BE/U4 Topic 1 Gandhian Philosophy of Wealth Management
Gandhian Philosophy of Wealth Management: The Gandhian Philosophy of Wealth Management is based on the principle that a wealthy man does not truly have the right to hoard wealth solely for the self; the only right he has is that to an honourable livelihood. It is described as the concept of “lok sangraha”, oriented towards the common good. This is distinct from capitalistic economics, with its attendant social ecological and psychological woes.
Trusteeship, as applicable to the corporate world, refers to the act of holding and managing resources on behalf of the stakeholders of the firm. “What’s new about that”, one may query. Given that the traditional take on wealth has almost always been tilted towards owners of corporations, this concept brings in an element of equity, by placing other stakeholders such as employees, customers and society on the same rung as large and small shareholders.
The idea is that all wealth, including human, financial and technological resources, belongs to society and the rewards accruing from their use must revert to society at large. The principles of trusteeship can be traced to the concept of collective Endeavour and community living. Briefly, these are: Resources must be held and utilized for the benefit of society. Managers are the trustees of the stakeholders and must work towards optimizing stakeholder value, not merely maximizing shareholder value. The small investor has as much a say in decisions as the large investor.
Thus, the overall approach is towards the macro and the long-term perspective, rather than the short-term, micro perspective which is often geared exclusively to suit the shareholder and top management. At first sight, this seemingly idealistic concept invariably raises a few protests.
“The owner/s must be rewarded for bearing risks and supplying expertise”: Definitely. But the reward must be in proportion to the skills and expertise supplied. The increasing instances of ethical transgressions on the part of leaders and CEOs indicates the need for better balance in the risk-reward relationship. The Enron fiasco and the sale of shares worth over $70m by erstwhile chief Rebecca Mark, a few months before its bankruptcy, is a case in point. “Corporations exist for profits”: They exist to fulfil the needs of society and in the process, generate profits. Moreover, even if profits were to be the only determinant of policies trusteeship would still score over inequitable sharing of wealth, since De management automatically leads to more lasting and stable equations with stake in turn, leads to higher profits, goodwill and trust. “Trusteeship might lead to an efficiency and efforts”: When individual and group efforts are correctly aligned w needs, the possibility of de motivation or deliberate inefficiency does not arise. Con the utility of the concept, coupled with the commitment of top leadership, would ensure efficiency as well as effectiveness.
The Indian Perspective
The wisdom of the Vedas and Upanishads point towards holistic progress, not fragmented movement in which one section gains at a cost to others. Moreover, the cycle of give-and-take is explained at great length. The Arthashastra of Kautilya and The Kural of Tiruvalluvar both describe the role of the king as trustee, with respect to the citizens and the wealth of the land. In the last century, Swami Vivekananda taught that sustainable progress calls for progress for all members and components of society. Fragmented progress is temporary and often illusory. It is only when all elements of the environment are taken care of that an individual or organization can hope to consistently succeed in its ventures.
Indian Corporate Leaders and Trusteeship: One of the most inspiring examples of corporate trusteeship, in recent times, comes from Infosys, particularly from its former CEO and current chief mentor, Narayana Murthy. His rationale for creating this company along with a small group of people (better sharing of wealth in society), the involvement of employees in the company’s fortunes (through ESOPs) and his contentment with a mere 7% of company stock (he prefers it that way) reflect a deep-rooted commitment towards trusteeship. Other notable examples include the house of the Tatars with their corporatized initiatives for socio-corporate benefits; the “WIPRO Cares” Foundation, with a targeted corpus of Rs 100 core for primary education; and the Birla foundation with its focus on socio-economic improvement in the lives of the people touched by the corporation. The possibility of feel-good exercises induced with an eye on the bottom-line cannot be ignored. Yet, corporate boardrooms are increasingly discovering a match between the long-term interests of the company and their willingness to expand focus to all categories of stakeholders. As the roles of wealthy CEOs and influential policy-makers continue to gain public scrutiny, the question that management must periodically ask themselves is: Does our existence lead to any benefits for society?
Gandhiji’s Seven Greatest Social Sins
Mahatma Gandhi said that seven things will destroy us. Notice that all of them have to do social and political conditions. Note also that the antidote of each of these “deadly sins” is an explicit external standard or something that is based on natural principles and laws, not on social values.
