Alpha Dominance

The crisis in Haiti is devastating and consumes much of the news hour these past days, and well it should.  We Americans pride ourselves in doing good and valuing life and humanitarian principles.  Our response in such times is an outpouring of support and service.  While there are always delays and issues in organizing massive relief efforts, we do a great deal of good and are among the first responders around the world.  Humanitarian motives are behind much of our foreign policy and behind the wars we have entered.  We have strong egalitarian and democratic ideals as a nation.  For this we can be proud.  It is our way; the American way.  Will Herberg put it better than I could when he said:

The American Way of life is individualistic, dynamic, pragmatic. It affirms the supreme value and dignity of the individual; it stresses incessant activity on his part, for he is never to rest but is always to be striving to “get ahead”; it defines an ethic of self-reliance, merit, and character, and judges by achievement: “deeds, not creeds” are what count. The “American Way of Life” is humanitarian, “forward-looking”, optimistic. Americans are easily the most generous and philanthropic people in the world, in terms of their ready and unstinting response to suffering anywhere on the globe. The American believes in progress, in self-improvement, and quite fanatically in education. But above all, the American is idealistic. Americans cannot go on making money or achieving worldly success simply on its own merits; such “materialistic” things must, in the American mind, be justified in “higher” terms, in terms of “service” or “stewardship” or “general welfare”… And because they are so idealistic, Americans tend to be moralistic; they are inclined to see all issues as plain and simple, black and white, issues of morality.

What a passage.  Who couldn’t feel a surge of patriotism and pride in reading this description?  Moreover, these ideals highlight the very reasons for past American prosperity. 

Of late the American prosperity engine seems to have derailed however.  Our economy continues to suck wind as our deficits grow and record unemployment plagues our collective productivity.  What is wrong here?  I believe recent trends have reduced our feelings of civic responsibility and our dedication to our collective good.  For most of our nation’s history, manhood was defined, among other things, as a responsibility to community, as well as self, family and nation.  Our increasingly separated lives have eroded our communities and throughout the nation from the micro to the macro scale, self interest has eclipsed a sense of civic duty and authentic patriotism.  Our leaders, our corporations, and yes even our very selves have thrown this value under the bus in the pursuit of our own piece of the pie at any cost.  Excessive materialism has led for many of us, to the erosion of our humanitarian sensibilities and willingness to give back to our communities and our nation and the world at large.  Our response to Haiti and other disasters shows that this spirit is not dead, but other factors show it is indeed ailing.  We discard a sense of civic duty and duty to the community at our own peril.  Man evolved as a leader and protector for the community.  What greater sacrifice than the heroic man who gives his life to the protection of his tribe or nation?  How can we consider ourselves men at all without embracing our obligation to the larger community?  There is no future and no fulfillment in the craven heartless pursuit of the self alone.  A nation without a collective identity and will, without a value system we can all embrace, has no future. 

I believe that the rampant corporate malfeasance that has led to our economic malaise, in large part due to the banks but by no means isolated therein.  This loss of respect and a sense of duty to all stakeholders in an organization has led to corporations who have no sense of responsibility to their employees and cut them loose to their own detriment to boost short term profits.  It has led to corporations who have no sense of duty to their nation and seek to cheat us out of their taxes rightfully owed.  It has led to corporations, even, who have no sense of duty to their very masters, the shareholders, whom they ostensibly serve.  Take as a case in point Goldman Sachs, who this year paid more in bonuses than they earned for the year.  Who, exactly, exists to serve whom?  Why is a binding shareholder vote on executive compensation even up for discussion?  Shareholders own the business and damn well should have the final word in compensation?  These rapacious executives are lapdogs run amok.  They need to be shown the firm guidance of a master who is empowered to muzzle them.  Our politicians are cast from the same mould.  Far from serving us, the speak platitudes while being paid off by corporations to gut the very legislation meant to reign in these excesses.  This has to stop and it all comes out of a lack of any sense of civic duty or even decency.  Our greed has gotten out of control and has gutted this fine nation of ours.  We must put a stop to this malarkey and quickly if we stand any chance of passing our pride in America to our offspring.  For our collective sake I hope we manage this feat.

