The Ties that Bind Japan

I was recently interviewed in the press about the recent Olympus scandal in Japan.

The Olympus episode illustrates competing moral virtues in Japan. In this case, it was the virtue of loyalty winning out over the virtue of honesty. I am increasingly coming to believe that one of the core problems in Japan is that while the elite may thoroughly understand the country's problems, it isn't necessarily in their short-term interest to push for change.

Real change will come from a change in thinking, which means education. People had put their hopes in seeing societal change come about from the election of the DPJ in 2009 or from the response to the earthquake in 2011. People also put hopes in corporate change coming from the response to business scandals like Livedoor and then Olympus. But it didn't happen. Now analysts are wondering whether a debt crisis (that some expect to hit Japan by 2018) might do the trick. I doubt it. Change will come about over a long term shift in the country's values.

When I recently visited Japan many people were talking about kizuna (social bonds), which was voted "the kanji of the year" for 2011. Sure Japan demonstrated the virtues of its strong community ties (or bonds) in its response to the earthquake and tsunami. But in a way, the bonds that tie Japan together are also part of the problem. They are binding Japan to the status quo or inertia. People are aware of this issue and are skeptical of powerful people taking advantage those bonds and the peoples' trust. For example, companies are using kizuna in their TV commercials and there is a new political party called kizuna. As one person told me, kizuna is fine as long as the social relations are on equal footing. Without equity, it's exploitation.

Now foreign investors are more likely to question the accounting books at Japanese companies. They are also more suspicious about Japanese corporate strategies for mergers and acquisitions. When the question of Tokyo becoming Asia's financial center comes up, people usually look around the room nervously like someone just told a bad joke.

"Toro Yama" photo by Chris Gladis.

Speaking Values with Confidence

This is a guest post by Diana Santana and Alberto Turlon from the Carnegie New Leaders program.

Consider a time in your career when you were asked to do something that went against your values. First, recall an instance when you acted in favor of your values. How did you do this? How did you communicate in ways that created change? Now, consider a time when faced with a similar challenge that you failed to voice your values. Why didn't you voice your concerns? Jot down these two stories.

Mary Gentile, educator, author of Giving Voice to Values (GVV), and creator of the GVV curriculum, opened a discussion of her work at a recent Carnegie New Leaders event by asking participants to call on their experiences and consider "A Tale of Two Stories." Adding to this exercise, Gentile recounted the Harvard Business School welcome speech that instructs incoming students to "look to the left of you, look to the right;" know that these are the people that you will call on for the rest of your life when faced with a values conflict. Drawing on one's network and reflecting on previous experiences are just two GVV tools that empower the individual to voice values in the workplace.

The GVV curriculum was born of observations and experiences that led to what Gentile referred to as a "crisis of faith." After Gentile's 10-year tenure at Harvard she began consulting with other top business schools on their business ethics curriculum. Scandals of the late 1990s and early 2000s involving MBAs were reminders that something in the classroom wasn't working. Despite attempts to change business school structure or course offerings, MBAs still exhibited unethical business behaviors. Survey studies released at the time also demonstrated that students were less ethical after completing business ethics courses.

Gentile keenly observed that relying on one's professional network and studying different models of ethical reasoning was not enough to ensure ethical behavior in the future. Something was lacking in the way students were being taught business ethics.

Gentile went on to become a consultant for a project at Columbia Business School. The project invited incoming MBA candidates to write an essay describing their experience with a situation where they were asked to act in a manner that conflicted with their values. The result of perusing some 1,000 essays, in light of earlier research conducted by Douglas Huneke and Perry London on altruism, created the foundation of Giving Voice to Values.

Gentile discovered that individuals who succeeded in communicating their values had at some point communicated their ideal response to another person they admired—a friend, a family member, a mentor, a work ally, a spouse, etc. She determined that this opportunity to pre-script the communication was essential to speaking up for their values in difficult situations.

Giving Voice to Values provides such an opportunity. It is a post–decision-making curriculum that enables individuals to hold strong to their principles and communicate their thoughts in a manner that best suits each individual's personality and communication style. The curriculum does not instruct students on what is right. Rather, it assumes that a values decision has already been determined and instead focuses on equipping people with the confidence to communicate their values.

Gentile recognized in her research that individuals in a professional setting tend to develop "preemptive rationalizations" that serve as excuses when faced with a values conflict. "Maybe I don't have all the information," one might claim. Another might think "this is just the way the industry works." Such excuses, coupled with the individual's sensitivity to their position in the hierarchy, stifle the individual from thinking through other possible scenarios and outcomes. The individual succumbs to the conflicting request despite uneasiness. GVV provides students the opportunity to observe others that have ignored these excuses and have found ways to express their values.

The curriculum encourages students to self-assess how personal goals align with organizational goals, provides exercises that ask the student to communicate their values in challenging situations, and gives students the chance to practice their communication with feedback. Armed with confidence, scripts, and values awareness, individuals are more likely to act on their values and enact positive change within an organization.

Gentile's presentation on GVV development and curriculum was convincing. She demonstrated the need for such a practical curriculum and showed its worth to students and society. It is no wonder the GVV curriculum is employed in organizations and universities all over the world. GVV provides the tools necessary to communicate personally while potentially making positive organizational and systemic change.

The exercises and examples Gentile mentioned were developed primarily for those in business and lacked specific application for those working in government, international organizations, and non-governmental organizations, the primary audience members at the Carnegie New Leaders event. Positive examples of non-business professionals communicating their values in challenging situations would have augmented the already powerful presentation.

Nonetheless, audience members understood that many of the values conflicts that arise in professional situations transcend industry. Each participant understood Gentile's broader message: Every values conflict has a remedy that varies on the individual's professional position, sensitivity, personality, and communication style.

GVV is an innovative approach that explores self-awareness of personal values and communication style. It provides the opportunity to construct and practice responses for a variety of situations. Giving Voice to Values gives values-driven individuals confidence to speak up for what's right, no matter the circumstance.

The Meaning of Google's Exit from China

Google announced today it will close its China-based search engine, redirect users to an uncensored site based in Hong Kong, and pull out its flagship business in response to cyber attacks by China-based hackers. Even though Google will shut down its local search engine, it will maintain some businesses in China. I have been thinking about the significance of this episode. I think it has implications at least for Google, China, and the international system. Here are few thoughts on each.

I have two themes to convey:

1. Openness is critical to economic development and global influence. My view here based on hundreds interviews I have conducted over the past six years in East Asia as part of an ongoing research project on the future of Asia.

2. We will increasingly see a future of convergence and negotiation in the international system as power gaps between states shrink. My view is based on an event series I have been running at Carnegie Council that started at the Nixon Center in 2007 that we call the "Rise of the Rest" after Fareed Zakaria's expression to describe what I see as biggest question in international relations of our time: What does the rise of China and other emerging countries mean for international norms and power?

1. What it means for Google and other companies

Google has opened up the range of options for companies operating in morally questionable environments.

