Category: Commentary

Henry Kissinger, along with Eric Schmidt, who was then the Executive Chairman of Google, have teamed up with the Dean of the MIT Schwarzman College of Computing, Daniel Huttenlocher, to write a trending new book, The Age of AI.

Belinda Luscombe of TIME Magazine writes: “The book argues that artificial intelligence processes have become so powerful, so seamlessly enmeshed in human affairs and so unpredictable, that without some forethought and management, the kind of “epoch-making transformations” they will deliver may send human history in a dangerous direction.”

Thus, the negotiator, the tech tycoon and the professor make the point that AI needs ethics.

Last year, the Caux Round Table asked around for inputs to a set of principles for AI, seeing that there was not yet a general set of guidelines for use of that technology.

You may read our proposed principles here.

Please let me know your thoughts on this draft.

The Caux Round Table has recently tried to draw more attention to the contributions of social and human capitals to the success of wealth accumulation of individuals, firms and communities.

The most recent issue of the Harvard Business Review, by coincidence, has several articles which substantiate that thesis.

One article proposes that success in business negotiations is enhanced by certain human capital skills: the ability to recognize that “the gains to be shared are the additional value the agreement creates over and above the sum of the two sides’ best alternatives.  This negotiation pie should be divided equally because both sides are equally essential to creating it.”

A second article proposes that innovation is enhanced by the application of decision-making skills.  “Businesses need to strengthen and speed up their creative decision-making processes by including diverse perspectives, clarifying decision rights, matching the cadence of decisions to the pace of learning and encouraging candid, robust, conflict in service of a better experience for the end consumer.”  Such a decision-making process is a form of social capital, resting on specific human capital skills and dispositions.

On the individual level, a third article points out that people who transition to new roles in the organization or in a new organization often have a hard time doing so successfully.  Successful transitions employ five ‘fast mover’ practices: surge rapidly into a broad network, generate “pull” by energizing new connections, identify how to add value and who can help them fill skills gaps, use the network to expand impact and prioritize relationships that enhance their workplace experience.”

A fourth article proposes that innovation can be enhanced by avoiding certain psychological traps that arise from fear: “consult your future self; use red flags as teaching moments to refine your ideas; dissect causes of failure after setbacks; reframe rejections – focus on what was not negative or left unsaid; don’t get distracted when the time for action arrives; do what you are good at and leave the rest to others.”

Three news items in yesterday’s paper bring to mind the ever-present question of the relationship of capitalism to the state.

One is the decision of the U.S. Department of Justice, in line with the Biden Administration’s concern for the concentration of market power in fewer and fewer hands, to prevent Penguin Random House from buying Simon & Schuster publishers.  The resulting merged company would have unprecedented control and outsized influence on what books would be published and how much authors would get paid for their works.

The market power of such a merged company would limit the ability of authors to get books published and bargain for their share of sales revenue.  The limitation of competition could also bring about censorship of works which the publishing staff did not like and so limit public understandings and discussions.

Of course, with the advent of new technologies for self-publishing on Amazon and the use of social media to promote books, there still is some room for authors disfavored by a major house to sell their books.  But self-publishing is a lonely enterprise, with no marketing support to attract buyers or place printed books in bookstores.

Secondly, the Dow index closed at over 36,000 for the first time.

Now, please ask yourself if that could have happened without governments creating trillions of dollars of liquidity in the global economy in recent years.

Thirdly, Yahoo is pulling out of China, leaving a huge market and customers, foregoing profits because of obstacles in serving customers created by the Chinese Communist Party and its government with policies and laws regulating social media.  Microsoft’s LinkedIn had previously ceased business operations in China.

Here’s the October edition of Pegasus.

In this issue, we include excerpts of an article on the Japanese concept of kyosei, written by Ryuzaburo Kaku, former Chairman of Canon and one of our participants, and how it relates to employees.

Secondly, we include our reaction to a recent article in the New York Times on black capitalism.

Lastly, we close with a piece on how moral capitalism could help alleviate the suffering of future pandemics.

I would be most interested in your thoughts and feedback.

As world leaders gather in Glasgow for the COP26 conference on how to offset the measurable warming of our planet, what might we think about the role of a moral capitalism in sustaining our earthly home and our civilization?

