Karl Lagerfeld: An Artistic (and Marketing) Genius

Weeks after Karl Lagerfeld’s death at 85 in February, 2019, I poured over interviews that the eternally-modern yet classic Renaissance man had given. “I only answer questions,” he had said an interview in at a WWD conference in 2013. His answers provide as inside as possible a look at l’homme extradinaire.  He considered himself a fashion designer, a book publisher (regular and picture books), and a photographer, though he did much more. I’m not sure whether his books, interior designs, architecture, and photography can be considered marks of genius, but that he extended his method of fashion-design and did so well is a testament to the man’s inner-workings. His answers remind me of Frank Lloyd Wright, the famous architect from Wisconsin whose work so revolutionized homes from the Victorian era. Essentially, he ushered in open homes from the closed roomed Victorian houses. Lagerfeld was also innovative, taking the classic Chanel look and adding bits of modernity, such as in combining a black dress with sneakers. Both men produced homes/dresses that were inexpensive and expensive. Neither was beyond reach, yet as visionaries so far above most other people. Lagerfeld, like Wright, saw things differently than most of their respective contemporaries did. This is perhaps their shared mark of genius: not be so tied to yesterday, combined with being inspired to use creative freedom then expanding its application. This is all based in the inner constitution of the two men, which I suspect was similar. As Lagerfeld said, “I am down to earth—just not this Earth.” This is actually quite telling of genius, for such minds typically think "outside the box" and so can easily see through even societal sacred cows and thus proffer very different perspectives. The thinking, intuition and/or artistic perspective, in other words, innately go beyond the societal and individual assumptions that most people do not even realize they live by or hold. I contend that Karl Lagerfeld's artistic, or visual genius went far beyond fashion-designing.  

Regarding his creativity, Lagerfeld said that perfect work conditions permit creative freedom such that fits of inspiration can run their course like a stream unimpeded by obstacles. Working for a label need not detract. “I do the job because I enjoy it,” he said. “I love to photograph architecture,” for example. He eschewed analyzing his work. “To analyze is very unhealthy,” he said. “The worst thing in fashion . . . is the ivory tower.” So Lagerfeld’s genius did not manifest chiefly through the commonly presumed realm of reason. “I don’t listen to my voice,” he said, “I listen to my inspiration. . . . When I like something, I don’t ask myself why,” he said. “I am like a building that has an antenna; I look at everything.” His genius may have been in both how he looked at everything (i.e., from a distinct vantage-point transcending his own day) and how his inspiration was related to the raw empirical sensory data. “I’m a story teller. From a little detail a story can be made.” The underlying mechanism is difficult to describe “Most of the time, there are strange accidents.” These are innately unprogramable and therefore beyond turning into a programmed series of steps (i.e., mechanization). “I’m not an office person, you know.” Both his unique way of looking at modernity and his inspiration were clearly not easily translated by reason. Yet curiously he viewed his sketching and writing as “the same thing,” which may imply that genius is genius underneath regardless of how it manifests.

Lagerfeld also had a unique approach to work. Believing that “there is always room to improve,” he stated, “I don’t want to rest on what I’ve done; I’m only interested in what I’m doing and what I will do.” He relished being stimulated, which is undoubtedly why he was so interested in looking at what is new at the time. “I lose interest very quickly. A lack of excitement can quickly result in a change in course, “or if people think they know better than I do” or cause complications because they think they think they are professionals. People who work to justify their salary is the worst.”

Although his father was a businessman (who made his fortune from introducing dry milk to Europe), Karl felt no need to assume a business function; he left that to others. He left business to others, though he could be accused of having had an eye for marketing his collections through elaborate shows. Even so, he was not a “business type.” For instance, he said, “People are supposed to work together. If they do, “you don’t need a contract.” A business practitioner would view this, and his dictum that he only works on things he wants to work on, as highly naïve. His lack of humility might have rubbed business practitioners the wrong way. On himself as a fashion designer, he said, “Somebody might do better, but I don’t know who.” Yet interestingly, he included himself in his observation, “Things are step by step; sometimes you go back two steps, but that is a healthy thing too.” He also valued competition, which is cherished in the business world even as its practitioners seek monopolization. “Do you know something heathier than competition?” he said, “I don’t want to rest on my success.” Friends thought he got only a few hours of sleep a night. “I’m not really a party freak, ” he remarked, “I have so little time.” As he kept working so, being open to learning more about the craft and to following through on his fits of inspiration, he may have felt he had earned the right to brag. At around 80 years of age, he still said, “My problem is to show collections that are right for the moment and right for the label.” He was corporate enough to subordinate himself under Chanel even though the company had given him free artistic license, which he regarded as necessary as part of good working conditions. Ironically, in ceding some control, the company’s CEO got more loyalty and financial success from the man. How many business practitioners past their first few promotions stay so eager to push themselves to learn more and improve rather than settle in?

Finally, the unique nature of his perspective looking out at the world as it was is in the moment, rather than looking back retrospectively, shows us how utterly distinct the vantage-point of genius is. As Fredrich Nietzsche had written in the last half of the nineteenth century in Europe, a philosopher is not a man of his time. Genius, whether analytically or artistically, can easily go beyond the status quo and its underlying operative paradigm (e.g., assumptions), and yet Lagerfeld relished the excitement from looking at modernity, which he defined as that which “is right for the moment and the next moment.” Avant guard, he noted, is an antiquated, overused word. Overused, no doubt, by minds that are not able (or willing) to transcend what they take for modernity.

