1 1.

INTRODUCTION In response to the current ecological and financial crises, the call for a more sustainable and fairer globalization is gaining momentum. Building this alternative must begin with a spiritual, moral and ethical understanding of our society and economy. We live in a time of transition, a time when all is changing and being challenged - weather systems, ecosystems, our interaction with nature, our understanding of other beings. We now understand that we are all interconnected and interdependent. Somewhere along the line, our actions as human beings have created enormous instability to the planet and the millions of species who reside here. Much of which is familiar to us and deemed the norm' is no longer working and is being challenged. Sometimes change brings with it destruction. Sometimes destruction is beneficial. It can alert us to practices that do not work. With destruction also comes new birth, and new avenues open wide to be explored. There are many choices as to which route to take; the issue is which route is the one that will provide life for all. The golden opportunity presented by the current ongoing crises is to make the right choices that will affect the long term future for us, our descendants and our planet. There is no denying the fact that we are in a serious state of crises, a crises of our own making, all of us and not the bankers alone. They responded to what we wanted: cheap, available, unregulated money and loads of it. They in turn were responding to the neo-liberal agenda of the so-called Washington Consensus: Privatisation, deregulation, market forces, liberalisation, low taxation, free trade, and one glove fits all policies and more. No regards, no respect for different cultures, civilisations, religions and history. What is good for America and the West, then, must also be good for everybody else, regardless of all other factors, we were told again and again. The tragedy is that we have now discovered that what we were pushing on others, which we thought was good for us - the so-called market-forces driven Anglo-Saxon model of capitalism was nothing but a huge cancerous cell which at the end brought the house of cards down. The emperor has no clothes, so to say. 1.1 ACTIONS TO BE TAKEN The current global economic crisis is deeply complex and perplexing. Many world politicians, business people, academics, activists, and civil society representatives, as well as religious and

2 spiritual leaders, have called for a new kind of "ethical capitalism" - a moral, spiritual and virtuous economy. People everywhere are calling for an international framework of standards for an equitable and sustainable global economy to replace the current economic system of unbridled growth and increasing ecological degradation. While some look for quick short-term solutions that would perpetuate the current economic model, others see the need for more fundamental changes of the model itself. Our challenge is great. In a time of continuing crisis and polarizing viewpoints, can the world agree on an ethical approach to the global economy? We should explore the emerging economic issues as well matters that are deeply ethical and spiritual:

What is the source of true happiness and well-being? What is the good life? What is the purpose of economic life? What does it mean to be a human being living on a spaceship with finite resources?

How can the global financial system become more responsive and just? How can the world make the global trade system more equitable and sustainable? What paths can be recommended to shift the current destructive global politicaleconomic order from one of unrestrained economic growth, profit maximisation and cost minimisation, to one that embraces material wealth creation, yet also preserves and enhances social and ecological well-being and increases human happiness and contentment?

How can society overcome poverty and scarcity with limited natural resources? How should we deal with individual and institutionalized greed? What are the requirements of a virtuous economy? What religious or spiritual variables should be considered in economic/business ethics and economic behaviour?

How are these components to be integrated with economic theories and decisions? What role should universities play in building an integrity-based model of business education?

What should be the role of the youth? How might the training of young executives be directed with the intention of supplying insights into the nature of globalisation from its economic, technological and spiritual perspectives, to build supporting relationships among the participants that will lead toward action for the common good within their chosen careers?

Indeed, is ethical, profitable, efficient and sustainable capitalism possible?

3 These questions and more need to be reflected upon, debated, and ultimately, answered and put into policy formation, guiding us to a more humane globalisation. A concrete framework for understanding what has gone wrong and possible remedies, including both broad perspectives on policies and specific recommendations, must include not only an economic perspective, but also a spiritual, moral and ethical understanding. Steps can be taken towards a sustainable economy, to turn the current crisis of casino capitalism into an opportunity for a successful, sustainable and everlasting change, where all people, wherever they may be, can live fulfilling, healthy, and yet more ecologically compatible lives. 1.2 STEPS FOR SUSTAINABLE ECONOMY 1. Begin a Journey to Wisdom Economics and business are all about human well-being in society and cannot be separated from moral, ethical and spiritual considerations. The idea of an economics which is value-free is totally false. Nothing in life is morally neutral. In the end, economics cannot be separated from a vision of what it is to be a human being in society. In order to arrive at such understanding, my first recommendation must surely be for us to begin a journey to wisdom, by embodying the core values of the Golden Rule (Ethic of Reciprocity): "Do unto others as you would have them to do to you". This in turn will prompt us on a journey of discovery, giving life to what many consider to be the most consistent moral teaching throughout history. It should be noted that the Golden Rule can be found in many religions, ethical systems, spiritual traditions, indigenous cultures and secular philosophies. Applying this universal principle can provide an enabling mechanism for the dialogue and development essential to resolving the challenges we face globally, nationally, and locally. 2. Now is the Time for a Revolution in Economic Thought "An economist who is only an economist cannot be a good economist". Therefore, the focus of economics should be on the benefit and bounty that the economy produces, how to let this bounty increase, and how to share the benefits justly among the people for the common good. Moreover, economic investigation should be accompanied by research into subjects such as anthropology, philosophy, politics and most importantly, theology, to give insight into our own

4 human mystery, as no economic theory or no economist can say who we are, where have we come from or where we are going to. Humankind must be respected as the centre of creation and not relegated to short-term economic interests, as has been the case for the past few centuries. 3. Don't Repair the Economy, Change It The current financial meltdown is the result of under-regulated markets built on an ideology of free market capitalism and unlimited economic growth. The fundamental problem is that the underlying assumptions of this ideology are not consistent with what we now know about the real state of the world. The financial world is, in essence, a set of markers for goods, services, and risks in the real world and when those markers are allowed to deviate too far from reality, "adjustments" must ultimately follow and crisis and panic can ensue. To solve this and future financial crises requires that we reconnect the markers with reality. What are our real assets and how valuable are they? To undertake this readjustment requires both a new vision of what the economy is and what it is for, proper and comprehensive accounting of real assets, and new institutions that use the market in its proper role as servant rather than master. We have to first remember that the goal of the economy is to sustainably improve human well-being and quality of life, not the promotion of materialism, consumerism and "shop till you drop" values - especially when they are done with borrowed money! Ultimately we have to create a new model of the economy and development that acknowledges this holistic context and vision. This new model of development would be based clearly on the goal of sustainable human well-being. It would use measures of progress that clearly acknowledge this goal. It would acknowledge the importance of ecological sustainability, social fairness and real economic efficiency. Ecological sustainability implies recognising that natural and social capital are not infinitely substitutable for built and human capital, and that real biophysical limits exist to the expansion of the market economy. Social fairness implies recognising that the distribution of wealth is an important determinant of social capital and quality of life. The conventional model has bought into the assumption that the best way to improve welfare is through growth in marketed consumption as measured by GDP. This focus on growth has not improved overall societal welfare, which is why explicit attention to distribution issues is sorely needed. 4. Recognise That the Economy Is Part of the Biosphere

