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Moral Capitalism Moral Capitalism Reconciling Private Interest with the Public Good.

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Presentation on theme: "Moral Capitalism Moral Capitalism Reconciling Private Interest with the Public Good."— Presentation transcript:

1 Moral Capitalism Moral Capitalism Reconciling Private Interest with the Public Good

2 Moral Capitalism – 1750 Capitalism begins and grows prosperous in Holland, England and Scotland An Inquiry into the Origins and Causes of the Wealth of Nations Adam Smith, 1776

3 Moral Capitalism Abuses of capitalism – (dark, satanic mills of Manchester; Ebenezer Scrooge) Communist Manifesto Das Kapital Karl Marx

4 Moral Capitalism Non-communist response: welfare state capitalism Bismark’s reforms Free trade unions John Maynard Keynes / New Deal Japan, Inc.

5 Moral Capitalism Collapse of communism Rise of CSR CRT Principles for Business (1994) Global Compact (2000) Moral Capitalism (2004) Stephen B. Young

6 Moral Capitalism Premises of Moral Capitalism 1) Values Outcomes 2) Values Congruent with Self-Interest

7 Moral Capitalism Values Drive Real Outcomes

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14 Theory of the Moral Firm (self interest considered upon the whole)

15 Moral Capitalism Theory of the Moral Firm: 2 CRT Principles Vision Stakeholders Corporate Governance Leadership Strategy Value Drivers Shareholder Value

16 Moral Capitalism Stakeholders: -Customers – moral compass for capitalism -Employees – moral agents, not parts for a machine -Owners and Investors – fiduciary duties of loyalty and due care -Suppliers – friends, not foes -Competitors – compete with quality and innovation, not price -Communities – enhance social capital to enhance future profitability

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18 Moral Capitalism 18 Category 1. Fundamental Duties 2. Customers 3. Employees 4. Owners/ Investor s 5. Suppliers/ Partners 6. Competitors 7. Communiti es 1. Responsi- bilities of Business Criterion 1.1 Criterion 1.2 Criterion 1.3 Criterion 1.4 Criterion 1.5 Criterion 1.6 Criterion Economic and Social Impact of Business Criterion 2.1 Criterion 2.2 Criterion 2.3 Criterion 2.4 Criterion 2.5 Criterion 2.6 Criterion Business Behavior Criterion 3.1 Criterion 3.2 Criterion 3.3 Criterion 3.4 Criterion 3.5 Criterion 3.6 Criterion Respect for Rules Criterion 4.1 Criterion 4.2 Criterion 4.3 Criterion 4.4 Criterion 4.5 Criterion 4.6 Criterion Support for Multi- lateral Trade Criterion 5.1 Criterion 5.2 Criterion 5.3 Criterion 5.4 Criterion 5.5 Criterion 5.6 Criterion Respect for the Environment Criterion 6.1 Criterion 6.2 Criterion 6.3 Criterion 6.4 Criterion 6.5 Criterion 6.6 Criterion Avoidance of Illicit Operations Criterion 7.1 Criterion 7.2 Criterion 7.3 Criterion 7.4 Criterion 7.5 Criterion 7.6 Criterion 7.7 Self Assessment Framework – Criteria Matrix

19 Moral Capitalism 19 Assessment Framework – Criterion/Benchmark Example 2.2. Customers How does the company contribute to the social well being of its customers through its marketing and communications? How does the company respect the integrity of the culture(s) of its customers? How does the company address situations where prevailing evidence deems a product harmful in any country? What role does disclosure play in this strategy? How does the company provide remedies for customer dissatisfaction? Describe applicable mechanisms for redress through recalls, warranties, and claims procedures How does the company follow relevant consumer codes to protect vulnerable consumer group? What are the company’s current levels and trends in key measures of product/service performance and applicability? Assessment Framework – Criterion/Benchmark Example CUSTOMERS (Section B) 1B - Beyond Shareholders towards Stakeholders - Customers Does the company provide its customers with quality products and services at reasonable prices, and on fair terms, while protecting their health and safety and their physical environment, and respecting their culture and individual dignity? POINTS TO CONSIDER – The company seeks customer feedback on its practices, monitors impacts, and is prepared to modify production or service as a result, plus provides relevant training of staff. Point(s): Please circle Please write down any concerns, explanations or additional comments on how or how not, the company is performing.__________________________________________________________________________________________________________ 2B - Economic & Social Impact of Business - Customers Do the company’s products and services contribute to the economic and social advancement of its customers and to the well-being of their communities? POINTS TO CONSIDER – Quality of product/service development; product quality and safety; adherence to relevant customer, safety and environmental codes; products / services positively impact living standards? Point(s): Please circle Please write down any concerns, explanations or additional comments on how or how not, the company is performing.__________________________________________________________________________________________________________

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22 Moral Capitalism 22 Assess Board Management and Employee Decision –Making Phase I – 60 minutes – CEO, Board Members, Senior Management Team Phase II – 60 minutes per stakeholder – Other Management Executives & Company Leaders

23 Moral Capitalism 23 Performance Improvement Performance Feedback to Management Management Action CRT Assessment The Corporate Improvement Cycle

24 Moral Capitalism The Problem of Poverty - For Individuals – use time and the assets of others - Debt - Education - Savings -For Nations – Build social capital - Rule of Law - Trust - Education - Infrastructures

