rights, dealing honestly, keeping one’s promises, paying one’s debts, etc. Philanthropy and charity were duties of the individual, whose moral convictions were expected to remain restricted to private affairs.[iv] In business, one bore a responsibility to work hard, steward resources wisely, and think sagaciously toward the future.

In time, the discourse on ethics in business grew concerned with the social and environmental responsibilities of businesses, the role of business as a social institution, the obligations of the corporate person, and ultimately with the institutional agency and power of business corporations. Advocates of corporate citizenship came to demand that business as a social institution bear obligations to society akin to the obligations the individual citizen owes to society. Just as human persons should be good citizens, so also should corporate persons. This notion evolved into a conception of corporate citizenship that regards corporations as akin to nation states[v], critically referred to as corporate states.[vi]

Business Ethics, once an academic trespass of philosophy into business, has now grown into an enormous business, with its concerns and inquiries appearing prominently in media outlets. The globalization of markets and expansion of information, communication, and travel technologies have served as primary drivers for the intellectual and commercial demand for business ethics, as the weakening of state governance globally has enabled businesses to externalize costs in the form of human rights violations, social/cultural erosion, and environmental degradation. Meanwhile, technological innovations and their democratizing implications have bolstered the capacity of people to expose such misdeeds and hold these businesses accountable through courts of public opinion. Where one stands along the political spectrum tends to influence the framing of such issues. Poor behavior by businesses has been attributed to a variety of problems, ranging from greed, the inevitability of markets and the necessity of sacrifice for progress on one side to the inherent flaws of globalization, capitalism, and corporate power on the other side. Business ethics as a field has sought to redress all of these problems through theories, mechanisms, and incentives for holding businesses to higher standards of comportment for the betterment of all.

Business ethics at the nexus of the left-right divide

Certain intellectual lineages descending from classical economics give credence to corporate social responsibility, citizenship, and sustainability practices. The notion that ethics and economic prosperity mutually reinforce one another echoes commonly in the quip that one can “do well by doing good,” implying that good ethical behavior pays in business. However, ethical behavior does not necessarily translate into wealth, especially in the context of a ruthlessly competitive marketplace. Consider the bankruptcies or travails of your favorite Main Street business devoured by big box competitors. Doing good might sometimes, but certainly not always lead to doing well. Clearly, non-profits that aim to do good, often struggle to stay afloat. The same challenge applies to businesses that aim to align ethical commitments with the wealth creating function of business. While good ethics can pay for itself over time due to the cultivation of good will, trust, and loyalty among many stakeholders (including regulators), such businesses must still compete in a global marketplace against others operating with less noble aspirations.

Moreover, there is plenty of evidence to suggest that some businesses “do well by doing evil”. Google may have popularized such a perception of ordinary business with its longstanding motto of “Don’t Be Evil.” Fortune ranked Apple, Exxon-Mobil, Wells Fargo, Microsoft, J.P. Morgan Chase, Berkshire Hathaway, Chevron, Walmart Stores, Johnson & Johnson, and General Electric as the top ten most profitable companies of the Fortune 500 in 2014. This list presents an interesting mix of companies in terms of how “good” they might be. Several of these have been implicated in grave ethical offences, such as child labor and sweatshops, bribery, gross environmental injustices, or outright propagandistic denials about climate change. Others have enjoyed more glowing records in terms of their moral reputations. Several fall somewhere in the middle, having done great deeds for some stakeholders while potentially shafting others. Moreover, pay inequity internal to these and other businesses remains an issue of heightening public concern, with CEO compensation serving as a lightening rod for debates.

Who does well, for how long, and to whom (and to whom not) is one doing good? It is possible for a business to do good by a few token stakeholders through a high profile and well-advertised philanthropy campaign, which also strategically benefits the bottom line. Corporate social responsibility could also mask legal violations, abuses of weak government oversight, unfair distribution of business wealth across stakeholders, or even serve to acculturate societies to the heightened institutional power of business corporations. It is contestable if and how society as a whole fares from the goodness of particular, responsible business deeds and the wealth created in the process. Furthermore, many question the underlying motivation for business good behavior, and doubt the authenticity of the ethics at play. The case for profitable ethics has remained fraught with all these complications, casting doubt on the pursuit of business ethics generally.

