The economic and political arguments for the market principle over alternative forms of economic organization are to my mind irrefutable. It is on the moral level that the perplexing concerns about capitalism center, concerns that have been raised from the beginnings of the industrial era down to the present time.1 This essay focuses on one major aspect of the ongoing moral test of capitalism: the test of whether our major corporations can both succeed in their profit-making efforts and also serve as one of society's chief mediating structures that stand, like family, church and community, between the individual and the state. Should the corporation serve not simply as a utilitarian arrangement for the efficient production of high quality goods and services, but also as a moral community that shapes human character and behavior?

James Q. Wilson, professor of management at UCLA, has no doubt about the answer. In an article last year, he said: "The problem of imbuing large-scale enterprise with a decent moral life is fundamental." Corporations' are systems of human action that cannot for long command the loyalty of their members if their standards of collective action are materially lower than those of their individual members.þ Capitalists should recognize, he concluded, "that, while free markets will ruthlessly eliminate inefficient firms, the moral sentiments of man will only gradually and uncertainly penalize immoral ones. But, while the quick destruction of inefficient corporations threatens only individual firms, the slow anger at immoral ones threatens capitalism, and thus freedom itself."2

For Wilson, then, the compelling reason for corporations and their leaders to behave morally is to evoke the trust and loyalty of their employees and the respect of the larger society, all to the end of ensuring the long-term viability of the enterprise and ultimately of capitalism and democracy. I agree that these prudential concerns are important, but my starting point is quite different. I start from a normative perspective that is embedded in both Judeo-Christian and classical Greek traditions. According to those traditions, morality imposes requirements that take precedence over all other modes of guiding conduct. These requirements are central to any conception of the good life and the good society. Thus, this world is about soulcraft, and our economic and political arrangements should be judged by the qualities of character they tend to produce or help sustain.

The job of making a living and supporting a family constitutes the very matrix of the moral life. "Man's life is built up every day from work, from work it derives its specific dignity."3 The workplace at its best is a school for education in virtue and community. In this light, the highest calling of the entrepreneurial steward of the enterprise is to create and sustain a work place in which its employees can flourish. They are enabled to flourish as they are guided by the end of providing the customer with top quality goods and services in a cost-effective manner, as each worker contributes to this end in cooperation with others and develops his or her skills and grows in responsibility, as they see how their respective parts relate to the whole process, as they come to value their friendships and conversations in the workplace, and as they share in the success of the enterprise.

It is from this normative perspective that I will address the question whether the corporation should and can function as a moral community. I will do so in the context of two developments which have taken place, side by side, over the last fifteen years or so and which I will describe in some detail. The first development concerns the efforts of corporations, in both the manufacturing and service sectors, to bring about a participatory work place in which the dignity of the workers is more fully recognized.

Ten years ago, a committee of United States Catholic Bishops issued a report entitled "Economic Justice for All: Catholic Social Teaching and the U.S. Economy." The report called "for imaginative new forms of cooperation and partnership among those whose daily work is the source of the prosperity and justice of the nation." It urged business leaders"to develop new patterns of partnership among those working in individual firms and industries." Much was made in the report of the obstacles in the way of such partnerships. For example, it noted the impact of advancing technology in downgrading and displacing workers; and the adverse effects on U.S. employees of imports of materials and products from foreign countries with low wage structures. Toward the end, the report referred to the legal dilemma of managers in being forced to give excessive weight to stockholder profits and inadequate weight to the stakes of employees and local communities.

At the time the report was issued, I was working at General Motors and was responsible for industrial relations and salaried personnel, among other things. It was sad to reflect on the long history of conflict between management and labor and the effects of the deeply held convictions of both sides that there is a basic conflict between success in the market place and human values in the workplace. As Karl Marx and others observed early on, when workers are reduced to the status of a means and their propensity toward purpose is denied except for the extrinsic goal of wage, no amount of material wage can redress this deep wrong to their personalities, and no amount of leisure in which to spend the wage can atone for the harm done them by their daily alienation. but not quite.

