Michael Sandel
The Man: As the Anne T and Robert M Bass Professor of Government, Harvard University, Sandel set a new benchmark for the idea of a super star professor. His course on Justice in Harvard takes place, not in a regular classroom, but in an auditorium packed with hundreds of students. His 2007 Justice course was filmed by PBS, and is one of the most watched on iTunes. His influence is spreading globally—in China, Japan and Korea. He says that nations need to rethink their basic values.
The Oeuvre: In Justice: What’s the Right Thing To Do? he argued against taking a utilitarian approach to societal problems. In his latest book, What Money Can’t Buy, he warns us against becoming a ‘market society’ from being a ‘market economy.’
X-Factor: He uses real life examples to explore the big ethical questions, and he doesn’t lecture, he engages the audience.
The Message: Engage in public life; articulate your moral convictions and be ready to listen
to people with whom you disagree.
The Hypothesis
It is very narrow to think of shareholders as a company’s only responsibility. The notion puts enormous economic pressure on companies to survive and succeed.
So What?
If a person does not make his mortgage payments the banks put it up for sale. We are tough with individuals. But when it is systemic it seems a different set of rules apply. This is because the players and institutions most adept at avoiding consequences are also the ones that are the most powerful. What is needed is a new kind of public debate where we engage more directly with the meaning of justice, values, of what constitutes common good and the responsibilities we have towards each other as citizens.
Morality and ethics apply to individuals but also to collectives—companies, governments and political community. But there is another level beyond this and that is about the values and norms that the company is committed to in the way it treats its employees, customers and shareholders. These norms may not be written down and may not be easy to capture. They may be better illustrated through examples or demonstration. Some companies are more successful than others in creating an ethos, a corporate culture, of ethical conduct and behaviour.
Companies often talk about stakeholders. Before that comes the concept of corporate citizenship. A citizen has civic responsibilities to the community within which it exists and which makes its operation possible. So in that sense, corporations are citizens of a community, often very consequential ones. I think it is very narrow to think of shareholders as the only responsibility. Some economists—Milton Friedman—advanced that idea. I think that is too narrow. It is certainly at odds with the notion of corporate citizenship. I think most companies see themselves as members of a community to whom they have obligations.
It is true that there are enormous pressures on the concept of corporate citizenship. These pressures are economic ones—to survive and succeed. That’s when the test of corporate citizenship is the greatest and that is when great companies establish a reputation for themselves.
Many companies may believe that if they follow all the laws then they have done their bit. The question to be asked is whether the legal requirements exhaust all the civic responsibilities. If we try and come up with a law for every situation then we would have far too many laws and too little responsible behaviour. That’s why I believe that norms—and not just laws—are needed for good corporate citizenship. There are reasons why this is so important to understand.
Very often—and in our recent memory, it has happened across the world—governments are called to bail out private corporations that are in financial trouble. It is not a legal requirement that governments have to do this. But the logic is that if nothing is done it would harm a lot of people. Now the bail-outs may have been necessary, but were carried out in a way that was deeply unfair. Tax payers subsidised the bailouts of companies that enjoyed tremendous profits from the risks they took. When the times were good the profits were privatised and when they were bad the losses were socialised or shared. There is still a lingering sense of moral outrage over this issue.
(This story appears in the 25 May, 2012 issue of Forbes India. To visit our Archives, click here.)