The Importance of Moral Government for a Moral Capitalism

Much dissatisfaction with capitalism, as a system, focuses on economic inequity – some have more wealth than others.  But is it capitalism that has failed or the state in which capitalism is attempted, which has serious shortcomings?

The Caux Round Table has, for 20 years, pointed to the interaction of the state and the economy as driving social outcomes.  The failures of the state should never be overlooked in analysis and efforts at remediation of inequality.

An article in a recent issue of The Economist was a proof point for this argument.

In South Africa, the company, Gold Fields, proposed to build a solar plant to help power South Deep, one of the largest gold mines in the world.  But soon thereafter, the mining company began to receive extortion demands from “business forums.”  In 2019, such “forums” invaded 183 construction sites worth $4 billion in investment value.  Gun-toting forum members led to two firms pulling out of a project to build what would have been the highest bridge in Africa.

There is a lot of crime in South Africa.  The Global Initiative Against Transnational Organized Crime ranked South Africa ahead of Russia and Libya.  Wildlife is poached.  Drugs are transited. Kidnappings rose from 6,000 in 2021 to 10,000 a year later.  Mafia-like organizations run the mini-buses used by two-thirds of commuters.  The cash-only business model opens access to money laundering.  Tens of thousands of illegal miners work for criminal organizations, taking from the industry $7 billion a year.  Around 10% of South Africa’s chrome production is exported illegally.

In 1997, there was roughly one private security guard for every policeman.  Today, the ratio is 4 to 1.

It is a fundamental axiom of a government’s claim to be a legitimate sovereign that it has a monopoly of violence in the territory it purports to rule.  If the state cannot provide security for lives and property, how can wealth be created?

As Adam Smith taught us in 1776, the wealth of nations does not originate with criminal enterprises and lawless environments.  Those conditions rather call forth social Darwinism of the most stark harshness and injustice, where lives are “solitary, poor, nasty, brutish and short,” to quote another Englishman, Thomas Hobbes.

Does America Need a Renaissance of Civic Virtue? – Thursday, January 19

Professor Emeritus Doran Hunter, a member of our board, has proposed that the Republic of the United States of America needs a renaissance – a rebirth – of civic virtue.

I agree.

Please join me and Doran for lunch at noon on Thursday, January 19 at Landmark Center in St. Paul.

Doran’s thesis is that in the beginning – ad fontes as leaders of the Italian Renaissance directed – private virtue was proposed as the foundation of a just society, economy and polity.  But, as Doran has written, the founders of our republic intuited that private virtue was a public good, as it, willy-nilly, gave rise to public virtues in the minds and hearts of citizens.

The issue, of course, is what is virtue and what are the virtues we should enfold into our character?  Doran proposes a list, with some assistance from Benjamin Franklin.

As thinkers of the Italian Renaissance and then the European renaissance, which triggered the Reformation and then the Enlightenment, which has given us modern civilization, looked back to Aristotle and Cicero, let us look back to Franklin, Madison, Hamilton, Locke, Smith, Blackstone and others who set forth the design of constitutional democracy and a just capitalism.

Cost to attend is $10, which you can pay at the door.

Box lunches will be provided.

To register, please email jed@cauxroundtable.net.

The event will last about an hour and a half.

Must Passion for Profit Take Control of Our Lives?

My colleague Patrick Rhone, who does such a marvelous job with the design and formatting of Pegasus, recently shared with me one of his blog posts.  We were discussing in a staff meeting the importance of free human agency and he mentioned his different take on achievement.

Here is his blog:

Profit and Passion

“A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects.”
-Robert A. Heinlein, Time Enough for Love (via Annie Mueller)

Once we can divorce profit and passion, only then can we find passion in any profit and truly profit from our passion.  The idea being that it is not the thing that is the passion, but something deeper.  That the thing is simply a clear path to a feeling… A place.

