In this posting I would like to contribute to the discussion of making sense of the current crisis in the financial sector as it has been taken up in recent postings by Chris Mowles and Karen Norman, and especially by Ralph Stacey in his recent book Complexity and Organizational Reality: Uncertainty and the need to rethink management after the collapse of investment capitalism.  Specifically I would like to respond and add to Ralph’s argument that we need to rethink the nature of communication and social interaction if we are to get at core crisis of ethics, particularly as it has been emerging in Western thinking.

 There is great deal of horror and astonishment being expressed about the greed, ruthlessness and lack of even any pretence of professionalism in the conduct of managers and leaders in the financial community.  Chris Mowles mentions the reaction of the English Queen in his post.  This reaction is in a sense surprising since the Windsors have been key figures in the shifting political and ethical culture of English society and the London business community and must have noticed and reflected to some degree on the radical changes of the last decades which they themselves will have experienced as an important stakeholder.  Michael Lewis in his book The Big Short gives a detailed description of the almost complete lack of professionalism and ethics in the financial sector, focusing on Wall Street.  But Lewis resorts to humor and a ‘cocktail party’ air of detachment from the events, presenting in detail the moves of those who, beginning in 2007 (or earlier) saw the crisis coming and began not to call for reform or appeal to reasserting basic values, but rather to bet against the doomsday scenario they perceived as inevitable and to amass sizable fortunes for themselves and their hedge fund investors.

 The ethical crisis is grounded in the way we have formalized ethics and divorced it from everyday life.  As a consequence this reduction of ethics to universalist and principled thought before action, actors, or perhaps better players, for instance in the financial sector, feel no responsibility for negotiating the ethics of the game as it now rapidly changes, with the emergence of new communication possibilities and innovative new technologies reshaping the politics of everyday interaction.  To the contrary, one is deemed as rather stupid if not involved in gaming the system before newly emerging loopholes are discovered and perhaps brought under regulation.  But the very political leaders who would be the ones to enact reforms are now moving quickly and easily between high level ministerial positions and the activism of receiving exceedingly high remuneration by lobbying for special interests, as has become evident in the long debate over health care in USA, the current scandal in the UK labor government over former ministers racing to take up lobbying jobs, and Schröder and Fischer in Germany moving immeditately not to the tedious politics of opposition but rather to lobbying positions after their tenure in government.

 I would like to suggest that one factor in the crisis of ethics is that there is something especially about leadership which we have a hard time talking about; namely, that it is, as a matter of fact, if it could be separated from being embedded in the everyday politics in which it emerges, ethically ‘neutral’.  Many authors, in major works on leadership, speak in introductory chapters, about this, but then quickly move on to basically looking at leadership as good in itself, as a ‘simple’ ideal. But of course one person’s freedom fighter is another’s terrorist.  Gangster families also have leaders who plan, with those who recognize them as leaders, the best strategy for the survival of their organization.  Bullies work together with those who subserviently recognize them to further the aims of their organizations. We need to think about how these ethics are embedded in the everyday political negotiations in our societies if we are going to seriously take up the crisis of business ethics. Continue reading →