There are a myriad of books, academic articles, blogs, consultants’ websites, etc. that focus on leadership and explain how to be a good leader of people and organizations. Many of us who teach in the field of leadership can spout off the names of those who have created concepts, theories, and models of leadership. We can talk about when and how to use a transformational or transactional style and what characteristics make a good leader. In his book, Rooted Leadership, Johnson proposes a different perspective on leadership – he refers to all these styles and behaviours of past authors and researchers but enhances these concepts by introducing a theological perspective on leadership. He goes beyond the focus on servant leadership, that many Christians espouse as the best leadership style, and provides a greater biblical grounding for how we should lead. He states that leadership studies don’t generally embrace a theology of leadership, and thus, as a theologian, he feels this knowledge gap needs to be corrected. For those of us who teach in Christian colleges and universities, and those who are Christians holding down a leadership role in an organization, a theological perspective on leadership is what we should be understanding, integrating in our teaching, and demonstrating in our behaviours. In his introduction to the book, Johnson states: ‘without a solid theological foundation, Christians will continue to buy into a sociological basis for human leadership, one that can become a functional heresy’ (page xv).
The book is divided into eleven chapters that answer different questions that leaders may ask about leadership. Each chapter provides many scholarly references that support his perspective, in addition to scripture that reinforces his thoughts and comments on a theology of leadership. Johnson refers to many of the well-known, and regularly cited, concepts and models, such as Kouzes and Posner’s transformational leadership model, Hershey and Blanchard’s situational leadership model, and Jim Collins’ examples of transforming a good organization into a great organization. He also refers to many Christian authors, such as Robert Greenleaf, Mark Buchanan, and John Maxwell, and their writings on leadership, in addition to respected theologians such as J.I. Packer, Eugene Peterson, Henri Nouwen, and N.T. Wright, explaining scripture. (A quick view of the 15 pages of bibliography demonstrates the depth of reading Johnson did before composing this theology of leadership.) He ends each chapter with a practical case of how a person in scripture demonstrated the leadership characteristic or challenge which the chapter is discussing.
Chapter 1 provides a framework for understanding a theology of leadership. Johnson begins by explaining why universities, colleges, and seminaries refer more to a secular view of leadership rather than a theological view. He discusses the impact that culture has had on our desire for a more pragmatic understanding of the world around us. This desire for the practical understanding of leadership has pushed the research and teaching of leadership studies into an anthropological and sociological study. He further indicates that philosophy and theology have been pushed aside for these other areas to be the demonstrators of knowledge and wisdom; due to this fact, he believes that an understanding of correct leadership will be skewed. He takes many pages in this chapter to expound upon our need for knowledge of the divine. He quotes from Shepherds After My Own Heart by Timothy Laniak, by stating: ‘True leadership, rooted leadership, can be understood only in terms of a fully integrated theological vision of God and his work on earth’ (page 13).
Chapters 2 through 4 define what leadership is, why leadership is necessary, and how one becomes a leader. Johnson focuses on how Jesus led His disciples in His ministry on earth – He was a servant. Johnson clearly defines servant leadership as one that does not diminish the authority of the leader and that our servanthood begins with service to God. He identifies that leadership is always present when decisions need to be made and when change is occurring around us; Johnson indicates that leaders are an integral part of God’s design and purpose. He further discusses how one becomes a leader, stating that ‘there is no such thing as chance, destiny, or luck in God’s kingdom . . . theology declares that God determines the course’ (page 74). The theological perspective of leadership is that it is a summons.
Chapters 5 through 7 explain the character traits and skills that good leaders possess. Of all the chapters in this book, these are probably the chapters that most current and future leaders will want to read and focus their thoughts upon. Johnson begins by stating that all the best leadership traits are focused on the heart of a leader – he indicates how failed leadership has everything to do with ‘unprincipled hearts’ (page 99). He explains the five traits that are critical for principled leadership – these are love, justice, humility, integrity, and diligence – and discusses the importance of God’s wisdom in understanding how and when to demonstrate these traits. With this guidance from God, the leader’s abilities to follow, to think, to see, to shape, to communicate, to manage, and to implement will be easily and effectively demonstrated.
Chapters 8 and 9 discuss the roles leaders play and how power and influence should be used. The focus is on how a leader needs to fulfill an organization’s mission and ensure that its values are exemplified. The challenge with these two chapters is that the discussion centres around organizations in which the mission and values are in accordance with Christ. These chapters do not clearly address how leaders fulfill their mission and vision achievement role in organizations that don’t have a Christian foundation and are not focused on how to minister to the world around them. The discussion in these chapters, however, provides much guidance to leaders working within the church and Christian communities.
Chapter 10 acknowledges the importance of suffering when in a leadership role and how it can be beneficial to developing a good leader. Johnson discusses many things that those of us in leadership experience – setbacks, misunderstandings, alienation, loneliness, personal failures, adversaries, loss – and provides guidance on how to manage our way through these challenges. This chapter provides much encouragement to help us endure through these times of suffering.
Chapter 11 ends the book with how leaders end their responsibilities and roles as a leader, and how a positive transition can occur. Johnson acknowledges the difficulties leaders have when letting go of this important part of their life; for some, their identity has been their leadership role. He explains the need for developing successors and discusses why good leaders should be sharing of their gifts and talents for ensuring the next generation of leaders are leading as God would have them do. Johnson goes on to provide many scriptural references on leadership in God’s future kingdom, which are good to contemplate, but the discussion is lacking in how past leaders, those who are followers of Christ, can effectively manage their future roles (no longer as a leader) while still here on earth.
To conclude, this book definitely adds to the field of leadership studies and fills a gap in our understanding of leadership from a theological perspective, which is greatly needed in Christian universities and colleges. The only reference that most of us use when teaching leadership is Greenleaf’s and Blanchard’s explanation of servant leadership, so having more scripture to refer to when explaining Godly leadership is imperative. The areas of the book, however, that are lacking in advancing the study of leadership are in the discussion of leaders in secular organizations; the addition of this would make this book a great book for Christians in the marketplace.
‘Rooted Leadership: Seeking God’s Answers to the Eleven Core Questions Every Leader Faces’ by John E. Johnson was published in 2022 by Zondervan (ISBN: 978-0-310-120872). 282 pp.
Andrea Soberg is a retired professor of human resource management from Trinity Western University in Canada. She continues to be active within the global academic and business community by researching, writing, and assisting organizations that have a focus on business as mission.
Andrew Hartropp, an Anglican Minister with doctorates in both theology and economics, has written this introductory book to help equip people to ‘live and speak for Jesus Christ in today’s world’ with the underlying conviction that doing economic justice is indeed part of this living and speaking for Christ. Its arguments are laid out clearly and the book is well written and accessible.
The balanced tone is set in the opening chapter which recognises that there are alternative foundations for justice (rights, needs and merits) and that in a pluralistic world an agreed understanding of justice can be elusive. Accordingly, Hartropp outlines a biblical understanding of economic justice which provides the framework for the book as a whole. It’s an understanding that rests on the claims that justice, including economic justice, is rooted in who God is, that God has built justice into creation and that the Bible discloses to us what justice is (page 12).