The Bishop's Letter was issued at a time when it appeared the tide was beginning to turn. The GM-Toyota joint venture had been in operation for over a year. We had learned a lot about the Toyota production system.4 We learned, first of all, that a highly centralized autocratic management style undermines quality and productivity because the masses of employees rightly sense that their feelings, insights, and suggestions are not considered, even in respect to decisions of utmost relevance to their work lives: the design of the production system and their particular work stations. Accordingly, managers tap only a fraction of the employeesþ potential for quality workmanship, innovation, and productivity.

In order to tap into much more of that potential, we learned that a radical change in management philosophy and style was required. Management began to solicit pertinent input from the persons most affected by its decisions. Management also began to delegate decision-making to the appropriate levels. The new style involved the concept of the team consisting of a half dozen or more members and a team leader. Each team was responsible for suggesting continuous improvements in both product and process. As these teams assumed more responsibility, unnecessary layers of middle management were eliminated. The new lean production system also meant that suppliers must deliver inventory just in time, that suppliers who fell below certain quality standards would lose out, and that the best suppliers would become strategic partners of the manufacturer in devising ways to improve the product. Finally, the Toyota system of empowering the workers was accompanied by a high degree of employment security.

Thus, we were forced to learn from a non-Western culture some rather basic truths as they apply to the workplace. The ideas behind the Toyota system, translated into the language of the Western religious and ethical traditions, are simple and yet profound. First, each employee of the enterprise has gifts and talents that are complementary to those of other employees. The wealth-creating power of the corporation depends on the recognition of that complementarity. Second, while there are necessarily different levels of authority and responsibility in the enterprise, we are all equal as human beings, and our spiritual ends far transcend the narrow commercial purposes of the corporation. Accordingly, respect for all persons is fundamental. Third, while there may often be a tension between these human values and our legitimate business purposes, there is no basic conflict. More often than not, the two are mutually reinforcing.

The improvement in the competitiveness of American manufacturing during the 1980s was due in very large part to the widening application of these principles, and this development served to reaffirm the notion that the business corporation best serves its stockholders and customers by creating a moral community in which employees can develop their talents for individual achievement and team cooperation.

Despite this encouraging development, I have become less optimistic in recent years about the prospects for soulcraft in the workplace. The reasons for my concern arise out of a second development that has been taking place in the corporate world. Before I describe that development, though, I must paint the larger backdrop. The late British economist, Fred Hirsch, observed in the mid 1970s that the market's exaltation of self- interest and the invisible hand was undermining the moral and communal values that are its own essential underpinnings. "As individual behavior has been increasingly directed to individual advantage, habits and instincts based on communal attitudes and objectives have lost out. The weakening of traditional social values has made predominantly capitalist economies more difficult to manage."5

Last year, journalist-philosopher George Will wrote an editorial urging us all to go out and join a bowling league. He was inspired to give this sermon after reading an article entitled "Bowling Alone: America's Declining Social Capital." It was written for a scholarly publication by Robert Putnam, professor of international affairs at Harvard University.6 The title certainly gets oneþs attention. The fact is that people bowl more than ever before, but they do it alone. Bowling leagues are much less common than they once were. This seemingly trivial statistic is symbolic of what has been happening to America. The networks of civic and social engagement, the little platoons of society as Edmund Burke called them, are in declining health. Yet they powerfully shape character by fostering sturdy norms of generalized reciprocity and by enhancing social trust.

For much of this century, market societies were able to rely on the well-springs of what Adam Smith called our natural sympathy for our fellow human beings and on the impartial spectator that resides within our breasts and holds us in check. Did Adam Smith appreciate that these virtues of fellow feeling and self-restraint were the legacy of a pre-market age and that they require continuing nurture that can only be provided by non-market, mediating institutions such as home, school, church and corporation? I don't know, but I do know that the character-forming power of these other institutions over the last few decades has been a poor match for the countervailing power of the market to privatize all of life and exacerbate our most selfish tendencies.

How did this culture of self interest get so out of hand?7 Some say that the primacy of technical, instrumental reason has eclipsed our higher ends. Others hold that the Western individualist tradition, dating back to Locke, is inherently unstable and that the notion of self-determining freedom, pushed to its logical limit, tips over into the most extreme forms of anthropocentrism. Still others would cite the movement of women into the labor force and their reduced time for community involvement; the uprooting effects of residential mobility; urban spatial patterns that entail the distancing of land uses and reduced opportunities for neighborliness; and the privatization of our leisure time as a result of television, the computer and other technologies. To this list I would add more generally the marketþs exaltation of "What's in it for me?"8

What does the decline of social capital and the culture of self interest have to do with the soulcraft perspective and the possibilities of the corporate manager as steward of a moral community? Bear with me as I now turn to the second development in order to make this link.

