What to Read Next
On Wall Street, where shareholder “value” is vigorously pursued through ever leaner and meaner organizations, business as usual changed abruptly on September 11, 2001. Within hours after the tragedy, obsession with self gave way to serving others. At the very epicenter of self-interest, people became engaged in collective effort.
There is a message for management in this. The point is not that concern for others is suddenly going to replace self-interest, but that there has to be a balance between the two. The events of September 11 and the following days helped to make evident how out of balance our society has become. The role of management — responsible management — is to work toward restoration of that balance.
The House That Self-Interest Built
In the past 15 years, we in North America have experienced a glorification of self-interest perhaps unequalled since the 1930s. It is as if, in denying much of the social progress made since then, we have reverted to an earlier and darker age. Greed has been raised to some sort of high calling; corporations have been urged to ignore broader social responsibilities in favor of narrow shareholder value; chief executives have been regarded as if they alone create economic performance. Meanwhile, concern for the disadvantaged — simple, old-fashioned generosity —has somehow been lost.
A society devoid of selfishness is certainly difficult to imagine. But a society that glorifies selfishness can be imagined only as base. The intention here is to challenge such a society — not to deny human nature, but to confront a distorted view of it. In so doing, we wish to promote another characteristic no less human: engagement.
A syndrome of selfishness has taken hold of our corporations and our societies, as well as our minds. (See “A Syndrome of Selfishness.”) It is built on a series of half-truths, each of which drives a wedge into society: from a narrow view of ourselves as “economic man,” to a distorted view of our values — reduced to shareholder value, to a particular view of leadership as heroic and dramatic, to a nasty view of organizations as lean and increasingly mean, to an illusionary view of society as a rising tide of prosperity. All of this looks rather neat, as does a house of cards. Before it collapses outright, we would do well to balance it with a rather different set of beliefs.
1. Originally published in M.C. Jensen and W.H. Meckling, “The Nature of Man,” Journal of Applied Finance, 7, no. 2 (1994): 4–19 (revised July 1997).
2. E. Mayr, “Darwin’s Influence on Modern Thought,” Scientific American, July 2000, 83.
3. See, for example, A. Rand, “The Virtue of Selfishness” (New York: New American Library, 1965).
4. “Statement on Corporate Responsibility” (New York: Business Roundtable, October 1981), 9.
5. “Statement of Corporate Governance” (Washington, D.C.: Business Roundtable, September 1997), 3.
6. A. Solzhenitsyn, “How the West Has Succumbed to Cowardice,” Montreal Star, News and Reviews, June 10, 1978, p. B1.
7. M. Kelly, “The Divine Right of Capital: Dethroning the Corporate Aristocracy” (San Francisco: Berrett-Koehler, 2001).
8.T. O’Brien, “The Day Trader Blues,” Upside, January 2000, 182–192.
9. American Customer Satisfaction Index, Q1, 2001, National Quality Research Center, University of Michigan Business School, Ann Arbor; www.bus.umich.edu/research/nqrc.
10. S. Anderson, J. Cavanagh, C. Hartman and B. Leondar-Wright, “Executive Excess 2001” (Washington, D.C.: Institute for Policy Studies, 2001), 1.
11. J.S. Lublin, “Executive Pay (A Special Report). Net Envy,” Wall Street Journal, Apr. 6, 2000, p. R1.
12. B. Brecht, “Life of Galileo,” trans. J. Willett, ed. R. Manheim (New York: Arcade Publishing, 1995)
13. “Extended Mass Layoffs in 2000,” Report 951, U.S. Department of Labor, Bureau of Labor Statistics, July 2001, p. 1.
14. International Herald Tribune, Feb. 15, 2000.
15. P. Barta, “In Current Expansion, As Business Booms, So, Too, Do Layoffs,” Wall Street Journal, March 13, 2000, p. A1.
16. A. Keeton, “Only 34 Percent of Employees Feel Loyal,” Montreal Gazette, Oct. 9, 2000.
17. C. Collins, C. Hartman and H. Sklar, “Divided Decade: Economic Disparity at the Century’s Turn” (Boston: United for a Fair Economy, 1999), 2.
18. E. Olson, “Rights and Strong Economies Go Hand-In-Hand, UN Finds,” International Herald Tribune, June 30, 2000.
19. L. Mishel, J. Bernstein and J. Schmitt, “The State of Working America: 2000-2001” (Ithaca, New York: Economic Policy Institute, Cornell University Press, 2001), 270.
20. “Poverty in the U.S.,” International Herald Tribune, Sept. 29, 2000.
21. Mishel et al., “The State of Working America: 2000–2001,” 353.
22. “Richer and Richer,” International Herald Tribune, June 7, 2001, p. 8.
23. Mishal et al., “The State of Working America: 2000–2001,” 266–267.
24. Mishal et al., “The State of Working America: 2000–2001,” 264.
25. “The Gulf Widens,” Washington Post, June 5, 2001, A20.
26. World Bank, “World Bank Section 28, Distribution of Income or Consumption,” in “World Development Indicators 2001,” 70–72.
27. J.B. Quinn, “Pilkington Brothers P.L.C., Case 3–1,” in “The Strategy Process (Concepts, Contexts, Cases),” eds. H. Mintzberg and J.B. Quinn (Englewood Cliffs, New Jersey: Prentice Hall, 1991), 826–844.
28. G. Hamel, “Waking Up IBM: How a Gang of Unlikely Rebels Transformed Big Blue,” Harvard Business Review 78 (July/August 2000): 137–146.
29. “The Invisible Fist,” The Economist, Feb. 15, 1997.