Position Papers

Raising the Ethical Bar in a Shrinking World (3)

It seems too that the most powerful international institutions tend to have the worst democratic credentials: the power distribution among countries is more unequal, and the transparency, and hence democratic control, is worse. Africa has suffered a lot from the downturn which has significantly affected growth rate and many other sectors of many nations’ economies even though the poor nations of the world have no part to play in the patterns of behaviour that precipitated the crisis [51] In Africa, individuals and groups are most vulnerable to the vagaries of the economy. A little economic instability affects all other aspects of life on the continent. Such economic recessions usually have dire negative consequences on poverty reduction and political stability. As Paulus Zulu argues, “Theoretically, all other things being equal, the capacity of states to dispense public goods and services is a function of their economic capabilities. Secondly, political stability within the state is a direct outcome of the capacity to dispense public goods and services” [52]. When the state fails to fulfil these functions, many areas of life are hampered.

Reconstructing a New Global Financial Ethic
What the global recession has brought to the fore is the truth that markets cannot self-regulate and so cannot be left to arbitrary economic forces and ideologies. Many states are entering to the markets to regulate its activities and so are international financial institutions. It is obvious that to stem a recurrence of a crisis of such magnitude, business can no longer operate as usual. As Albert Einstein says, “The significant problems we create cannot be solved at the same level of thinking that we were when we created them.” As such, the ethical bar of the global financial system has to be raised to meet with these new challenges. Even the business and political environments support the converging consensus towards a global code of conduct. Ethics is already working its way to the forefront of global discourse and there is the realization that as soon as individuals start to appreciate that their individual interests point towards common goals, they easily cooperate on just about anything [53].

The accelerated pace of global business relationships after the recession has generated a global sense of concern about the future. Statesmen, businessmen, ethicists, corporate executives and international institutions are asking what they must do to avoid a recurrence of the financial crisis in the future. Without exhausting the thoughts that have been generated in this matter, it is important to highlight four aspects which Win Swenson has identified: (i) Raising of corporate awareness, ethics training and culturally flexible codes of conduct should be emphasized as strategic assets that must be protected and carefully managed. (ii) Organizations should be encouraged to develop a broad-based values system to act as a screen for unethical behaviour. Values such as open, honest communication, team work and collaboration and personal accountability are hallmarks of strong organizations and, not coincidentally, highly ethical ones as well. (iii) Aggressively incorporate information ethics into business school curriculum. This has to go beyond academic principles and intellectual debates concerning what constitutes ethical behaviour. It should include practical, political, social, legal, regulatory and technological influences. (iv) Employees and business executives must be held accountable for violating corporate codes of conduct. If this is not done, the signal such negligence sends to others will be twice more detrimental than the misdeed itself. As such, management must measure and audit the effectiveness of its compliance to ethical initiatives [54]. It therefore needs no stressing today that “good ethics is good business and poor ethics can cost you business” [55].

All these point to the fact that the need for a holistic understanding and new humanistic synthesis of the operations of business and its motives should be given global expressions. According to Pope Benedict XVI, “the elimination of world hunger has also, in the global era, become a requirement for safeguarding the peace and stability of the planet. Hunger is not so much dependent on lack of material things as on shortage of social resources, the most important of which are institutional. What is missing, in other words, is a network of economic institutions capable of guaranteeing regular access to sufficient food and water for nutritional needs, and also capable of addressing the primary needs and necessities ensuing from genuine food crises, whether due to natural causes or political irresponsibility, nationally and internationally. The problem of food insecurity needs to be addressed within a long-term perspective, eliminating the structural causes that give rise to it and promoting the agricultural development of poorer countries” [56]. In another place, he says, “The economic sphere is neither ethically neutral, nor inherently inhuman and opposed to society. It is part and parcel of human activity and precisely because it is human, it must be structured and governed in an ethical manner. The great challenge before us, accentuated by the problems of development in this global era and made even more urgent by the economic and financial crisis, is to demonstrate, in thinking and behaviour, not only that traditional principles of social ethics like transparency, honesty and responsibility cannot be ignored or attenuated, but also that in commercial relationships the principle of gratuitousness and the logic of gift as an expression of fraternity can and must find their place within normal economic activity. This is a human demand at the present time, but it is also demanded by economic logic [57].

