Satyam chairman Raju’s crime and the Times’ reaction

About a couple of weeks back, I had a very interesting conversation with a friend (and former classmate). The converstion started off with him telling another friend that “a day will come when you will look for a meaning, a larger purpose in your job/life”. I enquired what he meant by a larger purpose and the conversation moved to self-interest and sacrifice. By the end of the discussion his position was that sacrifice should not be the guiding principle in normal life but that it may be necessary in certain (rare) situations. I claimed that pro-sacrifice and anti-selfishness principles are the dominant ethical principles today, to the exclusion of everything else and this has severe consequences in our lives, as these principles provide no guidance (at best) in normal life and actually create an undeserved sense of guilt if accepted. He responded that he did not believe that the pro-sacrifice ethical principles had many far reaching consequences. Since we were running out of time at this point, I said that I would provide evidence for my claim. Here is the first piece of evidence. This post seeks to show how prevalent the “selfishness is evil” theme is in the culture at large.

In its leading frontpage article on friday, The Times of India asks

Did Raju Pick Lesser Of 2 Crimes?
He Said He Inflated Figures, But Did He Divert Money?

… Raju said that in the second quarter (July-Sept) of 2008, Satyam showed an operating margin of Rs 649 crore (which was 24% of revenue) when it was actually only Rs 61 crore (that’s 3% of revenue). This, he indicated, was part of a fudging exercise over years to inflate profits—presumably to keep the stock price up and the magic of Satyam alive.
Essentially, what Raju confessed to was creative accounting—showing cash where none was generated and therefore did not exist. But, as he kept emphasizing, he did not profit personally from it. Still a crime, but not top of the pops in order of heinousness.

It’s a crime to show money in the books where none existed, which is what Raju said he did. But it’s a worse crime to divert money that actually did exist. 

Note the assertion that Raju’s crime would be less heinous if he did not profit personally from it. I do not know if this is true as per the Indian penal code. It is the moral angle that is more interesting. Consider the two possibilities.

1) What Raju wrote is true – that Satyam really was making very small profits (compared to the IT industry norms) and Raju inflated the books to keep the company going.

2) Satyam was making normal profits and Raju siphoned them off.

In both cases, Raju betrayed the responsibility he had as the company founder and board chairman. In both cases, he defrauded the shareholders. The difference in the two cases is that the motive in the first case is somewhat less personal than the second. So what does the Times’s assertion mean? It could mean one of two things:

a) Self-interest (personal profit in this case) is bad in itself.

b) Self-interest is amoral (neither good nor bad) but concern with other people’s interests (a larger purpose) is good.

I am sure that the pragmatist Times would hold that there is nothing wrong with personal profit if it is obtained by honest means. Its position on the issue (if it ever took the trouble of taking a definite position at all) would essentially be something like:

Selfishness is (regrettably) part of human nature and it is impractical to oppose it consistently. However it needs to be restrained in favor of a larger purpose (the common good).

So the Times assertion essentially means b. Now consider what that implies. It implies that the supposed “larger purpose” (keeping Satyam going in this case) can be a mitigating factor in the moral judgement of Raju’s actions. If things had gone a little differently and Raju had said that he fudged accounts after considering the delicate position of the global economy, the troubles his employees would face if Satyam were to shut down etc, etc…, the Times would find it difficult to take a unequivocal moral stand. After all it routinely justifies and calls for fudging the national accounts – by imposing fuel prices, interest rates, lending rates, printing money and a host of other such actions – on precisely such grounds.

Holding self-interest as amoral results in moral paralysis. One can no longer say that fraud is wrong irrespective of the motives behind it. All that is needed to justify it is some sufficiently “larger” purpose. And since everyone has a different “larger” purpose, a different “shared” vision for how other people should live – purposes such as Maharashtra for Marathis or India for Hindus or universal health care or universal education or the rule of Islam or saving the planet – anything goes.

Altruism, Pragmatism and Moral Relativism

Man is faced with choices in every conscious moment. To make these choices, he needs a code of ethics – a morality. For his choices to be successful, his moral code must be based on the facts of reality (including his own nature). Properly, a code of ethics must be derived from the nature of existence and the nature of man (man has specific requirements for survival and has free will and the abilty to reason) with reference to an ultimate purpose. This is the motivation for studying philosophy. One must discover the nature of existence – existents have a specific identity and behave in accordance with it. This is the task of metaphysics. One must acquire knowledge of the world (including of man’s nature). To ensure that the knowledge is accurate, one must validate it. This is the task of epistemology.

The dominant morality today is that of altruism. Here is the dictionary meaning.
1 : unselfish regard for or devotion to the welfare of others
2 : behavior by an animal that is not beneficial to or may be harmful to itself but that benefits others of its species

Altruism is a code that has “the welfare of others” as its ultimate purpose (note meaning 1 above) and sacrifice as its guiding principle (note meaning 2 above).

What altruism does by defining sacrifice as the guiding principle need not be elaborated here. The consequences are painfully apparent. By defining the ultimate purpose to be the welfare of others, altruism destroys the motivation to study philosophy. Without an explicit understanding of the nature of existence and the nature of knowledge, man is left in chronic doubt. He cannot be sure of what he knows or even whether he actually knows anything at all. Nevertheless, he knows that he has to make choices. He knows that he is not equipped to make them. What does he do? He adopts the principle “Do not decide any issue beyond the range of the moment”. He decides that he will only consider immediate concretes. He decides to reject principles on principle. This is how altruism leads to pragmatism.

Having rejected principles, man is left with no means to judge others. By considering concretes, he can still judge individual actions or situations to a limited extent. But he cannot judge others. Their motives and the long term consequences of their actions are not concretes. They can only be considered with reference to principles. Thus he adopts the principle “Do not judge people”. He decides that the concepts ‘good’ and ‘evil’ are neither absolute nor objective, but only have meaning in the range of the moment. This is how altruism leads to moral relativism.

Added on 29 April 2008 (In response to Scott Hughes’ comment):

Most religions prescribe altruistic ethical rules as absolutes, as a revelation from God. However those absolutes are of little help in the application of ethics to most real-life issues. Look at the Ten Commandments. How would they apply in formulating (or even evaluating) a company’s policy regarding employee benefits? Altruism has “the welfare of others” as its ultimate purpose. But what is this welfare? Altruism does not answer that. Without an explicit understanding of the nature of existence and the nature of knowledge, man is left with subjective (and inconsistent) emotions as the only means to an answer.

%d bloggers like this: