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The Murder of Shinzo Abe

Yesterday’s murder of Shinzo Abe, former Prime Minister of Japan, is one more disturbing “sign of the times.”  Along with Putin’s invasion of Ukraine, with tactics that prioritize destruction of the civilian environment; Covid; China’s hegemonic military intrusion into the South China Sea; the collapse of public support for President Joe Biden in the U.S.; the resignation of Boris Johnson as Prime Minister of Great Britain; and the success of populist autocratic nationalisms, such an individual act points to systemic destabilization in the current era of human history.

Which leaves us, once again, to ask the question: “What is to be done?”

If what the Biden Administration touts as the “liberal world order” is in decline, what will take its place?  The old Athenian realism that, “The strong do what they can, the weak suffer what they must?

Can we find and have the skill and fortitude to construct a new reality of social justice for all?

But how does one overcome destabilization?  Where can be laid the foundation for system and reliable expectations of life, liberty and the pursuit of happiness, both individual and communal?

The Caux Round Table was founded to consider meliorating capitalism, creating for that purpose ethical principles for business.  It then recognized that capitalism lives within a cocoon or chrysalis of government and so advocated ethical principles for government, as well.

The third sector of civilization is society – families; civil organizations of church; healthcare; education; philanthropy; and other mediating structures of journalism, rotary clubs, etc.  We have, therefore, suggested ethical principles for civil society organizations.

On learning of former Prime Minister Abe’s murder by a 41-year-old individual male, as a learned reflex, I thought immediately of previous assassinations of political leaders – Abraham Lincoln, the Archduke Franz Ferdinand – or the sectarian murders carried out by Islamist extremists.  In those cases, the motivations had in origin in some political or religious grievance.  But what if this murder was not political in any sense?  What if it was just the craving of a dysfunctional man living uncomfortably with his anger and resentments?

I then thought of John Hinckley and his attempt to kill President Ronald Reagan.

In recent mass shootings in the U.S., the perpetrators have been isolated, alienated males from dysfunctional families, young loners drifting aimless through life.  To me, they seem overwhelmed by some psychosis, which breeds in their minds a compelling narrative of victimization and justified rage, which legitimates their psychosis as a rational response to life, as it has impinged on them.  One such destabilized young man then takes his revenge, I suppose, first on his mother and another on his grandmother and only after that on innocent, young children.

Which leads me to ask: do we also need ethical principles for a moral society?

Such a society, I presume, would not be dysfunctional or destabilized.  It would be neither nihilistic, nor theocratic.  It would sustain an equilibrium between the individual and the collective, using one to check excesses in the other.

As American philosopher William James proposed, “The community stagnates without the impulse of the individual.  The impulse dies away without the sympathy of the community.”

ESG – Salvation or Wishful Thinking? Monday, July 18

I sense a shift in the geist where ESG is concerned.  What just a few years ago was touted as the way forward for capitalism is more and more moving to the margins.  Please join us at 9:00 am (CST) on Monday, July 18th for a Zoom round table on ESG – what does it really mean and what can it accomplish?

From my perspective, ESG is just the most current mantra for finding a way to have capitalism without negative side-effects.

As the industrial age emerged in the early 19th century, the common law of England and America responded by creating the law of negligence – taking responsibility for the harm you cause when you fail to use due care.  Later came causes of action in warranty and strict liability for defective products.  Statutes were enacted to enhance the contract rights of workers and to protect consumers and to limit the market power of monopolies.  In the 1930s in the U.S., financial capitalism was required to truthfully disclose all facts supporting or reducing the value of securities.

In the 1970s, investors were prodded by social activists to direct their capital away from firms which were not socially responsible and consumers were encouraged to take their trade elsewhere.  In the 1980s, the quality movement here taught companies how to give better value for money to customers and engage employees to become more proficient in creating such value. In a re-emphasis, companies were encouraged to see the intangible ways of enhancing financial value by taking better care of stakeholders.

In the early 1990s, the need for ethics was introduced in business schools to reframe the culture of decision-making in for-profit firms.  Then came advocacy of the strategy of corporate social responsibility.  In the early 2000s, the approach to changing the outcomes of capitalism looked at measuring and reporting impacts – the Global Reporting Initiative.  The Sustainability Accounting Standards Board was formed.  Then, the United Nations Sustainable Development Goals were promulgated to induce private firms to devise and deploy business models which both satisfied consumer needs and provided public goods in addition.

In 2019, we were advised that private firms needed a purpose, other than just making a profit.  We heard of conscious capitalism, common good capitalism, inclusive capitalism and the economics of mutuality.

