The world in which a businessman’s word was his bond – where deals were struck (and adhered to) on a handshake – is long gone. Elaborate legal agreements (with even more elaborate get-out/lock-in clauses) have seen to that. My dad, a businessman, used to laugh at me when I explained the competitive market theories I was studying. “Show me a competitive market of three firms” he would say, “And I’ll show you a cartel of two.” “Of course we like a little bit of competition, but most of all we like to feel in control … and the banks like it too. They run a mile from anything risky. But show them a corner of a market that you control, even a small corner, and they love it. So when corporations come stalking round looking for competitive small firms to acquire, don’t kid yourself. Their interest will be in closing down competition not extending it. Its in their DNA.”
Thank goodness my Dad never studied economics. He would have been much more of a pain in the ass to his tutors than I was. I only wanted to overthrow the system. He understood that, left to its own devices, a de-regulated market system would screw itself. He was also convinced that once a new social ethics was in place, businesses would emerge to compete within it. He may be right, but don’t tell him I said so.
My Dad’s generation understood that it was society that defined the ethics of the day, and that business was expected to work within this ethic. Personal/collective responsibility (and the prospect of imprisonment) always helped businesses to act at their most ethical level. To re-connect with this we need to unravel some of the current mythology about corporate ethics, remove some of the powers corporations now have to undermine the ethical society, and free up some of the inventiveness corporations and companies can still deliver to genuinely transform society.
This is not to argue that corporations cannot be a force for good or important engines of change. It is simply to acknowledge that ‘ethics’, when you find it, should count as a bonus. A more helpful starting point is just for corporate enterprise to be open, accountable, sustainable and legal. This would be a great leap forward.
The point behind the film I have chosen is that human inventiveness, determination and imagination can be harnessed by business as much as they can be blocked. In that sense, it is important to divide the corporate world between those with entrenched interests in their ownership of the past, and those interested in a bigger influence within a different future.
No generation in human history has faced the choices and changes we will have to make. It will involve a fundamental re-think of the nature of markets, the ‘footprint’ we impose on the planet, and our ability to deliver more but consume less. It is by no means certain that, as a species, we are up to it.
It has always been the case that societies define the ethics of the day. Corporations either reflect this or identify the loopholes that can be exploited within the legal frameworks that underpin this ethics. Today’s obsession with voluntary agreements, CSR programmes and mission statements often conceals market activities that are anything but ethical. As ethical levers, they are a poor substitute for personal liability, prison sentences and tough regulatory frameworks. At one extreme,in the biggest economic crisis of my lifetime, the financial sector has demonstrated that, stripped of personal liabilities and corporate constraints, markets have no ethics whatsoever. Feral capitalism became only a distant relative of markets supposed to be open, accountable and ethical. Mission statements will not change that, but creativity, inventiveness and (sustainable) self interest just might.
‘Who Killed the Electric Car’ and ‘The Revenge of the Electric Car’ both illustrate the creative tensions within the business world; inherent conflicts between the past and the future. Often ‘the past’ has a disproportionate share of the money and political influence, whilst the future holds a full hand of best ideas. This is as true of today’s UK debate about energy policy as it is in transportation. Sometimes, to find a breakthrough you have to begin by looking for different allies; playing one set of corporate interests off against another.
The motor industry would be transformed by an Exchequer that set VAT at 5% for all vehicles with missions of less than 100gmsC/km and a rising scale for all other emission levels. Energy policy will be transformed more by the telecommunications sector rather energy companies. Those who can deliver tomorrow’s lighter, brighter, more flexible energy systems will doubtless lay claim to the ecological virtues of doing so. They will be right. But the prime movement will have come from market opportunities relating to radical reductions in energy costs, avoiding pollution taxes and the reputational value of being ‘clean’. But if that is the future we want, the ethics have to come from a wider base than individual companies.
Business has a right to demand that government must ‘raise the bar’ of social ethics. If businesses are to compete against standards set by the best, rather than by loopholes exploited by the worst, this is what the market rules must require. If business has a lever to offer government (and society) in making such changes , it is in the creative ability to deliver radical, workable and sustainable transformations.
The film we will look at is about the revenge (or persistence) of such inventiveness.
Much of today’s market economics is in a terminal state. It isn’t that we will suddenly cease to require goods and services, but we will have to learn to deliver them in a lighter, brighter way. Some parts of industry and commerce understand this. Others sit on protected interests in the status quo that, if unchallenged, will sink everyone’s boats. As a lapsed economist, it is with a degree of sadness that I confidently recognise the profession will produce 100 retrospective explanations of the collapse we should have anticipated, but barely a single proactive model for doing so.
If we are to shape a different future, today’s ethical leaders in business must also be its most inventive activists. My question to would be leaders is ‘does this include us?’
The answer will determine what sort of future our children will inherit.
By Alan Simpson
Alan Simpson is a recovering politician. As MP for Nottingham South from 1992-2010 he never tried to ‘toe the Party line’, raising instead the issues he saw as dividing society or destabilising its future. He currently acts as a consultant to Friends of the Earth (on energy and climate policies), works internationally on future energy systems and lives in an eco-house that he and his family designed in Nottingham. He is a net supplier of renewable electricity to the grid.