Beyond selfishness.(article stresses balance between self-interest and concern for others in corporate management practice)

A syndrome of selfishness, built on a series of half-truths, has taken hold of our corporations and our societies, as well as our minds. This calculus of glorified self-interest and the fabrications upon which it is based must be challenged.

On Wall Street, where shareholder "value" is vigorously pursued through ever leaner and meaner organizations, business as usual changed abruptly on September 11, 2001. Within hours after the tragedy, obsession with self gave way to serving others. At the very epicenter of self-interest, people became engaged in collective effort.

There is a message for management in this. The point is not that concern for others is suddenly going to replace self-interest, but that there has to be a balance between the two. The events of September 11 and the following days helped to make evident how out of balance our society has become. The role of management -- responsible management -- is to work toward restoration of that balance.

The House That Self-Interest Built

In the past 15 years, we in North America have experienced a glorification of self-interest perhaps unequalled since the 1930s. It is as if, in denying much of the social progress made since then, we have reverted to an earlier and darker age. Greed has been raised to some sort of high calling; corporations have been urged to ignore broader social responsibilities in favor of narrow shareholder value; chief executives have been regarded as if they alone create economic performance. Meanwhile, concern for the disadvantaged -- simple, old-fashioned generosity -- has somehow been lost.

A society devoid of selfishness is certainly difficult to imagine. But a society that glorifies selfishness can be imagined only as base. The intention here is to challenge such a society -- not to deny human nature, but to confront a distorted view of it. In so doing, we wish to promote another characteristic no less human: engagement.

A syndrome of selfishness has taken hold of our corporations and our societies, as well as our minds. (See "A Syndrome of Selfishness.") It is built on a series of half-truths, each of which drives a wedge into society: from a narrow view of ourselves as "economic man," to a distorted view of our values -- reduced to shareholder value, to a particular view of leadership as heroic and dramatic, to a nasty view of organizations as lean and increasingly mean, to an illusionary view of society as a rising tide of prosperity. All of this looks rather neat, as does a house of cards. Before it collapses outright, we would do well to balance it with a rather different set of beliefs.

It is important to note at the outset that Enron and the other companies now under investigation are not the problem. They are the tip of the iceberg -- the exposed criminality. That can be dealt with in the courts of law. Far more massive and dangerous is the legal corruption taking place below the surface -- behavior that, while technically allowable, corrupts our leadership, our organizations, our society and ourselves as human beings.

Below we take a look at each of these half-truths upon which the syndrome of selfishness is built. We refer to each as a "fabrication" to convey that they are assumptions we have constructed, not truths we have discovered.

First Fabrication: We Are All, in Essence, Economic Man

In this view of the world, we are all economic man, Homo economicus, obsessed with our own self-interest, intent on maximizing our personal gains. Homo economicus, in other words, is never satisfied, but always wants more -- demonstrably, measurably more -- and is continually calculating to achieve that end.

In "The Nature of Man," (1) an article that has profoundly influenced generations of M.B.A. students, finance professors Michael Jensen and William Meckling introduced five models of human behavior. The first three --sociological, psychological and political man -- they quickly dismissed. The fourth, economic man, was not dismissed, but folded into their fifth and favored model, which goes by the rather convoluted label of Resourceful, Evaluative, Maximizing Model (REMM). The REMM postulates that everyone is an "evaluator," constantly making "trade-offs and substitutions among" wants -- specifically among the "amounts" of each. (That the amounts of some wants, such as money or diamond rings, can be evaluated and measured more easily than others, such as trust or integrity, is not discussed.) These wants are unlimited. REMMs cannot be satiated. And there are no absolutes.

According to Jensen and Meckling, "there is no such thing as a need," except, of course, the need for more itself. Everything is a trade-off. They illustrate this with a rather startling example:

George Bernard Shaw, the famous playwright and social thinker, reportedly once claimed that while on an ocean voyage he met a celebrated actress on deck and asked her whether she would be willing to sleep with him for a million dollars. She was agreeable. He followed with a counterproposal: "What about ten dollars?" "What do you think I am?" she responded indignantly. He replied, "We've already established that -- now we're just haggling over price."

The story is not startling -- it is, in fact, well known -- but Jensen and Meckling's use of it is startling. For, instead of qualifying this in any way, they follow it with this statement: "Like it or not, individuals are willing to sacrifice a little of almost anything we care to name, even reputation or morality, for a sufficiently large quantity of other desired things... ." In other words, pushed to the limit, every woman -- and every man -- is a willing prostitute. Everything, everyone, every value has its price.

Our quarrel is not just with the outrageousness of this claim, but also with its degree of truth. For while there are all too many such people in our midst, perhaps more than ever -- too many athletes or financiers or …