Author: CRT Admin

We recently posted more short videos on relevant and timely topics.  They include:

–Morality is an Intangible Asset

–The Value of Values

–Reflections on 2023

All our videos can be found on our YouTube page here.  We recently put them into 9 playlists, which you can find here.

If you aren’t following us on Twitter or haven’t liked us on Facebook, please do so.  We update both platforms frequently.

The 54^th annual meeting of the World Economic Forum at Davos ended back on January 19^th.  My take on the results of some 400 sessions is bleak and disdainful.  My thoughts are as follows:

The 54^th annual meeting of the World Economic Forum last month in Davos, Switzerland, was a bust.  Its results reminded me of Shakespeare’s take on the supposed great and glorious (and all of us as well):

Life’s but a walking shadow, a poor player,
That struts and frets his hour upon the stage,
And then is heard no more.  It is a tale
Told by an idiot, full of sound and fury,
Signifying nothing.

The meeting was convened to provide leadership in solving the trust deficit dragging humanity down into war, beggar-thy-neighbor economics and despair.  Its theme was “Rebuilding Trust.”

The Forum promised that it would “provide a crucial space to focus on the fundamental principles driving trust, including transparency, consistency and accountability.”  That privileged “space” was to be occupied by over 100 governments, all major international organizations, 1,000 Forum partners, as well as civil society leaders, experts, youth representatives, social entrepreneurs and news outlets.

“We must rebuild trust – trust in our future, trust in our capacity to overcome challenges and most importantly, trust in each other,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.  “Trust is not just a feeling; trust is a commitment to action, to belief, to hope.”

And what had happened by the end of the meeting: nothing of note.

The consulting firm McKinsey wrote a report listing the 10 key takeaways from Davos 2024:

“Despite seemingly endless geopolitical and economic uncertainty, global business leaders are coming away from Davos cautiously optimistic about 2024.  While challenges and surprises remain inevitable, opportunities abound.  This was a common theme at the 54^th annual meeting of the World Economic Forum, where delegates from global business, government, civil society, media and academia convened to focus on the fundamental principles driving trust.”

The key takeaways, as proposed by the McKinsey observers, were:

1.    Speed is crucial to outperformance.
2.    Cooperation is multifaceted and can coexist with competition.
3.    The generative AI revolution is only just beginning.
4.    Sustainability is a business imperative.
5.    Better women’s health is correlated with economic prosperity.
6.    A comprehensive approach to transformation is most effective.
7.    Business leaders need to focus on matching top talent to the highest-value roles.
8.    The best CEOs leave organizations in a better place than they found them.
9.    Performance and diversity are not mutually exclusive.
10.  Don’t overlook India’s potential.

What does all this have to do with building trust or preventing the meltdown of trust?  Nothing.

The World Economic Forum’s press office provided this “uplifting” summary of the meeting:

• At a moment of growing fragmentation and polarization, the World Economic Forum’s annual meeting 2024 served as a platform for advancing dialogue, cooperation and action-oriented partnership.
• Nearly 3,000 leaders from government, business and civil society from more than 125 countries, including 350 heads of state and government and ministers, participated in the meeting and connected across diverse viewpoints on key issues.
• Participants advanced new ideas and initiatives to increase resilience and security, revive economic growth, protect the climate and nature, balance innovation and guardrails for technology and invest in jobs, skills and health.

What does any of that do to build the intangible social capital of trust or prevent the erosion of that asset?

Nothing.

On building trust, “world leaders” at the Forum offered the following platitudes:

“Geopolitical divides are preventing us from coming together around global solutions for global challenges,” said United Nations Secretary General António Guterres.

“It is essential that we discard prejudice, bridge differences and work as one to tackle the trust deficit,” said Li Qiang, Premier of the People’s Republic of China.

“The world is not at a single inflection point; it is at multi-inflection points,” warned Ursula von der Leyen, President of the European Commission.  She urged countries to “deepen global collaboration more than ever before.”

Ajay S. Banga, President of the World Bank Group, emphasized the interconnectedness of crises. “We cannot think about eradicating poverty without caring about climate.  We cannot think about eradicating poverty without thinking about healthcare.  We cannot think about eradicating poverty without thinking about food insecurity and fragility.”

“We have a responsibility to be stewards of our beautiful, small planet’s future,” said Kristalina Georgieva, Managing Director of the International Monetary Fund.  “There is something that leaders need to embrace,” she added, “and it is the responsibility to act, even if it’s not popular.”

