Читать книгу Virtuosity in Business - Kevin T. Jackson - Страница 7

Chapter 1

Virtue and Character

Man looks in the abyss, there's nothing staring back at him. At that moment, man finds his character. And that is what keeps him out of the abyss.

—Wall Street (20th Century Fox, 1987)

APART FROM PROFOUNDLY disrupting the functioning of the economic system, the financial crisis has soured the reputation of the free-market economy and called into question the moral standing of business enterprises and the character of the people who run them.

Postcrisis angst can be seen in expressions of concern like these:

 immersion in contemporary business culture seems to lead many people away from fulfillment and well-being and instead diverts them toward vice, making them greedy, materialistic, and avaricious;

 such vice is seen in many corporate leaders, such as narcissistic “rock star” CEOs of distressed firms;

 the free market appears to sometimes lead to gross unfairness, as witnessed in outrage over excessive executive pay, particularly when lavished upon lackluster and, in some cases, seemingly talentless, chiefs of enterprises; and

 toiling away in today's vicious bureaucratic ethos may place the authentic human self in jeopardy, crowding out existential and social values that might otherwise promote responsible business conduct.

If allegations like these hold water, why would anybody contemplate pursuing a life in the business world (even if you get a corner office)? Indeed, coming to terms with such deep moral qualms about business culture requires turning attention to ideas from ancient wisdom. Perhaps the notions of virtue and character as understood in early philosophical thought will provide a good place to begin finding a path toward reclaiming faith in business, or at least gaining a keener understanding of what is at stake in the effort to do so.

Ancient Roots of Virtue

Turning the clock back quite a bit, we find an idea in Confucian and Taoist philosophies that virtue is a precondition for harmonious living. The premise that human society is built upon a foundation of virtue is expressed eloquently in the following passage from the Great Learning (Daxue):

Things have their root and their branches. Affairs have their end and their beginning. To know what is first and what is last will lead near to what is taught in the Great Learning.

The ancients, who wished to illustrate illustrious virtue throughout the kingdom, first ordered well their own states. Wishing to order well their states, they first regulated their families.

Wishing to regulate their families, they first cultivated their persons. Wishing to cultivate their persons, they first rectified their hearts. Wishing to rectify their hearts, they first sought to be sincere in their thoughts. Wishing to be sincere in their thoughts, they first extended to the utmost their knowledge. Such extension of knowledge lay in the investigation of things.

Things being investigated, knowledge became complete. Their knowledge being complete, their thoughts were sincere. Their thoughts being sincere, their hearts were then rectified. Their hearts being rectified, their persons were cultivated. Their persons being cultivated, their families were regulated. Their families being regulated, their states were rightly governed. Their states being rightly governed, the whole kingdom was made tranquil and happy. From the Son of Heaven (the emperor) down to the mass of the people, all must consider the cultivation of the person as the root of everything else. When the root is neglected, what should spring from it cannot be well ordered. It never has been the case that what was of great importance has been neglected, or that what was of minor importance has been cared for greatly.¹

Simply put, in order to attain excellence, and to place everything in a well-ordered state of peace, you must begin by rectifying your own heart.

We find a similar pronouncement in the Tao Te Ching:

Let the Tao be present in your life

and you will become genuine.

Let it be present in your family

and your family will flourish.

Let it be present in your country

and your country will be an example

to all countries in the world.

Let it be present in the universe

and the universe will sing.

How do I know this is true?

By looking inside myself.²

These eloquent passages imply that the most significant task a leader can undertake is to cultivate virtue. Virtue is cultivated not for the leader's own sake, not for her own glory, but for that of others. Listen to Lao Tse:

The Master has no mind of her own.

She works with the mind of the people.³

Perhaps we can distill these ancient insights into a terse message for those holding themselves out as business leaders today: stop acting as if it's all about you and your big ego; get your own act together, then help your people do the same; everyone will be better off as a result.

Moving thousands of miles away from ancient China to the origins of philosophical thought in Greece, we find Aristotle asserting something very similar. Aristotle does not separate living a life that is good for oneself from living a life that is good for one's community, for human beings are by their nature communal creatures.

Let's explore in detail the thought process by which Aristotle, one of the greatest philosophers of all time, establishes this viewpoint.

Aristotle

Aristotle's moral thought is aimed at human happiness. By offering a universal account of happiness, or flourishing, Aristotle stresses the importance of practicing virtue, that is, persistently behaving in a way that satisfies our highest potential.

Pursuant to their nature, people are drawn to demonstrate virtues such as courage, generosity, self-control, prudence, and wisdom, whether inside or outside the sphere of business. Yet virtues are not exercised to reach monetary triumph. Indeed, financial achievement is taken to mean that which is needed to underwrite the life of virtue.

For Aristotle, leaders of associations are among those exemplifying virtuous life.

An Aristotelian approach to business—a virtuosity mind-set—shows that business will rise to the highest moral level by having virtuous leaders, not only at the top, although that is necessary, but at all levels of the enterprise. In turn, such leaders will, by exercising virtue, foster ethical economic cultures.

It is good to keep two points in mind. The first is that the relative degree of prosperity generated by today's market economies accords a substantial amount of time for leisure, offering contemplative opportunities to a larger segment of the populace than existed in Aristotle's time. The second point is that today's business organizations all around the world offer a more extensive assortment of opportunities for leadership as compared to ancient times, when an elevated governmental position would have provided the only real chance to direct a sizeable outfit.

Adopting an Aristotelian outlook on leadership means enabling people to know themselves. It means helping people understand that a vast gulf separates merely living from living well. Virtue comes into the picture the moment we deliberately choose to seek excellence. You display virtue insofar as you opt to cultivate your distinctive talents and abilities, especially your higher-level capabilities of thought and feeling. Should you have the good fortune to hold a position as head of an organization, you display virtuosity to the degree that you are able to assist others to attain happiness and to realize their own human excellence.

When you think about it, we are all, in a real way, already leaders, or could develop into leaders. We just don't realize it. If we consider that parents are “leaders” of their children, and that those who occupy even foundation-level positions in organizations of any size face countless opportunities on the frontier of day-to-day interactions with others (customers, colleagues, supervisors) to set a nobler example, to point to a higher path through excellence and virtuous conduct, then everyone is, from a broadened perspective, truly a leader.

Virtue and the Good Life

Aristotle launched his study of the nature of morality in Nicomachean Ethics with the observation that all paths ultimately lead to the good: “Every art and every inquiry, and similarly every action and pursuit, is thought to aim at some good; and for this reason the good has rightly been declared to be that at which all things aim.”⁴ He seeks to establish that the good at which all of our actions are aimed is happiness. This strikes us modern readers as odd. Normally we speak about happiness and morality in starkly different terms. We praise someone for acting on moral principle even if they suffer personal hardship as a result. To Aristotle, however, happiness is not the same thing as enjoying a pleasant frame of mind. Otherwise, we would have to reach the conclusion that someone stays happy even while fast asleep. As he puts it:

With those who identify happiness with virtue or some one virtue our account is in harmony; for to virtue belongs virtuous activity. But it makes perhaps no small difference whether we place the chief good in possession or in use, in state of mind or in activity. For the state of mind may exist without producing any good result, as in a man who is asleep or in some other way quite inactive, but the activity cannot; for one who has the activity will of necessity be acting, and acting well. And as in the Olympic Games it is not the most beautiful and the strongest that are crowned but those who compete (for it is some of these that are victorious), so those who act win, and rightly win, the noble and good things in life.⁵

For Aristotle, the idea of eudaimonia, normally translated into English as “happiness” or “flourishing,” refers to activity that puts our capacities to correct use. Being in a state of happiness is tied to a way of living, that is, acting pursuant to our proper end as human beings. According to Aristotle, it is implicit in the logic of choice that whatever we are choosing to do, we are doing so to bring about an end.

Ordinarily, the nearest objective we are considering turns out to be, when we think about it, advancing some other objective. And that further end itself turns out to be sought for the sake of yet some other thing. By continuing to scrutinize all of our objectives like this, eventually we reach an end that is not leading us beyond itself to anything else. That is going to be what we pursue for its own sake, which is to say, the good life. As Aristotle explains:

If, then, there is some end of the things we do, which we desire for its own sake (everything else being desired for the sake of this) and if we do not choose everything for the sake of something else (for at that rate the process would go on to infinity, so that our desire would be empty and vain), clearly this must be the good and the chief good. Will not the knowledge of it, then, have a great influence on life?⁶

Because all human choice inevitably points this way, getting clear about what happiness entails constitutes the essence of ethical reflection. Indeed this focus on happiness is foundational for the structure of decent human associations.

Happiness Is Social

For Aristotle, happiness is not an exclusively individual affair; I can be happy only by living in a web of relationships with other people. In the eyes of Aristotle, humans are social and political creatures. People are inclined to live and to work collectively, and they do so not just from basic instinct, or because they need to, or because it's easier that way. Rather, nature disposes us to be social with an eye to our telos (end), which is coextensive with our perfection as human beings. Our flourishing entails living agreeably in a sociable community. There is reciprocity. You benefit your friends, family, and neighbors while they bring you benefits in return. Living in society completes us.

The proof that the state is a creation of nature and prior to the individual is that the individual, when isolated, is not self-sufficing; and therefore he is like a part in relation to the whole. But he who is unable to live in society, or who has no need because he is sufficient for himself, must be either a beast or a god: he is no part of a state. A social instinct is implanted in all men by nature, and yet he who first founded the state was the greatest of benefactors. For man, when perfected, is the best of animals…. ⁷

Thus, Aristotle maintains that it is not sufficient just to have the ability to reason. Nor is it sufficient to cultivate our reason. To be truly virtuous we also need to apply our reasoning ability toward the service of human communities. To grasp the significance of this for our look at virtue in business life, it is necessary to consider what Aristotle means by activities such as “philosophy” and “politics.”

To Aristotle's mind, those activities that are most distinctly human are politics and philosophy. Because these endeavors involve maximum use of abstract thinking, they are of the highest order. But the realm of “philosophy” is quite broad, encompassing what we today consider to be the arts and sciences, together with all learned professions. Alongside this wide sense of philosophy, virtuous people are also active in the practical realm of politics. By “politics” Aristotle means not just elected officials, but something much more expansive that would certainly include people occupying positions of leadership in business enterprises.