5 A comprehensive economic plan must be based on the scientific fact that the global economy is a subsidiary of the natural order. Economic policies should be attuned to the limited capacity of Earth's biosphere to provide for humans and other life and to assimilate their waste. Photosynthesis and sunlight are as essential to the framework for economic budgets and expenditures as the laws of supply and demand. 5. Acknowledge That We Need New Institutions An economic renewal tailored to the 21st century would establish institutions committed to fitting the human economy to Earth's limited life-support capacity. We need something like the central reserve banks which will look after shares of the Earth's ecological capacity, not just interest rates and the money supply. Money should be recognised as a social licence for using part of Earth's life-support capacity. Some functions of governance will have to operate at a global level through a federation modelled perhaps on the European Union, with enforceable laws designed to assure that individual nations don't overrun Earth's limits. The rules for the developed countries that are responsible for the current ecological crisis should be different from those of developing ones. 6. Fairness Matters A "right" human-Earth relationship would recognise humans as part of an interdependent web of life on a finite planet. The economy must recognise the rights of the human poor and of millions of other species to their place in the sun. In a world awash in money, addressing poverty only with growth reflects a tragic lack of moral imagination. Indeed, in pushing for more "free" trade as it is currently understood, we would entrench an ongoing addiction to consumption, pursued in a manner that often ravages the bio-productivity of developing countries. 7. Expand the Discussion The new knowledge that will forever mark this period in human history is the overwhelming scientific evidence that we are over-consuming the planet and accelerating toward ecological catastrophe. The short-term approaches of most ministers of finance and professional economists don't account for how the planet works, or even that the economy exists on a finite planet. Scientists morally committed to protecting the global commons and researching ecological limits to the global economy need more funding and influence in policy-making. 8. Look beyond Neoliberal Education and Short-Term Fixes

6 We must begin a serious debate on the role of education and what education is all about. We must greatly increase investment in educational and civic institutions that teach that we are not "consumers," but citizens of the Earth and guardians of life's prospects on a small, beautiful and finite planet. In today's largely decadent, money-driven world, the teaching of virtue and building of character is no longer part of the curriculum at many of our universities around the world. The pursuit of virtue has been replaced by moral neutrality - the idea that anything goes. For centuries it had been considered that universities were responsible for the moral and social development of students and for bringing together diverse groups for the common good. Given the above, it is clear that we need a new economic model, enabling us to deal with new challenges, rather that rescuing and bailing out a discredited and bankrupt model, philosophy and theory. The long-term solution to the financial crisis is therefore to move beyond the "growth at all costs" economic model to a model that recognises the real costs and benefits of growth. We can break our addiction to fossil fuels, over-consumption, and the current economic model and create a more sustainable and desirable future that focuses on quality of life rather than merely quantity of consumption. It will not be easy; it will require a new vision, new measures, and new institutions. It will require a redesign of our entire society. But it is not a sacrifice of quality of life to break this addiction. Quite the contrary, it is a sacrifice not to.

7 2. ETHICS AND THE MARKET SYSTEM CONCEPT The concept of the free market is meant to be an ethical idea. It is a manifestation of what is called "utilitarianism," that is, the ethical concept that stresses the maximization of pleasure in society. Under this view, an action is good if it has good consequences, regardless of the intention of the agent. This is central to both utilitarianism and the free market. What matters here is how one's actions make other people happy, satisfied or whatever they consider to be "pleasurable." 2.1 ADAM SMITH While around for a long time, the concept of the market as a species of utilitarian ethics was not developed fully until the 1776 publication of Adam Smith's famed "The Wealth of Nations." Smith's main purpose was to take the ethical vices of greed, envy and competition and turn them into things that can benefit a population. Greed, through the market, can be changed into social utility. 2.2 UTILITY The market, like all forms of utilitarianism, revolves around satisfying the desires of as many people as possible. The market concept does not attempt to define what it is that should make people happy, only that we know that plenty of things can and do make them happy. The market is not ethical in the sense that it dictates what is supposed to satisfy the population, but it does stress the concept of choice in society. Consumers vote with their dollars what firms stay in business and what firms go out of business. Competition, however, must remain for the system to work. 2.3 THE MARKET The abstract concept of the market is a society in miniature. There are many greedy people in the world who want to make money at the expense of others. The free market recognizes this and also recognizes that this greed cannot be stamped out --- it is a part of human nature. The point of the market, from an ethical point of view, is to channel that greed into socially constructive areas. From this demand comes the concept of competition. If three greedy people are all selling the same thing, then, in order to dominate their competition and rake in the cash, they will have to sell cheaply, treat customers well, service their products, act honestly with customers and maintain a high quality of both product and service. This is not because greedy business owners wants to do these things, but they realize that if they are to stay in business, they must do these things.

8 2.4 MARKET ETHICS From the point of view of public policy, the only ethical consideration concerning the market deals with the nature of competition. States have the right to legislate concerning false advertising claims, unfair competition practices like price-fixing, or practices like creating a monopoly. The ethical foundation here is that these practices harm the principle of competition. A monopoly has no incentive to treat customers well, since the customers have nowhere else to go. Competition is the ethical linchpin of the system. All that interferes with honest competition can be legislated against.

9 3. CAPITALISM - THE INSTITUTION OF ETHICS Up to now, we have seen that Ethics is a paradigm of individual choice. According to what rules will individuals make decisions? How may we acquire correct rules of behaviour that benefit us, rather than incorrect rules of behaviour that actually harm us? What can make our ethical theories to actually be good? In cybernetical terms, we speak of the structural coupling between two structures. The two structures concerned are the real world and each of our mental models of it. What ensures the relevance of our models and its ethical rules with respect to the real world and the laws of nature, so that our decisions actually benefit us? As always, the answer, in cybernetical terms, is feedback. You may have heard of experiments where a man is cut from his sensorial feedback, eyes and ears shut, plunged into a bath at body temperature, with artificial breathing and feeding. After a long enough time in such a situation, the man goes crazy. His mind has been disconnected from reality. Cut a man from his sensorial feedback, and after some time, he'll go raving mad, without sensorial direction. Well, the same is true for man as moral being: cut him from his moral feedback, and after some time, he'll behave in a morally crazy way, without moral compass. In the realm of morality, the feedback is named responsibility. Responsibility is when someone suffers the consequences of some decisions. And this means both the positive consequences and the negative consequences. When responsibility coincides with liberty, when the person who takes some decision suffers the full consequences of these decisions, then there is a feedback loop; then people benefit from their good choices and lose from their bad choices; and so they may learn from experience. As you may know, experience is the best teacher; but it is an expensive teacher, that always gives the lesson after it gives the examination. However, intelligent people learn from other people's experience, not just their own so they may learn the lesson and succeed at future examinations without having to fail at first. When it matches liberty of choice, responsibility before the consequences of one's own choice is the one principle of progress in human history. It is the feedback from reality that makes us stick to reality and improve ourselves within it. Responsibility is what keeps human action relevant to human fate. Without responsibility, we lose track of how to behave; worse, with misplaced responsibility, where those who decide are not those who suffer the consequences of decisions, then we get on the wrong track, and we run into disasters.

