Photo-synthesis - the alpha and omega of human civilization

I heard a talk the other day from a biologist who thinks about how humanity can survive.

The problem challenging the race over the coming decades is access to earthy resources - especially energy. It is estimated by reasonably sober minds that when human population maxes out at roughly 9 billion people and if those 9 billion will attempt to enjoy current American standards of comfort and living, they will need 5 planet earths to support them with energy and raw materials.

Those additional 4 planet earths will not be there.

So, what is to be done?

This is the great challenge to sustainability of human civilization; global warming is just part of the problem.

Well, curiously enough, he said many of the most important natural inputs to human life come from photo-synthesis - from simple little plants absorbing solar energy and transmitting it to mother earth and all who live upon her.

Animal life traces its sustenance to plants. Something feeds on plants and other, usually bigger living things feed on plant eaters, and so on up the food chain.

Our main foods - vegetable, fruit, nuts, grains, meats - trace their origins to photo-synthesis.

Our natural fibers - cotton, wool, linen, silk - similarly come from energy provided by photo-synthesis. Our wood comes from photo-synthesis.

Our energy from hydro-carbons and most of our plastics come from photo-synthesis accomplished millions of years ago and kept in deposits of coal, oil and natural gas.

Thus, if we could but create our own massive processes of photo-synthesis to convert sunlight into the energy and substances we need for life, we could sustain foreseeable human civilization on just this single planet earth - perhaps.

shareholders - limited liability means limited moral standing

I was listening to a presentation last week from a colleague who practices corporate law with a Minneapolis law firm. He was giving an overview of corporate law to participants in our certification training program on stewardship for members of corporate boards. Something in the way he placed emphasis on an old chestnut about corporations triggered an excited thought as if I was seeing the subject for the first time.

Bryn's comment was simple: corporate law places the management of a corporation in the hands of the board, not in the hands of the shareholders.

This basic rule for me expeditiously resolved one of the most tenacious arguments in business ethics - that between the relative claims of shareholders and stakeholders for a preferred status in the business calculations of corporate managers. Shareholders, some argue, have exclusive priority while many who promote business ethics would give the nod to stakeholders, including shareholders as one set of those who depend on corporate performance for their wellbeing.

The justification for giving preference to shareholders is that they are the "owners" of the corporation and as such have rights to full concern and attention of those who work for them. Stakeholders, on the other hand, it is pointed out are not owners but stand outside the structure of corporate power and decision-making.

Now, the fact that management of a corporation is given to the board and not the shareholders makes all the difference in this argument. Management is the prerogative of owners. It is the heart and soul of the powers of dominion that owners are given under the law. A fully empowered owner can do anything he or she pleases with property under ownership - even to the point of destroying or abusing or wasting it for no good reason.

If shareholders can't be such owners, then they are a limited kind of owner with expectations of exercising dominion less than those held by "real" owners.

Shareholders are not given rights of full ownership in a corporation; there are limits to their risk exposure. They enjoy limited liability - not full liability for the losses of the corporation, but only financial sacrifices up to the amount of their investment in the stock.

Their limited liability is balanced by limited rights and powers. Full liability as in a sole proprietorship comes with full rights of dominion. Gaining an advantage in having one's liability limited by the law is offset by having to sacrifice before the law advantages in one's ability to exercise power and dominion.

Shareholder rights are set by their contract with the corporation. They do not have rights of management.

Thus when it is argued on their behalf that they have priority over other stakeholders, we should cautiously think about the scope and expanse of such priority. They do not carry full risk of business failure; their corresponding claim to fortune should therefore be a modest one.

If they don't manage, they shouldn't ask for the deference that goes to those who are in the arena running all the risks and carrying all the burdens of success.

Shareholders do have a claim on the corporation, but not an extreme one. Their claims are as limited as their are powers of management and liabilities.

money and corporate social responsibility

The cynical and sad musical Cabaret has it that “money makes the world go round.” If so, then money must bear an awful responsibility for all the wrongdoing and misfortune that overtake humanity again and again.

On the other hand, St Paul wrote that “love of money is the root of all evil”, implicating not money but ourselves as the proper agent of wrongfulness in the world.

Similarly, Adam Smith proposed that seeking to make money need not be sheer malevolence when he said: “Man is never so innocently engaged as when he is making money.”

Advocates for more corporate social responsibility, however, often point to profit – acquiring cash money – as the driving force behind business negligence, abuse of market power, and willful omission to correct harmful externalities. Greed, it is more often inferred than said outright, biases judgment when greed is energized and encouraged by the availability of money.

Non monetized societies, as a rule, do not enjoy much in the way of business activity or capitalism. At the same time, they are more prone to poverty than wealth with all the conceptual opportunity costs that come with living in poverty.

If we want the fruits of wealth, which are many, but we fear the effects of greed and avarice, what role should we tolerate for money? Can we ever reach a positive moral assessment of those who strive for money?

Powerful ideas for thinking about money were given by Georg Simmel in his book The Philosophy of Money, written in 1900.

His first proposition is to accept the subjective theory of value. According to this understanding of human dispositions towards reality, the value of a thing is entirely determined by what we make of it. Value arises from our emotions and thoughts. Value, like beauty, is in the eye of the beholder not in the flower or the painting. From this perspective, there are no absolute values to be imposed on us, only the partial and relative values that we impose on ourselves and, may from time to time, attempt to impose on others.