I’ve had a lot of disparate jobs in my life.  Bagging groceries, working front desk at a hotel, managing video rental stores, writing customer service letters — the list goes on.  A common thread I found in all of my jobs and roles, both past and present, is “helping people.”  Every job I’ve had or volunteer opportunity, this is not only the common thread, but what “filled me up” about it.  And if I can simply identify the way in which whatever I choose to do helps people, I then can be filled up doing just about anything.

Once I discovered that my real passion wasn’t the various jobs/titles/work I’ve done in my life, but, instead, was the common thread that ran through all of them, I found that I didn’t need to do a particular job or a thing to experience the joy of my passion.  I found those roles were simply a catalyst and that I could find my passion doing just about any job or thing.

If I were paid to dig ditches, I would discover that the ditch is for a water line to a new house. That means someone gets clean water.  Once I think it through, I can find my passion in the ditch digging.

My friend, the storyteller Kevin Kling, once said to me, “A story is always about two things: what it’s about and what it’s really about.”

I think this is the “really” behind “pursuing your passion.”

Now, I am a writer, technical consultant, circus rigger, home restorer and mental health advocate (Not to mention a husband, father, son and friend).  The title field on my business cards reads, master generalist.  If you ask me what I do for a living, I’ll answer, “I help people. Sometimes, money is involved.”

I discovered that I don’t need a specific career, job, hobby, etc. to be able to “do what I love” or get “paid for my passion.”  I could stop chasing it and start realizing that I already have it (or could choose to).  Not only have it in one specific thing, but could have it in just about anything.

Patrick’s insight aligns with a famous affirmation of Mencius:

Mencius went to see King Hui of Liang.  The king said, “Venerable sir, since you have not counted it far to come here, a distance of a thousand li, may I presume that you are provided with counsels to profit my kingdom?”

Mencius replied, “Why must your Majesty use that word “profit?”  What I am provided with are counsels to benevolence and righteousness and these are my only topics.  If your Majesty say, “What is to be done to profit my kingdom?,” the great officers will say, “What is to be done to profit our families?” and the inferior officers and the common people will say, “What is to be done to profit our persons?”  Superiors and inferiors will try to snatch this profit the one from the other and the kingdom will be endangered.  In the kingdom of ten thousand chariots, the murderer of his sovereign shall be the chief of a family of a thousand chariots.  In the kingdom of a thousand chariots, the murderer of his prince shall be the chief of a family of a hundred chariots.  To have a thousand in ten thousand and a hundred in a thousand cannot be said not to be a large allotment, but if righteousness be put last and profit be put first, they will not be satisfied without snatching all.  There never has been a benevolent man who neglected his parents.  There never has been a righteous man who made his sovereign an after consideration.  Let your Majesty also say, “Benevolence and righteousness and let these be your only themes.”  Why must you use that word – “profit?”

If You Are Looking for a Holiday Gift…

This is that time of year when many seek to show their appreciation of family and friends with thoughtful gifts.

Our colleague, Klaus Leisinger, has written two excellent books relevant to the higher aspirations we seek to encourage at this time of year in many cultures.  We have published them on Amazon.  You might consider ordering one or both as gifts for others or as a present to yourself:

Season’s greetings and best wishes for the coming New Year.

Human Rights Day and the Nobel Peace Prize

Last Saturday, December 10, was Human Rights Day.  That same day, Memorial, a Russian research and human rights organization, received a Nobel Peace Prize for its efforts.

The principal mission of human rights, as set forth in the 1948 Declaration of Human Rights, is to put limits on government.  Certain rights of individuals are given priority over and protection against some applications of state power.  Under the social justice standard of human rights, individual persons are given some powers which governments must not restrict and governments are given some duties to serve individuals which such governments must not ignore or abuse.

In short, human rights prevent the state from acting as a tyrant and transform its work into service of the people.

When it recognized that no moral capitalism could survive cruel and oppressive political regimes, the Caux Round Table proposed a set of moral principles for governments.  The principal standard for all government action is to faithfully execute a public trust.  The Caux Round Table’s standards for government mirror the moral foundation of human rights.

