Piet Naudé has been rector of one of the largest business schools in Africa in Stellenbosch (South Africa) and has published a book, Contemporary Management Education, which has caused a debate picked up by the Financial Times. He has been in Barcelona, where he has been one of the star guests at Esade's Sustainability Week.
Does an entrepreneur have to feel guilty for making money?
From a philosophical point of view there are two possible approaches. One is that of Robert Nozick, who says that if you profit ethically, you are entitled to enjoy the fruits of your labor and your entrepreneurial spirit. Your responsibility would be limited to paying the taxes prescribed by your country. In this sense, there is no guilt. The other, preached by John Rawls, is the opposite. The social system works better if the economic surpluses are redistributed to the most disadvantaged citizens. The reference point of society should be who has the fewest advantages and not the richest. The issue is finding a balance.
And how is it done?
If you raise taxes beyond a limit, you destroy economic potential. No one will dare to start a company. But if you allow wealth to accumulate without redistribution, you create a society with too many inequalities that is not sustainable either.
The State has to redistribute.
Remember Buffett, who said that, proportionally, his secretary paid more taxes than he did? This situation is bad, because whoever generates more has to contribute more. But neither is it about killing the businessman as it happens in France, where businessmen are scared. They cross the border and go to Belgium. However, the idea of reducing taxes for the richest to stimulate the economy is not valid either. Just look at Liz Truss in the UK, she was a disaster. Governments, per se, do not really create wealth, but order. They must create the conditions for doing business.
Is virtue in the middle?
Depends on the country. In South Africa, a society with many disparities, it is necessary for companies to pay more because the Administration has a lot of expenses to help the poorest. But in Switzerland, with the main needs covered, it makes more sense to accelerate the growth of the private sector.
In other words: first an entrepreneur should make a profit and then take care of the common good?
No. This is wrong. The two things are not contradictory. You should do good thanks or through your business business. Let's imagine a supermarket that has between 5,000 and 6,000 cashiers. You have the possibility to fire them and set up an automated collection system. This would allow you to increase profits and entertain your shareholders. The question is whether this operation is a good idea. Because the company to do business needs social sustainability. If in the end you keep your employees you also increase your reputation. It is better to convince the board that it is convenient to increase the value for the client by betting on the common good. And, incidentally, you optimize your benefits.
Should managers have limitations on their remuneration?
Never by law, but by advice. The State does not have to decide how much private money should be allocated to pay people. The problem is not the amount itself, but that the boards are not really independent, because in practice we are dealing with a group of rich guys who decide the salary of another rich guy. They are all friends. And that there is no relationship between pay and production.
In what sense?
Take the case of the oil company BP. Has she caused the Ukrainian war? No. Has she pushed up the price of oil? No. Have the prices been revalued? A lot. Most of the factors that affect the price of a security are outside the control of its CEO. But when it comes time to cash in on shares, they are the kings of the mambo. Still, I would not like to see governments get into this matter. Skills are listed on the labor market. If you don't pay them what they ask, the executives will go somewhere else.
Here, in another area, there is talk of applying taxes to 'profits fallen from heaven'.
But who decides that they are excessive and from when? Government? The origin of benefits in each sector cannot be regulated by administrative means. It is better to have a progressive tax system that, beyond an amount, forces you to pay 60%.
You have been a dean at a business school. Are businessmen today more aware of their social role?
Most of them are aware that companies are an important institution in society, even if they are privately owned: they build buildings, provide jobs, pay taxes. According to the Edelman consulting barometer, companies arouse more trust than NGOs or the media. But a large percentage of those surveyed believe that employers should be involved in social justice or ecological responsibility. Thus, financial education must be integrated with notions of political science or psychology: with the war in Ukraine, pressure groups tell the company that "if you want to defend democracy, you must close your chain of hamburger restaurants in Russia." It is not an efficiency argument, but a political one. The entrepreneur has to say to himself: if I don't do it, what will people think of me?
But can these concepts be taught or do they belong to the personal sphere of each one?
One thing is knowledge, the other behavior. We can act on the former, without forcing people to act one way. Education has to provide the instruments, another thing is that they are applied. Each person makes their business and personal decisions. But ethics is a discipline just like economics.
Are interest groups more important than shareholders?
They are just as important because they are interconnected. Shareholders cannot maximize their profits without the approval of interest groups. There was a case in South Africa: they wanted to open a silver mine. The company promised to recruit members of the local community. When he did not comply, there was a demonstration of 10,000 people and the executive with his limousine could not even enter the office...
If I meet social objectives, will I earn more money as an entrepreneur?
The instrumental argument says that if, for example, I improve the value chain of coffee production from bean to cup and make it more sustainable, now it costs me money but after four or five years the shares will skyrocket. But there is also the intrinsic argument: I make money because I am doing the right thing and I work for the common good. If you only dedicate yourself to philanthropy, your business will go bankrupt. So you have to have benefits, but better if they come from the good you do socially.
But isn't there a risk of 'greenwashing' with these practices?
It is a massive risk. Because it is in the hands of marketing people, who are not honest by definition, because they work in illusions. There should be some kind of self-regulation or a body to complain to and punish with fines or taxes. I think of the concept of “clean coal”. What does this mean? Coal is dirty!