I have been thinking recently, in this connection, with the effects of human ingenuity and its empowerment of us to become “masters” of nature.  Such ingenuity has passed into our lives through technology – steam engines, paper money, steel, electricity, the telegraph, oil wells, automobiles, railroads, airplanes, cell phones, atomic bombs and nuclear power stations, to name a few of our inventions.

It seems certain that the human contribution to global warming has been 1) securing more and more energy by inventing and using technologies which release CO2 into the atmosphere and 2) using technologies to create a modern economy which, over the last 300 years, has raised our living standards to remarkable global levels of comfort and enjoyment compared to past millennia.

My question, then, is if our ingenuity and technological innovations have brought us to where we are today, then why can’t they get us out of our present predicament?

In my view, the incentive to conceive of, successfully develop and bring to scale the technologies supporting modern civilization was a product of capitalism and the financing of such inventions and their introduction and adoption on a global scale was also a product of that social/economic/cultural system.

We might pause to reflect on our current affliction from the SARS-CoV-2 virus on the point that our hopes for besting the virus lie most with vaccines developed by private companies, new technologies which could be taken up by government and widely distributed to peoples.

The material and technical side of communism and socialist governments were, with negligible exceptions, copied from capitalist economies.

Thus, the challenge of a moral capitalism is how best to encourage the conception, invention, development and production of those technologies which can establish a better balance between our civilization and its impacts on our environment, particularly our atmosphere.

We could, apparently, produce supercapacitors which can release large amounts of electric energy quickly, but can’t store as much as a battery.  A supercapacitor, coupled with a battery, could double the range of an electric car, allowing it to be driven some 500 miles on a single charge.  The new device could be recharged in five minutes to 80% of its capacity.

Some propose “dynamic charging” so that vehicle batteries can be recharged while the vehicles are in motion by wireless transmission from under the road pads to receivers on the bottom of the vehicles.  Roads, however, must be connected to the grid for this to happen.

Dr. Wang Zhong Lin at the Beijing Institute of Nanoenergy has proposed a device to ride on ocean waters and use the motion of waves to generate electric currents.  His device, a paddle, can generate electricity with large waves, but also from small waves which, in the aggregate, can generate considerable electricity.  He uses a novel technique – not passing a coil of wire through a magnetic field – but friction, like getting static electricity from rubbing a balloon.

Plants with the C4 gene for photosynthesis, mostly grasses, remove more CO2 from the atmosphere than other plants which don’t have that gene.  If human ingenuity could engineer the modification of other trees to include the C4 gene in their genome, forests could be grown in many countries to remove CO2 in large amounts from the atmosphere for sequestering in wood.

The use of hydrogen as a source of energy has its advocates, but as of now, is not practical. Hydrogen use is carbon free.  Hydrogen fuel cells produce as by-products only water vapor and warm air.  The challenge is how to acquire hydrogen in large amounts at a reasonable cost which is acceptable to consumers.

Nuclear power plants could be used to produce hydrogen by using steam and electricity to split water atoms and separate the hydrogen.

BP is experimenting with using wind power to produce hydrogen.  A 50-megawatt electrolyzer will split water into hydrogen and oxygen.  When excess electricity is generated by wind turbines, it can be used to make hydrogen, which can be stored for later use in producing useful energy.

A Canadian company, Planetary Hydrogen, proposes to take carbon out of the atmosphere and convert it into an antacid for mixing in ocean water acidified by absorption of too much CO2.

Airlines might use cooking oils, animal fats, agricultural crops and wood as biofuels for jet engines.  Today, biofuels cost up to 4 times more than conventional jet fuel.  Aviation drives 3.5% of human made greenhouse gas emissions.

Another possible jet fuel could be made from hydrogen combined with carbon monoxide.

Smithfield Foods is planning to sell methane to burn with shale gas, a byproduct of natural gas extraction, in home heaters.  Methane produces some 20% of greenhouse gas emissions and is 25% more potent than CO2 in trapping the earth’s heat.  Hog manure lagoons are being converted to capture methane emissions.  But such methane can’t compete on price with shale gas, so its production must be subsidized.  And manure lagoons need to be connected with gas pipelines, an expensive capital investment.

Sierra Energy has a prototype refinery in California which processes 10 tons of garbage a day into a ton of hydrogen.  The trash is blasted with 4,000-degree Fahrenheit steam and oxygen to break it down into hydrogen and carbon monoxide.  Garbage buried emits methane into the atmosphere.