Consciousness, said Simmel, endows objects with significance, not the other way around. No object has intrinsic significance.

Accordingly, it is our natural right to value or not value money just as we may or may not value a cowrie shell, an emu, or The Rollling Stones.

When two or more minds converge on a single evaluation, then we have a common value. What has been subjective now becomes more objective in that it has acquired a post-individualistic meaning with social characteristics and implications. Any such valuation in common takes on tangible form and public appearance, gains resilience in the presence of time and space, and acquires an aura of respect, even prestige.

Simmel pointed out that a primary function of money is to facilitate the process whereby people can reach common valuations. When they agree on a monetary amount to fix on an object, or a promise, they have achieved something social, something more objective than their individual preferences. When many people with different subjective concerns all come to agreement on a monetary price, then a market price enters social reality and conditions subsequent behaviors.

Without money, it is more difficult to find easily expressed and sustainable equivalences. With money, agreements can be more easily reached, kept and memorialized and transactions can be undertaken with far greater confidence in their having real advantages. The philosophical role of money, therefore, is to convert the intangible and the merely subjective biases and prejudices of the individual into social truth.

To probe further into the dark side of human dynamics around money, we need to consider the complex mental process of valuation.

Abraham Maslow proposed a hierarchy of human needs where prior and more immediate needs were associated with preservation of the self – responding to fears and threats, seeking food and shelter, etc..- were first attended to. Only after such necessities, as it were, were fully and satisfactorily attended to, would a person be likely to appreciate more abstract goals such as friendships, art, religious insight.

We can infer from Maslow’s notion of a hierarchy that money associates itself with goods on the lower levels of the hierarchy. Food, shelter etc. are most easily obtained with money. For most of us they are market goods which must be purchased from others.

Sigmund Freud associated money with his conception of an anal personality – someone fixated on retention and holding in. Anal personalities tend to be tight with money and stingy. They are also more comfortable as controlling personalities in their relationships with other people. Money for Freud took on a bad connotation of assisting anal personalities in their search for dominance over others.

Freud did not elaborate on the point at all but there is indeed an easily observed very strong link between money and having power. Since others need money to meet their own needs, we can use money to win their submission on a transaction basis. If we give them access to what they want, we can demand and receive in return some “price” paid by them for the goods or services we have at hand. That “price” could be money, but it could also be submission, labor, respect and public praise, help on a project, intimacy or some form of friendship.

I f our goal is indeed power, seeking money is a reasonable means to that end. What drives us, however, is not the money but the need for power.

Money, which through exchange can bring us into conditions of social objectivity, can also be conducive to the removal of the personal element from relationships. In this way money can contribute to our distancing ourselves from others and in so doing to protect ourselves from them. Money is indifferent and objective; with it we can be aloof from the desires and manipulations of others. Money can bring about reassuring feelings of inner independence and individual self-sufficiency.

Money has the amazing capacity to make possible relationships between people but at the same time leaves them personally undisturbed. It balances out respect for different dimensions of human dignity by leaving people alone in their own subjective majesty while permitting them to respond to the values and preferences of others.

And a need for power can be insatiable. When power is sought to make up for inadequacies, to fill a spiritual void of low self-confidence, to hold off fears of the infinite and the unknown, to make up for feelings of personal sinfulness and guilt or shame, then we can never enjoy enough power.

Correspondingly, such needy people can never have too much money. They are always on the hunt for what will make them feel more secure and less threatened.

At times, their approach to business can be to “cry havoc and let slip the dogs of war”. It is dominance that they seek and power that they need at almost any cost. The premises of Social Darwinism, Herbert Spencer’s theory of life and private freedom as constant rivalry and competition, fits comfortably with their understanding of who they are and what they need. Such strivers press for unconstrained competition and glory in making short term profits that they can appropriate personally not because they need the money, but because they would feel victimized without having the power that money can bring.

Avarice, as opposed to simple greed, is the will to power expressed through money where the power represented by money is experienced as the absolutely satisfying value.

Psychologists have studied motivations by using the “Ultimatum Game” where one player divides a pot of money between himself and another. The second player then gets to whether to accept the division or not. If the second player rejects the division, neither player gets any money. In this game, a stingy offer by player one to player two will usually be rejected – even though it will give player two some money. (The offers that get rejected are usually offer player two less than ¼ of the total pot.) Thus, game results imply that money in and of itself is not always a goal for human interaction. Other considerations come into play as well. The further implication is that people strive for relative, not absolute, prosperity, believing that it’s not the money but the share that counts.

In one series of Ultimatum Games played among men only, men with high levels of testosterone were more likely to reject offers with low proceeds for themselves.

Higher up on Maslow’s hierarchy of needs is having status in the eyes of others. Such status too confers a form of social protection, so it meets one’s need for power. But it has, apparently, other attractions as well.