Neoliberal economists, conversely, argue for “doing good by doing well”. In The Wealth of Nations Adam Smith proposed that a more limited role for government than had existed in mercantilism would yield greater economic prosperity for the whole, precisely by permitting the untrustworthy business class to act in their own self-interest, without conscious concern for the common good.[vii] The ensuing history of corporatization along with changing perceptions of consumer and labor rights and environmental health have led many to prefer an active government that stringently regulates businesses and markets. Such trends have simultaneously and ironically been countered by free market theorists who would seek to return the global marketplace to an idealized liberal golden era presided over by business leaders and entrepreneurs unencumbered and unfettered by government bureaucracies. Meanwhile, in recent decades wealth inequality has reached historical all-time highs, and the very survivability of the planet has been jeopardized by the unsustainable globalization of industry and the negative externalities latent in business production, distribution, and consumption.

Yet, free marketeers advocate moral values that bear high regard. Personal responsibility, entrepreneurialism, and efficiency incentives bolster individual autonomy and the wealth creating function of markets. Individualism counters the totalitarian threats implicit in collectivism, and moreover fosters differentiation, diversity, and innovation, all of which ultimately benefit the society as a whole.[viii] It is plausible to suggest that a market ethos should respect individual autonomy, encourage personal responsibility and acknowledge the importance of wealth for social welfare. Of course, how these values are defined and described merits considerable reflection and diverse iterations.

Nevertheless, individually focused responsibilities still risk externalizing problems onto third parties, and endorsing status quo conceptions of the good. For example, indigenous peoples and communities in poorer, “developing” countries stand to lose most from climate change and environmental degradation wrought by advanced capitalism. Yet, these parties did not contribute much, if at all, to generating these problems. From the perspective of those wronged by the insatiable consumerism of the “developed” world, climate change amounts to yet another series of catastrophes overwhelming them in the wake of neocolonial forms of globalized capitalism. As some groups become collateral damage of globalization, the inequities of such “spatial injustices” expose an ugly shadow side of market-dominated systems.[ix]

Individualism is at the root of capitalism, at least in its Euro-centric, neoliberal guise. And it allows blind prejudice to become tyrannical once capital accumulation permits concentration of power in the hands of the few. We can also see this problem at work in the reinforcement of stereotypes underscored by the one-dollar-equals-one-vote mantra and the subjection of personhood to labor extracting productivity measures. Hypothetically, if the ideal of individualism emerged as a strong value in a particular geographical and historical context, say, Anglo societies in previous centuries, and that value was constructed into ideologies forcibly propagated globally in ways that secured vastly unequal distributions of power and wealth, then later beneficiaries of this structure might come to justify their privilege and advantage in ways that continue to exclude and exploit the beneficiaries of a different value set. One instantiation of this ideological self-service is a majority white male executive leadership team that justifies its non-diverse composition by appeals to concern for “lack of qualified applicants in the available pool”. Even if the prejudice merely results from a naïve sense of personal accomplishments blind to the unjust entitlements undergirding them (rather than an all-too-common implicit/explicit racist, sexist, or other forms of noxious bias) this prejudice serves to further dominate others through an exclusion of other conceptions of the good society. So, capitalism construed under an individualistic rubric may likely conceal the group memberships of its dominant purveyors and those most advantaged by its ideological propagation.

Keynsian, Neo-Marxist, socialist, and “progressive” solutions to these problems insist on a stronger role for government in managing and directing markets toward more egalitarian and fair ends. While it is beyond the scope of this essay to decide ultimately upon the optimal role for government vis-à-vis the market, it is certainly within its scope to point up the necessity of confronting the question. We face a fundamental problem of how to situate markets in the context of social, political, and environmental spaces. Business ethics, which can underwrite the self-regulation of business and industry, may hand the responsibility of being ethical over to the market at the cost of abnegating proper government oversight. Such a view tends to translate values and principles into rules and standards inscribed by businesses rather than into laws and regulations crafted by governments. This is not to say that a utopian marketplace of responsible business players and civil society watchdogs should not serve as an ideal at which to strive. In evaluating market ethos we must take care of how and to whom we allocate the responsibility of creating, structuring, enforcing, and disseminating that ethos.

