Proceedings of Istanbul Workshop on Covenants of the Prophet Muhammad

As I have reported to you before, the Caux Round Table for Moral Capitalism (CRT) has taken an interest in learning more about certain covenants made by the Prophet Muhammad to respect and protect Christian communities. The CRT’s search for common values, which call forth responsible behaviors in our economic enterprises supported by just societies, has drawn us to the study of our different wisdom traditions. In our study of Islam, the covenants were brought to our attention. Our first workshop to learn more about them from Muslim scholars in the CRT network was held in the Vatican on January 19th of this year.

Our second workshop was just held on October 5th in Istanbul at Istanbul Sehir University. Our former Chairman, Lord Daniel Brennan, convened the meeting with the very able assistance of Professor Abdullah Al-Ahsan and his colleagues at Sehir University. Important presentations were made by Professor Ibrahim Zein and his associate Ahmed El-Wakil of Hamad Bin Khalifa University in Doha, Qatar.

Ahmet Davutoglu, former Prime Minister of Turkey, attended the dinner after the workshop.

The proceedings of the workshop can be read here.

My assessment of our study, so far, is that these covenants of the Prophet Muhammad should be accepted as part of the Sunnah of the Prophet and so should become guidelines for mutual respect between Muslims and Christians everywhere. Such respect would bring much needed tolerance and harmony to our global community.

Lord Brennan, Archbishop Silvano Tomasi and I called on His All-Holiness Patriarch Bartholomew of the Eastern Orthodox Church while we were in Istanbul to brief him on the results so far of our workshops. The Patriarch graciously expressed his thanks for our efforts and offered his support as we continue our studies. Previously, we had received very thoughtful encouragement from Pope Francis and Secretary of State Cardinal Pietro Parolin.

Reflecting on Great Depression Round Table – Thursday, October 31st

October is a month of many anniversaries, including one that is both a reminder and a warning. I am speaking, of course, of the Stock Market crash that took place 90 years ago at the end of October 1929 and ushered in the greatest economic crisis the country had ever faced: the Great Depression.

We know, in general terms, what caused the crash. A decade of rising wealth placed too much equity into the hands of too few people. The inevitable result was speculation unmoored to any accurate reading of the overall state of the economy. Over the next three years, unemployment in the U.S. climbed to 25 percent, triggering real fears that the unbearable conditions might lead to a revolution.

Beginning in 1932, New Deal programs were initiated to help ease some of the suffering and – just as importantly – adopt measures like the Glass-Steagall act which laid down a sharp line between commercial and investment banking.

For several generations, the New Deal’s social and economic programs prevented another crash. But then, the lessons of that critical period in our history were ignored and, as the saying goes, “those who ignore history are doomed to repeat it.” Increasing financialization of the economy, encouraged by changes in tax laws, began the trend that culminated in two of the most damaging political decisions initiated in the late 20th century. One was the repeal of Glass-Steagall on the grounds that “times had changed.” The other, equally or even more disastrous, was the adoption of the Commodities Modernization Act of 2000 which banned regulation of new forms of derivatives. Together, these two acts led directly to the crash of 2007-2008. Only a massive infusion of taxpayer money prevented another depression.

Today, we face increasing concentration of wealth in fewer and fewer hands, triggering the same kind of speculative folly that caused both the Great Depression and the 2008 economic crisis. Unless concerted action takes place, we are headed for another crisis in the not too distant future.

What steps need to be taken to prevent this kind of crash from happening again? What can and must government and business do to ensure that there are no new depressions or crises like 2008?

Please join us for a round table discussion on this topic at 9:00 am on Thursday, October 31st, at the University Club of St. Paul.

Registration and a light breakfast will begin at 8:30 am and the event at 9:00 am.

Cost to attend is $15 for members and $35 for non-members.

Seating is limited.

The University Club is located at 420 Summit Ave in St. Paul.

Parking will be available along Summit Ave.

The event will conclude at 11:00 am.

Get you tickets here!

Minnesota Business Leadership: Pioneering a Moral Capitalism – Friday, November 22nd

You are cordially invited to attend a special moment in the history of Minnesota business leadership.

At the Minneapolis Club from noon to 1:30 pm on Friday, November 22, the Minnesota-based Caux Round Table for Moral Capitalism (CRT), with the endorsement of the Minnesota Business Partnership and Governor Tim Walz, will mark the 25th anniversary of the publication of our Principles for Business.

