This essay presents an
alternative basis for the modern corporation. Theoretically at least, a company
in line with this new paradigm should be devoid of greed because this foundation is in line with the
notion of natural wealth, which, according to a few notable ancient Greco-Roman
poets, does not incur avarice. I contend, moreover, that this alternative is
fully compatible with the long-term viability of the modern corporation. To the
extent that greed trips over itself, a business built on a paradigm designed to
exclude greed can be expected to have an enhanced viability.
A lot of daylight separates
how the “natural wealth” Greco-Roman poets viewed wealth and how it is typically
thought of today.[i] Cato exemplifies what the poets were so against.
The strongest indication of his avaricious nature is that he wrote that man is
most wonderful when he leaves more behind in his final accounting than he had
inherited at birth.[ii] Wealth,
in other words, is the most important thing. Had Cato simply earned enough
income to meet his daily needs rather than invested his money to amass as much a
surplus as he could, he might be spared the greedy epitaph, for he would have
been closer to the poets’ ideal of natural wealth. Whereas it is limited to
subsistence living, avaricious wealth is without limit because human desire, as
distinct from needs, is limitless. This distinction—between limited and limitless—is vital to grasping the difference between the
maximizing (or satisficing) profit model and one loosely based on natural
wealth. Because such wealth is, strictly speaking, mythic in that it is of such
an age, only the abstracted principle behind the descriptions of natural wealth
can realistically be extracted and applied to a viable alternative model for
the modern corporation. Put another way, our organizational artifacts are of a
very different age than the mythic ideal of the Golden Age.
In their writings, Hesiod,
Ovid, Virgil, Horace and Tibullus wrote the definitive mythic accounts of a
once-golden age followed by successive ages of degradation.[iii] These poets depict a pristine golden age of
abundant food followed by successively degraded ages of injustice, avarice and
struggle. Although the golden age is mythic, the latter ages reflect the urban
moral corruption of the poets’ own day. The mythic ideal was for the Greeks and
Romans the life under Knonos (Saturn) during the Golden Age.[iv] The
Greeks tended to look back to a state of primal innocence. Plato, for instance,
looked to the virtues of the Stone Age and Xenophon looked to the virtues of
the early Persians. The Cynics sought a return to the simple life as against
the social conventions of their time.[v] Such utopias were less a sign of confidence
in the future than of dissatisfaction with the present.
The gradual accumulation of
wealth in the early Roman Republic had brought about such ostentatious display
and luxury that the Roman poets sought the simplicity of an earlier agrarian
age.[vi] In
the Roman culture of the poets’ own day, greed was thought to teach “arrogance,
cruelty, neglect of the gods, and the belief that everything could be bought
and sold.”[vii]
Indeed, the word mercator, which is the root for merchant/trader,
appears almost as a term of abuse during the time of the poets.[viii]
For the Greek poets too, dissatisfaction with their time led them to contrast
their own day with a golden age or lost paradise; that such a paradise could
return in their cyclic framework did not overshadow their sense of basic
pessimism.[ix] Nevertheless, that such an ideal—albeit
mythic in nature—was thought to be possible after their age suggests that we
can apply it to our modern world.[x]
The Golden Age is thus not like the Garden of Eden, for instance, which is an
ideal of another realm that will not recur in another cycle.
In Works and Days, Hesiod distinguishes five ages from the beginning
of mankind, with the first being golden and the last—that of his own day—being
the Iron Age, the most degraded of all the ages. The contrast here is between
living a simple agrarian life and the urban licentiousness of luxury borne of
wealth accumulated in excess of subsistence-level consumption.
The golden race “lived as if
they were gods, their hearts free from all sorrow, by themselves, and without
hard work or pain.”[xi] Because the people were free from toil and
grief, it seems reasonable to conclude that the golden race did not seek to
accumulate, or stockpile, wealth for themselves beyond their daily consumption
needs. Perhaps this is so because they had bountiful food, for “the fruitful
grainland yielded its harvest to them of its own accord; this was great and
abundant, while they at their pleasure quietly looked after their works.”[xii] The
people looked after their own works, such as a small herd of livestock,
suggesting that they did not produce and distribute goods to others.[xiii]
Hesiod states that pure
spirits roamed the earth during the golden age, bestowing wealth on the golden
race.[xiv] Such
a notion of wealth is in stark contrast to that of the modern corporation. Indeed, there is no mention of merchants or
firms existing in that ideal because the golden race could feast from the
fruits of Nature directly. “Pure spirits”
acted as the distributors, and, according to Hesiod, the people looked after
their own works, such as a small herd of livestock, suggesting that they did
not produce and distribute goods to others.[xv] It is not the sort of work that could become
normative for a modern industrial economy.