From Google's perspective, being in China was a trade off. It was a question of doing some evil in order to do some good and make some money. They put it on a scale and decided that the amount of good it could do in China was worth it. That is no longer the case. During my trip to China last winter, everyone, including Chinese, complained about corruption, arrogance, fakery, and a lack of trust in that society. The common global business question about China (how do we get in?) has now been turned upside down (is China worth it?). Google's move has expanded the debate. Meanwhile, U.S. Chamber of Commerce's Myron Brilliant said this week that the "wolves can no longer be kept at bay:" U.S. companies will begin to push for retaliation against mercantilist industrial policies in China. It is no longer a given that you have to be in China to succeed. Companies and people can take into account ethical implications of their actions.

Google founder Sergey Brin has been the moral compass of Google. Drawing from his experience growing up in the Soviet Union, he has never been comfortable with censorship. He recently said that to him it wasn’t so much important whether the Chinese government was involved with the cyber attacks on Google. His point was that the Chinese government and the PLA have tens of millions of people in it. So even if there were a Chinese government agent behind this, it might represent "a fragment of policy." China's government is so big, you can't hang it on the government. But that is a problem: who is accountable? Are there rogues in the government? If so, can other countries safely trust this country?

Brin has said in a recent public speech "We from the outside provided notification when the local laws prevented us from showing information, and the local competitors followed suit in that respect. So I feel like our entry made a big difference. But things started going downhill, especially after the Olympics. And there's been a lot more blocking going on since then. Also our other sites, YouTube and whatnot, have been blocked. And so the situation really took a turn for the worse."

Brin and co-founder Larry Page have touted Google's ability to spread democracy through access to information. "At its best, Google is data-driven with an ethical trump card," says Larry Brilliant, who headed Google's philanthropy. Brin gives credit to Northrop Grumman, whose data were stolen about the F-35 fighter, for coming forward and helping with Google's investigation. He encouraged more companies to come forward.

My point is Google's mission and culture go beyond profits.

No one knows precisely how extensive the cyber attacks were but the FBI, Pentagon, and just about every single serious China watcher has been talking about China's cyber attacks for a long time. The nature of US-China relations and vulnerabilities is changing; it makes previous flare ups, for example over Hainan island, look quaint. The gravity has grown over the past year and culminated in December when more than 20 companies were attacked. It is very serious. Human rights organizations have used Gmail to communicate with people in China. If Gmail were compromised it would literally put people's lives in jeopardy.

2. What it means for China

This story shows a bad turn for China in terms of moral leadership in the world and economic development at home.

Can the Chinese government censor information and foster growth? Fareed Zakaria calls that the trillion-dollar question. So far China has been successful at embracing markets while maintaining a controlled political system. I share his view that that this system cannot last. China is still in the early stages of modernization. But it is it's difficult to imagine China being "a truly innovative country at the cutting edge of the information age, of global economics, if it has all these constraints on information, all this political control on human-to-human contact, which is what the next wave of the information age is all about."

Can China be a world leader that is admired, imitated and that shapes the global system and global values? Again I agree with Zakaria's doubts that "an insular, inward-looking China that maintains tight political control over information and human contact will end up being the country that becomes the model for the world."

In essence, China's stability right now depends on an ultimately self-defeating strategy. Both for its own advancement and for its soft power and influence in the world, China will eventually need to open up, which will create a new set of risks. Ma Yuanye, a 55-year-old biologist in Kunming in southwest China, was quoted by Washington Post as saying, "Without Google, our academic research will be seriously affected. If Google is blocked, we will see nothing but darkness."

According to the interviews I conducted last winter in China, one freedom is seen as the most crucial to economic development. That's freedom of speech. It is the only way Chinese society, companies, government, etc. can tackle its rampant corruption problem, which will impede the advancement of China. It is essential for the efficient use of capital, scientific development, effective market functions, fair trade, sound diplomatic relations, and intellectual property protection. Without freedoms or the provision of public goods, the China brand will remain weak.

Some may argue that information censorship keeps political unrest under control. To the contrary, without representational democracy, Chinese society is searching for some kind of valve to release its pressure and frustrations—over corruption, jobs, deadly product and building safety problems, pollution, and land rights. Right now without freedom of speech, the balloon is being squeezed into Wild West internet forums in which people spread rumors and gossip. The country would benefit from a professionalized media sector with incentives to break stories freely. We are seeing the emergence of citizen, online justice: So called human-flesh hunting, cyber-posses exacting justice on their own.

Comparing China today to Soviet-era Eastern Europe, Rebecca MacKinnon put it, "China's censored environment makes it easier for the Chinese government to lie to its people, steal from them, turn a blind eye when they are poisoned with tainted foodstuffs, and cover up their children's deaths due to substandard building codes."

One of the biggest questions of our time will be how we make the inevitable compromises in global business and international affairs. I see a convergence of ideas and moral values. The Chinese are taking some of what is good from the West and rejecting other things. The West might be able to take some things that are good in China. We have to assess the merit and ethics of all decisions and stick to what we believe is right because what is right is also a practical matter. In the long run, I feel China will come to that conclusion as well. It is a business concern, too. Another release valve in Chinese society can be people's relationship and connection with companies. Visits to China have suggested to me that building an ethical, trusted brand in the Chinese market would be a huge opportunity. Worldwide, people admire China, but it is shallow compared to the admiration they feel for the United States and its institutions, rule of law, openness, etc.

I would like to propose something provocative. It's not a precise analogy but without free speech, will China suffer the stagnation of the USSR? Bad information, drying up of cheap labor, and decreasing marginal productivity gains led to USSR economic stagnation in the 1980s. Can China's market make right choices without a free press? We already see non-performing loans, a potential property bubble, and labor shortages and wage rises. Similarities in China and USSR include: Drying up surplus labor, centrally planned/managed economies, farming to urban industrialization, lack of innovation, and poor information. Side effects of censorship include wasted resources (as Natan Sharansky has argued), limited market power (inefficient capital use, corruption, etc), squeezed discourse into "human flesh hunters," and rumor. Without free press and open society, limitations abound.

3. What it means for the international system?

Some have described today's world as multi-polar or comprising a West and a Rest or two "worlds." I prefer Zakaria's "the rise of the rest." Given that global manufacturing is centered in China, the country will have more opportunities to build up its technology control capacity. It is also using industrial policy to encourage home-grown technology, pushing out opportunities for foreign companies. One question in my mind is whether we will see an increasing gap between two "worlds" with competing norms—between emerging markets or and rich countries or between state capitalist countries and free market democracies.

China scholar Harry Harding sees the world as an embryonic global community with two metaphorical political parties. One led by the United States as the elitist reform party that promotes democracy and self determination. The other led by China as the populist conservative party that promotes stability, harmony, and order in domestic systems. One wants democracy at the national level and hegemony at the international level while the other wants democracy at the international level and hegemony at the national level.