Even Lagerfeld’s reason for not going back over his own story is different, and thus telling. “No memoirs,” he said, “I have nothing to say, and what I could say I don’t want to say. . . . There were important people in my life but I don’t want to give them the pleasure of mentioning them again.” Bravo! Lagerfeld was interested in history, though not of his own, which he said he already knew it so why waste time going over it? Not being moored to a particular culture, present or past, he could critique it particularly well and yet go beyond it and critique a novel trend. For instance, He said of the eighties in France: “I prefer to forget about that.” The seventies, in contrast, “were not about money.” That decade had been one of freedom. “Today if you go to a party, you bring your body-guard; there are body-guards all around.” This is an astoundingly accurate observation and indictment of the increasing security consciousness gripping the urban West. Even just the increasing intimidation in the amassed security forces by businesses and police forces by universities and cities can snuff out the atmosphere of freedom that characterized European and American culture in the 1970s. Genius is out of place, yet so vital to a people ensconced in the status quo (or what has subtly entered the status quo unexamined and perhaps even uninvited).

Sadly, I was too young to partake of the hippie culture of freedom from the late 1960s to mid 1970s; my first political memory is of the Watergate congressional hearings in which then President Nixon was dropped even by his fellow Republicans on account of his law-breaking in office. That memory, plus that of OPEC-induced gasoline shortages and President Carter’s failure to return the Americans held hostage in Iran, gave a pessimistic hue to the decade to me and many other Americans. Fortunately, Europe had a different hue, as Lagerfeld would point out: Greater freedom rather than more corruption. I share his view of the 1980s as being more about money. In Reagan’s America, prosperity was the Gospel and the rich (and business schools) thrived. I’m not surprised to learn that that spread to Europe. Lagerfeld could look back at all the wealth created back in the 1980s and still say in 2013, “Many rich people of the past are poor today (relative to today’s rich).” In spite of the financial crisis of 2008 and the ensuing European debt crisis, the 2010s can be said to be about the super-rich and the related widening disparity in income and wealth approaching that of the Gilded Age. As for Lagerfeld on politics, he was interested in the news (and it was relevant to fashion), but he could proudly proclaim, “I never voted in any country; I am a free European.” The man who had wanted as a child to be an illustrator when he grew up had in fact grown up to pour his genius perspective into images and cultural critiques.

Source: “Interview with Bridget Foley,” The WWD Apparel and Retail CEO Summit, January 7-8, 2013.

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Bankers or the Bank: Which Is Responsible?

Along with paying $2.6 billion to settle criminal and civil charges for having “failed, and failed miserably” to notify the SEC of warning signs that could have short-circuited Bernie Madoff’s $17 billion Ponzi operation, J.P. Morgan Chase only had to acknowledge that its actions were improper.[1] No criminal prosecution ensued. The electronic evidence against Madoff's operation was too damning for JP Morgan Chase to have missed it. Indeed, according to USA Today, “JPMorgan had suspicions about Madoff’s operation as early as December 1998, when a bank fund manager warned the investment returns were ‘possibly too good to be true.’”[2] Without submitting any “suspicious activity reports” to the U.S. Government as required by law, the bank had pulled $275 million of its own “feeder funds” from Madoff’s fund two months before Madoff’s financial services firm collapsed.[3] In other words, the bankers connected the dots well enough for the bank's financial interest and perhaps even their own, yet strangely  enough no one at the bank could manage to let the outside world  know, even though federal law mandated reporting the suspicions to the SEC.  and responsibility urged it.

Does being strenuously pressured into making a public acknowledgement of impropriety accomplishes any internal improvement in a bank's corporate culture, including the pervasive attitude toward responsibility relative to profits? JPMorgan Chase had to acknowledge the impropriety of the bank's failure to keep the SEC informed, but this admission does not, in itself, mean that the bankers came to realize a sense of responsibility to the other investors (and potential ones) so they would not continue in Madoff's scheme. A formal acknowledgement is external, and all to amenable to business, whereas a sense of responsibility is internal; it is either there or its not. It is not something that a person can get by attending a training class. I'm always amazed, by the way, when a supervisor tells a customer that an employee's attitude can be "retrained," as if all the values and beliefs that a person has acquired even from upbringing can suddenly be changed by attending a workshop on proper employee attitude. 

In fact, it is not clear to me whether a corporate acknowledgement of guilt or failure even makes sense. Stated in terms of organizational theory, I want to challenge the popular presupposition that an organization itself can admit to criminal or improper actions. If so, must we assume that a firm is more than the sum of its parts and that this more has human attributes? Just because human beings are members of organizations does not mean the organizations are themselves human in some respect, such as in having a sense of responsibility.

Anthropomorphism, the projection of human characteristics or attributes onto non-human animals or things including collectives such as a company, government, or religious organization, is the underlying problem behind the justice in this case being insufficient. Did JPMorgan acknowledge that its actions were improper? Can it even be said that a bank has actions, since only people can act. You might retort that a bank has people who act for the bank, but this is not the same as the bank having acted. Did JPMorgan have suspicions? Human minds have suspicions. An organization does not have a mind (and thus not a memory). In spite of the legal fiction of “personhood,” a company made up of people and things such as money and buildings has neither a consciousness nor mind. 

