Costs as Cause

If the business is incurring costs, if it is spending more than it is taking in, then clearly tightening the belt is the obvious solution. Dire circumstances call for dire action! Guided by either/or thinking, the situation obviously calls forth a cut versus spend decision.  In a world where profit is paramount, everything is reduced to the choice between profit and loss—it is the way many business minded people role.

All costs are to be avoided, at all costs! This cost-cutting policy means no further spending on labor, advertising, marketing, sales, travel, except perhaps a little on electricity just to keep the lights on.

And what about the work of the business that requires incurring costs for transportation, labor, raw materials, and other such resources? We manage by the numbers and the numbers say it is time to circle the wagons. Relating to cost as a 4-letter word, one basically cuts costs to the bone, or at least to a level that is commensurate with current revenue toward returning the business to profitability.

There is nothing in this approach that allows you to do anything that would incur more costs that could potentially make for a better future.  It is a waiting game, waiting until profitability returns.  Because cost is the cause for less profit, costs must be significantly reduced (or eliminated) before the business is seen as again profitable.

Just how long will one have to wait?  Likely, until either there is a change in profitability or until the viability of the business is diminished.  That is to say until management does irreparable damage to the system, until there is no longer a (viable) business to manage. Eliminating the business of cost is just like bloodletting.  However, done to the extreme it can literally suck the life out of the system.

This view is all about eliminating costs, as if costs are causes. How or why is such a belief so prevalent?  It is a combination of having a short-term mindset and having the ability to do simple arithmetic.

In regard to the first point, essentially all costs equate to spending since the benefit of investment is most often realized beyond the (short-term) horizon and thus imperceptible.  To the second point, since profit is what’s left after costs are subtracted from revenue reducing costs to a minimum means more is left over.  Costs are cause for not enough profit—any fool can see that!  Therefore the single-minded focus on costs as a cause of not enough profit.

Accordingly cutting costs to the bare bones, particularly labor costs, is a popular action.  If one views people as labor, as merely something that diminishes profit—yes as a cost—then of course one will seek to minimize labor costs.  From this perspective, not doing so would be foolish.

Also it is equally foolish to put more into something that is subtracting from the profit that is so desired.  After all the business of business is not to provide goods and services, these are merely means to realizing profit.  Profit by any means is still profit! Moreover, often this strong desire (at times an addiction) for maximizing profit compels business leaders to seek the cheapest labor wherever it may be irrespective of the effects on the system, no matter the impact on quality and society—both issues unrelated to what’s in it for ‘me’ in the short-term.

Yes this scenario does seem a bit ridiculous.  Effective leaders don’t respond this way, particularly the entrepreneurially minded business leaders.

Cost as Necessary Outcome

To the entrepreneur costs (in the form of investment) is the means toward building a viable business.  And for the more mature business investing and not divesting in the business is the way to sustain the system’s viability.  Therefore in a well-managed business there is an understanding of the difference between spending and investment—not all costs are the same.  Therefore decisions around costs are not merely either/or decisions of cut versus spend.

Those in touch with their entrepreneurial spirit and who don’t suffer from short sightedness understand: a) that doing any activity requires expending energy which creates costs—costs are not causes but are unavoidable outcomes unless you do nothing; b) that not all costs are wasteful and unproductive and it is important to differentiate between spending and investment; and c) treating cost as a 4-letter word is reactionary and reflects a short-term focus which doesn’t allow for proactive development initiatives that would likely improve the revenue stream making costs productive.

Progress (with its requirement of investment and viability) is more important than growth in profit.  Subverting progress and viewing cost as cause of diminished profit is not the way of the wise.

Effectiveness in leading is about ensuring the system is managed to last and not simply to make the next quarter’s profit number or even next year’s.  The business of business cannot be profit and the future is not a series of short-terms.  Being of a different mind and leading with an understanding of (a), (b) and (c) above will most likely allow one to create a more favorable future for the business, and everyone touched by the business.

Accordingly, to the effective leader cost is not a 4-letter word to recoil against.  Incurring costs through investment initiatives is a way to ensure the viability of the system.  It is critical therefore to differentiate between spending and investment, between value-added and non-value-added costs.

Not doing so lumps all costs as spending, inevitably causing the system great harm and a short life.  Treating all costs as spending results in a lack of investment in support of the system’s viability.  If one hasn’t the ability to continue to exist in the future—if you aren’t viable—no amount of profit will help.

A Final Word (For All Who Aspire to Lead)

Cost is an outcome and not a cause.  Managing as if it is a cause with a focus on results along with the belief that the future is just a series of short-terms is a fool’s game. No amount of hope will help.

We create tomorrow’s reality by the decisions we make today.  If those decisions are ones that reflect a recoiling against all costs—reducing our choice to cut versus spend—then we are being reactionary and short sighted.  If, however, we believe having a future is a worthwhile expectation and want it to be better, then we must have the courage to enact it, to invest in it.

Being free independent individuals necessarily means people can freely do as they please or more specifically that they should do as they wish for their own pleasure—(my) life is all about me getting what’s mine without interference.  Apart from being unencumbered in seeking what we want, this belief also implies there is no obligation that an individual has to other individuals, because such obligation would be tantamount to an imposition (by another) upon one’s freedom to act as he/she desires.

Being independent also means I depend on no one else and no one else depends on me—everyone is on his/her own.  This implies that we each are separate with different intentions, hence the importance of being free to enact these intentions.  I think and do for me and only me.