From an Aristotelian perspective, what is most significant is not some particular job description or career path. What matters instead is how you go about putting upper-level mental potentialities to use. Accordingly, the rank-and-file employee that is enlisted to solve company problems may be using the same high-order capacities as one of the firm's executive. Nevertheless, Aristotle endorses a hierarchy. At the apex are people with the highest inborn ability as well as those who cultivate their own abilities most completely. To be sure, this way of thinking seems totally out of sync with today's emphasis on equality. It is congruent, however, with how many economists analyze things and with the vertical structure that many business organizations are patterned upon. For this reason Aristotle's thought is particularly germane to contemporary concerns about what those at the top of organizations deserve or do not deserve.

What we are seeing today is an odd juxtaposition of two things. On the one hand, there is the phenomenon of the “rock star” CEO. The cult of leadership personalities, such as Jack Welch and “J4M” who supposedly embody virtues for which extraordinary economic value is assigned, is reflected in the eye-popping ratios of monetary compensation when compared to the lowest-ranking members of a firm. On the other hand, there is the perception that if overvalued personalities are “bubbles” that have burst in the wake of a widespread crisis of moral authenticity maybe we ought to carefully scrutinize individual moral accountability at all levels of business organizations. In other words, we need to foster virtuous “leaders” not just at the top but in the middle and at the bottom of organizations as well. This entails rethinking business management. The virtuous leader is able to deliberate well and is curious, rational, introspective, and self-critical. Aristotle is dubious about whether one will long be successful in business matters absent such traits. Practical and virtuous individuals pose hard questions regarding what is good. Through habitual questioning of this sort, they arrive at an understanding of that which is right for not only for themselves, but also for their business and for their communities.

Aristotle states that deliberative people will opt to restrain their wealth. However, this does not mean that he is delivering a condemnation of business entrepreneurship or calling on the wealthy to relinquish all of their possessions. The point is not that the creation of wealth is inherently evil, but rather that it is good to seek moderation.

Considering commonly held views on happiness, Aristotle concludes they are reducible to a triad of pleasure, politics, and contemplation. “To judge from the lives that men lead, most men, and men of the most vulgar type, seem (not without some ground) to identify the good, or happiness, with pleasure; which is the reason why they love the life of enjoyment. For there are, we may say, three prominent types of life—that just mentioned, the political, and thirdly the contemplative life.”⁸ We shall consider each of these kinds of life in turn.

The Life of Pleasure

Gimme the loot, gimme the loot.

—Notorious B.I.G.

The way of pleasure is devoted to sensual satisfactions and to distractions of the mind that cause our most elevated intellectual abilities to lay fallow. Pursuing a pleasure-filled life means amassing creature comforts, enjoying culinary pleasures, inhabiting an enormous residence, and so on. The vast majority of people, observes Aristotle, cling to this ideal of happiness. Yet he rejects straightaway the hedonistic lifestyle sought by most people on the grounds that dwelling on sensual satisfaction places us on par with nonhuman creatures. “Now the mass of mankind are evidently quite slavish in their tastes, preferring a life suitable to beasts, but they get some ground for their view from the fact that many of those in high places share the tastes of Sardanapallus.”⁹

In today's world, business is of course deeply engaged in catering to, indeed fueling, such an ideal of a life of pleasure, both through encouraging mass consumption of goods and services and enlisting as employees people whose main objective in work is making enough money to fund that way of life. A materialistic culture is most “successful” when people's conception of themselves is dictated by how much money they possess and, accordingly, how much they are capable of consuming. Paul Nystrom coined the phrase “philosophy of futility” to denote a disposition triggered by the boredom attending the industrial era for people to pursue gratification from shallow aspects of life such as fashion. As Nystrom puts it:

One's outlook on life and its purposes may greatly modify one's attitude toward goods in which fashion is prominent. At the present time, not a few people in western nations have departed from old-time standards of religion and philosophy, and having failed to develop forceful views to take their places, hold to something that may be called, for want of a better name a philosophy of futility. This view of life (or lack of a view of life) involves a question as to the value of motives and purposes of the main human activities. There is ever a tendency to challenge the purpose of life itself. This lack of purpose in life has an effect on consumption similar to that of having a narrow life interest, that is, in concentrating human attention on the more superficial things that comprise much of fashionable consumption.¹⁰

The Life of Politics

The next account of happiness that Aristotle examines, the life of politics, seems at first glance to be disconnected from the life of business. But Aristotle believed that the life of politics mainly is about the governance of people with an eye to gaining honor, or stated in modern parlance, an outstanding reputation. “A consideration of the prominent types of life shows that people of superior refinement and of active disposition identify happiness with honour; for this is, roughly speaking, the end of the political life.”¹¹ So it is not much of a stretch to connect the life of politics in Aristotle's sense to the life of business. The structure of many of today's business firms parallel governmental organizations. Within such top-to-bottom structures managerial and executive positions empower people to govern substantial numbers of other individuals. In the course of exercising their power, business leaders are as quick to seize opportunities for burnishing their reputations as politicians are. Just think about the eagerness of corporate CEOs to get in the limelight on CNBC to brag about themselves and their firms.

The Life of Contemplation

The life of contemplation is the third of Aristotle's alternatives. Concerning distractions of the mind, Aristotle reckons it is ludicrous to labor for the sole purpose of paying for diversions. “Now to exert oneself and work for the sake of amusement seems silly and utterly childish.”¹² Today most of us would agree. After all, what would you think of a person who told you that their sole objective in slaving away at their job was to pay for video games, trips to amusement parks, and visits to comedy clubs? To Aristotle's way of thinking, it is more reasonable to see amusements as recreation that revivifies us while on the way to more important endeavors. “But to amuse oneself in order that one may exert oneself, as Anacharsis puts it, seems right; for amusement is a sort of relaxation, and we need relaxation because we cannot work continuously. Relaxation, then, is not an end; for it is taken for the sake of activity.”¹³ Although Aristotle accords merit to the acclaim people seek from governing others, ultimately he deems such a pursuit as deficient because it makes people dependent on others' opinions. We should not deem something a supreme good if it remains outside our influence. Plus, Aristotle notes that people who are ostensibly pursuing public approval are actually seeking to have their virtues acknowledged. For Aristotle, this shows that virtue lies at the heart of the good life. He writes:

A consideration of the prominent types of life shows that people of superior refinement and of active disposition identify happiness with honour; for this is, roughly speaking, the end of political life. But it seems too superficial to be what we are looking for, since it is thought to depend on those who bestow honour rather than on him who receives it, but the good we divine to be something proper to a man and not easily taken from him. Further, men seem to pursue honour in order that they may be assured of their goodness; at least it is by men of practical wisdom that they seek to be honoured, and among those who know them and on the ground of their virtue; clearly, then, according to them at any rate, virtue is better.¹⁴

In Aristotle's view:

If happiness is activity in accordance with virtue, it is reasonable that it should be in accordance with the highest virtue; and this will be the best thing in us. Whether it be reason or something else that is this element which is thought to be our natural ruler and guide and to take thought of things noble and divine, whether it be itself also divine or only the most divine element in is, the activity of this in accordance with its proper virtue will be perfect happiness. That this activity is contemplative we have already said.¹⁵

Quite a number of thinkers in the Western tradition, from Socrates and the Stoic philosophers to Schopenhauer and Adam Smith, espoused the notion that some form of deliberation constitutes the supreme good of life. In Eastern thought, one sees this view endorsed in the Buddhist, Confucian, Zen, and Taoist quest for a tranquil state of mind. Lao Tse's query runs:

Do you have the patience to wait

till your mud settles and the water is clear?¹⁶

Aristotle's ideas about contemplation resemble the Zen-like state creative artists experience when, intensely focused, ordinary thought is suspended. In this state, troubles seem to disappear. The artist Botero said he only started existing when working in his studio, a refuge from the world's violence. He felt superb fulfillment, finding harmony in precise form coupled with correct color. A profound joy he likened to lovemaking issued from a magical, unexpected moment. A sense of peace pervaded the canvas and his heart.¹⁷

How about the quest for riches? Aristotle dismisses this pursuit with the claim that we do not go after money for its own sake. What people genuinely want is not wealth as such. They seek to get at something else by means of their wealth. As Aristotle states, “The life of money-making is one undertaken under compulsion, and wealth is evidently not the good we are seeking; for it is merely useful and for the sake of something else.”¹⁸ What a person is truly after will fall into one of three categories: pleasure, recognition, or using the intellect in leisure. A skeptic might argue that Aristotle is overlooking the possibility that one might gleefully go after treasures, reveling in the hunt itself, as one might enjoy fishing or hunting. Acquiring immense wealth is like a game, a critic might say: the more money you make, the higher your score. We've all heard the line, “The one with the most toys at the end wins.” Yet this view is implicit in Aristotle's observation that “some men turn every quality or art into a means of getting wealth; this they conceive to be the end, and to the promotion of the end they think all things must contribute.”¹⁹ To be sure, Aristotle has a ready response. Someone chasing money for sport is in fact most interested in showing how great they are in winning the money game. On this point, Aristotle has the winning argument. He shows that, in the end, virtue is actually the good. Taking another swipe at the obsession for money grabbing, Aristotle claims that it not only saps our opportunity for engaging in leisure, it also tends to make us forget that, after all, wealth is not itself an end, but rather a means to attain the end of happiness. In Aristotle's words, “Some persons are led to believe that…the whole idea of their lives is that they ought either to increase their money without limit, or at any rate not to lose it. The origin of this disposition in men is that they are intent upon living only, and not upon living well; and, as their desires are unlimited, they also desire that the means of gratifying them should be without limit.”²⁰

Many people get trapped in a vicious cycle: unaware of the endless futility that occurs when no matter how much you get, you only want more. So Aristotle's thinking equips us with a way of understanding our own greed beyond that which our culture provides. Aristotle's thought gives a powerful vantage point from which to look at contemporary business. Consider the claim that some business practices leave people endlessly treading a hamster wheel. Aristotle is not averse to one's acquisition of goods from the natural world, as in farming, fishing, or hunting.²¹ Likewise, he is not against acquiring goods through exchange where such is required to satisfy a demand for goods (for example, shoes) that can be produced with greater efficiency by others (shoemakers). Here, the process of exchange serves to correct natural inequality in distributions of resources and talent, reallocating them in accordance with the natural arrangement of human wants. Aristotle makes the point as follows:

For example, a shoe is used to wear, and is used for exchange; both are uses of the shoe. He who gives a shoe in exchange for money or food to him who wants one, does indeed use the shoe as a shoe, but this is not its proper or primary purpose, for a shoe is not made to be an object of barter. The same may be said of all possessions, for the art of exchange extends to all of them, and it arises at first from what is natural, from the circumstance that some have too little, others too much.²²