Hydrogen could be used in the production of steel replacing coking coal.  Steel making accounts for about 8% of greenhouse gas emissions.  Hybritt, a Swedish industrial coalition, delivered the first ton of “green” steel last August.  Hydrogen can also replace the hydrocarbons of natural gas in other manufacturing processes, demanding high temperatures like chemical reactors, cement kilns and glassmaking.

Those who want to invest in the technology of using hydrogen for energy generation need to feel secure that others will produce enough hydrogen day-in and day-out at a predictable and acceptable cost.  Reciprocally, those who want to invest in the production of hydrogen need to feel secure that others will want to buy their production as a predictable price covering the costs of production, plus an acceptable profit.  The risky part of capitalism, moral or otherwise, is the alchemy of aligning a critical mass of consumers in timely fashion with a critical mass of producers.  Markets can do this, generally incrementally and not always easily or seamlessly.

Hydrogen is produced from electrolyzers.  Today, the world has about 3 gigawatts of electrolyzer capacity (a gigawatt is the capacity of a nuclear power plant).  Scaling up generating capacity would lower the cost of adding additional capacity.  On October 10, Andrew Forrest, Australia’s richest man and owner of Fortescue Metals Group, announced plans to build the world’s largest factory for making electrolyzer machines.

As a result of new generating capacity coming online, the cost of hydrogen made from renewable sources is dropping.  Chevron has made a big bet on producing hydrogen.  Some 350 large projects are globally underway to produce clean hydrogen, distribute hydrogen or to use hydrogen in industrial plants.

People, especially in urban centers, spend hours of the day in under-ventilated buildings.  Such conditions support headaches, fatigue, shortness of breath, coughs, nausea, irritation of eyes, nose, throat and skin.  Covid has drawn attention to the quality of indoor air.  Technology is needed to improve indoor ventilation.

With respect to food production, kernza is a perennial wheat with deep roots that help protect ground water supplies from nitrate pollution, stores more carbon in the soil and reduces erosion.  General Mills is interested in making its Cascadian Farms cereal from kernza wheat.

Technology is needed to protect kelp beds from sea urchins.  Kelp beds sustain fish and absorb carbon.  But warming waters have promoted the growth of sea urchins which eat kelp.

Our demand for meat has given rise to widespread use of land for farms and pasture. Industrialized food production is also energy intensive and consumes great quantities of pesticides and fertilizer, with negative impacts on the environment.  Now, new technologies are being explored to change food chains.  Yeasts are being programmed to grow proteins which can make a soy-protein patty that looks and tastes like beef.  Cells taken from living animals can be used in bioreactors to grow meat.  A bacon substitute is being made from mycelium, a network of fungal fibers.  Inland saline aquaculture can bring seafood to people living miles away from oceans and forestall overfishing.  Vegetables are being grown in shipping containers in cities just blocks away from the consumers who will buy and eat them.  In San Francisco, there is a “vertical” farm with some 8,000 square meters in production.

The company, Beyond Meat, earned $406 million in net revenue in 2020.  Having gone public in 2019, it now has a market value of $7 billion.  In 2020, plant-based cow milk substitutes accounted for 15% of America’s milk market.

The Judeo-Christian Bible and the Qur’an tell us that we are made in God’s image or with his spirit.  We, therefore, have both the capacity to create worlds and the moral obligation to let creation flourish.

In 1993 and 1994, when the participants of the Caux Round Table came together to think through and then write up the first set of ethical principles for business proposed by business executives on their own, two paradigms were on the table in dialogue – kyosei from Japan, proposed by Ryuzaburo Kaku of Cannon and the Centesimus Annus encyclical of Pope John Paul II, proposed by Jean Loup Dherse of France.

The discussion exposed fundamental harmonies and symmetries between the two paradigms.  The resulting principles integrated perspectives of both approaches to responsible leadership in business and finance.  The vision of Centesimus Annus today provides solid and generative support directing us how to best implement all of our talk about “ESG” and “sustainability.”

Raised as a Protestant, I was ignorant of the Catholic contribution of wise encyclicals on social conditions.  At the suggestion of Jean Loup, I read first Centesimus Annus and then Laborem Exercens.  I was most impressed and found myself with a deeper understanding of how to think about ideals and values in our daily lives and work.