The Caux Round Table Principles for Government hold as a fundamental principle that:

Public power is held in trust for the community.

Power brings responsibility.  Power is a necessary moral circumstance in that it binds the actions of one to the welfare of others.

Therefore, the power given by public office is held in trust for the benefit of the community and its citizens.  Officials are custodians only of the powers they hold.  They have no personal entitlement to office or the prerogatives thereof.

Holders of public office are accountable for their conduct while in office.  They are subject to removal for malfeasance, misfeasance or abuse of office.  The burden of proof that no malfeasance, misfeasance or abuse of office has occurred lies with the officeholder.

The state is the servant and agent of higher ends.  It is subordinate to society.  Public power is to be exercised within a framework of moral responsibility for the welfare of others.  Governments that abuse their trust shall lose their authority and may be removed from office.

The fundamental principal for moral government was eloquently applied by Jan Rachinsky on Saturday in his remarks accepting the Nobel Peace Prize on behalf of Memorial.  He said, in part:

We are investigating and documenting crimes; crimes against individual human beings and against humanity, already committed or currently being committed, by state power.  What we see as the root cause of these crimes is the sanctification of the Russian state as the supreme value. This requires that the absolute priority of power is to serve the ‘interests of the state’ over the interests of individual human beings and their freedom, dignity and rights.  In this inverted system of values, people are merely expendable material to be used for resolving governmental tasks.  This is the system that prevailed in the Soviet Union for seventy years and regrettably continues ‘til today. …

Another consequence of this exaltation of the state was and remains impunity, not only for those who make criminal political decisions, but also for those who commit crimes in the execution of those decisions. …

For seventy years, the Soviet state destroyed any solidarity among people, atomized society, eradicated any expression of civic solidarity and thus turned society into docile and voiceless masses.  Today’s sad state of civil society in Russia is a direct consequence of its unresolved past.

If the state has supreme value, as Rachinsky asserts, it cannot serve as a faithful trustee of its citizens and their values.

Elon Musk, the Entropy Fighter: Teaching a Lesson in Governance, as in ESG

There has been a lot of hype these past months on ESG as the road to capitalist nirvana, but it might be, as Texans allegedly say those who would be taken for cowboys and cowgirls: “All hat and no cattle.”

A recent commentary by Rob Wiesenthal in the Wall Street Journal teaches a playground lesson about corporate governance – beware the second law of thermodynamics.

Authority structures which use power and rules to isolate themselves from a surrounding ecosystem succumb to entropy.  Entropy then opens the way to a slow death – to atrophy.  Self-absorption and decadence are two peas from the same pod.

Wiesenthal wrote about Twitter and the beneficial impact on its governance made by its new owner, Elon Musk.  His point is that Musk is anti-entropic.  Musk seeks maximum work output from the system (overcoming entropy) by linking it directly to the ecology in which it lives in ways that will promote a flow of productive energy from the outside to the inside.

Wiesenthal writes:

Minutes after closing his purchase of the company, he started a process that reduced the workforce from 7,500 to 2,500 in 10 days. …

Mr. Musk is trying to cure a degenerative corporate disease: systemic paralysis.  Symptoms include cobwebs of corporate hierarchies with unclear reporting lines and unwieldy teams, along with work groups and positions that have opaque or nonsensical mandates.  Paralyzed companies are often led by a career CEO who builds or maintains a level of bureaucracy that leads to declines in innovation, competitive stature and shareholder value. …

Redundant managers, along with managers who have opaque responsibilities, are in essence professional critics.  Kenneth Tynan said, “A critic is a man who knows the way, but can’t drive the car.”  While corporate execs typically can’t drive the car, they do have a time-tested path to success at big companies: Don’t do anything.  Simply critique others’ attempts to do something. Don’t initiate any projects that have any risk of failure or embarrassment.  And always stay close enough for credit, but far enough from blame.  That’s the road map for job security, but not for innovation.