Adam Smith noticed this quite some years ago. In his 1759 book on human moral capacities, The Theory of the Moral Sentiments, Smith wrote: “… yet we cannot live long in the world without perceiving that the respect of our equals, our credit and our rank in the society we live in, depend very much upon the degree in which we possess, or are supposed to possess, ‘the advantages of external fortune’. The desire of becoming the proper objects of this respect, of deserving and obtaining this credit and rank among our equals, is, perhaps, the strongest of all our desires, and out anxiety to obtain the advantages of fortune is accordingly much more excited and irritated by this desire, than by that of supplying all the necessities and “conveniences’ of the body, which are always easily supplied.” (p. 213)

In another recent experiment, volunteers were asked to take sips of what they were told were five different wines priced between US$5 and US$90 per bottle. But actually only three wines were used; two of them were served twice. Volunteers were monitored for brain functions. As they drank what they thought were more expensive wines, activity in their medial orbitofrontal cortices increased in tandem. What were thought to be more expensive wines triggered more engaged mental activity.

What costs more money is, pro-forma, most likely to be more exclusive, more rare, and more prestigious. Fewer people will have access to it. Participation in exclusivity generation perceptions of value; it is the reward that comes to wealth and status and most of us like it.

A dynamic money culture can indeed spawn cynicism and a blasé attitude in the face of tragedy and human need. This results, says Simmel, when the concrete values of life are reduced by our choices to the mediating value of money. What should be highly valued, is reduced to the lowest instrumental value, one completely relative at that.

Money is a servant of our desires. If abusive desires merit our concern, we might be wiser to tackle the problem directly by confronting the desires rather than indirectly by reducing the means to assuage what will still be an active command center in our psyches.

We are come to an ancient point of view: tranquilization of the passions should be uppermost in our minds. Character to govern desire removes the “love” that would and does turn money from a boon into an evil. Aristotle taught this as did Cicero and Marcus Aurelius and Confucius. In our time, an eloquent teacher of this perspective on business is the Dalai Lama.

Money in and of itself enters the world as a useful good. It is we who abuse it, as we abuse many other things in the physical world. It is a useful tool; it is an institution through which the individual concentrates his or her activity and possessions in order to attain goals that he or she could not attain directly says Simmel. Like any tool money is inert; it has no purpose of its own and functions impartially to all humanity.

Money is demonstrative of the truth that humans are the “tool-making animal”, which infers, of course, that they are “purposive” animals with goals and desires. The tool incorporates the aspirations of the human will.

Money reveals its indifferent and empty character, says Simmel, very clearly where the valuation process putting it to work is exclusively upon consumption. When desires are superficial, money facilitates the triumph of superficiality.

Simmel wrote that “the psychological structure of demand is such that in most cases it is focused upon the satisfaction itself and the object becomes a matter of indifference so long as it satisfies the need.” If what we seek are status and power, and money is not available, will we not find other means to achieve our ends? And, the alternatives may be even more cruel or vindictive than making money.

Simmel notes perceptively that exchange – the transactions facilitated by money – are the highest form of interactions between people in that they are win – win, or non-zero. In a true exchange, which is voluntary and non-coerced by power or excessive need – each party is offered more than what he or she had before. So, the social work of exchanges is to increase the sum of value that is tangible.

Exchange presumes the scarcity of goods – that the goods available are not public goods made freely accessible to all upon use or demand. Exchange uses subjective valuation of that which is limited to respond constructively to scarcity and generate positive social enhancement embracing the parties to the exchange.

As Adam Smith said in The Wealth of Nations, the butcher and the baker look to their subjective needs to supply us with meat and bread for our dinner and we look to our needs to supply them with money, which they value as a means to meet their needs. Their values and our values are both vindicated- simultaneously and separately. It is an alchemy that turns selfish reflections into social good.

Furthermore in making an exchange and paying for it with money, one is subordinated to an objective norm. We are socialized in the process and become less the wild beast or the despoiler of the innocent.

Where there is pure subjectivity and no exchange, we might have either robbery and theft or compassion and gifts.

Simmel warns that exchange with money reconciles opposites: relativism and society. Money perpetuates a relativistic world view where each can live with his or her own subjectivities. But at the same time through exchange, money permits individual relative things, as valued by individuals, to become something of social consequence and so to enter into history as objective phenomena.

Money as the expression of a concept of objective economic value brings forth, says Simmel, an interpretation of existence. Money can be philosophy too.

Money is no more than way stations on an endless series of cognitions. Cognition – valuation – is a free-floating process where elements determine their positions reciprocally and relative to one another. Truth here is relative like weight or price. Truth is an aesthetic more than a command. It works through induction far more surely that with deduction. A culture of flux and change is engendered by money. Money has no respect for any eternal verities other that the process by which it is assigned to prices reflecting our values. As Simmel wrote, money corresponds to the “many-sidedness of our being and the onesidedness of any conceptual expression.”

The ultimate principles of such a culture proposed Simmel become realized not in the form of mutual exclusion (I-It over I-Thou to borrow from Martin Buber) but in the form of mutual dependence, mutual evocation, and mutual complementation – just like in an exchange. The philosophical significance of money, then for Simmel, is that it is the clearest embodiment of the formula of all being, according to which things receive their meaning through each other, and have their being determined by their mutual relations.

It interweaves all singularities and so creates reality. Money could, Simmel affirms, thus play the role of God for a weak minded humanity.

Moral Hazard: A Necessary Price to Pay for Stakeholder Responsibility

The current liquidity crisis centered in the American financial system but which has extended its cancerous tentacles as well out to global financial institutions has led to knowledgeable commentators reflecting on the problem of “moral hazard”.

Is it wise, some ask, to provide relief from the consequences of their actions for those who created too much risk?