Several Roman poets, such as
Horace and Virgil, portray the golden age more realistically, however, akin to
a primitive agricultural life. The Roman view of a Golden Age contains an
idealized depiction of primitive rural life mixed in with the idyllic lost
paradise.[xvi] Qualities of ancestors associated with their
simple lives were alluring as a solution to the social, economic and political
revolution of the late Republic and early Augustan age. Such ancestral
qualities, according to Horace, included “working the family field with his
oxen,” “watching his flocks of bleating sheep,” and “pruning sterile twigs with
his hook.”[xvii] It would seem that natural wealth, like
corporate wealth, is borne of labor. Horace writes in another passage of the
Golden Age, however, as being without labor. “The earth unploughed produces
yearly harvests, and vines unpruned are always in blossom!”[xviii] An uneasy connection exists, therefore, between
the primitive agrarian ideal of yesteryear and the utopia of the lost paradise
wherein Saturn provides for the golden race. The ambiguity can be seen in
Virgil’s work as well.
Smolenaars clears up the
confusion by pointing out that Virgil introduces the description of the
“simple, laborious country life” in the Praise.[xix] This
integration of labor and happiness in the farmer’s life is after the
Golden Age during which Saturn does the work for the golden race.[xx] “Like Aratus’ Dike, Virgil’s Saturn-Kronos,
as ruler of his golden age (aureus), makes the earth produce food for
the idle human beings.”[xxi] Accordingly,
Virgil writes in Ecologue IV that in the Golden Age the vine will not
suffer the pruning-hook or the fields the hoe in the Golden Age.[xxii]
Elsewhere, he mentions grapes upon the unkept briar.[xxiii]
He goes on to explicitly exclude investment and merchants. “The seafarer shall
roam the wave no more, nor ships made merchandise.”[xxiv] Horace, too, views happiness during the
Golden Age as coming from being aloof from business, with no investment at all.[xxv]
Cato would not have been at home in such an age.
Given the absence of labor,
investment, and merchants during the Golden Age, the primitive agricultural
motif only loosely applies. Even if the Golden Age of the Roman poets was an
agricultural world supplied by the gods rather than through human effort, the
Romans viewed the Golden Age as still attainable and realizable, “if only one
abstracts oneself from the extravagance, desires and ambitions of urban life.”[xxvi] Underlying natural wealth is the desire and
ability to walk away from accumulating excessive wealth beyond one’s
consumption needs; checking one’s ambitions, rather than a life without work,
is that which the poets claim is attainable and realizable after the Iron
Age. So, rather than facing an external
constraint in the form of a statute or supply limitation at their consumption
level, the people of the Golden Age naturally cease their accumulating activity
from within. An internal force
must constrain their unlimited desire for more.
The constraining motivation
might be seen in Tibullus’s carefree life of rural poverty without the
concerns associated with accumulated gold or excess cultivated land. That his
life is ‘carefree’ signifies the absence of worries that would arise over
stored up wealth;[xxvii]
whether he labors or not to supply his modest needs is irrelevant here. He wants to avoid the worries that go with
accumulating wealth beyond that which he can consume. He wants to avoid the
anxiety, which comes with ambition, epitomized by too much worry over one’s
accumulated goods. Tibullus would have
felt quite out of place among modern business practitioners.
Besides a lack of worry, a
stance against greed constrains members of the golden race internally. For all of the poets surveyed here, the
endless toil for ever-maximizing accumulations of wealth is to be avoided
because it signifies avarice. It doesn’t matter whether greed is actually
present; the behavior itself is indicative of excessive concern which in turn
attests to greed. It follows that the poets viewed natural wealth in positive
moral terms because did not contain the signs of avarice. Hesiod was
undoubtedly thinking of this sort of natural wealth when he maintains that
“shame goes with poverty” whereas “confidence goes with prosperity”—that with
riches goes “nobility and honor.”[xxviii] It would not be a sort of wealth gained by
greed, because greed brings with it anxiety.
A lack of both anxiety and greed coincide in
natural wealth, owing to its orientation, or limitation, to satisfying
subsistence needs.[xxix]
In Boethius’ Consolation, for
example, “(g)old, money, jewels and clothes are discussed and dismissed: nature
provides what humans need for their sustenance, and everything over and above
that is superfluous.”[xxx] A simple life connotes living within nature’s
means rather than having wealth as an accumulated surplus beyond what is needed
for consumption; the result is happiness or contentment without a hint of greed. In Horace’s Odes, primitive tribesmen are said to live better than rich Romans,
who seek riches by any means and are thus without virtue.[xxxi]
The alien romantic world of easy-going carelessness about possessions is quite
a contrast from wealthy Roman (or modern) materialism, which the poets drew on
in depicting the most decadent stage, the Iron Age.