With collective action requiring individuals to follow an idea that is likely not one’s own, it leads to everyone’s action being constrained or circumscribed by this idea.  Thus acting as or in a collective is something that must be rejected by free independent individuals—there can only be free independent individual action if there is no constraint or obligations.  That is, free independent individual concept as the overarching theory to guide order-creating policy necessarily means collective concerns are denied out of existence.  Thus, action upon each other (in pursuit of self-interest) is far more likely than acting with each other (in support of collective interests).

[Note following this idea might not even be possible because it equates to restricting one’s action by the imposed idea of another—specifically that you ought to act as if you are a free independent individual.  Hence this essentially means that another’s idea for how to order life is imposed upon your life and in conforming to the idea of someone else you would no longer be acting from your own idea as a free and independent individual!]

A Thought Experiment

Let’s conduct a thought experiment where we take the notion of free independent individuals to its logical conclusion. In this experiment we make the assumption that free independent individuals is the foundational principle upon which life is structured.

So we have a number of free independent individuals—a crowd of people—inhabiting Earth.  In this created world of free independent individuals each roams about following his/her own plans in pursuit of his/her own ideas unfettered by the ideas, needs or wishes of another.  Everyone is on his/her own doing his/her own thing!  Now let’s fast forward to the future to see what has come of this world of free independent individuals doing his/her own thing.

Absent of collective shared values, laws and ideas of what is right and good there is no rationale for or vision of a ‘we’ and hence no government.  After all a system of governance is antithetical to the notion of free independent individuals who believe that their freedom rests upon them not being encumbered and having no inherent or institutionalized obligations to others that would impinge upon them acting in accordance with their own plan for pursuing their own interests.  So for example, in place of government, we see each individual ensuring his/her own safety and security through his/her individual idea that each believes affords him/her safety and security.  Likely fearful of each other they each equip themselves with weapons of their choice for protection.

Also there are no other public services simply because there is no vision of a collective—a.k.a. a public—there are only autonomously acting independent individuals. In short there is no need for any public anything since each has the unquestionable right to act independently and free from accordance with or obligation to the ideas of another person or persons.  Individual rights are supreme.

Moreover, in this world we see each person learning independently (of course) on his/her own.  Learning is purely individual learning since accepting ideas from another would necessitate displacing one’s own idea with that of another’s and would equate to another’s idea directing one’s actions, which is counter to free independent individual action.  Also as a result there is an absence of scientific knowledge, as both science and its advancement would be impossible without cooperative and collaborative action.  Generally the advancement of knowledge among a crowd of individuals is quite unlikely because following or working with the ideas of others would be strongly resisted among independently acting individuals—creative and synthetic thinking would be rare.

Because the efficient and effective functioning of any system rests upon collective action there are no such systems in this free independent individual world. Therefore the existence of a functioning system of exchange and economic activity, as well as the development of industries and business organizations would not be possible. The whole idea of free independent people willfully coming together in support of the accomplishment of another’s idea and interests—especially when no obligation can be assumed from the other to them—is antithetical to unbridled autonomy, to a world of free independent individuals.

With each free and independent individual acting as if each has dominion over the resources nature provides, each will use them as he/she sees fit.  That is to say, there is no concern for either what is left for others or how it is left for others, since either of these implies an individual has an obligation to or is constrained by the others.  Again this runs smack in the face of being independent of other individuals.  Stewardship of the environment, not only for one’s self but for all others who have or will have a need for these resources is a concept that cannot be embraced within this world.

Moreover, to the extent that doing one’s own thing allows for procreation we have the corresponding (although remote) possibility of future generations of free independent individuals. That is, the likelihood of this is near zero since it requires two independent individuals giving up their independence to be dependent on each other and to be obligated to a third individual.  If this remote possibility did materialize, clearly infant mortality would be off the chart (100%) since newborn human beings could not live for long as free and independent beings.  In other words, since the development of a human being requires one or more individuals being obligated to and responsible for the child’s development, this required collective action is antithetical to a world of unbridled autonomy.

My life is all about me getting what’s mine cannot be the way to a high performing society, much less a healthy and harmonious society.  Why?  A society of people implies the existence of a collective, a ‘We’ and not merely a crowd of ‘Me’s’. Being free independent individuals does not necessarily mean we should freely do as we please or more specifically that we should do as we wish for our own pleasure.

History provides more than enough examples of intelligent individuals (acting as if they are free independent individuals) without a complimentary understanding and heartfelt sense of oneness with other beings doing horrible things.  The 2008 Financial Crisis is a case in point where unencumbered people inflicted harm upon many others in their pursuit of their own interest; there was no felt concern or responsibility for the consequences others might experience, there was no sense of ‘we’.

This thought experiment, which takes the belief that human beings are at base free independent individuals to its logical conclusion, clearly shows the idea to be more fantasy and fabrication than fact.  It should be clear from this thought experiment that free independent individuals as a principle for life is a recipe for the destruction.  If people critically think about this notion the vast majority will acknowledge its falsehood and its destructive impact on society.

Interdependent Not Independent

Acting as if we are free independent individuals is antithetical to our very nature.  It is counter to developing humanly productive relationships for the satisfaction of our inter-subjectness—we are social beings not merely separate independent beings. Consequently by structuring our life following the idea that we are free independent individuals—that we have no connection and obligation to each other—we necessarily lose our sense of humanness.  We become less than human, with an increased likelihood of committing inhumane acts—all in the name of independent individual freedom.

So people are not simply independent beings but rather social beings who must communicate and commune with other individuals in a social system for mutual development, for both individual and collective development.  Consequently, each individual requires being in helping relationships with others for the development of each other’s potential.  Individuals need to harmonize with other individuals, as there is an inter-subject aspect to being human as much as there is an individual intra-subject characteristic.  Human beings are social beings as much as they are individual biological beings—people exist collectively not strictly individually.