Recently, the case of Bear Sterns, the New York investment bank at the center of the sub-prime/CDO bubble – brought concerns for creating “moral hazard” to the fore.

To prevent the bankruptcy of Bear Sterns and defaults on its many borrowings and guarantees, which would have spread losses to many other financial institutions, the US Federal Reserve System with support from the US Treasury arranged easy terms for Bear Sterns to be purchased by another concern so that Bear Sterns’ business and obligations could go forward in some form of a going concern basis.

The Federal Reserve System – the American lender of last resort – took bad assets from Bear Sterns in exchange for a loan to buy the firm. If the Bear assets prove to be worth something in the future, the cost to the public for this intervention will not be so much.

The owners of Bear Sterns were paid at first US$2 and then US$10 per share for equity worth $80 per share in book value. They were so forced to absorb great capital loss as a result of their company’s imprudent business activities.

Nonetheless, the reformatting of Bear Sterns’ business set a precedent that, in the future, incautious investment banking practices will again be coddled by the government and not given a market death sentence as was the case with Enron. This act of public interference with market discipline, it is said, creates “moral hazard” – the hazard that business decision-making will be more “immoral” or irresponsible than otherwise because the decision-makers will have less fear of the consequences of their actions.

Creating moral hazard implies that businesses will be careless about the risks they create or assume.

Coming as part of the sub-prime mortgage meltdown where the mortgage loans of many sub-prime borrowers will be foreclosed and the borrowers will lose their homes, the government’s financial support for the well-to-do on Wall Street while providing no help for the poor was not well-received in many parts of society. The financial elite was indulged with tolerance of moral hazard while the poor were left to bear all on their own the consequences of their imprudent borrowing.

Market discipline is good enough for some but too tough for others it appears.

Under Treasury Secretary Paulsen’s proposal for revised regulation of American financial markets, investment banks will be invited to use the lending capacity of the Federal Reserve System. This will give the originators of the most sophisticated and most sought-after financial instruments deep pocket support in times of crisis – crises no doubt brought about by the very practices of creating investment vehicles now to be given a kind of fiscal insurance by the government.

Why should the government, that is the people, reward mistakes in judgment with indulgence and protection against extreme outcomes? This will only encourage weak character in senior business leaders who will be more likely as a result to let their greed take the reins of business strategy, to lower quality standards, and to become more childishly naïve about risk. Moral hazard promotes infantile fixation on the short term where adult maturity should have pride of place in decision-making.

The free market, with its powers of creative destruction, its weeding out of the weak, the overly greedy, the stupid, and the careless, has its own high standards of morality. Failure is punished harshly and there are few second acts for companies that can’t make the grade. Why not let the market dish out the consequences in all cases? All should get to sleep in the beds they make.

The justification for indulging in moral hazard is to eliminate contagion in financial systems. Financial systems turn on trust; credit is a gossamer thing, easily broken and lost. The so-called real economy of production and distribution is more tangible, with hard assets to support restructuring of ownership and creditor interests when things go badly. With financial services, however, protecting the intangible assets of trust and confidence keeps liquidity flowing so that industry and commerce can have their necessary flows of credit and cash on a daily basis.

Contagion in the financial system is a danger to all in a way that is not implicated so much when an individual home owner defaults on a mortgage or when an Enron or a WorldCom goes bankrupt.

The logic at work here in justifying indulgence in moral hazard is stakeholder thinking, akin to the ethical rational for corporate social responsibility.

When stakeholder interests are taken into account, good decision-making moves beyond pure market rationality narrowly defined in only micro-economic terms. When stakeholders are included in business decision-making, assets of a more intangible nature are added on to tangible ones in the calculation of risk and return.

Adding stakeholder considerations to the decision-making matrix moves more towards a system theory understanding of the economy, where tangible and intangible feed-back loops intertwine and crisscross one with another.

Thus, it would be very appropriate in the case of a Bear Sterns market failure to worry about contagion – the impact of one firm’s demise on many who have interests in the play of market forces.

It is only another example of the problem of externalities – who should pay the cost of consequences that are external to the firm’s profit and loss statement and its balance sheet?

In most cases, it is society that pays in one way or another – for environmental damage, for health problems of consumers or employees, for unemployment compensation when companies close down, etc.

So it would seem consistent with wider practices to have society, in the form of the Federal Reserve System that passes its costs on to all in the economy, step up and attempt to minimize the harm flowing from bad decisions on Wall Street.

The problem of moral hazard arises whenever we insure against the negative consequences of our conduct. When we spread the cost of our externalities widely through insurance policies, we create moral hazard by reducing the full measure of punishment on those whose actions produce the loss or harm.

By removing the onus of paying the “last full measure” of careful consideration from their shoulders, we encourage people through insurance programs to feel that they are less at risk themselves, So they may conveniently take greater risk with respect to the lives and fortunes of others.

Insurance, externalities, and moral hazard combine to form a rather intricate puzzle for optimizing market outcomes.

To reduce negative externalities, we want to bring the consequences of actions back on the actors. But they may not be in a position to make good on the harm they have created, so we need insurance to protect the interests of stakeholders who have no say in the decisions that affect them. But with such insurance, we open the doors to moral hazard.