10 To avoid confusion, note the distinction between (1) responsibility in fact, that falls upon whoever actually suffers the consequences of action, (2) the feeling of responsibility, that some people may or may not have, whether or not they actually suffer the direct consequences of given actions. It is through the feeling of responsibility that some people may adjust their actions; but it is actual responsibility that creates a dynamics whereby people learn to feel the right kind of responsibility rather than a wrong one. We may also distinguish (3) responsibility in law, which is about the praise or blame that people get, but I'll get to that later. Some people may try to equate Responsibility in Fact with some kind of immanent justice. However, it must be understood that conscious human action is part of the feedback that constitutes Responsibility. If humans don't consciously create feedback, then responsibility may fail to exist. In other words, in this matter as in others, We can't ``let nature decide we are part of nature; we can't ``let god enforce his will we are among god's agents; we can't ``let authority tell us we are the makers of the authority that determines things; it isn't above us, it is us. And we'll see that this is what Law is about. To summarize what Ethics is, Ethics is a paradigm of individual choice between opportunities, which choices are kept relevant to the meaning of human life through the feedback of responsibility. That is why Capitalism is precisely the Institution of Ethics: Capitalism is the formal recognition of Human Action as a Paradigm of Individual Choice between Opportunities. 3.1 CAPITALISM: THE INSTITUTION OF ETHICS

Capitalism is a Theory of Law. It is a Theory of Law that consists in the definition of individual property rights. A Theory of Law gives means to resolve and prevent conflicts. Conflicts arise when individuals make incompatible decisions about some resources that may be used in only one of the proposed ways at most. Capitalism is a Theory of Law based upon the recognition that human action is made of individual decisions, that are kept relevant through responsibility. Because a resource may be spent but by individual decision, whoever ultimately gets to decide the use or fate of a resource in fact possesses that resource. The only way to prevent future conflicts about resources is thus to determine whose decision is to prevail about said resources, who may legitimately possess it. Capitalism is thus based upon acknowledging to each potentially

11 disputed resource a proprietor, an owner. The owner may decide how this resource is preserved or spent. But under Capitalism, the way that ownership of resources is distributed is not arbitrary. Capitalism recognizes that possession in fact, without any previous conflicting claim from anyone else, makes for valid property rights. Hence, the personal liberties by which each individual owns his own body, mind, and activity. Hence also the homesteading rule by which individuals appropriate natural resources by being the first to put them to actual use. Capitalism also recognizes the necessity of responsibility. Thus, it seeks to match the liberty of making a decision with the responsibility for the consequences of making said decision. Hence, creators get to own whatever they create, whether it's good or bad. Hence, destroyers get to be responsible for what they destroy, whether it's good or bad. If during a transformation, one both creates and destroys things, one gets both the praise and the blame accordingly. And blame means that the culprit must compensate the victim for encroachment to the victim's property. Finally, Capitalism recognizes the goodness of mutually volontary exchanges. Hence, not only is a property individual: all decisions concerning it are ultimately borne by a one person, the owner. A property is also transferable: the owner may give or exchange his property with any other willing individual, at mutually agreed conditions. Finally, a property is divisible: either through physical division, time sharing or any agreed upon arrangement, the owner may split his property so as to exchange part of it with another individual, through contract. These are the principles of Capitalism. 3.2 LAW AND FACTS

But what relationship does Capitalism have to reality? Indeed, what does any Theory of Law have to do with reality? What binds Fact to Law? The choice between actions, good and bad, legitimate or illegitimate, still resides upon individual choice. Just because some action has been identified as legitimate or illegitimate doesn't magically drive individuals towards or away from this action. Once again, there is one distinction that may drive an individual's behaviour, when said individual is able to make this distinction: it is the distinction between what is good for said person and what is bad for said person. But unless you can somehow tie legitimacy to individual good, then it remains an irrelevant distinction as far as human action goes. That's where the domain of Law comes into play. Widely held opinions about what is legitimate, bind individual interest, through the implementation and expectation of enforcement. Because people expect punishment for their deeds that are generally found to be bad, they will refrain from indulging

12 such deeds or suffer the wrath of society, and eventually be removed from society, should they persist. Ideas have consequences. Ideas about legitimacy have consequences in terms of what rules of behaviour people adopt. Law is part of what makes fact. A wide feeling of legitimacy breeds force. Right makes Might. 3.3 THE ENFORCEMENT OF PROPERTY RIGHTS

If Law in general gets its power from enforcement, how are property rights to be enforced within Capitalism? Well, under a system of Capitalism, the owner of some resource may defend his property against trespassers, intruders, robbers; and the owner of destroyed or altered property may require tort reparation from intentional or unintentional borrowers, thieves, vandals, destroyers. 3.4 CAPITALISM AS A PHENOMENON

Now, you'll tell me, such unrestricted Capitalism doesn't exist at least yet. Its opponents call it ``wild capitalism, the law of the jungle. But it doesn't exist because it's actually much more civilized than our societies currently are. Whatever the case may be, in absence of such complete Capitalism, universally recognized as valid Law, what is the relevance of Capitalism in society? That's where I would like to say a few things about Capitalism as a phenomenon. Those who fight Capitalism, the phenomenon, are actually seeking to destroy mankind, they are seeking to destroy life itself. They want to put an end to civilization and return to brutish animality. They want to put an end to animality and return to vegetation. They want to put an end to vegetation, to change, to life itself, and return to the purity and stability of death. 3.5 CAPITALISTS

What is the relationship between Capitalism, the system of Law, and Capitalism, the phenomenon of Capital accumulation? And how does that make either concept of Capitalism relevant to our life? We saw that Capitalism as a phenomenon is consubstantial to life itself. And Capitalism as a System of Law is the implicit system by which everyone lives. Any person who faces moral questions, any human being who makes any individual choice, acts under the implicit assumptions that Capitalism makes explicit. Any two persons who voluntarily cooperate with each other act under the implicit assumptions that Capitalism makes explicit. Human action is

13 projection into the future. A capitalist is someone who looks into the future. A capitalist makes profit only in as much as he sees further than other people in the direction he's looking. 3.6 OBSTACLES TO CAPITALISM

If we are all implicitly capitalists in our human behaviour, why do people oppose capitalism as a theory? What drives people to reject Capitalism as a Law? Why are they rejecting the rational rules of individual and social life? Why do they subscribe to anti-rational rules of Law, that drive them to conflict and misery? First, I want to insist that almost by definition, most every man acts in good faith, according to his beliefs of good. As said Alexander Solzhenitsyn, who has seen the heart of evil, ``To do evil a human being must first of all believe that what he's doing is good. Certainly, there are very few psychopaths, who do what they know to be evil. And unhappily, we often find these psychopaths attracted to positions of political power. But that is a different problem. Most people subscribe to evil rules of behaviour, while believing they are doing good. And the psychopathic rulers would have no power, save for the compliance and support of a mass of well-meaning citizens. Capitalism as a Law is rejected by most people, out of error, out of misunderstanding. This misunderstanding is sustained by the action of evil people, but also by the mere reproduction of errors by other well-meaning people. It is a self-reproducing belief, a meme, that has not been replaced yet by the meme of Capitalism. And we must study it from the point of view of memetics. 3.7 ERRORS IN THE WAY OF LIBERTY

Most people are not able to conduct an abstract logical inquiry into the systemic consequences of the rules of actions they adhere to. And able or not able, such abstract logical inquiry is indeed a complex endeavour that is better left to the few people who are best at it; this follows from a proper division of labour according to skill. And thus, most people, most of the time, including those capable of abstract logical inquiry, act upon rules that they can't possibly inspect in all their consequences. People mostly act according to rules that have no dynamic context: in such situation, do this instead of that. Where this gets bad is when people wrongly abstract this daily behaviour into a universal principle. And then, they imprison themselves into a static view of the world: one where there are no choices, only obedience to one set of rules or another; one where consequences do not matter, only dogmatic rules; one where there is no dynamic creation or destruction of values, only static distribution of a fixed pie of wealth.

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3.8 CONVINCING PEOPLE

We libertarians may know that Capitalism is the rational way of living as individuals in society. But other people don't. And thus they are ready to enforce upon each other and upon us rules that violate natural property rights, rules that constitute oppression, and lead to suffering, misery, poverty, and death. If we want to be free, we have to convince all these people.

