Given at Green Templeton College, Oxford on 5th June 2015, on the 50th anniversary of management studies in Oxford.
Management: challenges and responsibilities in a changing world
It is an honour and a privilege to have been invited here today, at this important event marking 50 years of management studies in Oxford.
You may have been wondering why I was asked to give this lecture. I have been wondering why I accepted! But I am delighted to be here. We are at a fascinating moment when there is a striking and growing interest in the business world in what faith and philosophical traditions can offer to 21st century management. In the next twenty minutes or so, by drawing on that source of wisdom, I would like to take a look with you at some of the key challenges faced by managers today, at some of the underlying issues, and hint at some ways forward for dealing with them.
Those of you involved as students, teachers and researchers in management spend a lot of time thinking about those challenges and what to do to support managers in responding to them in new, effective and innovative ways. However, there is a level of analysis that is mentioned less often in academic papers and business school curricula, but which is attracting increasing recognition as crucial. This is the level of fundamental existential questions, those which are at the same time the most important and the most difficult to answer. They include questions such as: What is business for? Why do we go to work? What are the good life and the good society? How does business contribute to them? This type of question might have seemed beyond the ambit of management specialists until very recently, but after the effects of the financial crisis and the need to rethink things from the ground up, these questions are no longer the preserve of erudite philosophers or Cardinals – they are very much the stuff of the work of managers and business schools.
In 2009, the Pope at that time, Benedict XVI, published a major document entitled ‘Caritas in Veritate’. Its focus was human development. It had been due two years earlier but was delayed in order to take into account the effects of the financial crisis and to reflect on them. When it was published, I was contacted by Brian Griffiths, Vice-Chairman of Goldman Sachs, who said to me: ‘This is the best analysis of the financial crisis I have read. You should do something about it!’ That phone call was the beginnings of an engagement and dialogue with the business world in the UK of which I have been part in the years since then. It was this that gave the impetus to the initiative now known as the ‘Blueprint for Better Business’. Drawing on that experience, and the document itself, I would like to focus on three of the key insights that ‘Caritas in Veritate’ gave us into the challenges facing business and society today.
Firstly, a brief word about the critical issues that it identified for managers: inequality, corruption, overly restrictive protection of intellectual property, competition not only between businesses but also between states in a kind of “race to the bottom” embracing significant reductions in welfare provision, the collapse of earlier forms of solidarity between working people and the rise in their exploitation, the loss of cultural diversity in the face of global patterns of consumption based on the promotion of global lifestyles. While much of the encyclical praises positive developments in wealth creation, the Pope did not shy away from pointing out clearly these negative aspects. For instance, in regard to inequality, he noted that ‘the world's wealth is growing in absolute terms, but inequalities are on the increase. In rich countries, new sectors of society are succumbing to poverty and new forms of poverty are emerging’ (n. 22).
Global inequalities have not improved much since 2009. Closer to home, the Office for National Statistics has recently showed that more than a third of the UK population dipped below the poverty line for more than a year between 2010 and 2013, even if the UK has a better record on levels of ‘persistent poverty’ than many other countries. These are some of the challenges.
Secondly, Caritas in Veritate calls for a ‘further and deeper reflection on the meaning of the economy and its goals’ (n. 32). This is where the deep questions I mentioned above need to be answered. Sometimes people involved in business seem to want to avoid these questions, and treat their businesses as if they were machines or technically driven artefacts, instead of complex networks of human beings collaborating together towards the realization of shared goals. On the one hand, this is understandable – we all try to make life as simple as possible. On the other, however, this is a response which seems driven more by ideological concerns – what we think we should do, given our theories and our way of seeing the world – than by the reality of the situations we face. I will say more about this in a moment.
Thirdly, the Pope makes a stunning claim that has perplexed a lot of business people and economists: ‘The great challenge before us, accentuated by the problems of development in this global era and made even more urgent by the economic and financial crisis, is to demonstrate, in thinking and behaviour, not only that traditional principles of social ethics like transparency, honesty and responsibility cannot be ignored or attenuated, but also that in commercial relationships the principle of gratuitousness and the logic of gift as an expression of fraternity can and must find their place within normal economic activity. This is a human demand at the present time, but it is also demanded by economic logic.’ (n. 36)
It is revealing that this text caused so much consternation. I would argue that this insight is fundamental to addressing the financial crisis at its root. The text argues that the ‘logic of gift’, the importance of ‘gratuitousness’, (which we could also call generosity, giving freely without necessarily expecting a return, or love and kindness towards others) is not only a ‘human demand’ but also a demand of ‘economic logic’.
What the Pope is hinting at here is that our current way of thinking about the human person in economics damages the economic results we obtain, and was partly responsible for the crisis we are in, because it ignores the aspect of human existence that is generous, that is kind for its own sake, precisely in economic dealings. He does not say that we do not need competition or market mechanisms (the rest of the encyclical makes it very clear that he sees the necessity of both); what he is saying is that we need to recognise another, complementary dimension to human identity and action in economics: not only competition, but also cooperation: not only trade-offs between individual objectives but also shared achievement of shared objectives; not only achieving my own personal good, but also working together with others to produce our common good. This is the insight at the root of the Blueprint for Better Business initiative and the reason why it is attracting interest.