Hartropp identifies four key aspects of a biblical understanding of economic justice. ‘It means treating people appropriately, according to the norms and principles given by God; it requires a special concern for people who are poor, needy and economically weak; it emphasizes the quality of relationships – notably one-to-one relationships; and it means that everyone participates in God’s blessings, including material blessings’ (page 148).
Part One of the book looks at how we do economic justice in our own relationships as consumers, in the workplace and in local church communities.
The reader is challenged to look critically at the dominance of consumerism in today’s culture and to be aware of how this is at variance with God’s values before considering how their money should be spent. In the workplace, the emphasis is on the relationship with the whole person and the requirement for employees to be treated with respect, to have a fair wage, good working conditions and opportunities for personal development. At the same time the responsibility of the Christian employee to work hard and give of their best because their work will be pleasing to the Lord (Colossians 3) is a valuable reminder that doing economic justice entails mutual obligations between employee and employer (page 66) and also between borrower and lender (Psalm 37.21 page 25). The prompt settlement of invoices could have been included amongst these mutual responsibilities.
The second part of the book focuses on doing economic justice in wider society and the influence ‘that followers of Christ can have in and through the organizations and structures of which they are a part’ (page 89). In successive chapters, Hartropp looks at what this might mean in firms and corporations, banks and financial institutions and the place of government both nationally and globally.
The principles that were earlier espoused in the workplace are played out again on a larger scale when looking at firms and corporations. There is an admirably even-handed discussion about flexible working and zero hours contracts (page 108) and disquiet at, though not outright condemnation of, the levels of Chief Executive Officer pay in UK companies and the huge pay ratio between them and the average employee – 148:1 in 2014 among FTSE 100 CEOs (page 111).
When looking at banks and other financial institutions, the author includes a useful summary of the run-up to the 2007-8 financial crisis and helps us see excessive lending, borrowing and debt as a failure of the kind of relational justice that biblical economic justice requires. He seeks to adapt and apply the ancient biblical principle of Jubilee as a way of restoring relationships and offering hope for those trapped with burdensome debt and he is realistic about the way that a prevailing culture preys on fallen humanity’s susceptibility for greed, pride and folly. Wisely, there is no guide for a banking policy but rather the chapter aims to equip people with ways of thinking about some of the major challenges of finance (page 142).
This same caution is displayed when exploring the role of government in tackling the challenges of poverty and inequality both in the UK and globally. Returning to the four principles of biblical economic justice, Hartropp writes, ‘The call to do justice is to all people. Therefore it is not intrinsic to doing economic justice that the state must have a part to play’ (page 148, my emphasis). At the same time, he does not adopt a libertarian position but rather argues that, adhering to biblical principles, leaders should uphold relational economic justice, focus on the poor and act against economic oppression (page 163), an oppression which may or may not have been caused by market failure. In a brief section towards the end of the book, there is reference to Catholic Social Teaching and how its notion of subsidiarity can challenge the centralizing tendency of modern government (page 167).
The book introduces the reader to complex subjects and never over-reaches itself. It is balanced and has plenty of reminders not just of the obligations that fall on the economically advantaged, but also the responsibilities that remain with the disadvantaged. It is aware of prevailing culture and calls on Christians to counter aspects of it, not least by daring to believe that all work is for the glory of God.
Since, as the author says, ‘Much of what the Bible teaches about economic justice is common sense’ (page 19), it is not entirely clear who the book is for. Even if our common sense does sometimes desert us, the thoughtful reader – Christian or otherwise – will surely have worked out already many of the principles espoused in the first part of the book.
The second part of the book, looking at wider society or the ‘Public Square’, avoids any attempt to be a manual, but to help people in their thinking would have benefitted from a deeper consideration of economic forces at work. In particular, the potentially idolatrous nature of money, the way it is ‘made’ and the way it functions makes it such an important part of today’s culture that it cannot be ignored. Likewise, the ever-expanding role of the state and the consequences of government debt are matters that need illumination.
The author can rightly point out that this was deliberately beyond the remit of the book and also that this review in 2024 is of a book first published in 2019. The prevailing culture which so shapes us has changed considerably since then, all of which would encourage an updated and expanded second edition of this introductory book which the author is well qualified to produce.
‘God’s Good Economy: Doing Economic Justice in Today’s World’ by Andrew Hartropp was published in 2019 by Inter Varsity Press (ISBN: 978-1-78359-764-2). 215pp.
Rev Canon Andrew Studdert-Kennedy is Team Rector of Uxbridge in the Diocese of London. Before ordination, he studied PPE at Oxford and during the 1980s worked in the City and as a Researcher for two MPs. He has retained his interest in such matters.
The authors’ stated intention is to demystify sustainable investing for the ‘average’ individual retail investor who is motivated to achieve the dual goals of profit and purpose. They do this through a detailed examination of the many forms such investment might take, the provision of extensive on-line resources for investigating possibilities and the use of ‘Takeaways’ at the end of each chapter. These are a series of bullet points setting out the main points which the reader should note from the chapter, together with questions that they need to answer for themselves. The reader is encouraged to clarify their thinking as they go along, for example, the values that they wish to promote, their risk preferences and time horizon.
The authors are clearly masters of their subject. Yet unlike many experts writing on a complex subject, their language is clear and jargon-free throughout. The points that they make are illustrated through a wide range of examples. They make no assumptions about what investors’ values might be, and hence what they might think about issues such as the environment or investment in armaments. Instead they give advice on various places to look in order to invest in accordance with one’s values, including, say, strong support of the Second Amendment: the right to bear arms. They seek to provide a balanced explanation of the broad issues associated with sustainable investing concisely but authoritatively. Over the course of six chapters they aim to provide the thoughtful and conscientious reader with all the information they need to begin this form of investing.
Chapter One provides the context by examining the changing investment landscape and lays the foundation for the rest of the book. Chapter Two looks at corporate social responsibility and the evolving expectations about that and the obligations which follow. Chapter Three examines the social and religious values which shape sustainable investing. Chapter Four lays out the myriad investment options available. Chapter Five reviews the performance implications of sustainable investing. Finally, Chapter Six focuses on building a portfolio with a purpose.
The authors are clearly supportive of the concept of sustainable investing, which leads to them not challenging some of the common assumptions. They expect large corporations to be involved in significant social change without acknowledging some important questions. This would include the lack of democratic accountability, together with some corporate visions diverging widely from general social norms or even reality. One example would be the Gemini AI tool which, based on ideas about inclusivity, refused to depict images of white Vikings or Nazis, or only provided an image of the Pope as an Asian woman. Gemini was withdrawn within a month. The authors, however, seem to see corporations and social change as a seamless, wholly good thing.
There is not sufficient acknowledgement that there is no agreed definition of ESG (Environment, Social, Governance), what factors to include or what weighting is to be given to the different factors. The authors devote a paragraph (page 114) where inconsistent methods and ratings are mentioned, and then the investor is told to ensure that the rating provider’s approach is consistent with their preferences. This is unlikely to be helpful advice to the non-specialist. This lack of an agreed definition results in a range of dubious claims. Owing to the time at which the authors finished writing (2021 at the latest) they do not cover the increasing regulatory scrutiny of ESG claims which has resulted in many products having to be withdrawn. It is still the case, however, that there remains such a divergence of approach that it is difficult for a retail investor to be sure of what is actually going on.