It is perhaps ironic to quote a warning from Adam Smith regarding the need for careful regulation of political economy: “The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it” [58].

Global Civil Society, Active Citizens and Effective States as Engineers of Social Change
According to Samuel Huntington, in this new world of the twenty-first century, global politics will be the politics of civilizations. This clash of civilizations, as he calls it, will reflect the dominance of cultural factors over the political scene rather than economics or ideology. Thus, the nature and impact of culture on politics and economy is a new paradigm shift that must be taken into consideration. Since the philosophical assumptions, underlying values, social relations, customs and overall outlooks on life differ significantly from among civilizations on the global scene and cultures on the local scene [59], a further point that needs emphasis is for state actors to understand the dynamics of the new global culture and to integrate positive aspects of this culture into their plans and proposals for the reengineering of integral and authentic development in the economic and financial sectors of their states. We cannot omit Francis Fukuyama’s thesis on the imperative of “social capital” in our development models. We need a new appreciation of the importance of incorporating cultural factors into economic growth and development models today. Values and norms are increasingly becoming part of the models of economic life. International financial institutions are beginning to push for the application of a

set of economic principles and theories by which development can be freed and extricated from the dead hands of the state, and which would not be totally left to the shims and caprices of the market forces. This has made social capital a key issue on the front line of the successful implementation of development agenda. Economists, management experts, politicians, key policy makers and opinion formers are ever more realizing that it is not the case that economic liberalization does not work, but that economic policies are not just enough to induce real and sustainable development. In the words of Francis Fukuyama, “Economic policy of any sort must be carried out by a state; one that is limited in scope but strong in its ability to enforce the rule of law, competent and transparent in the formulation of policy, and legitimate enough to have the authority to make painful economic decisions. The development agenda, in other words, cannot abstract from politics or from political institutions” [60].

Many people agree to the fact that sustainable institutions are needed for development and are beginning to see the critical place of social capital in this arithmetic. “In the past, cultural explanations for poverty or underdevelopment have been abused because what was lacking was not the right values, but rather the right set of institutions, such as the rule of law or a system of commercial courts, allowing growth to occur. Institutions can be changed, whereas cultural values are much more difficult to manipulate through policy; hence, appeal to cultural factors often seemed like a counsel of despair.” Social capital is critical for any successful social change to be effected. Since it is what permits individuals to band together to defend their interests and organize to support collective needs, it helps to consolidate the structures of civil society and well-equips individuals and institutions to confront the challenges of development. It also supports institutions and the rule of law and is a vital underpinning of democracy which is the source of legitimacy for the political and economic framework in which human capital and material development increasingly takes place.

According to Francis Fukuyama, “social capital is shared norms or values that promote social cooperation, instantiated in actual social relationships” Social capital is related to culture as a form of creative expression of the totality of a people’s way of life and worldviews. It thus plays a functional role in the society since it is the means by which individuals and groups of individuals cooperate and communicate in a variety of activities. It strongly implies a concept of trust which is the bedrock of any relationship among people. Trust is the strongest social asset of social capital [61]. At an organizational level, the creation of social capital is not all that different from the creation of human capital: it is done through education, and therefore requires investments in training and an institutional infrastructure within which the training can take place. Unlike conventional human capital, which involves the transmission of certain specific skills and knowledge, social capital requires the inculcation of shared norms and values, and it is often brought about through habit, shared experience, and leadership. It is important here to offer some remarks about how global civil society, active citizens and effective states can appropriate social capital in their collaborative effort to re-groom the global economy and strengthen democratic structures after this period of recession. Of critical importance is the role of civil society in acting as checks and balances in global economic, financial and democratic reorganization as well as championing the fight against global poverty. The sociologist Ernest Gellner puts it bluntly: no civil society, no democracy [62].