The moral difficulty comes when we enter into the business of trade, where exchange is undertaken solely for financial reward. Yet this is precisely how a lot of business is conducted in the modern capitalist economy. Since there are no built-in limits to how much accumulation can result from trade (as distinct from the sort of exchange mentioned above, where natural wants impose constraints), Aristotle claims that involvement in trade leads us to harbor an illusion of unlimited accumulation of wealth. Rather than working cooperatively, assisting others in realizing their human capabilities, the enterprise of trade pits us in competition with each other. Consequently, we start to see other people as mere opportunities for amassing more and more profit. As Aristotle puts it, “There are two sorts of wealth-getting, as I have said; one is a part of household management, the other is retail trade: the former necessary and honourable, while that which consists in exchange is justly censured; for it is unnatural, and a mode by which men gain from one another.”²³ Compounding this moral problem, for Aristotle, is the practice of money trading over time. In other words, extending loans—with interest. The proper end for money lies in facilitating exchanges of goods, not in concocting yet more money. Thus, as Aristotle says:

The most hated sort [of wealth-getting], and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural object of it. For money was intended to be used in exchange, but not to increase at interest. And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of all modes of getting wealth this is the most unnatural.²⁴

But how realistic is it to abide by a stricture against lending money with interest in today's economy? After all, how would firms ever obtain the financial backing to get off the ground? Plus, we'd have to gut our savings to buy big-ticket items like cars, houses, and appliances. However, for Aristotle, there is a different priority at stake in commercial life: it falls on virtue to oversee the quest for wealth. Because it is the highest good, virtue is not to be sacrificed to pursue affluence. The true moral objective in life is lurking within the quest for the summum bonum driving the most virtuous elite. In other words, true happiness is not found in the preoccupation with creature comforts so characteristic of the masses.

To grasp how Aristotle reaches this conclusion, bear in mind that he considers happiness an activity. His notion of happiness does not exactly match our modern understanding. For Aristotle, a person is not happy if they are not performing well, regardless of what they are doing. To say something is performing well, for Aristotle, is to say that it is fulfilling its function or role. The function of a violin is to produce musical sounds. We would say that a violin that satisfies that function well is an excellent violin. Similarly, we all have some notion of what is means for a person to be an outstanding business executive, or a fine chef, or a superb musical conductor. And yet it will not suffice to just turn to conventional social roles to ascertain the broader meaning of satisfying a role or function with excellence. After all, ethics concerns what it is that leads human beings to be happy. Ethics is not about the narrow question of what renders this or that person happy. Thus, reasons Aristotle, we need to arrive at some understanding of the function or role of humans as such:

Since happiness is an activity of soul in accordance with perfect virtue, we must consider the nature of virtue; for perhaps we shall thus see better the nature of happiness. The true student of politics, too, is thought to have studied virtue above all things; for he wishes to make his fellow citizens good and obedient to the laws…. And if this inquiry belongs to political science, clearly the pursuit of it will be in accordance with our original plan. But clearly the virtue we must study is human virtue; for the good we were seeking was human good and the happiness human happiness. By human virtue we mean not that of the body but that of the soul; and happiness also we call an activity of soul. ²⁵

In the same way that we might best allocate tasks amongst people according to their differences, the function of humans should be picked out according to what distinguishes humans from all other beings. Humans share something in common with animals and plants alike: they are inclined toward nutrition and growth. And just like animals, humans are directed by appetite and able to perceive objects around them. What sets human beings apart, says Aristotle, is this: our souls possess a rational principle. This equips us to comprehend universal concepts, decide among different courses of action, and discipline our appetites.

There are two parts of the soul—that which grasps a rule or rational principle, and the irrational; let us now draw a similar distinction within the part which grasps a rational principle. And let it be assumed that there are two parts which grasp a rational principle—one by which we contemplate the kind of things whose originative causes are invariable, and one by which we contemplate variable things; for where objects differ in kind the part of the soul answering to each of the two is different in kind, since it is in virtue of a certain likeness and kinship with their objects that they have the knowledge they have. Let one of these parts be called the scientific and the other the calculative; for to deliberate and to calculate are the same thing, but no one deliberates about the invariable. Therefore the calculative is one part of the faculty which grasps a rational principle.²⁶

Since the distinctly human function is found in the use of cognitive capabilities, Aristotle concludes that virtue consists of reason being used with excellence.

Now if the function of man is an activity of soul which follows or implies a rational principle, and if we say ‘a so-and-so’ and ‘a good so-and-so’ have a function which is the same in kind, e.g., a lyre-player and a good lyre-player, and so without qualification in all cases, eminence in respect of goodness being added to the name of the function (for the function of a lyre-player is to play the lyre, and that of a good lyre-player is to do so well): if this is the case, [and we state the function of man to be a certain kind of life, and this to be an activity or actions of the soul implying a rational principle, and the function of a good man to be the good and noble performance of these, and if any action is well performed when it is performed in accordance with the appropriate excellence: if this is the case,] human good turns out to be activity of soul in accordance with virtue, and if there are more than one virtue, in accordance with the best and most complete.²⁷

Yet virtue does not, by itself, ensure happiness. In contrast to Stoic philosophers, who maintained that having virtue alone is pretty much enough, Aristotle believes that virtue is rightly accompanied by other goods apart from the mind.

It is impossible, or not easy, to do noble acts without the proper equipment. In many actions we use friends and riches and political power as instruments; and there are some things the lack of which takes the luster from happiness, as good birth, goodly children, beauty; for the man who is very ugly in appearance or ill-born or solitary and childless is not very likely to be happy, and perhaps a man would be still less likely if he had thoroughly bad children or friends or had lost good children or friends by death. As we said, then, happiness seems to need this sort of prosperity in addition; for which reason some identify happiness with good fortune, though others identify it with virtue.²⁸

Having monetary resources is needed before one can even think about undertaking some virtuous actions, among them generosity. Conversely, being short on financial resources ushers in temptation to defraud and steal.

Virtue and pleasure are linked insofar as the ethical individual will feel good by doing the right thing. Aristotle expresses the point well:

Now for most men their pleasures are in conflict with one another because these are not by nature pleasant, but the lovers of what is noble find pleasant the things that are by nature pleasant; and virtuous actions are such, so that these are pleasant for such men as well as in their own nature. Their life, therefore, has no further need of pleasure as a sort of adventitious charm, but has its pleasure in itself.²⁹

In the world of business, virtue in and of itself will not console someone whose 401(k) has been ravaged by the economic downturn, or who has been terminated from his or her employment or driven into bankruptcy. On the other hand, virtuous people will possess sufficient fortitude to ride out turns of misfortune. As Aristotle explains:

Now many events happen by chance, and events differing in importance; small pieces of good fortune or of its opposite clearly do not weigh down the scales of life one way or the other, but a multitude of great events if they turn out well will make life happier (for not only are they themselves such as to add beauty to life, but the way a man deals with them may be noble and good), while if they turn out ill they crush and maim happiness; for they both bring pain with them and hinder many activities. Yet even in these nobility shines through, when a man bears with resignation many great misfortunes, not through insensibility to pain but through nobility and greatness of soul.³⁰

But, as Aristotle notes, “Many changes occur in life, and all manner of chances, and the most prosperous may fall into great misfortunes in old age.”³¹ So if our hardship is substantial, or sustained, or turns up at a point in life where it's hard to bounce back, a person's fortitude is tested: “For neither will he be moved from his happy state easily or by any ordinary misadventures, but only by many great ones, nor, if he has had many great misadventures, will he recover his happiness in a short time, but if at all, only in a long and complete one in which he has attained many splendid successes.”³² Living the ethical life does not necessarily equate to business success. But Aristotle suggests that due to its durability, virtue lends sustainability to a person's life:

No function of man has so much permanence as virtuous activities (these are thought to be more durable even than knowledge of the sciences), and of these themselves the most valuable are more durable because those who are happy spend their life most readily and most continuously in these; for this seems to be the reason why we do not forget them. The attribute in question, [durability] then, will belong to the happy man, and he will be happy throughout his life; for always, or by preference to everything else, he will be engaged in virtuous action and contemplation, and he will bear the chances of life most nobly and altogether decorously, if he is ‘truly good’ and ‘foursquare beyond reproach.’³³

A message that can be gleaned from this—particularly in these times of postfinancial crisis anxiety—is that no matter how bad it seems, it's best to keep to the virtuous route, cling to the hope that the link between good actions and happiness will reappear, bringing an upturn in fortune that will help you spring back.³⁴

Virtues

Cardinal Virtues

The cardinal virtues are courage, justice, temperance, and practical wisdom (phronsis) or prudence.³⁵ What do we mean when we say these characteristics are virtues? A musician might claim that her violin possesses the virtue of keeping in tune. In this way, she is describing her violin in terms of its usefulness to her. (She doesn't have to retune it often.) Keeping in tune is a useful characteristic of a musical instrument that players have an interest in. But in talking about a person having virtue, we don't mean that she is useful. First and foremost, we are pointing out that she possesses dispositions conducive to the pursuit of human well-being, in particular to her own flourishing. To be sure, all of us keep our eyes on one another's character. However, your dominant interest looks toward developing your own character, and the sorts of things that you set out to accomplish in your life and career on the basis of it. You discriminate between your vices and virtues, knowing that your moral habits impact the nature of your private and cherished understanding of who you are. At the same time, not only do your first-rate inclinations draw you closer to achievements, but also they accord you inner harmony and serenity.

Aristotle reckoned this way too. Granted, the archaic world of the Greek city-state out of which Aristotle's thinking emerged was in some respects a far cry from the world inhabited by today's global business enterprises. The oikonomia of the ancient world was centered on home management and agriculture and the political sphere involved persistent threats of Athenian invasion from Persian neighbors. Yet Aristotle's line of reasoning touches what is unchanging about our essential nature as human beings. His philosophy is directed at uncovering what we need in order to live well today, at illuminating the moral features we draw upon in all facets of life that enable us to attain the excellence and state of flourishing for which we are destined by our design. As we saw in our earlier discussion of Aristotle, virtues are dispositions, acquired in part through emulation and practice, yet ultimately engaging the whole person in a dynamic deeper than just a Pavlovian stimulus-response mechanism.

As a person of virtue, not only are you developing greater discipline, but also you are cultivating better and more satisfying moral motives. What makes you a courageous person is not a developed ability to simply mimic the conduct of a courageous individual. Imitating some virtuous person's actions doesn't cut it because you cannot possibly know beforehand what any such person's actions would require you to do. When you are a genuinely courageous individual, your soul is stirred by the yearning for honor and excellence, irrespective of the toll to personal comfort and security. One of the things that is so striking about virtue is the dependability it carries. In large part, what makes you a person that others can place their trust in is that you have the right sorts of motivations and dispositions to act in certain ways. When dangerous circumstances arise, others will turn to you—the person of courage—because they place confidence in your deep disposition to elevate concern for the common good over narrow worries about self-protection.