15 4. ETHICAL ISSUES IN MARKET SYSTEM 4.1 ETHICAL ISSUES ARISING FROM THE NATURE OF MARKETS - The 18th Century economist Adam Smith demonstrated how in a free market the self interest of producers and consumers will produce an outcome desirable to all concerned

- But the market can also lead to inequality of income, wealth and market power: Monopoly suppliers can exploit consumers Monopsony buyers can exploit supply firms World wide inequality of income can result in unethical practices such as the child labour

Ethical issues and society - examples Involvement in the community Honesty, truthfulness and fairness in marketing Use of animals in product testing Agricultural practices e.g. intensive faming The degree of safety built into product design Donation to good causes The extent to which a business accepts its alleged responsibilities for mishaps, spillages and leaks The selling of addictive products e.g. tobacco Involvement in the arms trade Trading with repressive regimes

Ethical issues arising from internal and industry practices - examples Treatment of customers - e.g. honouring the spirit as well as the letter of the law in respect to warranties and after sales service The number and proportion of women and ethnic minority people in senior positions The organisations loyalty to employees when it is in difficult economic conditions Employment of disabled people Working conditions and treatment of workers

16 Bribes to secure contracts Child labour in the developing world Business practices of supply firms

Unethical practices in marketing - examples Pricing lack of clarity in pricing Dumping selling at a loss to increase market share and destroy competition in order to subsequently raise prices Price fixing cartels Encouraging people to claim prizes when they phoning premium rate numbers Bait and switch selling - attracting customers and then subjecting them to high pressure selling techniques to switch to an more expensive alternative High pressure selling - especially in relation to groups such as the elderly Counterfeit goods and brand piracy Copying the style of packaging in an attempt to mislead consumers Deceptive advertising Irresponsible issue of credit cards and the irresponsible raising of credit limits Unethical practices in market research and competitor intelligence

Unethical practices relating to products - examples Selling goods abroad which are banned at home Omitting to provide information on side effects Unsafe products Built in obsolescence Wasteful and unnecessary packaging Deception on size and content Inaccurate and incomplete testing of products Treatment of animals in product testing

17 4.2 ETHICS AND THE SUPPLY CHAIN - It would be hypocritical to claim to be a ethical firm if it turned a blind to unethical practices by suppliers in the supply chain. In particular: + The use of child labour and forced labour Production in sweatshops Violation of the basic rights of workers Ignoring of health, safety and environmental standards

An ethical producer has to be concerned with what is practiced by all firms (upstream and downstream) in the supply chain.

This is a key ethical issue in business It first needs to be stated that bribery to secure a contract (especially a contract with a public sector body) is against the law and severe penalties can result However, it is sometimes seem (wrongly) as a victimless crime and is often rationalised in terms of if we dont offer a bribery, others will From a moral or ethical perspective it should be approached not in terms of can we get away with it but is it right to offer a bribe to secure a contract

4.3 INSTITUTE OF BUSINESS ETHICS SUGGESTIONS FOR GOOD PRACTICE The Institute recommends that organisations issue statements of ethical practice in respect of: Relations with customers Relations with shareholders and other investors Relations with employees Relations with suppliers Relations with the government and the local community The environment Relations with competitors

18 Issues relating to international business Behaviour in relations to mergers and takeovers Ethical issues concerning directors and managers Compliance and verification

19 5. ETHICS OF MARKET SYSTEM-MARKET LIBERALISM The moral, political and social objections to market liberalism and the market itself. The market is not a neutral 'process', it is a structure deliberately imposed, to implement the goals of a liberal ideology. It can be ethically assessed, and rejected, on that basis: criticism of the market overlaps with general critique of liberalism. 5.1 THE GOALS OF MARKET LIBERALISM Market liberals see the free market as an instrument to achieve certain goals. Very few attempt to justify the market on quasi-esthetic lines, as something of intrinsic value but without direct application. When liberals speak of the free market, they mean a functioning market with real participants. ___Balance and stability Metaphors of balance and equilibrium are often used by liberal philosophers, to justify liberal political systems. The market is sometimes justified in these terms. In the early days of capitalism, the market was praised as a moderating influence on a turbulent society. The earlycapitalist ideology is described by Albert Hirschman in The passions and the interests: political arguments for capitalism before its triumph (1977). The expression 'la douce commerce' dates from that time: commerce was contrasted with war. The underlying value system is rarely explicit, but logically it implies that balance and equilibrium are inherently good - otherwise, why arrange society to maximise them? ___Hidden order Another philosophical justification for liberal structures is that they reveal, or bring into existence, a more perfect order. This line of argument derives from mediaeval theology (although it might be much older). The idea is that God's plan is revealed, by the combined result of human actions. In market liberalism, explicit claims that the market produces the best 'ordering of society' are common. Liberal societies, and the market, are also justified by their ordering of individual preferences. Neoliberals appeal to the superiority of 'emergent' or 'self-organising' orders, as opposed to 'patterned' or 'designed' orders. Again these are value preferences in themselves - 'emergent' is not a synonym for 'good' and an emergent order does not inherently justify itself. ___Prosperity and welfare of the community

20 Despite their claimed individualism, market liberals often appeal to the general success of market societies, to justify the market's existence. The fact that some individuals do not benefit, or are dissatisfied, is ignored. The usual comparison is with the planned economy of the Soviet Union, which is considered a total failure. Compared to historical examples of planned economies, market economies have higher average incomes - but unequally distributed. Again, it is a value preference in itself, to choose the 'common good' over any other moral defects of the market especially with such a crude measure of the 'common good'. 5.2 THE IMPOSITION OF THE MARKET Competition is a characteristic of the free market, but its supporters do not tolerate any competitor for the free market itself. Almost always, they support a comprehensive global free market, a planetary monopoly. The market has definite goals, as explained above - it is not neutral and there are alternatives. A global free market implies their suppression. A voluntary global free market does not exist, at least not on this planet. The market was imposed, and maintains itself, by deliberate action. ___Expansionism Expansionism is one of the clearest characteristics of market liberalism. Especially in the postSoviet 'transition economies' there are identifiable national lobbies and groups which have no other purpose, than to impose the free market on that country. There are also individuals and organisations demanding a global free market, although usually within the context of global liberalism. At present, market liberalism is probably the most aggressive global ideology - more so than for instance Islamism. Very few Islamists have serious plans for the Islamisation of the United States, but in contrast many Americans demand (and expect) a transformation of Islamic societies into liberal market democracies.

___Internal filters The internal ideological strength of the market is less visible than its expansionism, but no less real. The market, to use a biological analogy, has an immune response. The structures of a market society obstruct criticism and opposition to the market, it neutralises attacks from within. The filter working of the job market is the best example: it is much harder for opponents of the market to get a job, than for its supporters. This filter effect is in action every time a vacancy is filled, and is often institutionalised in the form of permanent assessment. Employees at an investment bank - who can lose their job if their tie is the wrong colour - are unlikely to suddenly join anti-

21 capitalist demonstrations. Over time, the probable effect is a lessening of all criticism, and a general acceptance of the market as inevitable and 'normal'. The social conformity, which was seen by dissidents as a typical characteristic of 'Soviet-bloc' societies, is just as evident in market societies. ___Military imposition of liberalism It should not be forgotten that the free market is also imposed by military conquest - not in isolation, but as part of an imposed liberal-democratic political regime. The present liberal market democracies in Austria, Belgium, France, Germany, Italy, Luxembourg and the Netherlands, are the direct result of invasion by US and allied forces in 1944 and 1945. In recent years, interim administrations with liberal-democratic orientation have been imposed by military force, on Bosnia, Kosovo, East Timor, and parts of Macedonia. A free market economy existed already in these areas. Nevertheless, the market is part of the 'packet' of values and social structures, imposed by the troops. In addition, the NATO as a military alliance appears to include the free market among its core values. All its actions are, at least partly, directed at the imposition of these values. It is certainly unthinkable, that a US or NATO force would supervise the introduction of a Soviet-type economy. 5.3 THE ENTREPRENEUR The free market, certainly the modern version, cannot exist without the entrepreneur. A liberal market society stands in opposition to an ethical society, and the entrepreneur stands in opposition to the ethical individual or organisation. ___Definition of an entrepreneur A familiar example of a pre-capitalist ethical organisation is the mediaeval monastery, where the monks worked for the glory of God. At least in theory - in reality the monasteries were often proto-firms, active in the commercialised sectors of the mediaeval economy. Nevertheless, it is clear that an ethical organisation can exist, and that individuals can act ethically (in accordance with some ethical goal). In contrast, the entrepreneur acts in accordance with market forces. This is so central to the activities of the entrepreneur, that it can be used as a definition. An entrepreneur is a person who, as a profession, acts in accordance with market forces. In modern economies, 'the entrepreneur' is usually an organisation rather than an individual. There are still many individual entrepreneurs, but their share of the Gross National Product is small, compared to that of firms. An 'entrepreneurial organisation' or enterprise, normally meaning a business firm, exists for the purpose of acting in conformity with market forces.

