Ever since Milton Friedman proclaimed that the market is “amoral” and the sole purpose of business is to make a profit, commerce has used the license of free market ideology, not only to excuse itself from any moral obligation towards the society in which it operates, but to threaten the bonds that have held that society together.
At this juncture, neoconservatives would cite Margaret Thatcher’s famous dictum: “There is no society. There are only individuals and families.” So why should commerce concern itself with anyone but investors? That point of view has enabled all kinds of sins to be committed – mostly in the name of increasing individual wealth at the expense of the organizations, communities, and environments in and by which these individuals enrich themselves.
An example: Between 1995 and 2005, CEO pay rose 298% while the paycheck of the average worker rose a mere 4.3%. Seen from another angle, the AFL-CIO calculated that the ratio of CEO pay to that of the average worker went from 40:1 in the 1980s to 300:1 in recent years.
As Globe and Mail correspondent Eric Reguly pointed out in a recent piece (“Stock-Based Pay Becomes a Monster As the Rich Get Richer”), this surge in executive compensation is largely due to the Pandora’s box of stock options, stock awards, and share buybacks opened up by the SEC’s Rule 10b-18 of 1982. Reguly points out this “essentially legalized stock manipulation by allowing companies to repurchase shares amounting to 25% of their average daily trading volume over the previous four weeks.” The result for S&P 500 companies was to spend a whopping $3.6 trillion on buybacks between 2001 and 2013.
This and other forms of deregulation, combined with reductions to both corporate and income tax – all paid for with cuts to public spending – helped bring the global economy to its knees in 2008 slowing the recovery since. As former US Secretary of labor Robert Reich has said, if consumers are responsible for 70% of the economy, you can’t keep taking money out of their pockets while simultaneously expecting the economy to grow.
The desire for individual wealth at the expense of collective prosperity is what Buddhists would call “unskillful” or “irresponsible” desire. A core teaching of Buddhism states that all phenomena are rooted in desire, and that desire is the root of all suffering. This makes it sound like all desire is bad. But a subtler reading of the doctrine reveals that only “unskillful desire” – that which requires immoral means such as lying, cheating, or theft to satisfy it – is bad, while “skillful desire”– which employs constructive aids such as creativity, imagination, and hope in search of not just your own, but others’ happiness – is good. Put another way, if unskillful desire is the cause of suffering, skillful desire forms part of the path to its cessation.
If the degree of suffering we see among the masses today is any indicator, unskillful desire is winning. As Washington DC blogger Sean McElwee puts it in his Huffington Post op-ed “Milton Friedman: Father of the Tea Party?”: “This creates one of the contradictions of capitalism: How long can a liberal democratic society (which relies upon cooperation, mutual interdependence, and shared sacrifice) exist alongside a purely capitalistic system (which relies purely upon self-interest)? How long can markets “crowd out” all instances of social virtue before we descend entirely into chaos?”
Skillful desire in a business context would walk away from the “heads I win, tails you lose” zero-sum mentality of free market fundamentalism and embrace a broader, more balanced approach to the meaning of prosperity. Skillful desire would seek win-win solutions that would reward everyone touched by the enterprise, not just the top executives and shareholders. Skillful desire would see past the quarterly results, and focus on the long game, not just to enrich itself, but to lay down a foundation designed to generate continued prosperity.
To quote economist E.F. Schumacher, in this deregulated environment, “Call a thing immoral or ugly, soul-destroying or a degradation to man, a peril to the peace of the world or to the well-being of future generations: as long as you have not shown it to be ‘uneconomic’ you have not really questioned its right to exist, grow, and prosper.”
Skillful desire in business would eschew the immoral, the soul-destroying, and the degrading, look past the realm of immediate self-interest, and link today’s economics to the peace, prosperity, and well-being of future generations.
Will Novosedlik is AVP, head of growth partnerships at Idea Couture. He is based inToronto, Canada.