And innovation in its various manifestations – tangible and intangible – is the death of entropy and the road to sustainability.  Innovation brings energy to a firm’s stocks of human and social capitals.

Does Our Human Family Need Another Renaissance?

Our colleague, Professor Emeritus Doran Hunter, who taught government, administrative law and jurisprudence for many years, has applied the process of seeking a “re-birth,” – a renaissance – to the U.S. as a remedy for its current travails.

I attach his essay here.

His suggestion may have broader application.

The COP27 gathering of leaders to reduce warming of our atmosphere was notable for its limited results, more in the line of charity for poor countries than investment in promising new technologies.

In China, the people’s resentment of one-party autocratic micro-management of individual lives expressed itself in protests.  The critique of Xi Jinping’s reimposition of an imperial order is an uncompromising rejection of its moral legitimacy.

In Iran, the news is of the regime surrendering its religiously grounded theory of restricted social intercourse for women, restrictions enforced by a special police force.

In Russia, Putin has refused to go along with long standing principles of international law and respect for others.

In the U.K., parliamentary governance is showing signs of wear and tear after 300 years,

Failure of the state’s capacity to provide law and order is worrisome in South Africa and Mexico. The Taliban has not yet brought well-being to Afghanistan.  Several million citizens have left and in 2023, more are expected to join them in leaving their homelands in Guatemala, El Salvador and Honduras to illegally enter the U.S.

If systems are experiencing stress and entropic decline, they need to be replaced with others energized by a better vision of the good.

An impressive effort to build anew a capable civilizational dynamic which, over several centuries, produced our modern civilization, began with a return to first principles – the Italian Renaissance.

Wikipedia notes that “The intellectual basis of the Renaissance was its version of humanism, derived from the concept of Roman humanitas and the rediscovery of classical Greek philosophy, such as that of Protagoras, who said that “man is the measure of all things.”  This new thinking became manifest in art, architecture, politics, science and literature.”

In many ways, the thinking of the Caux Round Table on moral capitalism and moral government has been inspired by the very humanism associated with that effort at “re-birth,” but now generalized in association with many other wisdom traditions.

With this scope for its importance to all of us, I commend to you Doran’s essay.

Now that Twitter is Free, Who is Responsible for Policing the Twitter-sphere?

Curious indeed that a billionaire capitalist and not politicians or bureaucrats or theological divines has come to the defense of free speech and open-ended social evolution.

Elon Musk made his money, as far as I can see, the “old fashioned way,” not from rent-seeking, but from innovation and risk-taking.

But if he converts Twitter to a free-for-all without censorship and human persons retain their fondness for speaking out stupidly, maliciously, with meanness and prejudices aforethought, must we suffer such indignities in quiet isolation?

The issue of freedom becomes that of responsibility – who should be responsible?  It’s the retort Cain put to God in the Old Testament: if I am free to be me, then “Am I my brother’s keeper?”

If censors on Twitter have freedom, the users don’t.  If users have freedom, then how will they use it – for good or for evil?

The Caux Round Table has answered this question with ethics – users of Twitter have an ethical obligation to be responsible.

We drafted a proposed code of ethics for users of social media, which we have shared before.

Here is our proposal:

General Principle: Serve the Common Good by Promoting the Moral Sense of Each and All

The business of social media is to attract users who in using the service provided by the business, provide personal data for the business to commodify and sell to commercial firms, along with advertising.  The users of social media stand in a stakeholder relationship of supplier to the business.  But the principal stakeholder of social media companies should be the community with a focus on its moral integrity.

Social media thrives at the intersection of private interest with the common good.  Social media companies contribute to the formation of foundational social capital, a pivotal public good supporting civilized living.  Individuals who use social media similarly contribute to such a public good through their personal use of communications, the consumption of a private good.