25 Moral Capitalism Poor Business Wealthy Government

26 Moral Capitalism Required for Moral Capitalism - Moral Courage - Leadership Moral capitalism doesn’t happen; it is made to happen

27 Moral Capitalism Conclusion: 1) Our Values Make a Difference 2) How to Analyze and Apply Values

28 Moral Capitalism Common Assumption: Virtue Conflicts with Self-Interest (St. Paul, Kant, Marx, Social Darwinism) “My Kingdom is not of this World” “You cannot serve both God and Mammon” “He who dies with the most toys, wins” VirtueSelf-Interest Conflict

29 Moral Capitalism Conclusion: There can never be a moral capitalism! - Capitalism needs private property and profits - Private property objectifies selfishness - Profits encourage avarice and greed

30 Moral Capitalism 30 Other-Regarding The Moral Sense Self-Regarding Self-Interest Considered upon the whole Self-Interest Narrowly considered Basic physical and Ego needs Self Interest Virtue

31 Moral Capitalism 31 Stewardship Service The Moral Sense Exploitation Power for common good; Ethical leadership; Kyosei Fear Power only for self Dysfunctional Leadership Dominion

32 Moral Capitalism Cosmos The Basic Self

33 Moral Capitalism VirtueSelf interest

34 Moral Capitalism 34 STRATEGY MANAGEMENTGROWTH INNOVATION KYOSEI INQUIRERS UNIFIERS PRAGMATISTS RULE- BENDERS ASPIRATIONS (LEVEL OF NOMATIVITY ) BUSINESS RESULTS (LEVEL OF FACTICITY) Copyright Caux Round Table MARKET ADJUSTMENTS IMPLEMENTATION Business Culture Dynamic

35 Moral Capitalism 35 CRT Principles for Business Seven Principles: 1. Recognize stakeholder constituencies 2. Create wealth for development of the world 3. Act with sincerity, candor and truthfulness 4. Respect the law 5. The World is one economic community 6. Sustain the environment 7. Avoid corruption and illicit dealings

36 Moral Capitalism 36 CRT Principles for Business Stakeholder Constituencies 1. Customers 2. Employees 3. Owners/Investors 4. Suppliers 5. Competitors 6. Communities

37 Moral Capitalism 37 Caux Round Table Principles for Business & Significant Ethical Traditions: Congruence Amidst Diversity

38 Moral Capitalism 38 CRT General Principles & Ethical Vision of The Koran Principle 1: The Responsibilities of Business Koran 4:36; 6:165; 16:16 – Create wealth for others Principle 2: The Economic and Social Impact of Business Koran 4:36; 6:165; 16:16 – Create wealth for others Principle 3: Business Behavior Koran 2:174; 23:1 – Keep promises Principle 4: Respect for Rules Koran 5:87 – Do not transgress Principle 5: Support for Multilateral Trade Koran 4:26 – Promote trade Principle 6: Respect for the Environment Koran 55:1 – Do not transgress the balance Principle 7: Avoidance of Illicit Operations Koran 2:188; 30:38 – No unjust acquisition of property

39 Moral Capitalism 39 CRT Stakeholder Principles & Ethical Vision of The Koran Stakeholder Principle: Customers Koran 6:149 – Just weight and full measure Koran 64:12 – Preserve self from greed Stakeholder Principle: Employees Koran 42:35; 16:90 – No oppression Stakeholder Principle: Owners & Investors Koran 16:16 – Seek bounty Stakeholder Principle: Suppliers Koran 83:1 – Treat fairly Stakeholder Principle: Competitors Koran 64:12 – Preserve self from greed Stakeholder Principle: Community Koran 42:35; 46:19 – No pride or injustice

40 Moral Capitalism 40 CRT Stakeholder Principle: Customers – Religious Foundation Foundational Judeo-Christian Old Testament Visions of Social Justice Leviticus 19:13; proverbs 20:17; 11:1 Canonical Protestant Moral Authorities Golden Rule; Matthew 5; Matthew 25:32-46 Papal Teachings On Business Responsibility Respect for the human person – Laborem Exercens; Avoid excessive self-love – Centissimus Annus Ethical Vision of The Koran Koran 6:149 – Just weight and full measure; Koran 64:12 – preserve self from greed Thai Theravada Buddhist Teachings Eightfold way: right livelihood Mahayana Buddhist Teachings Eightfold way: right livelihood; wise discernment

41 Moral Capitalism 41 CRT Stakeholder Principle: Customers – Religious Foundation Expression of Original Confucian Morality Analects, Bk XVI, Ch X Hindu Varnas as Expressed in the Law of Manu Text Manu, Ch 2, 93; Ch 7, 3; Ch n7, 49 African Spiritual Understandings Reciprocity; do not diminish life force of another Way of the Japanese Kami Upright and honest heart; strategic thinking Meso-American Indigenous Theology No self-magnification; no deception

42 Moral Capitalism From Normativity to Facticity (Jurgen Habermas)

43 Moral Capitalism 43 Improve Decision-Making Skills - Enhance Your Reflective Thinking Step 1: Find the right time and place to think. Step 2: Listen to your own thoughts as they come. Step 3: Briefly write down all your thoughts in no particular order Step 4: Become aware of and then ignore superficial and distracting concerns and worries. Step 5: Develop remaining thoughts in more complexity and assess those that become more important. Step 6: Gain confidence in accuracy of inner convictions. Step 7: Take action.


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