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Symposium 2011

Ethics and Trust in Society and Business

The Challenge

Society in general and the economic system in particular require trust built on ethical foundations and social norms as the basis for successful cooperation. Economic activity in modern society has become increasingly complex and lacking in transparency as a result of the rapid development of new technologies and new products and services and the globalization of supply.

Complexity and lack of transparency mean that information is highly asymmetrical, giving producers an edge over consumers, managers an edge over capital owners and employees and both producers and managers an edge over public authorities. Even if information is available in principle, it may come at high cost and individuals, struggling with the high degree of complexity, may instead tend to opt for emotional judgment and herding behavior.

Decisions that are taken under incomplete information often lead to unforeseeable and economically and socially inefficient outcomes. Examples from very different fields include the global financial crisis, environmental damage and new health problems in the workplace.

An economist’s standard solution for such inefficiencies is to look for appropriate government regulations. But the more complex a phenomenon is, the more complex the regulatory system has to be that is supposed to solve it. Usually, any rules, laws and contracts leave scope for circumventing or undermining them and excluding such imperfections may be burdensome.

Trust therefore offers a shortcut solution, especially if it grows out of common ethical foundations and social norms such as professionalism (where people take pride in the quality of their work) and reputation. Ethical foundations and social norms may help society to protect individuals from serious damage and they may help firms to exploit their internal creative potential and boost their market value.

Such ethical foundations and norms have for a long time been important for professional groups in areas where producers have superior information to customers and government authorities—for example, physicians, dentists and lawyers. A decent society requires that boards and managers of firms also follow established ethical foundations and norms, including when decisions are made about remuneration systems, which today often have very little link with actual contributions to the economic performance of the firm.

How would such an approach to ethical foundations and social norms affect the world’s ability to deal with global problems such as climate change and financial crises? How is it possible to restore trust in social norms? What is the role of ethical diversity when looking for common ethical foundations even at a global level? What is the role of politics?

Which activities should be subject to regulation and which should be left to business norms or market norms? What does this approach to ethics and social norms imply for such business activities as product development, marketing and acceptable forms of competition among firms? What does it imply for the relationships of businesses with their employees, their customers and their suppliers? How can business norms be enforced?

    Solutions

    Solution
    Symposium 2011

    Use real and virtual communication fora to develop shared values for global society.

    Use real and virtual communication fora to develop shared values for global society.

    Use real and virtual communication fora to develop shared values for global society.

    Polity, Academia, Business, Civil Society
    Solution
    Symposium 2011

    Adopt a procedure of “dream-debate-decide” within a social dialogue involving the general public.

    Adopt a procedure of “dream-debate-decide” within a social dialogue involving the general public.

    Adopt a procedure of “dream-debate-decide” within a social dialogue involving the general public.

    Polity, Academia, Business, Civil Society
    Solution
    Symposium 2011

    Shift from a “compliance culture” in business and government to one of “values-based leadership” based on the concept of “principles pragmatism.”

    Shift from a “compliance culture” in business and government to one of “values-based leadership” based on the concept of “principles pragmatism.”

    Shift from a “compliance culture” in business and government to one of “values-based leadership” based on the concept of “principles pragmatism.”

    Polity, Academia, Business
    Solution
    Symposium 2011

    Measure and report on the delivery on promises, for example, with indices on corruption.

    Measure and report on the delivery on promises, for example, with indices on corruption.

    Measure and report on the delivery on promises, for example, with indices on corruption.

    Business, Civil Society
    Solution
    Symposium 2011

    Establish an ethical oath for business; and create or extend business associations to develop and impose rules of conduct on their members.

    Establish an ethical oath for business; and create or extend business associations to develop and impose rules of conduct on their members.

    Establish an ethical oath for business; and create or extend business associations to develop and impose rules of conduct on their members.

    Polity, Academia, Business, Civil Society

    Proposals

    Proposal
    Symposium 2011

    by Richard Evans

    Corporate and political institutional failures have recently been attributed to a lack of ethics and trust in the corporate or political entity. Examples of failures include corporations such as Enron ...