Wealth Without Work
This refers to the practice of getting something for nothing – manipulating markets and assets so you don’t have to work or produce added value, just manipulate people and things. Today there are professions built around making wealth without working, making much money without paying taxes, benefiting from free government programs without carrying a fair share of the financial burdens, and enjoying all the perks of citizenship of country and membership of corporation without assuming any of the risk or responsibility.
How many of the fraudulent schemes that went on in the 1980s, often called the decade of greed, were basically get-rich-quick schemes or speculations promising practitioners, “You don’t even have to work for it”? That is why I would be very concerned if one of my children went into speculative enterprises or if they learned how to make a lot of money fast without having to pay the price by adding value on a day-to-day basis.
Some network marketing and pyramidal organizations worry me because many people get rich quick by building a structure under them that feeds them without work. They are rationalized to the hilt; nevertheless the overwhelming emotional motive is often greed: “You can get rich without much work. You may have to work initially, but soon you can have wealth without work.” New social mores and norms are cultivated that cause distortions in their judgment.
Justice and judgment are inevitably inseparable, suggesting that to the degree you move away from the laws of nature, your judgment will be adversely affected. You get distorted notions. You start telling rational lies to explain why things work or why they don’t. You move away from the law of “the farm” into social/political environments.
When we read of organisations in trouble, we often hear the sad confessions of executives who tell of moving away from natural laws and principles for a period of time and begin overbuilding, over borrowing, and over speculating, not really reading the stream or getting objective feedback, just hearing a lot of self-talk internally. Now they have a high debt to pay. They may have to work hard just to survive – without hope of being healthy for five years or more. It’s back to the basics, hand to the plow. And many of these executives, in earlier days, were critical of the conservative founders of the corporations who stayed close to the fundamentals and preferred to stay small and free of debt.
Pleasure without Conscience
The chief query of the immature, greedy, selfish, and sensuous has always been, “What’s in it for me? Will this please me? Will it ease me?” Lately many people seem to want these
Knowledge without Character
As dangerous as a little knowledge is, even more dangerous is much knowledge without a strong, principled character. Purely intellectual development without commensurate internal character development makes as much sense as putting a high-powered sports car in the hands of a teenager who is high on drugs. Yet all too often in the academic world, that’s exactly what we do by not focusing on the character development of young people.
One of the reasons I’m excited about taking the Seven Habits into the schools is that it is character education. Some people don’t like character education because, they say, “that’s your custom.” But you can get a common set of values that everyone agrees on. It is not that difficult to decide, for example, that kindness, fairness, dignity, contribution, and integrity are worth keeping. No one will fight you on those. So let’s start with values that are unarguable and infuse them in our education system and in our corporate training and development programs. Let’s achieve a better balance between the development of character and intellect.
The people who are transforming education today are doing it by building consensus around a common set of principles, values, and priorities and debunking the high degree of specialization, departmentalization, and partisan politics.
Commerce (Business) Without Morality (Ethics)
In his book Moral Sentiment, which preceded Wealth of Nations, Adam Smith explained how foundational to the success of our systems is the moral foundation: how we treat each other, the spirit of benevolence, of service, of contribution. If we ignore the moral foundation and allow economic systems to operate without moral foundation and without continued education, we will soon create an amoral, if not immoral, society and business. Economic and political systems are ultimately based on a moral foundation.
To Adam Smith, every business transaction is a moral challenge to see that both parties come out fairly. Fairness and benevolence in business are the underpinnings of the free enterprise system called capitalism. Our economic system comes out of a constitutional democracy where minority rights are to be attended to as well. The spirit of the Golden Rule or of win-win is a spirit of morality, of mutual benefit, of fairness for all concerned. Paraphrasing one of the mottos of the Rotary Club, “Is it fair and does it serve the interests of all the stakeholders?” That’s just a moral sense of stewardship toward all of the stakeholders.
I like that Smith says every economic transaction. People get in trouble when they say that most of their economic transactions are moral. That means there is something going on that is covert, hidden, secret. People keep a hidden agenda, a secret life, and they justify and rationalize their activities. They tell themselves rational lies so they don’t have to adhere to natural laws. If you can get enough rationalization in a society, you can have social mores or political wills that are totally divorced from natural laws and principles.
