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Corporate Crises Revisited

Alan Malachowski on readers’ responses to his recent article about philosophical mistakes that lead to boardroom disasters.

It was as gratifying as it was surprising to receive so many positive reactions to my recent article on ‘Corporate Crises’ (Issue 39). Steven Thompson seemed to capture the mood of my respondents when he signed off as follows: “Thank goodness you have taken the lid off this subject. Please do more. If ever there was a subject in great need of ‘systematic thinking’, it is this”. Nevertheless, it was also encouragingly clear that nobody wanted to simply sit back and let someone else lift the lid. Everyone had something interesting to say. I must therefore apologise in advance for not being able to deal with all the points they raised and for skimming the surface in the cases I do manage to discuss below.

The main areas of concern were apparently clustered around four questions: Had I been too hard on philosophers? Why should philosophers meddle in business matters in the first place? What can be done? Is there anything worth reading on the relationship between finance and business ethics? Let me briefly address each of these in turn.

Too hard on philosophers? Not so. Though I should immediately confess for those who voiced this concern that I believe, echoing Tony Blair, “it’s worse than they think”, In short, I could, and perhaps should, in some senses have been ‘harder’. One of my main points was that philosophers ought to give up on the idea that they have any kind of privileged position within intellectual culture. Far from denuding them, this suggestion is an empowering one. Philosophers need to free themselves from the shackles of their past in order to make a proper contribution to modern society. However, the insidious combination of indifference and ignorance that I attributed to contemporary philosophers is more pervasive than I had the space to indicate in the article. It is not only the ‘revolution in finance’ that eludes the standard philosophical agenda, but also every other radical upheaval in thought and culture. Here, philosophers have failed on two counts. First, they have failed to assimilate major changes in physics, mathematics, psychology, cosmology, the arts - you name it. Second, they have failed to muster up their own ‘revolution’. The Frege- Russell-Wittgenstein surge? The later Wittgenstein’s ‘antisurge’? Positivism? The Linguistic Turn? These turned out to be nothing but storms in the same old philosophical tea cup shaped by an over-stretched Platonic tradition that should have been supplanted long ago. In his iconoclastic book Philosophy and the Mirror of Nature, the American philosopher Richard Rorty famously tried to do philosophers a big favour by explaining the deadening effects of the Platonic tradition and he was branded as a traitor for his troubles. However, unless philosophers start to crawl out of the deep, dark, caves they have excavated for themselves in the history of ideas, culture will pass them by. This means giving up on their outdated vows of textual chastity so that they can engage with writings that are not obsessed with the narrow, residual problems of the Platonic tradition (i.e. the kind of problems that are posed in introductory courses, but also remain standing at the end of the most exhaustive research programmes, problems like ‘What is knowledge?’ and ‘How are mind and body related?’). It also involves shaking off aversions to ‘hands-on knowledge’ of what is going on in societies and of the disciplines (including the arts) that try to cater for worldly affairs. Philosophers need to become a bit more like everyone else within the wider intellectual community and be more willing to share the diverse interests of that community.

Even as I write, a wistful caveat emerges. The management guru Peter Drucker once urged the creation of a ‘space’ that is free from the influence of money. Anyone who has attended philosophical meetings will be familiar with the ways in which philosophers are able to conjure up such spaces. During a quiet afternoon in some gathering at Cambridge University or the American Philosophical Association, discussing topics such as counterfactual conditionals or the correspondence theory of truth with philosophers and fellow travellers, it is easy to forget ‘the ubiquity of finance’ and to romanticise about the ‘distance’ that philosophers have put between themselves and the world of business. For money and its trappings cut no ice in such company. It is possible that in excavating their caves, philosophers have constructed a robust means of protection against the smart bombs of commerce. However, the price of protection here is precisely the kind of isolation I mentioned earlier. Philosophers might not get blown up, but if they do not come out and face the music of history, they will, I fear, soon be buried. On the issue of ‘meddling’, it may seem that by divesting philosophers of their age-old repertoire of problems and techniques, I am making them even more unsuited to tackling corporate crises. My primary objection is not to the repertoire as such, but to philosophers’ unyielding attachment to it. Cutting the umbilical cord to the Platonic tradition will free philosophers up, give them more flexibility in their intellectual outlook, and perhaps encourage them to go find things out about other disciplines and make fresh connections between them. Above all, it will unleash their imaginations. Habitual, tradition-ridden definitions of ‘philosophy’, ‘philosophical problems’ and ‘philosophical method’ currently stand as barriers between them and phenomena like the recent corporate crises. Once these barriers are down, philosophers will be in as good a position as anyone to make a contribution to the emerging debate over ‘the revolution in finance’. If some of their old ways of thinking might help out, these can be reinstated (i.e. along the lines suggested in the article itself). But, there should be no prior assumption that they must be helpful, that somehow philosophy already possesses the necessary tools for putting business back on the right ethical path. What has happened with finance may well require some fresh thinking, a reconfiguration of the relationship between business and society. All this up for grabs by philosophers as much as by physicists, political theorists, poets or whoever. Where a new vision is required, worries about ‘meddling’ are thus beside the point.