J.P. Morgan hitting a man. Was he demonstrating that criminal law applies to human beings in organizations?  Image Source: Wikimedia Commons

Dennis Kelleher (of Better Markets) answered the JPMorgan settlement by observing, “Banks do not commit crimes; bankers do.”[4] Kelleher made the dogmatic statement in support of his criticism of the lack of charges against the bank managers who decided to, and went along with, keeping their suspicions from the SEC and thus the outside world. Who decided to pull the money in the bank’s feeder funds from Madoff’s fund two months before Madoff himself informed government officials? Were those JPMorgan employees aware of the refusal to inform the SEC? If so, they, not "the bank," had some explaining to do, and from that perhaps some external accountability was needed. Ironically, five former Madoff employees charged with aiding that fraud were on trial at the time. 

To be sure, it could also be asked whether the SEC should have needed to depend on reports from suspicious institutional investors such as JPMorgan to discover Madoff's scheme? It was so big that the SEC came off looking rather badly. If that regulatory agency has suffered from inadequate staffing (or experience, do to the higher compensation on Wall Street), part of the larger problem is that political contributions and lobbying from financial institutions convince elected and appointed officials of the federal government to keep the SEC too lean to do any damage to those particular institutions. Of course, damage to the financial system itself, or even the wider economy, as occurred in the financial crisis of 2008, is apparently not within the purview of responsibility. Again, the outsiders be damned, or, insiders at the expense of others. The lack of sense of responsibility in the bank thus mirrored that of the politicians and their paymasters. It is an inner circle of power and money that forsakes the public good.  

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1. This was according to Manhattan U.S. Attorney Preet Bharara.Tim Mullaney and Kevin McCoy, “JPMorgan to Pay $2.6 billion in Madoff Case Settlements,” USA Today, January 8, 2014.

2. Ibid.

3. Ibid.

Western Banks Lending to Asia's Expanding Middle Class: Profit vs. Planet

In April 2013, debt levels in Asia were reaching record levels as international lenders were extending short-term loans to a growing middle class. Non-mortgage consumer credit in Asia outside of Japan had increased 67% from 2007 to reach $1.66 trillion by the end of 2012. This credit included credit cards and loans for cars, electronic products, and appliances. Outside of Japan, Asian car and motorcycle loans nearly doubled from 2007 to 2012, to reach a record $219.7 billion. Appliance and electronics loans also more than doubled, reaching a high of $10.9 billion. Meanwhile, credit-card loans grew by 90% to reach a record $234.1 billion, according to Euromonitor. The incentive for the banks is not difficult to fathom. At the time, more than half of the world’s middle class was expected to be in Asia by the end of the decade. That translates yearly into more than 100 million additional people per year. For the banks, this was an opportunity since at least the beginning of the decade because growth was not possible in the European Union and the United States on account of the financial crisis of 2008 and the ensuing European debt-crisis that extended well into 2013. The European Commission of the E.U. was also working on regulatory proposals that would limit the incentives of mortgage servicers to produce too many “bubble-creating” mortgages. 
So Western banks had an incentive to look east for fruitful markets. Interesting, government regulators in China, Malaysia, and Indonesia had began reining in mortgage, credit-card and auto/motorcycle lending, perhaps in fear of an Asian financial crisis. Had Western bankers learned their lesson, or were they unwittingly bringing their reckless mentality to Asia? Two levels of concerns can be extracted from this case. I contend that the more immediate concerns were crowding out attention that ought to have been paid to the larger, but longer-term, problems.
One sort of concern suggests that the international banks may have been providing too much credit to people entering the middle class. Such borrowers, similar to the sub-prime mortgage borrowers in California, Arizona and Florida, may not be able to handle their new debt-loads. At the beginning of 2013, debt levels relative to individual income in many Asian economies, including Malaysia, China, South Korea, Thailand, Indonesia and India, were already up to 30% higher than in the United States. This would suggest that the Western bankers were again poised to be reckless. Citigroup’s claim that it was expanding its lending to the middle class in Asia in a “disciplined manner” can thus be challenged. More particularly, the financial-growth incentives facing the bank, given the continued weak economies in Europe and North America, can be critically analyzed. Did Citigroup's bankers accurately anticipate whether another debt melt-down might have resulted from the trend in debt-loads, or was this low-probability, high-risk scenario too long-term oriented to be factored in sufficiently? I don't know the answer to this, but I submit that baleful consequences that are larger and presumably further off tend to get pushed aside by the human mind, given the preoccupation with today, hard-wired by natural selection.
Even if we take Citigroup at its word that it was lending in Asia in a “disciplined manner” in spite of the rather unique opportunity for bank profit there, we can ask whether international banks have a responsibility to society, and even the species itself by resisting the temptation to immediately extend the rising middle class higher in spite of "growth pains" that could be anticipated. To a banker, this might have seemed like muzzling the golden goose, particularly given the soft economies in North America and Europe at the time.  What if his or her competitors would have stepped in anyway? Responsibility involves some voluntary restriction on a company’s financial self-interest that may require industry-wide commitment.  What are the chances that no one would cheat? Very low, I submit. Nevertheless, duty, a word mostly lost to today's short-sighted narcissism, is not meant to be convenient; otherwise, it would not operate as a tug on a banker’s conscience.
The upsurge in auto loans in Asia is a case in point. That is, is is responsible to facilitate an expansive auto market especially in China's major cities, which had already been known to be notable polluters. After 2000, the number of cars in use in China was doubling every year. Meanwhile, the Chinese were building an “interstate" highway-system that would dwarf the network of highways in the contiguous United States. Loans enabling an exploding middle class to buy cars increased the global demand for oil, resulting, other things equal, in a higher price at the gas pump. Would the magnitude of the surge in projected fossil-fuel use in China drain the Earth’s oil reserves before alternative sources of energy could pick up the slack, or should the Chinese too be able to enjoy a car economy like those in the West? It would be too easy for the Western bankers to resound with the latter at the expense of the former due to the allure of greater profits over duty to the species.

