‘We see things as we are, not as they are’ it says in the Talmud. If we are someone who wants to benefit from society’s resources and respect, and who therefore associates with the people, organisations and ideas ‘in power’, how will we see ‘things’? Will we see them in a way that accepts, even praises, the status quo, and scoff at ideas that seem to challenge power? As you are reading this review, and have got to this stage of a rather long one, you are likely someone who takes pride in ‘knowing’ about things. But what are you actually coming to know, if you do not look inside yourself? In the face of a financial meltdown, the head-scratching of people who like to think they know things, and know some things better than others, should serve as a lesson.

During the third quarter, in classrooms and canteens of business schools around the world, business school professors were muttering about ‘necessary oversight’ and ‘greater transparency’. Many could not bring themselves to use the ‘R’ word: regulation. It does not take an expensive education to know that markets require regulation, so the stupidity of thinking that deregulation of financial markets would be beneficial had to arise from a process of social conditioning, willingly participated in by careerist academics.

‘Since the early days of recorded history there have always existed a class of people who will sell their intellectual prowess to those in power. The exceptions seem so rare that they are talked about for centuries afterwards. The most famous being Socrates. More typical are those who come up with reasons that the status quo is the appropriate organization of society and that those in power are the perfect persons to be running things,’ explains Robert Feinman.61 Until the 18th century religious leaders played a key role in providing justifications for power, such as the ‘divine right of kings’. Their influence waned with the Age of Enlightenment and modern science. ‘What is needed is a “scientific” rationale for the organization of society. This role has now been taken over by economists. Through the use of statistics and mathematical theories they have been able to produce whatever justification was desired by those employing them. Proof of their intellectual dishonesty is easily found. For every economist who can “prove” the effectiveness of, say, trickle down economics there is another who can demonstrate that such policies are a complete failure,’ says Feinman. In business studies this approach is sometimes taken to the extreme, when an academic’s concept finds its validity through being adopted by a famous CEO. Therefore, professors in more traditional disciplines have sometimes regarded business academics as intellectual rentboys of corporate elites.

The alternative should not be a retreat to the libraries, but to be clear about the type of business and business person a business school seeks to inform. The difference between a management guru and a management geek is not only the style of communication and the reach of their ideas, but also how they see a wider context and serve a higher purpose.

The World Economic Forum (WEF) likes to think it is the leading intellectual forum on the world of business. As the financial system unravelled, their minor mea culpas mixed with ‘told you so’ was particularly revealing. In interviews with Bloomberg, leading staff at the WEF said ‘chief executive officers who gathered in Davos, Switzerland, over the last five years didn’t listen to warnings from their peers. Davos organizers also say they failed to play tough with the financial-industry bosses, opting to accept their funding and let them turn Davos into a rave-up for Wall Street excesses.’62

Leaders of the Forum have been putting their failure down to excess, rather than principle. ‘We let it get out of control, and attention was taken away from the speed and complexity of how the world’s challenges built up,’ said its founder Klaus Schwab. If not as much money had been taken from Wall Street speakers at Davos, would the WEF really have been much smarter? Hardly. The lesson is that an institution that pays its bills by convening the world’s largest companies to entertain them at high-powered meetings will be beset by systemic sycophancy. Some WEF staff complained that delegates did not listen seriously to helpful sessions on emerging bubbles. But what do they expect when you are in the Alps and Angelina Jolie might be at the bar? The hubris of the Forum is that they see themselves as an emerging power in global governance as significant as the UN. Yet it would be a truly crazy planet if the world’s largest corporations would be able to set the agenda for policies across the world.

Daniel Kaufmann: finance bosses had no incentive to change

Daniel Kaufmann: finance bosses had no incentive to change

A Davos delegate for seven years, the World Bank Director of Governance and Anti-corruption, Daniel Kaufmann, warned finance bosses ‘about global risk and the abusive nature of their actions, but they had no incentive to change . . . why should they have listened to us? I see it with my 10-year-old daughter, who scolds me because I don’t put the garbage in the correct bin. Let’s not delude ourselves. It’s impossible to teach old dogs and investment bankers new tricks unless you change the incentive structure.’63 This implies that if one is truly committed to improving the state of the world then one must reach out beyond the old dogs and fat cats. More than that, you must seek to be accountable to others. Perhaps if the WEF had listened to the protesters outside their luxury hotels, rather than their hand-picked corporate-sponsored NGO leaders, they might have developed a better sense of the state of the world. The WEF staff mistakenly thought such protests were about specific social and environmental concerns, which they could then effectively incorporate into the agenda. Other staff realised that the criticisms were of an economic kind, particularly as the alternative World Social Forum developed. They thought it was a disagreement about which economic theory was best to encourage social development. But the protesters do not challenge what the WEF delegates believe in, but rather their legitimacy to decide for others.

That message has not sunk in. For 2009, Schwab says his goal is to transform Davos into the ‘Bretton Woods of the new millennium’,64 a meeting targeted at establishing a fresh set of global rules for commercial and financial relations, much as the original Bretton Woods conference in New Hampshire did in the summer of 1944. Doing that in their current form, with their current membership, is bound to cause deep concern across civil society. The World Economic Forum might soon find that not only were they the greatest fans of the Emperor’s new clothes: they were those clothes. For the WEF to avoid being an intellectually insubstantial adornment to power, it will need to reconsider its membership structure and its approach to dialogue. This will become even more important if its Global Agenda Councils, which met for the first time in 2008, are to play a useful role in informing how we tackle global challenges.

» Looking East

(The references are available in the pdf download and hard copy versions of this annual review, available from Lifeworth’s bookstore.)

This section can be referenced as:

Bendell, J., and N. Alam, S. Lin, C. Ng, L. Rimando, C. Veuthey, B. Wettstein (2009) The Eastern Turn in Responsible Enterprise: A Yearly Review of Corporate Responsibility from Lifeworth, Lifeworth: Manila, Philippines. (Page numbers for this section are available in the pdf download and hardcopy.)

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