Good afternoon to all of you. I want to thank Dean Rapaccioli for this opportunity to express my thoughts on the delicate relationship between ethics and business.
What is progress?
Today, more than ever, it is necessary to be aware that development must do two things: it must be profitable and it must respect a sound set of cardinal values.
In this digital age, where innovation and transformation permeates nearly our entire society – especially our ways of doing business –we cannot let discussion about progress ignore human behaviors and limits.
This issue is currently being debated by the Pontifical Academy for Life, the Roman Catholic Church institution that studies one of the most controversial ethical dilemmas in our life: science vs faith.
Science is founded on trial and empirical research. Faith is based on religious belief and mystery. So, which is the right path to recognizing the extraordinary progress that science can provide to human lives?
Of course, the right path is the one that is ethical. This is what the field of bioethics studies, and it is one of the more difficult matters that Christianity is debating.
Perhaps you are wondering if I came to the wrong course. Actually, I do know this is the Introduction to Business class taught by Dean Rapaccioli.
You are sophomores and you are preparing yourselves to become business people…in just a few years, you could face a critical life dilemma: the dilemma between greed and value with ethics.
As students at the Gabelli School of Business, you are in the right season of your lives to think deeply about this issue. You have the privilege of studying here and building your character before you confront ethical dilemmas in the daily workplace.
Of course, the workplace now is much different than when I entered it, as a chartered account at Price Waterhouse in the 80s.
The firm that became PWC was only just starting to get into business advisory services. We were mostly accountants and consultants, and there was just one computer in my entire department…we were obliged to share that single computer but also had to protect client information…this was a great opportunity to practice ethical behavior in the workplace.
Since then, almost every aspect of our lives and nearly every industry has been changed by the internet and other powerful technologies.
In very short amount of time, we have evolved to incorporate technology everywhere, but have lost touch with parts of our human nature.
Let’s learn from ancient Greece
Emotions…creativity…imagination…these all can help people to live well together. You know better than me how strongly we are now interconnected through social media but you also know how difficult it can be to share the best human qualities in the digital realm.
I believe that in our current networked society, ethics maintain their own privileged place, as a constant in human life. They are an important guide through the complexities of today.
To think about this, I want to talk for a moment about the past… more precisely, ancient Greece, the birthplace of Western philosophical ethics.
That is where ethical debates began. The ideas of Socrates, Plato and Aristotle revolved around the verb educating, which comes from the Latin words ex (out) and ducere (to lead), to mean bring out; it is equal to developing faculties and powers inside a person – to build up character…
The ultimate purpose of this educating activity was to make people aware they are creators and operators of civilization, and that they are able to shape society, improving it so all can live happily together.
Living well together was the ultimate purpose in the Polis
This is what the Greeks called Eudaimonìa. It comes from the words eu (good) and daimōn (spirit): that was their concept of happiness. Here we can see happiness as a purpose of life and as foundation of ethics.
Happiness had a precise role in directing one’s conduct. According to Aristotle, happiness means to live in accordance with complete virtue, not for some chance period, but throughout a complete life. Happiness was an attitude of the soul.
This was the purpose of poleis, the ancient Greek city-states (the most complete form of political organization of Western history). In a polis, “living well” simply was the happiness of citizens, realized by logos, the rational principle that put together and gave a sense to life within the polis. Logos allows us to discuss and decide what is right and what is wrong, what is good or what is bad.
Mirror neurons confirm Greek philosophy
To Aristotle, polis has a very deep meaning. It is a community, a physical presence, a relationship. The community arises to make life possible and to produce the conditions for a good existence. To live individually is not enough.
More than 2000 years later, we can link this idea to a discovery by a renowned Italian neuroscientist, Giacomo Rizzolatti of University of Parma. In the 90s, Prof. Rizzolatti found the existence of mirror neurons when he observed that watching an action and performing that action activates the same parts of the brain, bringing about the same feelings.
Mirror neurons are why you cringe if you see someone slip and fall. They are the bricks of empathy – we all have them. These little cells program us to live in relation with others.
The art of character
Having established that we have a social brain, ethics and the art of working on our own character might be the key to building a more humane society based on mutual cooperation.
In the path of each person’s life, there are two variables to consider: destiny, which we cannot influence, and character, which we can work on.
So, let’s talk about character…working on character requires commitment and responsibility. I believe our best guide is the four cardinal virtues: prudence, courage, temperance and justice.
To practice these virtues in our everyday interactions requires us to make conscious choices. They can help steer our decisions and show our limitations.
When greed overcomes character
For example, the financial and banking crisis took shape during the summer of 2007 because multinational banks, particularly in the U.S. and Europe, were unethical in their credit and financial transactions. This spawned a new regulatory framework to enforce discipline and prevent any market disruptions.
But we need to ask ourselves what sparked the global crisis. We do not have to dig deeply to see that too many bankers exceeded their limits, literally and figuratively.
Multinational banks, particularly in the U.S. and Europe, were unethical in their credit and financial transactions. Bankers let ambition and greed overcome their character, ignoring their role in their communities.
Ambition and greed are among what John Maynard Keynes described as animal spirits…human behaviors that motivate us to take on certain tasks.
These behaviors can be engines for our evolution and improvement. But we have to make sure that they don’t interfere our ethics and morals, because that is what leads to our downfall – professionally and personally. In the end, respect and honesty are the foundations for the lasting relationships that get the job done.
Trust is our most important asset
Doing business is a deeply personal activity where trust is the most important asset. Among the four cardinal virtues, prudence called Auriga Virtutum, the charioteer of the virtues, is considered the most significant one.
Prudence gives us the capacity for proper judgment – for applying principles and moral judgment, for allowing us to determine what is good and what is bad. To make proper judgments, you need to be humble. Otherwise your ego will interfere with your decisions.
Pope Francis has won strong support worldwide by emphasizing humility. He says humility is indispensable, but has explained that being humble does not mean being polite and courteous – being humble means being able to accept humiliations.
Michael Milken offers an excellent example of accepting humiliation. At the height of success in the 1980s, the “Junk Bond King” made between $200 million and $550 million per year. Then he was found guilty of securities fraud and sentenced to ten years in prison.
Since he got out of prison, he has worked to atone for his crimes. He is promoting awareness of prostate cancer and raising money for medical research into serious diseases. He has been praised as someone who is helping improve medicine.
Andy Fastow, the disgraced former CFO of Enron, has been traveling around America since he got out of prison in 2011, giving lectures about how easy it can be to fall into unethical behavior.
Of course, it is better to accept our daily humiliations, admit when we are wrong, and avoid forgetting our ethics in the first place.
You can’t live outside the Polis
As you begin to take flight in your careers, there is another classic from ancient Greece that can help guide you. I try to always remember the myth of Icarus, who ignored his father’s warning and flew too close to the sun. Icarus overestimated his capabilities to the point that he lost touch with reality. His Hubris…his pride, stemming from privilege and power, ultimately led to his downfall.
To have the guts to admit to your own weaknesses and, unlike Icarus, to be aware of your own limitations is what will set you apart as you work towards your hard-earned successes. It is important to keep your pride in check with what the Greeks called Metis: wisdom and, again, prudence.
Ethics and business are not contradictory aspects of life – they are the winning path to sustainability. The challenge today is to prepare ourselves to be women and men with a sound set of cardinal values as well as financial notions and entrepreneurial spirit.
Remember, according to Aristotle, only angels or beasts can live outside the polis…we are mere women and men!
I want to leave you with this insight, and am happy to open the floor to your questions.
Thanks to all of you!