French President Emmanuel Macron called for world leaders to “be realistic, but be optimistic” about addressing the complex challenges of peace and security, jobs and decarbonization.  “I truly believe that the decisions that can change things are within our hands,” he said.

“I can’t think of a time when there’s been both a greater multiplicity and greater complexity of the challenges that we’re dealing with, “said Antony Blinken, U.S. Secretary of State.

On the role of the meeting in providing a space for diplomacy and diverse viewpoints, Børge Brende, President of the World Economic Forum, said: “The annual meeting serves as a vital platform for inclusive dialogue, bringing together parties to identify pathways toward achieving shared priorities.”

This collective “wisdom” should bring to our minds T.S. Eliot’s poem, “The Hollow Men”:

We are the hollow men
We are the stuffed men
Leaning together
Headpiece filled with straw.  Alas!
Our dried voices, when
We whisper together
Are quiet and meaningless
As wind in dry grass
Or rats’ feet over broken glass
In our dry cellar

Shape without form, shade without colour,
Paralysed force, gesture without motion.

So, where are our effective global leaders?  Might you, reader, be one?

As you know, the Caux Round Table for Moral Capitalism seeks annually to recognize and honor leaders in the Minnesota business community and so presents an annual Dayton Award for Distinction in   Moral Capitalism.

In 2019, the first Dayton Award was given to Douglas M. Baker, Jr. of Ecolab, in 2020 to Andrew Cecere of USBank and Don and Sondra Samuels for leadership in the community, in 2021 to police chiefs Medaria Arradondo of Minneapolis and Todd Axtell of St. Paul for leadership in public service and in 2022 to Mary Kowalski and Kris Kowalski Christiansen of Kowalski’s Markets and Kyle Smith of Reell Precision Manufacturing Corporation.

This year, the Caux Round Table will present the fifth Dayton Award.  I write to ask for your recommendations as to a suitable business executive to receive the award.  Our board has established  the criteria for selection of an award recipient as:

– CEO of a Minnesota company or similar operational organization
– Revenue and profits if relevant to mission
– Community impact if relevant to mission
– Demonstrated innovation/response to market opportunities
– Quality of company culture
– Care of employees
– Customer satisfaction
– Environmental stewardship
– Personal community commitment
– Company community commitment
– Vision and prudence: level 5 leadership traits (Jim Collins: From Good to Great)

In 250 words or less, please tell us why your nominee is deserving of the award.

In addition, we will take into consideration other factors you bring to our attention as deserving of recognition for their contribution to the enhanced well-being of Minnesota.

Please send completed nominations to jed@cauxroundtable.net.

The deadline for nominations is 5:00 pm tomorrow, Wednesday, January 31.

Our colleague, Jan Peter Balkenende, former prime minister of The Netherlands, with Govert Buijs of the Free University in Amsterdam, have just published a new book, Capitalism Reconnected, which carries forward the vision of the Caux Round Table ethical principles for business, government and civil society organizations.

My review of the book can be found here.

One hundred years ago today, Vladimir Ilyich Lenin died.

My first thought on learning this was that, indeed, he lived up to the expectations of the “Great Man” approach to thinking about human history – individuals who drive events and are not driven by them.

Lenin was an organizer, a man who built and directed systems of human collaboration.  He was a master of the “executive function,” adjusting and tacking before the wind when necessary, imposing his personal will when possible, putting others to work to realize his dreams.

The 1997 Black Book of Communism asserts that communist regimes killed over 94 million human persons.  Not a small legacy for Vladimir Ilyich.  Who else in history can take credit for anything so grand?

Karl Marx had only been an academic, writing up theory and commentating on history, politics, society and economics.  But Marxism without Lenin would have been no more than a minority partisan fancy of disenchanted intellectuals and a handful of their working class allies – the reality of Marxism in Bismark’s Germany.

Lenin made real, for all time, Georg Fredrich Hegel’s dream of the state as history.  Hegel had been gobsmacked by Napoleon, saying as he saw him ride through Jena: “I saw the Emperor – this world-soul – riding out of the city on reconnaissance.  It is indeed a wonderful sensation to see such an individual who, concentrated here at a single point, astride a horse, reaches out over the world and masters it.”

In his Outlines of the Philosophy of Right, Hegel wrote that “The state is the actuality of the ethical Ideal.  It is ethical spirit as the substantial will manifest and clear to itself, knowing and thinking itself, accomplishing what it knows and insofar as it knows it.”  The state, he proposed, is self-consciousness raised to its universality.  The state, therefore, is to be our overlord, Godlike.