Collectivism is no more a dirty word than is individualism.  To deny or renounce the need for collectivism is to refuse one’s own humanity.  The individual and the collective are part and parcel to our humanness, thus being human means we have a responsibility to both.

Of course as individuals we have the right to pursue our interests but we also have the responsibility to do so without impinging upon the right of others to do the same, now and in the future! Moreover while we have the responsibility to develop our humanness we also have the responsibility to facilitate its development in others.  Accordingly, we must act as individual agents as well as collaborative parts of a community.   This is not an either/or choice.  It is important that we each understand our (shared) nature and the fact that we each impact the environment within which we all live.

If we only could see that we are deeply interconnected and that we truly need each other—if we can transcend self-interest—then we’d have little difficulty embracing our responsibilities to each other and accordingly making our society a more human society.  The solution to our difficulties will not emerge by attaching to one end of the individual to collective spectrum. Doing so would lead to self-destruction. Responsible people will not be selfish and short sighted and thus not act in a way that would diminish the prospects for the continued quality of life of all individuals. By transcending self-interest and embracing our I-We nature we can each lead the evolvement of our society to a higher level of human existence ensuring a brighter future for generations to come.

It should be no surprise that so many people have negative experiences with the practice; that people abhor the annual performance appraisal.

As discussed in a previous posting the annual performance appraisal is a pathway to mistrust and not to high performance.  It enacts fear as the means of getting people to do what management wants—it is the go-to-lever for inciting action.

What action does one get?  Self-serving action.  After all one’s continued employment depends on it. Individualism not interdependence is the rule of behavior. Since ‘my’ results matters what I do for ‘me’ to get those results is what counts—in the end it’s about ‘me’ winning! As the saying goes, I don’t have to out run the bear, I just have to out run you!

The annual performance appraisal fosters the reinforcing attitude that you are on your own, which is an easy attitude to embrace given the system of economics—the context within which we conduct business—advances a self-interest focus. While the ‘you’re on your own’ message is easy to accept, because it fits together, it undermines the quality of work and the overall performance of the organization. The effect is the relationships among people are anything but helping and productive—synergy, the means to creativity, cannot possibly emerge.

The annual performance appraisal doesn’t foster a sense of interdependence among the members of the organization.  So in the end, both individuals and the organization lose.

So what would be better?  If the intent is to improve performance, not merely appraise it then facilitate its improvement!  So how do you do that?  You need a system for learning and not a system of appraisal.  In short, facilitate don’t appraise! Wouldn’t facilitating—which means to aid, to further, to help—be far better?

Integrate the plan-do-study-act continuous learning and improvement cycle into every job, especially management’s. Make this cycle the essential part of everyone’s responsibility.  Provide just-in-time feedback with the intent of facilitating learning. When feedback is not used for ranking, categorizing, labeling and reward/punishment—when it is not a means for accountability—then it turns from being harmful to helpful. Be a coach and counsel not a judge.

As Warren Bennis asserted, managers do things right and leaders do the right thing.  So stop trying to do the annual performance appraisal right; don’t just try to get it right but rather step up—exhibit the courage to care—to do the right thing: put a stop to this foolish practice of appraisal! Stop appraising and start facilitating.

Moreover it is not a strategy that supports the viability of the business.  Why? Because it runs counter to the elemental consumption-production dynamic upon which the conduct of business depends. The economic enterprise must not only create a product or service but it must also create demand for (consumers with the means to purchase) its’ product or service. Producing without having a population willing and able to consume would not be prudent—likely learned in Business 101.  As demand is created and sustained the need for (and cause of) production is sustained.  So as consumption continues the need to produce continues, it is a reinforcing cycle.

Cost or Cause

Labor can be seen as a cost of producing profit or it can be viewed as an investment toward enabling both production and consumption.  Henry Ford understood the latter quite well, as he provided his factory workers with a higher hourly wage than could be earned elsewhere.  This strategy not only improved the morale of the workforce making them more productive, it provided the Ford Motor Company with willing consumers who could afford to buy what Ford produced.

An article by Bernard Condon (an AP Business writer) suggests corporations are quickly approaching the limit of their cost cutting profit maximizing strategy.  Unfortunately, such a strategy is for scoring short-term profit not for sustaining a business.  It is a strategy formulated in the minds of shortsighted people who have little or no concern for what lies beyond the short-term.  To such people nothing else matters except what can be gained (especially for themselves) before the end of the current term.  Short-term thinking limits the life of the business!

Though hindsight can inform foresight—understanding history can help to avoid repeating it—it doesn’t mean that using the present versus the past comparisons, as the basis of decision-making, is the best way to manage.   Yet, most if not all management reports (intended to incite action) place the focus on the present against the past—variance reports abound.  The concern is for increasing such things as profit, revenue and shareholder value in the short-term.  The following question is representative of the type of questions that seem to consume management’s focus of attention: How did we do this quarter versus last quarter or versus this quarter last year?  They don’t quite understand that, although with two points a line can be drawn, two points don’t constitute a trend and the long term is not the linear sum of short-terms!

Mindful of the Future

However when the future becomes a concern, then realizing progress and taking the long view become important considerations in management decision-making.  Once we realize that the future is where we will spend the rest of our life, looking forward becomes the means of assessing our current position. It means we don’t forsake the future for gains today.  Then progress, not growth, becomes a key measure of success—the point of reference is the future not the past.  Shortsightedness no longer rules the day.

Realizing progress means that the viability of the organization is improved and not diminished by the decisions one makes.  This means that management relates to employees as subjects and not objects; to view people as people, not as a thing called labor. That is, to ensure viability management must invest in, not divest of, people.  With this commitment to invest management will increase the likelihood that the people employed are talented people.