Today, our society's devotion to the motivational power of economic self interest is so complete that we continually devise creative new ways for using market-like incentives to induce managers out of self interest to do for the stockholder benefit things that they could not be expected to do merely by virtue of their moral dispositions and convictions as fiduciaries.

One of these powerful new devices in the 1980s was the junk bond leveraged, bust-up, forcible takeover. In 1989, Michael Jensen, professor at Harvard Business School, wrote an article entitled "The Eclipse of the Public Corporation."9 In the article he basically argued that the days of the public corporation were numbered. As he put it," the idea that outside directors with little or no equity stake in the company could effectively monitor and discipline the managers who selected them has proven hollow at best." Only the junk bond leveraged buyout could provide the accountability and the strong incentives that were required.

The corporate governance movement was well under way by then, and over the next few years it led to greatly improved levels of board monitoring of executive performance, the very kind of board monitoring that Jensen thought impossible. Behind this movement was the newly demonstrated clout of some huge public pension funds which held large chunks of the voting stock of the major corporations and which were demanding more accountability from boards of directors.

Whether by takeover from outside the firm or by board-initiated shake-up from within, it was the dawning of a new era of the brutally efficient manager, driven by performance-based compensation programs. Actually the rapid growth in such programs --cash and stock bonuses, stock options, stock appreciation rights, phantom stock options-- had been under way for some time. In 1985 Arch Patton, retired director of McKinsey & Company, Inc. and a pioneer authority on executive compensation, wrote an article entitled, "Those million-dollar-a-year executives."10 In the article he expressed moral indignation over the excessive salaries, bonuses and stock options given to the CEOs of the top 100 companies. Thirty-two such persons had each received total income in 1983 in excess of $1 million, a three-fold increase from a decade earlier. His article appeared 11 years ago, so perhaps I should bring you up to date. In 1994, a group of 292 executives of large corporations averaged $3.7 million in total income, 187 times as much as the average worker.11 In the mid- 1970s that multiple was about 35. Think of it. CEO pay, as a multiple of average worker pay, has increased by over five times in just 20 years!

There has been much in the media of late about the growing gap between rich and poor. This is not the forum in which to address the adverse effects of growing inequality on the social fabric. Suffice it to say that the radical increase in executive pay, together with the multiplier effects of that increase throughout the world of professional firms, has been a chief contributor to this larger societal concern.

It proxy season, and the business press does its yearly exposes on "executive greed." Last time around, the conjunction of harsh corporate downsizings and multi-million dollar bonuses and stock option gains has provided new grist for the journalistic mill. Many large corporations have shed themselves of tens of thousands of employees, closed numbers of plants, and disposed of losing operations, all to the worthy ends of regaining global competitiveness and enhancing stockholder value. This phenomenon, which got under way in the late 1980s, has continued at an accelerating pace into the mid-1990s. Two months ago, the New York Times devoted a week-long series of articles to the economic and psychological devastation that has been inflicted on "downsized" middle class families across America.12

The same Michael Jensen who scoffed in 1989 at the notion of a public corporation that could face the tough issues, has had to reverse his position in this regard, thanks to the corporate governance reforms of the last few years. In a recent op-ed piece13 he extolled such leaders as Robert Allen, the CEO of AT&T, for their courage in laying off tens of thousands of employees. Admittedly, he said, "today's economic dislocations are wreaking havoc on the national psyche. But they are also the source of a wonderfully optimistic future. . . The Third Industrial Revolution that began in 1973 promises increased productivity, large reductions in the world-wide inequality of wealth, and substantial increases in world-wide living standards."

True, there is some short-term pain for Western workers as a consequence of the world-wide move to market-oriented economic systems. "[T]heir real wages are likely to continue their sluggish growth and some will fall dramatically over two or three decades, perhaps as much as 50% in some sectors. Wages will, however, reach a trough and recover as the cycle works its way through the system. . . . There is no way to completely eliminate the private pain that comes from this adjustment. We all wish it were different, but without the private pain, most people will not change."

