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The Emergence of Next Stage Capitalism and the Need for a Broadened Conception of Jewish Business Ethics
Abstract
Capitalism’s most essential problem is not an economic problem at all, but it is primarily a problem concerning human values. As odd as it may seem, especially for those of us who studied at business schools, the fundamental tasks for today’s capitalists are to identify, reflect, and understand the rich and complex variety of values necessary for human flourishing and to consciously design and to co-create organizations that will produce enough wealth for everyone, on the one hand, and to contribute to the development and well-being of workers, consumers, and society, across a hierarchy of various needs, on the other hand. The thesis of this chapter is that these new tasks demand a new level of consciousness, one informed not only by business, but by a broad and varied spectrum of philosophies including world religions and spiritualities. The specific purpose of this chapter is to explore the potential contributions of a broadly expanded conception of Jewish business ethics to the task of contributing to the continued emergence of a new kind of more self-conscious capitalism.KeywordsNext stage capitalismConscious capitalismConstructivismJewish ethics
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The notion of dignity as that which has intrinsic value has arguably been neglected in economics and management despite its societal importance and eminent relevance in other social sciences. While management theory gained parsimony, this paper argues that the inclusion of dignity in the theoretical precepts of management theory will: (a) improve management theory in general, (b) align it more directly with the public interest, and (c) strengthen its connection to social welfare creation. The paper outlines the notion of dignity, discusses its historical understanding, and explains its relevance in the context of management theory. Furthermore, it proposes a framework of paradigmatic assumptions along two dimensions: (a) understanding human dignity as unconditional or conditional and (b) understanding social welfare as wealth creation or well-being creation. I propose alternative management theory archetypes and discuss these archetypes’ theoretical implications for management research. I also suggest how management theory can be shifted to contribute toward social welfare creation more directly.
The current financial crisis has caused many of us to question the motives and actions that drive the business world. Even the basic notion that firms should be run so as to maximize shareholder value has come under increasing scrutiny. Simply put, the failures of some of our nation's most venerable financial institutions have called into question the very premise of value-based management (VBM). Moreover, by being paid out at a time when rank-and-file employees, suppliers, and other corporate stakeholders are suffering, excessive CEO compensation has produced public outrage. This book provides an up-to-date look at value-based management and finds that the underlying concept is as sound today as ever. One finding, however, is that, as initially practiced, VBM was often short sighted and thus needs to evolve if it is to continue to flourish. In particular, this book promotes a marriage of traditional VBM with the growing trend toward corporate social responsibility (CSR), a combination termed value(s)-based management. The case is made that CSR is much more than a feel-good concept; rather, it can make good business sense if practiced in a strategic manner. Ultimately, the book concludes that evidence supports the finding that, by embracing a program of corporate social responsibility, a firm can make the pie bigger, thus providing a win-win situation in which both the shareholders and other stakeholders benefit.
We develop a theory of how the intersection of business goals and the pursuit of "higher purpose" — something that produces a non-pecuniary social benefit valued by the principal and the agent — affects economic outcomes. Two types of principals — those pursuing only wealth maximization and those pursuing both wealth and a higher purpose — are considered. These are typically viewed as competing approaches to running organizations. However, the theory we develop, which shows that the pursuit of higher-purpose projects reduces labor costs and increases capital investments, highlights a potential complementarity between the principals pursuing a higher purpose and those exclusively pursuing wealth. The complementarity arises because the pursuit of higher-purpose projects by others can relax budget constraints for wealth-maximizing principals, and the presence of purely-wealth-maximizing principals may be essential for the higher-purpose-pursuing principals to obtain external financing. The absence of either type of principal may lead to a market breakdown involving no projects being undertaken.
Judaism, which relies on the Torah for its written law, has had a great impact on marketing and business. The Torah is replete with precepts dealing with business, and the Talmud, the source of Jewish oral law, elaborates and expands Torah law. The process is ongoing, and rabbinical authorities today build on the decisions of their predecessors to apply Jewish law to modern problems. Some of the issues examined in this article include honesty in the marketplace, fair pricing, employer-employee relations, and environmental issues. Jewish law is not only concerned with practical legal advice but in encouraging individuals to go beyond the requirements of the law and practice the “way of the pious.” Judaism does not have a negative attitude toward business and wealth—indeed, most of the Talmudic sages had occupations, and some were quite wealthy—but riches must be acquired honestly and used to help the poor, the needy, and the stranger.
THE CAPITALIST SYSTEM is under siege. In recent years business increasingly has been viewed as a major cause of social, environmental, and economic problems. Companies are widely perceived to be prospering at the expense of the broader community.
Ever since Adam Smith, the central teaching of economics has been that free markets provide us with material well-being, as if by an invisible hand. In Phishing for Phools, Nobel Prize-winning economists George Akerlof and Robert Shiller deliver a fundamental challenge to this insight, arguing that markets harm as well as help us. As long as there is profit to be made, sellers will systematically exploit our psychological weaknesses and our ignorance through manipulation and deception. Rather than being essentially benign and always creating the greater good, markets are inherently filled with tricks and traps and will "phish" us as "phools." Phishing for Phools therefore strikes a radically new direction in economics, based on the intuitive idea that markets both give and take away. Akerlof and Shiller bring this idea to life through dozens of stories that show how phishing affects everyone, in almost every walk of life. We spend our money up to the limit, and then worry about how to pay the next month's bills. The financial system soars, then crashes. We are attracted, more than we know, by advertising. Our political system is distorted by money. We pay too much for gym memberships, cars, houses, and credit cards. Drug companies ingeniously market pharmaceuticals that do us little good, and sometimes are downright dangerous. Phishing for Phools explores the central role of manipulation and deception in fascinating detail in each of these areas and many more. It thereby explains a paradox: why, at a time when we are better off than ever before in history, all too many of us are leading lives of quiet desperation. At the same time, the book tells stories of individuals who have stood against economic trickery-and how it can be reduced through greater knowledge, reform, and regulation.
As our great economic machine grinds relentlessly forward into a future of declining fossil fuel supplies, climate change and ecosystem failure, governments are at long last beginning to question the very structure of the global economy. In this fresh, politically charged analysis, Jonathon Porritt wades in on the most pressing question of the 21st century: can capitalism, as the only real economic game in town, be retooled to deliver a sustainable future? Porritt argues that indeed it can, and it must, as he lays out the framework for a new 'sustainable capitalism' that cuts across the political divide and promises a prosperous future of wealth, equity and ecosystem integrity.
Strategic Management: A Stakeholder Approach was first published in 1984 as a part of the Pitman series in Business and Public Policy. Its publication proved to be a landmark moment in the development of stakeholder theory. Widely acknowledged as a world leader in business ethics and strategic management, R. Edward Freeman’s foundational work continues to inspire scholars and students concerned with a more practical view of how business and capitalism actually work. Business can be understood as a system of how we create value for stakeholders. This worldview connects business and capitalism with ethics once and for all. On the 25th anniversary of publication, Cambridge University Press are delighted to be able to offer a new print-on-demand edition of his work to a new generation of readers.
Jewish business ethics in Israel addresses two major sources of economic immorality—unbounded desire and fear of economic uncertainty—through enforcement and spiritual education. Business is seen as a path to sanctity, when time is set apart for religious study, wealth is seen as originating from God, the vulnerable are protected against fraud and theft, charity is seen as an obligation, and mercy towards debtors is tempered by justice.
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