Social media can enhance the moral sense of individuals or entice them to ignore or even repudiate the moral sense, which is the foundation for human felicity and living in community.

Social media contributes to the enhancement of trust, a social virtue, but also to the destruction of trust, which degradation injures the community by eroding goodwill and good relationships.
Social media can educate and bridge divides of race, religion, ethnicity and perspective, all to the good of improving social capital, but it can, as well, aggravate ignorance, suspicions, hatreds and contempt for others and in so doing, destroy society’s capacity for promoting human flourishing.

All providers and users of social media have a stewardship responsibility to care for the common good, in addition to advancing their own private interests.  Self-aggrandizement and exploitation of others must yield in principles to faithful concern for the common good and for taking due care in minimizing harm to that common good.

There are, across religions and cultures, three ethical standards for providers and users of social media to uphold: 1) do unto others as you would have them do unto you, so do not presume to judge them, as you would want them not to judge you; 2) seek understanding and trust; and 3) be humble and seek no harm.

The contribution ethics makes to civilized living is to draw forth the “better angels” of our natures.  Power, of any kind, when administered by human hearts and minds can be abused.  Ethics guides the power we have towards mercy and justice.

Principle No. 1: Mutuality

Interpersonal communications is a social process.  It is the engagement of self with others.  Ethics, therefore, applies to communications, as it does to all human self-expressions and other uses of personal power in social settings.  The ethical quality of interpersonal communication rises or falls according to its degree of subjugation to narcissisms, ego-manifestations and other expressions of one’s will to power.  Interpersonal communications – oral, written, on-line or face to face – to be ethical, require habitual or alert restraint of the will to power.

Personal rights, exercised without responsibility, can be troublesome.  One person’s rights do not negate those of others, just as the rights of others do not negate the rights belonging to oneself.  There is in the moral course of justice a reciprocity of rights between self and other.  When taken to selfish extremes, rights can lose their legitimacy and become oppression of others whose rights and personal dignity are not then honored.  Rights are more noble when they are tethered to stewardship ideals.

Responsibilities embedded in the exercise of rights provide the reciprocity necessary for living with social justice.

Interpersonal communication is a common space among persons.  Ethical interpersonal communication requires finding that which can be in common, that which is not unilateral or expresses only a personal narrative or perception.  Such commonalities are often found in facts and in the search for truth.  Ignorance and avoidance of facts and a refusal to seek a higher truth than what our individual minds may, from time to time, reveal to us, may not be injected into interpersonal communication seeking to be ethical.

Taking offense at the thoughts and words of others and punishing them for having such thoughts or for sharing such speech, even just by holding them up for shame and ridicule, promote distrust and antipathy.

Principle No. 2: No Anonymity in the Exercise of Freedom of Speech and Thought

Social media may not limit freedoms of speech, opinion and thought, but can deny access to social media to anonymous users.  Anonymity draws forth egregious unkindness.  Users must identify themselves to providers of social media communications and to the public by name and email address.

Questions about and objections to the accuracy of social media communications shall be directed to the authors of such communications and made publicly available.

Identification of creators imposes on them accountability, encouraging their acceptance of ethical responsibility and respect for others.

Principle No 3: Respect

Providers of social media communications must respect those who receive such communications. Authors on social media must respect those who receive their communications.  Readers on social media must respect those who express themselves.

Those who might object to what they read or see on social media have an obligation to respect those whose beliefs, feelings, ideas, opinions and facts differ from their own ideas, opinions and facts.  Rushing to take offense at another’s words is unwise and childish.  “A kind word turneth away wrath.”  Users of social media who gain access to the words, beliefs, feelings, ideas, opinions and facts of others also voluntarily participate in a social process which protects others in having freedom to use such words, beliefs, feelings, ideas, opinions and facts.

Showing such respect requires humility in deciding who is right and who is wrong.  Such respect should cause one to think twice before seeking to resent, censor or punish another for their thoughts and words.  Consider, first, before replying with anger and disrespect that you might be mistaken.  Before concluding that someone else is hateful or malicious, seek dialogue to understand their narrative.