Unlike natural wealth, wealth in
the Iron Age is infused with greed. Virgil refers to the greed of the Iron Age
as a “lust for gain,” very close to Boethius’ “burning lust to possess.”[xxxii]
Interesting, Augustine refers to his love for God in such terms.[xxxiii]
Boethius portrays greed, which he defines as “the burning lust to possess,” in
terms of “digging up heavy masses of hidden gold and gems longing to remain
hidden, and is thus a feature of the ages past the golden age.”[xxxiv]
Hesiod claims that greedy profit is “a kind of madness,” and that “by greed, a
man’s shameless spirit tramples his sense of honor.”[xxxv] The lust for immediate gratification may be
behind Hesiod’s opposition to greed.[xxxvi]
To quote from the Hymn of Callimachus, “Tyrants may seem happiest of men, but
the poor sleep soundly at night. The man who sets a limit to his ambitions
escapes worry and fear.”[xxxvii]
A limit to desiring more means
a limit to the resulting wealth. In Metamorphoses, Ovid describes the iron race
as suffering not only violence but also the “wicked greed for gain.”[xxxviii]
The resulting wealth is “the spur of wickedness and sin.”[xxxix]
That is to say, the resulting wealth triggers additional madness. Supporting
the close link between Iron Age wealth and greed stressed by Ovid, Boethius and
Virgil, Williams reads Horace as stating that wealth of the Iron Age leads not
to happiness but “simply whets insatiable appetite for wealth.”[xl] Tibullus
believed that accumulating gold and cultivated land causes ‘incessant dread of
the approaching enemy’ and troubled sleep.[xli]
The amount of the wealth (i.e.,
beyond natural wealth) is thus a direct indicator of greed; from the external,
the internal (i.e., motivation) can be inferred. According to Kallet’s study on
Thucydides, the vast accumulation of money, rather than how it is acquired or
used, provoked the natural-wealth poets’ ire and moral condemnation.[xlii]
Plutarch, for instance, ascribes avarice to Crassius not so much from by the
way in which he had acquired his property, but by the size of it.[xliii]
The aristocratic ideal of the poets' own day includes proper means and
honorable ends for wealth.[xliv]
Therefore, the poets did not assume the orientation of modern business ethics,
which focuses on the proper sources and uses of wealth.
Today, the poets’ criticism
would be based on the size of a firm’s earnings and retained earnings relative
to what is needed for the firm to continue (i.e., sustenance) rather than
become wealthier. Managers being hardly carefree, the poets would label them as
greedy, and the surfeit corporate wealth as artificial rather than natural. The
poets would classify both the excessive labor and surplus under the last age,
the Iron Age, where “never by daytime will there be an end to hard work and
pain.”[xlv] By
implication, ceaseless profit-seeking is consistent with the greed of the Iron
Age.
Propertius viewed money, which
is absent in the Golden Age yet the object of such striving in the modern world,
as the problem:
“So you, then, Money, are the cause of our
anguished lives! Through you we travel
an untimely road to death; you furnish cruel nourishment for men’s faults; from
your head have sprung the seeds of woe.”[xlvi]
Given the possibility of
disaster or theft, people of money fear the loss of what they have accumulated.
Money is therefore hardly the sort of wealth that Hesiod praises as giving rise
to confidence. All the angst in companies over money thus attests to wealth
being artificial rather than natural—that is to say, of the Iron rather than
the Golden Age. Part of the rationale for basing the modern corporation on
natural rather than artificial wealth is thus to replace the anxiety and misery
that greed causes with the contentment that is consistent with natural wealth.
Accordingly, I turn now to constructing the alternative model, using ecological
theory to render a natural-wealth basis applicable to modern business.
THE MODERN CORPORATION BASED
ON NATURAL WEALTH AND ECOLOGY
In the Golden Age, nature
provides enough resources such as food to satisfy human daily needs. Wealth is
natural rather than accumulated—there being no need to stockpile because
nature’s bounty is continuous. Put another way, wealth is kept within natural
limits. Plutarch, for instance, describes the “riches that Nature requires” as
being limited and confined within “the compass of their real needs, as within a
circle drawn from a center at a certain distance.”[xlvii]
Accumulating riches beyond what Nature provides intensifies the illness of
greed such that it is “truly blind and deprived of light.”[xlviii]
Because Nature provides for human sustenance, accumulating more would imply desire
for more. The desire, being unlimited, is blind because it is unmoored from the
limited nature of necessities. Put another way, stockpiling knows no upper
bounds, especially if money that does not decay or diminish in its species is
used.
Corporate retained earnings
are accumulations of wealth. Revenue that is not needed to cover expenses goes
into retained earnings. Because Nature does not provide, a portion of the
accumulated wealth is necessary to cover expenses without which the company
would not continue as a viable concern. To distinguish this portion and keep
the retained earnings from surpassing it is, I contend, how the principle of
natural wealth can realistically be applied to the modern corporation. Rather
than being something to be maximized (less dividends), retained earnings is
oriented to an equilibrium level. Corporate strategy under the premise of
natural wealth rendered realistic is to be geared to reaching an equilibrium
level of yearly revenue—enough to meet the firm’s consumption-needs for the
year but no more. Equilibrium rather
than more is the basis of this
alternative model.