Moral Virtues

Reason carries an intellectual part together with a component governing the appetites. Hence, Aristotle differentiates two kinds of virtue. On the one hand are intellectual virtues, connected to the ways the soul arrives at the truth through activity that uses reason's apprehensive strength. On the other hand are moral virtues associated with regulating desire.

Virtue…is distinguished into kinds…for we say that some of the virtues are intellectual and others moral, philosophic wisdom and understanding and practical wisdom being intellectual, liberality and temperance moral. For in speaking about a man's character we do not say that he is wise or has understanding but that he is good-tempered or temperate; yet we praise the wise man also with respect to his state of mind; and of states of mind we call those which merit praise virtues.³⁶

Among the moral virtues are courage, temperance, self-discipline, moderation, modesty, generosity, friendliness, truthfulness, honesty, and justice. Rather than just learning the moral virtues, Aristotle says that we acquire them from persistent practice. Laying stress on the requirement of relentless rehearsal to produce virtuosity brings to mind the gag about the disoriented Manhattan visitor who asks how to get to Carnegie Hall and is bluntly admonished “practice, practice, practice!” “The virtues we get by first exercising them, as also happens in the case of the arts as well. For the things we have to learn before we can do them, we learn by doing them, e.g., men become builders by building and lyre-players by playing the lyre; so too we become just by doing just acts, temperate by doing temperate acts, brave by doing brave acts.”³⁷ It is optimal if such practice is started when young, continuing to the point of becoming habitual and second nature. As Aristotle puts it, “It makes no small difference then, whether we form habits of one kind or of another from our very youth; it makes a very great difference, or rather all the difference.”³⁸ Because there are persistent temptations toward vice, however, Aristotle claims that laws are needed to buttress what was instilled through youthful instruction. In his words:

It is difficult to get from youth up a right training for virtue if one has not been brought up under right laws; for to live temperately and hardily is not pleasant to most people, especially when they are young. For this reason their nurture and occupations should be fixed by law; for they will not be painful when they have become customary. But it is surely not enough that when they are young they should get the right nurture and attention; since they must, even when they are grown up, practice and be habituated to them, we shall need laws for this as well, and generally speaking to cover the whole of life.³⁹

Moreover, Aristotle claims that “most people obey necessity rather than argument, and punishments rather than the sense of what is noble.”⁴⁰ There is a suggestion here that, no matter how much importance we attach to moral virtue and character, attention still needs to be given to the question of the appropriate degree of legal regulation. The point is further spelled out when Aristotle, alluding to Plato's Laws, continues with this assertion:

This is why some think that legislators ought to stimulate men to virtue and urge them forward by the motive of the noble, on the assumption that those who have been well advanced by the formation of habits will attend to such influences; and that punishments and penalties should be imposed on those who disobey and are of inferior nature, while the incurably bad should be completely banished. A good man (they think), since he lives with his mind fixed on what is noble, will submit to argument, while a bad man, whose desire is for pleasure, is corrected by pain like a beast of burden. This is, too, why they say the pains inflicted should be those that are most opposed to the pleasures such men love.⁴¹

Intellectual Virtues

The intellectual virtue of phronsis, normally rendered as prudence or practical wisdom, concerns steering conduct through what we would today refer to as moral dilemmas. Just being aware that virtuous action is found as a mean between extremes leaves us with a certain vagueness. But prudence is what enables us to see what the right course of action is by taking all of the relevant specifics into consideration. A prudent person regularly renders correct judgments promoting all dimensions of the good life, from money and health to personal relationships and virtue.

Now it is thought to be the mark of a man of practical wisdom to be able to deliberate well about what is good and expedient for himself, not in some particular respect, e.g. about what sorts of thing conduce to health or to strength, but about what sorts of thing conduce to the good life in general. This is shown by the fact that we credit men with practical wisdom in some particular respect when they have calculated well with a view to some good end which is one of those that are not the object of any art. It follows that in the general sense also the man who is capable of deliberating has practical wisdom.⁴²

Aristotle observes that prudence will be exercised by a statesman and the head of a household (oikos) alike. As he expresses it, “We think Pericles and men like him have practical wisdom, viz. because they can see what is good for themselves and what is good for men in general; we consider that those can do this who are good at managing households or states.”⁴³ The type of prudence exercised in these instances is especially praiseworthy to Aristotle, as compared to self-focused applications of this virtue. The reason is that overseeing both households and public associations impose stepped up demands and duties, that is, helping others and not just oneself. Today's stations of leadership within business enterprises provide a myriad of chances for exercising this type of prudence in connection with social and economic affairs.⁴⁴

The other intellectual virtue is wisdom or sophia. Wisdom engages the part of reason equipped to apprehend necessary truths as opposed to the contingent ones that prudence grasps. Wisdom deals with theory rather than practice. A wise person has intuition along with scientific knowledge. Through intuition one discerns first principles upon which scientific results rest. Scientific knowledge enables one to make deductive inferences in reaching conclusions in theoretical science. “Therefore wisdom must plainly be the most finished of the forms of knowledge. It follows that the wise man must not only know what follows from the first principles, but must also possess truth about the first principles. Therefore wisdom must be intuitive reason combined with scientific knowledge—scientific knowledge of the highest objects which has received as it were its proper completion.”⁴⁵ In contrast to narrowly technical or industrial ways of thinking, wisdom is not motivated, as, say, Thomas Edison and Henry Ford surely were, to bring new inventions and improved gadgets into existence.⁴⁶ Wisdom seeks knowledge for its own sake. It undertakes the search by adopting a contemplative stance. The philosopher, or lover of wisdom, embodies this quest. By “philosopher,” Aristotle does not mean, as we do today, a person engaged in formal scholarship in the fields of logic, metaphysics, aesthetics, epistemology, and ethics. Aristotle's philosopher is the person in search of a complete reckoning of principles behind all reality—spanning human, natural, and divine spheres.

Contemporary Focus Point for Virtue: Executive Compensation

In the wake of the financial crisis, allegations of injustice stemming from apparently undeserved rewards for untalented performance have come to the forefront in discussion about executive compensation on national and international levels.⁴⁷

Many would say top executives are siphoning off a disproportionate share of the fortunes generated (or worse, not generated) by the organizations under their watch. Studies document a meteoric rise in CEO compensation.⁴⁸ During 2008, which ushered in dwindling corporate earnings along with sinking share values, most CEOs got compensation hikes, not downgrades.⁴⁹ In the face of the economic downturn, average CEO compensation for 2008 was only slightly diminished.⁵⁰ The economic downturn did not inhibit financially distressed firms from granting supersized payouts to high-ranking corporate chiefs.

Who are these corporate leaders who, with the backing of boards of directors that set their pay, are rewarded with ostentatious rewards, so out of step with what everyone else struggles to eke out? What drives their acquisitiveness? Reflection on such questions is absent in all but a handful of studies on executive compensation. Let's drill down into the details of some of these individuals' remuneration arrangements.

At the summit of CEO earnings in the United States for 2008 was Sanjay Jha of Motorola. Despite the firm's precipitous 71 percent drop in shareholder price, he received US$104.4 million.⁵¹ Robert Iger, Disney's CEO, was awarded US$51.1 million in 2008. That payment weighed in at almost twice the size of the US$27.7 million it had extended to him the year before.⁵² The huge rise in pay appears especially openhanded having come about in the same year that Disney's profits experienced a 5 percent decline. At the helm of American Express, Kenneth Chenault, received a reduction of 14.6 percent—dropping from US$50.1 million for 2007 to a paltry US$42.8 million for 2008.⁵³ Yet the reduction did not quite mirror the 29 percent overall fall in profits his company had suffered.⁵⁴

When AIG started channeling taxpayer bailout money it had received into its executives' paychecks, the public became outraged.⁵⁵ AIG's former CEO Martin Sullivan, who ran the company into the ground, was set to receive US$47 million in severance when he was fired, prompting New York State Attorney General Andrew Cuomo to place a stop on US$19 million of it.⁵⁶ In response to the granting of performance bonus awards for AIG top management, Charles Grassley, senior member of the Senate Finance Committee, proclaimed, “The first thing that would make me feel a little bit better towards them [is] if they'd follow the Japanese model and come before the American people and take that deep bow and say I'm sorry, and then do either one of two things—resign, or go commit suicide.”⁵⁷ Elaborating on the comments, Grassley's spokesperson Jill Gerber clarified that “clearly he was speaking rhetorically—he meant there's no culture of shame and acceptance of responsibility for driving a company into the dirt in this country. If you asked him whether he really wants AIG executives to commit suicide, he'd say of course not. Point being, U.S. corporate executives are unapologetic about running their companies adrift, accepting billions of tax dollars to help, and then spending those tax dollars on travel, huge bonuses, etc.”⁵⁸

In directing the Treasury Department to pursue all available legal means of reclaiming the funds, President Obama described the bonuses as an “outrage.”⁵⁹ Ohio Representative Dennis Kucinich called upon the SEC to launch an inquiry after the financially distressed Merrill Lynch doled out US$3.62 billion of the Troubled Asset Relief Program (“TARP”) funds it had received as executive bonuses.⁶⁰ In Kucinich's words, the bonuses were “little more than a farewell gift from senior management to themselves.”⁶¹ Amounting to more than twenty-two times the size of AIG's bonuses, the Merrill Lynch executive disbursements constituted 36.2 percent of its TARP allotment.⁶²

Adding to the dubious nature of any linkage between executive performance and financial reward, comes the extraordinary practice of companies lavishing enormous riches on CEOs even as they are firing them for failing on their jobs.⁶³ Upon incurring the biggest financial loss in corporate history, Merrill Lynch terminated its CEO, Stanley O'Neal. Yet that did not keep him from walking away with a sizable severance package totaling US$160 million.⁶⁴ Consider also the case of Home Depot's former leader Robert Nardelli. Even though he had been discharged as a result of his firm's lackluster share performance, Nardelli parachuted away with approximately US$210 million in severance.⁶⁵

However, granted that some chief executives are overpaid, in light of simultaneously mismanaging their firms while getting handsome remuneration, not all of the complaints about CEO compensation stem just from these well-documented abuses. In addition, there is protracted debate centering around the sharp increase in average CEO pay that played out over several decades preceding the appearance of the financial crisis. Thus, the total real compensation for CEOs of large public companies rose 600 percent between 1980 and 2003,⁶⁶ while median full-time earnings over the same time span only approximately doubled.⁶⁷

On average, the CEOs of the largest companies pull down nearly five hundred times what rank-and-file employees make. Stated differently, that means the typical daily earnings of CEOs of big enterprises surpass many of their individual employees' annual salaries. And the way stock options are distributed reveal big swings, depending on one's level in the corporate hierarchy. In the typical firm three-quarters of them are allocated to CEOs.