He admitted that inequality has risen, but not to worry. This same pattern manifested itself in the 19th century. Yet, after only a few decades real wages began to increase in the 20th century. We have to be patient and avoid mushy talk about stakeholder capitalism or any concept of a kinder, gentler corporation taking increased social responsibility. We must not slow down the process of creative destruction even though these are dangerous times and even though the severe dislocations threaten to undermine the stability of societies and governments around the world. We must hang tough, he said.

There is good reason, as Jensen argues, to believe that much or most of this painful downsizing has been unavoidable, mainly because so many managements became fat, dumb and happy over the 30 or 40 year period of post World War II stability and prosperity when American business reigned supreme around the globe and the increasing costs of bloated work forces and over-capacity could be passed on to the customer. Many if not most of the takeovers in the 1980s succeeded because managements and boards had been asleep at the switch. Bureaucratic cultures had undermined efficiency and management agility and had weakened management's focus on the customer. Length of service had become the primary criterion for promotion and pay increases, and the ranks of middle management had swollen under a philosophy of cradle-to-grave job security.

That was before the emergence of global markets, the explosion in computer and communications technology, and lean production systems. By reason of these developments, the large corporation was brought to a critical juncture in the 1980s. Could it provide an entrepreneurial environment, or was it the fate of the large corporation to witness the steady migration of the nation's best talent to private firms where the untrammeled market is allowed to carry out its distilling and refining process and where this talent need not live in goldfish bowls? If so, large corporations would become lifeless, leaderless bureaucracies, controlled by mediocre executives who must depend on outside consultants for the making of complex decisions.

In this context, it is not surprising that business and professional firms came to pay ever greater premiums for professionals who demonstrate high degrees of agility, resourcefulness and judgment. Investment bankers, management consultants and law firms greatly intensified their efforts over this period to recruit the best and the brightest, and at a mind-boggling rate of increase in starting salaries. Over the same period, we also witnessed a burgeoning of venture capital firms which hold out to their executives the prospect of substantial capital gains. As a consequence, large corporations have faced formidable competition in recruiting, grooming, and retaining the most able people for top positions.

Does this mean that the explosion in CEO pay over the last two decades, and particularly the last five years, is fully justified or at least explained by the market factors that I have just outlined. I donþt think so. We have made the market something of a scapegoat. Graef Crystal, well known compensation expert, likes to point out that inasmuch as the best CEOs in Japan and Europe make only a fraction of what top CEOs in America are paid, there cannot be a genuine market in CEOs as there is in the rest of the workforce. Why not? Very simple. The board of directors of the U.S. corporation selects the top executives and sets their pay, and their decisions are not based on some market pricing mechanism for CEOs.

Arch Patton, in the 1985 article I mentioned earlier, had a different explanation for the run-up in CEO pay, one that has nothing to do with the market. Patton saw a pervasive lack of integrity--too much coziness and mutual protectiveness--among directors, executives and outside consultants. He also argued that self interest and personal greed had replaced the virtues of company loyalty and internal promotion. This trend had been greatly aided, he said, by recruiters and compensation consultants who knew the wisdom of deferring to management's wishes. It is only recently that compensation committees have begun to hire the outside compensation consultant and make it clear that it is the committee, not the CEO, to whom the consultant reports. Perhaps if there were less coziness, we might be able to develop real pay-for- performance packages for CEOs. We have been told that the point of stock option plans, under which most of the big money is made, is to provide the CEOs with strong incentives to maximize stockholder wealth. But if this is the purpose, and if we want CEOs to behave as if they were large stockholders, why donþt we require them to be at risk as the stockholders are? Why donþt we see more plans that facilitate and require a CEOþs ownership of stock in his company in an amount that constitutes the major portion of his total assets? As Warren Buffett has said, the problem with CEO pay is that there are too many carrots and too few sticks.

That is one problem: the one-way street. Another problem with the use of stock options is that the CEO and other top executives can reap huge gains even when the stock of the company has increased in value by only a fraction of the amount of increase in the S&P 500. The value of stock options often has much more to do with the vagaries of the stock market than with executive performance. We have not begun to see the kind of ingenuity that would truly induce corporate managers to think like large stockholders.

