Realism and Idealism in Business Ethics: A Post-Bear Reflection

I suppose that I should start with a disclaimer that this isn’t really about Bear, but continues a theme (some called it unduly pointillistic) I started a week or so ago while thinking about Bear. (By the way, for a surprisingly counter-intuitive take on responsibility and victimhood in the sub-prime crisis from a liberal commentator, see Michael Kinsley’s endpaper essay in Time last week.)

This past week, we had a successful program at Suffolk, jointly sponsored by the law and business school, entitled “From Enron to Refco” dealing with the criminal liability of service providers to corporations involved in nefarious activities. (Several of the people in the audience reflected an unfortunate aspect of the politics of all of this, which was a confusion between criminal fraud, say like WorldCom, and business judgments that go badly wrong, like Bear, but that’s a subject for another discussion.) The keynote speaker was Joshua Hochberg, now a partner at McKenna Long & Aldridge, and formerly the head of the US Department of Justice’s Fraud Division, where he supervised some of the major bubble-bursting cases of the last ten years – Enron, Arthur Andersen, etc. Also on the panel were Jim Rehnquist, a partner specializing in white-collar criminal defense at Goodwin Procter here in Boston, as well as John O’Connor, a retired vice-chairman of PriceWaterhouseCoopers (and a Suffolk alum to boot). My role was to be the “audience moderator” which means that I flitted around in the audience with a wireless microphone, doing my Jay Leno thing. I asked a question myself, which failed completely in its purpose of raising the concern expressed below.

The morning after, I had the following reflections on the program (after congratulating all the organizers for its success and somewhat edited for this purpose).

If you listened to a combination of Josh Hochberg, the corporate fraud prosecutor, and Jim Rehnquist, the white-collar defender, it sounded like being co-opted into corruption and fraud was something that happened inexorably in the business world, and there was almost nothing you could do about it – sort of like being a passenger on an airplane and hoping this isn’t your unlucky day. I think that’s a view steeped in a pessimistic ultra-realism, shaped by careers in which what you do is either prosecute or defend people after the problem has already occurred. It wouldn’t surprise me if prison guards also had a generally downcast view of human nature. I’m agnostic on the question – I think there’s equally as much evidence that we are innately good as innately bad, and the issue is not capable of resolution.

Yes, it is a reality of the world that all of us can be co-opted by our commitment to ends that begin to blur the edges of our reservations about inappropriate means. That can affect CEOs, prosecutors, police, Secretaries of Defense, university presidents, and law school deans. There’s really no cure to that other than trying to reach an honest reflective equilibrium of idealism (what ought to be) and realism (what has to get done) through whatever means are available. But it was troubling to me that the only discussion of values came right at the end, and not from the lawyers, but from John O’Connor, the accountant.

Especially troubling was JIm Rehnquist’s not untypical litigator’s view of the lawyer’s role as advocate. Trust me, when you are sitting in the corporate board room, and there’s a difficult decision to make, and it has moral or ethical overtones, the last thing you want to be is an advocate. Your job at that point is to be a counselor, and, if you are effective, to be a counselor that understands the limits of the law and its relationship to other normative rules, whether they be social norms, moral duties, or utilitarian calculations.

Of course, none of the lawyers sitting on the panel had ever been in a corporate management suite or a boardroom except after the crap has hit the fan.

As I said, I was troubled by the message to the students in the audience. It was that the corporate world is corrupting and essentially random and beyond your control, and there’s not a whole lot you can do about it, except hope that your figurative airplane doesn’t crash. I acknowledge my views on individual freedom and autonomy may not be everybody’s, and this is a statement reflecting my strange position of Kantian corporate governance, but there’s not much hope if we don’t even discuss it.

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2 Responses

  1. A.J. Sutter says:

    Not pointillistic this time, but to the point, and a good one.

  2. Pat says:

    Reality vs Optimism:

    The sad part of reality is that once people learn to make donuts and do it all the time, they can tell the difference between one that baked rightly and one that doesn’t look quite right.

    It’s all about the donuts being made.

    Practice makes perfect.