Conventional Arguments Given by Economists: The Pay-for-Performance Paradigm

In the eyes of some boards, executives, and investors, such disparities may appear palatable insofar as their judgments are based on the pay-for-performance paradigm and the various arguments that flow from it. According to the pay-for-performance rationale, the focus should be on the economic value generated for the firm by an individual leader. Pay for performance can be viewed, on the one hand, as a reward for performance, or on the other hand, as an incentive to encourage performance. Some debate has arisen in the literature about whether and to what extent these seemingly alternative justifications—pay for performance versus performance for pay—are distinct, or not.⁶⁸ At any rate, the underlying rationale for both is agency theory. The theory hold that agents, that is, managers and CEOs, should see it in their own interests to advance the interests of the principals, that is, the shareholders. Thus, if the agents are to be well compensated for superior performance the agents should be motivated to achieve that type of performance.

Competition

Competition for top management is a key pay-for-performance explanation. This position is advanced under several arguments. One argument asserts that, for publicly traded companies, a steady relationship exists in the market between total CEO compensation and the size of the firms they lead. The argument offers the so-called 30-percent rule as authority for this claim. For each 10 percent rise in the size of a company (calculated by sales, market value of assets, or other relevant indicia), CEO remuneration rises by approximately 3 percent. Since the correlation is alleged to have held constant since the 1930s, it is not thought to be the result of the steep escalation of stock options and other forms of compensation, which originated in the 1970s. And a seminal study found an average increase in CEO compensation of $3.25 for every $1,000 increase in shareholder wealth.⁶⁹ However, deeper questions arise: What do these correlations mean in a normative sense? Are the various pay-for-performance arrangements, alleged to be driven by competition, generous, or are they meager, and by what criteria might one decide? The standard discussions of this type of metric in the economics literature are characteristically devoid of moral reflection on such issues.

Talent

A second argument asserts that the biggest firms tend to draw the greatest management talent. Accordingly, the argument runs, larger companies need to compensate their CEOs more highly so as to provide a disincentive for them to abandon their firms and go lead smaller enterprises. What is notoriously absent from this line of argument, however, is any satisfactory notion of what “talent” actually means, beyond the bare threat of departure for greener pastures.

A closely related argument states that the rise in CEO pay is a product of the increase in market value of companies. The head of a more valuable enterprise is more productive because even if he ratchets up firm value by only a few percentage points, the increase in absolute value is greater the more valuable the company is. Assuming two managers with equivalent skill, one who directs a small hardware store and the other Xerox Corporation, the manager of Xerox is responsible for creating bigger value.⁷⁰

It is worth pointing out that the disclosure of companies' executive compensation structures and levels requirements sometimes triggers invidious comparisons; boards and compensation committees, goaded by executives and remuneration consultants, approve escalating pay packages. After all, firms do not wish to be seen deficient compared to peers. Part of the ratcheting tends to be attributed to the aforementioned apprehension of a “flight of talent” to better paying firms, or migration to private equity, despite a dearth of empirical evidence of this. Yet one might ask: What exactly is meant by the “talent” of a corporate executive? Is there really a distinctive talent that can be moved so readily from firm to firm, as Toscanini was able to transport his stature as a maestro conductor from the New York Philharmonic over to the NBC Symphony?⁷¹ And how deeply rooted, how sincere, are the commitments of a leader to the firm under his charge, given that he is so easily lured away, simply by the one-dimensional enticement of a bigger pay package?

Efficiency

Finally it is argued that considerations of social efficiency dictate that the best managers should lead the biggest firms. Their heightened skills, it is claimed, exert a greater influence, owing to the fact that they are managing a greater share of capital, labor, and other resources. In other words, an efficient coupling of superior management with bigger firms in a competitive market for top-flight executives implies a positive correlation between enterprise size and total compensation awards.

Counterarguments and More Questions

As others point out, such explanations about the allocation of CEO pay often have less to do with real talent, proven performance, and actual contribution than with brute power, cronyism, and outright manipulation. Moreover, the competition argument is attacked on the ground that if increases in CEO compensation really did attract greater talent, then the resultant heightened competition for CEO positions ought to have softened any steep rise in compensation. However, no significant overall dampening in CEO pay has transpired. Hence, it is claimed that a more plausible explanation is that the bigger a firm's market value, the more likely it is that the CEO's pay can be hidden away, along with the compensation of other high-ranking executives, such that the big disparities are not noticed. Thus, CEO compensation gets increased whether he or she has contributed to enhancing the value of the larger enterprise.

Further questions arise: What levels of executive remuneration are proper? How ought such levels to be established by a firm's board of directors? What standards should guide the establishment of compensation levels? Is this something that the government should keep out of? Is it best to leave everything to the market to decide?

One of the most heated topics broached at the Pittsburgh G-20 summit was executive compensation. Many believe that exorbitant remuneration is inappropriate in cases where financial institutions have enjoyed bailouts with public revenue.⁷² Others contend that perverse incentive arrangements prompted financiers to assume inordinately high risks. From this they conclude that incentive structures ought to be reconfigured to reflect longer-term firm performance and broader social contributions. By contrast, some people would maintain on deontological grounds that over-the-top executive compensation is immoral per se, irrespective of the consequences they may or may not have brought about.

To sharpen our focus on this debate, let us bring Aristotle back into the discussion. By giving an account of the correct and fairest apportionment of labor, Aristotle connects reflections concerning the vertical array of human capabilities to the wider economic makeup of society, maintaining that those at the top of the natural pecking order ought to be occupied in undertakings so as to contribute the most to the economy and to society. From an Aristotelian standpoint, curtailing someone's chances to cultivate their skills in the name of equality contravenes justice. Even less justifiable is exalting those with little ability, making them leaders of society, or captains of enterprises, meanwhile keeping those of highest natural ability at the lowest strata. Aristotle's contention is that meritocracy provides the most just type of arrangement. All are better off from governance by the most proficient.

Firms need to make decisions about how they set compensation levels for all job functions. Assessing just what warrants merit is a matter of justice in distribution. However, as the following passage points out, those on contending sides of the issue are inclined to espouse positions in line with their personal interests. Within oligarchies, the governing elite pins merit to wealth. By contrast, in democracies the populace claims an equal entitlement to goods.

Let us begin by considering the common definitions of oligarchy and democracy, and what is justice oligarchical and democratical. For all men cling to justice of some kind, but their concepts are imperfect and they do not express the whole idea. For example, justice is thought by them to be, and is, equality, not, however, for all, but only for equals. And inequality is thought to be, and is, justice; neither is this for all, but only for unequals. When the persons are omitted, then men judge erroneously. The reason is that they are passing judgment on themselves, and most people are bad judges in their own case. And whereas justice implies a relation to persons as well as to things, and a just distribution, as I have already said in the Ethics, implies the same ratio between the persons and between the things, they agree about the equality of the things, but dispute about the equality of the persons, chiefly for the reason which I have just given—because they are bad judges in their own affairs; and secondly, because both the parties to the argument are speaking of a limited and partial justice, but imagine themselves to be speaking of absolute justice.⁷³

Thus, to Aristotle each perspective carries a partial truth. Getting at the whole truth requires some philosophical reflection. Aristotle's conclusion is that merit is tied to traits that allow someone to perform a task in question. The problem of how to allocate instruments among flute players provides an illustration. Should we ask whether a flutist is rich or poor? Should we inquire whether the player is legally on par with the others? Aristotle's answer is no: what really counts is how well they can play the flute. The musicians that can play them well ought to get the best flutes. The players having less proficiency should get the inferior flutes.

When a number of flute-players are equal in their art, there is no reason why those of them who are better born should have better flutes given to them; for they will not play any better on the flute, and the superior instrument should be reserved for him who is the superior artist…. For if there were a superior flute-player who was far inferior in birth and beauty, although either of these may be a greater good than the art of flute-playing, and may excel flute-playing in a greater ratio than he excels the others in his art, still he ought to have the best flutes given to him, unless the advantages of wealth and birth contribute to excellence in flute-playing, which they do not.⁷⁴

To decide differently makes for a mismatch. Superior quality flutes are wasted on maladroit players. Interestingly, such a principle can be readily applied to the business world. A firm considering who'll get promoted to senior vice president, will query: Which of our candidates holds promise to be the most excellent for this role, adding maximum value to our enterprise? But notice that here the locution “maximum value,” does not signify “maximum profit-maker.” After all, profits are not the goal of life. Rather profit is merely a means to attaining happiness and the good life, which is constituted through virtuosity—that is, virtuous business conduct. We shall examine the connection between profit generation and virtue in greater detail in Chapter 3 (“The Art of Business”).

Aristotle's take on this suggests that company heads ought to allocate benefits, bonuses, job advancements, raises, and the like, not simply along lines calculated to achieve maximization of profit, but as a way of rewarding and incentivizing virtuous behavior.

Aristotle's overarching regard is for the welfare of the whole community. Aristotle does not want to posit a natural human pecking order as a rationale for prizing the genetically endowed at the top. Nor is he seeking to lighten the load for the well-off. To the contrary: people having the greater abilities ought to be released from the more menial tasks in order to focus on things that maximize their capabilities and the social gains they may bring about. Those atop the ladder shoulder responsibility for assisting those on the lower rungs. By doing that, all are elevated from the presence of inequalities rooted in genuine abilities and aimed toward economic betterment.

To turn to a contemporary illustration, we might ask why Steve Jobs, founder, chairman, and CEO of Apple, ought to be the one rendering executive decisions at the company. The answer is not that he has some natural right to be in charge, or that he is “a productive narcissist.”⁷⁵ Rather, it is to everyone's advantage, across the organization, that the best talent be placed at the summit. After all, who in their right mind would sign on at Apple if the firm's guiding mission was a commitment to uncompromising equality, mandating that those appointed to the firm's top-tier executive squad be mentally challenged workers selected from the cleaning crew, leaving Steve Jobs to be the elevator operator?