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Because the authors seek to cover every type of investment, many potential retail investors may feel overwhelmed by the astonishingly wide and conflicting possibilities available, particularly as set out in Chapter Four. This is one reason why I found the authors’ suggestion that readers can dip in and out of chapters depending on the topic unlikely to be helpful. Without previous explanation, much of the discussion would be impenetrable to the non-professional. The exception to this is Chapter Five, on performance. This might have been better placed as Chapter Two, as it gives a broad perspective within which the reader can locate some of the specifics, as well as reassuring an inexperienced investor worried that sustainable investment will inevitably result in poor performance.
It is not clear to me exactly who Chapter Six is aimed at. Building a portfolio is a complex task with multiple decision points. Certainly the material covers the necessary elements, but I considered it unlikely to be of particular value to the intended reader. High net worth individuals will almost certainly leave the detailed asset selection to their financial advisor. Most other retail investors will not have sufficient funds to achieve the appropriate diversification that a portfolio brings, nor have the necessary knowledge and experience to stock pick. I would have liked to have seen a focussed discussion of the pros and cons of a bespoke portfolio versus buying into an existing fund.
The authors are based in the US, which inevitably means that this is their prime focus. This shows in their cultural, social and political assumptions. Most of their business examples are American; the extensive on-line resources cited are located there and focus on that market. This reduces the pertinence of the book to those located elsewhere. Some of the options they suggest are not available in other markets or are in a different form. Regulatory and pension frameworks also differ. This is not to say that their work is not informative for non-US investors, but it does mean that potential investors will need to do more extensive personal research to find relevant information. The book does not quite live up to its sub-title: What Everyone Needs to Know.
A readership which might benefit would be financial advisors – not because they don’t already have the information, though there may be lacunae which could be filled – but because this book gives a clear, jargon-free route to explaining sustainable investment to a retail investor. Professionals can overlook the reality of expert and exclusive language which prevents some investors making a genuinely informed decision. If they had done nothing else, demystifying the language justifies the book’s publication. They have, however, also provided a useful resource for potential investors. For readers prepared to make some effort to grasp the detail, this is a book which can inform their decisions and ably assist them to achieve their objective of investing for profit and in line with their values.
‘Sustainable Investing: What Everyone Needs to Know’ by H. Kent Baker, Hunter M. Holzhauer and John R. Nofsinger was published in 2022 by Oxford University Press (ISBN: 978-0-1976-4378-5). 272 pp.
Catherine Cowley has for more than 30 years been a Trustee of the Religious of the Assumption with particular responsibility for Investments. Her doctoral thesis was on Ethics in the Financial Sector, and this remained the focus of her research, together with the application of Catholic Social Thought to business practice. Before retiring she taught Ethics at Heythrop College, University of London.
Geoffrey Jones is Isidor Strauss Professor of Business History at Harvard Business School and a fellow of the Academy of International Business. He is the author of several books in the broad field of business ethics from a historical perspective.
The author offers us a fascinating and informative historical review of what he calls “deeply responsible business”, a term which provides the framework for the book but which is, perhaps, slightly overworked.
Jones uses the term “deep responsibility” to characterize the set of values of those “who have seen business as a way of improving society, and even solving the world’s problems” (page 4). He distinguishes his approach from both those who seek to rewrite the rules of the game, as he puts it, and also from the now somewhat discredited approaches of corporate social responsibility (although I could offer some defence of philanthropy in this regard). His central thesis “is that deeply responsible business leaders are motivated by a set of values that shape their practice” (page 5). Some might find that defining characteristic rather weak, but I welcome it, because it enables a proper discussion of values-based business approaches in a realistic way, dealing with character, integrity, wisdom and spirituality, without embracing neo-Marxist opposition to the market economy per se. Indeed, Jones specifically contests any idea that a manager in a for-profit business could never be virtuous.
The book brings several important and significant insights. Its most noteworthy contribution is placing the quest for responsible business into a longer historical view. Jones comprehensively demonstrates that it is not simply a recent phenomenon, but one with a long history that has exercised business leaders since industrialisation. He also helpfully places “deeply responsible business” into a global context, reminding us of the pitfalls of a simply western focus.
The book consists of ten chapters divided into three parts. The first four chapters are encompassed together under the heading “A Question of Responsibility.” Here Jones looks at some significant historical figures in business leadership and history. He covers George Cadbury, Edward Filene (the Boston businessman and pioneer of credit unions), Robert Bosch and examples from India (J.N. Tata) and Japan (Shibusawa Eiichi). This is the strongest, most insightful and interesting part of the book.
The first two chapters tell gripping stories, one of which I am very familiar with, and the other of which I knew nothing about. The first chapter deals with the story of the entrepreneurial Quaker, George Cadbury, who together with his brother, Richard, pioneered a moral approach to business. As Jones argues, given “this emphasis on trust and honesty, it is not surprising that Quaker enterprises became some of the earliest examples of socially responsible business” (page 25). Jones notes the central role of spirituality (here and elsewhere in the book in various forms), the importance of housing, welfare and flourishing of the workforce, the challenges of raising capital and the ownership structure and Cadbury’s wider commitment to the community. Virtue, wisdom and spirituality lay at the heart.
The second chapter was less familiar territory for me but I was captivated by the story. Edward Filene, born in 1860, ran the family retail business in Boston with his brother, Lincoln, and pioneered many business practices. Among his ethical approaches, he introduced employee training, paid high wages whilst seeking to keep prices low and was actively concerned with not only employee welfare, but also employee involvement. He introduced health and illness insurance and banking services for employees. Although Filene did not share their faith perspective, there are several crosscurrents here with the Quakers.
Geoffrey Jones quotes Filene that the purpose of business was to:
“serve people, not merely to support the business man concerned in it. I was not an idealist. I wanted profits. I even had a strong preference for becoming rich. Nevertheless, this discovery of what business really is did strange things to me. It made me want to serve” (page 53).
Of real interest was the story of Filene’s involvement in the development and promotion of the credit union network, which is a much more significant feature of the American financial landscape than, for example, in the UK. He was involved in the 1914 launch of the Massachusetts Credit Union and helped draft a series of eight principles of good practice (page 64). He launched the Massachusetts Credit Union Association in 1921 to promote the idea of credit unions which spread rapidly, although there was always some tension between state and federal provision. Filene was elected the first president of the Credit Union National Association in 1935, with 3,600 credit unions and 750,000 members. Those numbers had grown to 7,500 retail credit unions with 92 million members by 2010.
Part 2, “Turbulence” begins with a fascinating chapter on the history of Harvard Business School and its second dean, Wallace Donham, who had called in 1927 for business leaders to adopt what he called a higher level of responsibility (a further and helpful reminder of placing these ideas in historical context). Further chapters deal with the desire to reduce wealth disparities as an aim of business leaders, consumerism and some other matters. In these chapters the book slightly loses its way. They are the least convincing part of the book and certainly, on occasion, fall into virtue-signalling around business leaders’ personal political objectives and detracted from the really significant insights of the book. In particular, chapter 9, entitled “Social Three-Folding”, seems quite disconnected.