22 ___Characteristics of an 'enterprise' In practice, all enterprises have certain characteristics which clearly distinguish them from an ethical organisation, even when both operate in a market society: 1. the enterprise competes for market share with other similar organisations 2. it is prepared to damage the interests of its competitors, for instance by reducing their market share 3. it sells products at more than cost price 4. it seeks to ensure its own continued existence, even when that contradicts ethical goals, and it makes no provision for its own dissolution on moral grounds 5. it excludes from decision-making persons of good will, who might seek its dissolution on moral grounds 6. it does not distinguish on moral criteria, among its customers, or suppliers, or clients, or in the selection of its personnel 7. it internalises the principle of competition, by for instance competitive selection among job applicants - so creating a new market within the market, the 'labour market'.

5.4 THE ENTERPRISE CULTURE AND THE FIRM The entrepreneur seeks primarily to act in accordance with market forces within a free market economy: nevertheless certain sub-goals logically follow from that. In addition, an enterprise culture has emerged, which can not always be logically derived from the original ideology of market liberalism. ___Entrepreneurs are liberals There must be a market, or the existence of the enterprise makes no sense: therefore the enterprise is pro-market. This may seem a trivial point, but it is important to realise that every enterprise is at the same time a political organisation. Every entrepreneur is a market liberal, in the general sense. In mid-19th century Europe, this was a political reality: the 'industrialists' supported the dominant liberal parties. The rise of the mass parties - nationalist, Christian, socialist - eroded the political role of those liberal parties, but their model of economy and society remains triumphant. ___Businesses are pro-business

23 Again it may seem trivial, but by definition an enterprise must support its own existence, and therefore the existence of enterprises as a class of organisations. Entrepreneurs act collectively as a lobby, to demand facilities for entrepreneurs. As mere private individuals, in a non-market society, they could not achieve much. Their demands are addressed to the state. That may seem inconsistent - but only the state can structure itself as a facility for entrepreneurs, it would be pointless to demand that from the clergy, or from the art world. ___'Business' as such exists The 'business community', as it is called in the United States, does exist as a community, and it is a pro-business community. It exists as a social factor, beyond the economic activities of its individual members. It influences society, by the way it spends its money. Business, for instance, will not sponsor left-wing parties: business supports the right in politics, including the nationalist and racist right. The personal preferences of the businessman and businesswoman are generally conformist and conservative, as is visible at any business conference. In contrast to their own mythology, they are unadventurous. There is even a collective style in clothing - the business suit is one of the few voluntary uniforms in modern societies. The business world has its own language and social style, it is a complete subculture. The question is: why should this particular minority have total control of the economy? ___Glorification of the entrepreneur In a typical market society, the entrepreneur is assigned a heroic role, and is glorified as the source of wealth and innovation. Non-entrepreneurial activity, for instance idealistic activity, is seen as secondary or even parasitical. This vision is not only promoted by entrepreneurs themselves: ideological praise of the entrepreneur is as old as market liberalism itself. Modern neoliberals, such as Tony Blair, are especially active in glorifying the entrepreneur, and explicitly demanding an 'enterprise culture'. The heroic entrepreneur is also a central theme of libertarian propaganda. ___Market demand and the customer Market societies tend to view the market as norm, a view which is itself propagated by market liberals. In a market society, market forces are treated as if they were an ethical goal in themselves: indices such as the Dow Jones or the FTSE are idolised. The staff of the business firm are told that "the customer is always right" or more recently, that the shareholder is always right. Assuming, of course, that neither threatens the firm itself. Again this is a deliberate substitution of the aggregate customer and shareholder, for ethical judgment and moral principles.

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5.5 THE EFFECTS OF THE MARKET The free market has effects on the course of history, and on society. The Dutch word 'marktconform' is useful in describing these effects - it means 'in conformity with the market' or 'determined by market forces'. A 'marktconform' housing policy, for instance, means that houses are built by entrepreneurs, where and when they want, in whatever size or form they think they can sell, and without regard to planning or environmental considerations. The result - generally suburban sprawl - is also 'marktconform'. The market is not neutral, and can not neutrally order preferences: its own preference is for a 'marktconform' world. ___The market limits positive and negative possibilities Despite the propaganda, the free market limits choice - it produces only goods and services which are marketable. Try to find a supermarket stocked entirely with un-marketable goods, or an enterprise which produces them for years on end. The logic of the market is, by definition, that the unmarketable is competed out of existence. So the market prevents the existence of the unmarketable: a limit on possibility. The propaganda of market liberals presents the market as innovative, or at least as a facilitator of innovation. Nevertheless, a free market will inherently suppress any innovation which is unmarketable. A market society is by definition permanently in a 'marktconform' state, and contra-market innovation can not exist there. Once a market society has become a perfect outcome of market forces, then it will remain stable, unless an external shock disrupts its 'marktconform' stability. In a negative sense that is also true - it is impossible in a free market to abolish anything which is 'marktconform'. If I want to forbid Disney products, for instance, I can not trust the market to achieve this goal: so long as they are so successful and marketable, they will be available. Only the state can effectively prohibit marketable goods: that is why drug and alcohol prohibitionists use the state, not the market, to enforce their values. ___Adaptive, non-innovative, conformity A market society creates and encourages a mentality of adaptation to the existing world. This is most evident in the labour market, in the behaviour of job-seekers, especially students. Many students choose their courses, not for personal or idealistic reasons, but simply for 'good career prospects'. The career-seeker does what the employer requires, and refrains from what the employer dislikes. The resulting attitude is a strangely aggressive form of conformity. ___Harm by competition

25 Harm is an integral part of any free market, and this harm is not limited to the entrepreneurs. Market liberals say that the entrepreneur should seek to advance his own interests. In a free market, that must consist of damaging the position of others. Each entrepreneur competes with other entrepreneurs for a limited resource - market share. Whatever happens to the Gross National Product, the combined market shares are always equal to 100%. To increase share (advance his own interests), an entrepreneur must, by definition, reduce the market shares of others. In any case, by the market-liberal definition of success, a successful business competes its rivals out of existence. At first, the rival firms suffer financial loss. Ultimately, they can not meet their financial obligations: they collapse, usually via a bankruptcy procedure. Their employees lose their jobs. This is how a free market works - its supporters understand that job security undermines it. ___Harm to others as a social value It seems dangerous to ground a society on the value of trying to disadvantage others. That is exactly what market liberalism proposes, and the results are predictable. Since the entrepreneur has no other interest other than his own, he will not seek to protect others. When he benefits, he will seek to actively harm others - if he thinks he can get away with that. An endless series of scandals show that entrepreneurs are indeed prepared to injure and kill others for their gain. The sale of contaminated food is probably the most typical example of entrepreneurial behaviour. Governments find it necessary to restrain entrepreneurs in the food industry, by regulation, to prevent them from poisoning the population. That in itself ought to say enough about the entrepreneurial mentality. Nevertheless, entrepreneurs continue to evade these regulations. Recent epidemics of animal diseases in Europe illustrate that. Although everyone in the sector is familiar with the risks, there are always some who use contaminated feed, or transport animals illegally, and so spread the disease. The entrepreneur seems incapable of self-regulation - and that is not surprising, since liberal market culture abhors regulation. ___Selection by competition The free market generates a form of Darwinian selection: the survival of the competitive. Noncompetition, or incomplete competition, is failure. The market produces a hierarchy of failure, with the most competitive firms and individuals at the top. Not necessarily those with the best products, or the most honest advertising, or the best treatment of their employees - but those who can best compete in a free market. The least competitive are at the bottom of the hierarchy, or simply dead - in many parts of the world, no job means no food. The market is not the only social structure which generates inequality in this way: modern educational systems, for instance, are

