Profit with Honor

Profit with Honor: The New Stage of Market Capitalism

Copyright Date: 2006
Published by: Yale University Press
Pages: 208
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  • Book Info
    Profit with Honor
    Book Description:

    This wise and optimistic book examines the rampant scandals that plague American corporations today and shows how companies can reverse the resulting climate of mistrust. By seizing the opportunity to address some of the nation's-and the world's-most serious problems, business can strengthen its reputation for integrity and service and advance to a new stage of ethical legitimacy. Daniel Yankelovich, a social scientist and an experienced member of the corporate boardroom, describes the toxic convergence of cultural and business trends that has led inexorably to corporate scandals. Yet he offers reassurance that opportunity exists for positive change. Creative business leaders can advance market capitalism to its next stage of evolution, building upon business norms that simultaneously emphasize the legitimacy of profit making and the importance of the care that companies give to employees, customers, and the larger society.

    The book asserts that American culture has abandoned its old tradition of enlightened self-interest, of "doing well by doing good." A narrow legalism has taken over ("I didn't break the law; therefore I didn't do anything wrong"). Yankelovich argues that attempts to deal with such flawed ethical norms by means of more laws and regulations cannot succeed. He offers a series of case histories to show how and why stewardship ethics can strengthen individuals, corporations, the nation, and the world economy.

    eISBN: 978-0-300-12742-3
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Preface: Short Books and Their Authors
    (pp. ix-xiv)
  4. Introduction: How to Profit from the Scandals
    (pp. 1-20)

    The purpose of this short book is to suggest that the business community can turn the scandals of recent years to good use, both for business itself and for the larger society. The scandals have shocked the business sector into realizing that something is seriously wrong with its current practice, and that to regain the trust of the American people it must institute far-reaching changes—or else suffer punitive reforms imposed by government. The most badly needed changes are ethical in character, and taken together they represent a new stage in the evolution of market capitalism.

    My main argument in...

  5. Part I Framing the Problem
    • I The Wrong Way to Stop the Scandals
      (pp. 23-33)

      The new century started with some heavyweight business scandals. Enron and its CEO, Kenneth Lay, Tyco and its CEO, Dennis Kozlowski, WorldCom and its CEO, Bernie Ebbers—in each case, colorful men, gifted with more than a touch of good old American con artistry, had apparently enlisted the aid of younger men with specialized accounting skills to cook the books. It took years of trials and mistrials and bald-faced denials and evasive legal maneuvering for their cases to move to the courts. Only the decades of sexual abuses in the Catholic Church—and the hefty fines the church paid to...

    • II Screwed Again
      (pp. 34-44)

      Research into the causes of mistrust reveals a sure-fire formula for guaranteeing that you will never be trusted again. Here is what you must do.

      First, you work hard to win the trust of others.

      Then, when you have it, you go back on your word. You lie, you deceive, you play the others for fools.

      Then you seek their forgiveness. You admit you were wrong. You say you have learned your lesson. Slowly, gradually, painfully, you rebuild the bond of trust.

      Then, once you are sure you have regained their trust, you screw them again.

      That should do the...

    • III Unenlightened Self-Interest
      (pp. 45-56)

      The current climate of mistrust poisons the atmosphere. It tempts observers to grow judgmental and to blame the ethical scandals on an all-encompassing “culture of corruption.” The tendency to resort to punitive legalism creates a mood in which it seems natural to hold jury trials in which highly visible CEOs (yesterday’s culture heroes) face the kind of stiff prison sentences that one ordinarily associates with rape and armed robbery.

      L. Dennis Kozlowski, the former CEO of Tyco, a giant conglomerate with 270,000 employees and $36 billion in annual sales, is believed to have stolen $170 million from the company. He...

    • IV Yesterday’s versus Today’s Ethical Norms
      (pp. 57-68)

      These seven deadly norms can be grouped into two broad categories—norms that come from within the business community and norms rooted in the general culture. The business norms are the “shareholders-come-first” norm that focuses on who the main bene-ficiaries of corporate success should be, and the “let-businessbe-business” norm that leads to deregulation.

