Business ethics? – smethics!

Since the financial meltdown, corporate ethics seem to experience a new renaissance. CSR and ethical behavior of C-level managers is portrayed as the solution to all that is wrong. Well, business ethics have been in business school curricula for decades without much impact. Don’t get me wrong, I strongly believe that ethical behavior is fundamental for an organizations long term high performance, but it is only one factor in the equation. If we truly examine what structural changes underpin the economic woes of the traditional high performing countries it is interesting to see that the same structural changes facilitate the rise of the new economic heavyweights: the dramatic decline of the middle class. Look at the only economic and socially strong country in Europe: Germany – with a bulging middle class and low wage disparity. Eastern countries that succeeded to rise in sustainable wealth, social stability and well-being, and portray superior economic performance, all manage to reduce wealth/wage disparity and build an increasingly solid middle class. South America, all countries with exemplary economic performance achieved this by the same route: decrease wages disparity and increase affluence of a well educated middle class. Now look at the US, and many European basket cases: increasing wealth/wage disparity,rapid decline of the once so powerful and stabilizing middle class. Policy makers in these countries seem to want us to believe that increasing charity by the newly so powerful upper class and corporations combined with strong ethics will get us out of the quack-mire, well, pigs may also fly. It is my strong belief that reversing the trend in wealth distribution and the re-building of a strong, educated middle class is not only ‘American’  but should be one of the top priority issues if we want to maintain our place at the ‘feeding troth’. 

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