In a world of terrorist attacks, corporate scandals, ineffective governance and big social and ecological crises, it is important to find people who are inspiring vectors of positive change. Today, government appears increasingly helpless and even ‘schizophrenic’ against the ever converging concentration of power in corporate hands that seem to empower poor people, make demands on governments that officials are not prepared to meet and provide effective and efficient service in a swift and reliable fashion than government is accustomed to providing [63]. Civil society, understood as the social entrepreneurship sector, citizen sector or the third sector is thus growing in the provision of necessary social services, leadership, innovation and energy. This growing trend is also changing the structure of society and how society addresses social problems. This obviously has implications for business and government. For business, it provides opportunities for collaboration with sophisticated and increasingly effective citizen groups. For government, social entrepreneurs are providing a stream of field tested new ideas and much needed competition. It is today providing individuals with fresh cutting edge ideas for social change, entrepreneurial spirit and strong ethical fibre [64]. Social entrepreneurs are social innovators. They are people who radically alter the way things are done in the society and how society responds to the magnitude of social problems that today’s world is increasingly being faced with. As propellers of broad and breathtaking social change, social entrepreneurs have a profound effect on society. Social entrepreneurs, according to David Bornstein, are “transformative forces: people with new ideas to address major problems, who are relentless in the pursuit of their visions, people who simply will not take ‘no’ for an answer, who will not give up until they have spread their ideas as far as they possibly can.” [65].

For Joseph Schumpeter, the entrepreneur is a source of creative destruction necessary for major social and economic advances. Old ways and patterns of doing things have to be creatively destroyed to give way for newer ideas, fresher insights, stimulating approaches and innovative impulses that pave the way for leaps in productivity and waves of change. Social entrepreneurs advance systemic change to counteract the spread of problems. Around the world today, humanity appears to be clueless to the vast problems of inadequate education, failures in healthcare systems, poverty and hunger, the spread of disease, high crime rate, terrorism, environmental disasters, declining trust in political institutions, corruption and large scale financial fraud, poor leadership and inept governance. Leaders of governments, technocrats, global financial institutions and international bodies on their part seem to be bogged down by this upsurge of events which have created many more crises unparalleled in the modern world. As these problems continue to task the ingenuity of generations of the world’s leading scholars and agonize the consciences of moralists, individuals and groups who inspire hope that change is possible and work towards it are a welcome delight. As Bornstein argues, “It takes creative individuals with fixed determination and indomitable will to propel the innovation that society needs to tackle its toughest problems” [66] and this change often starts from a single individual who takes the initiative and creativity to act on that vision.

I have chosen to look at the social entrepreneur as that person who utilizes social capital and harmonizes it with social engineering to effect social change. The fact is that there are restless people today seeking to deal with problems that are not being coped with effectively by existing institutions. These people who are at the lead of cutting edge research, ideas and scholarship recognize the fact that if things must change, they have to be done in ways that are different and entirely new from how they are currently being done. They are propelled by new ideas to escape old formats in order to invent ne

w forms of organizations that stand the test of time. This is the Power of Paradigm Shift, that every significant breakthrough in the field of human social endeavour is at first a break with tradition, with old ways of thinking, with old paradigms. If we want to change our life’s situation, we must first change ourselves, and to change ourselves effectively, we first have to change our perceptions. But note this: not all paradigm shifts are in the positive direction. But whether they shift us in the positive or negative directions, whether they are instantaneous or developmental, paradigm shifts move us from one way of seeing the world to another. And those shifts create powerful change. Our paradigms, correct or incorrect, are the sources of our attitudes and behaviours, and ultimately our relationships with others.