26 structured as a competition of intellectual talents. They also produce hierarchy, inequality and failure, although they are not a market. They are part of a general category of liberal structures, where the aggregate outcome of competition determines the final structure. The formal equality of such liberal structures (everyone can participate) does not reflect the real inequality of the 'talents' required. Not everyone can compete like Bill Gates - and not everyone should. ___The triangular form of selection In market-liberal propaganda, the market is represented as a fair two-party transaction, typically buyer and seller in free contract. In reality the free market can never function with two parties - it has a 'triangular' character. At least three parties are required - one buyer and two competing sellers, for instance. Only in such a triangle can competition and market forces exist: the two sellers compete, and market forces drive their prices down. As a result, one party can be disadvantaged, even by a free and fair contract between the other two. The buyer may like the price, and the seller may like the price, but the third party (who failed to sell) might starve. In the real free market there are billions of parties, and repeated transactions: the effect of disadvantage is cumulative. ___Centering The free market extends the power of selection to many, although their individual effect on the outcome is small. That is not necessarily a good thing: the evidence is that the market selects against innovation. Conformity, conservatism, and middle-of-the-road taste are typical of consumer behaviour, in the western market democracies. The selective effects of the market are themselves cumulative. Whatever is marginalised by the operation of market forces, becomes less attractive and more marginal - as a result of that status. What already sells well, becomes more marketable. This is a general characteristic of all liberal social structures, not just the market. 5.6 MORALITY OF THE EFFECTS The free market is grounded in a value system: its morality can be questioned simply by stating alternative values. ___Universality The free market has no end, its duration is indefinite: in principle it is forever. So far as I know, no theorist of the market has ever fixed a time limit, or named a structure which will replace it. The duration of the market is a universality in time: the market is also intended to be universal in space. When market liberals advocate the market, they advocate a permanent global market - an

27 implicit claim that it represents the highest possible form of society. However, the market should not have a planetary monopoly, nor should it last for ever, nor should it intensify itself, by centering society on a core culture which is itself a market culture. ___Interactivity Like other liberal structures, the market promotes interaction and transaction: it is grounded on the premise that these things are inherently good. They are not, and neither goods nor ideas exist solely to be exchanged. Market liberals implicitly claim, that all humans should be linked by transactions, to the greatest possible extent. There is no basis for such a claim: transactionmaximisation is not inherently right. A collective decision-making process, with a great number of transactions, destroys the moral autonomy of the subject. In such a process, there is no causal relationship between the decision of an individual, and the aggregate outcome of global market forces. Ethical action is impossible in such a society. ___Conservatism The market blocks the innovative transition to a non-market world. It structures the world in a particular way, as the outcome of market forces, and it keeps it that way. Stability, balance, and harmony are not inherently good, and it is wrong to order the world in accordance with these values. Order is not inherently good, and the creation of order can form no justification for the market. The ordering of preferences is not inherently good, and it is wrong to order human society merely as a preference order. Whenever the market inhibits or obstructs innovation, then innovation should take precedence over the market. Innovation as a value overrides order, stability, balance, harmony, and any non-innovative preference order. 6. CASE STUDIES 6.1 INDIAS INFOSYS: A CASE STUDY FOR ATTAINING BOTH ETHICAL EXCELLENCE AND BUSINESS SUCCESS IN A DEVELOPING COUNTRY At conference after conference on corporate ethics, values, governance and social responsibility the major speakers either come from leading European and U.S. companies, or from consulting firms and academia that use Western firms as their models. There is, all too often, an unspoken and widespread sense that companies in developing countries either adhere to lower standards for so-called cultural reasons, or just cannot afford the luxury of the high model Western norms. Such arrogance is commonplace. The approaches pursued by Infosys of India deserve far greater attention as a model for all companies, wherever they happen to be headquartered. Infosys Opens NASDAQ, Co-Founder Moves Up to Chief Mentor Post

28 N. R. Narayana Murthy is as well known as a promoter of corporate governance reform and excellent corporate workplace ethical practices, as he is as the co-founder of Infosys Technologies Ltd., the Mysore-based company that is one of Indias new technology leaders. Murthy, who turns 60 later this month, is relinquishing key executive positions in the company he co-founded in 1982 to become the enterprises Chief Mentor. Much like Bill Gates at Microsoft, Murthy has pioneered a technology revolution and as his corporation has become firmly established and very successful, so he has distanced himself from day-to-day operations. Infosys, which employs over 58,000 people worldwide, provides consulting and IT services. It is one of the pioneers in strategic offshore outsourcing of software services. Murthy is a fervent believer in globalization, a major influence on the thinking of author Tom Friedman (The World Is Flat: A Brief History of the Twenty-first Century) and a leader of Indias technology revolution. His approach to corporate governance and workplace values has been no less influential on the most dynamic and successful technology companies in India. Infosys highlights its perspectives at www.infosys.com On July 31, 2006, Murthy opened the NADSAQ market from his corporate headquarters in Mysore. He said, Twenty-five years ago, we founded Infosys with a vision of the global delivery model. That vision has been validated as the tide of globalization has swept across the world and businesses are dramatically changing how they run their organizations. Opening the NASDAQ market from India is not only a great honor for Infosys, but also illustrative of the emerging new world. The Companys Vision Is: "To be a globally respected corporation that provides best-ofbreed business solutions, leveraging technology, delivered by best-in-class people." And, its Mission is: "To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large." Infosyss stresses that its operations are driven by key values that it calls C-LIFE: 1. Customer Delight: A commitment to surpassing our customer expectations. 2. Leadership by Example: A commitment to set standards in our business and transactions and be an exemplar for the industry and our own teams. 3. Integrity and Transparency: A commitment to be ethical, sincere and open in our dealings. 4. Fairness: A commitment to be objective and transaction-oriented, thereby earning trust and respect. 5. Pursuit of Excellence: A commitment to strive relentlessly, to constantly improve ourselves, our teams, our services and products so as to become the best. Corporate Governance is an area of critical importance to Infosys and one where it has sought to be a global leader. It is seeking to use its model example to promote far higher standards in India and Murthy has been one of the most vocal and influential advocates of