More people=More cars=More pollution    source: Businessweek

The viability of the species enters the equation of course because of the scientifically-proven link between carbon emissions by humans and climate change in which both the atmosphere and oceans of the planet have been warming since well before 2013. To be sure, it could indeed have been argued that the Asian middle-class deserved the same freedom and ease provided by owning a car in the twenty-first century that the American and European middle-classes enjoyed in the twentieth century. Fair is fair, right? However, the global climatic threat to the species had not been pressing during the industrial revolution and through the ensuing shizogenic (i.e., a maximizing variable) consumerism of the twentieth century. By  analogy, even though a person starting to smoke at 50 can point to a person starting at 20 and say, “I should be able to have my years of smoking too,” the person who smokes at an older age faces more health risks than the person who smokes when young. Is it worth a heart attack to a 50 year-old to insist on having years of smoking too?  Similarly, the question of the additional oil for more cars, as well as more coal-sourced electricity powering electronics and appliances—all being facilitated by the upsurge in loans—can legitimately be answered differently when it is accurately (and thus justly) feared that unless the carbon-use trends reversed themselves everywhere, the species would likely face dramatic negative effects all too soon, with the very survival of the species itself perhaps hanging in the balance further out.

As these diverging patterns demonstrate, the threat of over-population is not uniform across the globe.   source: fashionzombie.net

In terms of public policy, if corporate social responsibility is not strong enough given the addictive allure of profit-seeking to ward off even current use that could result in a very different climate, perhaps resulting in a new equilibrium beyond the bounds of human habitation, then government regulation may be humanity's only option to pick up the slack. Because the problem is global in nature, this option is also problematic. 
Because the interests of the government of China and other countries do not take kindly to economic costs inflicted on their respective peoples for fear of political unrest and economic recession,  the absolutist interpretation of national sovereignty might finally have to be compromised in order, ultimately, for the species to survive or at least not be inundated even in the twenty-first century with climatic havoc. To the extent that the explosion of the human population is the root cause of the increase in carbon (and methane) in the atmosphere and oceans, even government regulation enforced at the global level would be difficult, even ethically, especially as countries fear an older demographic in a declining base. It would be a lot to ask bankers to take this on. Nevertheless, societies and governments can legitimately ask banks not to exacerbate global warming by acting so as to dramatically increase human consumption too much given the business environment. As the managerial role is profit-seeking by design and incentive, however, it is not likely that bankers would agree. Hence I have viewed corporate social responsibility as a creature more of marketing than duty, especially in societies in which the honor of duty is not valued. 

Source:

Kathy Chu, “Consumer Loans Surge Across Asia,” The Wall Street Journal, April 22, 2013. 

What is the basis of Business & Society?

Scholars and practitioners alike in the field of business & society tend view it as being synonymous with corporate social responsibility. It is easy to do. Another error concerns the conflation of CSR and business ethics. In fact, the very name of the topic, corporate social responsibility, is problematic. Straightening all this out could result in more topics in business & society even as the field ceases to overstep into business ethics and the nature of CSR becomes more transparent in business as well as society. 
First, corporate social responsibility is a topic in business & society; CSR is not a field in itself. Business & society contains several topics, one of which being CSR. The study or practice of how business and societal norms converge or diverge does not reduce to how to design and implement a CSR program even though such programs are typically marketed as helping society in some way under the veneer of business-altruism. The managers of a business are aware that even just projecting this patina of a warm glow into the business environment can help even the bottom-line, not to mention reputational capital, a long-term intangible asset. Not that the managers of most companies believe that the business actually has a responsibility beyond making or selling a good product.