These problems pale by comparison to a third defect in so-called pay-for-performance programs. That is the short-term focus of these programs. And yet, as we well know, the most important decisions made by a CEO --those that will have the greatest long- term effect on stockholder wealth-- are those pertaining, first of all, to strategies for building on the competitive strengths of the company and adjusting to changing conditions, and second, to the selection and orchestration of the key executives for working with the CEO in designing those strategies and then mobilizing the entire workforce to implement them. This being his mission, the benefit or cost to stockholders of his efforts cannot usually be known except as they play out over a period of years.

There are many ways in which this problem can be addressed. For example, the top executives of a company might receive the bulk of their incentive compensation and stock awards in the form of grants made every three years or so. None of the benefits, whether cash or stock, would vest until some years after grant. Then in the ensuing few years, the amount of the payout would depend on how well the company performed in the interim in terms of return on capital or some such measure, or how well its stock performed in relation to some relevant standard such as the S&P index or some group of peer company stocks. In the closing years of the manager's career, the value of his incentive awards would come to depend more on the corporation's performance in the few years after his retirement. Under such a scheme, the executives would be better motivated to take those actions that create long term wealth for the stockholders and to avoid the kind of short-term cost reduction efforts and corporate dismemberments that improve current profits, and thereby maximize their short-term oriented bonuses, but that may cripple the companyþs long-term wealth generating powers.

Yet, even if we did all the right tinkering with incentive compensation arrangements, there would remain the issue of whether the CEO pay level is so out of fair proportion to the pay of the average company employee as to undermine the possibilities of a productive, participative workplace and also whether that level is so out of proportion to what schoolteachers and others in the larger society earn as to undermine public respect for the corporation and for the economic institutions of capitalism in general.14

Let's pause for a moment. I said at the outset that I wished to inquire into the prospects of the corporation as a moral community and that I would address this question in the light of two developments. I first sketched the development respecting notions of employee community and the resulting enhancement of worker productivity, product quality, and customer satisfaction. Before turning to the second development in the corporate world, I focused your attention on some larger cultural forces that have tended to undermine the prospects for community of any kind. This was the necessary backdrop for the second development I then described: namely, the emergence of the market for corporate control, strong financial incentives for aligning the economic self interest of management with the larger stockholder interest, and the evolution of corporate governance mechanisms for holding managers and boards of directors more accountable to stockholders.

These means that we have employed to induce the stewards of our corporate enterprises to maximize stockholder value have provided the intended impetus for management to break up old bureaucratic cultures and eliminate waste. But what happens after that transitional mission has been largely accomplished? Will the same executives then be able to take on the enduring strategic challenges to management of anticipating emerging technologies and changing consumer demand? Will they be able to build a top team and an entire work force of great talent and having an esprit de corps?

Or do corporate managers tend to change as they take on the role of "rationalizing" the corporate assets and slashing "headcount" (as the work force has come to be referred to by the rationalizing manager) and as economic incentives drive out moral incentives? Do they tend to lose whatever virtues and strengths of character might have qualified them to serve as leaders of a community of employees and build an organization based on mutual trust?

To answer these questions, we must now return to the theme of my opening comments about the soulcraft perspective, a perspective common to both the Greek tradition and the Judeo-Christian tradition. Aristotle said that virtue derives from the development of good habits. If he is right, and I think he is, then it should not be surprising that a corporate manager shaped for his entire career primarily by self-interest incentives would have little power to inspire a high level of social cooperation. Fifty years ago, the great economist and curmudgeon, Joseph Schumpeter, said in effect that corporate managers are anti-heroic and have no charisma; that their habits of life are not of the kind that develop personal fascination and sustain group feeling. Theyþve been taught all their careers, as well as in business school, to keep their nose to the grindstone and their eye on current profits. Accordingly, said Schumpeter, outside the office the business executive is often unable to say boo to a goose.15

