Taming the beast: Virtues of corporate life

Christian Century, March 23, 2004 by Douglas A. Hicks

The Soul of Capitalism: Opening Paths to a Moral Economy.

By William Greider. Simon & Schuster, 384 pp., $28.00.

Saving Adam Smith: A Tale of Wealth, Transformation, and Virtue.

By Jonathan B. Wight. Financial Times/Prentice Hall, 3.52 pp., $24.00.

IN THE COMPELLING story of capitalism the protagonist is the free individual who willingly exchanges his or her stuff for other people's stuff. The land of capitalism is a kind of peaceable kingdom in which the wolf and the lamb meet voluntarily in the marketplace to engage in fair competition. Even this whimsical image suggests, however, that capitalism depends upon prior rules of what is acceptable and what is not. Without some prohibition against violence, the wolf could simply eat the lamb for lunch. Adam Smith, the great moral philosopher and founder of classical economies, tells us that the market requires a moral-legal foundation. "Justice," he writes, "is the main pillar that upholds the whole edifice" of society, including the economy.

Part of capitalism's story is the claim that it provides the maximum in freedom. It allows individuals to choose how they allocate their time, where (and if) they work, and what they do with the money they earn. How could any freedom-loving person object to such a scenario?

But many people do not experience freedom in the current economy, as William Greider and Jonathan Wight point out. Indeed, Greider and Wight share the profound conviction that we are constrained by economic forces in ways that negate our personal agency. Economics should be just one part of the good life; instead, powerful economic forces now create pressures on individuals and families to pursue material gain at the expense of other important human ends.

Greider, a senior journalist at the Nation, and Wight, an economist at the University of Richmond, understand that capitalism is more than a technical economic system and that it is supported by more than rational argument. In its current form, a complex set of narratives undergirds capitalism. These range from the ways in which Economies 101 is taught on university campuses to the commercials and ads that pervade every aspect of contemporary life.

Greider and Wight's strategy is to fight narrative with narrative. Greider has collected a series of stories of people and organizations that have begun to reform and humanize parts of our economic system. In an even more explicitly integrated narrative, Wight has written a novel about the economy, in which an economies graduate student gains his education from a resurrected Adam Smith. Both Greider and Wight provide interesting accounts, but Wight's is the more morally and analytically coherent of the two.

Greider's The Soul of Capitalism follows up on his best-selling Who Will Tell the People? The Betrayal of American Democracy (1992). Unlike his book on global capitalism, One World, Ready or Not (1997), his latest analysis of the economy is limited to an American perspective. Greider confronts the ways in which our democratic, entrepreneurial and altruistic impulses conflict with our self-interested, consumerist and competitive urges. "Here is my notion of patriotic obligation," he writes. "Americans will not become fully realized as a people--as a society that fulfills its potential--until we learn, in the spirit of Walt Whitman, to embrace our contradictions, all of them."

This American-centered view is peculiar, given Greider's fundamental argument about the daunting, impersonal and, now, transnational nature of economic forces. But whether national or international, the economic system Greider presents lacks responsibility and accountability. One beast that must be domesticated is the publicly held corporation. Greider helpfully reviews corporations' status as persons in the U.S. legal system and the ways in which corporate and political power are intertwined.

THE RECENT CEO scandals are merely a symptom of wider problems with the role of corporations, Greider notes. While limited liability allows corporations to take significant risks for the sake of innovation, it also encourages corporate recklessness. Weak antitrust laws enable large corporations to have the power of monopolies or oligopolies, though such power actually tends to discourage innovation. Many economists agree, Greider points out, that the current capitalist system doesn't live up to its own free-market justification.

Corporations are not sufficiently accountable to their shareholders, he asserts. One important dimension of the problem--and here those in churches and the academy should take self interested notice--is that managers of mutual funds, largely comprised of 401(k) accounts, often have little voice in corporate governance. Fund managers have strong incentives to acquiesce to corporate executives, since they fear that if they express dissent the executives will take their companies' retirement thuds elsewhere.

The current economic system as a whole, like corporations in particular, fails to take a long-term perspective on economic life. The stock market encourages short-term speculation, pressuring corporate leaders to focus on quarterly earnings statements in lieu of taking more prudent steps to assure long-term strength. Greider also explores the strain on the environment that current modes of production and consumption create. The environmentally informed view requires attention to reusable inputs and final products. In his chapter on "consuming the future," Greider cites intriguing examples of firms and individuals who have put the concept of reusability to creative use.