I once met a man who for five years served as the “ethics director” for a major aerospace company. He finally resigned the post in protest and considered leaving the company, even though he would lose a big salary and benefit package. He said that the executive team had their own separate set of business ethics and that they were deep into rationalization and justification. Wealth and power were big on their agendas, and they made no excuse for it anymore. They were divorced from reality even inside their own organization. They talked about serving the customer while absolutely mugging their own employees.
Science Without Humanity
If science becomes all technique and technology, it quickly degenerates into man against humanity. Technologies come from the paradigms of science. And if there’s very little understanding of the higher human purposes that the technology is striving to serve, we becomes victims of our own technocracy. We see otherwise highly educated people climbing the scientific ladder of success, even though it’s often missing the rung called humanity and leaning against the wrong wall.
The majority of the scientists who ever lived or living today, and they have brought about a scientific and technological explosion in the world. But if all they do is superimpose technology on the same old problems, nothing basic changes. We may see an evolution, an occasional “revolution” in science, but without humanity we see precious little real human advancement: All the old inequities and injustices are still with us.
About the only thing that hasn’t evolved are these natural laws and principles – the true north on the compass. Science and technology have changed the face of most everything else. But the fundamental things still apply, as time goes by.
Religion Without Sacrifice
Without sacrifice we may become active in a church but remain inactive in its gospel in other words, we go for the social facade of religion and the piety of religious practices. There is no real walking with people or going the second mile or trying to deal with our social problems that may eventually undo our economic system. It takes sacrifice to serve the needs of other people – the sacrifice of our own pride and prejudice, among other things.
If a church or religion is seen as just another hierarchical system, its members won’t have a sense of service or inner workship. Instead they will be into outward observances and all the visible accoutrements of religion. But they are neither God-centered nor principle-centered.
The principles of three of the Seven Habits pertain to how we deal with other people, how we serve them, how we sacrifice for them, how we contribute. Habits 4, 5 and 6 – win-win interdependency, empathy, and synergy – require tremendous sacrifice. I’ve come to believe that they require a broken heart and a contrite spirit – and that, for some, is the ultimate sacrifice. For example, I once observed a marriage where there were frequent arguments. One thought came to me: “These two people must have a broken heart and a contrite spirit toward each other or this union will never last.” You can’t have a oneness, a unity, without humility. Pride and selfishness will destroy the union between man and god, between man and woman, between man and man, between self and self.
The great servant leaders have that humility, the hallmark of inner religion. I know a few CEOs who are humble servant leaders – who sacrifice their pride and share their power – and I can say that their influence both inside and outside their companies is multiplied because of it. Sadly, many people want “religion,” or at least the appearance of it, without any sacrifice. They want more spirituality but would never miss a meal in meaningful fasting or do one act of anonymous service to achieve it.
Political Without Principle
If there is no principle, there is no true north, nothing you can depend upon. The focus on the personality ethic is the instant creation of an image that sells well in the social and economic marketplace.
You see politicians spending millions of dollars to create an image, even though it’s superficial, lacking substance, in order to get votes and gain office. And when it works, it leads to a political system operating independently of the natural laws that should govern — that are built into the Declaration of Independence: “We hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness….”
In other words, they are describing self-evident, external, observable, natural, unarguable, self-evident laws: “We hold these Truths to be self-evident.” The key to a healthy society is to get the social will, the value system, aligned with correct principles. You then have the compass needle pointing to true north – true north representing the external or the natural law – and the indicator says that is what we are building our value system on: they are aligned.
But if you get a sick social will behind the political will that is independent of principle, you could have a very sick organization or society with distorted values. For instance, the professed mission and shared values of criminals who rape, rob and plunder might sound very much like many corporate mission statements, using such words as “teamwork,” “cooperation,” “loyalty,” “profitability,” “innovation,” and “creativity.” The problem is that their value system is not based on a natural law.
Figuratively, inside many corporations with lofty mission statements, many people are being mugged in broad daylight in front of witnesses. Or they are being robbed of self-esteem, money, or position without due process. And if there is no social will behind the principles of due process, and if you can’t get due process, you have to go to the jury of your peers and engage in counterculture sabotage.
In the movie The Ten Commandments, Moses says to the pharaoh, “We are to be governed by God’s law, not by you.” In effect he’s saying, “We will not be governed by a person unless the person embodies the law.” In the best societies and organizations, natural laws and principle govern – that’s the Constitution – and even the top people must bow to the principle. No one above it.