It would be sad indeed if we as a society have come to the point where the role of the professional corporate manager is merely to maximize stockholder wealth and if this role provides him with an excuse for abdicating from his other role as steward of a moral community. Arthur Applebaum, professor at Harvard's Kennedy School of Government, recently wrote an article entitled, "Professional Detachment: The Executioner of Paris."16 In the article he uses as an extreme example of detached professionalism the imaginary defense of the actions, attitudes, and behavior of the Executioner of Paris, Charles-Henri Sanson, who served with great skill and "professionalism" all the regimes from the monarchy to the most extreme elements of the Revolution in the years before, through, and after the French Revolution. The essence of Applebaum's theme is captured in the concluding words of his article: "Left on our table are a number of claims Sanson has made in defense of his professional role that deserve closer attention. . . . Sanson's arguments do not look all that different from the arguments offered by lawyers, business executives, politicians, bureaucrats, journalists, and soldiers to justify their commitments to their professional roles when these roles ask them to act in ways that, if not for the role, would be wrong. If versions of these arguments do indeed justify the moral permissions to harm others that are claimed by these professions, why do they not work for Sanson? And if we are sure they do not work for Sanson, should we not reconsider whether they work to justify less sanguinary professional roles?"

Applebaum says that role is the moral concept central to a proper understanding of a profession. The unsettling question for the professional is whether he has permitted his role to be defined by the culture or the competition17 in such a way that his excellent performance of that role is harmful to some larger public as well as to his own soul. This moral dilemma extends far beyond the modern business corporation. The corporate executive is a "professional" who views his accountability to stockholders in much the same way as Sanson views his accountability to the social order or as lawyers view their responsibility for the zealous representation of the client.

I happen to be a lawyer, and I must confess that I am not very happy about what has happened to my own profession in recent decades. To quote Professor Barry Schwartz, a professor of psychology at Swarthmore College: "The law and lawyers provide us with an inescapable model of how one lives a life. And itþs a model from which notions of justice and responsibility are conspicuously absent. Itþs a model that tells us to seek and press every advantage we can over potential adversaries, and to assume that they are doing the same. As a result, itþs a model for the disintegration of the person and the social fabric. . ."18

The same could be said about business managers who make the maximization of stockholder wealth their sole reason for being. We have created a set of conditions in which the employeesþ capacity for trust is at a very low ebb. They have been given a strong message over the last several years that their corporation competes in a harsh environment; that their jobs are insecure; and that they had better remain on the alert for ways to make themselves marketable outside the corporation in which they have honed their skills for twenty years or more.

And so I return to the question I posed at the outset of this lecture. That is whether the corporation ought to serve not merely as a profit-making enterprise for its stockholders but also as a moral community that shapes human character and behavior. The answer to this "ought" question from my perspective --what I have called the soulcraft perspective-- is a resounding yes. Nothing else matters very much if the work environment is such that people cannot thrive as moral human beings and aspire toward their higher spiritual ends. We have created the greatest economic engine the world has ever known. But what will it profit a society if we all become highly prosperous and lose our souls? As one just-retired chief executive officer of a major corporation recently told me, "It used to be fun. It was deeply satisfying to be an agent for sustaining a community of highly motivated employees. Now, it's as if the CEO, so isolated by his pay packages and his "rationalizing activity," is himself Marx's ultimate alienated man. The cash nexus between the executive and his work appears to be all that is left."

We are at a crossroads in corporate America. We must rediscover the power of a turned-on community of employees led by a new kind of corporate manager who is motivated much less by money and much more by pride of product and by the joy of unleashing the employees' talents and energies and tapping their potential for personal growth and team cooperation.

"Ought" implies "can." One cannot be morally obligated to perform the impossible. How then do we begin to work our way out of the present dilemma? Part of the answer lies in refashioning economic incentives along the lines I earlier suggested so as to bring about a longer term perspective on the part of the manager. By reinforcing the long-term perspective, the executives would tend to place much more emphasis on the need to build relationships of mutual trust with employees, customers, and suppliers. They would also begin to see the wisdom of building unity of purpose among employees at all levels of the company through aspirational programs to define the shared values that guide both management and the work force, through common profit sharing plans, and by other means. These are among the preconditions to corporate-wide human productivity over the long term.

Second, boards of directors will have to rule out as candidates for top corporate positions those executives who are preoccupied with their own pay and that think of employees as "headcount". Rather they will need to identify candidates who not only are highly competent but who also have a spiritual inner strength and set of convictions that preclude a narrow, egoistic view of the world. Without this kind of anchor, I just donþt think that a top executive will have the vision and fidelity and caring to build a great organization.

