An important question for a capitalist society is, how does capitalism affect our morality? It’s important because we should be aware if there are negative side-effects to unfettered capitalism, so that we can resist such potential damages to society, and introduce regulations where they are necessary. An interesting investigation into how corporate environments can shape morality is given by Robert Jackall’s 1988 book Moral Mazes, which I highly recommend.
The basic thesis of the book, supported by in-depth interviews across several large companies, is that managers in large companies tend to internalize a flexible morality — one that is not based on rigid ideas of right vs. wrong, but one able to invent moral explanations for what is in the current best interest of the company, or at least in the best short-term interest of a particular manager. In other words, to fully maximize profit in a company requires making decisions that might be at odds with traditional morality; e.g. breaking promises, ruthless business practices, cutting benefits to workers, bribing officials, lobbying for changes in regulations that may have negative environmental impact, etc. Thus, to be an effective manager often means meeting targets set for you from above by any means necessary.
In this way, the most effective managers are typically those who are able to rationalize post-hoc, to themselves, or at least to others, why they are making certain decisions that might be seen from outside as unethical. Managers learn to be pragmatic, to do what is necessary without raising qualms about moral or ethical considerations:
As a former vice-president of a large firm says: “What is right in the corporation is not what is right in a man’s home or in his church. What is right in the corporation is what the guy above you wants from you. That’s what morality is in the corporation.”
Overall, perhaps the insight is that whatever incentive system is driving the company as a whole will end up filtering through a corporation to breed a moral environment aligned with that incentive system. Because large corporations are often under significant pressure to be profitable in the short term, the morality of “anything that increases short-term profitability is good,” can spread throughout a company and trump more traditional moral concepts.
The book describes how targets and objectives get set within a corporation:
The key interlocking mechanism of this structure is its reporting system. Each manager gathers up the profit targets or other objectives of his or her subordinates and, with these, formulates his commitments to his boss; this boss takes these commitments and those of his other subordinates, and in turn makes a commitment to his boss.
Then there is the pressure to optimize those objectives:
At each level of the structure, there is typically “topside” pressure to achieve higher goals and, of course, the CEO frames and paces the whole process by applying pressure for attainment of his own objectives.
In this way, the company as a whole is set to optimize for objectives; and the result is that a morality based on objectives seems to pervade managers. That is, reaching the objectives is the overarching goal, and a decision is “moral” if it helps along those paths, and “immoral” if it impedes those paths, regardless of how those decisions might be viewed through traditional morals or ethics.
As a society we are already aware of corporate immorality. We know not to interpret what comes from a company’s PR department as gospel truth. We question scientific studies sponsored by corporations that are in line with their interests but counter to scientific consensus. We are wary of lobbying attempts by corporations to influence regulation and politics, because we know that their best interests are often not our own.
Like humans, corporations have significant pressures to commit crimes out of self-interest; e.g. a person wanting more money might decide to rob a bank, if there were no consequences. However, as a whole, corporate morality may be more perverted than that of individuals, and corporate influence far greater. The result is that often influence can be applied to rewrite the rules in a corporation’s favor, or at least escape from much significant harm when they are caught breaking the law.
As citizens, we express outrage when corporate greed leads to devastating economic effect (e.g. the 2008 financial crisis) without any punishment to the offending corporations or their leaders. Our criminal justice system seems to punish those without influence (e.g. the poor, or average citizens) far more severely than those with influence (e.g. the rich and corporations); this seems unjust.
Thus perhaps a potential solution is to apply punishment more uniformly and justly, whatever the status of the perpetrator. This might offset a corporation’s drive towards immorality through strong negative incentives to break laws or cheat. However, it is not clear to me how to achieve such reform, which would itself require massive influence. Any ideas?