I believe the best recipe for a strong and healthy society includes three main ingredients: a capitalist economy, a democratic government, and ethical leadership. The Greek philosopher Heraclitus taught his followers that character is destiny. He believed lives are not pre-ordained, but rather, what we do impacts what happens to us.
His teachings are supported by findings of recent research. Nations that conduct business with honor and integrity become more trusted and have stronger long-term economic growth while corruption in government leads to less business investment and economic growth.
Research on state government corruption and economic development has produced similar results. Additionally there appears to be a relationship between corruption in state government and the cost of conducting the people’s business. More specifically, per capita spending has been found to be higher for more corrupt states than for less corrupt states and the ten most corrupt states carried higher debt than the other forty states.
Capitalism is often maligned by politicians and social activists, but the right of private ownership is actually a liberal concept. I think it is the best economic structure for building wealth, but there must be regulatory safeguards that ensure businesses are run in an ethical way that is good for the broader society.
At least since the middle of the Twentieth Century, capitalism has outperformed other economic structures. According to research presented by the Organisation for Economic Co-operation and Development, from 1950-2015, the average per capita gross domestic product generated in the advanced capitalist economies of the world was consistently multiple times greater than the average per capita gross domestic product generated by other economies.
Given that protecting, sheltering, feeding, clothing, and educating a population depend upon a country’s economic strength, social well-being is not possible without a consistently strong economy. And given that corporate scandal can negatively affect profitability and stock value, one can reasonably argue the long-term success of a nation requires ethical leadership. An economy is likely to be stronger in the long-run when there is ethical leadership in our governments and our businesses.
Quite simply, ethics pays.
Jill Long Thompson
Visiting Clinical Associate Professor
Dean’s Fellow for the Intersection of Business and Government