In any case, society seems consistently to take the stakeholder perspective into account through its laws and regulatory practices and so runs the risk of allowing too much moral hazard.

The point would seem to be that markets turn on more than the stand-alone profit and loss accounts of firms and individuals, but are forced willy-nilly by the powers that create and sustain them to take account of intangible stakeholder concerns even at the cost of indulging in moral hazard.

Does capitalism make a constructive difference?

One of the ethical debates around business and capitalism arises from a skepticism that profit-seeking, driving market behaviors and resting on private property can ever achieve moral outcomes for society.

I argued in my book Moral Capitalism that human dignity, morality, ethical behaviors, can't happen very well in a society that has no private property to support individual autonomy and self-reliant decision-making. Moreover, a life in poverty has fewer opportunities for personal achievement and service than a life lived in more comfortable circumstances where access to various forms of power is more readily at hand.

A recent news story on Russia, I thought, made a similar point about the constructive advantages of capitalism.

From 1999 - after its financial collapse - to 2007, the Russian stock market total capitalization rose from US$60 billion to US$ 1 trillion, it was reported. At US$1 trillion of market cap, a society can have many investors and a middle class worth notice.

Russia, now a more market grounded society, has been growing in wealth at 10% a year in real terms. Russians are becoming home owners. They are nearing the European standard of living - for the first time in history.

Russia is now a country with widespread property ownership and has millions of consumers brimming with confidence.

While such growth and its distribution has not solved all Russia's problems and has not of itself generated a viable multi-party electoral democracy, Russia can never be the same as it was under the Tzars or the Commissars.

Something fundamental has changed in the circumstances of the Russian people thanks to early stage capitalism and so significant political/cultural changes will not be that long in coming as well.

Can the United States Ever Partner with Islam for the common good of humanity?

My country, the United States, is entering the last lap of a fateful presidential election. Should Barack Obama become the next President of the United States, the burden of moral evil infesting our culture from the legacies of slavery, then Jim Crow segregation, and, more recently, from well-intentioned welfare-state dependency, will be lifted in historically significant ways.

But in this election the other moral challenge for Americans is what to do about the War on Terror?

Finding a way forward with respect to Osama Bin Laden and similar terrorists that will be both just and successful, demands an American reconsideration of how to engage with Islam.

To date, I would argue, there has been no substantive American moral engagement with Islam, with American policies and attitudes shaped more by distance and fear than by respect and appreciation.

I do not believe that the conceit of war is appropriate for the kind of relationship that is needed in a supposed clash of civilizations. The United States can not really withdraw into a Fortress America only to sally forth on occasion to kill, capture, and intimidate those who are feared as enemies and so expect to win its War on Terror.

America should not withdraw from the world. Nor should it turn its back on all of Islam out of disappointment and petulance. As a Muslim scholar recently said to me “Your President is our President too – for better or worse.”

Wisdom in the use of power brings not only respect but also success. Rule by fiat - the essence of relationship by war – that reflects only unilateral considerations of right and justice, may impose a government’s will for a time as long as conditions remain favorable.

As Thucydides wrote about Athenian arrogance at its height, “the strong do what they will, the weak what they must.” But such rule can never sustain political authority for the duration of an age. America can accomplish more, and faster, if it has good friends and willing supporters than if it must bribe and bully its way through history.

Furthermore, any arrogant use of power contradicts the core American moral tradition in politics of seeking in Christian Biblical terms to be a “City Upon a Hill” to which the eyes of the world will turn in honor and admiration.

To look up to such a City or not to look is an act of choice on the part of the beholder; prospective admirers can always turn away and look elsewhere for inspiration or leadership. Americans do understand that it is up to those who rule to win obedience through the convincing moral quality of their actions in holding public office.

This vision of government as a public trust, as a shepherd for the flock, is ancient. In the books of prophets from the Judeo-Christian Old Testament it is written in 1 Samuel, that setting up human institutions of despotic rule – kingship – is a turning away from God. The prophet Ezekiel said “Woe unto the Shepherds of Israel who have fed themselves and not the flock.”

And in the Christian New Testament, the Gospel stories of Jesus rejecting Satan’s offer of rule over powers and principalities are telling commentaries on the dangers inherent in selfish appropriation of earthly power and misuse of office.

The Qur’an is no different. Rule is a trust, an amanah from God to be used wisely with care and concern. “Verily, Allah likes not the Mufsidun (those who commit great crimes and sins, oppressors, tyrants, mischief-makers, corrupters)” 28/Al-Qasas 77

What the world needs, therefore, are wise Americans, good stewards of power, whose policies will reveal thoughtful reflection on the ends of human society and the dangers inherent in human willfulness. Such Americans would seek a different approach to ending terrorism originating within the Muslim world than just war alone.

Replacing the War on Terror

The Bush Administration’s declared War on Terror has not gone as well as many Americans had hoped after the murderous attack on the World Trade Center towers on September 11, 2001. The War has not been well or appropriately fought because its strategy and tactics were not based on wise principles of stewardship.

Extracting an eye for an eye, a tooth for a tooth, at the cost of innocent lives lost in collateral damage may not be the most effective response to terrorism. Such violence is neither redemptive nor dispositive; it is only a prelude to more violence, which in turn will again be neither redemptive nor dispositive in seeking its own account.