It is tempting to cultivate market ethos by identifying values to be infused throughout the marketplace. A shortlist could include: honesty, trust, integrity, charity, promise-keeping, industriousness, creativity, fairness, equity, liberty-respecting rights (such as privacy and property rights), etc. Some of these values are proudly written into corporate mission statements and elaborated in ethics/compliance codes and reports. Others have remained under the purview of governmental, educational, or other social institutions. Scholarship in business ethics attends primarily to the former, with that in politics and legal theory attending to the latter.

It is also tempting to establish rules of the game by which all parties must abide for fair and mutually beneficial outcomes. Our current era experiences a turf war between various social institutions, with business corporations likely emerging the stronger in the bid for power. Laws and regulations create rules restricting business when government institutions wield authority. When corporations gain the upper hand, they set the rules of the game, both through influencing government laws and regulations and by engaging in forms of self-policing, a solution made palatable by the field of business ethics. Weak rule of law in developing countries has served to justify corporate social responsibility for multi- and transnational enterprises operating in a globalized market. Against this backdrop of politico-economic institutional struggles, questions about market ethos point us toward issues of how to divvy up control over business activities.

Notes on the political economy of the future

Envisioning market ethos through such a lens invites us to embark upon a journey to reframe current discourses on business ethics and market regulation in light of different values and conceptual parameters. Given current trends, the immediate future may see a continued shift in the power fulcrum toward corporatized forms of self-organization, as exist not only in business enterprises, but also in non-profits and smaller governing bodies. Resistances to this trajectory take many forms, perhaps the most potent of which occurring through grassroots movements, cooperative alternatives, and collective activism. The exact form of political-economy to be manifested through the rise of these institutions and resistances remains elusive, but the dawning era may call for entirely new paradigms for interpreting, analyzing, and theorizing market ethos.

It is possible that the nature, significance, and scope of market itself will evolve. Classically, the marketplace had been restricted to the space in which business transactions, understood as buying, selling, and profiting, occurred. Over time, the concept of market expanded to include all things that could possibly be subject to purchase, sale, and gain. The marketplace in concrete goods became a market for labor, capital, services, intellectual property, cultural artifacts, etc. In an era strongly dominated by business enterprises, one wonders what is not for sale, as body parts, genetic material, sexual and reproductive labor, and indeed every aspect of social, cultural, and political life becomes subject to market norms and framing.[x] And while the old bastions of the left still decry these trends and romanticize protective, caring national governments, other forces at work in civil society interface with this expansive market in ways that counter its totalizing tendencies toward commoditization, monetization, quantification, capitalization, and profiteering. Civil society institutions in the form of schools, religions, non-profits, activist organizations, social media, and alternative communities monitor business activities, punishing and rewarding perceived business ethos, and provide goods and services in and through market spaces with objectives and motivations other than wealth accumulation. While these institutions certainly are not new, their oversight and influence over businesses, along with their insertion into markets positions them as competitive alternatives to business as usual. Hybrids between businesses and non-profits have surfaced as businesses increasingly incorporate social responsibility objectives demanded by civil society, and non-profits learn efficiency, marketing, and other business strategies and techniques from their for-profit counterparts. The rise in cross-sector partnerships further muddies the waters dividing traditionally separate institutions in the private space of the so-called market. The market has ceased to inhabit a discrete zone from the rest of society. In today’s world, the market is everywhere.

Such an omnipresent market can no longer be identified in terms of interactions between businesses, modeled as sale for gain operations. Instead, as the very purpose of business has changed, through the rise in the corporate form of enterprise, expansion of market scope, and civil society demands for ethics, the market itself has evolved into a new terrain of contested institutional control that also supports dynamic interactions and evolving ethical parameters. So, as businesses become corporations, markets imbibe spaces previously sanctified in non-market terms, the nature and purpose of these institutions transform, as does those of other institutions. The values and ethos of once segregated domains cross-fertilize and/or collapse, generating new conceptions and practices of ethics in these zones of a more broadly defined market. It is within such a complex and all-encompassing market that ethos must be chartered. And to respect plurality, multiplicity, and creativity, such an ethos must also expand to be neither static nor univocal, while acclimatized to burgeoning political-economic structures.

