Corporate morality

I wrote about many forms of exploitation in my book Total Sustainability and many of the things we dislike about business come down to that. There exists a stereotypical business executive for whom getting to the top is all that matters, and it doesn’t matter how many people they walk over on the way. Their mantra: “business is business.” Some executives are proud of being ruthless and scornful of factoring any morality into their deals, taking maximum advantage of any weakness in their opposition wherever they can. Thankfully, those in that stereotype are the minority. Most business people are decent people trying to make an honest living by providing good products and services to their customers while treating their employees as well as they can. The proof of that is that business scandals still make the news. Most people exercise the same sort of moral behavior in their companies that they do in everyday life and some studies have shown that around 90% of people are good and honest.

Anthony Howard wrote a blog on the issue of corporate moral obligation too, at: http://anthonyphoward.com/do-boards-have-any-moral-obligation/

Unsurprisingly, our views overlap. Most people agree that amoral and immoral corporates will have to behave better, and if they don’t they will face consequences thanks to the transparency and immediacy of the net and the speed at which consequences can appear. The ethical wolf is at the door.

In the age of corporate social responsibility and instantaneous network shaming, most companies already understand that they must appear to be doing the right thing so they have CSR departments. In most but not all cases, the CSR Department’s job is actually to figure out how to do better rather than replicating the marketing department job of spinning reality to achieve the best message. The few that pick the latter approach face regular social media embarrassment. Sunlight is a good disinfectant.

A few companies seem to aim for the minimum legal standards. As Anthony observed, their view is that they can do anything legal and that if people want them to behave better than the law should be changed to force them to. Some try to spin being greedy and irresponsible as fulfilling their corporate duties to their owners as well as possible. Voluntary codes simply don’t work to ensure good behavior when some companies take the line that anything goes if it’s legal. These companies believe that nice guys finish last, and spoil the markets for everyone. Forcing nasty people and nasty companies to do what nice people and nice companies do voluntarily adds very expensive rule-making, administration, checks and policing that everyone then has to pay for. Until then, there is temptation for the nice guys to behave worse to keep up with the bad guys.

That the law is badly written with lots of loopholes and with major differences still between nations reflects very badly on governments and the international governance that they have negotiated. Companies can still avoid paying fair taxes just by moving money among their offices in different countries, or duck environmental rules by moving operations or exploit employees by picking the right host country. These are legal but not moral. Bad laws do not justify bad behavior, even if they do accidentally permit it. Behaving ruthlessly and searching for loopholes to use does not make you a business genius, it just means you are a nasty exploitative person who happens to be in business.

Social networks and effective media are good at exposing bad practices and rewarding better ones and as the networks continue to mature, transparency may improve further.

One issue though that may tip the balance over the coming years is machine intelligence. People on company boards know they should act responsibly, that their company is a part of the wider economy, and most board members’ humanity would make them inclined to try to be responsible and to give something, not just be a parasite. If they choose to be parasitic, though it may be legal, they will face frequent conflict and shaming and ultimately their market suffers. Human nature includes emotions a strong moral enforcement mechanism. Nasty people can choose to ignore it, but most people are not nasty.

A machine-AI-based company might not care about being disliked but would still face social backlash and market decline if it behaves badly. The trouble is, although most machine-run companies would presumably be initially set up to behave well, others may be deliberately tuned to be as exploitative as they can get away with. Some such AI companies could be inherently agile, mobile, and even capable of evolving, just evolutionary algorithms wandering the clouds, immediately exploiting any weaknesses in any niches they find for a fast buck, rather like the malware we’re already used to but more effective. This is the next generation of the same sort of AI already embedded in City trading. Bankers may be disliked but they will seem like angels compared to the gutter level of next generation AI companies.

In the human system, backlash against bankers eventually led to a politically motivated crackdown on practices and rewards, and even though they have lobbied and fought to delay real punishment there can be little doubt that it is a battle they will eventually lose. More recently, backlash against global corporate tax avoidance has also resulted in new regulations and taxes.

With AI companies psychologically immune to emotional or political pressures, there is only one approach that can work and that is to fix the global corporate taxation treaties and other regulation, fixing the loopholes and bringing it all into line with what people consider reasonable behavior rather than the minimum acceptable. That is quite a task. Shabby lawmaking has been with us  far too long and there are lots of things to fix. But if political pressures haven’t been strong enough yet to get the task well under way, it won’t be much longer before they are. It will be difficult and expensive, but there will be no choice.

When that’s done, companies can still behave very well if they wish and reap deserved market benefits, but amoral and immoral companies will have no choice but to behave at the levels deemed reasonable.

However…

This solution requires that it is possible to police activity online and to block or eliminate rogue AI companies. Those that stick to the law would not be a problem, but some won’t if it possible to evade detection. With our national security services already moaning about the latest encryption systems, it may well be possible and even easy to evade detection long enough to make a quick profit, evolve,  and move on with a fresh instance to another target. Not all industries are susceptible of course. If manufacturing or distribution of physical products is required, then policing can move back into the physical world. If it is just electronic business such as mediating or advising or providing data, then companies could arise, exploit, cash in and move on within very short times, theoretically fractions of a second. Heavily encrypted organisations that only exists short times and are distributed among many servers may be impossible to police. Without policing, temptation is strong, and AIs could be set up to set up other AIs to set up other AIs to exploit whatever they can however they can and deposit the rewards in complex chains of accounts, also managed by AIs to provide fund extraction on demand.

This scenario is technologically feasible and could become a foundation of the future online criminal industry. It is limited to certain niches though, so it isn’t much of a nightmare. Most of industry and commerce still has to function within the law to do business effectively. The companies in those very dominant sectors will behave reasonably or better.

So… the future has a similar pattern to today – most companies behaving well or OK, and a few rogues, but the balance will be better. The minimum standards are likely to be higher, more of the holes in the rules will be sealed, and there will be a better relationship between companies and the communities in which they do business. Not perfect, but still better. I’ll settle for that.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s