Stepping away from CSR within business & society, much material can be studied as well as be used by companies. For example, the field extends to the macro (i.e., above the firm-level) level. CSR folks typically miss this point completely. The business sector itself being within a culture or society is also a matter of study in the field from the standpoint of values and basic beliefs. 
Business culture in a given society may stress, for instance, getting as much as possible out of external stakeholders, whereas in society people may look disparagingly on self-seeking, manipulative people. In the business sector of course, a focus on the firm's interest is not viewed as selfish, and interactions with people outside the firm are not characterized as manipulative. Yet from the standpoint of societal norms, those people outside the firm may perceive the business mentality as such. 
Another area of study in business & society concerns whether the business sector dominates such that even societal norms have been swayed in that direction. In contrasting the E.U. and U.S., for example, American values are arguably more pro-business. The Americans have even made a de-facto holiday out of first shopping day after Thanksgiving! 
Also, industrial titans in the late 19th century believed that they owned America. What then of democratic values, it was asked, if the Congress was indeed bought and paid for? The U.S. Presidential election of 1896 showed that the barons could sway, likely by payoffs, their workers into voting for the pro-business party rather than that whose platform for a more economically egalitarian distribution was more in the workers' economic interests. In terms of business & society, the issue here is the hegemony of business values and norms over those of society such that its own reflect those of business. The question of whether the hegemony is right, or ethical, is exogenous to business and society, as ethical reasoning is instead in the field of business ethics, which draws on two other fields: management and philosophy. 
Should is an ethical term, so answering the question of whether businesses should be socially responsible is properly done in the business-ethics field, whereas business & society is descriptive, being about norms and values. What are the respective values/norms in business and society, and what are the costs to both businesses and societies of divergence and the benefits for both of congruence? Asking furthermore whether business values and norms are hegemonic in American society is different than asking whether they should be. The latter requires justification by reasoning and ethical principles, whereas description does not. The European philosopher, David Hume, claimed in the eighteenth century that we cannot get from a descriptive statement to a normative statement. To say, for example, that I am hungry is not to say that I should be hungry (or not be hungry). That the respective values (and consequent norms) of business and society differ, this is not in itself enough to claim that they should differ. The should statement requires rational justification by ethical principles or theories. 
It follows that the third theoretical movement of corporate social responsibility, "CSR3," is an oxymoron in that it conflates CSR with ethical justification. The latter is the method of ethics in philosophy, which, with management, is an underlying discipline of business ethics but not of business & society, which deals with extant rather than ethically justifiable values and norms in capitalism as well as the societies in which markets and businesses operate. 
I contend that the term, responsibility, in CSR is inherently ethical and thus properly exogenous to both CSR and moreover business & society. In other words, corporate social responsibility suffers from the inherently-moral term, responsibility. The misnomer represents a category mistake (confusing business ethics and business & society). CSR takes it as a given, at least in its label, that businesses are responsible for societal problems and thus are obligated to take part in solving them. In other words, the question of whether businesses should be held to be responsible for societal ills has essentially already been answered in the label of CSR. In other words, the title begs the question and answers it before a person enters into the topic. Debating the question within the topic and even the title itself, such as I did in William C. Frederick's doctoral seminar at the University of Pittsburgh, is an uphill battle from the start, for the playing field is severely slanted from the start (i.e., the label, CSR). 
Interesting, Bill and I were both sickened by the marketing exploitation of CSR by corporations (although, admittedly, some social good results even if as a by-product). I turned to the field of business ethics while Bill, whose doctorate had been in anthropology and economics at Texas, took up the study of applying genetics, evolution, thermodynamics and other natural sciences to business organization. My first two years in college had been in a biology/botany major, and from those classes in science I took quite well to Bill's work. Finally Bill and I were on the same page academically, years after I had graduated. We had both rejected CSR as it had evolved and went to basic theory as a foundation. I went on to ethics in philosophy and religious studies, yet while picking up Bill's approach to business & society. He was more my professor then than when I had been his doctoral student. The arguments I had made against CSR are in this essay, yet the arguments I believe have matured (as have I). 
Going beyond my criticism of the incorporation (and basis) of the term, responsibility, I can now go on to proffer a basis for the field of business & society. CSR is not this basis; as a topic in the field, CSR is further out--a middle planet in the solar system rather than the sun.
Rather than being based on ethical justification, the basis of the field of business & society can be said to be how people working at a company and external actors relate with each other. At the interpersonal level, finding common ground in how we relate is the core chore of the field. Business and non-business people alike, and even managers/employees and their external stakeholders, unwittingly or intentionally clutch at their respective roles. These can belie the common humanity that naturally exists as a common denominator between people as we interact. Business & society is essentially about transcending these roles to relate on a human level interpersonally. Simply calling into a company's customer-service call-center can illustrate how a rigid role can snuff out human interaction, which is ultimately in a business's best interest because  more can be accomplished with mutual understanding and flexibility that with talking at the other person. From a business's standpoint, more can be accomplished with a customer who is not shouting at the employee. Business & society is ultimately about the persons on both sides getting past their respective roles (and stereotypes of the other) so common ground on an operative value and norm can be realized in a way that business can be done in society. Borrowing from Bill Frederick's application of natural science, I submit that we are all of the same species, homo sapiens, so common ground in terms of values and norms, or at least being able to transcend clashing values and norms, must be possible. In fact, given our common DNA (as well as basic socialization, such as being raised by adults), the common ground is more natural than are the differing values (and related norms). 
From the business end, employees (including managers) can let go of the jargon-crutch and rigidity that come from a policy-oriented, top-down management system, while people outside a given company or the business sector itself can compromise too in attempting to interact rationally rather than emotionally--meeting business halfway. Those people can also realize that employees are being paid to economize their time rather than listen to stories about relatives or pets. The interpersonal dynamic that is typical between call-center employees and customers is in great need of this fundamental task in business & society. Like Buddha's "middle way" and Aristotle's doctrine of the golden mean, the people in both business and society can (here, not should!) go halfway to relate as humans. 
Corporate programs in social responsibility not only do not adopt a middle standpoint, but also can keep a business's management from attending to where business & society can really change how a business interacts with people including customers. Even in assuming that people in society self-identify mainly as customers or even consumers has too much of the business-perspective in it. People in society may view the ways of business, and especially its self-oriented profit- or advancement-mentality as different and even strange. 
In short, norms of business and society can be aligned at a basic, human level, meaning in how people relate to each other. Employees can say hello in having even brief contact with people outside the company who are of no use to it--that is, not being so purpose-driven--while the people can put any anti-business fervor aside and relate as individuals.  The relating itself is fundamental to business and society. It should be done at the middle between the extremes of business-culture and society so both business and societal norms/values can be invoked and related. Studying Mars from the Earth does not do Mars justice; hence, NASA has sent craft to the red planet. I take this to be the basis of the field, with matters of institutional programs such as CSR being relatively artificial and thus not human enough to be central to the nature of business & society. 
A program with policies and functionalities (i.e., offices) is an extension of how businesses are organized and function. People in our daily lives do not organize as such, and thus recognize CSR programs as being on the business rather than society side of the field. It might be interesting to imagine how CSR could be established and done from the middle standpoint. 
In short, a CSR program reflects the ways of business, and is thus not far enough out on the business plank to fundamentally touch the societal end. Whereas the field is by definition business and society, CSR is mostly on the business side. It is no wonder that many businesses use CSR as "window-dressing" designed to make the company look good so more people will buy goods or services there. Of course, CSR programs do benefit societies, and this point can be argued to justify the central marketing use by business. Nevertheless, meeting societal norms means going half-way even in the approach that a business uses. 