To mark the anniversary of this Minnesota contribution to global capitalism in our time, the CRT will initiate an annual Dayton Award for Distinction in Business Service. The first award will be presented to Douglas M. Baker, Jr., CEO of Ecolab, at this event.

In addition, Paul Polman, Chairman of the International Chamber of Commerce and former CEO of Unilever, will speak to us about his high regard for Minnesota companies.

Lunch will be provided.

Seating is limited.

The cost to attend is $100 per person.

You can register here.

People’s Republic of China – 70th Anniversary

Today marks 70 years since the end of a civil war among the Chinese. The nationalists, mostly politically organized by Chiang Kai-shek and his Kuomintang party and army, collapsed before a relentless mobilization of other Chinese by Mao Zedong and his Communist Party.

During the last 70 years of the Communist organized People’s Republic of China, China has lived under two different forms of Communism. The first was Mao’s experiment in radical reconstruction of persons and the social order. The second began after Mao’s death under the leadership of Deng Xiaoping, who opened China up economically to markets and culturally to more acceptance of commonplace human nature.

Where Mao insisted on everyone thinking in ideological terms, with the certainty and passion of religious converts living righteously and bringing down evil, Deng was far more open-minded, famously asking who cares if a cat is black or white as long as it catches mice. Deng also proposed that it is glorious to get rich.

Mao was spiritual in the Western sense of having a Kantian insistence of us only acting from the purist of universal motives without any concern for self, while Deng was utilitarian.

By following Deng’s moral philosophy, China has become a wonder in human history for economic growth. The Chinese people are now well on their way to becoming the world’s leading nation state, with more wealth and global power than ever before in history.

In a way, both Mao and Deng nationalized socialism. Deng’s formula for the Chinese state was to build socialism with “Chinese characteristics.” In his time, Mao was not a follower of Stalin and the Soviet version of Marxism. He was too Chinese to do that. Mao split with the Soviet leadership after the death of Stalin.

To me, Mao, too, sought to build a socialism with Chinese characteristics. His selection of Chinese values and behaviors to guide his party, which would use the state to mold the people, favored the millennialism of the White Lotus religious sect. The White Lotus sect had given birth to the Ming Dynasty of imperial control of thought and culture. White Lotus beliefs are Manichean, where people must choose between good and evil, between the light and the dark. There can be no compromise between these realms and each person must incorporate in his or her mind and heart only the tenets of the good and repress all contrary thoughts and actions.

Deng, on the other hand, was more practical and took his sense of what “good” Chinese characteristics were from ancient thinkers like MoZi, GuanZi and Shang Yang. These thinkers were influenced by the realism of Yin and Yang, where life results from natural forces. But they proposed ways of manipulating human nature to subordinate the individual to the state. The role of the state is to channel what is natural to the people – like getting rich – in order that the state could grow stronger. Deng released the latent psycho-social energies of the Chinese people and the rest is history.

Both Mao and Deng adopted the Chinese imperial order for the country under which the state set the agenda and made sure individual egoism would never have the power to drive any political agenda. This central premise of Chinese socialism dictated Deng’s response to the 1989 Tiananmen demonstrations. He allegedly said, “Comrades, don’t you understand? When Chinese blood starts to flow, the South China Sea will turn red.” And so, the popular movement was repressed with relentless determination.

Today, Xi Jinping follows this imperial Chinese pattern of rule with great devotion and attention to detail, creating the world’s first surveillance state.

Thus, China under the Communists has created an effective form of state capitalism or nationalized socialism, where private economic interests are coordinated by the party for the good of the state.

The moral capitalism of Confucius, Mencius, the Yin/Yang school and the Taoists only exists in the ancient texts and, maybe, in the hearts of the Chinese people.

2019 Global Dialogue: Registration Now Open!

I would like to invite you to join us for our 2019 Global Dialogue taking place Thursday, November 21 through Saturday, November 23 in Minneapolis, Minnesota.

Two items of special note:

First, Paul Polman, Chairman of the International Chamber of Commerce and former CEO of Unilever, will be speaking to us over lunch on November 22 on the 25th anniversary of the founding of our Principles for Business.

Secondly, we will be awarding the first Dayton Award for Distinction in Business Service to Douglas M. Baker, Jr., Chairman and CEO of Ecolab, also during lunch on the 22nd.

Registration information can be found here.

I do hope you can join us.