Today with knowledge continually advancing and challenging organizations to adapt, learning becomes a critical aspect of an organization’s capability.  Thus toward sustaining viability, making a commitment to continually develop the potential of people by providing opportunities for learning is paramount.  However, the benefits of education/learning are not (fully) realized in the present or short-term, but rather most likely in the long term.  The need to take the long view and make such a commitment should be clear.

Though we cannot predict the future with certainty, we certainly do influence it.  We do in deed participate in creating the reality we will experience.  Since we will live in the future doesn’t it make sense to turn our attention to it and invest in it?  Doesn’t it make sense to conduct business differently?

With short-term thinking, an imagined future does not impact one’s thinking and actions.  Costs and benefits that could happen beyond the (immediate) horizon are immaterial, speculative and thus ignored.  By living in the short-term we render ourselves blind to the impact of our actions beyond this horizon.  So we exploit what we can—and this includes people and finite natural resources—without concern for any negative impact that will actualize in the future. Again we are concerned more about what materially benefits us now than about the ramifications of our hedonistic behavior.  Moreover our self-interest causes us to seek to be unconstrained in our self-interest pursuits: In the short-term unfettered action maximizes pleasure.

Growth is About the Past

Since (material) growth is assessed in the present relative to the past, the present or what happens in the next moment is always a matter of most concern.  Why? Because our economic theory—which was made up by people sometime ago applying knowledge from sometime ago—rests upon the assumption that people are at base primarily driven to maximize material self-interest. We correspondingly have learned to place tremendous importance on material growth.  This is why the vast majority of those at the higher rungs of the hierarchy in business organizations direct their organizations by looking in the rear view mirror.  Driving by looking back works just fine as long as the trends of the past are straight and do not change in the future—when the future is a repetition of the past.

Because of the short-term’s frame of reference ideas that require management to venture beyond the horizon or to understand the underlying shifts or tectonic type changes in the environment cannot be sensed.  If these are perceived they are seen an affront to their right to maximize self-interest, so these are usually seen as threats.

So many top executives, with the cooperation of their governing boards, have driven their organization into the abyss because of an unwavering adherence to short-term thinking.  Most recent example is Kodak, whose so-called-leaders simply did nothing with the idea of digital photography.  Another, GM had for years sacrificed innovation for profits, and it would have fallen into the abyss had the U.S. government not provided life support thus keeping GM from succumbing to its suicidal tendencies.

In a HBR blog network article, two economists attending the 2012 Davos World Economic Forum offered the following thoughts regarding the seemingly widespread inability to attend to the future: “Leaders don’t have time for the future because they’re too busy with the present” (Muhammad Yunus);  ”We’re limited by being human. We want results fast, and we discount the future”(Saul Perlmutter).   It seems the conclusion is, even if leaders weren’t so busy concerning themselves with what they can get now, they would be incapable of thinking about the future because they are human.  Really!

If this is an immutable fact then of course—being self-indulgent—we must get for our self what we can now.  We mustn’t waste time thinking about, imagining and planning for the future.  Developing our creative capabilities—which is inherently future-oriented—is pointless.  Therefore we need not worry that our educational system is facilitating the unfolding of inherent creative potential. The future is not ours’ to enact only to react.

The World Beyond

We should question the notion that we are destined for this way of being.  Contrary to the implication of Perlmutter’s belief, this is not genetic; it is not inherently part of being human. So yes we discount the future not because we are human but because we haven’t transcended our animal nature: We haven’t progressed toward becoming fully human.

We need not continue to act from our animal nature.  We need not rely on crises for motivation to act.  Stimulus-response may be the primary if not the only way for animals to act it is not the only way for humans to act. The world of the immediate and urgent is not the only reality people can live within—we aren’t just intelligent animals.

There is another world, one that requires people to use the unique capabilities they have as human beings. Specifically this speaks to the use of powers emanating from the unique human capacity for conscious awareness.  Only we have the power to think about our thinking, to consciously transcend what came before and to change our way-of-being in the world.  Our destiny lies in the decisions we make about how we will be in this world.  It is not genetics that makes us seek material gain at the expense of everything else—to only have a concern for ‘me’ and ‘my’ profit now.

It is hopeless, and frankly a bit foolish, to think that we can change our life experiences and the direction of the history of our very existence without changing our (individual and collective) minds about what it means to be human.  We must cease acting as if we believe we are destined to live within the very limiting world of the short-term.  It is a space wherein nothing else matters except self-interest, except our material gain and growth.  Life can be more, much more, than a linear sequence of short-terms.

Even though we all will live beyond the short-term horizon, most refuse to think about the possibilities we can provide to ourselves beyond this horizon. Most do not think about and recognize the importance of realizing progress toward maintaining (our collective) viability. Now, in this present moment, is the only time we can take action to make our future reality a more humanly productive—not just materially productive—reality.  A better world won’t happen if we don’t enact it—wishing and hoping won’t make it so!  To do this we must step out of the short-term and broaden our concerns.

Aren’t we in this life together for the long term?  Shouldn’t we (all) be proponents of the long view?  Shouldn’t we be proponents of progress and not (solely) material growth?  We can enact not merely re-act.