Nissan's CEO Caught in the Crosshairs of Business and Society in Japan

Ordinarily, courses that include business & society (with business & government, and business ethics material also included as if the three fields were somehow one) have been relegated to the periphery in American business schools. Perhaps the business sector and its sycophantic deans have simply assumed that little actual cost comes from business managements deviating from societal norms and values. Admittedly, such a schism decreases reputational capital, a long-term intangible asset. Even so, the long-term-oriented and intangible can manifest as immediate jolts to such capital, with actual, measurable financial costs kicking in. They are triggered by news-worthy incidents in which a company or even one high-level manager, such as a CEO, are perceived societally as being in the wrong. The general perception of wrongness in turn depends on how far a company or manager have deviated from societal norms and values. Crucially but typically ignored, even though societal norms and values can absorb certain ethical principles or theories, business ethics is a distinct field because reasoning from or to ethical principles or theories lies at the core there. That is, no philosophical reasoning is involved in business & society; rather, the norms/values of a business sector, industry, or company are compared or contrasted with relevant societal norms and values. In this essay, I analyze the case of Carlos Ghosn, who was CEO of Nissan, Renault, and Mitsubishi on November 19, 2018 when he was arrested “on allegations that for years he had withheld millions of dollars in income from Nissan’s financial filings.”[1]
In 1999, Ghosn came to Japan “to carry out an American-style restructuring of a failing Nissan. The Japanese carmaker had $35 billion in debt, provided lifetime employment to a bloated work force and produced a fleet of the kind of cars you’d dread getting at the rental counter.”[2] He closed factories, cut suppliers, and laid off 14 percent of the workforce. As a VP at Renault, he “had helped oversee a turnaround at the middling French automaker, which had agreed to spend $5.4 billion to buy a 36.8 percent stake in Nissan Motors.”[3] On both counts, he was successful even though the CEO of General Motors at the time said Nissan was fixable.

In Japan, whose culture generally viewed outsiders with distrust, Ghosn “achieved a status bestowed on only a handful of chief executives. . . . In 2004, Emperor Akihito awarded him a Blue Ribbon Medal for his extraordinary contributions, making him the first foreign business leader to receive the honor.”[4] Ghosn, “a brash Brazilian-born and Lebanese- and French-educated engineer,” had been accepted in one of the most closed societies in the world.[5] Accolades aside, this made him extremely vulnerable should he intentionally or unintentionally violate a major societal norm or value. “From the start, he faced distrust from the Japanese policymaking and business establishment. The very idea of an outsider’s bringing free-market capitalism to Japan’s quasi-socialist corporate culture jabbed at historical wounds” even though Ghosn was not an American.[6] In other words, in “representing” a foreign economic system that a victor in World War II wore like a crown for the world to admire (even where it didn’t), Ghosn inadvertently put himself in a long-simmering wound in Japan. Not that any ethical principle had been violated; rather, his subtle predicament was predicated on a divide between a strongly valued societal norm and him as well as the company he ran. At the firm level, his “splashy—some would say autocratic—presence was out of sync with modest Japanese culture.”[7] As one Nissan employee put it, “No one dared to say anything that would confront [Ghosn’s] opinions.”[8] So a cleft between business and society can affect the degree to which a business leader’s style is accepted organizationally. That he cut 21,000 jobs but spent more than $200 million for Nissan to be a sponsor of the Rio Olympics in 2016, and that he hopped between homes paid by Nissan and flew in company jets would likely put him out in virtually any society in the world only gave the Japanese fetter for distrusting the foreigner in spite of his early contributions to Nissan and thus Japan’s economy.

The triggering incident that brought down Ghosn’s reputational capital in a flash stemmed from a divergence between how he had handled the matter of his compensation (i.e., business) and how CEO’s in Japan were supposed to handle it (i.e., society). “In Japan, salarymen slave away at the kaisha (or company) with a sense of communal pride almost as important as the salary.”[9] In 2017, Ghosn made $16.9 million ($8.4 million from Renault, $6.5 million from Nissan, and $2 million from Mitsubishi), which was nearly 11 times what the chairman of Toyota, the world’s largest automaker at the time, earned.[10] Astonishingly, Ghosn had “made the case to the public that he was underpaid.”[11] Even at the annual meeting in June, 2018, he said the company remained “financially very disciplined” in rewarding senior management.[12] Asked at the time by the Financial Times if he was overpaid, he laughed and replied, “You won’t have any C.E.O. say, ‘I’m overly compensated.”[13] Breaching yet again a valued societal norm in Japan, his “brazenness rankled employees and the public in Japan.”[14]

So when a whistle-blower in Nissan said in October, 2018, that the CEO had been instructing Greg Kelly, a top aide and a board member (which represents a conflict of interest) to split Ghosn’s compensation between that which would be paid in the current year and reported in the annual report and securities filings, and that which would be paid only after the CEO will have left the company. Nissan went to prosecutors to allege that Ghosn had been underreporting his income since 2009. The company added that Ghosn and Kelly had developed future plans to pay Ghosn a further $124 million in cash and other financial instruments—some as compensation for an advisory position after the CEO’s retirement. The issue was that of committed compensation (yet not to be paid in the year committed) not being reported in securities filings (as well as the annual report). Stakeholders, and the Japanese public at large, could be harmed by not knowing the full amount of the company’s long-term liabilities.