In Part 3, Geoffrey Jones brings us back to more contemporary debates with three chapters dealing with the rise of value driven business right through to the issues around ESG (“environmental, social and governance”) and B Corps. He provides a balanced overview of the strengths and challenges of these movements. He is particularly helpful with his supportive critique of B Corps – though there was no mention of the UK’s B Corp movement, which has made some advances.
In his conclusion Jones reminds us of the reason why his book makes a good and useful contribution:
“As we delved into the history of deep responsibility, we saw many examples of business leaders across time and space who combined making profits and pursuing positive social impact” (page 342).
Jones argues that deeply responsible business will select an industry which does no harm (though that might be easier to define in some instances than others), will engage with stakeholders with respect and humility and support communities. He notes that affecting “a single city might be less glamorous than “reimagining capitalism”, but it can greatly enhance the lives of generations of people” (page 345).
Jones should be congratulated for recognising that a values-based approach to business has a long and honourable history but is not a panacea and that there are weaknesses as well as strengths. In this he is a realist and enhances his overall arguments. He recognises the values which shape character, virtue and spirituality and the need to convince the mainstream of business rather than simply movements on the margin. This is a good book, which I recommend, albeit slightly disappointed with the middle chapters.
“Deeply Responsible Business,” by Geoffrey Jones was published in 2023 by Harvard University Press (ISBN: 978-0-674-91653-1). 431pp.
Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.
Robert White is dean of faculty and assistant professor of philosophy at the American University in Bulgaria. He was previously Chair and dean of the Faculty of Business. He teaches courses on business ethics and the philosophy of capitalism and has previously written on Adam Smith and also on aspects of the idea of profit. He is thus well-qualified to write on the moral case for profit maximization.
The book consists of 7 chapters, but in reality is a book of two halves around the pivotal chapter 4 which provides brief portraits of businessmen as examples of virtue and character necessary for the moral basis for profit maximization. The first three chapters deal with the more theoretical basis, identifying the questions (chapter 1), the moral basis (chapter 2) and the notion of objective value (chapter 3). The last three chapters turn to clarifications around the concept (chapter 5), incomplete defences (chapter 6) and finally a critique of Corporate Social Responsibility (chapter 7).
In a context of frequent confusion over the proper role of business, together with the emergence of differing approaches to purpose from B-Corps to mutuality, this book makes a welcome case for the morality of profit maximization. The author brings out some important points that are frequently lost in the discussion, not least the emphasis on the moral rather than simply the economic case. In doing so he brings the topic back to a philosophical debate about both value and values.
The writing, however, is somewhat repetitive, circular, occasionally “preachy” and rather laborious which consequently loses some of the impact. The second half is increasingly polemic and hence likely to alienate some readers, – apart from an excellent discussion in chapter 6 on Milton Friedman, to which I will return. It concludes with a rather wasted last chapter attacking corporate social responsibility.
The real strength of Robert White’s approach is brought out in the first half of the book. The moral case for profit maximization is based on the value of what business produces and the virtue of how it is produced. This is a useful couplet in discussions around profit, shareholder value and so on and I would have liked a more reflective discussion on the relationship between the two. In summary, White argues that “Profit maximization is moral because profit is a businessman’s reward for creating goods or services that are of objective value” (page 62). He goes on to cite the wheel, the refrigerator and the shipping container as examples of goods produced of objective value that significantly contributed to human life and well-being.
White makes the important point that profit maximization does not mean either that it is prioritized above all other values or that unethical or suspect business practices are an inevitable consequence of a quest for it – such behaviours would fail the virtue test. He makes a crucial distinction between profit maximization and profit prioritization, the latter would require a businessman to act against his values which would be contrary to White’s concept of profit maximization. However, the sorts of examples that White quotes are often, though not exclusively, those of personal morality (for example, pornography, page 122); a more comprehensive discussion of how this distinction operates in the area of competing business or economic values would have been helpful.
The book takes a slightly different turn in chapter 4 with profiles of several historically prominent business figures, J.P. Morgan (1837-1913), John D. Rockefeller (1839-1937) and Thomas Edison (1847-1931) together with the research scientist Louis Pasteur (1822-1895). He offers these as examples of virtuous businessmen and “models for a well-lived life” (page 96). To use just one example, that of Rockefeller, Robert White argues that through his Standard Oil company he both raised the quality of oil and reduced the price and, therefore, through this provision of fuel enhanced the quality of lives of millions of people. The point that we often overlook is the basic improvement in human life brought about through the efficient operation of the profit-maximizing corporation.
It is certainly true that Rockefeller identified goods of objective value that he was able to produce efficiently and effectively and that they contributed to the public good. In that sense a moral case is made. It would nonetheless have been helpful for White to set out explicitly why, in this example, there is an inextricably link to profit maximization.
We do, however, see traces in this chapter of the beginnings of some of the polemic that emerges in the second half of the book. White turns in the second half of chapter 4 to deal with what he calls unjust accusations against his selected examples. Clearly he chose some contested figures, which he acknowledges. There are a number of “straw targets” set up to be shot down. For example, Rockefeller obtaining preferential rates from the railroads is seen not as an example of oligopolistic power but a consequence of a mixed rather than market economy (page 113). White accepts his examples were mixed characters but the comparison is always with their personal lives rather than business practices.
Chapters 5 and 6 approach the debate about the morality of profit maximization from a negative perspective, concentrating on what profit maximization is not more than its positive presentation. This makes for a more defensive reading and reasoning. The highlight of these chapters is an excellent discussion in chapter 6 around Milton Friedman’s famous maxim, in his 1970 New York Times article, “The Social Responsibility of Business Is To Increase Its Profits”. White notes that Friedman argued that the business corporation and its executives had an absolute responsibility to the owners of the business on whose behalf they acted and points out that this is not profit maximization as such and, if the owners had different, or mixed objectives, then the corporation and its executives must serve those aims – Friedman’s real argument is for the rights of shareholders to determine a corporation’s direction (page 154).
I agree with a good deal of the critique of Corporate Social Responsibility (“CSR”) set out in chapter 7. However, this chapter sits somewhat ill-at-ease with the rest of the book and, in particular, falls into polemic. Why choose CSR for such treatment? The questions of business purpose and responsibility have rather moved on from the CSR approach. This chapter made the book feel somewhat dated and the chapter reads like an add-on, and, occasionally a rant. Why not an overview of alternative approaches to the morality of profit maximization?
This is an important book with a distinctive and creative approach to the question of the morality of profit maximization. It establishes a sound basic framework and asks some central questions. The book is, however, unnecessarily unbalanced, allowing polemic to emerge in defence of a rationale and well-founded set of ideas. It would have been improved by a more rigorous engagement with alternatives. The conclusion could, of course, remain, that there is a strong moral case for profit maximization rightly understood.