Later, mostly by coincidence, I was asked to join the advisory board of the Papal foundation established by Pope John Paul II to advocate the insights and ideals of his encyclical in business and financial settings and organizations – the Fondazione Centesimus Annus Pro Pontifice.  Lord Daniel Brennan, now our chairman emeritus, is another member of that board.  We were together these past few days in Rome for the annual meeting of the foundation.

I found in the discussion that the relevance of concepts such as “solidarity” are more relevant to our conditions than ever before after the pandemic.  That sense for our necessary connection with others 1) facilitates our ability to collaborate and create social capital and 2) justifies our acceptance of personal responsibility and a proper turning away from narcissism of mind and spirit.

On Saturday, in audience with Pope Francis, we heard him speak to us most reasonably on how the social teachings of his church could make a difference for the better in our lives.

You may read his remarks here.

I only met General Colin Powell once where we exchanged greetings and pleasantries.  I heard him speak one other time.

At that meeting here in Minnesota, he met again South Vietnamese Colonel Vo Cong Hieu.  Both men were tearful when hugging each other.  I knew Col. Hieu in the Vietnamese community here.

After his promotion to captain in 1962, Powell received orders for Vietnam.  Powell was a senior tactical adviser to the 2nd Battalion, 3rd Infantry Regiment, 1st Division, Army of the Republic of Vietnam (ARVN).  That ARVN unit executed search and destroy operations against invading North Vietnamese communist regulars in the highly contested A Shau Valley near the Laotian border.

Powell developed a close bond with Capt. Vo Cong Hieu, a respected commander of the 2nd Battalion.  Hieu appreciated Powell’s counsel on training, fortification techniques and combat tactics.  Powell worked carefully to be “useful without taking over,” he later wrote in his memoir.  On long jungle patrols, the battalion came under frequent sniper attack and suffered gruesome casualties.  Mindful that he was a role model for the South Vietnamese infantrymen, the American adviser consciously tamed his own anxieties.  “Every morning,” Powell wrote, “I had to use my training and self-discipline to control my fear and move on.  As a leader, I could show no fear.”

Early in his assignment, when his ARVN battalion was attacked, Powell charged into the jungle in hot pursuit of the enemy, but before long, he realized that not a single soldier had followed him.  On another occasion, when his battalion was on patrol, a U.S. marine helicopter gunner accidentally killed two soldiers in Powell’s unit.  “This bloody blunder had undermined their belief in me,” Powell recalled.  But his credibility rebounded when a U.S.-made protective vest saved a Vietnamese private on lead patrol.  Powell had insisted that the vest be worn.  Thereafter, soldiers hailed the American as “a leader of wisdom and foresight.”

As I wrote in the last chapter of my book Moral Capitalism, moral capitalism does not happen on its own; it must be made to happen.  And those who make it happen must be leaders.

The same is more true for moral government.

Later in life, General Powell set forth 13 rules for leadership:

1. It ain’t as bad as you think.  It will look better in the morning.
2. Get mad, then get over it.
3. Avoid having your ego so close to your position that when your position falls, your ego goes with it.
4. It can be done.
5. Be careful what you choose.  You may get it.
6. Don’t let adverse facts stand in the way of a good decision.
7. You can’t make someone else’s choices.  You shouldn’t let someone else make yours.
8. Check small things.
9. Share credit.
10. Remain calm.  Be kind.
11. Have a vision.  Be demanding.
12. Don’t take counsel of your fears or naysayers.
13. Perpetual optimism is a force multiplier.

I commend these to you.

I just read in the Wall Street Journal a very favorable review of Jonathan Rauch’s new book, The Constitution of Knowledge.

The review highlights why Rauch’s philosophical stance on finding truth demands use of the Caux Round Table Principles for Business and for the discourse ethics of our principles for moral government.  Open-mindedness, opportunity to falsify and flexibility in engaging with reality result from application of the principles to our institutions and relationships with others.

Here is the review for your consideration:

By Benjamin and Jenna Storey
Oct. 12, 2021

The Constitution of Knowledge: A Defense of Truth

By Jonathan Rauch
Brookings Institute

In The Constitution of Knowledge, Jonathan Rauch makes a convincing case that we still need our institutions of expertise and the people who work for them.  Mr. Rauch, a senior fellow at the Brookings Institution, argues that human beings have a natural tendency to believe whatever they wish, irrespective of evidence.  Our institutions of expertise incentivize intellectual rigor through practices such as peer review and fact checking, which help tame this tendency.

