by Elizabeth Oldfield
Friday, 18
September 2020
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08:00

Boeing’s deadly sin

by Elizabeth Oldfield
Grounded Boeing Jets. Credit : Stephen Brashear/Getty Images

The full extent of corporate failure at Boeing over the 737 Max has been revealed this week. The congressional investigation into the crashes is damning, findingcost-cutting… that jeopardised the safety of the flying public”, “regulatory capture” and a “culture of concealment” leading to the deaths of 346 people in two separate crashes. 

The dry procedural language used in the report stood out to me, in part because I have been reading an economics classic by E.F Schumacher, Small is Beautiful. While official documents condemn “troubling mismanagement misjudgements”, and Boeing admits “mistakes were made”, it is left to the bereaved families to use words which for most of us come closest to an accurate summation: “I lost my dad to greed, corruption and lack of human decency.”

Schumacher, an eminent German-British statistician and economist, is similarly hard-hitting in his use of moral language. Coming to his 1973 classic, knowing its long legacy in economic thinking, but not the text itself, this is startling. Most of us are more used to conversations about business, economics and the right ordering of society being conducted in that familiar, distanced legalese. Proposals are rationalised and systematised, carefully avoiding any whiff of emotion or judgement.

Not so Schumacher: 

I suggest that the foundations of peace cannot be laid by universal prosperity, in the modern sense, because such prosperity, if attainable at all, is attainable only by cultivating such drives of human nature as greed and envy… There can be growth towards a limited objective but there cannot be unlimited generalised growth [based on] a predatory attitude which rejoices in the fact that ‘what were luxuries for our fathers have become necessities for us. 
- E.F Schumacher, Small is Beautiful

He continues:

The cultivation and expansion of needs is the antithesis of wisdom… of freedom and peace… Economically, our wrong living consists primarily in systematically cultivating greed and envy and thus building up a vast array of totally unwarrantable wants.
- E.F Schumacher, Small is Beautiful

I cannot remember the last time I heard an economist or business theorist use the words wisdom, greed or envy. Why are they so nervous about using moral rather than technical language to condemn actions that so clearly violate moral codes? Clearly perceived “moralising” attracts accusations of hypocrisy, and finger-pointing at individuals is rarely edifying. 

I think it goes deeper though. “Profit-maximisation” (another thing Boeing is accused of) is so baked into our assumptions of good business in an economy premised on eternal growth that we never stop to ask if it has become another way of saying greed, a deadly sin dressed up in a pin-stripe suit. 

Schumacher was not anti-business, in fact arguing that right-sized, local businesses could help build a better world. Developments such as the B Corp movement and interest in Environmental Social Corporate Governance (ESG) investing are arguably part of his legacy. But he wasn’t afraid, and neither should we be, of calling greed by its name when he saw it.

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  • “Unhinged” is not a helpful word. Tom has already explained that he is not accustomed to discussions here. I think we’re all in agreement that the level of exploitable oil reserves depends on the cost of exploitation and the costs of obtaining that energy any other way.

  • I rather think that one of the things that went wrong at Boeing was precisely that the board did attempt to do what they thought their shareholders wanted, namely to maximise profit. But to maximise it in the short-term, by cashing in the capital of the company: its intellectual capital in terms of the experience and expertise of its workforce. One if not the only cause of the disaster was that the company did not fully understand the effects of what it was doing.

    But you talk about the one and only “duty” of a company. That’s talking about the company as a moral agent. If it’s a moral agent, then why is that its only duty? Its shareholders are increasingly likely to be other companies such as financial institutions. What are their moral duties? It seems as if there’s a feedback loop in which every corporation behaves as if its only corporate duty is to maximise profit, with no link back to people and what they want and need.

    But, more worryingly, what if corporations are not moral agents?

  • So you discount Schumacher’s views because he was a victim of plagiarism, and because the British coal industry collapsed acrimoniously 15 years after he left the Coal Board?

    Perhaps it’s because he believed that oil is a finite resource? Interesting to hear an argument for there being infinite amounts of oil in the ground …

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