Value System

As reported in the New York Times on 19th August, 2019, “Chief executives from the Business Roundtable, including the leaders of Apple and JPMorgan Chase, argued that companies must also invest in employees and deliver value to customers.”

And if you don’t believe that such a day would ever dawn, CLICK HERE for proof, sorry URL. Is there a difference between the two?

And Pepsi and Walmart too. And not just employees and customers, suppliers too will be dealt with fairly and ethically. “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.

The Business Roundtable, incidentally, is a lobbying organization that represents many of America’s largest companies.

Revolutionary, isn’t it? And not a moment too soon. It is important these views are articulated because such things have never been done in the past.

After all, in a competitive world, driven by free-market principles, a business could be successful without delivering value to customers. What businesses in the free-market driven world do is not deliver value to customers. And no competitor would be ready to step-in and deliver value. Nor would customers notice the absence of value. 

The reasons customers buy from businesses are well known. At least from what we may call successful businesses. They buy because they don’t get value. They buy because they are forced to; they don’t have choices. They buy only things they don’t need. They buy because they are weak-willed with a low self-esteem and unable to withstand relentless messaging of big companies that tells them they are losers if they don’t have the product. If customers queue up overnight to be amongst the first to buy a device in the morning, it must be the fault of the maker that the offered device does not deliver value.

After all, in a competitive world, driven by free-market principles, a business could be successful without bothering to invest in employees, or worrying about their aspirations. That is what businesses in the free-market driven world do. And no competitor would notice. Nor would their employees.

The reasons employees work for a business are well known. At least for what we may call a successful business. They work for a particular business because they have better opportunities elsewhere. They work because their qualifications make them suitable for better jobs. They work because they prefer the risk of a monthly salary over the security of self-employment. They work for the enrichment of the employing business and not their own compensation and advancement. They work so that they can walk out on a whim if they get a better opportunity. This is why jobseekers claim they cannot find jobs and businesses claim they cannot find employees.

After all, in a competitive world, a business could be successful without treating its suppliers fairly and ethically and destroying value for them. That is what businesses in the free-market driven world do. And no competitor would notice. Nor would the suppliers. 

The reasons suppliers work with a business are well known. At least for what we may call a successful business. They work for a business because it treats its suppliers unfairly by paying less than what has been contracted and agreed. They work because the business will pay much later than the timeframe for payment agreed in the contract. They work because they don’t salivate at the prospect of large future orders from that business. They work because they don’t dream of some day making their business as big and successful as the business they are supplying to. They work because they are forced to. And a situation where a big company is a supplier to another big company, or a small company, just cannot exist.

The rising global discontent over income inequality, harmful products, domination that hurts competition and unethical practices cannot be the fault of our lawmakers whose job it is to ensure equity and fairness and justice. It must be the fault of business corporations since they are not representatives of the people voted into office to safeguard the interest of the common man. Since they have been able to establish themselves as a force in the world of business earning a lot of money, they can be trusted to create value for customers, invest in employees and deal fairly and ethically with suppliers. And work for the upliftment of the downtrodden in society. And world hunger. And global peace. And environmental conservation.

Can someone please tell me why we spend billions on elections in India, and in many countries around the world. If it is the large business corporation that is going to deliver value to customers, invest in employees and treat suppliers fairly, and work towards global peace and world hunger and environmental conservation, why exactly do we need elected representatives? 

In an explicit rebuke of the notion that the role of the corporation is to maximize profits at all costs that has held sway over the last hundred years, leaders of the Roundtable have ruled out obvious options like cutting executive compensation, or paying higher taxes, or increasing wage levels. They believe that their noble ideals can be achieved without doing any of these. They believe that their noble ideals can be achieved without doing anything.

But I am being unfair. It is not without doing anything their ideals will be achieved. After much deliberation, and as an example to the world of their commitment to achieving their ideals, the Roundtable has developed a Vision Statement for all members which is to be prominently displayed in the CEO’s office:

‘The purpose of our corporation is no longer to advance only the interests of shareholders. Instead, we will create value for customers, invest in employees and deal fairly and ethically with suppliers. We vow to protect the environment by embracing sustainable practices across our businesses and foster diversity and inclusion, dignity and respect. We will work for the upliftment of the downtrodden in society. And world hunger. And global peace. And…’

And now that the problems of the common man have been effectively solved by the Roundtable and its members, our political leaders are counting the days to the next election when they will be able to tell us how they will solve our problems.