The latest iteration is ESG – environment, society and governance.  What is meant by society and governance is none too specific.

What, then, is the role of ESG investing and reporting?  Please help us understand what is going on.

To register, please email jed@cauxroundtable.net.

The event is free and will last about an hour.

June Pegasus Now Available!

Here’s the June edition of Pegasus.

In this issue, we include an article on opportunity costs and another on recentering moral capitalism.

We also run the MBA Oath, which was founded in 2009 in the aftermath of the financial crisis by graduates of the Harvard Business School to be a Hippocratic Oath for managers.

I would be most interested in your thoughts and feedback.

Technology and the End of Climate Change

My optimism that technology can save us from disastrous climate change (just as it gave us the run up to potentially disastrous climate change) is rewarded when I run across reports of constructive innovations.

A Swedish steelmaker, SSAB, is building a plant that a year ago refined iron ore for the production of steel with the emission of water vapor.  Oxygen atoms must be stripped from iron ore to get iron.  Then, iron is transformed into steel.  SSAB’s new plant uses hydrogen instead of CO2 heavy coke, hydrogen separated from water by renewable energy.  Then, the hydrogen is heated to about 1,600 degrees Fahrenheit and injected into a furnace containing iron ore pellets.  The hydrogen combines with water in the iron ore to form water vapor, leaving behind “sponge” iron. The “sponge” iron is melted with recycled scrap to make steel.

The traditional steel making process produces 8% of the world’s CO2 emissions.  SSAB proposes to use electric furnaces to turn iron into steel.

Secondly, there is a systemic problem with electricity transmission grids moving green electricity.  The grids use alternating current, which must oscillate between 50HZ and 60HZ. With fossil fuels and nuclear power maintaining that stable oscillation by the inertia of the generating turbans of older plants.  With wind and solar power, there is no or too little inertia in the grid.  So, flywheels need to be added to the grid to provide the needed inertia.

In Scotland, a new plant has been built housing two giant flywheels, each of which weighs 194 tons and rotates 500 times a minute.  But existing fossil fuel stations could be repurposed to house flywheels and generate inertia for the grid.

Thirdly, researchers at MIT have soaked an order-eating clay used in cat litter with a copper solution.  The resulting compound can capture methane from the air and convert it to CO2, which is a less harmful greenhouse gas.  Devices containing this helpful compound can be put in the vents of coal mines and cattle barns to absorb methane.

If methane emissions were to be reduced by 45% by 2030, projected warming would be reduced by ½ a degree Celsius by 2100.

Another clay, zeolite, has tiny pores which permit it to function as a filter for methane.

Fourth, Alphabet (Google), Meta, Shopify and Stripe and the sustainability practice of McKinsey have pledged $925 million over nine years to buy technology which would remove CO2 from the atmosphere.  It is estimated that humanity needs to remove 6 billion tons of CO2 a year from our atmosphere by 2050.

What Hath God Wrought? Capitalism Contributes to Cultural Decadence and the Atrophy of Social Capital

The first message sent by the new technology of the telegraph in May 1844 was “What hath God wrought?”  The text was a bit misleading because an American had invented the telegraph and the U.S. Congress had paid for construction of the first telegraph line from Washington, D.C. to Baltimore, Maryland.  Neither Samuel Morse, nor the Congress, had much divinity to speak of.

But apparently, Morse’s “message” was of deeper meaning.  He took the question from the book of Hebrews in the Bible referring to God’s plan for the Hebrew people to achieve greatness in a land reserved for them.  I think Morse was not only referring to prospects for his own native land, but to God’s plan to have humanity invent new technologies in his creation.

Now, when we contemplate the impacts of social media, should we again praise God for what we have done to ourselves?  Is social media part of a loving and gracious God’s plan for humanity? Or maybe it’s a plan of the jealous God of the Old Testament who takes care in his own ways of the recalcitrant among us who “walk not in his ways?”  Who knows for sure?

Reid Hoffman, co-founder of LinkedIn, recently wrote an encomium to his invention in the Wall Street Journal.  His case is: “Today’s young people haven’t been ruined by social media. They’ve been equipped to unleash the power of a new technological era.”

He complains about the narrative that social media has turned them “into entitled narcissists, hopelessly distracted by superficial and trivial concerns.”  He then cites a 2018 Pew survey that found members of Gen Z valuing social media as “a key tool to connecting and maintaining relationships, being creative and learning more about the world, keeping them in touch with their friend ‘feelings.’”

Hoffman finds the Gen Z cohort living lives characterized by participation and community.

He also touts the value of growing up as a “we” and not an “I’ because careers today are all about the team, not the individual.  The individual, more and more, counts for less and less.