In order to unpack this a little further, let me digress for a moment and say a few words about an important article with which you may well be familiar, published in 2005 by Sumantra Ghoshal, ‘Bad Management Theories are Destroying Good Management Practices’
Ghoshal argued that through a combination of a kind of ‘pseudo-science’ and a negative view of the human person, management theorists, wherever their theories actually influenced practice, had succeeded in creating the very opportunistic, greedy, untrustworthy people that their theories were supposed to control. Ghoshal makes the crucial point that people are not like atoms in a gas; their behaviour is affected by the way they are treated by their managers, which in turn is influenced by the theories these managers use to guide their behaviour. If managers think that their people are likely to take advantage of any situation for their own benefit, against the good of the firm or the shareholders, they will tend to treat their staff with suspicion, thus generating that very untrustworthy behaviour they were trying to suppress. Ghoshal goes on to say that by propagating ideologically inspired amoral theories, business schools have actively removed from their students any sense of moral responsibility.
Of course, this conference today is witness to the fact that he can’t have had Oxford in mind!
Ghoshal tragically died shortly before this article was published (it was finished by his son and some colleagues). In it he pointed to what is needed. We need, he said in a lovely phrase, a “scholarship of common sense”, with a realistic anthropology as its starting point. Ghoshal and Pope Benedict agree on the central point at issue here: at the very heart of the problem is the fundamental question of what it is and means to be human, and the urgent need to articulate a more realistic and comprehensive view.
What might this more realistic view be? In commenting on Pope Benedict’s text, we have started to outline it. However, at the present time the view we actually take starts (and often ends) with the fact that we are individuals. As embodied individual beings, fixed in time and space, we constantly seek to satisfy our individual needs and desires, including the ‘higher’ desires for goods like prestige, status and power. In this effort we are in competition with others, especially when the goods are in short supply. Of course this stimulates us to do better and, in itself, is good and important. But it leads us, logically, to assume that relationships with others are also aimed at satisfying individual goals. Relationships, therefore are best seen as contracts and competing interests, constrained not only by custom but also by law and regulation.
A more realistic view, with deep roots in Greek philosophy and the Christian tradition, does not deny the place of self-interest and individuality, or indeed the importance of law and regulation. But it recognizes that there is another dimension that operates within every person: our need and desire for relationships of meaning and belonging with others. We grow in freedom through such relationships which help us achieve our potential. In doing so we create with others ‘common goods’, such as friendship and trust, which only come into existence through the commitments we make one to another. And these are truly ‘common goods’. They are not divisible or owned by anyone.
Much modern research confirms what the wisdom traditions of old have taught. Some argue that cooperation is bred into us, such that Richard Dawkins, in the forward to the 30th anniversary edition of ‘The Selfish Gene’ admitted that in the light of more modern research a good alternative title for the book would have been ‘The Cooperative Gene’.
These twin aspects of our being human, being-an-individual and being-in-relation, operate in all aspects of our lives, both at home and at work, with friends and with customers. Just as the simplest explanation we can give of light is that it is both a wave and a particle, since we cannot explain the results we get from experiments with light without adopting this ‘wave-particle duality’, so we human beings also need to be modelled as a duality - we are all both relational and individual.
This view of the human person - linking the individual with the relational, the objective with the subjective good, technical competence with moral judgement - can provide a more realistic and more effective basis for our management theory. There is an important opportunity here for universities and business schools. And this is the anthropology at the core of the ‘Blueprint for Better Business’, now an independent movement supported by a good number of very experienced managers as helpful in re-directing management after the financial crisis. It certainly has my full support.
In conclusion, let us recall the famous line by T. S. Eliot: ‘the greatest treason is to do the right thing for the wrong reason’. This phrase brings us back to the meaning of what we do in management. If we could really take on board that management and money-making are there to promote human dignity and serve not only ‘common goods’ but also the wider and true ‘common good’, we would start doing what we need to do as managers (which includes being efficient and effective) ‘for the right reason’. This can only help to rebuild trust between business and society.
It could lead to a transformation as profound as the one wrought by the Benedictines over the first millennium. They managed to change fundamentally the general view of manual work which had been despised in the classical period as something for slaves. Rather, they dignified work, turning it into a source of human development and a form of praise to God. Without this transformation the Industrial Revolution and the massive increase in living standards that it permitted would never have been possible. What could be possible if we could really take on board a view of the human person that allows us to see how cooperation and competition work together, and how the human person is designed to serve the common good in cooperation with others in order to achieve personal goals and goods? Adopting in our theories a more realistic view of the human person could release untold energies and innovations that are unthinkable for those of us caught up in the world of trade-offs between self-interested preference maximisers.
The remarkable public reaction to the pontificate of Pope Francis and his constant encouragement to us to turn away from an “economy that kills” and to recognise our real “vocation” to business, points to the hunger of people in our time for such a change. I hope and pray that the great institutions of this university, whose 50 year tradition of scholarship and leadership we are celebrating today, will play a key part in bringing this new economy into being.
+Cardinal Vincent Nichols