Because the golden race of the
Golden Age maintains itself within a sort of natural equilibrium, individuals
taking only what they need to meet their daily consumption-needs (because
nature can be relied on), the metaphor of an ecosystem is a useful way to
understand the alternative model of the modern corporation, especially as we
have a natural inclination to construct our relationship with the surrounding
world as a social reality in partially biological and ecological terms.[xlix]
More to the point, an organization can be thought of as an ecological system,
wherein forces being maximized press against various internal
constraints that protect the viability of the organization itself. Simply by
virtue of being a system, an organization acts as a constraint on forces
within.
Ecological sustainability can
explain how an organization can exist and flourish in the long run.[l] The
ecosystem feature is the requirement that otherwise maximizing forces in an
organization are legitimate up until the point that they bump up against the
constraining force of the organization itself.
A company under ecological principles could pursue and accumulate
profits only to a certain point, rather than without limit. Bring in the
natural-wealth principle realistically applied and the upper bound is that
which corresponds with expenses needed to be incurred for the company to
continue. Greed is assumed to be obviated as long as the maximizing forces do
not piece the “ecosystem” constraints that protect the viability of the system
(i.e., the organization itself). Put another way, as long as profit-seeking is
limited to meeting expenses that are necessary for the organization to continue
rather than “grow,” business need not incur or involve greed.
I am not claiming that the
carrying capacity of a business’s natural environment proffers sufficient
constraint, for natural systems can accommodate stockpiling activities in
excess of meeting basic operating needs.[li]
Similarly, being ecologically sustainable—meaning that a firm can survive and
profit in both its economic and natural environments—is not sufficient.[lii]
A tighter constraint is needed to expunge greed because companies can exploit their
natural environments in ways that externalizes (i.e., to third parties) the
costs, while reaping revenue in excess of what is needed to keep the businesses
in business for another year.
Nor can we assume that industry-level
constraints, such as industry self-regulation, and inter-industry pressures are
sufficient. A variety of business
ecosystems, each of which spans several industries, perforate through the
modern world of business. Like its natural counterpart, a business ecosystem
includes interdependent “species” (i.e., industries) and “members” (i.e.,
firms) that evolve in a reciprocal cycle in which changes in one species impact
the process of natural selection for the other species.[liii]
Within a business ecosystem, for instance, firms co-evolve capabilities around
a new innovation. Interdependence, reciprocal cycles, co-evolution, and
ecosystem-stability imply a potentially-constraining web-like structure that
can potentially at least work as a constraint of the firms and even industries
within. However, the accumulating of profit would not necessarily be constrained
to consumption levels. For one thing, industry self-regulation can allow for
quite a bit of “slippage” (i.e., mutually advantageous looking the other way).
Moreover, several business-ecosystems may vie for dominance within a larger
business environment. During such a phase, the constraints on accumulating
activities would presumably decrease.
Therefore, to hold motives maximizing
accumulations down to a level oriented to sustenance-oriented consumption,
constraints more powerful than those represented in the
organization-environment constraints suggested by the ecological theories cited
above are needed. “Ecologizing”
constraints capable of greater tightness in binding maximizing forces back are
necessary such that an equilibrium level of revenue as well as retained
earnings is achieved and maintained.
In the remainder of this
essay, I discuss the ecologizing forces at the business-organization level as
possible constraints on maximizing forces based in efficiency and power,
respectively, inside. The same dynamic can be extended to the
business-ecosystem level, though I do not cover it here. In discussing how
organizational infrastructure can act as a semi-permeable membrane possibly containing
intra-organizational forces that inherently resist being constrained, I draw
heavily on Frederick’s theory on natural corporate management.
Frederick argues that
potentially conflicting clusters of values pertaining to business and society derived
from natural forces operate in businesses as well as between them and their
respective business-environments.[liv]
Each cluster comes out of “life-affecting processes,” and thus has a biological
basis.[lv] He claims that value-clusters pertaining to
economy, power and technology exist within business, while ecologizing values
are external to the firm, being based in the broader economic-natural
ecosystem.[lvi] I submit that an organization itself can act
as an ecologizing force potentially constraining otherwise maximizing
power-aggrandizing and economizing (i.e., efficiency) forces (see figure 1).