Restraint and Moral Capitalism

A premise of our thinking about prospects for a moral capitalism is restraint on power – restraints suggested by the moral sense, restraints from market preferences and restraints from law. As in most things moral, personal character and good leadership values are indispensable drivers of responsible behaviors. Comfort with restraint is a disposition of character most conducive to moral outcomes.

Accordingly, restraint of market power is a necessary check and balance in the constitutional arrangement of capitalism. In the U.S., thinking more favorably about more rigorous enforcement of antitrust laws is on the rise.

From 1981 to 2017, antitrust cases filed by the U.S. Department of Justice decreased 61%, while mergers and acquisitions, a key means of consolidating private market power, increased by 750%.

I also just read of the drugmaker AbbVie buying its rival Allergan for $63 billion. As a business strategy of growth by merger, AbbVie had bought Pharmacyclics for $21 billion in 2015 and Stemcentrx for $10 billion a year later.

Previously, Bristol-Myers Squibb bought Celgene for $90 billion, Pfizer bought Array BioPharma for $11.4 billion and Eli Lilly bought Loxo Oncology for $8 billion. How is declining competition in drugs good for consumers?

In many industries, a handful of firms now dominate sales.

I have read several academic articles concluding that increased concentration explains recent trends in wage stagnation, rising economic inequality and sluggish productivity.

In step with 1980s economic theory that made a firm primarily responsible for making short-term profits for shareholders, thinking about having too much or too little market power gave priority to making money from consumers. If a merger had advantages for consumers and the market approved of its prospects for enhanced share value, it was held to be a good merger beyond the reach of antitrust laws.

Just as we are now moving on from the theory of the firm as a cooperative enterprise funded to make profits, we are on the cusp of moving away from the theory that bigger firms are better for society.

Why Might We Need Good Constitutional Orders?

This past Tuesday, September 17th, was Constitution Day here in the U.S. While I am hesitant as an American to write about my country in the abstract, the idea of a written constitution providing for citizen sovereignty, checks and balances and rights for individuals against the state has universal ethical implications.

Today, we see great commotions over these issues around our world: a test of an unwritten constitution in the U.K., the evolution of a constitutional order in the European Union as a federation, the unconstitutional order in Venezuela and autocracy in Turkey, theological supervision of the state in Iran, protests against the state apparatus in Hong Kong and Moscow and progressive American presidential candidates such as Bernie Sanders and Elizabeth Warren suggesting that checks and balances are oppressive and should be abandoned or bypassed so that a majority can enjoy its will to power.

The points to contemplate, I suggest, are two: one is the purpose of a state as set forth in our Constitution. This is an ethical statement about the use of public power in trust. The preamble sets forth the legitimate business of government:

“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

(I am, I hope, not unduly immodest in these days of political discord in my country to acknowledge my pride that one of my mother’s forebearers, Gouverneur Morris, wrote these words.)

The legal form of the U.S. Constitution, I suggest, is a deed of trust. The sovereign people, acting through state conventions, entrust limited powers to a government for all of them. The powers are to be used in trust so the Constitution provided the text of an oath which qualifies a person to become president. That person must swear to rise above party, religion, self-interest and all personal prejudices in order that he or she may “faithfully execute the office” of president.

Constitutional government is one of office, not of will. Constitutional government rejects the will-to-power ethics of Herbert Spencer’s social Darwinism and of Nietzsche’s nihilism.

The reason for this constraint lies in keen and truthful conclusions about our human nature. In Federalist Paper No.55, written by James Madison, it holds that:

“As there is a degree of depravity in mankind which requires a certain degree of circumspection and distrust, so there are other qualities in human nature which justify a certain portion of esteem and confidence. Republican government presupposes the existence of these qualities in a higher degree than any other form. Were the pictures which have been drawn by the political jealousy of some among us faithful likenesses of the human character, the inference would be, that there is not sufficient virtue among men for self-government; and that nothing less than the chains of despotism can restrain them from destroying and devouring one another.”

Economic Inequality Isn’t Unique to U.S.

I recently saw a report on real income growth in Russia. American capitalism is not alone in favoring the top over the middle and bottom of the socioeconomic order. In Russia, from 1989 to 2018, income for the top 1% grew 429% and for the top 10% by 171%, but for the bottom 50%, income shrank 20%.

Overall growth in income was 41%.

Political power everywhere is fungible with money and power. One breeds the other.