While such harm (as well as the economic inequality even in the CEO’s current compensation) could be useful in an ethical analysis, but in this business-and-society analysis, the issue comes down to whether Ghosn’s deviations from valued societal beliefs and norms added to the severity of the government’s response in going after the gilded CEO—a foreigner nonetheless and thus at bottom to be distrusted in Japan. The issue is not whether Japan’s norms are ethical; rather, in this analysis they are taken as given so a qualitative measure of Ghosn’s deviations can be made and related even causally to the outcome (i.e., the arrests without bail, as well as the extent of the blow to the man’s—and perhaps even his company’s reputational capital). It is indeed easy to conflate such an analysis proper in the field of business & society with that of business ethics, for we tend to apply should or should not to valued norms whether in business or society. Whereas existing norms (and cultural beliefs) are descriptive, ethical principles are normative. The two fields do share a border, however, as in asking whether a cleft between the norms (and related policies and conduct) of a business and of societies in which it conducts business is ethical or not. In going from the descriptive to the normative, ethical analysis is necessary, so I would classify this matter to lie within business ethics, drawing on the descriptive in business & society.

To be sure, legal analysis of the acts of Ghosn and Kelly would carry us a considerable distance in getting to bottom of this case study. Just when the Japanese police were going to release the CEO on bail, they rearrested him “on new charges that he shifted personal losses during the 2008 financial crisis temporarily onto Nissan’s books.”[15] The matter of an associated deviation from societal values may not be a material factor due to the crime itself, which rendered it offensive in virtually any civilized society at least at the time. This crime arguably goes beyond the failure to include committed but not paid out compensation in financial reports to the government (and in company annual reports). The impact of business & society as distinct from legal analysis was likely more significant in the failure to disclose committed compensation because Ghosn had at least gone through the company (admittedly via Kelly) in structuring his compensation. It was not as if he would get the total committed compensation in the years committed. In other words, going against valued societal norms can render a person or company particularly vulnerable, other things equal.

Business managers—even CEOs—may not recognize their own vulnerability and that of the company at which they work. For one thing, we humans tend to discount low-probability, high-cost events, especially if they are not expected in the short term. The immediacy of quarterly earnings (whether for their impact on managerial compensation or investors in the stock market) is typically of much greater concern. The design of Capitalist economy systems that emphasizes the short term is likely due in part to the fact that human beings (homo sapiens) have been “hardwired” through almost 2 million years to be oriented to immediate cravings such as hunger and sex (i.e., survival) and threats (i.e., to avoid getting eaten). Almost all of the natural selection, which gradually changes a species, took place during the hunter-gatherer stage of humanity; agriculture has only existed for the last 9,000 years. In other words, immediacy being foremost is a result not just of economic, political, and social systems giving it emphasis, but also of the context (i.e., hunter-gatherer) of human natural selection. As the context today is greatly different, perhaps systems should be designed that emphasize the long-term so as to counter how our species has evolved.

On the impacts of human evolution (and other sciences) on modern management, see William C. Frederick, Natural Corporate Management, available at Amazon.
For cases of unethical business, see Skip Worden, Cases of Unethical Business, available at Amazon.

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1. Amy Chozick and Motoko Rich, “The Rise and Fall of Carlos Ghosn,” The New York Times, December 30, 2018.

2. Ibid.

3. Ibid.

4. Ibid.

5. Ibid.

6. Ibid.

7. Ibid.

8. Ibid.

9. Ibid.

10. Ibid.

11. Ibid.

12. Ibid.

13. Ibid.

14. Ibid.

15. Ibid.

Business and Religion: Financial Ethics Found Lacking in the Vatican's Institute of Religious Works

In probing corruption leads in the Vatican Bank, Italian financial police stumbled on to a plot back in July 2012 to smuggle €20 million into Italy.[1] The alleged culprits include a monsignor, a financial broker, and a former member of Italy’s secret service. For his part, the cleric is said to have had people pretend to have given him donations of €560,000 so he could furtively pay the financial broker for his role. Crime, Italian politics, and the Vatican Bank—hardly a novel discordant tune. That not just any bank, but that of a Church, could stray so far from what would reasonably be expected from a bank whose formal name is the Institute of Religious Works boggles the mind. Even so, the intersection of ethics, religion and business is fraught with complexity.  A religious verdict from ethical premises is possible nevertheless.

The full essay is at "Business Ethics in the Vatican."

Christmas: A U.S. National Holiday Privatized by Logical Fallacy and Passive Aggression

On December 18, 2018, U.S. President Donald Trump issued an executive order, the first section of which states, “All executive departments and agencies of the Federal Government shall be closed and their employees excused from duty on Monday, December 24, 2018, the day before Christmas Day.” Christmas itself had not been an official federal holiday until an Act of Congress was signed by President Ulysses S. Grant in June, 1870. That Act also declared New Year’s Day and the 4^th of July would be national holidays too, and yet by the 21^st century a significant number of Americans, and especially business managers, were committing a gaping category mistake by treating Christmas as not commensurate with the other two holidays as public holidays. By Christmas in 2018, the self-ingratiating “mistake” was still not transparent. Hence, this essay.