This journal article similarly suggests that our corporations serve a role in forming individual morality and duties.  In an ostensibly free market such as ours, they hold a magnified importance and we must work to ensure that these enterprises exist to serve their stakeholders, not the other way round:

By KLAUS SCHWAB

Few things have captured the attention of the public as much in recent weeks as the issue of excessive bonuses for corporate executives. This discussion is being conducted in a very emotional way, driven by factors such as greed, envy and moral outrage.

Nevertheless, the discussion is superficial, as it doesn’t consider the essential point of the matter—namely the role that companies (including banks) play in society and the role of executives within these companies. The bonus discussion is just a symbol of a much deeper transformation that has taken place in the business world.

Almost 40 years ago, I first developed the “stakeholder theory” for businesses at the World Economic Forum in Davos, Switzerland. This considers the enterprise as a community with a number of stakeholders—in other words, social groups that are directly and indirectly connected to the enterprise and that are dependent on its success and prosperity. These groups include employees, customers, suppliers, the state and especially the society in which the enterprise is active.

The idea at the core of the Davos meetings was to create a platform where managers could meet their stakeholders and discuss their mutual responsibility. According to the stakeholder approach, the top management of the enterprise acts as a trustee for all stakeholders—and not just the trustee of the shareholders. It is based on the principle that each individual is embedded in societal communities in which the common good can only be promoted through the interaction of all participants.

We have witnessed a gradual erosion of this communitarian spirit over the past years. This has been visible not only in business, but also in politics and other areas. The erosion of societal values has progressed to a great extent in business, and it is one of the primary reasons of the current economic crisis.

In the last few years, the business enterprise has been transformed from a purposeful unit to a purely functional unit. The purpose of an enterprise—to create goods and services for the common good—has been replaced by a purely functional enterprise philosophy aimed at maximizing profits in the shortest time possible. But if management decision-making processes are decoupled from the responsibility of managers for their own risk-taking, then the entrepreneurial system is being perverted.

In this context, the enterprise is no longer an organic community. It becomes instead a functional “profit-generating machine” in which all parts that do not fulfill their purpose, including managers, employees, products, locations, etc., are replaceable. This development was particularly visible in the financial sector, where there is at best only an indirect connection with the original purpose of an enterprise, meaning the creation of substantive, real value.

This has consequences for individual behavior. One cannot expect anything other than selfish thinking and action from an individual who knows that he or she is replaceable at any time. Instead of a world that is guided by a communitarian sense of duty vis-à-vis society, there is a rise of individualistic profit-seeking behavior in which society plays only a secondary role.

The current crisis should actually be a warning shot for us to fundamentally rethink the development of our morals, our ethical norms, and the regulatory mechanisms that underpin our economy, politics and global interconnectedness. It would be a wasted opportunity for all of us if we pretended that the crisis was simply a bad dream, especially now that we are beginning to see the first signs of improvement in rising share prices or quarterly profits returning to banks—with corresponding bonuses.

Unfortunately, the reality from which we are still hiding looks very different. The financial crisis has led to an increasing level of unemployment that will remain with us for years to come; it will also put an enormous pressure on public goods and services as governments are forced to pay off their ballooning debts.

The billions that are needed to pay off the debts will lead to higher taxes, reductions of social and public health systems as well as reduced investments in education and infrastructure. In the end, it is the taxpayer, the average citizen, who has to shoulder the costs of the crisis by a reduction of his or her disposable income.

There is a real danger that the financial and economic crisis will develop into a real social crisis. Difficult times lie ahead. If we want to keep society together, then a sense of community and solidarity are more important now than ever before. This communitarian spirit is the basis of the stakeholder principle. We need to embrace that stakeholder principle, not just within the narrow confines of companies, but at a national and global level as well.

From this context, the bonus discussion is just a symbol of a more fundamental question: whether we can adopt a more communitarian spirit or whether we will fall back into old habits and excesses, thereby undermining social peace.

Mr. Schwab is founder and executive chairman of the World Economic Forum, based in Geneva, Switzerland.

The Alpha male must be a leader of men.  He must lead by example in demonstrating that the privilege endowed upon him by his peers, in making him a leader, is countervailed by his own duty to guide and protect them.  To be a man, one must be a humanitarian.  Anything else is craven and self serving and by its very essence, beta, if not omega.