While taking an Aristotelian virtue perspective is not likely, by itself, to provide a comprehensive solution to the executive compensation imbroglio; doing so at least suggests some questions that virtuoso leaders would want to pose to themselves, questions that point in a much different direction than the one indicated by the sort of conventional economic analysis described earlier: Is my remuneration commensurate with my contribution to the firm? Is the current allocation of goods within our firm helping to foster the happiness of the community our firm makes up, or is it actually dampening morale and inhibiting other people from attaining happiness?

Moreover, an Aristotelian outlook implies that in assessing the conventional pay-for-performance paradigm, we ought to distinguish between, on the one hand, high financial rewards for “performance” in firms and, on the other hand, the value creation arising from the firms' activities. For instance, it has been argued that an aggressive quest for profits in banks and other financial institutions has been value destroying, not only for the institutions themselves, but ultimately for society and human welfare, as manifested in the financial crisis.

Indeed, it is arguable that the costs and externalities associated with a given profession's activities should be deducted in calculating that profession's Social Return on Investment (SROI) contribution, a la the New Economic Forum's approach.⁷⁶ Looking at broader indicia such as SROI prompts the question: Why on earth are executives working in certain sectors, such as banking and financial services, the privileged recipients of such extraordinary rewards?

On a wider account of wealth creation—particularly in light of the concerns voiced by Aristotle with regard to the proper and improper ends of money—such as his “money from money” critique cited earlier in this chapter,⁷⁷ it could be asserted within the spirit of this criticism that, even in the course of favorable economic periods, banks (to name but one financial institution), in the course of taking deposits, transmitting and clearing payments, and bringing investors and savers together with users of capital and borrowers, play merely a secondary role as facilitators for the primary economic participants who render more direct and pronounced contributions to society. So why are bankers the object of “hero worship,” and why did the attitude emerge that treats bankers “as masters rather than servants of the economy”?⁷⁸ Arguably, it is in carrying out this secondary role that banks negligently overreached by overleveraging deposits in risky bids for ever greater profits, thereby destroying, rather than creating, value. Strangely, even in the midst of a massive credit crunch, created by their own calamities, banks were roundly refusing credit to what would have earlier been deemed viable business propositions.⁷⁹

Turning to a question raised earlier concerning the personal motivation behind those in hot pursuit of attaining excessive executive compensation, lurking in the background is the specter of homo economicus, the lowest common denominator of human motivation. One writer, reflecting on the matter in the context of the banking industry, questions the wisdom of lavishing so much reward on the business activities of people who depend on “technology to present infinitesimal arbitrage opportunities around the world—which, when aggregated over very large leveraged balance sheets, create massive profits…. A growing undercurrent suggests that in fact these are not terribly useful economic activities…. This system also reinforces money—not values, strategy, culture, or the quality of the institution—as the only reason to work at a bank.”⁸⁰

Much of the current thinking about pay for performance is devoid of consideration of the sorts of values that emerge from adopting a virtue-regarding outlook. For example, there is little reflection on the character dimension of individuals who appear to be greedy beyond any limits or controls to accumulate as much money as possible.

It is in light of this void that Aristotle's thought affords a wider and deeper philosophical outlook. For instance, using an Aristotelian lens to look at the significant layouts of funds that typify the “reward me big-time” culture of many corporate executives, there is a peculiar sort of virtue to examine: magnificence. According to Aristotle, what makes you a magnificent person is having the good taste to divert big money appropriately and to advance a laudable end. In stark contrast to a vulgar kind of individual, you are magnificent if you are not being gaudy. That is, you are not showing off your affluence by spending more than circumstances warrant.

The man who goes to excess and is vulgar exceeds…by spending beyond what is right. For on small objects of expenditure he spends much and displays a tasteless showiness; e.g. he gives a club dinner on the scale of a wedding banquet…. And all such things he will do not for honour's sake but to show off his wealth, and because he thinks he is admired for these things, and where he ought to spend much he spends little and where little, much.⁸¹

We can perhaps find no better illustration of what Aristotle is talking about by way of vulgarity through tasteless excess than to recall Dennis Kozlowski, the Tyco International CEO who fell from grace due to a string of malfeasances associated with his receipt of unauthorized bonuses and his misappropriation of corporate assets. In the course of his criminal trial we all learned about the details of the US$2 million, weeklong birthday bash (known as the “Tyco Roman Orgy”) for his second wife on the island of Sardinia, complete with dancing nymphs, models dressed as gladiators and Roman servants, a performance by singer Jimmy Buffett and his group (flown in to the tune of US$250,000), a birthday cake in the shape of a woman's body with sparklers protruding from her breasts, and an ice sculpture imitation of Michelangelo's statue of David urinating Stolichnaya Vodka. Kozlowski also was noted for leading an extravagant lifestyle supported by the booming stock market of the latter 1990s and early 2000s. Purportedly, he had arranged to have Tyco shoulder the cost of his US$30 million Manhattan apartment on Fifth Avenue, which included a US$6,000 shower curtain in the maid's room, a US$15,000 umbrella stand, and a US$17,000 traveling toilette box.

Ironically, Koslowski's defense insisted that he didn't “hide” anything; his self-serving appropriations of corporate resources were open for all to see. So, under his way of thinking, our categories of rational thought appear to have simply vanished: the normal distinction in both law and morality between “appropriation” and “misappropriation” has been repudiated, all in the service of the self-serving greed of the leader.

At the other end of the spectrum is the petty person that fusses over the smallest details of every financial layout. Listen to what Aristotle has to say about that: “The niggardly man…will fall short in everything, and after spending the greatest sums will spoil the beauty of the result for a trifle, and whatever he is doing he will hesitate and consider how he may spend least, and lament even that, and think he is doing everything on a bigger scale than he ought.”⁸² In the course of steering clear of the excesses of vulgarity and pettiness, you could be magnificent by allocating some of your wealth to the development of public goods, for instance by building a library, being a patron of the arts, or adding a new wing to a hospital. Consider the case of Bill Gates. His foundation contributed US$4.2 billion for ameliorating disease throughout the developing world.

It is interesting to note that, given the choice between, say, stretching beyond financial means to outfit one's residence with fancy, new-fangled gizmos and keeping to a budget with understated, more durable alternatives, a magnificent person goes for the second of these. “A magnificent man will…furnish his house suitably to his wealth…and will spend by preference on those works that are lasting (for these are the most beautiful), and on every class of things he will spend what is becoming.”⁸³ A suitable modern contrast could be drawn between the homes and lifestyles of, one the one hand, Nicholas Gage (whose gaudy foreclosed Bel Aire mansion was described by a real estate agent as a “frat house bordello”),⁸⁴ and on the other, Warren Buffet (one of the world's richest persons, who still lives in the same modest home he bought for US$31,500 in 1958, yet gives thirty billion dollars to charity).⁸⁵ Yet Aristotle may not have been completely adverse to what is known today as consumerism as one might suppose, given his staunch opposition to the hedonistic life. For Aristotle the bottom line is that your consumption should be balanced, that is, under the guidance of what self-perfection requires.

Aristotle advances a universal vision of the good life, wherein human fulfillment is coextensive with moral and intellectual virtue. What is particularly noteworthy about Aristotle's treatment of the intellectual virtues from the standpoint of our inquiry into the broader intellectual and cultural implications for business life, is the insight that the highest deployment of the intellect is to be found in the leadership of others and in the philosophical search for truth. To propose such a vision for the life of business sets a higher bar than conventional thinking seems to allow. To adequately grasp some sense of this extended vision necessitates adopting an unconventional mind-set toward commercial life. For that end, it is vital to find a way of seeing business as essentially connected to basic goods of human nature. We shall extend discussion of this point further in subsequent chapters. For now, let us turn our attention to the connection between virtue and character.

Character

For Aristotle, a prime concern of ethics is human character. A virtuous person reveals the combined excellence of character and reason. As the following passage illustrates, the character of a person encompasses virtues and vices along with emotions and desires.

Just and brave acts, and other virtuous acts, we do in relation to each other, observing our respective duties with regard to contracts and services and all manner of actions

And with regard to passions; and all of these seem to be typically human. Some of them seem even to arise from the body, and virtue of character to be in many ways bound up with the passions. Practical wisdom, too, is linked to virtue of character, and this to practical wisdom, since the principles of practical wisdom are in accordance with the moral virtues and rightness in morals is in accordance with practical wisdom. Being connected with the passions also, the moral virtues must belong to our composite nature; and the virtues of our composite nature are human; so, therefore, are the life and the happiness which correspond to these.⁸⁶

Thus, although having a virtue means being inclined to behave in a certain way, having a good character amounts to more than just checking off a list of worthy accomplishments. Having appropriate emotions counts too. In other words, a virtuous individual knows what doing the right thing is, and there is some emotional connection to it as well. In this way, character is fused to what a person enjoys.

We must take as a sign of states of character the pleasure or pain that ensues on acts; for the man who abstains from bodily pleasures and delights in this very fact is temperate, while the man who is annoyed at it is self-indulgent, and he who stands his ground against things that are terrible and delights in this or at least is not pained is brave, while the man who is pained is a coward. For moral excellence is concerned with pleasures and pains; it is on account of the pleasure that we do bad things, and on account of the pain that we abstain from noble ones.⁸⁷

A person having good character gets enjoyment from acting virtuously. That is, a virtuous person attains a kind of psychic harmony. Desires also come into play in the sense that a person who, for instance, has a generous character truly wants to be that way.

Aristotle states that the twin excellences of reason and character are closely linked. We cannot have one but not the other. “It is not possible to be good in the strict sense without practical wisdom, nor practically wise without moral virtue.”⁸⁸ Since Aristotle does not explicate the precise way in which the two virtues are interdependent, scholars differ on this point. One view emphasizes practical wisdom (phronsis), the intellectual virtue related to action, as the decisive disposition.⁸⁹ Another view lays stress on the inclination to have the right sort of feelings.⁹⁰

Certainly Aristotle's doctrine of the mean is central to understanding the virtues of character.⁹¹ A virtue of character is an action-directing disposition to strike a state of equilibrium, or mean, between two extreme emotions in particular situations. For example, when faced with danger, courage is a person's disposition to attain the mean between foolhardiness and cowardice. It is not that the extremes by themselves determine the mean. Rather, the mean is determined by extremes relative to demands presented by some given situation, which includes facts concerning the person facing that situation. Additionally, it is by way of the idea of the mean that we grasp the intellectual virtue of practical wisdom because it requires a reasoned outlook on a set of circumstances to attain the mean. The concept of the mean also supplies a basis for differentiating genuine virtues from natural dispositions or emotions.