It was Lenin who first created such a man-God on Earth, though the pharaohs before him and the Chinese in Asia had achieved a similar absolute submission of a people beneath a ruling apparatus claiming divine authority for its legitimacy.

In 1903, when he was 33 years old, Lenin precipitated a schism in the Russian socialist movement, demanding a “hard” cadre-led party of militants willing to use violence in place of a “soft” open party working within the law by building alliances.  Lenin’s principles were “vanguardism” and “democratic centralism” or centralizing power in the state, a la Hegel, to tell the masses – the “demos” – what they should think and do.

In 1921, Lenin would put his vision of justice in the phrase “The whole question is – who will overtake whom?” – which became the Russian communist mantra for legitimation of everything: “Who – Whom” (kto kogo).  This central and very practical concern of Leninism is “Who does what to whom?,” with the point being that you always want to be the doer and never the victim.

 

Lenin’s faith in the rightness of dictatorship was set forth in his 1902 pamphlet, What is to be Done? Burning Questions of our Movement.

Lenin believed with all his heart that proletarians would not, on their own, become political and seize state power through strikes and seeking better working conditions.  To produce a Marxist thinking proletariat capable of taking state power and eradicating the power of capital, Lenin insisted that Marxists should form a political party to be the vanguard of revolutionary progress.  He wrote: “Class political consciousness can be brought to the workers only from without; that is, only from outside the economic struggle, from outside the sphere of relations between workers and employers.  The sphere from which alone it is possible to obtain this knowledge is the sphere of relationships (of all classes and strata) to the state and the government, the sphere of the interrelations between all classes.”

When we recall the achievements of Lenin, we should never fail to note that there are evil people in the world and sometimes, they even make history.

My thanks to the Wall Street Journal for publishing the below excerpts of a recent speech at Davos where Argentine President Javier Milei makes his case for the good to be ascribed to capitalism:

The Western world is in danger and it is in danger because those who are supposed to have to defend the values of the West are co-opted by a vision of the world that inexorably leads to socialism and thereby to poverty.  Unfortunately, in recent decades, motivated by some well-meaning individuals willing to help others and others motivated by the wish to belong to a privileged caste, the main leaders of the Western world have abandoned the model of freedom for different versions of what we call collectivism.  We are here to tell you that collectivist experiments are never the solution to the problems that afflict the citizens of the world.  Rather, they are the root cause.  Do believe me, no one better placed than us, Argentines, to testify to these two points.

When we adopted the model of freedom back in 1860, in 35 years, we became a leading world power.  And when we embraced collectivism over the course of the last 100 years, we saw how our citizens started to become systematically impoverished and we dropped to spot No. 140 globally. . . .

Since there is no doubt that free-enterprise capitalism is superior in productive terms, the left-wing doxa [public opinion] has attacked capitalism alleging matters of morality. . . . They say that capitalism is evil because it’s individualistic and that collectivism is good because it’s altruistic—of course with the money of others—so they therefore advocate for social justice.

But this concept, which in the developed world became fashionable in recent times, in my country has been a constant in political discourse for over 80 years.  The problem is that social justice is not just and it doesn’t contribute either to the general well-being.  Quite on the contrary, it’s an intrinsically unfair idea because it’s violent.  It’s unjust because the state is financed through tax and taxes are collected coercively—or can any one of us say that they voluntarily pay taxes?  Which means that the state is financed through coercion and that the higher the tax burden, the higher the coercion and the lower the freedom. . . .

Unfortunately, these harmful ideas have taken a stronghold in our society.  Neo-Marxists have managed to co-opt the common sense of the Western world and this they have achieved by appropriating the media, culture, universities—and also international organizations.  The latter case is the most serious one probably because these are institutions that have enormous influence on political and economic decisions of the countries that make up the multilateral organizations.

Fortunately, there are more and more of us who are daring to make our voices heard because we see that if we don’t truly and decisively fight against these ideas, the only possible fate is for us to have increasing levels of state regulation, socialism, poverty and less freedom and therefore will be having worse standards of living.  The West has unfortunately already started to go along this path.  I know to many it may sound ridiculous to suggest that the West has turned to socialism, but it’s only ridiculous if you only limit yourself to the traditional economic definition of socialism, which says that it’s an economic system where the state owns the means of production.

This definition, in my view, should be updated in the light of current circumstances.  Today, states don’t need to directly control the means of production to control every aspect of the lives of individuals.  With tools such as printing money, debt, subsidies, controlling the interest rate, price controls and regulations to correct the so-called market failures, they can control the lives and fates of millions of individuals.  This is how we come to the point where, by using different names or guises, a good deal of the generally accepted political offers in most Western countries are collectivist variants, whether they proclaim to be openly communist, fascist, Nazis, socialists, social Democrats, socialists, Democrat Christians or Christian Democrats, neo-Keynesians, progressive, populists, nationalists or globalists.