On the federal holiday of Christmas Eve Day before Christmas of 2018, I went grocery shopping at a Bashas’ supermarket. Waiting in the cashier line, an elderly woman at the front and I confronted the cashier, who refused to name the two-day holiday by name. What was behind this rather obvious fit of passive aggression? After the cashier felt the need to inform us that his holiday had been two weeks earlier, I countered that a vital difference exists between private and public holidays. My birthday is a personal holiday to me, and yours is to you, but neither of us would presume that our individual holidays are commensurate with a public holiday; we would not expect and even insist that other people recognize our respective birthdays as holidays. We would not say to strangers, “Happy holiday.” Yet in replying, “My holiday was two weeks ago,” the cashier was treating Christmas, a public, national holiday, as if it too were the private holiday of some people. Herein lies the category mistake! Factually, a public holiday is not a private holiday, so a person errs in putting them into the same category.
Let's pretend that I shop at a Bashas at the end of June, and the cashier facing me says, "Happy Fourth of July!" I reply, "I hope you enjoy your holiday; my holiday was a week ago." I could have been referring to the Summer Solstice, for instance. My holiday is not commensurate with a national holiday, so my use of your and my would be inaccurate, and, frankly, insulting to the public holiday and the people who celebrate it, for it makes no difference to a public holiday how many people celebrate it. The holiday is still a national holiday. The subterranean "game players" either don't understand this, or they reject it without a sound rationale. My response to Independence Day would doubtless be considered very strange; it would also be strange were the cashier to go out of his way to refuse, like a stubborn child, just to say the name of the public holiday (i.e., Independence Day, or "July 4th"). Even so, these dynamics, or games, around Christmastime are accepted as valid on the strange assumption that just because some people might be offended, it is an affront just to with people in public a Merry Christmas. Put another way, the societal dysfunction, which had even become institutionalized thanks to American retailers, has faced a considerable blind-spot (or state of denial). This would not have been the case for Independence Day and New Year's Day in spite of the fact that these two holidays had been made legal public holidays in the same Act of Congress in which Christmas Day was included! 
Lest I be pronounced an ardent rationalist like Kant, who argued that logical contradiction in a maxim being universalized means it is unethical, I supplement my displeasure at the category mistakes with Nietzsche's theory in order to drill deeper, or diagnose the underlying weakness, or sickness. To whit, I submit that resentment and even jealousy, which are manifestations of weakness, are behind the warping of logic. 
To Nietzsche, the weak resent and are jealous of the strong simply because the weak lack it while the strong have a surplus. So the self-confident strong, who are (unlike me) not bothered by the pestilence of the weak not only because it is not a threat, but also because strength resides in itself even as it's benefits overflow to the fishing boats below. “What are those parasites to me!,” the strong say, for the latter are awash in their own strength, which the parasites cannot capture except through “moral” Thou Shalt Nots. This is why Nietzsche was so critical of modern morality; it can be, and has, been used like a club to gain power over the beguiled strong. Ironically, the weak who seek to dominate easily resort to cruelty, whereas the strong have enough of the pleasure of power, especially in mastering a stubborn instinctual urge. 

Speaking to a Bashas’ manager briefly on my way out of the store, I said that the cashier had been rude to another customer and myself by stubbornly staying with the claim that this one national holiday, Christmas, is, in his view, merely a private holiday like his own, thus below New Year’s Day and Independence Day. 

Perhaps part of the explanation of the warping of logic is simply ignorance of the U.S. Constitution, whose first amendment stipulates that the federal government cannot act to establish a religion. Even favoring a religious holiday is out of bounds for the federal (and state) government. So the Act of Congress signed by President Grant must have a non-religious basis; hence, the public holiday of Christmas has survived constitutionally to join Thanksgiving (signed by Lincoln not much before Grant’s Act) and the two other holidays of Grant’s Act as an official public, or national, holiday. So liking Christmas only as akin to the private holidays or individuals or associations thereof cannot merely be a matter of religious jealousy (out of some erroneous sense of equivalence on religious grounds). In other words, the claim that my (personal or associational) religious holiday is equivalent to yours even though yours is associated with a public holiday of the same name is erroneous. Beyond the logic lies resentment and jealousy, which are misplaced.
So saying “Happy Holiday” only for Christmas—a slogan whose passive aggressive core is masked by considerateness in not wanting to offend—is not justified by even the seemingly salubrious mask because the practice has not, at least by 2019, extended to the other public holidays in the United States in spite of the fact that some American Indians may be offended by Thanksgiving greetings, anarchists and other political protesters may be offended by “Happy Fourth of July!” and Quakers and other non-violence groups may be offended by Veterans Day, which is a major public holiday in Arizona. In other words, why is offence so significant only in the case of Christmas?  Because it is an official national holiday in the U.S., and thus a public holiday, Americans are not even ethically bound to omit entire mention of it even on it’s eve just because offence may be taken. The same applies to the other national holidays. My question is the following: why did so many Americans, and virtually all retail businesses, capitulated to Thou shalt not! of the resentful, irrational weak who seek to dominate even the strong. Nietzsche contends that the strong have enough mental strength to overcome their most intractable instinctual urges by mastering rather than repressing them. The weak, in contrast, cannot resist acting on the urge to dominate (even to be cruel if necessary!) even the strong, as if weakness were strength too. Both the cashier and the manager, who, by the way, merely gave me a diplomatic look evinced weakness; without sufficient power internally to change and liking their Thou Shalt Nots, they would no doubt continue even after having their category mistakes revealed. 
Would the American public too simply go on as herd animals once transparency is make possible? Or would Americans, as strong individuals, not be beguiled by mistakened, passive-aggressive false-narratives such as “Christmas is just a religious holiday, and thus equivalent to private religious holy-days, so Christmas is not really a public holiday”?

See On the Arrogance of False Entitlement, available at Amazon. The book applies Friedrich Nietzsche's philosophy to business managers and business ethicists.