Accordingly a free (unregulated) market is the answer to everything, since it is the mechanism affording unfettered self-interested action that makes for the invisible hands to do their work.  What’s the solution to our economic crisis? Allow the self-interest of those with the most—the winners—to be enacted without constraint and in so doing it will help the rest of us be winners—ah the wonders of the invisible hand doing their trickle-down thing.  What’s the solution to our educational problems?  Enable profit-seeking organizations to provide an educational experience to society’s children.  What’s the solution to our healthcare system problem?  Put healthcare in the hands of profit maximizing insurance and pharmaceutical companies.  In general what’s the answer to how to provide society’s services (apart from national defense) to its citizens?  Privatize, because the business minded can solve it all!  That is except for the many recurring problems in business they themselves create and can’t quite resolve.

Only the foolish seriously expect to realize improvement by intensifying commitment and effort toward the very same thing that created or caused the current situation.  Doubling down on a losing hand is losing strategy—it is sure way to accelerate loss.  Or as the tribal wisdom of the Dakota Indians asserts, “when you discover you are riding a dead horse, the best strategy is to dismount.” For example (staying with the Dakota Indian analogy) in business we get a stronger whip by raising standards, holding people accountable and exhorting others to get better results.  Since we are seeking to turn educating children into a business we employ the same but stronger whip—we double down.  We even go further and hire outside firms to ride the horse (we put education in the hands of profit-maximizing organizations).  Not surprisingly, with our market-based solutions to education we see no real lasting improved system of education.

It’s Heresy

Those who question capitalism—those who think critically about it and want to improve it—are heretics, heathens and worse socialists.  Unless you fall in line, you fall out of favor! If you can’t credibly argue the veracity of your belief—if you haven’t facts to support your argument—then the only recourse is to disparage those who bring it into question. Thus name-calling is clearly a reactive response in defense of an unsupportable position.

Who are the ones disparaging those who seek a better way?  Usually it is those who benefit (most) from the way things are.  So it is a good idea to challenge the real motive of those calling people who ask ‘what if questions’ heretics.

Be a Heretic

Yet because of the power of and propaganda from those benefiting from the way things are and not critically thinking about the why of things, our past continues to overtake our future. The habits of thought we’ve been following are no longer serving our collective interest—they are not serving society as a whole.  We must acknowledge that the fundamental set of beliefs and practices that we have embraced are no longer helpful toward guiding behavior and structuring life in society.   If we wish a better reality, then we need to enact a better belief system.

Where is it proven as an immutable fact that people are at base selfish?  If this was so, how do you explain people risking their life to save others—doesn’t this smack right up against self-interest? Where is it proven to be an immutable fact that markets require short-term profit maximization as the dominant motive? We can only change what is by changing how we think about ourselves. If we wish to experience a better reality, then we need to enact a better belief system.  Its time we change our errant ways.

Our economic system has no (explicit) concern for ‘we’ in its design, it is all about ‘me’ getting what I can for ‘myself’—it is best labeled an egoistic economic system.  The pursuit of material self-interest is the guiding principle for all action.

It promotes (and requires) a belief system about what being human means that is narrow and thus limiting.  That is, it rests upon people believing they are at base individualistic, selfish, materialistic and competitive.

As discussed in It’s the EconoMe, Stupid, society to the egoist is “nothing but the sum of the actions of each individual; it is nothing apart from what each individual separately contributes to it” and what one can extract from others.

Making Society In Service

While most acknowledge that democracy is of, for and by the people, it’s objective is also to afford individual freedom in life in the pursuit of liberty and happiness. Since democracy is about having a society of free individuals it is rather easy to mold it into a system in service to egoistic economics.  That is, given the focus on individual freedom and without a similar compelling vision of a collective ‘we’—everyone’s responsibility to each other, to community—democracy is easily hijacked by self-interest.  Everyone believing in self-interest is not the same as people having a shared common interest.

Happiness when viewed through the lens of egoistic economics becomes the egotistical ‘Me’ having ultimate freedom to maximize ‘My’ profit. The story is that if you do what is expected, if you work hard in striving to maximize your material self-interest then you too will realize happiness.  If you don’t realize happiness then it is your fault, after all as the story goes we are all independent individuals each seeking our own gain. You’re on your own and should be lovin it! (That is if you are among the few who can win.) While this is an alluring story, it is also a foolish story to believe.

Think Again, Critically

Just a little inquisitiveness and critical analysis with an open mind would reveal that no one ever got what they have without the cooperation and help of others.  Each individual would be lost without the support and help of  ‘We’.

Thus we understand that life in society is not simply a collection of independent individuals bumping into each other as each exercises their notion of individual liberty to have it all for ‘Me’. The fact is that we need each other for more than the satisfaction of our material desires. We are not simply instrumental to each other’s needs. While our economic system would have us believe this for the sake of maximizing our self-interested desire to consume we are not mere cogs in this machinery.

It is a fact that each is an individual whole person and just as factual each is part of the whole of human society. That is, while you and I are different individual ‘I’s’ we are not separate ‘Me’s’.  This ‘I’ that I am and the ‘I’ that you are are deeply connected. And by acknowledging and acting on this connection we can become a ‘We’.  In our society we can sustain the unity implied by us being in this particular society.

Accordingly, we each must recognize our I-We nature and the dual responsibility that this implies.  Forsaking either one we forsake our self.  We have a very deep interpenetrating responsibility to each other’s unfolding, and therefore each of us is incomplete without each other.  As noted by Amitai Etzioni “the I’s need We to be” (The Moral Dimension). To treat anything collective with contempt is to disdain human society itself; the same can be said about the individual.  Moreover, with morality and ethics requiring a concern for ‘we’ a society of individuals where ‘me and mine’ is what’s important would find it impossible to avoid becoming an unethical society.

