In his interview with CIPE, Stephen Young of the Caux Round Table focuses on the role of business in society and the linkages between ethical business practices, institutional environment, and social progress. According to him, some of the pressures against reforms that we so frequently observe come from the risk factor associated with market transactions:
In many markets we are seeing a growing demand by people to provide protection against risk, protection against change. In some cases, this is a backlash against market reforms, private enterprise, and economic and social change. That is the origin of the recent debate on corporate social responsibility, corporate citizenship, and ethics.
Further, he argues that backsliding from the course of market reforms in many countries could be explained through mistaken perceptions of markets and democracies. In fact, in many cases what those countries experienced was crony capitalism and illiberal democratic mechanisms, not democratic and free market systems rooted in concepts of economic freedom and political liberty. For example, in Croatia:
…when you talk to most Croatians about the free market, entrepreneurialism, and capitalism, they immediately think of cronyism. There is little popular support for the free market. However, Tudjman did not open Croatia to free market enterprise by any means – he created a system of crony capitalism.
Combating such perceptions remains one of the key problems in generating public support for and implementing reforms. Part of the solution is to promote ethical businesses practices that can reinforce market and democratic institutions and act within the boundaries of the law. It is also important to simultaneously reform the way government governs society and the private sector to eliminate possibilities for opaque, behind-the-door dealings.
Stephen Young has also written Moral Capitalism, which touches on a lot of the same themes in more depth.
Published Date: January 17, 2007