Pari Roundtable on Corporate Ethics, Globalization and Economic Instabilities
November 16,17 2002
International trade is as old as human history. Globalization by contrast is new and its short and long term effects only poorly understood. Issues revolve around the high degree of complexity involved, the international movement of vast sums of "virtual" money, and the high speed with which information can be shared across the globe. Natural systems tell us that while a complex open system can self-organize and generate its own dynamics and rules of behavior, it can also enter realms of chaos or encounter bifurcation points where behavior suddenly dislocates. What is more, globalization is not being introduced on a level paying field. There are wide discrepancies involving access of knowledge and technology between the First and Third Worlds.
For such reasons globalization without some set of international agreed rules of conduct must inevitably lead to economic instability. What should be the basis of such rules and to what extent should they reflect moral and ethical principles? Ethical principles of conduct reduce uncertainty, both globally and locally, because rules of behavior become more predictable under various circumstances. According to Dr Ernesto Illy "Respect, Honesty and Trust" are the invisible pillars on which the market stands.
Lloyds and the London stock exchange were once founded on the principle of "my word is my bond". With the introduction of electronic means of communication and the erosion of principle in favor of expediency such trust has been eroded. Recent events in the United States have further demonstrated the fragility of the market place when ethics are abandoned in favor of "cooking the books". If such uncertainties existed on a global scale they could lead to catastrophe for large sections of the world's population.
Cultural diversity also presents a challenge when different ethical principles and strategies of negotiations are involved. This is further complicated by the considerable differences between First and Third World markets, disparities in access to information and different viewpoints on the ownership of intellectual property
The issue of corporate ethics is easily resolved in cases of businesses founded by a few like-minded individuals who adhere to strong moral principles. In nineteenth and early twentieth century Britain, for example, Quaker industrialists, deeply concerned about poverty and ethical business standards, introduced such policies as pension funds, five-day working week, worker education and employee profit sharing. Traditional Islamic business practices insisted that profits and interest should be returned to the community as a whole.
Issues begin to arise when a company expands or operates at an international level. Is a blanket set of principles to be imposed on new board members? Most of us would like to believe that we are moral beings, yet in everyday situations we generally adopt a position of compromise. After all, ethical bases for action must be tempered by pragmatics - what consequences do these actions have for others? How are they perceived by shareholders? What if a certain set of principles result in lower profits or a reduction in a company's work force?
Again a glance towards natural systems may give us some clues as to rules of procedure. They suggest that in some areas economic and environmental principles may be universal and that all can benefit when all contribute to the health of the environment (economic or natural).
The Pari roundtable will explore and discuss the issues of ethics, rules of procedure and ways of dealing with the increasingly complex sets of interactions in our modern world.
The Pari Center would like to thank Centromarca and the Monte dei Paschi bank for their financial support of this meeting.