I see the Google story illustrating what I see as the likeliest resolution of these tensions in international affairs between these two worlds: a convergence of norms, governance, and practices. After two months of negotiations, Google will maintain some business in China, and other American companies such as Bing and Twitter will seek to gain market share in China. Similarly, we will see convergence and negotiation rather than dictates on issues like climate change, UNSC, Iran's nuclear program, corporate governance, and World Bank and IMF governance. This week, the Japanese government conceded to give technological data to Chinese government purchases of Japanese high tech products in a compromise. Cooperation will come from this process and an acknowledgment of shared interests. Looking at China's refusal to budge on censorship, what's certain is China won't be lectured to or bossed around--sometimes to its own detriment.

As for the United States, its strength over competitors remains its openness. Thomas Friedman on Saturday wrote about the 2010 Intel Science Talent Search, which honors the top math and science high school students in America. Most finalists hailed from immigrant families, largely from Asia. Alice Wei Zhao of a Wisconsin high school, who served as a spokeswoman of the finalists told the audience: “Don’t sweat about the problems our generation will have to deal with. Believe me, our future is in good hands.” (As long as we remain open.)

"A Rallying Cry for CSR" - The CSR Journal

Here is my summary from our "Top Risks" event last month at Carnegie Council, published in The CSR Journal (Volume 5), which is edited by Michael Levine, co-chair of the ABA's CSR Committee. It is republished here with kind permission.

A Rallying Cry for CSR?

By Devin Stewart

One day after Google's bold decision last month to stop censoring its Chinese search engine and possibly quit its operations in China, Carnegie Council held its annual "Top Risks and Ethical Decisions" panel for 2010. Google's announcement and the earthquake that hit Haiti, two unexpected events with moral consequences, guided much of the panel's discussion.



The salience of the Google announcement was heightened by the foresight of Eurasia Group president Ian Bremmer who had placed U.S.-China relations as the 2010's top risk in terms of likelihood of change. It also highlighted the ethical challenges of doing business in China and globally as well as the positive leadership role businesses can play. Bremmer told me before he presented his full list of risks that he predicted Google would indeed pull out of China given the company's wide range of appeal—from technologists to free marketers to human rights activists—and the Communist country's inability to credibly guarantee security from further cyber-attacks. Google, along with at least 20 other companies, had been hacked in December, and it is widely believed the attacks were in coordination with a Chinese government agency that was attempting to gather information on dissidents. If personal information were compromised, peoples’ lives would be at stake. Business ethics are a very practical matter.

Bremmer wondered whether Google's moral stand might serve as a rallying cry for other companies to follow suit in China. Since Google's announcement, the company has been lauded, and the U.S. government has had to reverse its direction by stepping up its rhetorical pressure on China. In U.S.-China relations, the news came against a backdrop of tensions over possible UN sanctions on Iran, U.S. arms sales to Taiwan, and a Chinese test of a missile interceptor. It also occurs amid the longer-term trends Bremmer sees, specifically the acceleration of divisions between the world's developing and developed countries; free market economies and state capitalist economies; and the U.S.-led and multipolar worlds. Bremmer sees U.S.-China relations as the biggest risk for the year because "U.S. and Chinese economic systems are fundamentally incompatible. Compromise is a possibility but let's not obscure the question." He also noted that it isn't clear how the world will square China's global responsibilities given its limitations and societal pressures.

The Google episode in China also underscores the gap between short-term profit-seeking and longer-term ethical concerns for companies and countries alike. Without an expansion of rights and freedoms in China, the government risks hindering economic development. Without free press, for example, China simply cannot stem corruption. Above all, Google's move has expanded the options and the debate on the Chinese market. Carnegie Council's approach toward exploring international issues has been precisely that: to expand the scope of options and to encourage people to ask ethical questions. In line with Andrew Carnegie's vision, the Council aims to create and disseminate knowledge and understanding in order to facilitate societal transformation toward world peace. The "Top Risks" event is part of an ongoing series that brings companies and civil society together to examine business ethics issues, such as human rights policies, the role of the media, trust in the financial system, green job creation, and the fight against corruption.



Michele Wucker, head of the World Policy Institute, posed one of these potentially transformational questions. Considering the ecological limits of the planet, how much consumption is enough? China has just become the largest automobile market in the world, but do we really believe that every person in China can own a car? If the United States moves away from naked consumerism, what will take its place? And, how do we avoid policy solutions that hurt the poor? Wucker also pointed to the extreme poverty in Haiti, which exacerbated the devastation from the recent earthquake, highlighting the fact that risk is often increased when more than one factor is in play. Wucker predicted that finding sustainable levels of consumption and a balance between short-term and long-term gains would be the most pressing moral questions facing businesses for the foreseeable future.



A major obstacle to finding this balance, however, relates to the very nature of individuals and institutions, something that strategy+business editor Art Kleiner has been following for years. He identified at least three "meta risks" for 2010. The first is that although the stakes are higher than ever, it is unclear whether governments possess the management capacity to deal with the riskiest challenges, such as climate change and terrorism. The second is what he called "the risk of transitional capability," meaning that not only are changes in the global business environment occurring more rapidly than ever, it is also uncertain whether organizations can adopt the best practices in time to keep up with the changes. Moreover, transition implies unintended consequences and thus more uncertainty. Finally, bringing it to the personal level, there is a plausible scenario in which the world addresses these problems, but it will require individuals to change their behavior. It is becoming increasingly difficult for people to lead a "normal life," so what do you do? Kleiner asked. "To the extent that human survival requires individuals to change, will enough people be willing to do it? Maybe," he said.



"Integration" has already become the buzzword in business and policy circles this year. In applying this concept, Georg Kell, head of the UN Global Compact, explained that integration means companies must be best in class in their products and services but that isn't enough. Companies must also be able to deal with non-financial risk, such as environmental, social, and governance risks. Ethics is the floor or baseline for international business because "going global means going local," and globalization has therefore become a test case for the question, "Can we live with one another?"

Kell was optimistic about humanity's prospects because he believed the 2008 financial crisis brought ethics back into business decisions in at least three ways. First, it highlighted the need to move from short-term to long-term value creation. Second, it showed the importance of bringing non-financial issues into decision-making. Finally, he saw a general shared sense of ethics as underpinning these trends. His research has shown that there is a universal sense of fairness and justice around the world that can also be observed in religious traditions, philosophies, and law. Kell concluded by advocating for the "traditional values," such as cooperation, that made the free market work in the first place.

The panel seemed to agree that only human innovation can pave the path toward global salvation in the face of ecological, security, social, and economic risks. Thomas Stewart, Booz & Company’s chief knowledge officer, somewhat darkly concluded by encouraging people to find the courage to muddle through. He jokingly asked whether it is possible to avoid the future all together. Kleiner quipped, "There is always a way through by the skin of our teeth." The event also highlighted the large moral questions for the upcoming year, thus framing the fourth year of Carnegie Council's Workshops for Ethics in Business series programming, which is currently being expanded into a full-blown corporate membership program. If ethics matter to you and your organization, please contact us to get involved with this unique program.