When reading, have courage and no fear of others; seek to understand.  Remember your strengths and dignity.  Don’t let words “trigger” you; you are your own “safe space;” “sticks and stones can break your bones, but words can never hurt you.”  If anxious or angry, center yourself.

Whether or not a personal expression on social media can be said to threaten others or have the potential to intimidate, exclude or silence them depends on the perceptions of whoever is making the judgment.  Perceptions are not the truth, as they reflect many idiosyncratic cognitive biases. Perceptions can be false and misleading, not at all correctly understanding the intention of the person making the communication.  The ethic of respect demands humility when judging others, giving to them a benefit of the doubt and for a moment, putting aside one’s own prejudices before drawing harsh conclusions.

When you point a finger at another in blame and accusation, remember that three of your fingers are pointing back at you.  Clean your own house first.

When composing, use words ethically and accurately.  You are not at war with the world or anyone in it.

Before posting anything on social media, ask yourself, “How does this help?”

Ridicule is a particularly judgmental, condescending and autocratic way to express your feelings and opinions.

Ad hominem disparagements, slanders and other demeaning descriptions of persons and undeserved or misleading ad hominem praise for another are of no probative value by themselves and only the objective of creating a cognitive bias in favor of or against another’s character and veracity, so have no place in ethical communications.

Don’t be an instrument of dissemination of misinformation and deception of people.  Avoid harming people unknowingly by verifying the information you get before you share with others.

Avoid posting anything on your own or someone else’s account that you would not be willing to say to his or her face.  Do not troll.  Deliberately attempting to anger or enrage someone at a remove is cowardly and childish.

Post items which elevate, challenge and encourage people to think.  If you haven’t anything worth texting, text nothing at all.  There are lots of people who will be more than happy to take up the slack.

A good argument online is no different from a good argument in person.  State your position. Read what others write.  Be polite at all times.  The world is more than well-supplied with small, belligerent people who use the internet to punish strangers for their own experiences of humiliation or scorn.

Anything posted online can and will be remembered for a very long time, possibly forever, so ask yourself, “Is this how I wish to be remembered?”

Principle No. 4: Fairness in Access to Social Media

Providers of social media platforms stand in the relationship of common carrier to users of their platforms for having market power controlling a gateway for transactions under the rule of Munn v. Illinois (U.S. Supreme Court 1876).  Providers of social media, as equitable trustees for the users of their service, may not arbitrarily infringe on the contract rights of their users.  Providers, as common carriers, may not use contracts of adhesion to inequitably limit the rights of their users.

Access to a platform may not be curtailed or denied a user without the provider finding that the user committed a knowing malfeasance or acted with grossly negligent nonfeasance, states of mind more culpable than ignorance.  The platform has the burden of establishing that the user acted from such a culpable state of mind before curtailing or denying access to a user.

Please Join Us for a Zoom Round Table on Mindsets – Tuesday, December 13

Please join us at 9:00 am (CST) on Tuesday, December 13, for a round table discussion on “mindsets” over Zoom.

The November issue of our newsletter Pegasus presents an innovation in thinking about moral capitalism, ESG, sustainability, stakeholder capitalism, companies with a purpose, profit and loss outcomes, net impacts on society and culture, wealth creation – “mindsets.”

The premise of this approach is simple: what we accomplish often depends on what we do or don’t do.  What we attempt to do or neglect to do depends on what our thoughts, values and perceptions are.  Our thoughts, values and perceptions – our various narratives and motivations – our very moral sense itself – are now often bunched together in the popular jargon of “mindset,” as in “sustainability mindset.”

Please help us better understand and develop a “mindset” approach to wealth creation with your thoughts and recommendations.

To register, please email jed@cauxroundtable.net.

Michael Hartoonian, Associate Editor of Pegasus, will lead the discussion.

The event is free and will last about an hour.