What to do?

My answer to this is I’m afraid rather messy. As far as philosophy is concerned, my instinct is to say: let’s throw everything we have at the issues involved, see what sticks and then take it from there. More generally, we need to create an intellectual ethos within which ethical issues in business (and other issues concerning the huge practical perplexities of modern living) generate much more attention. There need to be fundamental changes across the intellectual board here and not just in the attitude of philosophers. Ignoring the normally disconcerting fact that some of the things mentioned might turn out to be incompatible and some may cancel each other out in other ways, my present suggestions are:

• Put it about that we badly need a general philosophical theory of the relationship between business and society. (I do not think that by itself such a theory can solve anything, but it can help fix ideas, stir up debate, create a vocabulary that facilitates discussion and generally attract attention to the issues at stake)

• Raise the status of Business Ethics as an academic discipline. (It should be clear by now, even to those philosophers scuttling around at the back of the cave, that since business pervades so much of our lives, it is impossible to ‘do ethics’ without taking it into account)

• Make ‘the history of business’ and ‘business ideas’ important parts of the study of history, social theory, politics, and philosophy (so companies like IBM or Ford have the same high profile as important historical figures and so that theoretical contributions like the Modigliani-Miller Propositions stand side by side with more familiar intellectual achievements).

• Encourage philosophers to take a special, professional interest in at least one subject that would not normally be considered philosophical (on the assumption that some would pick ‘business’ or ‘finance’)

• Forge more fruitful and diverse connections between business and philosophy (here philosophers will need to learn how to: write for business audiences, contribute to business publications/conferences, network with members of the business community, become executive directors and so forth)

• Create ‘fast track’ courses for bringing philosophers up to speed on developments in the business world. Then build up corresponding sectors of philosophy departments that sponsor research into business ethics and co-operate with companies to that end.

What to read?

The dearth of good material here is indicative of the very problems to which I have alluded. Philosophers still have to wake up to the importance of business and the role that finance plays within it. To get a grip on developments in finance theory, it would be useful to read chunks of The Revolution in Corporate Finance, edited by Stern & Chew, Jr. (Blackwell) or The New Corporate Finance: Where Theory Meets Practice, edited by Chew alone (McGraw-Hill). The best, and perhaps only, overview of the general issues at stake is provided by Ethics in Finance, by J.R. Boatright, (Blackwell). For background reading, a clear, incisive, philosophically-informed approach to ethical problems in business can be found in Business Ethics, by Sorell & Hendry (Butterworth). For reference only (because modesty forbids and it is so expensive), I can recommend Business Ethics: Critical Perspectives, 4 Vols, Malachowski (ed.), Routledge. If you find the prospect of leaving the whole familiar philosophical landscape behind just too daunting, try the following compromise: Philosophy & This Actual World, by Martin Benjamin (Rowman & Littlefield). Otherwise, watch out for a hefty tome called Principles of Financial Ethics. This will be on the shelves in bookstores pretty soon after a publisher makes me an offer I can’t refuse. Finally, though others came close, Martin Parkinson came closest to spelling out the reasons why the philosophy department I originally described could be in for a nasty surprise. I had the possibility of a ‘hostile takeover’ in mind, but I will leave Martin to voice the last word:

“The virtuous philosophy department is vulnerable because now that business has become the preferred model for thinking about most types of human activity, it will be forced to justify itself as a quasi-business. Unfortunately, a traditional business justification (success in answering a pre-existing need while giving value for money) is now viewed as irrelevant or of secondary interest: the justification must be in terms of profit and market valuation. So the department’s high academic standing will not in itself protect it from having to answer some equivalent of ‘how high is your share price?’.”


Alan Malachowski is Honorary Lecturer in Philosophy at the University of East Anglia and also teaches business ethics there at the School of Management.

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