Abandon Text!

W. H. Auden once said: "Poems are not finished; they are abandoned." I have been abandoning writing projects for many years, since only the pressure of deadline and high expectations ever got me to finish, or even start, anything of merit. This blog is an attempt to create a more consistent, self-directed writing habit. Hopefully a direction and voice will emerge.

Wednesday, October 04, 2006

Free market ethics

I am a big fan of our capitalistic, free-market economic system. At least, I believe it is the best of all options when it comes to intelligently directing resources and correctly valuing all things. Markets are savvy exchanges of vast amounts of information, flexible and collective and (for the most part) quite rational. Still, it has its flaws . . . the biggest of which is a paucity of true ethics.

Many people cite the ever-increasing number of business scandals as evidence that capital has no morality. But the WorldComs and Enrons and Tycos don't bother me too much, because most people (especially in business) still recognize that what those executives did was wrong. What really bugs me is when our very notion of right and wrong starts to slide, and ethical lapses clothe themselves in the market language of competition.

Take negotiations, for instance. In the idealized vision of free markets, two free parties will negotiate with each other over a transaction, and if both parties freely agree to the terms of a particular arrangement, then those negotiations are termed "fair." That sounds good on paper, but it quickly devolves into a hypercompetitive aggressive stance that says, in effect, "What's fair is what I can get away with." Businesses routinely beat up vendors over their prices, getting quotes from multiple sources and then using the best price from the deepest discounter to pummel a better deal out of the others.

That is the way of markets. I suppose it forces everyone into the most realistic price. But just think about that mentality: "What's fair is what I can get away with." What was fair in the context of negotiations suddenly gets shady when applied to other realms. "I probably won't get audited on this deduction, so I'll go ahead and take it. That's how the game is played, right?" "Oh, those employee will never notice that we took a little off the top of the pension fund." "Well, I did take an obscene bonus from a company that is floundering and back-dated my stock options to boot, but hey, the board approved the package."

In only a few steps, the ethic of competitive markets becomes . . . no ethic at all. "What's fair is what I can get away with." In other words, "Cheat . . . but don't get caught."

This mentality has pervaded all of the business world, not merely the ranks of corporate CEOs drunk with their own power. I see it especially when it comes to Accounts Receivable. It's the most basic part of doing business: getting paid. But, oh, the tangled webs we weave to postpone paying our bills. We're still stuck with this quaint system of "terms," where we give people stuff and then don't expect to get paid for a month. (That might have made sense fifty years ago, but in an age of computers and modern banking, it's silly.) So businesses routinely play this little passive-aggressive game called "collections": "Gee, that invoice? I don't think we ever received that invoice . . . why don't you send it again." Some organizations don't even think about paying a bill until someone asks them point-blank for the money. And if no one comes calling to collect? "Oh, I guess we don't have to pay that bill." It's like the debt never existed.

Occasionally, with fits and starts, businesses awaken to another way to think about things. There is very serious talk about how "our people make the difference," and how we need to "delight the customer." Naked capitalism is capable of seeing the benefits of true service and true concern for the other guy. But we could still use a lot more of it.



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