Sustainable Management Futures - Essay Example

The same was the case in 2007 when banks started providing home mortgage loans while knowing that the borrowers were not eligible or qualified – a major fact that was ignored so that the bank may later charge huge fees and seize the possession of property in case the customer is unable to pay off mortgage and can be termed a debtor. Previous example of similar frauds came on the surface in early 2000 also with Enron, Tyco and WorldCom being the players for stuffing their top management with millions of dollars and ripping the shareholders wealth down by billions.

This is exactly what David Cameron declares regarding the current system. Though both the parties more or less stay firm on their stands for generating wealth and profits for the country to make it withstand the upcoming crisis, but the difference prevails relating to the actions and strategies for overcoming such issues that requires shaking the core. Primarily, the objective here should be to hit the basics. Adam Smith, the father of capitalism, had certain ethical values over which the philosophy of the free economy system is standing.

In his first book, The Theory of Moral Sentiments, he postulated that keeping the self-interest exposed to moral justice based on justice and fair policy, the resultant would be in the best interest of the society, while the invisible hand playing its part in the background. But solely what is missing in decision making process of the current scenario is the absence of ethical decision making. What needs to be kept in the loop is the following set of important questions while making strategic decisions, spanning decades to come and potentially affecting millions of people: 1.

What are the rights of the stakeholders and shareholders? 2. What are the obligations, defined and undefined both, of CEO and the board towards these parties? 3. In certain cases, how, the top management walking away with millions of bucks, in the best interest of the shareholders? Despite of both parties claiming to have measures taken in the past and also presenting their future convictions in terms of regulations and plans for the modification of the free economic system, not much has been there to discuss as success for overcoming the downside of the system which is more than just that.

The system’s nature calls for the urgency of departing from the uncontrolled, so called, self-dealing for society’s good. The terms ‘prodigals’ and ‘projectors’ were given by Smith to promoters of excessive risk. The terms may be best illustrated by credit swap insurance promoters and those of mortgages in the recent years. Yet government regulations may only provide a short term survival in this high tide scenario. The financial reengineering requires for more creative attempts towards its designing for favourable outcomes in favour of greater number.

COMMON CRITICISMS This can be argued that greed may not have been in Smith’s mind while framing the word ‘Sentiments’ for his book. The bottom line is that ethical behaviour is not something that can be legislated. Possessing the desire of doing the right for the society and not acting as per self-interests is what comes from within. Following are few criticisms that remain valid since the inception of this system, yet remain unanswered and not catered to a good extent. Power and coercion: Selfish materialism: The free market system encourages this phenomenon in the sense that it marks no