Kant in the Boardroom

Poor Kant! Our foremost western philosopher, so proud of his rationally determined moral imperatives. And yet, in any busy & conceited Boardroom he’d be derided as an irrelevant irrational moralist. Just imagine that board-members, before an important business decision, would not only demand assurance regarding profitability and compliance with legal, fiscal and operational constraints but would also test the decision on its obedience of the Kantian imperative: “ Act in such a way that you treat humanity, whether in your own person or in the person of any other, always at the same time as an end and never merely as a means to an end.”

Glad I made you laugh. The “business of business is business” , isn’t it (1). Of course, any successful organization, to ensure its survival and growth, is interested only in what people can contribute to its business ends, and not in their intrinsic worth (whatever that may be). If people don’t perform, they’re out, however good as persons they may be, however great the suffering of being sacked (2) may be. Idem, if a business line would no longer be profitable, then you have to close units down and “make people redundant”.
And “we” all accept that, knowing that the success of our western business models depends on a “rational allocation of resources as dictated by the market” . And in the end, so the reasoning goes, everyone is the better off if resources (ie people and capital) are put to profitable use.
Surely we don’t want wasteful soviet-style inefficiency (or do we)? Surely we prefer economical “creative destruction” which ensures that obsolete activities make way for brave new & innovative industries . And yet, in this “rational allocation” game, it is clear that (all too) often people are not treated as an end, but merely as a means.
So: are we immoral? Or was Kant wrong?

But perhaps we can still wriggle out of our moral dilemma if we formulate Kant’s imperative differently: “Act only according to that maxim whereby you can at the same time will that it should become a universal law”.
This one does permit us to point to a greater collective good down the road, one that would more than compensate for the individual cases of ‘using people as a means”. So we could say it’s just an economic game that we as a society have collectively agreed upon. And each of us individually, by signing a labor contract, accepts the rules of this game. Plus, modern society does try to smooth out the worst effects of this ‘being used as a means’: by sets of labor laws, social protection, redundancy pay etc.

So neither we nor Kant should worry about our business customs: it’s all about a rationally calculated, limited suspension of morality to get the job done. And having qualms about that is against the company’s and the society’s greater good.

Being rational in business terms would then mean you have to suspend your natural emotions of sympathy for your fellow-man so as to be able to take a decision that takes into account only objective factors of performance and suitability to the company’s goals. Yuk. This sounds awful, doesn’t it?
And yet, if I would present this differently, it would sound not horrendous at all but only just and reasonable. Here we go: suppose that you’re a team’s supervisor and that you would leave in place a blatantly incompetent team-member because you feel personal sympathy for him or her: this would be sheer nepotism or favoritism that would be rightly resented by the rest of the team….

So for the time being, let’s leave it at this: by presenting things in black and white, we won’t get anywhere, this is yet again a case where “being good” is a matter of striking a balance, of pursuing ends as efficiently as possible, but while respecting certain minimum standards of human dignity.

Leave it at this???? While we’re living in a time that has exposed the Great Geniuses of Finance, those eminently Rational Allocators of Capital, as incompetent at best and as crooks at worst? A previous post circled around the benefits and risks of greed. And it ascribed the current economic catastrophe mainly to weak regulation failing to keep excessive greed in check.
But maybe one should question further the dominant economic paradigm that equates “Good” = “rational” = “ efficient pursuit of self-interest and greed”. Perhaps one should not meekly accept a definition of rationality in which there is no room for moral feelings or for sympathy.
Perhaps it is this one-sided definition of rationality that got us into this incredible mess in the first place. (3)

Time for a bit of cool-headed, objective analysis. Greed is an emotion, right? Fear is an emotion, right? Greed and fear are powerful primitive emotions having evolved very early on to ensure personal survival. OK, and survival = good = rational. That’s how the reasoning goes.
But! Later on in the evolution moral feelings of sympathy and a sense of justice (4) have evolved too, probably because a sense of community and trust allow people to collaborate, which is no mean evolutionary advantage.
And as Adam Smith himself (thé proponent of self-interest as leading principle) has always pointed out, moral feelings of sympathy for one’s fellow-man are needed to avoid the excesses of greed.

A very interesting blog post argues that the current state of huge global companies does no longer permit the natural checks that spontaneous human sympathy might place on selfish greed, because neither CEOs nor flashy traders ever actually see the people impacted by their decisions. Hence, a structural absence of natural sympathy would explain why the greed-bubble could reach such horrendous proportions.

So lo and behold – perhaps we really should not settle for anything less than a redefinition of economic rationality : Good = rational = “the efficient and just pursuit of self-interest, judiciously balancing the emotions of greed, fear, justice and sympathy”. Granted, not the pithiest & sexiest expression ever. …..

But apart from monstrous formulations, the point I do want to insist on: we should no longer accept being ruled by a concept of rationality that is based only on the most primitive urges of greed and fear, and that discounts as irrelevant and irrational our moral feelings and our sense of justice.

Perhaps it’s bit rash for a humble Sunday Blogger to just ditch ruling economic paradigms like that and to pretend to redefine economic rationality itself. So let’s go for a less grand example.

Let’s present a wholly fictitious (5) small scale boardroom drama (to keep in style). Suppose the members of the board of a small subsidiary of a larger group, are invited by the chief commander of this large group to validate his decision to fire the boss of the small subsidiary. The chief commander, of course, is made of steel , does not ever come back on decisions and does not suffer opposition gladly. The board members of the subsidiary are all employees either of the subsiduary or of another entity of the Group (so in the end all subordinated to the chief commander).
The case against the small subsidiary boss, who has a 10 year record of good management and is widely respected , is presented by the chief commander: no fraud, no obvious incompetence but some petty acts of assertive independence and so yes, clearly a matter of clashing characters.

There are those who say it is rational to vote for dismissal of this boss, as asked by the chief commander. There is the personal risk of irritating the chief commander, there is the fact of going against an order of a superior and the decision has been taken anyhow.
Abstention would then be irrational, because it goes against one’s own self-interest in the strict sense and has no impact anyhow. A personal assessment of the presented evidence would be futile and a sense of justice should not enter into the decision, because, again, that would be irrational.

Here I want to yell (yelling ever so demurely & ever so rationally, of course): those “rational followers of the chief commander" are wrong, they delude themselves, they are entirely mistaken about the rationality of their decision : theirs is a decision wholly inspired by fear (and maybe greed too).
And over the ages , it’s that kind of allegedly rational decisions (which abandon personal responsibility and stifle the own sense of justice) that have gotten us in the deepest trouble.

a rationalized set of footnotes
(1) This brilliantly alliterating & deep phrase was coined by the eminent economist Milton Friedman
(2) the psychological suffering of being fired ranks in the top of the stress factors, together with severe illness, divorce, loss of a beloved one etc.
(3) Lovely Wikipedia primer on “rationality”
(4) they are located in a “later” part of the brain
(5) An enlarged opinion, if you will …. “a sensus communis” - Yes, just like Kant’s aesthetical judgment that wants to claim universality.
(6) Any resemblance with real life situations or persons is of course entirely accidental

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