Economizing involves prudent actions that produce a net
excess of outputs from a given amount of resources.[lvii]
That is, economizing is oriented to “acting prudently and efficiently in using
energy and matter, thus economizing, conserving, and sustaining those resources
required for survival and material flourishing."[lviii]
This value-cluster is oriented to maximizing the survival capability of the
organism, in so far as economizing transforms resources into products of value
for the organism’s survival. The maximizing tendency is inherent in
economizing because the probability of a company’s survival can never be
assured with certainty, so transforming resources into survival value never
reaches a sufficient point. Like a squirrel not knowing for sure how long
winter will be, a company’s management cannot have too many nuts stored—not
counting dividends as the stockholders’ residual, and thus maximizing, claim
(and thus value or force).
Power-aggrandizement values,
which are geared to the acquisition, retention, and accumulation of power, have
the same maximizing tendency. Such
values, and thus forces, are based on the forces in nature that are geared to
dominance in a rank order or status hierarchy.[lix] Frederick includes efforts toward a
power-equilibrium, such as in the creation of an organizational structure
solidifying status positions, as falling within this value-cluster.[lx] Viewing
solidified status arrangements as if eddies on the side of a river’s main
current, I contend that power-aggrandizing values are inherently expansionist, or
maximizing, rather than seeking equilibrium.
Dominance behavior found in
nature (including humans) has an inherent maximizing tendency because it is
based on an animal’s continual status-dominance efforts to maximize its
inclusive fitness (i.e. reproduction, or passing on genes as a broader
goal). An animal can never rest content
with enough inclusive fitness because the probability of genes being passed on
and surviving is never certain. So efforts to establish and maintain one’s
status dominance must be continual; dominance must be continually
maintained. Hobbes puts for “a general
inclination of all mankind, a perpetual and restless desire for Power after
power, that ceaseth only in death,” because a human “cannot assure the power
and means to live well, which he hath present, without the acquisition of
more.”[lxi]
Absolute power represents a quantity that can never be attained; hence
power-aggrandizement is inherently a maximizing variable—a motive that can
never truly be satisfied.
Although Frederick points to
the tensions between the economizing, power-aggrandizing and technologizing
value-clusters within a business enterprise,[lxii]
I submit that the three forces are more congruent and thus mutually supportive
than they are at odds with each other because they all have the maximizing
tendency; that is, they have the same basic underlying nature. Because certainty of survival, security, or
improvement can never be realized, economizing, power-aggrandizing, and
technologizing efforts can never be sufficient. For instance, taking the
resource-dependence, market power and innovation perspectives respectively,
these value-clusters can be seen as being oriented to maximizing tangible short-run financials.
In the language of systems
theory, the three value-clusters, or forces, have a schizogenic nature. A schizogenic system is not self-regulating
because at least one variable within it seeks a maximal value (i.e., keeps on
going) and is not held back by constraint either within the system or from the
system itself.[lxiii] Because
the variable is out of control, the system itself is in flux than able to
re-establish equilibrium (i.e., a homeostatic steady-state). A natural
ecosystem with a species maximizing itself, for instance, cannot maintain its equilibrium
because the maximizing species pierces through the ecosystem, essentially
puncturing it. Relatedly, increasing carbon-emissions can push the global climate
beyond its long-held equilibrium, such that all bets are off on the survival of
the maximizing species.
The fundamental tension in
nature, including social organization, lies not in the tensions between the
maximizing clusters, but, rather, between these and the ecologizing
value-cluster that is of entirely (i.e., qualitatively) different nature. Ecologizing
forces bring about and protect a dynamic equilibrium as well as steady-state
homeostasis. In other words, such forces protect the viability of the whole by
keeping the maximizing forces within from “piercing the envelop.” Ecologizing
forces hold the system, whether an organism, social organization, or
society/ecosystem, together (see figure 1).
Ecologizing values emphasize
the value of interconnectedness or mutualism that exists within any system.[lxiv]
They are based on natural forces operative in any natural ecosystem. Their
character is found in the nature of an ecosystem qua ‘system’, as a
system by definition constrains the forces within it. Absent a huge disturbance
radically unlike those handled in the past, ecosystems are in “a state of
homeostasis—that is, they are designed by evolution to be self-maintaining and
self-regulating in order to achieve a stable long-term balance or dynamic
equilibrium.”[lxv] Although
ecosystems can grow or shrink, they are characterized by a basic long-term
balance between the demands of a population and the environment.[lxvi]
In fact, balance (of species and the environment) is integral to an ecosystem.
Systems theory can help to
explain the functioning of an ecosystem in terms of its various forces. A
homeostatic equilbrium can absorb a certain amount of disruption while staying
at a steady-state without interrupting natural stability; and obviously then a
dynamic equilibrium can too, as it grows or evolves. A steady-state system contains systemic
feedback loops which act to constrain the forces within the system. This holistic
character to self-corrective systems permits balance and equilibrium.[lxvii]
The complexity, or web-like quality, of an ecosystem
tends to keep the population of each component at the level most appropriate
for the smooth functioning of the ecosystem as a whole.[lxviii] The checks and balances in the web-like
structure of interdependence and environment-species ‘fit’ permit the ecosystem
to be self-repairing, maintaining, and regulating by means of negative
feedback; beyond certain limits, the expansion of a component gives rise to
positive feedback which drives the system toward destruction until a new homeostatic
balance can be maintained.