Stewart is program director and senior fellow at Carnegie Council for Ethics in International Affairs and can be reached at dstewart@cceia.org

With China Rising, Moral Gaps Abound

Few people should have a regular column. I am not naming any names. But Newsweek's Fareed Zakaria is one of the handful of people who are smart, insightful, and original enough to deserve one. For instance, Zakaria rightly pinpointed "what is really at stake" in the recent Google vs. China episode. As we have argued here and Harry Harding has argued in Policy Innovations, it is about shaping global norms, or ethics. As he put in his Newsweek column, here is how Zakaria put it in CNN Opinion:

So far China has been remarkably successful at maintaining a system that has embraced markets, but also maintained a very controlled political system. My own view is that that cannot last forever, but that China is still in the early stages of modernization, and it is quite possible that it will be able to continue doing this for several decades. But I think it's very difficult to imagine China being a truly innovative country at the cutting edge of the information age, of global economics, if it has all these constraints on information, all this political control on human-to-human contact, which is what the next wave of the information age is all about. Ultimately the question is: Can China be a world leader that is admired, imitated and that shapes the global system and global values? There I have my doubts that an insular, inward-looking China that maintains tight political control over information and human contact will end up being the country that becomes the model for the world.

This is precisely what I heard last month during my month-long Asia trip, which took me to Singapore, Tokyo, Yokohama, Shanghai, and Nanjing. China's lack of openness broadly speaking is having a negative impact on its development. Specifically, the lack of free press and free expression is inhibiting the country's ability to tackle corruption and spur innovation. These ethical matters are not optional for civilizational advancement; they are essential for China to make the next leap, to be seen truly as a model, to emanate ideas, culture, brands, and enterprises that the world will seek.

In the coming years, assuming China's economy remains stable, the big picture question will be: How will China influence global norms?

As this expansive New York Times article put it, cataloging a decade's worth of China issues:

When the United States was snapping at the heels of the British empire, the global hegemon of the early 20th century, the situation caused plenty of friction, even though both countries spoke the same language, shared similar cultures and were liberal democracies. China, in contrast, is a Confucian- Communist-capitalist hybrid under the umbrella of a one-party state that has so far resisted giving greater political freedom to a growing middle class. Now its ascendancy is about to set off what many officials and experts see as a backlash on both sides of the Pacific.

My guess is that China's influence on the world will result in a convergence of norms. More equality among nations at the global level and eventually more equality among people at home in non-free countries like China. The Google episode in China seems to prove my point: Companies like Google and countries will seek compromise. As relative power equalizes between companies and countries, it will be a process of real negotiation. The alternative is conflict or even disaster.

During my visit to China last month, I presented to a Chinese university several of the ethical gaps I see emerging between China, the United States, poor countries, and the rest of the world in the climate change arena. These gaps, in my mind, will make the climate change mitigation and adaption process difficult.

- The countries least responsible for climate change are the most vulnerable to its effects

- Emerging economies, such as China and India, no longer represent the interests of the poorest and most vulnerable, which seek immediate solutions, and are using the poor as a shield

- The pace of the international political process of negotiation in Copenhagen (and in Mexico City this November) does not match the scientific urgency of climate change

- Most of the countries that will most need to adapt to climate change do not have the political or budgetary capacity to place adaptation in their spending priorities

- Similarly, the security implications of flooding, droughts, and cyclones are not being considered by the countries most vulnerable to extremism and militants who could take advantage of disasters

- The right to "dirty" development and poverty relief is in opposition to the devastating consequences of climate change

- Exiting the dirty development path through clean tech can run up against the protection of intellectual property rights on technology

- The benefits accrued to previous generations by polluting contrast with the current conditions in poor countries

- Nuclear energy promulgation bumps up against the security interests of nuclear nonproliferation

- Central government goals of emissions reductions can oppose the goals of local governments, which are concerned about job creation or are plagued by local corruption and vested interests

- A global ethic on climate change therefore is needed since "finger pointing" will likely derail climate change negotiations yet "naming and shaming" is expected to be the likely enforcement mechanism

As scholar Samuel Fankhauser described in his Dec. 7, 2009 article "If it warms up, who's going to pay?" it may be better to consider adaptation support as "a way to show solidarity, to fairly deal with a shared challenge. The strong should help out the weak."

Photo by vasilken.

Google's Rallying Cry in China

I was just interviewed with Daniel Gross by Newsweek On Air about Google's announcement that it may leave China due to hacking of Gmail accounts and censorship in China. Here are my comments from the interview today.

How essential do you see greater freedom to Chinese economic development, and how long can they continue their current influence on world markets without it?

One freedom is perhaps the most crucial to economic development. That's freedom of speech. It is the only way Chinese society, companies, government, etc. can tackle its rampant corruption problem, which will impede the advancement of China. It is essential for the efficient use of capital, scientific development, effective market functions, fair trade, sound diplomatic relations, intellectual property protection. Without freedoms or the provision of public goods, the China brand will remain weak.

Given that global manufacturing is centered in China, the country will have more opportunities to build up its technology control capacity. One question in my mind is whether we will see an increasing gap between two "worlds" with competing norms—between emerging markets and rich countries or between state capitalist countries and free market democracies.

What about the argument that without tight controls the pent up aspirations of China's 1.3 BILLION people could cause chaos? Is it ethical to stir that pot?

To the contrary, without representational democracy, Chinese society is searching for some kind of valve to release its pressure and frustrations—over corruption, product safety scandals, pollution, land rights. Right now without freedom of speech, the balloon is being squeezed into Wild West internet forums in which people spread rumors and gossip. The country would benefit from a professionalized media sector with incentives to break stories freely.

Even Americans who don't care much about internet freedom in China are worried about Chinese cyber-attacks on U.S. companies and the government. How extensive is it and what are they after?

No one knows but the FBI, Pentagon, and just about every single serious China hand has been talking about China's cyber attacks for a long time. The nature of US-China relations and vulnerabilities is changing; it makes previous flare ups, for example over Hainan island, look quaint. The gravity has grown over the past year and culminated in December when more than 20 companies were attacked. It is very serious. Human rights organizations have used Gmail to communicate with people in China. If Gmail were compromised it would literally put people's lives in jeopardy.

Leaving aside the cynical view of Google's move, is there a real ethical question about whether that particular company's presence in China—even if complicit with Chinese censorship—helps spread democratic values, slowly to be sure?

From Google's perspective, it was a trade off. How much evil would it have to do in order to do some good and make money. They put it on a scale and decided that the amount of good it could do in China was worth it. That is no longer the case. During my last trip to China last month, everyone, including Chinese, complained about corruption, arrogance, fakery, and a lack of trust in that society.

The question has now been turned upside down: Is China worth it? I think the biggest effect of Google's move is that it will expand the debate and increase the range of options. It is no longer a given that you have to be in China to succeed. Companies and people can now think in a broader framework that takes into account ethical implications.