In the case of Iraq, it is true that Saddam Hussein was brutal and oppressive, but the climate of fear and the other consequences that followed on American application of a doctrine of pre-emption and unilateral military predominance has also been very harsh on the people of Iraq.

Though America’s War on Terror has been ongoing for six years and at the expense of hundreds of billions of dollars, Osama Bin Laden has not been brought to justice. Iraq has suffered many dead and still lacks effective government. Two million Iraqis have fled their homeland. Sectarian warfare has broken out between Sunni and Shi’a believers in one Qur’an. Violence in Iraq continues apace; the supposedly very secure Green Zone is mortared regularly; sectarian militias control much the population through mafia-like intimidation. The Iraqi people suffer from too little electricity, too much fear, and a massive failure of government services.

Violence is rising in Pakistan, encompassing the assassination of Benazir Bhutto, and continues in Afghanistan – all killings set in motion by unreconciled Taliban leaders hiding in their foreboding mountain sanctuaries. Terrorists guided by their interpretations of Qu’ran strike in Great Britain and destabilize southern Thailand.

Nor have the war in Iraq and the more global War on Terror brought brighter prospects for the long-term security of Israel, an important American strategic objective. The Israeli invasion of Lebanon (strongly endorsed by the Bush Administration) did not cripple the Shi’ite Hezbollah movement; Israeli actions in Gaza and the West Bank have not undermined the appeal of Hamas for a significant number of Palestinians. Time is on the side of Israel only as long as American might is available for its defense in depth. American military action against Iran is now urged to protect Israel yet again.

History teaches us that extreme political movements that use violence to promote a self-righteous ideology do indeed fade away when their teachings are rejected by the majority of their neighbors, relatives, race or co-religionists. . Isolation from community, evaporation of financial support, withdrawal of moral support, the falling off of volunteers, all these inexorably force violent minorities into withering away into irrelevance.

Armed repression alone rarely succeeds in quickly stopping terrorists and determined insurgents. War is of limited utility when abandonment of fixed and, to them, sacred beliefs is required on the part of the enemy

In Northern Ireland in recent years, we have seen a remarkable conversion of the IRA from terrorism to full participation in electoral politics and surrender of their weapons. It was not British armed might that secured this very constructive outcome but a more complex process of reforming the police while promoting a re-evaluation of ancient fears and hatreds among both Catholics and Protestants.

A new American strategy is needed if the threat from Islamist extremists is to be more successfully overcome. Simply put, the War on Terror must be replaced with a strategic alliance with Islamic Civilization.

How can this be done? With whom could America partner?

The answer is rather obvious: with those Muslims who find their faith compromised by misinterpretations and misunderstandings of Qur’anic guidance. America, in my judgment, can make itself – and the world - more secure against terrorism by working with the global Ummah under principles of Islam Hadhari then it can by fighting extremists largely on its own without the full support of the Ummah.

Those who kill in the name of the Qur’an are not only the enemies of America and other free peoples; they are apostates to Islam as well. In Islam because the doors of Ijtihad or moral reasoning from revelation remain open, reasoned appreciation of the Qur’an cannot lead any of us to the contemporary inhumane actions of terrorists where the innocent are killed in the name of a merciful and compassionate God.

It is the God-given amanah of pious Muslims to correct those who stray from the true guidance. Correction and redemption of those who are angry and bitter can happen most effectively within the community of Muslims. Terror arising within Islam is best ended with the application of Qur’anic guidance; it will not be effectively subdued by outsiders using bombs and bullet, renditions, torture, and harsh internment facilities.

Muslims have a Qur’anic duty, it would seem, to clear away the confusion created by people who carry out heinous deeds and later claim them to be part of an ‘Islamic religious obligation”. The United States would, therefore, be well advised to bring its efforts to thwart any criminal asserting Islamic justification for his or her terrorist actions within the scope of Islamic aspirations for peace, compassion and justice.

All Muslims hold themselves as an Ummah – a collective that seeks to foster right guidance among human kind. “Let there become of you a community that shall call for righteousness, enjoin justice, and forbid evil.” (3 The Imrans 105) It is the Ummah that must conciliate its stray sheep and return them to the flock where they can rise up in the sight of God and man as devout servants of Islam Hadhari.

In Malaysia’s Prime Minister Abdullah Badawi, both Americans and Muslims can find a proponent of Islam Hadhari as an approach to Qur’anic Guidance which seeks to bring the Islamic community back to fundamentals. Islam Hadhari seeks not only to keep Muslims on the true path of their faith but also to bring them towards inter-cultural respect and parity within the global community of humanity.

According to Prime Minister Badawi, Islam Hadhari focuses on enhancing the quality of life via mastery of knowledge and the development of the individual and the nation. For the individual – equally for men and women – Islam Hadhari provides a way through intelligence, knowledge and reason to piety that embraces noble values, honesty and trustworthiness.

Prime Minister Badawi believes that for any Muslim nation Islam Hadhari leads to a dynamic economic, trading and financial system and balanced development based on the application of science to human needs and the use of technology to bring fruitfulness to all of God’s creation. Furthermore, Islam Hadhari requires a politics of responsible stewardship and governance by the highest standards of accountability and transparency.

At the core of Islam Hadhari is the Qur’anic vision of human subservience to the will of God and to God’s purposes. Qur’an teaches that God created all that is for benevolent purposes. The natural order in which we make our way through life was thus created by God that humanity might be able to flourish as his dutiful vice-regent on earth.