Therefore, a key feature of an ecosystem is the ability
of its web-like structure to constrain the growth of species within which would
otherwise result in excessive production that the rest of the ecosystem could
not tolerate given the existence of other limits which are relatively slow to
adapt to the excessive growth.[lxix] Limits are part of the web-like
self-regulating process that leads to homeostasis and dynamic equilibrium. In fact, limits are necessary for there to be
any system at all. Were the species able to maximize without constraints in the
environment (i.e., the ecosystem), which includes all the other species, we
could hardly say that the different animals are part of a system. No one species can grow indefinitely, maximizing
itself and in the process displacing all other species, for this would destroy
the system, and consequently, that which sustains even the species itself.
The pervasiveness of
negative-feedback controls in an ecologizing force can enforce a homeostatic or
dynamic equilibrium; the limitations are built into the ecosystem’s structure
itself.[lxx] Whereas economizing and power-aggrandizing
are irreversibly linear, the web-like mutuality characterizing the ecologizing
forces of an ecosystem are circular or cyclical—hence the positive and negative
feedback-controls. There is therefore an inherent tension within any given
ecosystem between forces seeking a maximal value and those tending to maintain
or tend toward equilibrium.
Consider, for instance, the
impact of the ecologizing force of cooperation, a manifestation of
interdependence, in constraining power-dominance in human and other primate
species. The moral sanctioning in egalitarian political arrangements can
suppress the dominance behaviors by particular members.[lxxi]
One scholar writes that “the capacity for purposeful and decisive collective
action provides a cultural antidote to the domination tendencies of would-be
alpha males that over the generations ensures that stronger individuals cannot
establish despotic political styles or dynasties.”[lxxii]
In the early 1960s, the tussle between key alpha-males in the U.S. and U.S.S.R.
could have destroyed the global ecosystem, not to mention the species
itself.
Opposing value tendencies,
such as sharing and cooperation on the one hand and domination on the other,
come out of contrary impulses implanted by nature, which result in an unstable
equilibrium.[lxxiii] Indeed,
human nature itself is not monolithic but is the outcome of competing forces
that commonly result in behavioral ambivalence. Nietzsche suggests that even
thoughts are essentially instinctual urges that tussle for dominance—the idea
that reaches the conscious mind is the most powerful instinct among those in
contention. In short, a “psychology of balancing, contradictory tendencies” that
play out in human nature and through human evolution can be thought of as
ecologizing forces in that the balancing keeps our power-aggrandizing,
economizing, and technologizing/innovating forces from destroying us and the
ecosystems that sustains us as a species.[lxxiv]
That ecologizing forces can be
seen in a human nature as well as in natural ecosystems is good evidence that
such forces can be found along with the maximizing forces in human
organizations as well as in business ecosystems. In other words, a company
contains both maximizing and potentially constraining forces, and so do
business systems, such as a financial system or an industry (i.e., a business
ecosystem), which are comprised of (potentially maximizing) companies. Even
though the scale changes step-wise, the dynamic of maximizing forces
interacting with steady-state forces is the same. Ecologizing forces are
enacted at the system's level of any system because they are inherent in that
which makes a system a system, whereas economizing, power-aggrandizing and
technologizing forces can be found at the level of a system’s constituent
units. Certain components of a company can get out of hand, resulting in the
firm’s destruction. Likewise, a company within a business ecosystem can get out
of hand and ruin the ecosystem. In 2008, Dick
Fuld’s power-aggrandizing and reckless over-economizing ruined Lehman
Brothers and nearly caused the U.S. financial system to collapse. Clearly,
Lehman’s institutional restrains were no match for the CEO’s appetite.
Some ecologists “suggest that
individual organizations cannot become sustainable: Individual organizations
simply contribute to the large system in which sustainability may or may not be
achieved.”[lxxv]
Frederick concludes that ecologizing forces must be external to the firm, at
the business-ecosystem level, which contains firms and other organizations in
society.[lxxvi]
If so, the financial system let us down in 2008; to expect Lehman Brothers to
have muzzled its CEO’s power-hungry greed would be unrealistic.
Nevertheless, organizations
are themselves systems that are composed of component parts—namely, departments
and human beings. Any organization contains an internal tension between its
maximizing and constraining steady-state forces. Businesses bear the costs of
integration in part so no department gets out of hand. Because those costs
increase disproportionately as an organization gets larger, budget-cutters may
enervate the central ecologizing force. Undoubtedly, AIG’s
stockholders in 2008 must have regretted that the financial derivatives
department in London had not been more closely integrated (and thus monitored).