In the last couple of years, tons of hundreds of different types of international citizen organizations have emerged around the world. Their emergence today is even occurring on a scale unprecedented in history with organizational activity more globally dispersed than ever. They are less encumbered by church and state and, in fact, exert considerable pressure on government. They are able to forge partnerships and collaborations with businesses, academic institutions and governments and, in many cases, they tend to refine and sharpen government’s representational functions. Because of this new surge of activity and the responsibility of citizen organizations not to be like the many wasteful, inefficient and corrupt organizations that abound today, there is a pressing need for them to demonstrate their efficacy and efficiency. Faced with this wave of energetic social entrepreneurs who are building organizations that are strategic and fast moving in ideas, information and technology, people managing sluggish, outdated and outmoded institutions no longer find ‘business as usual’ to be a safe attitude and deportment. It is even getting riskier by the day to remain static while coasting on past glories of good reputation. The arrival of entrepreneurialism and competition represent an early but fundamental change in the dynamics of the citizen sector which history has shown to sit on the edge of innovation and creativity.

Today, these citizen organizations are defined in the negative as non-profit or non-governmental organizations. They are understood to comprise a new sector of civil society which is variously known as “independent sector”, “non-profit sector”, “third sector” or “citizen sector.” Thus, by sharpening the role of government, shifting practices and attitudes in business and opening waves of opportunities for people to apply their skills, talents, proficiency and creativity in ever new and positive ways, the citizen sector of social entrepreneurship is radically organizing the way society gets work done and the way the work of society is done. The prosperous breakthrough in the second half of the twentieth century occasioned by the phenomenal upsurge in modern technology which drove industrialization, capitalism and globalization has redefined human life in new ways. The biggest change is that people seem to live longer and have more time, resources, health, energy, mobility, social exposure and freedom to think about things than simply staying alive. They are able to move faster from one place to another. Big money and information now exchange hands with a swiftness and cheapness that cannot but astound us. The revolution in communication has given millions of people a wider, insightful and more detailed understanding of the world. Because of the outburst in technology, many people are able to enjoy uninhibited access to information that formerly was the exclusive preserve of elites and wealthy nations. One major consequence of this change is that citizens have become more acutely conscious of environmental destruction, entrenched poverty, health-care catastrophes, human rights abuses, failing and deteriorating education systems and escalating wave of violence and hostility. Another consequence is that people possess powerful communication tools to coordinate efforts to attack these problems.

While concerns have mounted about global problems, the conviction that government appears clueless on how to address them has also risen. Decades of failed development policies, discouraging wars on poverty, drug, crime and high profile corruption has led many to the conclusion that while governments must be held accountable for translating the will of the citizenry into public policy, they are not necessarily the most effective vehicles and certainly not the sole legitimate vehicles for the actual delivery of many social goods. Consequently, today there is a high level of deference to citizen organizations than is accorded to the government. Across the world, social entrepreneurs are demonstrating new approaches to many social ills and new models to create wealth, promote social well-being and restore the environment. The citizen sector is conspicuously leading the push for the reformation of economic and political systems; and individuals seeking meaningful work frequently opt to build, join, advocate for or support organizations that are more innovative, more responsive, more durable, more reliable, more effective, more efficient and operationally superior to traditional and obsolete social structures. Today, many people who desire social change need a blend of information, proficiency, scholarship and innovation to push their ideas and visions to fruition [67].