Qur’an says that “Truly, we did give Al-Amanah (the trust or moral responsibility that God has bestowed on those who live) to the heavens and earth and the mountains, but they declined to bear it and were afraid of Allah’s torment. But man bore it.” (33/Al Ahzab 72)

Individuals thus hold an amanah placed directly by God in their hands, hearts and minds. They – men and women - are each called to service in being thoughtful and prudent in the execution of that holy office. They should be pious and honest; upright and decent; moral and compassionate; thoughtful and growing in capacity for implementation of God’s will.

Life on this earth is a journey that requires us to discharge our responsibilities towards society in an honest, transparent, and trustworthy manner. In this way, Qur’an teaches are we to carry out our trust from God.

Those who govern nations also hold an amanah from God. As their capacity for doing harm with their powers is great, so too is the enhanced responsibility expected from them as rulers and administrators. As a check on their selfish inclinations, Qur’an instructs leaders to govern through Shura or consultation with the wise and the experienced and also with those who will be affected by their actions.

An old Muslim folk saying has it that “The most fearsome beast on earth is a ‘Khalifa’ (ruler) who does not remember that he is also an “Abdullah” (servant of God)”.

National development as well requires effort, assumption of responsibility and determined application of human ingenuity. “Verily, never will Allah change the condition of a people until they change it themselves (with their own souls).” (13/Al Ra’d, 11) Under the principles of Islam Hadhari, national development is a special kind of personal struggle or Jihad to benefit from God’s manifold blessings. Peoples as well as individuals and leaders are called by God to make something good of themselves.

Islam Hadhari consists of 10 main principles for action:

1) Faith in Allah and piety

2) A just and trustworthy government

3) A free and independent people

4) A vigorous pursuit and mastery of knowledge

5) A balanced and comprehensive economic development

6) A good quality of life for the people

7) The protection of the rights of minority groups and women

8) Cultural and moral integrity

9) Safeguarding of natural resources and the environment

10) Strong defense capabilities

These principles, it might be noted, would not be inappropriate as the platform for an American political party.

The first principle of faith in God and piety in personal deportment actually embraces important goals of many prominent American founders like George Washington and Benjamin Franklin. The principle resonates as well in the character of Abraham Lincoln and can be heard in the words of his Second Inaugural Address. The remaining nine principles have been the bread and butter of American democracy since George Washington subscribed to them in his First Inaugural Address. Thus I see no impediment to a close collaboration between the United States and Islam Hadhari.

What is there to fear from Islam Hadhari?

Closer cooperation between the United States and its allies in the War on Terror with the Islamic Ummah would not expose the United States to acquiescence in standards of bad government and human rights violations. Cooperation would be based on the aspirational principles of Islam Hadhari not on the past failures of many state regimes ruling over Muslim societies to live up to Qur’anic expectations.

Many shortcomings await remediation within the Muslim Ummah. For example, Malaysia’s Prime Minister Badawi believes that the sheer weight of the problems that confront the Muslim world today is tremendous. He admits that many Muslim countries have become synonymous with poverty, illiteracy and malnutrition. Some even stand out as a result of oppression, tyranny, and injustice. But this historical reality does not comply with Quranic standards he argues. Moral leadership is an essential prerequisite for a government that upholds Islamic principles and values, honesty and integrity, a passion for justice and a sense of fairness, a love of the people, especially the poor, and a willingness to listen to their grievances, and a readiness to seek counsel from the wise and the learned. The Prime Minister reminds all of us that these qualities were some of the attributes of leadership and good governance outlined by famous Islamic thinkers such as Al-Farabi, Al-Mawardi, Al-Ghazzali, and Ibn Khaldun.

It is because justice is to pivotal to good governance that concepts such as “equality before the law” and “the rule of law” were given so much importance in early Islamic jurisprudence. It is significant to note that more than 1,400 years ago the fourth Caliph, Ali ibn Abi Talib, declared that judges should be “above every kind of executive pressure or influence, fear or favor, intrigue or corruption.”

The political counsel that has virtue in the eyes of God is only that which enjoins charity, kindness and peace among men. (4/Al-Nisa 114). God, Qur’an tells us, does not love arrogant and boastful men. (4/Al-Nisa 36) “Do not transgress; God does not love the transgressors. Eat of the lawful and wholesome things which God has given you,” adds the Qur’an. (5 The Table 87) These are expectations of stewardship, not arbitrary dictates, that are reflected in the contemporary philosophy of Islam Hadhari.

This Islamic legal tradition of interpretation of Qur’anic guidance, called Shariah, is not an obstacle to just constitutionalism with check and balances, the Rule of Law, and stewardship of the people according to their wishes. The Shariah is more that a set of black letter laws. It is also a system of values, where the specific black letter rules are only manifestations of those overriding values. What is important for Muslims, therefore, is al-maqasid al-Shariah, or understanding the purposes and goals of Shariah, which are life, intellect, faith, property and progeny. Other scholars have added justice, human dignity, and even economic development (the call for Zakat or uplifting the poor so that they can become fully engaged members of the Ummah). The science of al-maqasid al-Shariah allows Muslims to focus on a more fundamental notion of religion, freeing members of the Ummah from excessive literalism and legalisms.