No wonder young people are more and more anxious and depressed.  They, themselves, don’t matter all that much.  Without safe spaces provided by “community,” their personal lives have little purpose and less meaning.  Their lot is not to find vocations, but to slog away as dependent cogs seeking recognition from the machine and always vulnerable to cancelation by the mob action of others.

In short, these network natives have little sense of personal agency.  That’s God’s plan for humanity?

But Hoffman believes that “adaptability is the new stability,” so that personal and professional networks are essential to developing that adaptability.

On the other hand, Jonathan Haidt gave us a very different take in the May issue of The Atlantic. His commentary offers as its thesis, “How social media dissolved the mortar of society and made America stupid.”

Haidt claims that Americans are disoriented, cut off from one another and from the past, unable to find common truth.  Haidt observes that users of social media learned how to present themselves as a brand, not as a person, putting on performances designed to spruce up their brand appeal.  Brand to brand relationships are not friendships, nor do they build trust in others, a form of social capital most needed in democracies.

Social media became a blood sport, a game of likes and clicks.  Thousands of unknowable strangers lifted you to fame or buried you in ignominy.  The new social game encouraged dishonesty and mob dynamics.

Haidt is of the opinion that social media has magnified and weaponized the frivolous.  He reports that, according to a recent Edelman Trust Barometer, people living under the autocracies of China and the UAE have more trust in their institutions than do Americans, Brits and South Koreans.

He notes that when people lose trust in institutions, they lose trust in the narratives told by those institutions.

He quotes Martin Gurri saying that the digital revolution has fragmented the public and “it’s basically mutually hostile.  It’s mostly people yelling at each other and living in bubbles of one sort or another.”  It is a discourse regime where stage performance crushes competence and “nothing really means anything anymore – at least in a way that is durable and on which people widely agree.”

In other words, those communities touted by Reid Hoffman are not wholesome and healthy expressions of social capital, but rather, are toxic and insidiously corrosive of human commitment to the common good.

Social media has given more power and voice to the extremes, while reducing the power and voice of the moderate middle.  The online world of networking has allowed, Haidt claims, a small number of aggressive people (“jerks,” he calls them) to attack a much larger set of victims.  This may result because non-jerks are easily turned off and drop out, leaving the stage to the jerks.

But people who try to silence or intimidate their critics become more stupid in the process.

Social media has privileged confirmation bias – selecting to heed those who think as you do – which is the most pervasive obstacle to good thinking in people.

Haidt alleges that after 2010, American institutions got stupider en masse “because social media instilled in their members a chronic fear” of getting attacked and belittled or worse.  “Participants in our institutions began self-censoring to an unhealthy degree, holding back critiques of policies and ideas… that they believed to be ill-supported or wrong.”  In short, the communications technology made everyone more stupid.

It was a Gresham’s law at work – stupid people drive away smarter ones.  Thus, has technology created a “stupefying” process.

A third recent article which bears on our assessment of the goods and bads – the net impacts – of social media was written by Arthur Brooks in the March issue of The Atlantic.  He looks at our innate need for self-affirmation – satisfaction with our lives.  As a living system, our body tries to maintain stable conditions, avoiding extremes.  This is called homeostasis.  When we experience a shock – alcohol, drugs, emotions – our brains work quickly to get us back to the status-quo ante.

So, when we experience a lift from, say, success, our brain puts us back in our pre-happy state and so we act to get that happy feeling once again.  This is called the hedonic treadmill.  Once our sense of self-worth turns not on our inner convictions, but on what others do or don’t do for us, on externals, like money or position, Brooks says we will run from small victory to small victory, but never get “no satisfaction,” as Mick Jagger famously complained in song.  Without internalizing the insights of the Stoics and the Buddha, our race through life is, as Schopenhauer said, like drinking seawater; the more we drink, the thirstier we become.  And the same is true of fame.

How do we link this struggle against homeostasis with social media?  When we see ourselves only as others see us, we have become objects, no longer in control of our satisfactions, always needing the next hit of reassurance, the sense of power over others, validation of ourselves from submission to their norms and tropes.  Social media attaches us to others dysfunctionally and so triggers a need for more and more exposure to seeking what we are attached to.  This is the state social media puts us in if we do not defend ourselves from within using our moral sense and good conscience.

Brooks goes on to contrast haves with wants.  He argues that while we can never have enough, we can manage our wants and so slow the pace of wanting to have more and more.  He advises that the sources of happiness are intrinsic – “They come from within and revolve around love, relationships and deep purpose.”

There is very little of that on social media.

So, did God plan for us to have social media or have we presumptuously built ourselves a tower of Babel which will end up leaving us divided and without community?