Duncan Green talks about the role of active citizens in grappling with poverty. By active citizenship he means the combination of rights and obligations that bind individuals to the state. Active citizens can use their political, social, economic and civic rights to improve the quality of their lives through involvement in the formal economy or formal politics, or through the sort of collective action that historically has given poor and excluded people the opportunity to make their voices heard. At the individual level, active citizenship entails the development of self-confidence that helps to overcome the insidious way in which people are kept in situations of powerlessness. In relation to other people, it means developing the ability to negotiate and influence decisions. When empowered people work together, it means involvement in collective action. Thus, when individuals join hands to challenge situations of perpetual servitude and oppression, they can transform these institutions that keep them under oppression. Instead of being passive victims of poverty or beneficiaries of charity, poor people take their destinies in their hands by acting as agents of social change. Such activism by people living in poverty has profound influence in turning their lives around. It constitutes a central means of fighting inequality, injustice and discrimination by redistributing power, voice, assets and opportunities to those who lack them. People working together to determine the course of their lives, fighting for rights and justice in their own societies are critical in holding states, private companies and others to accountability. The advantage of active citizenship lies in the opportunity it gives to poor people to have a voice in deciding their own destiny, rather than be treated as passive recipients of welfare and charity. People must be recognized as subjects of rights and obligations, not objects of government action for their efforts to bear fruits [68].

Green also outlines the primacy of the effective states as institutional channels for promoting the rule of law and guaranteeing security of lives, rights and property. He argues that of all institutions that exercise power over people’s lives, it is the state that is capable of channelling the power of individual initiative and the market towards long-term development goals. Effective and accountable states are essential to development because they ensure the provision of social services in

the areas of health, education, sanitation, water, and housing. They guarantee security, the rule of law and socio-economic stability, while regulating, developing and upgrading the economy. The mark of an effective state is in its ability to remain accountable to its citizens while fostering their rights. History has shown that progressive and prosperous nations have active and effective states behind them that can manage the process of development. For Green, the road to development lies with the state as the main actor in the drama. States can help to overhaul the deeply inequitable forms of global governance so that global phenomena such as climate change, capital flows, migration, conflict, trade and investment are managed effectively in the interest of human sustainability. In such a world, citizens and states carry great responsibility for their future and so should concentrate in putting their houses in order by cracking down on current harmful activities. Thus, a central challenge today is how to build states that are effective and accountable, able to address poverty and inequality wherever they exist and whichever guise they assume, and ensure respect for the rights that allow citizens to flourish. They are critical in reducing vulnerability to shocks and enabling poor people and communities to benefit from the market [69].

It is important to re-state the fact that at the beginning of the twenty first century, humanity finds itself in a state of despair and disillusionment. The early events of this century have shattered our vision and sense of triumph that was widely perceptible a few years ago. Although the forces of globalization, technologization, industrialization and marketization have opened up new vistas and new frontiers for improving the material standards of living of many poor and rich people alike, present state of affairs forces us to rethink the proclaimed notion of universal and inevitable human progress. The downturn in the global financial sector, the sharp drop in the stock market, the financial scandals accompanying the economic meltdown and the spates of violence and terrorism have created a sense that progress has been seriously endangered, and perhaps, our future [70]. The challenge before us today is quite enormous, and it will be worthwhile to quote at length from Alan Greenspan as a mark of our end of discourse: “The new world in which we now live is giving many citizens much to fear, including the uprooting of many previously stable sources of identity and security. Where change is most rapid, widening disparities in the distribution of income are a key concern. It is indeed an age of turbulence, and it would be imprudent and immoral to minimize the human cost of its disruptions. In the face of increasing integration of the global economy, the world’s citizens face a profound choice: to embrace the worldwide benefits of open markets and open societies that pull people out of poverty and up the ladder of skills to better, more meaningful lives, while bearing in mind fundamental issues of justice; or to reject that opportunity and embrace nativism, tribalism, populism, indeed all of the ‘isms’ into which communities retreat when their identities are under siege and they cannot perceive better options. There are enormous obstacles facing us in the decades ahead, and whether we surmount them is up to us….despite the many shortcomings of human beings, it is no accident that we persevere and advance in the face of diversity. It is in our nature- a fact that has, over the decades, buoyed my optimism about our future” [71]. As Amartya Sen says, “The world needs hope as well as know-how.”

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