“The Moral Case for Profit Maximization,” by Robert White was published in 2020 by Lexington Books (ISBN: 978-1-4985-4265-4). 231pp.
Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.
Written by Harvard Business School professor Max Bazerman, Complicit: How We Enable the Unethical and How to Stop is published by Princeton University Press and features glowing praise from notables such as Cass Sunstein and Steven Pinker. Given this background, one expects a far different book than the one that it is.
The basic idea of the book is that when people think about the cause of unethical actions, they often fail to consider the many people who enabled the actions through various degrees of complicity. Relatedly, those who enable bad actors don’t think about their own role and the aggregate role of others in similar positions. At the outset, Bazerman claims, “In contrast to past accounts of these stories, Complicit will focus on the overlooked importance of others who were complicit in the bad behaviour.” (page 6) This is a sensible perspective, and one that I hoped would be investigated with sensitivity and precision. However, the book deals with an interesting ethical topic in a way that staggers in both senses of the word.
The book consists of 11 chapters divided into three sections. After an introductory chapter, the first seven chapters present readers with profiles of complicit actors arranged by the type of complicity. Bazerman begins the book with two chapters on those who are most clearly complicit in extremely unethical acts (“true partners” and “collaborators”). As the book progresses through the second section, the degree of complicity declines with five chapters on “those who benefit from privilege, those who are true believers, those who defer to authority and loyalty, those who rely on their trust of others, and those who create and accept unethical systems” (page 12). The final section has one chapter on the psychology of complicity (though this is also covered in some of the chapters) before ending with two applied chapters: one on dealing with complicity on a personal level and another on developing institutional strategies to prevent complicity.
The march through the case studies might have worked if the case studies weren’t as high-profile and there were more of a focus on each example. Or, perhaps, if they were interspersed with the potential methods to stop a particular type of complicity shown in an example. Instead, the reader is left lurching as the author discusses, among others: Hitler, Trump (my worries began when the two were separated by seven words and a semi-colon in the introduction), the Sacklers, Weinstein, Elizabeth Holmes and Adam Neumann, along with many somewhat lesser-known figures. There is great range in the type of misdeed committed and the types of complicity that enabled the misdeed. The institutions in which these figures operated, and the incentives faced by those surrounding them varied considerably as well. Despite the often-enthralling stories presented, the reader is left adrift without much real explanation or robust ideas about how to stop complicity.
Much of the book is written in a way that suggests genuine concern with the misdeeds presented in the case studies and the various degrees of complicity that enabled them. This is often good, but in some cases, like the chapter “Benefiting from Privilege,” it reads like an older colleague trying to signal his ability to adjust to a changing landscape. This is part of a broader identity crisis for the book, which covers a lot but explains little about each of the wide range of ways that complicity can present itself in different contexts.
I held out hope for more specifics to be dealt with in the final chapters (pages 157–216) but was for the most part disappointed. These chapters dealing with the theoretical explanations for complicity and tangible steps that one can take to reduce it are themselves as meandering and full of journalistic anecdotes as the earlier chapters. After another bizarre introduction about Hitler and Trump, the first chapter of this final section of the book suggests it will elaborate on the psychological reasons for complicity. While it offers some detail and academic research, the things offered as explanations include the perceived differences between commission and omission, fear of retaliation, and a slippery slope of smaller misdeeds slowly escalating. These basic explanations might be sufficient had they been pursued in some depth, but they are dealt with cursorily. The following chapter offers some more tangible insights into strategies at the individual level for stopping complicity (reducing the risks to speaking up, deliberating more in advance, recognizing blind spots, and enlarging our circle of concern). But here again, the second part of the chapter is padded out with profiles of whistleblowers and others who actively overcame the tendency to become complicit. The final and perhaps most interesting chapter looks at the structural reasons for complicity and organizational tactics for preventing it.
Despite the weaknesses of the book, there are sections that are of real interest. Besides the most famous and compelling stories of Theranos and Purdue Pharma, the comparatively less well-known examples from later in the book may offer more relevant examples for readers. For instance, it is interesting to learn about the level of complicity involved in the Volkswagen emissions testing scandal, where senior members of the regional German government and trade unions were aware of the fraud but overwhelmed by their interests.
Separately, Bazerman’s personal role in the still ongoing scandals in psychology and behavioural economics where researchers such as Dan Ariely managed to secure global fame and permanent positions at top universities with research that is now clearly discredited in some cases because of outright data fraud. The personal email correspondence with his fellow coauthors (including Ariely) that Bazerman reproduces offer a new and interesting look at the topic. But even here he steers clear of the more interesting questions about the broader institutional context of the academy.
The most interesting parts of the book are those that deal with complicity encouraged by systems and relatedly institutional solutions to complicity. Part of Chapter 8 deals with the compelling topic of goal setting in organizations namely how explicit goals can overwhelm more tacit ethical standards and how conflicts of interest can create ripe situations for complicity. In some situations, the systemic problems were intentionally created, but in many of these scenarios, they only occurred because of accidental confluences of interests rather than conspiracy. Both are of interest and ripe for hard thinking about solutions. The most thoughtful solutions are offered in Chapter 11, but I came away thinking that the viability of any institutional solution requires a specificity that couldn’t be achieved by the scattershot approach of the book.
Sadly, even the more useful and relevant aspects of the book are drowned out by the repeated and sustained focus on lighting rods. A search of the text reveals that variations of “Trump” appear in the main text of the book nearly as much as any variation of “complicit.” “Nazi” appears 26 times. Even beyond this, after all the pages over which Bazerman has journalistically recounted the many, many examples of complicity, there is bizarrely little sustained explanation or ideas for how to structure organizations to prevent complicity. Readers should not seek out Complicit.
“Complicit: How We Enable the Unethical and How to Stop” by Max Bazerman was published in 2023 (UK) by Princeton University Press (ISBN: 978-0691236544) 264 pp.
At first glance some readers (myself included), might be mistaken to assume that Faith Driven Investing is another “how to” guide on ethical investing – it is not. In fact, the book has very little to say about investing per say and rather focuses on the “faith driven” investors themselves and the wider role of the Christian faith: What makes a Christian investor? What drives them? How do they influence change? How should a Christian think about risk? How are Christians in the financial sector or in business called to engage with the capital markets and money more generally? (pages 3-4).
These broader questions are tackled in the book by a collection of authors (seventeen to be exact). The contributors are mostly prominent practitioners within the field such as Cathie Wood, Luke Rousch and Richard Okello, as well as those with more of a theological/pastoral background such as Timothy Keller and Andy Crouch.
The structure of the book therefore comprises fourteen chapters representing individual essays that are collated within two larger sections. The first is called “Faith Driven Investors are…” while the second is titled “Therefore, They…”, reflecting the overarching intention of exploring who faith driven investors are and what they are called to do. The main audience of the book is Christian investors and entrepreneurs but those with a wider general interest in business as a force for good will find it worthwhile. The various essays use minimal technical jargon (be that in respect to theology or finance), making the book accessible to the layperson and specialist alike.