To hear people speak disparagingly about ‘those people who rely on society’s assistance’—you know the poor who have not gotten ahead on their own—you would think that they themselves took no help from society whatsoever.  They seem unable to understand that if not for society—especially the government policies written to favor their interests—the current gains they enjoy would not exist.  They wouldn’t have so much to love about ‘your on your own economics’ if the politicians they paid for hadn’t helped them to make the vast majority of gains derived from society their gain.

The collusion among moneyed interests and government—private business and political parties—is tantamount to injecting steroids into self-interested behavior.  It is nothing short of pure greed.  But in the context of egoistic economic society greed is good; the 1987 movie character, Gordon Gekko, and his 21^st century real life incarnates on Wall Street tell us it is so.  It is because of greed that the drive for getting and having goes forever unsatisfied ensuring a consuming and acquisitive society.  This has transformed what could have been a society of equals in regards to political power into a system for maximizing gain for a select group.

With money equating to speech, those with the most money overwhelmingly have the most say; the converse being those with the least money have the least say.  When money matters the people with money matter more!

It Can Be Better

In a culture that’s all about me getting it all for me, it is a bit naive to believe that those who rigged the system to serve their material self-interest will actually change things for the benefit of everyone.  You see the system is not at all broken, it is working just fine doing what it is rigged to do.  It is not that those in authority don’t know what to do to right the ship: It is that they haven’t the will to do what is right for the benefit of all.  We mustn’t forget that universal care and compassion is anathema to the greedy.

What we are facing is a self-imposed crisis of will.  We participate in the creation of our reality by acting on what we believe about our selves.  Having the will to change enables our ability to change. Where there is a will there is (always) a way also implies where there is no will there is no way.

Preserving What Is

In a self-interest based culture most people’s concern is a narrow (self-interest) concern.  Appealing to the general narrowness of concern among the citizens political parties readily gain support from various self-interest groups by creating fear among the people that their interest is at risk.  Such a strategy tends to be divisive (it creates an ‘us versus them’ mentality) which is exactly what those seeking to control the thinking of their audience requires.  If I can get you to think other citizens are detrimental to your interest and that I am on your side then you will support me, which is in my interest—after all my interest is what I really care about.  Facts must not get in the way of ‘me’ getting ‘mine’.

Political campaigns have devolved into medicine shows where each seeking election is selling his/her brand of snake oil while at the same time casting opponents and their supporters as the enemy as they play upon the fears of the audience’s narrow self-interest.  So election after election, congressional session after congressional session nothing fundamentally really changes.   It is the same wine in a different bottle.

So the assumption of egoistic economics (which guides the functioning of American society) that if you attend first and foremost to your self-interest—in the extreme holding supreme your liberty to do as your self-interest desires—then eventually and unintentionally everyone will benefit is at best clearly false and at worst destructive to society.  If America is the United States, then what is it that they are united about?  What is it that unites them?

The Root of It All

So what’s the problem with American democracy?  Egoistic economics is the problem! Self-interest can’t possibly unite!  Having only concern for me and mine is not the way to a well functioning sustainable human society—it is more the making of an unruly unethical collection of divisive groups.  Each seeking self gain does not lead to a unified effort toward a future better than the present.

Organizations that are sustainable are not designed and managed this way, so why would anyone believe society without a unifying vision that binds people together would have a chance of sustaining itself?  A wise businessperson would not even try to design and manage an organization wherein everyone is out for him or herself and where no one has concern for and commitment to the collective known as the organization.

It should be quite clear that a functioning viable society must advocate equally for individual and community—for the ‘I’s’ and ‘We’—since they are complimentary (and necessary) components of a wholesome society.

Clive Boddy (Nottingham Business School, Nottingham Trent University) in an article in the Journal of Business Ethics defines the corporate psychopath as executives/business leaders “who have no conscience or empathy and who do not care for anyone other than themselves.”  As Boddy explains these type of people can be callous in their disregard for the needs of others in pursuit of their interests and their “own self-enrichment and self-aggrandizement.”

A Good Fit

How is it that such people can realize positions in the upper echelon of corporations? To answer this all we need to do is understand what the economic system and business culture find most important. In an economic system that advances the primacy of material self-interest and a results oriented culture, getting results irrespective of means is what counts!

Clearly the corporate world would be quite enticing to the socially friendly psychopath.  After all, it can be just as lucrative as the world of crime without offering a high probability of prosecution for crimes committed against humanity.  But not only is a world of self-interest with short-term thinking desirable to the psychopath, many of the traits of these people—calculating, charismatic, manipulative, materially driven, ruthless, unemotional—are embraced by a material self-interest oriented corporate world.

Thus charismatic people who unabashedly focus on driving for results will do very well in such a world—a world where nice guys finish last.  Accordingly, with the maximization of short-term profit being most important people who can drive and deliver results will be deemed ‘leader material’ and accordingly developed by their organization for positions of increasing responsibility.

A Matter of Degree

Seemingly what the above is describing are quite self-interested people and possibly greedy characters.  But is greed different than self-interest?  Well of course they are different, but they are also foundationally related.

Greed is essentially unfettered self-interested behavior; it is self-interest on steroids. With self-interested behavior you could have people seeking advantage over others for self-benefit and with greed you could have people causing harm to others for self-benefit.  That is to say, people acting out of self-interest can lead to unfairness and people acting out of greed will often lead to fraud.

Greed as a behavioral trait is sought and developed.  It is because of greed that the drive for getting and having goes forever unsatisfied ensuring a consuming and acquisitive society.  Adam Smith argued the importance of the pursuit of material self-interest to the industriousness of the labor class and in turn to the wealth of a nation.  As he assumed (in The Wealth of Nations) “every man…is much more deeply interested in whatever immediately concerns himself than in what concerns any other” thus implying that the propensity for satisfying one’s self-interest is most significant in influencing profit maximizing behavior.  In a recent paper appearing in The Academy of Management Annals, titled On Greed, authors Long Wang and J. Keith Murnighan claim “the basic logic of capitalism…suggests that organizations and their members should do what they can to maximize their economic interest.”

