Jonathan Haidt on the business advantage of being ethical

This is a fascinating talk by Jonathan Haidt, a psychologist situated within one of the most prestigious business schools in the world whose research focuses on morality and emotion. I can’t help but be impressed when someone addressing business concerns leads with biology, and Haidt does a good job of summarizing the “disruptive cooperation” (read: competitively-superior cooperation) that led to the formation of prokaryotes, then eukaryotes, and then multicellular organisms. Can leading with these foundational evolution of cooperation topics convince businesspeople that cooperation is the most successful strategy in the history of the earth?

He makes a nice transition from hive-forming animals to hive-forming humans, and rightly links religion, military advances, and advances in the way we form corporations in the expansion of human cooperation. I also like that he recognizes that we are running out of higher scales at which to interaction, although he fails to point out the problematic nature of not being able to compete earth against other planets (although let us try to get the country-versus-country thing straightened out first!).

Using both evolutionary logic and data on company success, he makes a strong case that being ethical gives companies the cooperative advantage. The fact that company ethics rating systems like Ethisphere can also predict which companies are more successful is fascinating.

But this all seems a bit oversimplified to me. What about the equity inherent to these companies? Are these companies actually paying their workers more equitably, and does that mean that we can just sit back, wait for ethical companies to dominate as predicted, and let them set us back on track to more equitable societies? When companies create shared interests, is the resulting success shared evenly?

What about cheating? One of the biological stories that Haidt fails to tell is how cheating and exploitation are rampant in biology, perhaps in large part because cooperative success creates abundance that some organisms can parasitize. How do we prevent cheating? What is the cultural — including regulatory — environment that is required such that we can then sit back and let the most ethical companies thrive (he does hint at this issue when he talks about transparency, but there’s got to be a lot more to this story).

An important issue that Haidt illuminates is the question of who companies work for. Treating workers and customers as stakeholders creates the kind of shared goal that allows companies to harness the power of higher-level selection. But when building wealth for shareholders is the primary goal of a company, that kills the in-group benefits of the stakeholder approach. And yet plenty of companies exploit workers, do as poorly as they can by their customers, and still deliver to their shareholders. Haidt kind of ignores an important dynamic of the many scales of human organization: while it is true that we have come to belong to larger and larger groups, it is also true that particular individuals can transcend their individuality and come to hold power at much higher levels (he alludes to Vladimir Putin, who seems an apt example of an individual whose influence far exceeds the individual level). If we are going to invoke the importance of understanding humans from a multilevel perspective, we had better make sure we understand the exact nature of our many levels. We are not quite like cells in a body or bees in a hive.

And if you are going to invoke multilevel selection, you also need to acknowledge that it presents problems as well as opportunities. If increasing groupishness has led us to be more and more successful by allowing more cooperative groups to outcompete less cooperative groups, we need to acknowledge that such a mechanism of success kind of tops out once you get to the countries-competing-against-countries level. If you want global peace and prosperity, some new paradigm has to emerge that allows all countries to reap the benefits of not just cooperation within the country but cooperation between countries. If Haidt’s assumption of group selection in the past shaping what companies survived and thrived is correct, we can’t allow that process to leave some countries to fail. Perhaps figuring out how to foster cooperation without strong selection against some groups is one of the challenges that Haidt’s Ethical Systems group should be taking on.

There’s no denying that there are some great ideas here, but without a bit more actual problem-solving, a lot of what Haidt presents is more wishful thinking than informed prescription.

If you want more on this subject, there are a couple of posts on this topic on the Ethical Systems site here and here.