creating an ethical space for business - presentation to asper school panel on the occupy movement
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On December 8, Winnipeg's Asper School of Business organised a symposium on the Occupy movement and its significance for business. The school kindly invited myself and Radhika Desai to take part, and also invited a speaker from Winnipeg's Occupy movement, interestingly enough the only University department to do so. In the event, the Occupy speaker didn't show, but there was a fascinating discussion and a series of multi-faceted seminars in the school that followed it. There is also a web-side, whose location I'll post when I've found it. Especial thanks to Professor Hari Bapuji and his colleagues for their help in facilitating the event and the websiteTRANSCRIPT
Alan Freeman
An ethical space for Business
The economic case
To judge the effect of inequality we need a comparatorWe are going through times of great changeThe recent past is not the best comparator
I focus on the possible futureI will judge the consequences of inequality
against what we could do if it we didn’t have itBut based on present trends.
This is an ethical vision, but…It’s a practical one
An evangelical approach
The Living Wage policy in London – why is it so popular?The technology of creativity – why is it growing so fast?An ethical space: the capability for a new technological
age Investment in human beings yields the greatest marginal
increase in productivity.Makes possible a growth-led way out of crisis which is based
on human development instead of resource exhaustion.Not an inevitable future. We have to exercise choice.
Ethics thus informs governance, conduct, law and contractWe have to get out of the ‘age of machines’ and into the
‘age of creation’.
The evidence: a summary
The lowest-paid in London should earn 40 per cent more than the poorest wage earners in the rest of the UK,
according to Boris Johnson.The city’s mayor has increased the London living wage, the optional minimum pay rate for the capital, to £8.30 ($13.84)
an hour, 40 per cent more than the current national minimum of £5.93 an hour.
The increase in the London rate of 45p, or more than 5 per cent, is the biggest annual increase since its introduction in 2005 in a sign of the increasing cost of living in the capital,
pushed up by the high level of inflation.
Financial Times May 2, 2011
KPMG was named Living Wage Employer of the Year by London Citizens at their AGM in December 2010. KPMG has paid the Living
Wage since 2006 and hosted a major event in
November at which Boris Johnson, Mayor of London,
urged more London businesses to sign up to pay their cleaning and contract staff at least a Living Wage (currently
£7.85 an hour)
KPMG ‘who we are’, 2010
‘Efficiency gains’Reduced AbsenteeismLoyaltyLower Employee TurnaroundTraining and skills retention
Conventional economic theory ignores theseSee ‘Myth of Measurement’ and ‘Monopsony in
Motion
The technical blah
Ford astonished the world in 1914 by offering a $5 per
day wage ($110 today), which more than doubled the
rate of most of his workers…
The move proved extremely profitable; instead of
constant turnover of employees, the best mechanics in
Detroit flocked to Ford, bringing their human capital
and expertise, raising productivity, and lowering
training costs …
Ford announced his $5-per-day program on January
5, 1914, raising the minimum daily pay from $2.34
to $5 for qualifying workers.
The proof of the pudding
A new economic paradigm? How an exception is becoming a rule
Assets:
•The combined assets of the six largest content-driven conglomerates is larger than Exxon
Consumers
•Spending on creative and cultural products overtook that on food in 1994 and is now more than twice as large
Business
•Businesses now spend more on creative products than on financial services
Creativity
•The key resource employed by the sunrise creative industries is creative labour
2004 2005 2006 2007 2008 2009 2010 2011 2012 20130
500
1,000
1,500
2,000
2,500
UK revenue from music
Recorded Primary Recorded SecondaryLive Primary Live Secondary
£million
The rise of content as a product
What is creative capacity?
The productive paradigm has changed
The old idea that machines are replacing people has reversed
Design is kingThe main
required resource is people
An ethical choice is a public choice Individuals can influence it: see The Economists’ Oath, Movements can influence it: the Occupy Movement
BUT: the Living Wage was public policy: a Mayor’s decisionNot just a moral injunction. It is a procurement policy.A contractual standard: a moral basis for all contracts
Economically Rational as well as morally soundBoosts the ‘ethical’ against the ‘bottom-feeding’ sector. These are the industries of the future Because they are investing in the productive resource of the
future.Conclusion: morality and practical economics now coincide.
Non-ethical contracts are bad both for business and for the people.
An ethical space must also be a public space.
Concluding remarks: the public and the ethical
to the Asper School
to the Occupy Movement
And to the London Citizens Network
Thanks!
Card, D.E., 1995. Myth and Measurement: The New Economics of the Minimum Wage, Princeton, N.J: Princeton University Press.
Manning, A., 2003. Monopsony in Motion. Princeton, N.J.:Princeton University Press.
George DeMartino: The Economist's Oath: On the Need for and Content of Professional Economic Ethics. Oxford: Oxford University Press
KPMG: www.kpmg.com/uk/en/whoweare/whatmakesusdifferent/ourawardsuccess/pages/default.aspx
GLA Living Wage Unit http://www.london.gov.uk/mayor/economic_unit/workstreams/living-wage.jsp
Citizens UK (UK national living wage campaign). http://www.citizensuk.org/campaigns/living-wage-campaign/
Freeman, A. Creativity in the Age of the Internet: http://ideas.repec.org/p/pra/mprapa/9007.html
Find out more
Background data 1
Background data 2