31 thoughts on “Value System

  1. I suppose the Roundtable member corporations will not merely try to maximize the shareholder value from now own – they will care about the employees, suppliers, environment, diversity, and so on by trying to maximize the shareholder value and hoping that this value will eventually trickle down to the employees, suppliers, environment and diversity.

    • They have taken on a huge responsibility – of maximising shareholder value. As many of our political leaders also try to convince us, it is in our interest to make them succeed. So that they can create value for employees, suppliers, and all of us.

      • And if they only succeed in maximizing the shareholder value and not in any other endeavors, well, then, it wouldn’t be for the lack of trying, because they do have that printed pro-employees/suppliers/diversity/environment mission statement in the CEO office, and it did take a lot of effort to print it and hang it there.

      • After all, what is a corporation without a Vision and Mission statement? One that can be hung in the CEO’s office. One that can be applauded by other ‘leaders’. One that can be understood be no one. One that can be followed and implemented by even fewer people than no one.

  2. In the times when even Darwinism is under challenge, I’d be remiss to point we may be headed towards extinction as a nation. It’s not the institution of democracy that has failed us, it is the other way round. The path to sanity, and thereby continuity has been indicated by the Roundtable. The intent and action are up to us to generate.

    • ‘Tilting at windmills’ has become commonplace. We imagine an enemy and start fighting it. Anything and everything is fair game. As ‘sheeple’, which Susan used in a comment, we are losing, or running away from so that we don’t need to take responsibility, the ability to think for ourselves and, in the process, our self-respect.

  3. Reading your critical article on corporate ethics, I felt the sulphuric acid dripping out every paragraph of your well-written post, Ankur. How much progress can we expect in the economic world, when the obvious goals are continuously stated, but never acted upon?

    • Ha ha! You made my day Peter. Many years back, I had read this phrase somewhere, “he had barbed wire dipped in sulphuric acid around his tongue….” That is the ideal I strive for when I am in the ironical frame of mind which, in the context of this blog, is always. The modern definitions of progress have been around for over a hundred years. In my view, the jury is out if the world is a better place to live than it was a couple of hundred years back. I am beginning to think that there might be a problem with our goals.

  4. Australia’s Treasurer called for companies to invest in things other than just giving returns to shareholders. (https://www.afr.com/politics/federal/treasurer-s-plea-to-business-invest-20190825-p52kjq)
    BUT. https://www.smh.com.au/business/the-economy/business-leaders-angrily-push-back-against-treasurer-on-investments-20190826-p52kra.html
    “I don’t wait to be told by politicians as to what we’re supposed to do,” said the boss of Boral Industries. “What we’re doing is what’s in the best interests of Boral and its shareholders in the long run.”
    In other words ‘Stick that up your jumper”

    • And I agree with Boral. We (humans) created the joint stock enterprise to facilitate free market enterprise and made rules around them. While as a society we have the right to update these rules, we ought to let them operate under the rules currently applicable. If that means working for the benefit of shareholders, so be it. But giving ‘guidance’, ‘advice’, ‘suggestions’ on how they should operate is an ugly effort at playing God. And secondly, even if Boral were to say that they have now turned over a new leaf or ‘gotten religion’ and plan to work for the upliftment of society, would you believe it?

  5. I have always felt we should hand over governance to the private sector. All said and done, their level of responsibility and accountability is a tad more than the people we elect. That said, we are also more involved as employees in the said company as we are as citizens… Win win maybe? Or at least not a lose-lose!

    • Hmmm. I am in part agreement. Private corporations do seem to be more efficient as they have a limited goal, and all energies are geared towards meeting that. However, if given power, I worry about how they would treat others who do not have the same goal, i.e. making money for them. Elected reps have a much wider responsibility and are perhaps slowed down by the need to ensure fairness for all. IMHO, if individuals are more responsible and active, governance will get better.

  6. “Chief executives from the Business Roundtable, including the leaders of Apple and JPMorgan Chase, argued that companies must also invest in employees and deliver value to customers.”

    I’m rolling on the floor laughing.

      • In their ruthlessness the starvation wage paying capitalists show their stupidity which arises out of their immediate gratification greed. First you can’t have a consumer society without consumers. Second, workers cannot become consumers if they do not have enough wages to buy the products they manufacture. Higher wages would lead to expanded sales and increased profits by expanding the consumer base.

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