The exercise of the intellectual virtues, including practical wisdom, is not merely something of instrumental value. As components of the fulfilled human life, the intellectual virtues as well as the virtues of character are each morally significant in their own right. Because they are part and parcel of the good life, there's no difference between selecting virtuous actions for their own intrinsic worth and selecting them as a pathway to happiness. Granted, both the nonrational and rational components of the soul are motivators of virtuous action. Yet just because the reason-holding portion of the virtuous person aims at virtuous conduct because it is good, constituting part of the good life, it does not follow that it is selecting such conduct simply as a route to happiness.

It is reasonable to take Aristotle as holding that the virtues of character make up a whole, meaning that, like buying tickets for a subscription concert series, you cannot have one of them unless you have them all. So displaying the virtue of generosity involves more than just giving the proper measure to the right person at the appropriate juncture for the right reason. It would also be necessary to have obtained what is being passed around in conformance to the other virtues, for instance, justice. Similarly, the courageous individual needs temperance so as to not overreach by being reckless. And the temperate person requires courage to resist the temptation of peer pressure. Hence the person of virtue needs to consolidate the various virtues into a unity, allowing each of the virtues to display their respective value. Prudence plays a role in each virtue and in turn depends on all of them to keep from being more than just a mean-driven excuse for risk avoidance. Armed with such a disposition, a person of prudence will reckon into a given circumstance the requirements of the various virtues in order to craft a well-arranged verdict about how to act.

Having merged the virtues of character into a concordant totality, could different virtues impose competing demands, pulling in different directions? For Aristotle, such dilemmas need not pose a threat to the excellent individual's virtue. When pressed to make a choice between distasteful alternatives, going with the least abhorrent one does not imperil your character, albeit you may experience a sense of remorsefulness for making the choice.

Raising Existential Thoughts

If you are consciously deciding that you wish to be a good person, are you thereby deciding the sorts of desires and emotions that you want to have? Based on the linkage of a good character to having the right kind of dispositions, it would seem that this would be the case. But on what basis should you decide what kinds of things you want to enjoy and desire in the first place? To be frank, if you take this route of inquiry, you are raising some deep existential questions for yourself. When I am getting to know my students at the beginning of a semester I ask them to write on a card what they want to do in their career, and what kind of lifestyle they want to have. “What are your objectives, both business and personal, and why,” I inquire. “Are you interested in just making money? Or is there something beyond that you are after? Do you want a career-driven lifestyle where work is everything, or a more balanced lifestyle where work matters but is not necessarily the end-all-and-be-all? Is there anything that might lead you to prefer the one lifestyle to the other?” Then I probe further with a string of almost mind-numbing questions: “Can you tell me what, deep down, you desire your desires to be?” “What do you actually want your inner wants to be?” “What do you prefer your preferences to be?” “What are you interested in being interested in, and why?”

These questions matter. Sometimes people reflect back on their careers with a profound sense of regret of the sort depicted in Tolstoy's The Death of Ivan Illich. They question whether they have really lived a good life. It occurs to them that, given the chance to do it all over again, perhaps they could find a way to devote more of their time to family life, or to be less occupied with their own self and more concerned with others. A person who has attained great financial achievements yet has fallen short of living a genuinely good life may have gotten shortchanged by being devoted to the kinds of considerations parodied in Sinclair Lewis's Babbit ⁹²—materialism, conformity, and false values—instead of being guided by reflection and contemplation.

There is something exceedingly difficult about confronting such questions. Yet when you consider that the culture of the firm where you work sometimes exerts an enormous influence on your character, the task of selecting where you are going to work includes selecting the kinds of desires that you are likely to be fostering. This kind of choice is almost like selecting your character in advance. A choice about the character of the company you want to work at, and the line of occupation you will pursue, figures into a choice about the character of the person you wish to become. It is, in the end, an existential choice of the sort we will discuss further in Chapter 2 (“Authenticity and Freedom”).

Opting to work at a particular company having a reputation for a virtuous culture might incline you to wish to become honorable and forthright as you imbibe that culture day in and day out. Making a decision in favor of some other firm, like the ruthless stock brokerage company portrayed in the movie Boiler Room, might lead you to prefer being cold-blooded and opulent. But how do you arrive at the knowledge beforehand of what sort of person you wish to become? Making a choice such as that is not what we would normally call a “rational” decision. (It is for this reason that we will look at the Sartrean account of character and the freedom of choice that lies at the heart of human existence in the next chapter.)

For Aristotle, being reared in a good community constitutes the chief means of becoming virtuous. What the community considers as important influences what is taken to be virtuous. From childhood, a person starts to understand what courage is all about by being shown that certain kinds of actions exemplify courage, while others exemplify cowardice. Then, over time, a person acquires a habit of behaving courageously.

Having a virtue requires using rationality and knowing what is important, being attuned to one's values. For instance, a person does not acquire the virtue of courage simply by going around mimicking courageous individuals. It is necessary for a courageous person to understand what she values. Only in this way can she be in a position to make a rational assessment of what degree of risk is called for to preserve what she deems important.

While ethics depends on rationality, it bears a greater resemblance to endeavors such as navigation⁹³ and the arts,⁹⁴ which are “less exactly worked out” than the sciences.⁹⁵ We will see in a moment how closely ethics is affiliated with the field of music and its study.

The way that Aristotle conceives of ethics and the good life are closely related to the idea of harmony. Instead of just involving a string of unrelated occurrences, the good life carries with it an underlying unity or totality. Well-being involves having rational desires. That means your desires are in harmony with each other and also in harmony with your values. It also means that your actions are in harmony with your desires. What all of this amounts to is that you are happy when you are living in a state of psychic harmony. Basically having a good character boils down to keeping your soul in such a state, where everything in your soul is functioning the way it is meant to. Naturally we want to avoid being troubled with conflicting desires. That only leads to a state of continual dissatisfaction with life, which Aristotle associates with wicked persons. Such people “shun themselves,” because

they remember many a grievous deed, and anticipate others like them, when they are by themselves, but when they are with others they forget. And having nothing lovable in them, they have no feeling of love to themselves. Therefore also such men do not rejoice or grieve with themselves; for their soul is rent by faction, and one element in it by reason of its wickedness grieves when it abstains from certain acts, while the other part is pleased, and one draws them this way and the other that, as if they were pulling them in pieces.⁹⁶

To most of us this is self-evident. According to Aristotle's perspective, declaring the lack of any right or wrong in ethics—as many who buy into today's pervasive moral relativism are inclined to do—is tantamount to claiming that happiness and unhappiness are indistinguishable, that living a satisfying existence is identical to living a wretched one. But such an assertion flies in the face of common sense.

Music, Culture, and Character

Philosophers throughout the ages have been intrigued by the question of the broader significance of music for human existence. According to Jamie James, to retrace the paths taken not only by Western music but also Western intellectual history reveals a concerted quest for the supreme orderliness of the cosmos.⁹⁷ This idea of music manifesting a universal order is what Pythagoras claimed to be the music of the spheres: the apparent soundlessness across the firmament is eternally emitting a higher form of music that only the gods can hear. According to Liebniz, writing at the time of J. S. Bach, music represents a kind of unconscious calculation that produces, along with harmonic delight, an apprehension of the uppermost forms of truth. Schopenhauer believed music to herald an appearance of cosmic reality, which is suffused throughout our existence.

Yet music serves as more than a topic for meditation on its metaphysical features. The relationship between musical study and performance, on the one hand, and moral virtue and character, on the other, has been probed since the very origins of speculative thought.

As we saw in our discussion of Aristotle's concept of virtue, in classical teachings, the idea of “politics” is broad, and concerns not simply the activities of elected officials, but a wider range of activities that includes leadership of human associations. Accordingly, we turn to consider what insights that teaching offers for our understanding of virtuosity and the cultivation of excellence in business life and the broader culture of which it is a part.

Ancient thinkers, alluding to the elements of harmony, rhythm, and melody, deemed such features of music to carry moral and emotive force. Both Aristotle and Plato attach particular significance to rhythmic and harmonic phenomena due to the force they hold for impacting the attainment of the chief goal of the life of politics. To Aristotle that objective is to inculcate a particular sort of character in people, that is, to render them virtuous, able to accomplish noble acts. It is obvious, to Aristotle, that music contributes to virtue since we can see from numerous things that we take on a certain quality of character on account of its influence on us.

To the ancient mind, music is understood to be an “imitative” art in the sense that music portrays the range of emotions and forms of character that humans exhibit. In the words of Aristotle:

Since…music is a pleasure, and virtue consists in rejoicing and loving and hating aright, there is clearly nothing which we are so much concerned to acquire and to cultivate as the power of forming right judgments, and of taking delight in good dispositions and noble actions. Rhythm and melody supply imitations of anger and gentleness, and also of courage and temperance, and of all the qualities contrary to these, and of the other qualities of character, which hardly fall short of the actual affections, as we know from our own experience, for in listening to such strains our souls undergo a change.⁹⁸

Not only do musical representations appear to the soul (psychê), but they leave an imprint on it. Such an imprimatur tends to have substantial delibility for highly impressionable souls, as with youth. Such a character-shaping tendency exists with respect to one's exposure to works of art in general: sculpture, painting, and poetry. Accordingly, Socrates voices his position in the Republic regarding youth that, from immersion in beautiful works of art, youth will stand equipped for goodness, “likeness and friendship and harmony with the principle of beauty.”

Yet for Socrates, of all the images of art, music remains the most influential. Thus he opines that “musical training is a more potent instrument than any other, because rhythm and harmony find their way into the inward places of the soul, on which they mightily fasten, imparting grace, and making the soul of him who is rightly educated graceful, or of him who is ill-educated ungraceful.”⁹⁹

Aristotle and Plato are especially intrigued by the notion that music can be conducive to one's capacity for self-restraint. Music can excite our passions, and it also has the power to calm them. Vladimir Horowitz believed that the virtuoso is able to contain inner passion, controlling its release during the performance.¹⁰⁰ The composed state of the passions cultivated through suitable upbringing in music is good preparation for virtuous activity. That is due to the tendency, Aristotle says, for undue passion to interfere with a person's aptitude for moral reasoning and choice. Aristotle contends that the virtuous life demands the exercise of prudence, understood as the dual capability to recognize moral virtues—first principles of conduct—and to ascertain how to actualize such virtues through specific behaviors.