Yes, economic incentives are important, but they are no substitute for character. Nor can they substitute for moral discernment. I wonder how many boards of directors, when considering a rich compensation package for the CEO, or a very sizeable downsizing of the workforce, undertake a morally sensitive process of deliberation. Such a process might entail, for example, an inquiry into whether some or all of the employees should be offered a chance to stay on the job at reduced pay, perhaps combined with an opportunity for stock ownership, and whether large executive bonuses should be paid out simultaneously with a sharp downsizing of the work force. After all, the need for radical downsizings often arises as a result of many years of inattention to belt tightening and the failure to utilize attrition and selective pruning, year in and year out, and the board should consider whether current management was partly responsible for those years of neglect. Even if it was not, there are other considerations such as the likely consequences in terms of organizational morale and public reputation.

I submit that this kind of process is not only right. It is also prudent. As employees come to understand that their board reaches decisions as to executive compensation and corporate downsizings only after due consideration of the alternatives and after carefully weighing the economic and moral implications of these alternatives, they will be much more likely to accept the Board's decisions and respect the leadership of their corporation.

Will we find our way out of the present dilemma? Well, I see some hopeful signs. One is that after all the downsizing and rationalizing efforts have been put mostly behind us and the dust has settled, competitive pressures will once again drive boards to choose managers who know how to build the greatest competitive advantage a company can have: a highly motivated, highly skilled, highly productive cadre of employees who care about the customer. Also, there are signs that public pension funds are becoming more interested in the corporation as an intergenerational partnership for the creation of jobs and wealth. They are strategically positioned to perform an important role by once again prodding boards of directors, this time over matters that contribute to, or detract from, the building of such a competitive advantage.

Finally, there is evidence that many talented young adults, now in their 20s and early 30s, are profoundly distrustful, if not cynical, about our political and economic institutions and their leaders. These young people are the inheritors of an age of diminished expectations. This legacy was bequeathed to them by older generations who made out quite well, partly by mortgaging the future of their children and grandchildren. These young people do not see the opportunities, on anything like the scale the baby-boomers saw, to work their way up a reliable corporate ladder. Many, out of distrust, are opting to own and operate their own firms where, as they put it, they will at least have some control over their future. Others, out of disillusionment, are looking for careers that are more purposeful, though less remunerative. So, in a strange way, this distrustful young generation may force the brutally efficient manager to face up to the costly consequences of mistrust.19

While there are these hopeful signs that the pendulum may swing, I am all too aware of how bad things usually have to get before a critical mass of leaders muster the courage to do anything about the kind of dilemma I have described. We are all so comfortable. Why get personally involved? Why speak out and stir the pot? The silence of the good people, said Augustine, was the reason for the calamities that had befallen the Rome of his time:

"Where can we readily find a man who has the courage to hold accountable those persons on account of whose pride, luxury, and avarice God now smites the earth? For often we wickedly blind ourselves to occasions of teaching and admonishing, because we fear to lose good friendships, lest this should injure us in some worldly matter which either our covetous disposition desires to obtain or our weakness shrinks from losing."20

Saddest of all is the thought, which I pray is not true, that any appeal to peopleþs moral sense is likely to fall on deaf ears because our culture of economic individualism has already robbed them of that sense.

That is the point of these lines from one of T. S. Eliot's "Choruses from The Rock":

What life have you if you have not life together? There is no life that is not in community, And no community not lived in praise of God.

And now you live dispersed on ribbon roads, And no man knows or cares who is his neighbour Unless his neighbour makes too much disturbance.

And the wind shall say: "Here were decent godless people: Their only monument the asphalt road And a thousand lost golf balls."

Can you keep the City that the Lord keeps not with you? A thousand policemen directing the traffic Cannot tell you why you come or where you go.

When the Stranger says: "What is the meaning of this city? Do you huddle close together because you love each other?" What will you answer? "We all dwell together To make money from each other?" or "This is a community?"

And the Stranger will depart and return to the desert. O my soul, be prepared for the coming of the Stranger, Be prepared for him who knows how to ask questions.