Exhibit A:       Trust: the behavioural challenge   PwC Point of View paper, Oct 2010

Exhibit B:       The Rational Optimist

Let’s start with Exhibit A, a recent paper put out by PwC which looks at the role of Trust in corporate culture. Underpinning the analysis is the “ethicability” methodology advanced by Prof Roger Steare, a fellow Business and Politics contributor. Roger works to good effect with corporate and public sector clients to look more deeply into what they are doing and so examine the less tangible ‘moral’ value of processes and outcomes.

Amuse yourself for a few minutes and see what his computer program has to say about your ‘Moral DNA’ by answering some online questions.

I have just completed my own ethicability questionnaire. I scored powerfully on Honesty (“very high scores can mean offending others with brutal honesty”) and on Excellence (“very high scores can lead to perfectionism”). However, I rated modestly on Humility (“low scores leads to pride and arrogance”) and even more modestly on Love (“low scores on Love can mean indifference or callousness”). Sounds about right?

All such exercises depend 100% on the underlying assumptions and how the computer weighs them. This aspect of the way ethicability works is not altogether obvious. Still, when enough people take them some interesting patterns may emerge. Then we can all mull over what, if anything, such patterns might mean.

The PwC paper identifies the contrast for business and corporations between “compliance-led processes” and “embedding the right culture” (where ‘right’ is defined in ethicability terms):

Amid the current debate over the need for a new settlement between business and society, we believe these issues are critical … the relationship between business and society cannot be restored by regulation alone.

Hmm. Who is calling for a so-called new settlement between business and society? What are their motives? Second, why are Business and Society juxtaposed as completely different phenomena? An objectionable proposition (see below).

We then get this:

With the move away from shareholder value as the primary compass for setting corporate purpose, companies are looking beyond the pure profit motive to identify and pursue more socially relevant and sustainable reason for existing …

Interesting. Especially if you’re a shareholder. It appears to mean that you are investing the results of your own hard work and creativity in an organisation dedicated not to giving you maximum reward for your investment, but rather aiming to satisfy “external stakeholders”.

Who are these external stakeholders? No-one knows, and certainly no-one chooses, least of all the hapless shareholders. But be sure that these external stakeholders will be good at noisily appointing themselves and bossing everyone else around, as they and they alone purport to define what is and is not ‘socially relevant’.

Then this:

For society as a whole, non-regulatory disclosures on issues such as corporate behaviour and governance are becoming an increasingly important part of the information exchanged that underpins companies’ licence to operate

So, farewell then, freedom. Your business exists only if you get a “licence to operate” from ‘society as a whole’, as ably represented by anonymous bureaucrats.

But all is not (perhaps) lost:

PwC’s view is that the time has come for a new settlement between business and society — one based on less regulation and more responsibility.

Not a bad idea, especially since according to ethicability research government itself has very low moral DNA scores, a fact no doubt reflected in the way that under New Labour the UK tumbled down international league rankings for public integrity. Why look to government to set all the rules anyway?

Anyway, read the whole thing. A curious document which ends up in a sort of sensible libertarian conclusion — the more government tries to regulate anything, the less Trust we all end up with — but gives the impression of not daring openly to espouse libertarian principles for fear of making people in Hampstead swoon.

What I found worrying about this piece was the way it separated out Business from Society.

Without Business there is no Society. This is proved conclusively by Exhibit B, Matt Ridley’s magnificent new book about the central role of trade in liberating human inventiveness and creating wealth.

Does ethicability methodology do justice to the existential moral value of trading, itself an expression of intrinsic human integrity. Take, for example, Love.

Many people these days think that compassion/love require the successful to give to the unsuccessful — and that if the successful are loath to give as generously as the unsuccessful want, the successful should be forced at gunpoint to do so.

But what if the very act of compassionate giving by the Giver serves to create a self-absorbed sense of entitlement to receive on the part of the Receiver, thereby turning that transaction completely away from the solid moral basis of fair trade or even mere generosity/kindness to something looking much more like serfdom — where the Giver is the serf?

What is the role of Love in all that? Is a stern parent who lays down strict rules and often tells children ‘No’ really less loving than the parent who gives children too much freedom and sweeties on demand?

And what to call the work done by entrepreneurs who toil to invent new products and sell them honestly?

Isn’t that a form of Love, sharing one’s energy and mind generously and fairly with the wider mass of humanity?