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Moral Capitalism: Reconciling Private Interest with the Public Good Hardcover – October, 2003
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Excerpt. © Reprinted by permission. All rights reserved.
The moral character of an individual shapes the degree to which higher levels of moral value are imposed on lower levels of action. If a person seeks to be happy in their work, they need to consider what values govern their value pyramid. Sustainable profitability of a business requires common sense blending of social responsibility and service of customer needs. Virtue and interest must go together for profit maximization.
The value pyramid gives rise to two versions of capitalism: Moral Capitalism where social values of responsibility prevail and Brute Capitalism where only narrowly focused ego needs set goals and standards. Moral Capitalism permits win-win solutions, while Brute Capitalism promotes win-lose outcomes. Moral Capitalism is the form of capitalism Adam Smith advocated in The Wealth of Nations; Brute Capitalism is often called Social Darwinism for validating the survival of only the fittest.
The Caux Round Table (CRT) Principles for Business set standards for Moral Capitalism. These Principles blend the Japanese ethic of Kyosei ("human dignity" from Catholic theology on social justice) and American Protestant notions of stewardship. The CRT Principles describe 7 principles and then define certain responsibilities towards 6 stakeholder groups: consumers, employees, owners and investors, suppliers, competitors, and communities.
The CRT Principles can be decentralized into management benchmarks and objectives, permitting continuous improvement in a companys level of social responsibility. The CRT obligations for each stakeholder group are as follows:
Consumers. The moral values of capitalism are brought to the markets by consumers. Businesses create wealth by meeting the needs of consumers
Employees. Employees should be accepted as agents participating in a fiduciary relationship of mutual respect and obligation, not as mere sellers of labor
Owners and Investors. Moral Capitalism argues for the advantages of disclosure, honest and good corporate governance
Suppliers. Moral Capitalism builds on the learning of the Total Quality Movement to advocate relationship ties with suppliers rather than one-time purchases based on price alone
Competitors. Competition in moral capitalism uses quality and innovation rather than price for business success
Communities. Business needs to pay a return on social capital in order to survive and to maximize its profits
Moral Capitalism creates wealth and ends poverty. Social capital must be in place for business to perform its social office. Government has the responsibility in the first place to build reserves of social capital. Business, as it grows, must then add to those reserves. The CRT presents Principles for Responsible Government as a companion guide for governments, which will foster conditions in which companies can prosper and be socially responsible using the CRT Principles for Business.
In Moral Capitalism, business leadership demands the assertion of values. Those who seek to lead must first go inside themselves to find the values that they will place atop their personal values pyramid. Selfish values will not do; the search for meaning does not stop with the self, but transcends the self, invoking each persons moral sense. Moral character, not position, is the foundation of leadership. Then, leaders must develop intellectual skills of judgment and application of principles to factual situations in the manner of law judges. Leaders build Moral Capitalism and prevent the spread of Brute Capitalism.
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