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How bad times make for good conduct

James Bailey
James R. Bailey is the Tucker Professor of Leadership and chair of the Department of Management at the School of Business, George Washington University.

The FBI recently reported a precipitous decline in 2009 crime rates. Last year's 5 percent drop extends a trend that corresponds almost exactly with the current recession. Criminologists and sociologists are mystified; this just shouldn't happen. Why not? Much of social science has embraced the same assumption that economists make--that bad times make for bad conduct. But this assumption is as flawed when interpreting crime patterns as it is broader social ones, especially when it comes to the corporate world.

Conventional wisdom holds that during tough stretches such as the feeble, disheartening economic climate that's gripping the nation, the lines between right and wrong blur. Reliably decent people, whether on the street or in the boardroom, find the compromising conditions in which they live sufficient justification to bend the rules, to find grey hues in colors otherwise refracted as black and white, and to excuse their own transgressions as externally driven. No reproach of personal character is evoked when one acts as the necessity demands. "It's not my fault," one might protest. "I'd lose my job if I didn't do it!" Or, "Come on, others are getting their fair share, why not me?"

This line of reasoning is a chief product of several hundreds of years of economic theory that has been absorbed into the public consciousness. From Adam Smith through David Ricardo, Thomas Malthus, John Stuart Mill, and, recently, Milton Freeman, economists interested in big issues like the allocation of national resources have had to make assumptions about what motivates average folk. The answer? Self-interest.

It's perfectly reasonable to suspect self-interest is an undeniable human quality. Anyone who's raised children knows that no matter how nurturing and generous the environment, kids are self-centered little seeds way before life's lessons have hardened them. And there is, to be sure, truth to this egocentric picture of human nature. But it doesn't nearly explain the whole story.

Economics predicts that in good times, self-interest is satisfied and thus more charitable, civilized behavior trumps baser instinct. The full creature gives the hungry one a turn at the trough. There's no reason to commit a crime when one's life is sated, right? It's a nice thought, but it doesn't square with recent history.

The two decades of economic prosperity prior to 2007 are examples of how good times don't always make for good conduct. At the zenith of America's success, neither Wall Street nor the Capitol seemed overly concerned with the ethical minutiae that, when woven together, describes the character of a society. It's most often the little things that, in the midst of plenty, seem like small ethical potatoes. The accounting of the market value of an asset as a profit on a balance sheet, or the creation of financial products from derivatives--whether appropriate or not--is cast as acceptable when the sun shines. It's natural to think of oneself as an invulnerable master of the universe when all goes according to plan. It's easy to excuse personally beneficial lapses when the overall tide lifts. It's convenient to dismiss another's failure as incompetence when one's own star is rising.

So when do humans become humane? Even a casual read suggests that we are most ennobled when most disadvantaged. Strength triggers arrogance, which leads to belief in a just world where those who've fallen deserve their fate. They are the inept or cowardly products of a simple Darwinian equation. In contrast, weakness triggers vulnerability, which leads to a belief that anyone can fall prey to life's vicissitudes. Here sympathy, not superiority, is evoked.

The armies of the unemployed in Detroit, New York and elsewhere have a pristine empathy for their own and others' fragility. This is not a class or a religious allegiance but a psychological one. The fate of laid-off lawyers, financiers, consultants and managers is directly equivalent to that of skilled laborers that find their life's circumstances inconsolably discombobulated. Misfortune, or the prospect thereof, is life's great equalizer.

Psychology, not economics, provides a more compelling explanation for how we come to grips with tumultuous times. When times are stable and munificent, we humans erect intellectual and emotional structures that allow us to revel in the conviction that we are in control of our lives and thus not susceptible to fortune's foul winds.

But when, as inevitably happens, the hard rain falls, these structures are punctured. They no longer protect or prevent awareness of our vulnerability. It is at these moments and in these times that empathy is most heightened. The chastening reminds us that life is unpredictable and unfair, which in turn gentles our attributions of others. The result is that benevolence bests bestiality.

The reality or prospect of hard times breeds compassion and connection, not coldness and correction. When the tectonic plates of life shift underfoot they are accompanied by an equally powerful psychological shift. The recognition of our own vulnerability casts the vulnerability of others into sharp relief, which in turn triggers sympathy and a renewed appreciation of "there but by grace go I." In today's recessionary times, there's every reason to believe that munificent conduct will rule the day.

By James R. Bailey

 |  October 11, 2010; 4:07 PM ET |  Category:  Crisis leadership , Economic crisis Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Challenging a long-held and widely embraced view of human behavior, Bailey offers a provocative alternative that I find persuasive and well argued. Let's hear more from him.

Posted by: margoth1963 | October 23, 2010 12:23 PM

Dr. Bailey presents a thought provoking analysis that has a certain face validity. I wonder if there is a way to enhance or even instill the sense of basic equality that those who have suffered hard times have that those who haven't don't.

Posted by: UncleJohn | October 19, 2010 7:19 PM

In the short term it would appear the Dr. Bailey’s theory holds true. The question that I posit is; for how long does this remain true? If the hard rain continues to fall I feel that self-interest would again take over and the short term benevolence becomes a fight for shelter.
“There but by the grace of God go I” becomes; there but by the grace of I go I.

Posted by: jjcii | October 19, 2010 4:08 PM

I do think there is something to Professor Bailey's analysis. I have taught ethics courses in business schools for about 25 years now and there is a noticeable difference between a set of students whose life history has clearly been continually winning versus those who have had their noses bloodied (even if they themselves tend to be successful 90% of the time). The never-lose folks do tend to be noticeably less empathic (at least in my classes) than the ones who have been stabbed in the back a couple of times. Whether thay plays out the same way in all parts of life, as raised by some of the other commentors, is an interesting question that would be worth knowing more about, but I do think Professor Bailey has the right idea on the vulnerability-empathy tie.

Posted by: Phud1 | October 18, 2010 11:59 AM

Excellent article...compelling commentary on the state of our society. I agree completely that the power of psychology for explaining patterns of behavior is far greater than economics. Just one reason that the field of behavioral finance is making great advances toward explaining financial behavior (e.g., investing) which is quite often irrational.

Posted by: nielsen14 | October 18, 2010 11:50 AM

This is an interesting analysis: bad times creates more empathy. I wonder if you could say more about how this does or does not translate into actual aid for others. I note for example how this morning's paper talked about the sharp drop in charitable giving. And surely the public's response to tax policy has become increasingly heated and agitated: keep your hands off what is mine. (Why are Wall Streeters so unbelievably angry at the public's response to their windfall?) So reading this great post, I wonder whether we act and behave more ethically in bad times in all things but our economic transactions. Would like to hear more on this subject and more from this commentator.

Posted by: mercerreader | October 18, 2010 11:14 AM

Compelling piece -- isn't this all ultimately driven by self-interest though? Compassion and altruism are both self-motivated, no? In those contexts, it seems the yearning to "do good" is motivated by the yearning to feel good.

Posted by: ccmanning3 | October 18, 2010 11:09 AM


Posted by: dx13 | October 12, 2010 11:54 PM

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