Timothy Keller (1950-2023), the late pastor and theologian from New York opens up the discussion in Chapter 1 with an intriguing take on personal identity and what it means to have an identity that is rooted in Christ. Keller writes that “…an identity that flows from who he is and what he has done for us changes everything. It radically transforms the way we work, the way we invest, the way we view money, all of it” (page 14). He then goes on to list four different ways in which this happens. We won’t enumerate all here but the third makes an interesting and important point: God (being omnipotent) could provide for our material needs directly yet he chooses not to do so and instead uses human work as a means of provision (page 15). This raises profound implications for the nature and value of work which, according to Keller, means that: 1. All work carries great dignity, even the most menial; 2. Through work we are “…God’s hands and fingers, sustaining and caring for his world”; 3. One of the main ways of pleasing God is simply to do our work well (page 16). These assertions are consistent with the historic Protestant view of work of which Martin Luther was an early advocate. Those who wish to explore them further could read other books reviewed on our website such as Why Business Matters to God, Business for the Common Good and Tides of Life.
In Chapter 4 Luke Rousch, cofounder of Sovereign Capital brings a fresh challenge to some established normative positions that many Christian investors take. Rousch spent his entire career in large scale business commercialisation and development and argues that for too long faith driven investors have become known for what they are against, rather than what they are for (page 59). He rightly points out that this is a missed opportunity for Christian investors to become better known for what they stand for in the world and not merely for what they stand against. Part of the problem, Rousch argues, is “that it’s easier to avoid things than it is to engage with them. That’s also true in life, not just investing” (page 62). Avoiding “sinful” industries altogether such as tobacco, adult entertainment and so on is perhaps the most obvious example. The risk is that we end up steep in legalism and behaving like the Pharisees did. Sure, negative screening is important when it comes to constructing an investment portfolio but “…we are called to lean in, with truth shared in love, and celebrate the great things God is doing in and through the marketplace. We must seek out, embrace, and pour ourselves into the creation of new things” (page 62). Rousch thus argues for a more proactive approach where we should seek “…a balance between negative screens, positive screens and active engagement” (page 63).
Casey Crawford, CEO and founder of Movement Mortgage concludes the discussion with a reminder to seek God’s larger perspective rather than our own, “…are we working for our return of for God’s return?” (page 198). In the Parable of the Tenants we have the example of the tenant who did nothing with what was given to him, Crawford argues that we must maintain an attitude of expectancy of the coming new Kingdom. This doesn’t necessarily mean “…working harder so we’ll have more success to show God. It’s about seeking our work as an act of service to the Master” (page 199).
In summary, “Faith Driven Investing: Investment Has an Impact–What’s Yours?” is not a “how to” guide on ethical investing and those seeking investment strategies or advice should look elsewhere. It is however a compelling collection of essays that stand at the intersection of finance, theology, and the broader implications of truly living out the Christian faith. A thoroughly recommended read for all those with an interest in the subject.
“Faith Driven Investing – Every Investment Has an Impact–What’s Yours?” by Henry Kaestner, Timothy Keller et al. was published in 2022 by Tyndale House Publishers (ISBN 1496474481, 9781496474483), 240pp.
Andrei E. Rogobete is Associate Director at the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.
The American social psychology author, Daniel Pink, has written a number of best-selling books concerning human motivation, performance and innovation. The Power of Regret- How looking Backward Moves Us Forward continues the genre and, filled as it is with both anecdote and analysis, is an engaging and enjoyable read. A wide range of people will benefit from reading it, not just those who have to deal with regret on the part of both themselves and those for whom they are responsible in a business context.
Noting that there are over 50 books in the US Library of Congress with the title, No Regrets, Pink aims to challenge the US obsession with positivity and reclaim regret not just as an unavoidable part of mature human living but also as a means of improving decision making and performance.
The book draws on Pink’s own work with the American Regret Project and the World Regret Survey, which between them have collected and examined more than 20,000 regrets from around the world.
Pink identifies Four Core Regrets:
Foundation regrets stem from our failure to build a stable platform for our lives; the schoolwork we shirked, the debt we accrued, the drinks we enjoyed. Excess, too much or too little, often features. A simple summary of a Foundation regret is If only I had done the work.
Boldness regrets, as the name suggests, concern the chances we didn’t take, the courage we lacked. Evidence suggests that past inactions that can haunt us rather more than a past action – If only I had taken the risk.
The third category, Moral regrets, are those times when we know we have behaved badly – deceiving a spouse, cheating in a test. At the time of the act, we may convince ourselves it wasn’t so bad, but over the passage of time, we see that this is not the case. In this category (the smallest of the four) it is a past action rather than inaction that troubles us – if only I had done the right thing.
The final category (the largest of the four) is Connection regrets, which “arise from relationships that have come undone or remain incomplete” (page133). What Pink has in mind here are friendships allowed to wither, kindnesses that were not shown or interest in other people that was not expressed – If only I had reached out.
Looking further at the four regrets, Pink suggests that each of them “reveal a need and yield a lesson” (page 96). Foundation regrets, he argues reveal the need for stability whilst the lesson they yield is “Think ahead. Do the work. Start now” (page 96). Boldness regrets reveal the human need for growth and the lesson they yield “Speak up. Ask him out. Take that trip. Start that business” (page 111). Moral regrets reveal the need for goodness, the lesson is “when in doubt do the right thing” (page 129). Finally, Connection regrets reveal the need for love and the lesson they yield is “to do better next time … and (if the door is open) do something now” (page146)
Having analysed regret in this way, the final section of the book, Regret Remade “describes how to turn the negative emotion of regret into a positive instrument for improving your life”. (page 15)
The advice here consists of taking steps to undo a particular action, for example by making an apology, and where this isn’t possible to seek a silver lining to the regret. This entails being grateful that the mistake wasn’t worse and saying to ourselves “At least…” That way, writes Pink, “At Leasts can turn regret into relief” (page 165).
When regrets do threaten to become overwhelming, Pink suggests that talking about what is on our mind, not being too harsh on ourselves and putting the anxieties in perspective, through imagining others confronted with the same challenge, can be beneficial. “Looking backward can move us forward, but only if we do it right. The sequence of self-disclosure, self-compassion and self-distancing offers a simple yet systematic way to transform regret into a powerful force for stability, achievement and purpose” (page 182)
Whilst regret is a retrospective emotion, Pink describes the way in which by anticipating regret most effectively, what he calls optimizing regret, we can improve our decision making and hone our strategy for pursuing the good life.
As this outline of the book suggests, there are plenty of instances when it seems to be telling us things we already know. In some ways this is its strength. For it is a book about human behaviour and we recognize ourselves in it. Accordingly, the selected survey samples and different stories that Pink uses as illustrations are satisfying to read because we feel we know in advance what they will tell us. We find ourselves in the story.
At the same time, some of the analysis of the regrets and the responses to them can seem rather laboured. Mistakes are an everyday part of life, and we learn from them with varying degrees of effectiveness. Sometimes we will never do such a thing again whilst at other times we find ourselves being repeat offenders.
Some readers will warm to the systematic approach that Pink outlines and may change their behaviour accordingly. Others will recognize themselves in the illustrations he offers and carry on as before.