That this could have been done undermines the argument that ecologizing forces
can exist only at the business-ecosystem level. A company itself can be thought
of as an ecosystem.
For instance, valuing interdependence
and cooperation normatively as well as in terms of the bottom line within a
company could constrain profiteering by particular profit centers such that the
departments work together to reach a common goal. The value and a supporting firm-wide
infrastructure of policies and procedures can operate as a systemic constraint
on department heads. Such an infrastructure could be used to serve a goal of keeping
the company in its homeostatic or dynamic equilibrium instead of maximizing
profits. Such a use of ecologizing forces would be in line with the principles
of natural wealth.
A NEW MODEL OF THE MODERN
CORPORATION
Rather than as a ceaseless
profit-seeking machine, a firm can be alternatively intended and designed as a
system striving to maintain a homeostatic or dynamic equilibrium tied to its
consumption needs, which remain constant or evolve, respectively, rather than
expand exponentially or even without limit. Obviating the problems that go
along with the distended hypertrophy of a component part of a business
organization when maximization is valued, a fixation on holding to an
equilibrium state may even enhance a firm’s long-term viability.
A natural ecosystem is
sustained in a homeostatic steady-state, whereas its transformation into a
schizogenic (i.e., maximizing) system leads it to destruction. Frederick claims “steady-state economizing is
a condition of homeostasis, in which the life unit simply maintains itself, staving
off entropic tendencies”[lxxvii]
This condition is more conducive to the survival of the organism than is
limitless maximization because of the lack of stability in the latter.
Admittedly, a belief in growth
even for its own sake dominates the modern-business mind, so it should not be
surprising to find executives (and stockholders) esteeming economizing and
power-aggrandizing values.[lxxviii]
The reigning assumption that the lack of growth means death reckons equilibrium
an admission of failure rather than a sustainable basis. Corporate wealth
should be accumulated without limit, it is typically thought, or competitors
will gain the upper hand by capturing more market-share. No thought is given to
the possibility that the stability of equilibrium could enable attention to be
focused on improving the product or service.
Put another way,
intensification can replace maximization. Crucially, efforts to intensify
within a static or dynamic equilibrium could not be so much as to threaten the
equilibrium. Improved sales figures, for instance, would trigger increased
dividends and/or days off rather than higher retained earnings, more
investment, and ceaseless profit-seeking. A healthy equilibrium with some slack
built-in as insurance against a market shock is consistent with the adage, work
to live rather than live to work.
Under this alternative model,
profit would be sought up to the point at which consumptory expenditures,
including investment in plant and equipment (including human resources) and dividends,
can be met. Operating expenses, capital investments, and dividends would not
surpass levels that are in line with the static or dynamic equilibrium, whether
existing or planned. Dividends, for instance, would be constant (i.e., static
equilibrium) or gradually increasing as the firm evolves (i.e., dynamic
equilibrium).
Although Frederick maintains
that ethical principles may function as ecologizing forces, I contend that an
organization staving off the maximizing mentality would require internal
constraints stronger than the normative value that greed is squalid.[lxxix]
The CEO, as the leader of an organization, could evoke a vision that limits the
accumulating activities to consumption needs. Shareholders could approve a
charter amendment to the effect that profit would be pursued only to the extent
to which a dynamic equilibrium could be maintained. Human resource policies,
for example, could mandate more vacation-days as revenue approaches the
equilibrium level.
In short, the ecologizing
forces would need to have sufficient disproportional strength to outweigh the
force of avarice in ceaseless profit-seeking and accumulating. At the point at
which revenues hit the equilibrium-ecologizing level, a firm’s strategy would
turn from gaining more revenue to maintaining the equilibrium. It is at this
point that the alternative model really differs from the default model.
Indeed, rather than viewing
the modern corporation so much as a concentration of private wealth, the emphasis would be on the corporation’s functioning
as an exchange mechanism wherein resources pass through in a value-creating
process that is in equilibrium within and beyond the organization in the larger
system of business and society.
Figure 1
Ecologizing Model Adapted from Frederick
(1995)
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[i] In part, the
shift in Christian thought from anti-wealth to pro-wealth (i.e., from
associating wealth with greed to uncoupling the two) through the centuries
accounts for this difference. See Worden (2015).
[ii] Lewis
and Reinhold (1951):230.
[iii] O’Daly
(1991).
[iv] Dodds (1973),
p. 3
[v] Ibid.
[vi] Lewis
and Reinhold (1951), p. 230f
[vii] Earl (1967),
p.19.
[viii] Earl
(1967). See Cicero, The Republic IV,
7, 7 in Rudd and Powell (1998); and Cicero, Brutus,
232 in Bailey(2002). Also, Plautus treats the commercial class with hostility
and contempt, according to Earl (1967).