To remind us of why we developed these institutions in the first place, Mr. Rauch returns to the beginning of modernity.  When the wars of religion were drenching Europe in blood, writers and philosophers such as Michel de Montaigne and John Locke saw a way through that impasse of intransigence.  They originated an approach to thinking that systematized doubt and made it productive.

The institutions built to encourage constructive doubt embody Mr. Rauch’s constitution of knowledge.  Their cardinal principles are “fallibilism” and “empiricism.”  Knowledge is fallible if it might be debunked yet “withstands attempts to debunk it.”  It is empirical if the method we use to check it “gives the same result regardless of the identity of the checker.”  While our processes of review don’t tell us exactly what truth is, they often identify what truth isn’t.  And they produce tested hypotheses that help us govern ourselves.

Mr. Rauch draws a parallel between this constitution of knowledge and two of liberalism’s other hallmark institutions, constitutional government and free-market economics.  All of them “organize far-flung cooperation, distribute decision-making across social networks and exploit network intelligence.”  The result is political cooperation, reliable scientific findings and economic prosperity.

For much of the 20^th century, Americans implicitly trusted the institutions of the constitution of knowledge.  If a claim showed up in a prestigious newspaper or scientific journal, most people assumed it had survived critical scrutiny.  If the FDA approved a medicine, most believed it was safe and effective.

Many no longer do.  Why?  Mr. Rauch identifies two forces undermining the constitution of knowledge.  The first is the nihilism of the internet.  “The commercial internet was born with an epistemic defect,” he writes.  Its “metrics and algorithms and optimization tools were sensitive to popularity but indifferent to truth.”  Sensational rumors, salacious images and outrage-driven social media pile-ons are clickbait; truth is at best a secondary consideration.

Some see the confusion that results as a political opportunity.  State actors deploy bots to soak social media in conspiracy theories—less to promote certain electoral outcomes than to “induce uncertainty, disorientation and attendant cynicism.”  The point is to “exhaust your critical thinking,” as Garry Kasparov has put it, and produce “epistemic helplessness.”  Such cynicism and despair undermine our capacity for thinking together and make republican self-government harder.

The constitution of knowledge also faces a challenge from the inside: cancel culture.  Cancel culture is rooted in what Mr. Rauch calls “emotional safetyism,” which construes arguments one disagrees with as threats that must be policed.  Emotional safetyism turns a culture of critical review into a culture of confirmation bias and censorship.

Mr. Rauch’s defense of the constitution of knowledge is an insightful and important reminder of the real goods produced by expertise.  But he largely ignores the deepest reasons for the crisis of public confidence in the institutions he cares about.  His intellectual history proceeds as if no serious person had ever challenged the constitution of knowledge.  He describes those who think outside its framework as a collection of cranks: “creationists, Christian Scientists, homeopaths, astrologists, flat-earthers, anti-vaxxers” and so on.  To this list, one might add many of the mightiest minds ever to have put pen to paper: religious thinkers, from Blaise Pascal to C.S. Lewis, but also secular ones, from Jean Jacques Rousseau to Friedrich Nietzsche.

All of them pointed out that the trouble with the Montaignean and Lockean worldview is that it truncates our minds, enervates our hearts and leaves us existentially clueless.  This is why no society has ever fully accepted Mr. Rauch’s vaunting proposition that “liberal science . . . is the only legitimate validator of knowledge.”  Greater familiarity with the best arguments against this Enlightenment worldview would give its proponents some much-needed humility.

Mr. Rauch defends a ruling class: the “reality-based community” that determines what views get published, platformed and enacted as policies.  But a ruling class that systematically blinds itself to the most profound longings of human beings will misunderstand and misgovern those under its sway.

In recent years, the expert class has undermined its pretensions to authority with high-profile displays of ineptitude, from shifting and contradictory pandemic policies to the botched withdrawal from Afghanistan.

If experts want to regain the trust they need to be effective, they must remember that, while they judge themselves by their credentials, others judge them by their fruits.  Mr. Rauch rightly points out the invaluable work done by the institutions of the constitution of knowledge.  But those who rule can only justify their place by ruling well—and knowing their limits.