Pink focusses on the positive power of regret and, although he is aware of regret’s negative power, the book could have benefitted from further exploration of this. A sermon in which the preacher said, “To regret something is to lose the battle a second time” comes to mind. What lies behind this claim is not a refusal to learn from mistakes so much as an acceptance of who we are and where we find ourselves.
The four core regrets that Pink outlines all express themselves through “if only” and the danger of this is that it could lead to someone saying “if only I were someone else”. For there lies behind Pink’s writing an unspoken assumption that we all desire effective, high achieving and purposeful lives which are to be achieved through a combination of self-will and self-discipline. There must surely come a time when, for example, the person who has failed to be as bold as they might have been needs not just to accept that this is who they are but delight in it. In other words, their value and distinctiveness lie outside the parameters which are so often laid down by others.
Perhaps as a priest, I was bound to find this a short-coming of a book which does indeed reclaim regret and seeks to improve human living but does so from a secular perspective.
“The Power of Regret” by Daniel Pink was published in Great Britain in 2022 by Cannongate Books (ISBN-13: 978 1 83885 706 6), 240pp.
Revd Canon Andrew Studdert-Kennedy is Team Rector & Vicar of St Andrew’s, Uxbridge.
Business Ethics: what everyone needs to know by Josephine Nelson and Lynn Stout brings a distinctive angle to the discussion by interweaving the field of business ethics with components of law and legal practice. It also branches out into wider peripheral subjects such as philosophy, psychology, and organisational management. Josephine Nelson is Professor of Law at the Charles Widger School of Law at Villanova University, she specialises in how legal frameworks affect individual behaviour within organizations. The late Lynn Stout was Distinguished Professor of Corporate & Business Law at Cornell Law School. Her previous book, The Shareholder Value Myth was also reviewed on this website and proved to be a popular choice amongst our readers.
The ambition of the book is laid out from the onset – that is, to survey “not only moral philosophy, behavioural science, economic principles, and other contributions, but to make business-law concepts accessible and understandable to businesspeople and students of law, business, and ethics” (page xi). Fortunately, the language of the book fulfils this aim. It is clearly written and accessible to the layperson and makes only limited use of technical jargon. In instances where more specialised terms are indeed discussed (particularly in chapters referring to legal concepts), ample explanation is usually provided to assist the reader.
The book is comprised of 15 chapters and whilst at first glance may appear to be long, one third of its contents (168 pages of 513) are dedicated to an appendix of “Additional Resources and People You Can Reach Out To” (including notes). As the title suggests, the appendix offers additional resources and information for those wishing to delve deeper in the subject – some readers will certainly find this useful.
Chapters 1 through 4 open the discussion by focusing on the broader field of business ethics itself, which is defined as a “…set of moral principles that govern behaviour in a specific sphere of life: the world of business” (page 1). The authors dismiss the popularised idea that business is a cut-throat environment where individuals seek their self-advancement at the expense of others. They view this as “…misleading and inaccurate” whilst acknowledging that “…there are instances of bad behaviour” (ibid). Yet these instances are not dissimilar to other areas of life but just happen to also be occurring in the world of business. The majority of people in the private sector “…will tell you that sound ethics are integral to a successful business career” (Ibid). The book goes on to elaborate why it might be beneficial for a business to think and act ethically. The premise here is the ethics within an organisation not only benefit the organisation itself and its employees but the wider array of stakeholders and indeed society itself – ethics has a multiplier effect.
Chapters 5 through 10 bring in elements of law and legal practice and take a more practical approach to applying them in specific business scenarios. For instance, Chapter 5 addresses questions such as: “What does it mean to owe a legal duty to a partner or other natural person?” (page 61), “When do I have a duty of obedience?” (page 68), “What are duties of confidentiality?” (page 79), “What are disclosure duties?” (page 83). Perhaps more interestingly, the last question asked is “Why should businesspeople act more ethically than the law requires? Isn’t the law enough?” (page 85). The response here is that the law is simply not sufficient to promote and ensure a positive ethical business culture. In some situations it can even be the case that, “legal requirements are not ethically correct” and that “ethically correct decisions are not legally required” (pages 85-86). So there is a lot of material and food for thought in these chapters – readers who are interested in legal matters will find them particularly useful.
Chapters 11 to 15 conclude with a discussion on “How to institute best practices” (chapter 13) and “Designing an ethical culture” (chapter 14). The book emphasises the need for and importance of robust “compliance and ethics programmes” and argues that most effective ones are driven by five key principles: strategy, risk management, culture, speaking up and accountability (page 281). The importance of a “speaking up” culture is stressed in arguing that it is the key indicator of an organisation’s moral environment because it reveals, “…what it feels like to work within the company, and what employees truly understand their organisation’s expectations to be” (page 291).
The book achieves a great deal: First, it provides a comprehensive and for the most part, compelling insight into how legal matters affect ethics in business. Second, it offers practical advice on what can be done to institute an ethical culture and prevent companies from falling into organisational malaise. Third, it succeeds at remaining accessible to both the practitioner and layperson alike. However, the book is not immune from weak points. Perhaps the most evident of these is found in Chapter 3 where the aim is overly ambitious and misses the mark. In under 12 pages, the chapter attempts to integrate major philosophical schools of thought and their relation to business ethics – these include, Aristotle’s virtue ethics, Kant’s categorical imperative, Rawls principles, communitarianism and utilitarianism. The result is an inevitably shallow account that is peppered with overgeneralisations. The book’s account of Kant’s categorical imperative is perhaps the most acute example of this which will no doubt leave some readers disappointed, and others rather perplexed.
Despite these shortcomings, Business Ethics: what everyone needs to know is a worthwhile read for those with an interest in business ethics, legal matters, and the interplay between the two. While it is predominantly aimed at business and legal practitioners, those outside the field will find it thought-provoking and worthwhile.
“Business ethics: what everyone needs to know” by J. S. Nelson and Lynn A. Stout was published in 2022 by Oxford University Press (ISBN: 9780190610289, 019061028X). 513pp.
Andrei E. Rogobete is the Associate Director of the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.
Kimberly Kay Hoang is an Associate Professor of Sociology at the University of Chicago. In Spiderweb Capitalism, she both describes and draws conclusions from her research into the way in which business is conducted in Vietnam and Myanmar. Some of her conclusions do not follow from her findings, her terminology and analysis is laden with ideology and the metaphor of a spider’s web that she uses throughout the book is ear-tingling but misleading. Nonetheless, the book should be read by everyone who wishes to be aware of the problems associated with business in emerging markets, especially those who are involved in making decisions as to what business they should conduct in such markets.
Hoang poses the question “How do global elites capitalise on risky frontier markets?” and says that her goal is “to uncover the structure of the networks… to examine the people who make and move the money around the world through offshore vehicles, and… to reveal how elites finesse the gray space between legal and illegal practices to establish significant social and political connections that allow them to exploit new frontiers” (page 2).