29 corporate governance reform in his country. The company states: We believe that sound corporate governance is critical to enhance and retain investor trust. Accordingly, we always seek to ensure that we attain our performance rules with integrity. Our Board exercises its fiduciary responsibilities in the widest sense of the term. Our disclosures always seek to attain the best practices in international corporate governance. We also endeavor to enhance long-term shareholder value and respect minority rights in all our business decisions. The Infosys corporate governance philosophy is based on the following principles: -Satisfy the spirit of the law and not just the letter of the law. -Corporate governance standards should go beyond the law. -Be transparent and maintain a high degree of disclosure levels. When in doubt, disclose. -Make a clear distinction between personal conveniences and corporate resources. -Communicate externally, in a truthful manner, about how the company is run internally. -Comply with the laws in all the countries in which the company operates. -Have a simple and transparent corporate structure driven solely by business needs. -Management is the trustee of the shareholders capital and not the owner. Infosys stresses that at the core of its corporate governance practice is the Board, which oversees how the management serves and protects the long-term interests of all the stakeholders of the company. It states: We believe that an active, well-informed and independent Board is necessary to ensure the highest standards of corporate governance. Majority of the Board, 9 out of 16, are independent members. Further, we have compensation, nomination, investor grievance and audit committees, which are comprised of independent directors. As a part of our commitment to follow global best practices, we comply with the Euroshareholders Corporate Governance Guidelines 2000, and the recommendations of the Conference Board Commission on Public Trusts and Private Enterprises in the U.S. We also adhere to the UN Global Compact Programme. To promote corporate social responsibility the company established a philanthropic foundation in 1996, which is mostly engaged in social, health and education programs in India. Murthy is the chairman of the governing body of the Indian Institute of Information Technology, Bangalore and the Indian Institute of Management, Ahmedabad. He was the Chairman of the Committee on Corporate Governance appointed by the Securities and Exchange Board of India (SEBI) in 2003. He is a member of the Board of Overseers of the University of Pennsylvania's Wharton School; Cornell University Board of Trustees; Singapore Management University Board of Trustees; INSEAD's Board of Directors and the Asian Institute of Management's Board of Governors. He is also a member of the Advisory Boards and Councils of the William F. Achtmeyer Center for Global Leadership at the Tuck

30 School of Business, the Corporate Governance initiative at the Harvard Business School, and the Yale University President's Council on International Infosys Foundation, the philanthropic arm of Infosys Technologies Ltd., came into existence on 4th December 1996 with the objective of fulfilling the social responsibility of the company by supporting and encouraging the underprivileged sections of society. In a short span of time, the Foundation has implemented numerous projects in its chosen areas. The Foundation has undertaken various initiatives in providing medical facilities to remote rural areas, organizing novel pension schemes and in aiding orphans and street children. It has undertaken a large rural education program titled "A library for every school" under which 5500 libraries have been set up in government schools spread across many villages. Other activities include the reconstruction of old school buildings, setting up of rural Science Centers and schemes to provide support to dying traditional art and culture forms.

6.2 WIPROS CODE OF ETHICS Scandals and lack of corporate governance dont encourage public and the retail segment in taking active interest in the capital markets. But if companies are more transparent, keep a consistent track record and there is less volatility then they can get back the confidence in the retail markets. FIIs are determining movement of the Indian capital market. I think it is not an exciting trend but it is a global trend and you cannot reverse it, said Azim Premji, chairman, Wipro Corporation, while responding to a question on the role of FIIs in the country. Mr Premji was interacting with the CEO Forum of the Mahratta Chamber of Commerce, Industries and Agriculture in Pune. Speaking about making ethics a cornerstone at Wipro, Mr Premji said, Ethics was an asset not a liability. It may increase transaction time but it reduces transaction cost. Lack of ethics is expensive, Mr Premji pointed out. He was of the firm belief that it was possible to break a corrupt system with honesty. He warned of competition from China not only in manufacturing but also services. Dont underestimate China. They are in a major drive to upgrade and compete with India in services. People dont realise how forward Chinas thinking is. Everything they do they are think 10 years ahead and go single-mindedly to achieve it, Mr Premji added. On emerging opportunity for India, Mr Premji said that the demographic shift is taking place in the developed world. Older people outnumbering the young people is an opportunity for India. When the West is aging India will be young and the world will depend on India to keep the global engine running, Mr Premji added.

31 IT major Wipro understands clearly the difference between a bribe and 'facilitating payment' and is not averse to giving gifts "in the normal course of business" provided that these do not exceed $50. "A contribution or entertainment should never be offered under circumstances that might create the appearance of an impropriety. Some very modest gifts with a value not exceeding $50 or equivalent currency, appropriate to give in the normal course of business practice may be acceptable," the company says in its code of business conduct and ethics. Wipro, banned for four years from doing business with the World Bank for offering improper benefits to its employees, has questioned the global lender's decision saying it had done nothing wrong. In its code, the company says there is a clear distinction between bribe - a practice of corruptly giving a thing of value in exchange for gaining advantage in favour of the giver or any other person - and 'facilitating payment'. It defines 'facilitating payment' as "payment of money to expedite a

routine governmental action to which the giver is otherwise entitled to. After the World Bank made its decision of 2007 to debar the company for four years, Wipro had said in a statement that it had offered the staff of the global lender shares under a plan approved by the authorities. It is important for the employees to understand the difference between bribe, which it said was a strict-no, and facilitating payment, the code said, adding that even the latter is discouraged in the company. The company's Code of Business Conduct and Ethics, posted on its website, calls for it to comply with Foreign Corrupt Practices Act, which prohibits corrupt payments for obtaining or retaining business.The code also says that "Wipro will only obtain and conduct business legally and ethically. The quality of our products and the efficiency of our services at the most competitive prices is our greatest tool in marketing our business." "We should ensure that third parties do not violate Wipro's policies and should never give, offer, or authorize the offer, directly or indirectly (proxy bribing), of anything of value (such as money, goods or service) to any third party including government official to obtain any improper advantage." Offerings of items that cost up to $50 are acceptable if they meet the following criteria: "They are consistent with accepted business practices. They do not violate applicable law. They cannot be reasonably construed as payment or consideration for influencing or rewarding a particular decision or action. Their public disclosure would not embarrass Wipro." 6.3 MEDIA ETHICS Launched in 2000, Tehelka has become one of India's most popular independent weekly newspapers. Its editor is Tarun Tejpal. "Tehelka," a word which means "sensation" in Hindi, succeeded in creating that in March 2001 when it released video footage of its first major sting operation, "Operation West End." The videos showed several defense officials, officers, and

32 politicians from the then-ruling coalition Indian government discussing and accepting bribes. Tehelka had two reporters pose as arms dealers peddling "fourth generation thermal hand held cameras" on behalf of a British company. The president of the Bharatiya Janata Party (BJP), the mainstay of the government, was shown taking 100,000 Indian rupees (roughly $2,500 in U. S. dollars). He resigned the next day. He was followed a day later by the Minister of Defense who had also appeared on the video-accepting twice as much. Several additional defense ministry officials and officers were suspended later. This scandal pushed the Indian government into an immediate crisis and this in turn hammered the Indian stock market-which was already down as the result of an insider trading scandal. The government fought back by attacking Tehelka's methods. It claimed that the allegations were based on misleading references and touched-up pictures. Even though it is easy to sum up the whole story and conclude that corruption was exposed due to Tehelka's efforts and that justice has been served, the underlying ethical issues regarding the case are still open for debate. There are questions yet to be answered. First, is it investigative journalism or is it self-interest which encouraged the Tehelka reporters to engage in false impersonation, carrying hidden cameras and wiring themselves up? The reporters paid large sums of money (bribes) to touts, officials, politicians on false pretexts. Then they recorded their payments on hidden cameras and eventually offered these recordings as news to the public.