Virtue in Chains

Marcus Tullius Cicero was a remarkable jurist and student of the moral sense. But in his time, his Roman Republic was rotting from within.  Executed on orders of Mark Antony, Cicero lived until the death throes of his beloved republic.

Once, however, he – without knowing it – put his finger on the disease which was eating away at the life force sustaining Republicanism – the culture which valued and sustained a res publica – a “common thing.”

This month of June in 59 BC, 2,081 years ago, Cicero wrote a letter to his friend, Atticus.

Atticus, as I recall, was out of Rome in Greece on a business trip.  The triumvirate of Crassus, Pompey and Julius Caesar was in power unconstitutionally.  Crassus allegedly fixed elections and bribed juries.  Pompey had legions loyal to his person.  Caesar had smarts.

Cicero wrote: “We are held down on all sides.  We don’t object any longer to the loss of our freedom. … All with one accord groan of the present state of affairs, yet no one does or says a thing to better it.”  The only one to speak or offer open opposition is a young Curio.

All this, wrote Cicero, dolor est maior, cum videas civitatis voluntatem solutam, virtutem adligatam: “only makes sadness the greater for we see that the will of the community is not tied down, its virtue is in chains.”

Whenever virtue is in chains, the state does not belong to citizens, but to those who dictate the terms and conditions of life.

That is the way some years ago, the Caux Round Table took for its motto the Latin phrase – Virtue is not Chained:

Unilever, Aristotle, Maslow and Moral Capitalism

A recent story in the Wall Street Journal reported that Unilever is associating its product Hellmann’s mayonnaise (full disclosure: Hoa and I buy Hellmann’s) with a mission to curb food waste.

For example, in the post-industrial consumer economy of the U.S., each year, 108 billion pounds of food is wasted.  That equates to 130 billion meals and more than $408 billion in food thrown away each year.  Shockingly, nearly 40% of all food in America is wasted.

This follows a “brands with purpose” business strategy adopted by Unilever CEO, Alan Jope.

Some resist this strategy of associating virtue with the products and services provided by capitalism on the grounds that companies should not go “woke” and attempt to impose political, social or cultural outcomes in free societies.  Consumers, it is said, should have the right to follow their own values in the way they spend their money.

But as I argued almost 20 years ago in my book, Moral Capitalism, the values of capitalism come from consumers, from buyers, not suppliers.  Consumers, on the whole and in sub-markets, determine the outcomes of capitalism.  If no one wants a product or a service, any company planning to supply it will quickly run into market failure.  Investors and lenders will only fund such a profitless company for so long, unless they look at it as a charity meeting some deserving need, like a church or a homeless shelter and become donors.

Now, in ethics, Aristotle described happiness as a combination of active virtue and having sufficient material goods.  Thus, for Aristotle, a consumer of mayonnaise who wants to act virtuously, while selfishly enjoying the taste and other sensible physical properties of the concoction, is seeking personal happiness.  Such consumers can use their money freely in the marketplace for food to realize, on their own, their personal understanding of happiness.

The modern psychologist, Abraham Maslow, provides an alternative understanding of why Unilever’s brand with purpose strategy is a sound business model.  Maslow has a different, but rather similar take on happiness than Aristotle.

Maslow described individuals as seeking various kinds of happiness, from the most material and mundane to the most abstract and intangible.  He also proposed that people first seek to satisfy basic needs and then proceed to reach out for more and more intangible forms of  “the good,” as Aristotle would say.

Maslow’s famous hierarchy of human satisfactions is:

From my point of view, Alan Jope is selling in one jar of mayonnaise a product that 1) satisfies a basic need of food, but also 2) provides the purchaser with an opportunity to experience self-actualization and 3) perhaps also meet esteem needs in being appreciated by others who worry over food waste and belonging needs to be part of a cultural community which also worries over food waste.

Thus, both Unilever’s strategy to do “good,” as their customers are now more willing to purchase participation in bringing about such good and the proposal that companies should have a “purpose” over and above profit, shows capitalism evolving along the lines proposed by Maslow – from meeting basic needs to more and more selling opportunities to meet psychological and self-fulfillment needs.

I predict that the market, as driven by customers, will sort out those companies that can meet real needs that customers are willing to pay for satisfying and those that fail to produce goods and services for which there is no demand.

It should come as no surprise that, with the astounding success of capitalism over the last 300 years in creating wealth, humanity today can enjoy living where, more and more, psychological needs and self-fulfillment needs are achievable.  Wealth has enabled so many to meet their basic needs so that they can now aspire to meeting needs higher on Maslow’s hierarchy.  Thus, it is only natural that the forces of capitalism – demand and supply – are now focused more and more on helping us meet those more abstract needs.

