Are Watchers essential to capitalism?

My personal trainer has taught me an important truth: Observation drives better behavior.

The more I am observed, he told me, the harder I exercise. I am more focused, consistent and committed. It is harder to cheat, I feel guilty not showing up, and actually feel compelled to exercise more strenuously.

This truth about observation, I believe, is as true for individuals as it is for corporations: Being observed may be the best solution to making corporations behave better.

I recently read an interview with Eliot Spitzer in Sunday New York Times magazine section (Sunday March 20th, 2011). The former New York Attorney CNN was asked if he gets angry when he meets those who exposed him for consorting with prostitutes. The reason, he says, that he does not get angry publicly against his accusers is “because there are too many people watching”. The implication — that he would if he could — is both illuminating as well as revealing of the personality that drove him to his excesses, both good and bad. That the public is watching constrains him; he is therefore forced, he feels, to behave better because he is being observed.

This reminded me of two excellent examples of reformed corporate behavior driven by public watchers. Kimberly-Clark was outed by Greenpeace as complicit in clear-cutting forests. And ForestEthics outed Victoria’s (dirty little) Secret – not using recycled or FSC-certified paper for its millions of catalogues.

Greenpeace orchestrated an agreement with Kimberly-Clark where they committed to no longer purchasing pulp from two forests in Northern Ontario (Kenogami and Ogoki Forests) until certain ecological criteria were met; in addition Kimberly-Clark agreed that 100% of the fibre used in its products will be from environmental responsible sources. These commitments came only after Greenpeace ran a stinging campaign against Kimberly-Clark – the Kleercut campaign – that ran for five years. The campaign involved convincing over 700 companies and 17 universities not to purchase Kimberly-Clark products, moving vans and logging trucks were made to look like Kleenex boxes, and there were several blockages of mills and Kimberly-Clark offices. The question remains – would Kimberly-Clark have shifted their behavior had it not been for the observations and extremely public outing?

ForestEthics, a San-Francisco-based environmental group, waged a provocative campaign against the lingerie company, Victoria’s Secret (parent Company The Limited) which is reported to mail out over 350 million catalogues a year. Victoria’s real secret was that these catalogues were printed on non-recycled, nor FSC-certified paper. ForestEthics’ objective was to get the company to use more recycled paper. Playing off the concept of “secret”, the campaign involved mini-protests in front of stores, and full-page ads in major newspapers, in a style similar to the catalogues.

Two NGOS doing the homework and reconnaissance, creating innovative social action campaigns drove two companies to change their behaviours.

Adam Smith had a watcher in his description of the emerging capitalist economy. He called it the “impartial spectator” – the voice that resides in all of us that tells us if our behaviours are good or bad. The impartial spectator exists because, as much as we love ourselves and are self-interested, we equally want to be loved by others. As Smith put it, we want the approbation of others, and that is the source of this internal spectator, or watcher, who guides us towards better behavior.

Be it out of fear of punishment, or the loss of love or respect, we behave better when others are observing us. Back to my trainer, yes I want him to think I am great; I also want to avoid the punishment, potentially even larger thighs. Which is why the NGO watchers are so vital.  Without them, there would be no public outing, no evidence-based criticism, no exposure of duplicity and disingenuineness. NGOs are our collective impartial spectators, watching the behaviours of corporations and, if not actually exposing corporate malfeasance, the fear of them driving better behaviours.

At the end of the First Book of The Wealth of Nations, Smith discusses the three levels of society: the landed classes, he says, because they do not have to worry about how they make their money (it is secured because of the land they owned; remember this was 1776), knew the public interest, or good. The problem, however, is that they do not understand how the new emerging capitalist economy works. So while they are trustworthy, they no longer have the right knowledge. The monied class absolutely understands how the new market system works, but they cannot be trusted because they are entirely self-interested, and have no vision of the public good. The laboring classes, have, again according to Smith in 1776, neither the knowledge nor time to consider the public good or how the market works; they spend their lives working to survive.

Much of this assessment continues to be true. If the recent financial collapse tells us anything it is that the “monied class” absolutely understands the system, but is not to be trusted to ensure the public good. And those of us who toil in the working class also know that while we may be inclined to strive for the public good, our daily concerns of mortgages, children, parents and community activities preclude us from pursuing the public good in any fulltime way.

In 2011 we no longer have a “landed class” that need not worry about their income, although one could argue that we have a few wealthy philanthropists who have devoted themselves to improving the world. Apart from this extremely select group, the heartbreaking difference between Adam Smith’s day and today is that there is no “class”, or group of people that sees the public good. And we need to be able to see it first in order to act on it.

We need people who watch out for the public interest. Even if they are extremists or fanatics, they provide an essential function to capitalism – they observe with an intensity and rigour that has the power to shine glaring lights on corporate behaviours.

We may object to the earnestness, and often extremism, of NGOs – just as the extreme enthusiasm and drive of my trainer often irritates me. One might also question their motives.

Driven by a combination of wanting to make the world a better place, wanting to expose corporations, and believing in the absolute rightness of their position, NGOs are tenacious zealots in seeking out behaviours they believe damage the public good. NGO watchers may not have a vision of the public good as Smith believed the landed classes did, but their hyper vigilance is essential to the survival of capitalism.

If corporations want to pre-empt the uncomfortable outings that are increasingly common, they might consider a new position – Chief Conscience Officer, a corporation’s impartial spectator.  Being observed may be the best solution to making corporations behave better. And a final thank-you to my trainer (who is far more than an enthusiastic “rep” counter) for suffering through the boredom of watching me sweat. You have made me fitter.