Aristotle observes in Politics that receiving correct training in music empowers a person not simply to make appraisals of noble melodies, but also to appraise noble things as such.¹⁰¹

Turning our gaze higher, the early philosophers advise that suitable upbringing in music grooms the soul for philosophical inquiry and reflection. Aristotle and Plato alike teach that immoderate passion blocks not only moral efforts but philosophical pursuits as well. Therefore, by quelling passions that divert the soul away from its quest for truth, temperance-creating music clears a path for philosophy. Music kindles in one's soul a magnetism for the truth that philosophy pursues. The exquisiteness in music reveals to the soul the realm of the beautiful and the intelligible. With its charm and the natural delight attending it, music nurtures an enduring predilection for ordered beauty. And this is precisely what the philosopher is yearning for. As Socrates states in the Republic, the philosopher associates with the divine and orderly in the universe.

Closely connected with this notion, the Pythagoreans located harmonic, arithmetic, and geometric means underpinning the musical scale. In addition, they identified ratios associated with musical consonance, that is, intervals of the octave (1:2), perfect fourth (3:4), and perfect fifth (2:3). According to the Pythagoreans, the just and well-ordered society is analogous to a well-tuned lyre. Whereas the separate notes preserve their individuality, they are proportionally connected to the larger group that comprises the musical scale. As such the notes are in a state of interdependence.¹⁰²

What does this all mean for the life of business? Can we somehow appraise the health of economic life today through an examination of our musical culture? In addressing this matter, it is instructive to consider the type of diagnosis of contemporary culture (especially music) and politics (in the broad sense discussed earlier, which encompasses business), along with their impact on the soul, that follows from the perspectives of Plato and Aristotle.

First of all, Aristotle and Plato argue that the type of character cultivated through musical study serves as the foundation of a civilization that is upright and free. Thus, in Plato's Republic music instruction will engender people who will be repulsed by vice and drawn to virtue. As a result, the city that is able to deliver high-quality music pedagogy will be freed from the burden of having to enact a massive amount of law. In today's parlance, we would say that good music education is a foundation for self-regulation or enlightened self-governance. This point is of vital importance concerning the issues of necessity for and appropriate degree of legal regulation of business.

Among the ideas explored in Aristotle's Politics and Plato's Republic is the claim that by and by the person in the grip of undue passions comes around to wielding unjust methods for fulfilling them. Consequently, when an entire people's character has been shaped from, on the one hand, inculcation in agitating music, or, on the other hand, from the absence of emotion-quelling music, they venture down the path toward widespread injustice, which in turn incites strife amongst a citizenry, which ultimately ushers in a proliferation of law—what we would today call overregulation—in a doomed essay to cure such maladies.

Secondly, the ancient's reflections on character development through music are related to the promotion of human excellence, therefore to human well-being as well. This is significant, since the kind of musical instruction that is endorsed mediates the passions but not with rigid restraints; rather, one's study of music is prompting yearnings for philosophical illumination and moral decency. These proclivities reside at the very heart of our human nature. For Aristotle our true self inheres in the intellect through which we are able to contemplate and also to undertake action with an eye toward what is noble and true. However, the true self requires the aid of music in order to actualize itself. Consequently ancient thought sees music as vital to one's realization as a complete human, to achieving full happiness.

It may be objected that there are people with no musical training and no interest or talent in music who nevertheless are capable of rendering sound moral decisions, sizing up other people according to their character, and acting virtuously. From the other side, there are certainly cases of gifted musicians who pass through life as evil psychopaths. Such considerations may prompt a skeptic to doubt the legitimacy of any connections we might claim between music and the cultivation of moral virtue.

By way of response, it is crucial to understand just what Aristotle and Plato are saying. They are not contending that music will, in any facile and direct manner, impel us to behave in some particular fashion. Instead, their view amounts to the twofold contention that (1) music influences human passions, and (2) such an influence will either make it harder or easier for reason to grasp and the will to select the right things in life.

These ideas acquire further illumination from the stress that ancient thought places on human flourishing as an attainment surpassing bare public stability. If you were to go around today asking what it means for human flourishing to take place, you would doubtless receive all sorts of answers, ranging from “spending more time with the kids” to “having enough money to play golf” to “getting in touch with my spiritual side.” According to the ancient Greek mind, though, the utmost happiness arises out of the engagement of our intellect in leisure. Aristotle instructs that leisure is the objective of human life. Many people consider their work as simply a means to acquiring goods that they will be able to enjoy once they are away from work. By comparison, leisure is a state during which we are able to relish whatever we have chosen for its own intrinsic value. Leisure is what most of us prize and where we look to gain fulfillment.

A key issue for Aristotle and Plato, though is this: Is what we are enjoying in leisure genuinely the kind of thing deserving of a rational being, and is it fostering the kind of well-being that is fitting for that sort of being?

Another response, of a more general nature, is that we ought not to demand too much from music, as if it can supply something of a sinecure that even a modern legal order and religion are not equipped to do. What is more important to grasp from the enlightened ancient reflections is the idea that music imparts, even in the midst of our obvious moral crises and social failings, a glimpse of something in humanity that is higher, immutable, and most worthy. The ancient philosophers' insights into virtuosity help us to gain a greater awareness of our potential for fostering human excellence, whether in music, in the arts, or in business.

Assuming the vantage point of ancient philosophy, the importance that today's culture attaches to material wealth and hedonism, together with its acceptance of moral relativism and a general apathy regarding the pursuit of human excellence is utterly unsatisfactory. Early thinkers maintained that this sort of society attends to the lowest features of humanity. Consequently, the soul comes around to pine for sustenance that is absent in the culture at large. According to the classical account, the type of “society of pigs” rejected by Glaucon fosters irrational and disorderly passions that disfigure the soul while imperiling the foundations upon which society rests—an imperilment that is in fact mirrored in much of the turmoil and disorder transpiring within the global economic crisis.

My contention is that it is vital that people incline themselves toward the uppermost human ends singled out by ancient philosophers. Only out of the pursuit of human excellence—virtuosity—can a respectable social order and an ecology of the market materialize as a consequence. The early philosophers instruct as to why music stands indispensable to cultivating an adoration of the highest things, and thus to safeguarding civilization.

Raising Awareness

According to Aristotle, a person in possession of good character sees circumstances in the right way, discerning their relevant moral dimensions. Among other things, this explains, for instance, why we “punish those who are ignorant of anything in the laws that they ought to know and that is not difficult, and so too in the case of anything else that they are thought to be ignorant of through carelessness; we assume that it is in their power not to be ignorant, since they have the power of taking care.”¹⁰³ It is by means of our imagination (phantasia), that we can comprehend the ethical features of our conduct, and our inability to grasp the morally significant aspects of a state of affairs is a mark of poor character. If we are a person of good character, we will see a given action, say, the racist comment of a client, as requiring us to exemplify courage in standing up to challenge the remark. In fact, being morally spineless, lacking the will to stand up for what is right, can be a symptom of incorrect moral awareness. “For [although] both the man who has knowledge but is not using it and he who is using it are said to know, it will make a difference whether, when a man does what he should not, he has the knowledge but is not exercising it, or is exercising it; for the latter seems strange, but not the former.”¹⁰⁴

Businesspeople enter judgment and chose how to behave based on the way they model complex phenomena—like the financial crisis. In Chapter 7 we shall consider how contemporary thinking about business has developed around different mental models. In particular we will discuss how various mental models have portrayed the global financial crisis differently, and we will suggest how those models need to be expanded.

Thus, for economists, issues surrounding the financial crisis are framed as technical problems, not moral issues. Typically the language used is descriptive, centering around raw sets of values fed into systems instead of normative analysis of obligations, rights, and fairness. Such an econometric language-game can be commanding and alluring, creating an illusion that considerations of morality, of the human side of things are somehow off-message for business culture. To the extent that a moral-cultural mental model can be brought to bear on business and economics, it will assist us in gaining fluency in the language of virtue, character, human dignity, and the common good. Such a way of thinking enhances our moral imagination and raises the likelihood that we will be able to provide a more comprehensive account of morally important states of affairs.

It is precisely to this end that I am endeavoring to weave into our tour of ethics in contemporary business a fair measure of allusions to artistic excellence. Here is why. Excellence in any human endeavor, be it in music, art, literature, science, or athletics, in the end points to our higher nature. Paradoxically, we may only be able to come to an adequate understanding of what is at stake in the world of business and economics today by looking beyond them. By casting our gaze away from the ever-present realities of commercial life, we may come to see new possibilities that have eluded our attention, to gain a vision of the transcendental, sacred side of our moral nature, to refresh our sense of one another as beings in pursuit of what is best in ourselves: our virtuosity. This is especially apt to be true during our collective experience of cynicism, anxiety, and moral disorientation occasioned by the financial crisis as well as the extended sequence of scandals that preceded it.

Returning to Aristotle, we are reminded that the way we portray a moral problem is a matter of our character. For Aristotle, the notion of character casts a wide net, extending beyond our values and principles to include as well our willingness to act on them. Our inclination to act is, in turn, often connected to the relative degree of intensity that an ethical issue has for us. The intensity of a moral matter flows from the significance we attach to it.¹⁰⁵ A significant number of managers at Enron attuned to the corporation's deployment of off-balance-sheet partnerships—which were eventually cited as a substantial reason for the company's implosion—perceived the complex scheme of partnerships as being legal and therefore ethically acceptable. Being disposed to accept legality as a sufficient standard of conduct, the Enron managers were not inclined to interpret them as raising any moral issues, so they did not take any action to oppose or question them. A similar situation appears to have existed at Lehman Brothers in advance of its collapse, through its use of “Repo 105” transactions to dress up the firm's financial results and hide debt.¹⁰⁶

Our character also embraces our capability to discern how principles and values ought to be applied in concrete cases, no matter how complicated or knotty that might turn out to be. A middle manager may genuinely proclaim the value of courage, yet fail to put it into effect from a failure to appreciate that voicing an objection to an upper manager's order to overcharge a client is what courage demands now. Here, the middle manager may be earnest, yet lack courage.

Aristotle instructs that being ethical is mostly about being someone with good character. A good character comes from the right engagement of emotions, practical intelligence, values, and virtues. Moral values that we learn from our experience and from the wider culture constitute a starting point for gaining wisdom. Making headway in ethics means honing and fine-tuning our values, gaining greater expertise in bringing them to bear on decision making, and keeping them safe from threatening surroundings. By having self-knowledge, which is a key ingredient of a good character, we are guided to safeguard our paramount values by selecting an ethically hospitable habitat within which to carry on our business activities. Equally we will shield our highest values by steering clear of temptations to veer off-beam.

So how does the person having a good character render a decision when faced with morally complicated situations in the real world? To address this important question, we will benefit from having a look at a philosopher who hails not from the peripatoi of ancient Athens but from the Parisian cafes of post-World War II France, the existentialist Jean-Paul Sartre.