To this end, Hoang spent several years seeking to get under the skin of business in Vietnam and Myanmar, primarily by means of a large number of discussions (sometimes lasting many hours) with founders of businesses, investors, managers, fixers and various types of professional advisers, including people based both on-shore and off-shore. She provides interesting descriptions of her methodology, the challenges that she faced in conducting research without herself becoming implicated in illegal activity and the limitations that she laboured under. The limitations were significant but it is astonishing how much Hoang managed to persuade people to discuss with her. She ponders on the reasons why they were prepared to do this and recognises the possibility that it was of some assistance that she is a woman and may, perhaps, have been less threatening to some interviewees than a man might have been. She also notes that her University of Chicago connection may have helped since “The dominant reputation of [the University] often clouded my status as a ‘leftie sociologist’ critical of elites” (page 231).
The majority of the book comprises of descriptions she was told and otherwise found out during her research. These are grouped broadly around various topics (e.g. how deals are set up, types of corruption and bribery, and tax strategies). Hoang’s style is, at times, journalistic (e.g. “It was 5:00p.m., the sun was setting…”, page (xi)) and she tells her stories well. She also seeks to set the context of her various interviews and give insights into the life and character of the various people she encountered. This both makes her accounts more interesting and provides helpful context.
One of the strengths of her accounts is that she does not deal in caricatures. She comments that she “came to understand that [the individuals involved in emerging market business] were complex, multi-dimensional people” and that “Caricatures of them that I had read both in books and in the public media did not quite resonate with my experience spending hours talking to people” (page 169). It is in this spirit that Hoang seeks to understand how the various actors rationalise their activities and even, in some cases, compartmentalise their lives so as to keep a distance between their “playing in the gray” (as she calls their activities) and their home or other private lives. She also recognises a spectrum of willingness to play in the gray: “anti-corrupters”, “greasers” and “bribers” being among the possibilities.
Likewise, Hoang acknowledges that business activities in emerging markets are themselves legally and morally more complex than is sometimes suggested. For example, it is good to see her recognising that some complex structures serve “pragmatic functions beyond secrecy and evasion… [which] include privacy, tax concerns, finessing weak local banking institutions, off-shore arbitration, access to a wider pool of global investors, asset protection from law suits, easier off-shore exits, and the ability to send and receive payment in private through designated nominees”. She also appears to accept the difference between the ensuring of secrecy (because there is something nefarious to hide) and a desire for privacy.
Readers need to be on their guard in relation to Hoang’s use of terminology, which in some cases does not correspond to normal business usage. For example, she describes transfer pricing as an accounting practice designed “to legally write off parts of the costs of the business”, (page 126). She also quotes one of her contacts as saying that “a special purpose vehicle is a paper company set up off-shore” (page 4) and appears to have adopted this definition, which may be useful in the context in which she was operating but is a very narrow conception of a special purpose vehicle.
More seriously, Hoang sometimes fails adequately to distinguish legal from illegal activities and she has a tendency to overstatement. For example, although in one place she recognises that the limited partners of an investment entity may comprise pension funds and other institutions, she focuses on individuals who are limited partners, stating that “they are all global citizens who claim citizenship in one or two countries but regularly travel all around the world” (page 28), which is unhelpful since it does not reflect the reality of many investment funds or their investors. She also states that “the world is now divided between [High Net Wealth Individuals] and poor people across developed, emerging, and frontier markets around the world” (page 19), which is an extraordinary statement bearing in mind that the growth of the middle class has been one of the most notable features of economic development in South, South East and East Asia over the past generation.
Statements such as this point to the more fundamental problems with Hoang’s book. She has conducted research into a particular type of business in two emerging markets but she wants to draw conclusions of much broader applicability. Some of her conclusions may be correct but her evidence does not demonstrate this. Myanmar is by no means a typical emerging market and, although Vietnam may be regarded as more typical, it has a particular history. It is probable that some practices in these countries are replicated in other places (e.g. Sub-Saharan Africa), but it is dangerous to make assumptions in relation to this. Hoang makes clear that cultural factors play an important part in the way in which business is conducted and one should not automatically assume that business practices are the same in places where the cultures are radically different.
Furthermore, one should not assume that the practices that are prevalent in relation to business start-ups and early-stage external investment in businesses prevail in relation to more mature businesses, particularly those which have major international funds and corporations among their investors. Hoang at times appears to recognise this (e.g. she notes that the people she was dealing with were involved in business ventures that were too small generally to hit the headlines and that businesses tend to spend time cleaning up their practices and accounting prior to moving on to the later stages of their development). However, this does not prevent her making sweeping contentious generalisations.
She says that her goal is to “give global capital a face” (page 9, emphasis original) and she seems to believe, without supporting evidence, that what she has found is representative of global capitalism as a whole. For example, she states that frontier markets “illustrate how most capital accumulation takes off through a set of transactions that are often considered corrupt and dirty” (page 10), which is a grave exaggeration. Likewise, she constantly refers to “global elites” as if they comprise the people she is studying whereas, in fact, many of these people could not by any stretch of the imagination be described as “elite” and the majority of those who may properly be regarded as the “elites” have very little to do with the kinds of investments that Hoang has studied.
All of this seems to be associated with Hoang’s ideological commitments. These are manifest in her use of loaded language, of which the metaphor of “spiderweb capitalism” is the most obvious example. She presses this analogy, suggesting that there are both “dominant spiders” and “subordinate spiders” and that “Some spiders build and repair the web, some subdue and organise the prey, still others work to keep the place clean” (page 22). Even more memorably, she asserts that “the ‘prey’ in spiderweb capitalism encompasses the public and all those who are snared in these capital webs” (page 24). This type of language may be picturesque but it is not what one would expect in an academic work and it obscures rather than illuminates the complexity of the relationships and activities that Hoang is analysing.
Much of what Hoang has uncovered is blatantly illegal or, at the very least, highly morally dubious and it undermines economies and healthy social structures. Many people will doubtless say that she merely confirms what they already knew or suspected but her findings nonetheless deserve to be studied carefully, particularly by western investors and professionals, some of whom may be tempted either to close their eyes to what is going on or naively to assume that all is well when it is not. Ultimately, however, Hoang appears to get carried away by her own metaphor and exaggerations.
Her ten page conclusion builds up to a crescendo that bears little connection to the preceding research. She asserts that “One consequence of these massive webs is the growing economic inequality between the rich and poor globally” (page 220), which accords far too much importance to the types of business that she has examined; she adds “These structural webs produce intersecting consequences, including poverty, climate change and environmental damage, and the out-migration of people” (page 221), assertions for which she has presented no evidence. She concludes: “Future generations must have the creative will to build a society with policies and protections in place to save our planet, reduce inequality, and prevent most people from becoming trapped, drained, and lost in these massive spider webs” (page 221), which is a disappointingly polemical ending to some interesting and thought provoking research.
“Spiderweb Capitalism” by Kimberly K Hoang was published in 2022 by Princeton University Press (ISBN: 978-0-691-22911-9). 240pp, plus notes.
Richard Godden is a Lawyer and has been a Partner with Linklaters for over 30 years during which time he has advised on a wide range of transactions and issues in various parts of the world.
Richard’s experience includes his time as Secretary at the UK Takeover Panel and he is currently a member of the Panel. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the firm’s Executive Committee.