In a panel discussion at the Carnegie Council last week, Ian Bremmer of Eurasia Group—a frequent guest on this show—said a major ethical challenge for many companies and Western governments will mirror Google's—how to co-exist with China despite very different value systems, respecting theirs and our own. How do we best approach making those inevitable compromises?

That is one of the biggest questions of our time. I see a convergence of ideas and moral values. The Chinese are taking some of what is good from the West. The West might be able to take some things that are good in China. The answer is that we have to assess the merit and ethics of all decisions and stick to what we believe is right. What is right is also practical. In the long run, I feel China will come to that conclusion as well. It is a business concern, too. Another release valve in Chinese society can be people's relationship and connection with companies. Visits to China have suggested to me that building an ethical, trusted brand in the Chinese market would be a huge opportunity.

Photo by gwydionwilliams.

Reflections on US-China Climate Change Working Group

Last month, the Carnegie Council, Booz & Company, and China Reform Forum held a US-China working group in New York City on the ethics and innovations surrounding the global climate change debate ahead of the US-China summit in November and the Copenhagen climate change talks in December. The big success was in that the group was able to list a set of concrete research, technology, and policy objectives (forthcoming in a later publication).



As Nikhil Chandavarkar of UNDESA noted, the group was able to view the US-China relationship as a positive sum game and less binary than is sometimes portrayed in the press or in domestic constituencies. The group also noted how similar the United States and China are in their attachment to values. Nikhil recommended more US-China talks on the civil society level in order to build confidence between the countries.



Similarly China energy expert Chris Brown noted that the group was able to lay out a set of proposals for future cooperation--and in specifics (an unusual feat). Chris said it was one of the most "forward-looking, constructive" panels he has been on. As for the atmosphere for the US-China summit in November, Chris was encouraged by the agreement on both sides of the enormity of the climate change problem. The problem will be getting past domestic obstacles.



Carnegie Council Trustee Jonathan Gage (of Booz & Company) compared the working group to the delegation we led to Beijing last year. He sensed a growing level of trust and willingness to talk about future initiatives.



One of the big themes of the discussion was the moral obligation of businesses to society in the context of climate change. Jeff Hittner of IBM made the case that publics will hold companies to account for their impact. "Sustainabilty and profit... go hand in hand," he said. "Ethical consumers" are making decisions based on a broader set of factors, he continued. Because of the growing interconnectedness of technology, Jeff said, people can make better, more efficient decisions with a greater awareness of the impact of those decisions.

Stay tuned for our forthcoming conference statement.

Socratic Investigation of Business Ethics

I just got back from spending four days at the Aspen Institute's Socrates Society conference in Aspen, Colorado. Many luminaries were present, including Thomas Friedman, Jim Woosley, Nouriel Roubini, and Walter Isaacson. The Socrates Society conferences are unique in that they explore issues by using the Socratic method, so the entire group carries the conversation, which is moderated. My group focused on the relationship between business and government since the 2008-09 financial crisis and the discussion was moderated by Clive Crook of the Financial Times.

Some of our group discussion was devoted to cataloging the many "improbable" causes of the financial crisis, including: the ambiguous status of Fannie and Freddie; financial deregulation; incentives that encouraged risk-taking without accountabilty; financial innovation; rating agencies' relationships with financial sector; tax incentives for borrowing; a culture of debt in the United States; and the assumption that the housing bubble would continue indefinitely. Of course, I also added the global elements of high savings rates in East Asia, the huge demand for US debt in Asia, and the low interests rates that occurred as a consequence. I was surprised that another global factor didn't come up: The demand for American financial products in Europe.

The US financial reform plan was described as having three basic components: 1. new regulations for non-bank financial institutions that were acting like banks; 2. the government category of tier one or "too big to fail" banks, which will become more regulated with stricter capital requirements as well as an "early resolution authority" (the FDIC); 3. the establishment of a consumer finance protection agency, which will tighten mortgage lending. Some gaps in US reform include the lack of action on US regulatory reform complexity and a question about whether local consumer protection may be better than a central US agency. Finally, many people expressed the need for short, plain English contracts that go with loans rather than long, arduous documents with lots of fine print.

A great deal of discussion dealt with the notion of "libertarian paternalism" or soft paternalism. Basically, people were split on the morality of framing questions or "nudging" people to choose what is best for them through, for example, "opt-out" forms at the motor vehicle department. For example, is it ethical to ask people to opt-out (instead of opt-in) of organ donation or participating in 401K schemes? I took the view that framing questions like this is analogous to persuasion along the lines of commercials, public service announcements, or speeches. But some participants complained that this strategy was a "slippery slope" that could lead to abuses; one participant cited an example of a state using the "opt-out" tactic for license plate forms to fund a private party for a foreign dignitary--an example of abuse.

At the end of the three-days of Socratic investigation into business ethics, we turned to corporate social responsibility (CSR). Much of the discussion centered around whether CSR activities should help the corporate bottom line. One person suggested that CSR was OK as long as it improved a company's business. But what about the long-term effects on employee relations, marketing, brand, etc? Most of the discussion about CSR treated corporate responsibility as if it were something separate from the core business model; it seemed to be a dated perspective. To me, the most cutting-edge understanding of CSR is when companies integrate into their business models regulations that ultimately advance a broader, social interest. That's why many people say that companies that are truly responsible don't need a separate CSR department.

The whole experience was extremely rewarding. I felt my time in Aspen sharpened my mental blade and I would recommend it to anyone!

REINING IN THE WORLD OF FINANCE

At last week's Workshop for Ethics in Business on Restoring Trust in the Global Financial System a certain consensus emerged: the trust lost in the recent financial crisis can only be restored through the introduction of a fair, transparent, and most of all international regulatory regime.

There was, however, another consensus reached by the panelists, Neal Flieger, Stephen Jordan, Seamus McMahon, Christian Menegatti, Tom Donaldson - that while the goal of creating a new system of financial governance is noble, it is also unattainable. The blame-game and a competitive scramble to re-capitalize and re-regulate the financial sector is in full swing. Continental Europeans blame the Anglo-Saxon model for the recent crisis, Russia and China are calling for a new reserve currency (a concept also articulated in a recent Policy Innovations article by Korkut Erturk), and the US Financial Accounting Standards Board just changed unilaterally the way banks value their assets - and thus their losses. The spirit of cooperation is nowhere to be seen.

A comment by Stephen Jordan helped me to put it all in perspective. He called the structure of the financial system pre-Lehman collapse a giant poker game, with none of the participants knowing what the others were holding in their hands. This was also a major argument put forward by Neal Flieger, who proposed that the current crisis, and the Obama administration's response to it, has been an "opportunity to be transparent and honest." One can assume this means the present system is anything but. We are thus provided with an explanation for why, according to Seamus McMahon, trust levels in the banking sector and the stock market are below 20%.

Why, then are we not seeing the development of a consensus on a universal regulatory regime? Tom Donaldson identified three causes of the current crisis: (1) a pattern of paying for peril, (2) a normalization of danger, and (3) the tech shock that created financial instruments too complex to understand or regulate. As the world emerges from this economic disruption, and financial institutions begin to rebuild their balance sheets, should we expect a return to the behaviors of the past?

