Moral…!

In my session on Corporate Governance, whenever the topic of Ethics vis-à-vis Morality needs to be discussed and reflected upon, I make it a point to share the following story with my audience, every single time without fail!

A man bought several boxes of cigars and had them insured against fire. When he had smoked them, he put in a claim against the insurance company that they had been destroyed by fire. The company refused to pay, and the man sued. The judge ruled that the company had given the man a policy protecting against fire, and must pay. As soon as the man accepted the money, the company had him arrested on a charge of Arson – a crime of intentionally and maliciously setting fire to buildings, wild-land areas, dumpsters, vehicles or other property with the intent to cause damage.

The man and the insurance company in the story both showed ethical conduct, no fault there. It is neither a chargeable crime to insure your stock nor offering insurance of the stock against payment of premium. However what make this story interesting is details of shrewdness of the protagonist and smarter comeback of the company to make most of the situation, both lacking same thing – morality!

Although Corporate Governance is a good thing and certainly offers the guiding framework for the ethical code-of-conduct, it doesn’t suffice when it comes to act morally and with social responsibility. If only compliance of Corporate Governance principles had been sufficient we would never have witnessed Enron, Folks Wagon, Vijay Mallya, Nirav Modi and many other charges on the top executives of financial and other institutions, all around the globe. All these fraudulent cases hoarded under the nose of robust Corporate Governance mechanisms in place to keep the transactions in check.

Cory Booker, United States Senator from New Jersey, said – ‘If you look at great human civilizations, from the Roman Empire to the Soviet Union, you will see that most do not fail simply due to external threats but because of internal weakness, corruption, or a failure to manifest the values and ideals they espouse.’

The history of human society after settlement right through monarchic Feudalism to today’s Capitalism feeding on consumerism, stands the proof of failure of any and all systems in which society at large is either not involved or is taken for granted, even in FPTP democracy where winner takes all, let alone Socialism or Communism. As the collapse of the Soviet Union and the missing star in China’s flag are evident enough for the failure of communism; in another story that is very dear to me, I try and explain the failure of socialism with help of a narrative of Professor of Economics that made rounds on internet.

An economics professor at Texas Tech said he had never failed a single student before but had, once, failed an entire class. The class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer. The professor then said OK, we will have an experiment in this class on socialism. All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A.

After the first test the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. But, as the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too; so they studied little.

The second Test average was a D! No one was happy. When the 3rd test rolled around the average was an F. The scores never increased as bickering, blame, name calling all resulted in hard feelings and no one would study for anyone else. All failed to their great surprise and the professor told them that socialism would ultimately fail because the harder to succeed the greater the reward but when a government takes all the reward away; no one will try or succeed.

We have evolved from hunter-gatherers of the stone-age to the techno-savvy millennials of digital-age and with the material development we have become civilized, cultured and sophisticated in due course, as we like to believe. However, how good is the developed status if we, as a species, do not use our individual creativity and collective conscious to build a society for ourselves that is inclusive, expansive, responsive and self-reliant and, a dynamic yet sustainable ecosystem with a rich biodiversity and wholesome environment for the entire existence. This could not be achieved by rules, regulations, legislation and governance alone.

Democracy is as good as the conduct of the last person voting for it and the conscious of the voted – the winner who takes it all. Corporate Governance is as good as its governing framework and individuals making and checking the compliance with the checkbox approach. The Giving Pledge commitment and CSR are not as good as Compassionate Capitalism, which, besides sounding philanthropic, has its own limitations.

What could take all of us ahead from here together in a dignified, honorable, peaceful and sustainable manner is individual commitment to only three things –

1. I would make my living by contributing to a purpose that is decent, inclusive, fair and socially responsible in letter and spirit.
2. I would earn exactly what is required to maintain a decent living and would not indulge in spending just for false social status or peer pressure.
3. I would refrain from extravagant lifestyle leading to compulsive hoarding and wrongdoings for it, whatsoever.

Individual moral and collective morale is the only manner humanity could survive in harmony as, peaceful coexistence and respecting mutual dignity could neither be enforced by law nor could be made mandatory through any system; it is a matter of individual conscientious and moral conduct.

The Complete Social Reform that I envisage comes from the morality of each individual of society breeding from the seed of fundamental values and beliefs of humanity, not from the development based on greed of more and more profit. It is possible only with the theory of trusteeship as Mahatma Gandhi made it very clear –

“I desire to end capitalism, almost, if not quite, as much as the most advanced Socialist or even Communist. But our methods differ, our languages differ. My theory of trusteeship is no make-shift, certainly no camouflage. I am confident that it will survive all other theories.”

Way to go…!

Image Credits – HieroGraphic/Shutterstock