At bottom, there are no major differences.  They all say that the state should steer all aspects of the lives of individuals.  They all defend a model contrary to that one which led humanity to the most spectacular progress in its history.  We have come here today to invite the rest of the countries in the Western world to get back on the path of prosperity, economic freedom, limited government and unlimited respect for private property—essential elements for economic growth. And the impoverishment produced by collectivism is no fantasy, nor is it an inescapable fate.

But it’s a reality that we Argentines know very well.  We have lived through this, we have been through this because as I said earlier, ever since we decided to abandon the model of freedom that had made us rich, we have been caught up in a downward spiral as part of which we are poorer and poorer, day by day.  So, this is something we have lived through and we are here to warn you about what can happen if the countries in the Western world that became rich through the model of freedom stay on this path of servitude.  The case of Argentina is an empirical demonstration that no matter how rich you may be or how much you may have in terms of natural resources or how skilled your population may be or educated or how many bars of gold you may have in the central bank, if measures are adopted that hinder the free functioning of markets, free competition, free price systems, if you hinder trade, if you attack private property, the only possible fate is poverty.

Therefore, in conclusion, I would like to leave a message for all businesspeople here and for those who are not here in person, but are following from around the world.  Do not be intimidated, either by the political caste or by parasites who live off the state.  Do not surrender to a political class that only wants to stay in power and retain its privileges.  You are social benefactors.  You’re heroes.  You’re the creators of the most extraordinary period of prosperity we’ve ever seen.  Let no one tell you that your ambition is immoral.  If you make money, it’s because you offer a better product at a better price, thereby contributing to general well-being. Do not surrender to the advance of the state.  The state is not the solution.  The state is the problem itself.  You are the true protagonists of this story and rest assured that as from today, Argentina is your staunch unconditional ally.  Thank you very much and long live freedom, damn it.

My apologies.  I recently learned that last year, 2023 in the Christian calendar, was the 300^th anniversary of the birth of Adam Smith.  He was baptized on June 5, 1723, in Kirkcaldy, Fife, Scotland.  The Caux Round Table should have been more alert and made some comment months ago on Smith’s contributions to the well-being of humanity.

What is notable is that there has been no commemoration, to my knowledge, of the birth of that most important architect of modern civilization.

While Smith was a thinker and writer and not a doer, his theory on how the “the wealth of nations” could be created year-in and year-out, ad infinitum, provided a compass and road map for humanity to build modern economies.

Even socialisms have had to defer to Smith’s discovery of the “factory system,” with its specialization of function, division of labor, introduction of technology into the means of production, all to create from nothing but innovative thoughts increased productivity and lower per-unit costs of production.

Those socialisms, actually national socialisms or fascisms, like Pol Pot’s Khmer Rouge or Mao’s Great Leap Forward, which never mastered the factory system, were collectives of miserable peoples living in poverty and under inhumane oppression.

And we should not wonder, even for a second, why, after World War II, every nation in the world sought economic growth and “modernization,” one way or another.

As Mae West quipped in one of her movies: “Honey, I’ve been rich and I’ve been poor and rich is better.”

Here is a chart revealing what capitalism has done for humanity:

While money isn’t everything (listen to the Beatles on “Money Can’t Buy Me Love”), it’s more helpful to living well and living long than whatever else is in second place.

To give Smith his rightful due, we must never overlook his first book – The Theory of Moral Sentiments.  Smith was, first and foremost, an observing student of human nature.  He belonged to the first generation of “scientists,” those who observed first and drew conclusions second. Like Newton and the apocryphal apple falling on his head, leading him to find gravity as a natural phenomenon or the first to use telescopes to view the heavens or microscopes to see minutia or Linneas coming up with names for so many genus and species.

Smith observed how we are governed well or badly by a “moral sense” and then how a mode of production was emerging around him in his time, something new in history.  In his second book, An Inquiry into the Nature and Causes of the Wealth of Nations, Smith described the patterns of cause and effect in this new system based on “factories,” markets and steam power.

Still, as I wrote in my book, Moral Capitalism, we would be better off if our business practices and laws brought together, in one social system, Smith’s recommendations to use our moral sense, with his observations as to how best to profit from the factory system and its supporting market institutions.

My feeling on just discovering Smith’s birth 300 years ago is to say: “Thank you very much.  We wouldn’t be where we are today without you.”