Some exciting possibilities for such an expanded ethos could draw from the values of traditionally non-business institutions and marry them with old-fashioned business values to produce offspring capable of inheriting a corporatized, post-national, multi-institutional matrix characterizing the market of the future. Such progeny might synthesize seemingly contradictory or incompatible values, like gift-giving and profit, compassion and efficiency, contemplativeness and productivity, austerity and prosperity, inclusion and independence, unanimity and conflict, discourse and busyness, collaboration and competition, pure abstraction and materialism, and any number of imaginings. The marriage of diverse institutions could repopulate the global landscape with forms of human collaborative endeavor that defy the barriers between private/public, for-profit/not-for-profit, economy/politics, or market/state/civil society that their contemporaries, not inhumanly, tend to regard as natural, forgetting their social construction or historical contingency. The dissolution and reconstruction of these barriers need not issue in an amorphous amalgam of poorly defined intentions, although initial attempts at synthesis or synchretism may at first appear inchoate.

Another alternative could include a symbiosis of clearly defined elements, as currently manifests in cross-sector partnerships between institutions in diverse sectors. In such partnerships, governments, businesses, and non-profits could collaborate on projects where each leverages its own special competencies to achieve a common purpose of benefit to all parties. Arguably, environmental problems demand such collective action, as collective problems invite collective solutions, and complex problems may best be solved by harnessing the synergies of diverse inputs. Cross-sector partnerships are akin to and bolstered by interdisciplinary academic scholarship, though on a grander scale. Multiple academic disciplines can serve as components of cross-sector partnerships that transcend the academy.

Although these musings on market ethos have erred on the side of accepting and valorizing markets and corporations, the point has not been to capitulate to those economic institutions as traditionally understood, in terms of either nature/purpose or ethos. Rather the reader is invited to consider an historical trajectory, with an eye to anticipating new forms of society and economy that supersede pre-existing political-economic conflicts, as typically expressed in the effete left-right divide. It may be that the terms market and corporation, or even states, will disappear into oblivion, along with their attendant buzzwords like corporate social responsibility and corporate citizenship, all swept into the now proverbial “dustbin of history”. In their place new structures will emerge, hopefully more useful to the emerging forms of life that generate and beckon them, and these too will alter and transmute. So let us conclude these notes on future political economy with a suggestion: through paradox and play, an ethos, classically understood as the way of living of a people, may transform the market itself, whose own destiny remains uncertain.

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[i] Aristotle, Book One in Politics (Chicago: University of Chicago Press, 1984).

Aristotle, The Nicomachean Ethics (Englewood Cliffs: Prentice-Hall, Inc.,1962).

Plato, Book Four in The Republic (New York: Basic Books, 1968).

[ii] Adam Smith, The Theory of Moral Sentiments (Indianapolis: Liberty Fund, Inc., 1759).

[iii] Andrew Carnegie, The Gospel of Wealth and Other Writings (London: Penguin Books, 2006).

[iv] Milton & Rose Friedman, Free to Choose: A Personal Statement (New York: Harcourt Brace Jovanovich, Inc., 1980), 25-27, 36-37.

Milton Friedman, “The Social Responsibility of Business Is to Increase Its Profits,” The New York Times Magazine, Sept. 13, 1970.

[v] Andrew Crane, Dirk Matten, and Jeremy Moon, Corporations and Citizenship (New York, NY: Cambridge University Press, 2008).

[vi] Ralph Nader, Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State (New York, NY: Nation Books, 2014).

[vii] Adam Smith, An Inquiry into the Nature and Causes of The Wealth of Nations (New York: Random House, 1994). See especially: Book IV, Chapter II.

[viii] F.A. Hayek, The Road to Serfdom (Chicago: University of Chicago Press, 1944), 37-48.

Ludvig von Mises, Liberalism in the Classical Tradition (San Francisco: Cobden Press, 1927).

Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962).

[ix] JoAnn Carmin and Julian Agyeman, eds., Environmental Inequalities Beyond Borders: Local Perspectives on Global Injustices (Cambridge: Massachusetts Institute of Technology, 2011), 1-11.

[x] Michael J. Sandel, What Money Can’t Buy: The Moral Limits of Markets (New York: Farrar, Straus and Giroux, 2013).