To some, Enron's collapse -- with its revelations of shady
accounting and inflated financial statements -- was the last nail in
the coffin of the "irrational exuberance" that fueled stock prices
and stoked economic growth in the late 1990s.
But for others, the fall of Enron and other, once high-flying
businesses, is cause to question the very ethical foundation of the
business community. Since Enron's fall, other companies have issued
revised earnings reports, dropping accounting procedures used to
pump the value of the company. At the same time, accounting firms
have tried to separate their consulting and auditing practices to
reduce apparent conflicts of interest.
While some see those steps as beneficial to the investing
community, they also illustrate just how deeply compromised many
companies have become in recent years.
That begs the question: If some successful businesses achieved
their positions through fraud and chicanery (at times destroying the
life savings of thousands of investors), what does that say about
the moral underpinnings of our economic system?
For James Kenderdine, associate professor at the Price College of
Business at the University of Oklahoma, the answer is clear: The
state of ethics today is "for the most part, pretty poor."
Kenderdine blames the lack of business ethics on a wide range of
factors that have been developing for decades. Reversing that trend
will take years and won't be easy, he said.
"You have to start holding people accountable for their
behavior," Kenderdine said. "You have to send Enron executives to
jail. We have to say just because they've got college educations and
live in million-dollar homes and drive BMWs doesn't mean that they
can't do hard time in jail if they screw up."
But where Kenderdine sees a long, drawn-out deterioration of
business ethics and community values, others see well, the same
old, same old.
"Not much has changed over the last 500 years," said Jonathon
Willner, an associate professor of economics at Oklahoma City
Willner noted that when economist/philosopher Adam Smith
described the "invisible hand" of the markets in the 1700s, he
assumed business owners would engage in "this very self-interested
behavior pattern" in which they devised "methods to raise prices or
restrain trade in some fashion" -- in short, that self-interest
would always trump nebulous appeals to community spirit.
That's a lesson people have forgotten in recent years, he said.
"In the `20s, basically the executives weren't making any claims
of ethics. They were saying, `Business is business. My job is money
and if I can get it I'll get it,'" Willner said. "And we had a lot
of people in the `90s who I think were portraying themselves as sort
of above-average human beings in terms of their ethical standards.
And they got caught with their pants down flashing somebody, and so
now they have to give up on that particularly principled stand and
be down here with the rest of us."
Kenderdine agrees that people are driven by self-interest, but he
believes society once provided a series of checks and balances that
kept those impulses under control. Today, he believes that system
has been wiped away by moral relativism.
"I think if you went back 75 years in this country and you asked
people, `Is there such a thing as good and evil?' they would have
said, `yeah.' I think today a large part of the population would
say, `Well, that's really not evil, it's just different,'"
The roots of that problem may go as far back as the Great
Depression of the 1930s, Kenderdine said. Before the Depression, he
said most people believed in the American ethic -- that if you work
hard, you would make your way up the economic ladder. The Depression
dashed that theory to pieces for many Americans.
"They lost their savings. They lost their farms. …