The discussion of a global oversight body, the rebuilding of trust, and multilateral agreement on restraining the most egregious behavior, brought to mind another upcoming round of talks, those on a successor to the START treaties. Nuclear disarmament talks gained momentum during the Regan administration - a president not known for being soft on the Soviet Union. What drove Regan then was the repugnant nature of the nuclear weapon, along with the realization that the arms race, at least in the nuclear sphere, got out of control.

And here the parallels between the current financial crisis and the nuclear disarmament talks crystallize. Just as we continue to live with the specter of mutually assured destruction, we have gotten a taste of what can happen when the financial markets implode and take the global economy with them. Little wonder Warren Buffet called some instruments "financial weapons of mass destruction." The arms race, or the recent regulatory race, created the untenable situation of governments compromising on safety for the sake of building a more potent arsenal (of warheads or international financial institutions). Both situations also resemble the classic prisoner's dilemma - the only way out is for all parties to trust each other and coordinate their actions.

The agreements entered into by the Soviet Union and the US required both to cede some degree of sovereignty. Both countries agreed to restrain their weapons build-up. Both also agreed on an inspection regime more intrusive than anything seen before. This "trust and verify" approach, as President Regan dubbed it, became the foundation for all future US-USSR treaties. It can also form a solid foundation for a new international financial markets regulatory framework.

That the US will need to restrain its financial sector is also the theme of Martin Wolf's column in today's Financial Times. Aligning that restraint with others, however, has so far only been advocated by the likes of Merkel and Sarkozy. It was the Europeans who have advocated for a convergence of regulation, and placed it on the agenda at the G20 summit in London. Nevertheless, we may not be too far off from the day when this idea takes root in the US as well. After all, if Washington is willing to compromise on such a sensitive issue as defense policy, what is to stop it from ceding a bit of sovereignty and allowing a body like the IMF to scrutinize its financial regulation? We already know the costs of inaction.

Behind the Great Firewall of China: Freedom, Control, and Democracy on the Internet

The Great Firewall of China is widely known, but what does it look like, how does it operate? Policy Innovations advisor Rebecca MacKinnon gave a fascinating presentation on Freedom and Control on the Internet at the Open Society Institute in New York earlier this week, detailing some of the trends and practices in Chinese censorship.

Search engine censorship is one of the primary forms. Rebecca showed examples of the different sets of image results one gets from Google.com and from Google.cn when searching for Tiananmen massacre. Google.com, the global site, returns photos depicting violence and victims. Google.cn, the Chinese domestic version, shows nothing of the sort. Instead the results include at least one photo of the Nanjing massacre.

Rebecca also showed what happens when you try to visit banned sites or post sensitive words to a blog. Banned sites are made to look like you're experiencing a temporary technical error, and blog posts with sensitive words can elicit a pop-up that says the "community editors" will get back to you shortly, so don't repost your text. Of course, you never hear from them and your draft never gets published.

The Chinese government is also proactive about shaping opinions online, throwing their support behind organizations like anti-CNN, a website that combats "the lies and distortions of facts from the Western media." They also pay members of what has come to be known as the 50-Cent Party to post opinions favoring the government and its policies in online forums. 50 Cent refers not to the American rapper but the per-post rate these loyalists receive.

Spoof and humor seems to be the predominant form of online criticism that is somewhat tolerated. In the wake of the recent Mandarin Oriental hotel fire next to the Chinese Central TV headquarters building—which has been dubbed the "underpants" building by Beijingers due to its unique two-legged architecture—various visual puns and mashups appeared online mocking CCTV. It turns out CCTV caused the blaze with illegal fireworks while celebrating Chinese New Year. Sadly one firefighter died and several were injured in the incident, but humor nonetheless belongs in politics, as the Tina Fey phenomenon made clear during the U.S. election.

A parallel trend of resistance is what Harvard's Ethan Zuckerman describes as the cute cat theory of digital activism: where free speech, organizing, and other forms of anti-authoritarian protest piggyback on social media that are primarily intended for benign and mundane activities like sharing photos of adorable pets. Authorities can't take down the whole site to delete the protest group pages without killing the cat appreciation society pages, too.

So is the Chinese government worried about online activism and dissent moving into the streets? Very much so. This is where the rubber meets the road, said MacKinnon, although no opposition party has yet to emerge from the Internet. The true test may come later this year as economic downturn meets a slew of dramatic anniversaries: March 31, 1959, Dalai Lama flees Tibet; June 4, 1989, Tiananmen Square; October 1, 1949, People's Republic of China founded.

MacKinnon emphasized that Internet norms in the West will influence what happens in China. We're at a stage where large communications companies exist in a mediating layer between people and their governments. If this layer remains opaque, then the system will tend to reinforce incumbent power, she said. To help keep things transparent, Rebecca has worked to develop the Global Network Initiative, a voluntary code of conduct for the ICT industry. Through a multi-stakeholder process, GNI has crafted a "collaborative approach to protect and advance freedom of expression and privacy in the ICT sector." She says we may see companies conducting "human rights feasibility assessments" in the near future.

Operating in an environment of censorship presents ICT companies with significant ethical choices. Should they fudge on their philosophy to gain early market access? Will fostering some openness be better than none at all? How sensitive should they be to the domestic affairs of a sovereign nation?

Chinese private enterprises don't have the luxury of ruminating on these matters. In fact, they are legally responsible for the content their users post, and the government can rescind their business licenses if they don't manage to keep controversial material off the web. For the individual user who wants to maintain freedom and anonymity, there are options such as the Tor project.

Creating Real Value - Capitalism Quo Vadis?

I just got the transcript back from my talk in Brussels on Nov. 14 last year. It was at the European Parliament and the theme was "Being Bold - A Key to Sustainable Success?" as part of the International Business & Leadership Symposium, sponsored by the International Association for Human Values.

Here is my speech:

Thank you very much for having me here. It’s a delight to be here.

Who knows what the origin of the current financial crisis is? Raise your hand - zero.

Does anybody have a policy recommendation for the current crisis? Okay, zero.

I’m going to do a brief tour of the horizon. I apologize for my slightly American-oriented talk today. The crisis is believed to have originated in the United States, so I think it’s a bit appropriate.

So on the plane ride over here, I gathered a whole bunch of analyses of the current crisis, let me just give you a sort of tour of the horizon; from the least good to better. I’ll start with the publishing millionaire Steve Forbes. He believes that the main problem was bad monetary policy. The loose dollar, the dollar fluctuated too much and dropped in price, weakened, and he advises that America tie the dollar to the gold standard and lower taxes. He even proposes a flat tax. I even see that the value of this analysis, although I don’t agree with much of what he is saying, is that there is a need to lower taxes and create stability in order to drive incentives to do the right thing. Now, I don’t agree with his policy prescription, but I understand his goal.