      The shareholders-come-first norm derives from a shift in corporate culture that is only a few decades old. The norm that the laws of the free market brook no interference, intervention, or regulation is much older. It derives from economic theories that go all the way back to...

    • V Two Incomplete Visions
      (pp. 69-80)

      Let us assume that a coercive legalistic approach isnota sufficient solution to the ethical scandals that are tainting business and other institutions—the accounting scandals, the rip-offs, the blatant conflicts of interest, the tainted Wall Street advice, the rigged bids, the cover-ups, the dispiriting picture of the most respected institutions in the land routinely violating the public trust.

      What, then,would besufficient?

      As is often the case, the solution develops out of how one defines the problem. I have framed the problem as one of weakened ethical normsandregulations.And I have suggested that neither legal solutions...

  6. Part II Moving toward a New Stage of Market Capitalism through Stewardship Ethics
    • VI Unpacking Stewardship Ethics
      (pp. 83-103)

      We now turn from framing the problem to finding a solution. The scandals and the mistrust they generate are the problem. Moving toward a new stage of market capitalism through stewardship ethics is the solution.

      A full-scale solution requires:

      1. A working understanding of what stewardship ethics is and how it differs from corporate social responsibility

      2. A vision of how stewardship ethics will affect the business sector

      3. A strategy to achieve the vision

      4. Tactics to implement the strategy

      In this chapter I unpack the concept of stewardship ethics and compare it with corporate social responsibility. In Chapter...

    • VII The Vision of Stewardship Ethics
      (pp. 104-118)

      What is a vision? The word has so many shades of meaning that I should specify how I am using it here.Vision,as I see it, is a way of articulating goals that seeks to overcome deeply ingrained negative practices. A vision in this sense is a word picture of what life would be like if we were able to stop or reverse an undesirable condition.

      Martin Luther King Jr.’s “I Have a Dream” speech illustrates this meaning. King paints a picture of what life in the United States would be like if we were able to rid ourselves...

    • VIII What to Do about Shareholder Value
      (pp. 119-133)

      To make room for stewardship ethics it will be necessary to address and reform the two business norms that are directly linked to the scandals—shareholder value and deregulation of laws that discourage conflicts of interest. This chapter focuses on shareholder value.

      The doctrine of shareholder value has become highly controversial and polarizing. Its advocates support it passionately; its opponents denounce it with equal fervor. Its advocates assume that those who oppose it must be naïve antibusiness liberals; its opponents assume that its supporters must be greedy, blind, or indifferent to its abuses.

      Ironically, much of the controversy arises from...

    • IX Restoring Gatekeeper Integrity
      (pp. 134-145)

      Deregulation—the outlook that assumes that the market works best when free of constraints—reinforces the harmful effects of shareholder value in its perverted form. The decade of the 1990s was one of the most aggressive periods of deregulation in the history of our market economy. Political conservatives, and even some liberals, pushed hard for looser, less stringent forms of regulation. Conservatives regard deregulation as part of a coherent set of ideological values. They correlate freedom from regulation with democracy, political freedom, and individualism. But conservatives were not alone. In the 1980s and 1990s, liberal economists (for example, Fred Kahn)...

    • X Hummer versus Hybrid
      (pp. 146-170)

      The global economy cries out for American business to respond to a series of daunting challenges. Domestically, the business sector is responsible for maintaining high levels of productivity, employment, capital investment, and stimulation of consumer spending. Internationally, the business community has the great responsibility—and privilege—of helping to lift the majority of the world’s population out of poverty,poor health, and deprivation. Today’s multinational corporations, with their powerful integrations of capital, technology, and managerial skills, constitute just about the only force capable of transforming billions of people subsisting on meager incomes of one or two dollars a day into active...

  7. Appendix: Daniel Yankelovich’s Directorships and Trusteeships
    (pp. 171-172)
  8. Notes
    (pp. 173-176)
  9. Bibliography
    (pp. 177-180)
  10. Index
    (pp. 181-189)