People have taken for granted, without questioning, the notion that we are at base selfish beings.  Accordingly our societal culture embraces the notion that people are at base driven to maximize their material self-interest—what’s in it for me is not just cliché it reflects a general attitude, the American zeitgeist.  This unquestioned belief has been forged by the widespread application of the self-interest precept of our economic system, infiltrating life in society in so many aspects—business, government and education.

Accordingly rigging the system in service to one’s self-interest is just the way we’ve designed things to work—special interest rules the day.   Why else are there so many elected officials who become millionaires during their term in office in what should be service to society?  Why else are there lobbyists (many of whom served on Capital Hill prior to becoming a lobbyist) working to establish quid pro quo relationships with government officials? Why is it that those who are able to offer sizable amounts of money to elected officials (our public servants) given far greater access, credibility and opportunity?  Seemingly every thing is an economic exchange through which each is seeking to better his/her position materially.

According to Smith “it is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from the regard to their own interest.”  Substitute senator, congressmen and president and it no doubt applies. It is therefore no surprise that special interests dictate the discourse and much of public policy.

Insatiability of Material Gain

Moreover according to Wang and Murnighan “neoclassical economics’ focus on self-interest almost seems to glorify greed” (p 287).  British philosopher David Hume, a close friend of Adam Smith, believed greed to be both vice and virtue.  In regard to the latter Hume claimed it motives people and thus can be a positive force in commerce.  Smith clearly agreed since his theory of economics (of societal wealth creation) rested upon each individual striving to maximize his/her material self-interest.

As Wang and Murnighan noted “the negative social consequences of greed focus primarily on its uneven distribution of resources” and the growing gap in income inequality in the U.S. is a case in point.  In the period between the 1950’s and 1960’s CEO compensation was about 25 times that of the average worker.  Today it is 340 times that of the average worker!  As a result of the income trend lines going in quite different directions, some argue that we have two economies.

It would appear that the seed of material self-interest has grown into sequoia-sized greed.  It seems clear that everything for me and nothing for others—though a popular path for those seeking greater personal wealth—is a recipe for destruction and the eventual depletion of societal wealth.  It surely is not the way to progress, if by progress we mean the likelihood is good that our future will be better than the present.

As Lester Thurow noted in his 1996 book The Future of Capitalism, in capitalism “there is simply no social must.”  Moreover, capitalism honors competition, and winning in a limited resource competitive environment is auto-correlated.  In other words the probability of winning is greater for those who have previously won—winning begets winning—and the probability of non-winners winning increasingly diminishes.   As the gap between winners and losers increases moving from losing to winning gets more and more difficult.  Correspondingly, since a self-interest seeking materialist can never have enough, trickle-down doesn’t happen—the evidence of this is quite strong.

How does material self-interest become greed?  The pursuit of material gain has no natural satiation point, thus unless the individual is morally awake the desire for having more is unfettered and thus escalates without bound.  Moreover with egoic self-interest bounded by one’s own skin, in pursuing more and more a concern for one’s impact on others is essentially nonexistent. The concern for ‘me’ and ‘mine’ is all consuming.  The 2008 financial crisis is a case in point of the consequences of greed. In fact, Clive Boddy claims corporate psychopaths theory as an explanation of the cause of the global financial crisis.

Smith believed that human beings weren’t capable of self-control and thus people require external forces to keep them within the boundaries of fair play in their economic endeavors.  Smith wasn’t advocating regulation but enforceable laws.

Unfortunately human behavior can’t be legislated, especially greedy behavior.  Unregulated material self-interested behavior transitions readily into fraudulent behavior.  What’s better for society, to reign in such behavior before the fact or to seek retribution for the behavior after the fact?  Is it better to prevent theft or to enforce the law (i.e. prosecute) against theft?  [It seems, at least thus far, we’ve done neither in regards to the actions of Wall Street.]

The issue is not whether greed is part of human nature, but whether greed is an unavoidable part.  We could say the same for morality.  Both are in our potential.  However we are not destined to be moral actors any more than we are destined to be greedy.  Just as a sense of morality must be developed, so too must greediness.   In regards to the latter, our current system of economics is doing this quite well.

As with most dimensions of human development, we are guided and facilitated in our development by the societal context—the zeitgeist—within which we are raised.  In the U.S. the societal context facilitates the belief that we each are self-interest maximizing beings—self-interested behavior is expected, it is our ethos.  It is no wonder that many of our corporate executives are far more calculating, far less empathetic and ruthlessly political/manipulative; there appears to be no concern or regard for the impact of their self-serving actions on others.  [We are even seeing this in our elected officials.]

Just because the Citizens United decision by the Supreme Court concluded that corporations are people and thus it is legal for corporations to have an opaque and dominant voice in the election of our representatives doesn’t mean that corporate executives should act on this.  Those who are morally developed—whose sense of self doesn’t stop at their own skin—and who are not solely guided by the legality of an action understand that can doesn’t imply should.

What if we believed we are not just self-interest maximizing beings? What if we weren’t so consumed by (i.e. addicted to) having more and more as a way of being and establishing our personal identity? What if having a concern for ‘We’ is just as important as a concern for ‘me’? What if we are deeply connected?  [As noted by Amitai Etzioni “the I’s need We to be” (The Moral Dimension)]. What if our sense of self didn’t stop at our skin, but included all of humankind?

