Is anyone out there?
03 Jun 2009 by Peter Barrett
Recently, I was fortunate enough to hear a very well respected economist talk about the ‘road to recovery’ (or not). To give you some idea of his status, he is a professor at the London School of Economics, an ex-member of the Bank of England’s Monetary Policy Committee, a former economist for the European Bank for Reconstruction and Development and a regular blogger on the FT. Bloomberg even sent a camera crew to the event to relay his presentation live to all of their trading desks (this was in the light of the UK receiving a downgrading by one of the major ratings agencies the day before).
He was duly controversial and quite funny (not a normal characteristic for an economist), but one of his comments was quite intriguing. He talked about financial institutions ‘losing their moral bearings’ and the need for them to regain trust. Banks ‘need to look in the mirror and practise an earnest look’, he argued. It got me thinking about how the whole trust issue is becoming more important – not just for banks, but for other public figures in the business world (don’t even mention MPs and draining moats or duck palaces).
Will we trust Tesco Bank more than Barclays? Who are the role models we look up to in business? In an age where failure is rewarded by huge pension pay-offs (although Sir Fred Goodwin has now apparently been excluded from his local golf club – tough, eh?) is there anyone out there? Do we have to look to part-time activists like Bono to find people with integrity? In an era where many corporations are talking corporate social responsibility (CSR) and ‘green’ agendas, why is it so hard to believe them?
The fundamental question here is whether capitalism has actually failed – and there is a lot of talk recently that it has. I think there is a distinction between ‘financial capitalism’ – the kind that we have seen over the last nine months with excessive risk-taking and little or no accountability – and the other emerging option ‘state-owned capitalism’ – where the risk-takers have ended up! Is there not a third way? I wonder if the likes of John Lewis are successful because they are partnership-based and everyone shares (in some way) in any profits made. I used to work for a company that was owned by its employees and although it was a tough, competitive environment, people were rewarded fairly for their efforts, even to the point where I still receive the odd cheque even now, based on investments in new ventures while I worked there (and that was over five years ago). I remember the chairman of M&S (many years ago – and this is a paraphrase) saying that ‘honesty is always the best long-term policy – and the most profitable one’. The founders of Google – Larry Page and Sergey Brin – have a great corporate motto: ‘don’t be evil’. Now I’d prefer something a bit more positive, but it’s a good start.
If business in the future want to be distinctive, it’s not enough to be offering great prices or competitive products (important though that is). It’s about whether you think they put your interests first, rather than their own; and whether you can believe what they tell you, based on their actions not their words. I don’t think this will be an optional extra. Ironically, the companies that are doing that now are the ones who appear to be riding out the current recession. But we could do with a few more.
So, I ask again – and perhaps you might like to comment and dialogue with me on this: In an era where many corporations are talking corporate social responsibility (CSR) and ‘green’ agendas, why is it so hard to believe them? And who are the role models we look up to in business now?
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About the Blogger
Peter Barrett
A fan of Arcade Fire, U2, T-Bone Burnett, Radiohead, Everton football club (since I was zero), Liverpool (the town where I was born), poems (writing and reading them), Flannery O’Connor and David Mitchell, coastlines and deserted places, changing the world while having fun and films by Martin Scorcese.