Second guy, Martin Wolfe, it’s a bunch of white guys, sorry, but then again it’s an American perspective. Martin Wolfe, I think is a British economist, he’s a Financial Times columnist. He says the opposite of Steve Forbes. He says we need to grow the American deficit world-wide, we should also raise taxes, including a value added tax and tax energy consumption. And he says, we should demand fiscal stimuli from countries with trade surpluses while we keep trade open. Trade open is good but I don’t know how we demand fiscal stimuli from them. We’ll see how it works?

Next guy, Tom Friedman, columnist for the New York Times, has been going around talking about what he calls the need for a ‘green’ bubble. He subscribes to the idea that bubbles are inevitable and we might as well get some use out of it. Previous bubbles have included the railroad bubble in the United States, and then the IT bubble out of which both the United States enjoyed productivity gains. Generally speaking the current bubble resulted in a bunch of empty houses that we can’t really produce much out of. Related to that is former Vice-President Al Gore’s idea of looking at the crisis as three inter-related crises: energy, climate and finance. And that as far as technology and long term investment, and I’ll talk about long term investment later, you necessarily solve all the crises at once, i.e. if you have long term investment in energy infrastructure, you can solve the energy crisis, as well as the climate crisis.

Related to that and going a step further and looking at the causes of the crisis, Cass Sunstein, who is a major figure in the Obama administration and influential at Chicago and other universities, describes the current crises as what he calls a mixture of what he calls “bounded rationality,” which means you act rational but you don’t know what the environment is, so that limits the amount of rationality you can exhibit. And number two, “temptation or fragility of the human condition,” that if you are tempted to just take a little bit more, you will probably do it. So he suggests the need for more transparency in that to take these complex systems, not necessarily destroy them, but make them more easily understood.

That was just one stack I had and I hope that gives you a fairly ambivalent tour of the horizon. Now let me take it into the ethics part. Rather than going in to a policy prescription on how to save capitalism, as Steve Forbes tried to do in the cover article of Forbes magazine, let me give you some ethical principles that we might draw from, in order to reach a negotiated policy approach.

Okay, at the Carnegie Council for Ethics and International Affairs , a ninety-five year-old institution in New York City, we’ve started to espouse a set of three principles that we believe are helpful in the creation of policy formation and agreement. The three are: fairness; rights and responsibilities; and pluralism. And I’ll go quickly through them.

Fairness is basically a way out of prisoner’s dilemma. If you and your negotiating party both believe that you’re operating on the principle of fairness, then burdens and benefits can be shared equally. There’s a game called the ultimate game, it’s a little elaborate, I’m not going to go into it right now, but basically it’s an experiment with different people who have different control over the outcome, and people generally will prefer a fair outcome over one that benefits that benefits them unfairly or disproportionately.

Second, rights, you know God has been invoked here quite a bit and spirituality, and I’m okay with that, but I think that a lot of people, including the Dalai Lama, whose written this fabulous book, “Ethics for the New Millennium,” says something that we agree with at the Carnegie Council, which is that religion tends to make people angry, so we like to talk about ethics as a stand-in, or a practical way of going about it. And some people say that we are born with rights from God – that’s fine, but I think that rights are also a practical matter: if we didn’t have rights, we would need to invent them. Several atrocities in mankind’s history show that we need to have a concept of human rights, and with them goes the responsibility to protect other people’s rights, you can’t just have rights for yourself.

Third, pluralism. Pluralism is a way to get around monism and relativism. It’s in-between, and I like to call it a sort of golden mean – right in the middle. Monism is to say, “my way or the highway.” Relativism is to say that anything goes. We like to say that pluralism is a better way to address problems. It’s bringing everyone to the table, it’s creating a more sustainable and a better-informed solution.

I am going to propose something a little bit playful. I wrote an article about a year ago, an attempt to promote a new idea of fair trade. There was this idea in America, very popular among the Democrat congress members of creating a fair trade policy, rather than just a free trade policy.

Okay, what does that mean? It could be protectionism in disguise – how do we get from an unfair policy, one that cuts off the chance of poorer countries of tapping into the benefits of the trade system. How do we do that? Well, I suggested that trade might not be completely free, nor completely regulated. Again, something in the middle, a golden mean.

So, I talked about three freedoms that we might think about truncating or limiting or sacrificing: the freedom to trade with anybody; the freedom to trade anything; and the freedom to trade with impunity. This was something I put together for a trade policy paper, but I think it’s actually quite relevant for the financial crisis. The freedom to trade with anybody: if you’re selling something to somebody who doesn’t know what’s contained in this box, it’s a package that is opaque, it’s not a very good business deal. If you’re selling things that are shoddy or mysterious, that’s also not good business, and you should be responsible for your actions that result from the trade that you make. There is a great deal of business literature I can go into later on which suggests that if you’re benefiting from the externalities of your business relationships, then you do in fact have a duty to ameliorate them.

Now, I was going to go into a few concrete ways of how to make this practical. This came about a few weeks ago, Prof. John Ruggie of Harvard University, who is the United Nations representative for Human Rights. He came to our institute recently to explain his new mandate. His colleagues at the United Nations have been so happy with his work, which is essentially a survey of companies, that they have extended his mandate for another three years.

After he gave his impeccable, magnificent talk, on business and human rights and the challenges, I asked him: “Professor Ruggie, I am going to be talking about the future of human rights and capitalism in Brussels next week, can you tell me what I should say?” And he said, Okay, ethical capitalism, that sounds interesting, "well sure." He said that you can’t force people to be ethical on their own, rather you have to embed incentives in the system to encourage people to be ethical. And I would add to that that you have to create a system of incentives that are based themselves on ethics, and that’s the challenge. You know, I was watching TV the other day, a news report on these hedge funds, and the bosses saying, “Hey, you know, we didn’t break the law.” So, you have to give them the opportunity to do good.

So, I will just briefly go over some incentives: having prices reflect their true value; re-examining fiduciary duty – I know some of you might be a little skeptical about this. I have a forthcoming manuscript for a book, it’s called, “Sustainable investing: the art of long-term performance.” And the chapter I have here is Stephen Viederman's chapter on fiduciary duty, and one of the things he says is that we should take a look at the original words that we used to describe fiduciary duty. Number one was profit, and the other one was prudence, and both of them imply more long-term thinking. Profit was more for the welfare of people, rather than simply benefiting, and prudence was simply long-term strategic thinking. So his argument is that it is a return to basic principles.

Another one that hasn’t been talked too much about here, but I was going to mention it briefly, and that is a very hot topic in New York City, is Web 2.0, and it’s ability to supercharge corporate social responsibility. It’s an accelerator and a facilitator of what Bill Drayton, the found of Ashoka tells me he calls “the awareness tipping point,” where enough people are aware of what’s going on, they are aware of their connection, their interconnectivity with people, that they are going to create a new movement.

