5ème Rencontre Internationale

Ethique, Finance & Responsabilité

29 et 30 Septembre 2006, Genève

Compte-rendu abrégé des contributions et des débats

L’héritage éthique de Peter Drucker, John Galbraith et Sumantra Ghoshal / Peter Drucker’s, John Galbraith’s and Sumantra Ghoshal’s Ethical Heritage

Andrew Cornford introduces the session pointing out that Galbraith’s participation in political life was extensive. His thinking affected the framework within which decisions are being made. There is a strong ethical underpinning to his thinking.

Henri-Claude De Bettignies says that his presentation will be centered on Ghoshal. He participated in the programme he organized for chief executives. There is also a book, “Sumantra Ghoshal on management”. He had a doctorate from MIT and he worked at LBS until his death. He was a charismatic teacher. His book, “Managing Across Borders” made his name. He was a consultant for several companies including Phillips and Ikea and also had a good practical experience. The business schools, he argued, do not act in a very ethical fashion: there’s a partial model not accounting for the complexity of human behavior. Managers cannot be trusted. Morality and common sense have been victims of the endeavor of making business management a science. All models are value loaded. Nothing is more dangerous than a bad theory. Should business schools be concerned about the common good? We cannot outsource the common good to NGOs. Chief executives have a lot of impact on society. Business schools can change their culture.

Joaquin Guzman Cuevas begins by saying he has chosen the topic of the role of the teaching of ethics in economics and management. Four main principles are applicable: ethics deals in values; these values must be largely established; economic behavior must pursue individual interest; at the same time, the common interest. Drucker, Galbraith et Ghoshal have different views of motivations: Drucker insists on profit maximization; Galbraith mentions fear of sanctions ; Ghoshal speaks of preferences. How is common interest understood? Galbraith wants to achieve equality through the Welfare State; Drucker banks on the NGOs. The big problem is how to make compatible individual and common interest. The structure of the economic system is made of three levels: the techno-economic level, that which is taught in the business schools; the socio-political level, which gives rise to institutions or rites; the axiology level, which relates to a paradigm (ideology). If we base on another paradigm like cooperation things present themselves otherwise. But nobody questions the prevailing paradigm of the pursuit of self-interest. This lack is particularly obvious in the thought of Drucker.

Andrew Cornford disagrees pointing out that Drucker was a very prolific writer and it is not fair to say that he was uncritical of the basic conception of economics.

Frank P. McHugh underlines that his interest is not only to speak about the three authors but also to speak about ethics. Ethicists speak on a far to general level. They speak about the observable context of ethics, tax evasion, wage differences, etc. But there are issues more difficult to get at, for instance insider dealing: it is against the law but it is not necessarily fraudulent. The question is different in a highly liquid market. We must address an ethical message which takes into consideration the reality of people. Ethics must open the eyes on the complexity of reality. The basic concepts are risk, uncertainty, knowledge and time. Ethics must relate with them. In pensions, the central concepts are time and uncertainty. Galbraith is a political economist. Ethics is a social thing and Galbraith addresses the social impact of economics. Textbooks rely on assumptions which do not exist any longer like competition and rationality. Obsolescence of economic teachings is generally high. Speaking of Drucker: he lists three things and talks about the mission of business and management. The main task of management is to make people attain common goals, which is reminiscent of the common good. Drucker’s writing has a strong ethical component. However, Ghoshal appears to be the most attractive of the three. People are right in their intuition that there is something wrong about business. The ethicist is to reinforce the importance of a manager to himself. There is a pessimistic view on human nature and Ghoshal gives a big opening: he has the gift of imagination, lacking both in economics and ethics.

Andrew Cornford says that the question about insider trading is very interesting: one must look at the context in which a precept applies.

A participant argues that emerging businesses will not find guidance in those three authors. There are more interesting authors like Hayek, dealing with more interesting subjects.

Bernard Koechlin emphasizes that the number one goal of a company is to bring a useful product or service to the public. This is one lesson brought by Drucker. Others would say that the first goal is to make money.

Andrew Cornford admits that Galbraith was not a management writer. But he speaks about small and medium enterprises in his later writings.

Paul Dembinski remarks that his book on the topic could be one of the most important books in terms of corporate social responsibility.

Andrew Cornford says that the institutionalist school in the United States died with Galbraith but the questions he addressed remain.

A participant thinks that a new model could be derived from a real thinking of the role of the economic agent. There should be a return to a basic understanding of human behavior.

Mohammad Farrokh