    Corporate and political institutional failures have recently been attributed to a lack of ethics and trust in the corporate or political entity. Examples of failures include corporations such as Enron, AIG or Bank of America. On the political front the lack of tax compliance in Greece and Italy are cited as core reasons for deficits and financial crises. Similarly, corruption is frequently given as a key driver in the failure of developing countries – e.g. Guinea, Somalia or Yemen. Further, the negative consequences of such failures is not limited to the entities themselves, but to their trading partners and the

    Business, Civil Society
    Proposal
    Symposium 2011

    Ethics and Trust in Society and Business

    ‘There comes a tide in the affairs of men,’ Shakespeare cautioned. Tsunami warnings are now ringing about the global economy. The global financial system is under stress. Economic growth is stumbl ...

    ‘There comes a tide in the affairs of men,’ Shakespeare cautioned. Tsunami warnings are now ringing about the global economy. The global financial system is under stress. Economic growth is stumbling. Confidence in governments is decreasing everywhere. Multi-lateral institutions like the WTO and IMF created to promote global integration and stability are ineffective. Communism was declared dead with the fall of the Berlin Wall. Now there is less faith in the concept of the free market, even amongst Western economists. Why has liberal, free market capitalism, the victor of the Cold War of ideologies also stumbled? The confluence of

    Polity, Academia, Business, Civil Society
    Proposal
    Symposium 2011

    Ethics and Trust in Society and Business - by Dr. Hans-Paul Buerkner

    The last twenty years have witnessed the building of great wealth in the developed world and in the emerging markets. At the same time, inequality has increased in most developed economies. The excess ...

    The last twenty years have witnessed the building of great wealth in the developed world and in the emerging markets. At the same time, inequality has increased in most developed economies. The excesses during the e-commerce bubble and the sub-prime mortgage wave with the securitization of toxic assets during the past have fundamentally undermined the trust into financial institutions, markets, and business in general. All part of business seem to have been involved in same way and have, at least for a time, profited from the excesses: financial institutions, businesses and business leaders, rating agencies and also professional services firms.

    Business, Civil Society
    Proposal
    Symposium 2011

    by Bo Ekman

    Trust is forever in flux, as is distrust. It is probably easier to loose trust than to loose distrust - that is to regain trust once lost. Trust is a quality of relationships between individuals but a ...

    Trust is forever in flux, as is distrust. It is probably easier to loose trust than to loose distrust - that is to regain trust once lost. Trust is a quality of relationships between individuals but also between smaller or very large parts of the technological, social, cultural, economic systems in which we act. The degree of trust (or distrust) decides the “tonality” of the interactions between the parts of a social system: between nations, between political parties, between actors in a market, between lovers, between parents and children. Social systems that are emptied of trust break down –

    Business, Civil Society
    Proposal
    Symposium 2011

    Ethics and Trust in Society and Business

    To restore trust as the basis for economic and social cooperation one could think of the following solutions: Solution 1: In order to deliver a sustainable society, one that does not lose sight of the ...

    To restore trust as the basis for economic and social cooperation one could think of the following solutions: Solution 1: In order to deliver a sustainable society, one that does not lose sight of the common good, the following issues should be addressed: Many communities, particularly in Western countries, require new narratives for their ethical foundations. In more recent years, a small-time ideal of making money has perhaps been overly stressed, as if it were a virtue in its own. A return to a broader perception of success in life is called forth, particularly by laying more stress on individuals’

    Polity, Academia, Business, Civil Society

    Background Paper

    Background Paper
    Symposium 2011

    Ethics, Trust and Altruism in Society, Politics and Business

    Society in general and business in particular require trust as a solid ground for cooperation of humankind. Trust requires confidence in the fairness of institutions and in the honesty of cooperati ...

    Society in general and business in particular require trust as a solid ground for cooperation of humankind. Trust requires confidence in the fairness of institutions and in the honesty of cooperation partners based on a set of common ethical foundations, and altruism may create the common good that sustains this trust in political, economic and social life. According to recent research from various disciplines—behavioural economics, neuroeconomics, cognitive psychology, social psychology and sociology, etc.—, altruistic behaviour and the demand for ethical foundations quite generally seem to be rooted in the very nature of humankind, yet the actual significance of these seem be subject to various positive or negative external influences. Thus, for instance, people seem to behave differently whether acting in a social context or in a market context. Also, they are highly responsive to their peer group’s identity and collective belief system, which may vary according to parallel sub-groupings of society and according to the fluctuations of a haphazard zeitgeist.

    The whole issue of ethics, trust and altruism has evoked a huge unseizable literature. Rather than trying to survey this whole literature, in the following, I will highlight just some of the complex relations between ethics, trust and altruism in some spot-like arguments.

    Polity, Academia, Business, Civil Society