Happy Anniversary fellow prostitutes3 January 2019
It’s 2019, which seems innocuous enough—not a prime number, not even a leap year (i.e., divisible by 3 but not 4). In actual fact, however, 2019 is a banner year: the 25th anniversary of the declaration that we are all prostitutes. I refer to the publication in 1994 of the pivotal article “The Nature of Man”, by Michael Jensen and William Meckling, in the Journal of Applied Corporate Finance. Here is a story they told:
George Bernard Shaw, the famous playwright and social thinker, reportedly once claimed that while on an ocean voyage he asked a celebrated actress on deck one evening whether she would be willing to sleep with him for a million dollars. She was agreeable. He followed with a counterproposal: “What about ten dollars?” “What do you think I am?” she responded indignantly. He replied, “We’ve already established that—now we’re just haggling over price.”
Cute. Not so cute is the declaration that follows: “Like it or not, individuals are willing to sacrifice a little of almost anything we care to name, even reputation or morality, for a sufficiently large quantity of other desired things…” In other words, deep in our souls, or in the absence of them, we are all prostitutes.
Jensen and Meckling used the term “Shareholder Value” in the article, which has everything to do with maximizing personal wealth and nothing to do with enhancing human values. (Notice their use of the term “large quantity”. These two professors were trained in economics, a field that teaches a lot more about quantities than qualities. Oscar Wilde wrote about a cynic as ''a man who knows the price of everything and the value of nothing.'')
Shareholder Value went on to become a celebrated orthodoxy, at least in stock markets, executive suites, and business schools. Jensen himself went on to the Harvard Business School, to teach his value of Value to many of the future captains of business, in what became the most popular elective course in the place. Many of these captains, however, went on to fail. Excessive Value and inadequate values?
A prostitute can be defined as anyone who sells a cherished resource indiscriminately. Thus, a poor woman who sells her body to feed a starving child is not a prostitute, whereas a rich celebrity who sells his reputation by endorsing a product he cares nothing about is a prostitute. And so too are the beneficiaries of Shareholder Value who have enabled pharmaceutical companies to set prices so that sick people die for want of medicines that could be affordable, and suitably profitable, likewise the university professors who take research grants from such companies to do their bidding. Prostitution is running rampant in this world of Sodom and Gomorrah.
There are many decent professors at the Harvard Business School now singing the praises of corporate social responsibility (CSR), just as there are many decent executives in corporations pursuing it. Even Jensen has since offered his share of mea culpa, much as Jack Welch, the exalted CEO of General Electric who championed Shareholder Value, later called it “the dumbest idea in the world.” (What does that make you Jack?) Too late, the damage was done, and continues: corporate social irresponsibility (CSI) runs rampant too. As Tom Lehrer sang in his off-color song about the republicans in the Spanish Civil War: “Though [Franco] may have won all the battles, we had all the good songs.”
Enough of the songs; it’s time for action. How about making 2019 the year that we throw off the yoke of Shareholder Value, for the sake of human values?