There were also reports from other media that the Tehelka reporters allegedly offered women as bait during the episode. This was later justified by Tehelka during a "meet the press" programme conducted by the Mumbai Press Club. Tehelka strongly defended its team for using women in the sting operation to unearth fictitious defense deals, stating that they were minor ethical transgressions used to expose the grave corruption in the system of governance. Is this justification morally valid? Are the methods followed by the reporters ethical and did they violate anyone's rights in the process? Did Tehelka create this mess? The Tehelka undercover operation brought these acute questions out in the open, perhaps for the first time-which is interesting when viewed from the overall media ethics angle in India. Some writers and reporters argue that a vast gulf existed between exposing corruption either by snaring or tempting people into accepting gifts or bribes using the "sting" approach versus the exposure of corruption using traditional (and approved) investigative reporting methods. According to freelance journalist Sadhu (2005, Para. 15), "an occasional sting operation made with professional commitment may serve the cause for the time being. But that is no alternative to investigative journalism. To build its credibility and ensure its freedom under democracy, the media in India will have to turn to serious investigative reporting." Then why are the media, especially in India, increasingly turning towards "sting" operations instead of investigative journalism to produce major stories, even though there are several risks

33 inherent in these operations? First, to encourage investigative reporting there has to be an independent, free and fearless media. But sometimes the owners and the editors have their own political or corporate agendas which do not necessarily encourage investigative reporting. A second factor is the Indian bureaucracy, which is notorious for its red-tape. Even ordinary information is kept out of reach of the public. The third factor is the lack of ethics codes for media in developing countries like India. The fourth and final factor is time. India has more than 100 different news channels and more than one hundred major dailies, often competing against each other to be the first ones to deliver the "breaking news" to the Indian public. Investigative reporting is a tough business and would need lot of self-discipline from reporters and editors. This type of reporting process is always time consuming and would often take weeks and sometimes months to come out with a single story. Under all these conditions it is natural for the media to believe that sting operations are the best, possibly the only, answer. For groups supporting this type of journalism, only the end results matter and the final outcome justifies the process.

Teleological Analysis Using the principles of Utilitarianism, actions are "right" insofar as they tend to promote happiness, "wrong" as they tend to produce the reverse of happiness. What makes an act right or wrong is its consequences, how it affects individuals, whether it causes them pleasure or pain. This principle evaluates actions based on the outcome or consequences of an event. At the end, if the positively affected (people who benefit from the event) outnumber the negatively affected (people hurt by the event), this principle would support the view that the event is ethical because the greater good is served by it.

The important stakeholders in this case were the Indian public, the then-Indian government, Tehelka reporters, editor Tarun Tejpal, several Defense officials, the Defense Minister, BJP party President, BJP party, opposition political parties, media in general, the Indian stock market and its investors. The following table shows how these major stakeholders were affected by this case. From a long-term point of view, the negatively affected stakeholders outnumber the positively affected stakeholders in this case. The Government, the Indian army and the stock market with thousands of investors were negatively affected after the disclosures. There was also an initial positive outcome in terms of the huge public euphoria (corruption had been exposed!) that followed the disclosures. The Indian public saw on TV, probably for the first time, how corrupt some politicians were and how some of the deals affecting the Indian army were made. Interestingly, after the initial shock waves, the public euphoria died down and the populace quickly lost interest in the case. The first reason for this could be that, in India, there has always been a general feeling of mistrust towards politicians, even before the Tehelka tapes, and people

34 in general have come to accept that bribes and some level of corruption are a part of the daily routine. The second and most critical factor could be the methods adopted by the reporters. The alleged use of women, liquor, and money by the reporters to lure the unsuspecting in this whole episode have worked against Tehelka in the long term.

Even though this operation brought into focus the corruption issue, it is because of these two factors that it failed to capture the imagination of the nation long enough to ignite a massive clean-up of the corrupt political system in India. The end result was that, except for the then-BJP Party President, the rest of the tainted politicians were back in business within a few months.

Irrespective of the conclusions based on the outcome of various ethics theories, including the Utilitarian analysis above, there seems to be one universal fact. It is that journalists everywhere play a vital role in providing the public with knowledge and understanding and must remain sensitive to issues such as fairness and accuracy. Reporters continuously need to ask ethical questions throughout different stages of their investigations and be ready to justify their decisions to editors, colleagues, and the public. Usually, the ethical way of accomplishing tasks is tougher, but all reporters should be willing to confront such a challenge. Even though the methods adopted by Tehelka's team could be challenged using some ethics theories, they have forced people to debate and discuss ethics in media in India, probably for the first time-which is a good development indeed.

35 CONCLUSION The preceding analysis suggests that competitive market situations encourage the reasonably high standard of business ethics called the ethic of justice. The financial incentives of the market exact a price from business leaders trying to be more ethical or less ethical. Saints and sinners can exist, and indeed they do. But in most cases they could improve their profit by adhering to the middle-ofthe- road ethic of justice. This conclusion is based on the long run view and the assumption of accountability. Business leaders intent on maximizing long run profit will find the justice ethic in their long run best interests if their past ethical performance is known to prospective customers, employees, investors, suppliers, competitors and local communities. A record of poor ethical performance in the past will cut off cooperation from others in the present and future. A good record will encourage cooperation and, with it, improved profit. The conclusion does not apply to situations where the business leader can misrepresent the ethical standards to be practiced, can capture the profit before the other economic agents realize that they are being exploited, and can leave the relationship with no fear of retaliation by the unsuspecting victims. One-time business transactions and short-lived business relationships thus represent a natural habitat for the unscrupulous businessperson. The analysis also suggests that economic development should tend to raise the minimal standards of ethical behavior over time. Not only should material well being improve but the relationships between economic agents in their daily dealings should exhibit greater degrees of honesty, loyalty, friendliness, courtesy and fairness. But that improvement will be arrested far short of the ethical ideal of altruism. Competitive market systems will reach stable levels of business ethics falling short of the altruistic ideal. Hence, there would appear to be a permanent conflict between idealists who hunger for universal altruism and pragmatists who through study or experience realize that an efficient economic organization will have to be satisfied with a level of ethics that reaches the border of altruism but is unable to pass into that promised land. I will now conclude. Ethics is the paradigm of Human Action: individual choices, kept relevant by responsibility. When you compose the many choices of many people, you get Economics. Economics is the Plural of Morality. The spinal structure of any economic system is the Theory of Law that people hold and defend. Law is a matter of opinion. And the history of liberty is the history of the evolution of opinion. That is why, if we are to play a role in furthering liberty, we must learn how to teach liberty.

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37 BIBLIOGRAPHY BOOKS AND JOURNALS Becker, Gary. The Economic Approach to Human Behavior, Chicago: University of Chicago Press, 1976. Hattwick, Richard, Bong-Gon Shin and Larry Wall. Business Ethics -- Findings of a Survey of America's Business Leaders, Journal of Behavioral Economics, Vol. XIll, No.2, Winter 1984, pp.155-185. Kohlberg, L. Moral Stages and Moralization, in T. Lickond (ed.)., Moral Development and Behaviors Theory, Research and Social Issues, New York: Holt, Rinehart and Winston, 1976. Maslow, A.H. Motivation and Personality, second edition, New York: Harper and Row, 1970. Schumpeter, Joseph. Capitalism, Socialism and Democracy, New York: Harper and Brothers, 1942.

INTERNET WEBSITES http://www.frozennorth.org/C1848698620/E2001512392/ http://www.anbhf.org/pdf/hattwick.pdf http://www.scu.edu/ethics/publications/ethicalperspectives/accountingethics.html http://tutor2u.net/business/strategy/business-ethics-issues.html http://web.inter.nl.net/users/Paul.Treanor/free-market.html http://fare.tunes.org/liberty/sofia2005.html http://media.www.mediaethicsmagazine.com/media/storage/paper655/news/2008/12/31/ AnalysesCommentary/Operation.West.End.A.Case.Study.In.Media.Ethics3643813.shtml Ethics and the Market System Concept | eHow.com

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