Acknowledging our ‘I-We’ nature puts us in touch with the individual and collective aspects of being human and in turn to the simultaneous responsibility we have to each other.  Accordingly life in society is not simply a collection of independent individuals seeking advantage over others as each strives to have it all for ‘Me’. We are not simply instrumental to each other’s wants.

If we wish those who lead—corporations and government—not to be so self-serving then we must change how we as a society not only choose but also shape them.  This requires us to change what we believe about ourselves, and in turn to change the system of economics, and correspondingly the conduct of business, that has infiltrated so much of life in society.  After all we do shape the reality we experience.

They are symptoms of an enacted belief by the majority of society, which has become institutionalized in society’s systems, that self-interest (which includes special interest) is paramount and correspondingly success in life is measured by the size of one’s material gain.  That is to say, they are symptoms of a wrongly purposed economic system becoming infused into every aspect of life in society, most notably government, education and of course the conduct of business.

In regards to the system of government, when wealth becomes so concentrated and elected officials become so money dependent then the conduct of government unavoidably moves increasingly in favor of the wealthy.  In effect, the very wealthy become the overlords of society.

Today we are clearly operating according to a set of beliefs that are antithetical to the advancement of democracy and the development of people.  The fact that we have elections—that we are allowed to vote—though necessary it is not sufficient to ensure democracy is operative and thus ensure freedom from oppression.  Voting when you have little choice does not equate to participation in choosing who will represent you.

Occupy Wall Street could provide the finger-snap that will awaken people in society from their hypnotic sleepwalk through life.

Oh you say people are awake, they aren’t sleepwalking.  Really!  As noted by Charles Blow, “most Americans now say that the fact that some people in the U.S. are rich and others are poor does not represent a problem but is an acceptable part of our economic system.” This is a manifestation of the unquestioned belief that material self-interest is paramount.

How often do people think the same thoughts in the same way they’ve always thought about them?  How often do they listen (without judgment) and seek to understand? How often have they actually explored perspectives that are not consistent with their view of how things are without filtering that of the other through the beliefs they hold so dear? Thinking is not merely a rearrangement of thoughts!

How often do you actually critically think about your thinking?  How often do you explore and challenge the beliefs and assumptions that are the foundation of your beliefs, thoughts and actions? How often have you actually improved the way you think and what you think about?

Those protesting the injustice and unfairness of the way things are in society are providing a wake-up call to everyone—just as the Vietnam and civil rights protesters did before them.  The Occupy Wall Street protest must keep the focus on changing the system and not follow the suggestion of what many pundits and news anchors offer, fixing on ‘a simple demand’ and/or forming or becoming aligned with a political party.  Either one of these would limit the scope, make for colonization of the message and turn the conversation more divisive.

The way things are is the result of a system of orientation that has ordered life in (our) industrialized society for quite sometime.  Thus its underlying assumptions and beliefs are hidden well below the surface of everyday experience. Since these have reached their extreme and have become massively destructive, they need to be brought to the surface for conscious exploration by an awakened critically thinking mind. To detach our self from our thoughts, which as Mahatma Gandhi said “is the prerequisite for effective involvement.”  Gandhi noted that attachment to our opinions often distorts our thinking—it keeps us from engaging the power of critical thinking.

This is not a left-right issue or a political party issue but a very human issue! We must break away from the habit of thinking in either/or terms—such thinking leads to fear and diminishes understanding.  It is time that we wake up to the fact that we are all the same: human beings seeking to live a fulfilling and meaningful human life.  It is not the time—and it is not clear when it ever is—to recoil against ideas intended to help everyone. We are so deeply connected that when others are unjustly treated we all suffer.  Yet because of an attachment to individualism as our guide we are unable to understand our interdependence and connectedness.  We must cease believing that it is all about me having mine so to hell with we.

What is a sure fire way to keep things as they are?  Continue to reinforce the primacy of the individual over the collective—keep people thinking in either/or terms.  Incite people to fear the bogyman by creating stories about those who aren’t members of their group. This keeps people fearful and reactive thus stopping them from thinking and actively listening (without distortion and judgment) to the ideas of others.  So the focus of attention turns toward demonizing others and most importantly away from collaborating with others toward fundamental system change.  Yes this is all part of keeping people from coming together to solve the problem thus ensuring things continue as they are.

It is time to let go of the thought that you are of this party or that and to embrace the fact that you are at base a human being and to acknowledge that each and every ‘I ‘ needs a vibrant ‘we’.

What we need is to develop as a society of people toward becoming a human-centered society—a viable society.  This requires a viable citizenry, which can’t be realized as long as the system fundamentally remains as it is.

To continue saying that it is broken suggests that all that is needed is a little repair when in fact what is needed is critical thinking: It is a fundamentally flawed system that has infiltrated the very workings of democracy.

In the existing system our choices range between unfairness and fraud, from a little greed to a lot of greed.  Greed won’t allow itself to be regulated: Such an idea runs counter to its very essence!

Thus, if the Occupy movement allows itself to be colonized by a political party—beware of the demagogues—then it will render itself ineffective toward calling for and facilitating fundamental change.

If we are to have a serious conversation, then that conversation can’t begin with the aim of fixing a broken system, it must begin with the intent of revolutionizing the system.  What is required is a majority that continually challenges the status quo by asking what if things don’t have to be as they are.

You see no matter how corrupt the system, it does require the cooperation of the people adversely impacted for the system to continue as it is.  So squelching or disparaging protesters increases the likelihood that cooperation will continue.  However, once a critical mass stops going along with the way things are, then what can be becomes probable.  Hence the power of non-violent movements!