“What’s it for?” – Moral responsibility in an age of globalization

Several years ago, I was approached by an Indian student following a lecture I had given on globalization and the interdependence of markets through cross-border flows of goods, services, ideas, knowledge, science and people. His question was: “But what’s it for?” In the late 20th/early 21st centuries the global economy was booming. Riches were created across the planet; although concerns were raised about growing inequality and sustainability, the general atmosphere among global elites, notably as celebrated annually at Davos, was one of euphoria. Such a question would have seemed out of place. The answer seemed obvious.

Euphoria has now been replaced by growing doubt. The recession precipitated by the collapse of Lehman Brothers in September 2008, from which the advanced economies have not yet recovered, has clearly had systemic consequences. With a number of the major emerging economies also encountering significantly slower growth, concern is growing that prospects for the world economy generally may be less than brilliant. To this is added the realization that the institutions of global governance that should be defining and implementing the global agenda are not functioning. The WTO Doha Round is dead. (I have been warning that this risked happening since 2003!) The Rio + 20 meeting had less than meagre results. The G20 has lost credibility. The European Union, which until recently stood out as a remarkable achievement of collective pooling of sovereignty in generating peace, prosperity and democracy, is in such a deep crisis that recovery seems unlikely, at least for the next five years.

Perhaps though the most viral cancer to afflict the system has been the egregious manifestations of unethical, immoral and in many cases illegal behavior of major corporations, especially, but not exclusively, in the field of finance. In the eyes of many the whole system seems to be corrupt and unjust. Banks destroy billions of dollars of wealth, while over a billion people do not have access to proper sanitation, potable water and sufficient calories. Hundreds of millions of children go to bed hungry, while the men (there are few women in the field of finance) whose incompetence and possible immorality have done so much harm to global finance earn outrageously high salaries and bonuses.

So what’s it for? Is this the kind of world we wanted? If today’s state of the global market economy and society is the answer, as the saying goes, it must have been a very stupid question. Looking at all the current global trends – social, ethical, environmental, political, geopolitical, and economic – it is difficult to envisage a future other than cataclysmic.

As global society continues at full throttle down this road, voices similar to those of my Indian student are becoming more numerous, more alarmed, more strident in asking: where are we going and what’s this journey for?   In response there has been a growing and quite rich literature that seeks to bring about a profound recalibration of the global economy and society. These include books such as: Michael Sandel, What Money Can’t Buy: The Moral Limits of Markets, Tim Jackson, Prosperity without Growth: Economics for a Finite Planet, Robert and Edward Skidelsky, How Much is Enough? Money and the Good Life, Joseph Stiglitz, The Price of Inequality: How Today’s Divided Society Endangers our Future, and Robert Schiller, Finance and the Good Society.

There is convergence of views among all of these authors that the planet faces two absolute imperatives. One is to eradicate global poverty and all its ills. The other is to ensure social and environmental sustainability. The two cannot be disassociated. As Lord Nicholas Stern, author of the Stern Review on the Economics of Climate Change, has stated if we fail on one of the two challenges, we fail automatically on the other.

To achieve these goals one important means is to revisit definitions of key concepts. In answering “what’s it for,” we need to define what we mean by prosperity and wealth. For the last few decades these terms have been seen as material (the accumulation of assets) and individual. But, as the authors cited above argue, wealth and prosperity should more appropriately be seen as spiritual and collective. Does happiness come from owning yet another Ferrari or from seeing that society has become better balanced, happier, more harmonious because inequality has been reduced and there are fairer opportunities for all?

What should be the goal and guiding moral principles of each of us in this globalized economy, and especially of those with access and influence? Is it about amassing money, or is about creating genuine social wealth? The question of my Indian student will not go away. It deserves to be answered not only by philosophers, but by all stakeholders.

This article was first published by the IMD and is posted with permission.