Web 2.0, which is social networking, social interactivity on the internet, is facilitating this awareness. I will just draw your attention to this article which is very popular, in the New York Times, about Google using its data from its search engines to track flu. Well, this reminded me of some of President-Elect Obama’s ideas, how he can connect with his massive database of emails. Beyond the “Walmart sucks!” type of websites, beyond that to a more positive engagement, politicians are thinking about this, to what was the result of a long-term workshop

I was engaged in with SAP, which is essentially how do corporations like technology companies help to build trust, which is again one of the main themes of this conference, between civil society, companies, consumers, investors, and with the understanding that has been mentioned earlier that all these identities are fluid and overlapping, they are not discrete. Finally, there is another theory about the way that emerging value is measured in this new economy – a more globalized, connected economy.

I have tried to coin a term I call the “empathy economy,” to describe a theory that processes are now global. That business processes, human resources, skills, knowledge, data are all part of ubiquitous computing, and it has driven down the price of data and knowledge, and driven up the value of empathy, design, innovation and ethics, broadly speaking. One study I saw on the impact of intangibles on valuation and brand, and I’ll conclude with this, was a survey of how intangibles affect brand, and therefore valuation. Number one was ethical leadership. The next two were social and environmental stewardship.

Thank you for having me speak today.

How to Blog: Share, Link, be Consistent

Slate puts on the web today some tips from Arianna Huffington's new book on blogging. See Slate's "How to Blog."

Here is the truncated list on best practices on blogging (bloggers, including Josh Marshall have told me that consistency and uniqueness are the keys):

1. Set a schedule. Blog often. Jeff Atwood, who runs the fantastic programming blog Coding Horror, told me that the key to his early success was sticking to a realistic target of six posts a week.

2. Don't worry if your posts suck a little. Unless you're Jeffrey Goldberg, your first blog post is unlikely to be perfect. Indeed, a lot of your posts aren't going to be as great as they could be if you spent many hours on them—and that's OK.

3. Write casually but clearly. This one flows from the last two—the best way to stick to a blogging schedule is to write quickly, and a good way to write quickly is to write as if you're talking to a friend.

4. Add something new. This might seem obvious, but new bloggers tend to forget it: Readers aren't going to stick with you unless you give them something they can't find elsewhere.

5. Join the bloggy conversation. And link! The only way people will find your blog is through other blogs—and you'll get other blogs to notice you by responding to what they're writing about.

6. Don't expect instant fame. Actually, don't expect any fame. There are better ways than blogging to get rich and famous.

It strikes me that sharing, consistency, uniqueness, and volunteerism are themes here, and they happen to be the themes in a lot of business literature on how to be a good worker in the global economy. How to be a good blogger and be applied to life; and many are lessons we learned in in kindergarten.

These themes have also come up over the past several months at the Carnegie Council. "Join the bloggy conversation. And Link!" is like Jay Rosen's "ethic of the link."



Similarly, Lawrence Lessig spoke recently at Carnegie Council's Public Affairs program on sharing economies or a hybrid economy. He sees the hybrid economies as those that combine the value from free and shared labor and commercial value.



The volunteerism that is often done on the web, for example social networking or product ratings, are free work that gives network power to companies. David Grewal also spoke recently about his "network power" concept:

Message from Brussels: Yes We Can!

It is amazing how much positive impact the election of a moral American president can have on world attitudes. I just returned from Brussels, attending a conference on ethics in business, ethical leadership, and the financial crisis, held at the European Parliament with the International Association for Human Values. For the first time in years, I was able to travel abroad without having to defend or argue about U.S. foreign policy. I imagine that my experience was similar to an American traveling abroad during the Kennedy years.

The themes I heard in Brussels were: the need for trust and ethical leadership; the financial crisis is an ethical crisis; the need for a global economy that is fairer and benefits more people; and "Yes We Can!" In fact, Barack Obama's phrase "yes we can" was uttered several times during the conference, much like "amen" might be uttered in a church.

Before I get into some of the things said during the panels, I want to mention the presentation made by the CCS World Youth Forum, a select group of young leaders that attended a training course on ethical leadership before the conference.


The young leaders (pictured above) made speeches, showed a film they made on the financial crisis, and sang a song. Here is an excerpt of the lyrics (the music was reminiscent of "Day by Day" or "Bless the Lord" in the musical "Godspell"):

Ideas to action not into words
Aim for the stars, have a dream
Change the world - you are free
We are the change the moment is now

Yes we can! Yes we can! Yes we can!

Keep your heart burning.
Be the change you want to see in the world... let's keep it real

Together we can!

Some other themes from the conference:

Ludo Bammens of Coca Cola's EU Group made a speech that prompted one audience member to ask him how he got to be so inspirational. Bammens said that there are two types of trust: the unconditional trust he feels with his child and the "transactional trust" between companies and stakeholders. Transactional trust is built on the following formula, he said:

Trust = Performance - Expectations

Where expectations are placed on how a company impacts "my community, my well-being, and the global environment." The rewards and punishments (teeth) by stakeholders include:

Do I buy your product? Do I buy your stock? Do I want to be employed by you? Will the government regulate you? And does the public believe you (your information)?

Performance is the ability to inspire and make a difference. And this factor is multiplied by time.


One person from the audience asked where do profits fit in the formula. Bammens answered that Coke was established more than 100 years ago when profits were everything. That is not the case anymore. A company needs to do more and offer more value to society to survive.

Rabbi Awraham Soetendorp also gave one of the most memorable speeches. He said the figure Abraham of the Hebrew Scriptures was tested by God to show if Abraham knew himself (or "Know Thyself," as famously written on the Temple of Apollo at Delphi, along with "Nothing to Excess"). Similarly, the financial crisis is testing the world to determine whether humanity can reach its potential. The emergence of a million NGOs is in the same spirit of 1948, the development of international systems in accordance with human values, dignity, and brotherhood.

A relevant phrase that was conjured by one of the speakers was: "A falling tree makes more noise than a growing forest."

Is the crisis "Made in America"? Sure, we have seen some commentary to this effect. But I was encouraged that the speakers and conversations were mostly non-ideological.


I (seated in foreground) was wondering if an anti-American view (see comments on earlier post in this blog) would come up during my trip to Brussels last week. Fortunately, it did not. During my speech on the future of capitalism, I asked the audience if anyone could identify the precise origin of the crisis, and not one person raised their hand. To the comment on American capitalism, I would just offer a couple of comments: One is that this crisis is global; no major economy--no matter its variation of governance--is invulnerable. Yes, the crisis had much of its origins in the United States, but the causes and impacts are global.

Second, the global economy has created more wealth and has raised more people out of poverty than could have been imagined 20 years ago. Finally, American capitalism has morphed many times over the past century. I might suggest we rediscover some of the first principles of capitalism: real, broader profit and real, long term prudence. I would agree that consumerism should be reexamined but, ironically, we will need fiscal and monetary stimuli to get out of the crisis. As Paul Krugman recently noted, any fiscal stimulus less than monumental will be insufficient.

The global debate so far to the crisis has been mostly non-ideological. This is promising: the world needs to cooperate and stay open.