COLUMNIST: Christopher Schaefer

Christopher Schaefer


The media appropriately chastises Enron executives for immoral behavior. On Feb. 3rd the New York Times noted "At the bottom of the Enron debacle there now appears to have been a simple proposition: for years Enron reported profits that it should not have reported, while Enron insiders reaped huge profits to which they had no right."

What I find surprising in both congressional investigations and in media treatment of the Enron scandal is not the moral outrage but the lack of sustained reflection on how the Enron situation reveals the fragility and weaknesses of our corporate system. The first thing to note is that publicly traded companies are rewarded for maximizing short-term profitability. The higher the short term profitability, the better the stock price, the higher the salaries and stock options offered to key executive of the corporation by their board.

Everyone is out for their short-term gains: investors, boards of corporations who have a legal obligation to maximize share holder values and benefit when they do so, as well as key executives of corporations who are handsomely rewarded for delivering the goods. Everyone is locked in to a financially self-interested mechanism given our present forms of public corporate ownership and the functioning of the stock market.

The temptation on the part of key executives to provide false information, of accountants who are also consultants, to participate in deception and of brokerage houses to give misleading forecasts are great. The fall of Enron is not surprising. What is surprising is how few corporations actually participate in such deception given the pressures they are exposed to.

Rudolf Steiner repeatedly noted the danger of the speculative financial system controlling the production of goods and services, the economic system. Enron points to the need for looking more deeply at the ownership forms of companies, at mechanisms for raising capital and at criteria for the pay of employees. Laws alone would protect us from immoral behavior in a system based on self-interest. Both the limitations of our present system and helpful alternatives are explored in David Korten's new book, The Post Corporate World, Life after Capitalism (Kumerian). Balancing the rights of capital with the right of people is the subject of the compelling historical analysis of Bowles and Guitis, Democracy and Capitalism, Harper Collins.

Also, for a different model of relating economic, political and cultural life which supports and provides a context for the other two studies see Rudolf Steiner, Toward Social Renewal, .

If we want to overcome the dangers of elite globalization, of environmental degradation and of a growing gap between rich and poor we will have to explore alternatives to both capitalism and socialism. Steiner's insights into what he called the 'Threefold Social Order' can provide a start.

Christopher Schaefer, Ph.D.

1. NY Times, Feb. 3rd, page. 1


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