[ix] Dodd (1973)
[x] See
Virgil: “The seafarer shall roam the wave no more, nor ships make merchandise:
for all the earth shall be all-fruitful.”
Eclogue IV (lns 43-46), in Virgil (1924), p. 26.
[xi] Hesiod (1959),
p. 31, lns 111-113
[xii] __________,
p.33, lns 117-119
[xiii] See
also Virgil, Eclogue IV (lns 43-46), in Virgil (1924), p. 26.
[xiv] Hesiod
(1959), p.33
[xv] ______
(1959).
[xvi] O’Daly (1991), p. 180. See Virgil’s Fourth Eclogue
and the Georgius, Horace’s Second and Sixteenth Epodes, Propertius 4.1, and
Tibullus 1.3 and 2.5.
[xvii]
Horace (1994), p.204.
[xviii] __________,
p. 224, Epode 16, lns 43-44.
[xix]
Smolenaars (1987), p. 394
[xx] ______________,
p.397
[xxi] Ibid. See the Georgics 2.536ff.
[xxii]
Virgil (1924), Eclogue 6, p.26.
[xxiii] _________, Eclogue 6, lns 32-33, p. 26.
[xxiv] _________,
Eclogue 6, p. 26
[xxv] Horace
(1994), p. 204, Epodes 2.
[xxvi]
O’Daly (1991), p.182.
[xxvii] See
Tibullus, Elegy 1, in Kelly (1884).
[xxviii] Hesiod
(1959), p. 61 (lns 349-50), and p. 57 (lns 323-4).
[xxix] According
to Brazouski (2000), the golden race lived simply but happily, and without
greed, as indicated by Boethius’ Consolation
and in Roman elegy. Boethius stresses the dangers of gold and gems, expensive
dyed fabrics are spurned, men avoid extravagance and are not gluttonous. Rather, they make proper use of the earth’s
natural features and products for nourishment, shelter and refreshment,
avoiding such perversions of natural products as wine mixed with honey. O’Daly
(1991), p. 183.
[xxx] O’Daly
(1991), p. 183, 2.5.15f. Dracontius(1914) provides a similar association.
[xxxi] Horace’s
(1994) Odes iii, 24.
[xxxii]
O’Daly (1991).
[xxxiii] See
Augustine, Confessions.
[xxxiv]
O’Daly (1991), p. 180
[xxxv] Hesiod
(1959).
[xxxvi]
Lamberton (1988).
[xxxvii]
Williams (1968), p. 587, lns 17-40.
[xxxviii]
Ovid (1986), p. 5, 1.128f.
[xxxix] Ibid.
[xl]
Williams (1962); Horace (1994, Ode III, 24).
[xli] Kelly (1884).
[xlii]
Kallet (2001), p.4.
[xliii] Plutarch,
Life of Crassus, ii, 1-6 In Langhorne and Langhorne (1893). See also
Plutarch (1905).
[xliv] Earl (1967),
p. 32.
[xlv] Hesiod
(1959), p. 39, ln 177.
[xlvi]
Propertius (1990), p. 275, Book 3 ln 7.
[xlvii]
Plutarch (1905), p. 297.
[xlviii] ___________,
p. 305.
[xlix]
Berger and Luckmann (1966).
[l] Starik
and Rands (1995), p. 909.
[li]
Jennings and Zandbergen (1995), p. 1016.
[lii]
Schmidheiny’s (1992).
[liii] Moore
(1993).
[liv]
Frederick (1992, 1995, 1998, 1999).
[lv]
Frederick, (1992).
[lvi]
Frederick (1992,1995).
[lvii]
Frederick, (1995).
[lviii]
Frederick, (1992).
[lix] Frederick,
(1995).
[lx] Ibid.
[lxi] Hobbes
(1996), p. 70.
[lxii] Frederick
(1995), p. 92. For instance, potential innovations and economizing initiatives
may be smothered by rank-order privilege behavior.
[lxiii] Bateson
(1972).
[lxiv] Frederick
(1995).
[lxv] Ophuls
(1977), p. 25.
[lxvi] ___________,
p. 13.
[lxvii]
Bateson, (1972), p. 315.
[lxviii]
Ophuls, (1977), p. 27.
[lxix] ____________,
p. 30.
[lxx] ____________,
p. 33.
[lxxi] Erdal
et al. (1994).
[lxxii] Erdal
et al. (1994), p. 179.
[lxxiii]
Boehm, (1989); James, (1890), p. 429.
[lxxiv] Erdal
et al. (1994), pp. 178, 181.
[lxxv]
Jennings and Zandbergen (1995), p.1023.
[lxxvi] Frederick
(1999).
[lxxvii] Frederick
(1992).
[lxxviii] Frederick
(1992), p. 43.
[lxxix]
Frederick (1995).