But when business seeks to meet psychological and self-fulfillment needs, it begins to trespass into the social spheres of culture and politics, which are contentious, as different people value different kinds of psychological well-being and have different ideas about what self-fulfillment is all about.  What I insist is good for me may be anathema to you, so do I get to cancel you or do you get to cancel me?  Moreover, who between us should be the guide to best business practices?

The Person and the Office are Not One and the Same

I recently ran across a saying of American President Harry Truman which I had never seen before, but which goes to the moral core of the Caux Round Table’s Principles for Government.

Our foundational principle for moral government is that public office is a public trust.  No trust gives ownership, personal dominion to be willful, arbitrary or capricious over the powers and assets held in trust.

President Truman once said to a reporter: “Two persons are sitting at this desk.  One is Harry Truman and the other is President of the United States and I have to be sure that Harry Truman remembers on all occasions that the President is there too.”

Checks and Balances: 50 Years after Watergate – Tuesday, June 28

Please join us for an in-person round table at 9:00 am on Tuesday, June 28, at Landmark Center to consider the state of our constitutional republic.  Democrats in the U.S. House of Representatives allege an unconstitutional insurrection occurred on January 6, 2021; Dinesh D’Souza alleges in his new documentary, 2,000 Mules, an unconstitutional stuffing of ballot boxes funded by plutocrats to steal the presidency in 2020.

Fifty years ago, the break-in at the Democratic National Committee headquarters by agents of the executive branch took place on June 17.  As a result, President Nixon resigned from office after the constitutional process of impeachment for abuse of power exposed his personal involvement in a cover-up of that burglary.  Was that extra-constitutional political act of seeking electoral advantage the beginning of the erosion of our constitutional democracy?

The issues we face today were clearly and precisely foreseen in the Federalist Papers.

Madison wrote that a well-constructed republic has a “tendency to break and control the violence of faction.”  Faction, he said, introduces into public councils “instability, injustice and confusion.”  Sounds like the USA of our time.

Federalist 51 advises that a republic must be so contrived that the interior structure of the government and its several constituent parts may, by their mutual relations, be the means of keeping each other in their proper places.  “Ambition must be made to counteract ambition;” “… the constant aim is to divide and arrange the several offices in such a manner as that each may be a check on the other – that the private interest of every individual may be a sentinel over the public rights.”

“If men were angels, no government would be necessary.”

When a jury in Washington, D.C. condones lying to the Federal Bureau of Investigation, can federal courts ply their proper role in providing a check on the police power of the federal government?  If law is not enforced, of what use is a constitution to check the corrupting vice and destructive power of faction?

In his written Farewell Address to the American people, Washington wrote:

“All obstructions to the execution of the laws, all combinations and associations under whatever plausible character with the real design to direct, control, counteract or awe the regular deliberation and action of the constituted authorities, are destructive of this fundamental principle and of fatal tendency.  They serve to organize faction; to give it an artificial and extraordinary force; to put in the place of the delegated will of the nation the will of a party, often a small but artful and enterprising minority of the community.

However, combinations or associations of the above description may now and then answer popular ends, they are likely, in the course of time and things, to become potent engines by which cunning, ambitious and unprincipled men will be enabled to subvert the power of the people and to usurp for themselves the reins of government, destroying afterwards the very engines which have lifted them to unjust dominion.

Let me now take a more comprehensive view and warn you in the most solemn manner against the baneful effects of the spirit of party, generally.

It is substantially true that virtue or morality is a necessary spring of popular government.”

So, right now, in our time, what is the role for morality in our republic?  Or rather, whose morality?

Cost to attend is $10 per person.

A light breakfast will be served beginning at 8:30 am.

To register, please email Jed at jed@cauxroundtable.net.

The event will last about an hour and a half.

With Regrets – Cancellation of Global Dialogue at Mountain House

We have been informed that accommodations at Mountain House in Caux, Switzerland this coming July 30 and 31 will be, shall I say, spartan at best.

Other meetings in July have been cancelled so that staff will not be hired. Reception support, meal preparation and cleaning will be provided on a minimal acceptable basis.

After discussion with our board, we have decided to cancel our planned Global Dialogue. I am concerned that participants will inconvenience themselves with travel and time, but not experience Mountain House at its best. Support for last minute travel issues, etc., as they arise, may be lacking as fully needed by our participants.

Regretfully and with apologies, therefore, we are cancelling this year’s Global Dialogue at Mountain House.

I am exploring options for convening a Global Dialogue yet this fall in another venue in Europe.