Islam Hadhari is a guide towards constitutional democracy for Muslim societies. Follow it and responsible government is found. Like George Washington and Abraham Lincoln, Islam Hadhari looks upon public office as a public trust.

The Qur’an says: “Allah doth command you to render back your trusts to those to whom they are due; and when ye judge between man and man, that ye judge with justice.” (4/

Al-Nisa, 58)

A program for Islamic Economic Development

Central to a possible partnership between the United States and the Muslim Ummah would be American support for institutions of Islamic Banking.

Only five out of the 57 Muslim-majority countries are deemed to have high human development by the UN Development Program. Twenty four more countries are in the medium-development category and twenty eight, or roughly half the Muslim world, are classified as having low human development.

Only five countries in the Muslim world enjoy a GDP per capita above US$10,000. Thirty Muslim countries have a GDP per capita of les than US$1,000. In one third of Muslim countries more than half the population lives on US$2 a day.

Promoting robust economic development is a must for Muslim nations. Not only private sector financial houses but the World Bank should open Islamic Banking windows. This is actually starting to happen with international financial markets buying Sukhut bonds that abide by Qur’anic concerns for excessive power in the hands of creditors. American leadership promoting Islamic Banking would bring about more rapid economic development in Muslim communities and would show the Ummah respect for its values and traditions on the part of the greatest Western superpower. It would be a quid-pro-quo for the Ummah to work closely with the United States in achieving global peace and justice.

Qur’an forbids certain debtor-creditor contracts out of concern for abuse of power that such contracts place in the hands of creditors. These contracts place too much risk on the debtor. Qur’an requires more mutuality in the allocation of risk in business ventures. The Qur’anic injunction is against riba, or loans where fixed interest is charged and the creditor can obtain return of the principal amount lent out of any of the debtor’s possessions, regardless of the circumstances. Debtors who encounter bad luck or unexpected losses caused by forces beyond their control nevertheless must shoulder all the risk of such misfortunes. There is a resulting lack of balance with their creditors that upsets Qur’anic principles of equity and fair opportunity to succeed in life.

Islamic Banking starts from the premise that creditors must accept some share of entrepreneurial risk. Such legal arrangements have been a commonplace in Western law since Roman times. They are hardly unusual or strange. Nor are they religious in origin. In the more familiar terms of western contracts, Islamic Banking can be understood as resting on joint venture contracts or partnerships. The allocation of profit and loss is shared between the partners.

Islamic Banking instituted on a global basis would attract the savings of millions of Muslims. It would also provide acceptable forms of capital investment in new enterprises in Muslim societies, leading to the growth of entrepreneurial middle classes throughout the Ummah from Nigeria to Kazakhstan.

Large scale use of Islamic Banking would finally bring modern forms of private sector led economic development into Muslims societies helping them achieve parity with other nations in reaping the benefits of the industrial and post-industrial revolutions in production and wealth-creation. It also justifies in my mind the opening of an Islamic Banking window by the World Bank. In that way it could attract new capital from Muslim economies and contribute to higher levels of productive investment in Muslim societies. Islamic Banking blends rational economic considerations with Qur’anic piety in very constructive ways.

Conclusion:

There is a better way than the current War on Terror for the world community to confront and eliminate those who justify their criminal acts of violence with quotations from the Qur’an. It is to engage the world-wide Muslim Ummah in a program of renovation and renewal based soundly on Qur’anic principles of amanah.

what makes for leadership?

Well, in the United States, Super Tuesday is over. The primaries and caucuses in 22 states have brought forward the people's preferences for president.

This year, more than most I believe, the candidates are presenting themselves as models of leadership styles. Leadership, not policies, is of concern to the people.

Hillary Clinton is the candidate of effective, insider power; she will be "ready on day one."

Barack Obama is the candidate of vision, hope, inclusion, inspiration, rising about race and partisanship to be American in the best sense of the term.

John McCain is the warrior - tough, determined, relentless, "take the hill", "get the job done."

Mitt Romney is the manager - deliberate, builder of administrative teams and employer of experts, not flashy but steady.

Mike Huckabee is the candidate of faith - inspired by his God to serve God's purposes on earth.

So what is leadership?

What do people want? That is one thing. What they deserve might be something else.

In democratic politics, we often deserve better than we get.

What we get reflects the trials and tribulations of our passions, our selfishness, our fears, the shallowness of our institutions and cultural conventions.

The Caux Round table, I think, recognizes these limitations in leadership and administration - both in business and government. That is why we advocate certain principles: we want aspriations for the better to penetrate into our actions - both individual and collective and so lead to better outcomes from private and public descision-making.

Our core observation is that good leadership comes from knowing acceptance of trust responsibilities - of stewardship.

Here in Bangkok, His Majesty yesterday on Feb 6th accepted a new cabinet to govern Thailand.

In his remarks to the new Prime Minister and Ministers, His Majesty said from the point of view of a thoughful Theravada Buddhist monarch that words must be matched with actions and deeds.

"Words," His Majesty said "are honorable if they are matched by action because if you speak without doing, your words will carry no honor."

The proof of the pudding is in the eating.

Leadership is accepting personal responsibility for results and then seeking to obtain results.

"The buck stops here" said American President Harry Truman.

Corporate social responsibility, business ethics, public service, are all in the doing, not the talking.