I got to know Bernie Madoff through his service to Yeshiva University’s Sy Syms School of Business. Until news of the scandal broke, he served as chairman of our board. I, and other faculty members, worked closely with him on an academic committee, meeting frequently at his now-infamous Midtown office.
He is charming, soft-spoken and fatherly. Like the old E.F. Hutton commercials, when Bernie spoke, people listened. As he presumably did for many others, he provided us with charismatic leadership and a strong sense of security and optimism. There was little doubt when Bernie Madoff was in the room about who was the decision-maker.
Now, of course, the money is gone, the charisma has evaporated and, instead of security and optimism, there is fear, uncertainty and concern about the future.
Personally, I begin to wonder, does my work teaching business ethics even matter? Can an academic course on business ethics really stop a would-be Bernie Madoff? Not likely.
Bernie Madoff stole gigantic sums of money, but perhaps more importantly he has diminished society’s stock of social capital. In a single stroke, the revelation of his actions has made it more difficult for us to trust one another. He has loosened the taken-for-granted connections that bind us together and robbed us of some of our faith and hope in the future. If yesterday, some of us were naïve idealists, today we are all hard-headed realists. And that is a shame.
But, of course, we all know that Bernie Madoff was not acting alone. He had many enablers. There are those who invested other people’s money with him and did not engage in the due diligence their position of responsibility required. There were likely others who invested with him suspecting that all was not kosher but assuming that he was earning real profits with inside information or by front-running.
Perhaps the biggest enabler though is the prevailing ethos of the business world. We live in a world that has become increasingly oriented toward a bottom-line mentality. Ours is a culture of money first. In every business school I know of, we teach our students to maximize profits. Good enough is never enough.
Our Jewish communities, which once honored rabbis and scholars, now almost exclusively honor those with the biggest bank accounts. Our students and children surely take note of this.
Bernie Madoff should be punished for his wrong-doing, but we simply fool ourselves if we think that jailing Madoff will solve the deeper problem of which he is just the most recent symptom.
With every crisis, however, comes a new opportunity. We need to stop looking for mechanical solutions to our ethics failures and start discussing more meaningful ones. We face a defining moment. We can go back and try to do what we were doing before, only better, or we can move forward and critically reconsider our goals and priorities. This demands not only a change in actions but a change in consciousness, as well.
I suggest that in business we replace profit-maximization with sustainability. We should supplement traditional financial statements with triple bottom-line statements that measure social and environmental performance in addition to economic performance. The latter should stress long-term success and not just short-term profitability. The Jewish tradition, a 3,000-year-old and ongoing project, has much to contribute to this discussion.
Further, I suggest we challenge those who separate completely business and economic affairs from the rest of life. I suggest we resurrect and reinvigorate the biblical vision of combining earning a livelihood and acting in a just and caring way. The institutions of the jubilee and sabbatical years have much to teach us today if we give up on a literal interpretation of the Torah text and seek to understand the egalitarian spirit and caring ethos underlying these ideas. The mitzvah of loving the stranger takes on an added dimension and urgency in a global economy and interconnected world.
We should stop looking for outsized heroes and begin to participate in lively ethical dialogue with one another. The Torah speaks of brit, or covenant, in nearly every one of its books. We need to re-imagine the meaning of covenant — a shared agreement among equal partners — and demand that it speak appropriately to a pluralistic and postmodern world.
I will continue to teach business ethics but I have learned through recent events that this is only a tiny part of a much larger job. Unless we all become informal ethics teachers, none of us will get where we want to go.
Moses L. Pava is the Alvin Einbender Professor of Business Ethics at the Sy Syms School of Business. He is the author of “Business Ethics: A Jewish Perspective” (Ktav, 1997), “Leading with Meaning: Using Covenantal Leadership to Build a Better Organization” (Palgrave Macmillan, 2003) and the forthcoming “Jewish Ethics as Dialogue,” due out from Palgrave Macmillan in 2009.