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In post-Covid world, growth of business must not be at expense of societal well-being

The lockdowns following COVID-19 have caused many people to introspect about the purposes of their lives, and the purposes of the enterprises they serve. It has also provided an opportunity to reset the course of economies.

Written by Arun Maira |
Updated: June 26, 2020 9:36:40 am
coronavirus, covid cases, covid economy, post covid economy, coronavirus effect on job market, coronavirus on employment, indian express The fundamental question seems to be, how much qualifies as sufficient private gain while providing a public service? (File Photo)

COVID-19 has caused a healthcare crisis in India. Consequently, concerns about the ethics of the medical profession have arisen, with questions about the prices charged by hospitals for treatments, and by pharmaceutical companies for medicines.

The fundamental question seems to be, how much qualifies as sufficient private gain while providing a public service? This question will arise whenever any industry becomes attractive for investors, who want their investees to run their enterprise as a “business” rather than as a public service.

Doctors who prescribe tests and medicines that patients do not really need to increase the revenues of hospitals and sales of pharmaceutical companies (and improve their own bonuses) are placing the needs of business owners above those of the public they serve. The same applies to other industries: Professional journalists become less professional when the news media becomes a business, and they are pressed by the owners of the business to produce what sells — to attract eyeballs and increase TRPs and advertising revenues. They lose sight of the purpose of professional journalism, which requires the diligent uncovering of truths.

Three eminent social psychologists saw the crises in professions brewing in the 1990s with the accelerating advance of businesses into the domain of public goods. In their book, Good Work—When Excellence and Ethics Meet, Howard Gardner, Mihaly Csikszentmihalyi and William Damon, write: “We have no fundamental quarrel with the operations of the market in economic spheres; we recognise the positive role that markets can play, for example in competition among publications or pharmaceutical companies… But not all spheres of life are best run on a market model. Many professional spheres — medicine, science, education, art — ought not to operate in the same way as commercial enterprises do, in the way suggested by the Adam Smith-Friedrich von Hayek-Milton Friedman view of the marketplace. Medicine requires financial prudence, but the purpose of the profession should not be to achieve the greatest profit for shareholders of a health maintenance organisation. Nor should legal protection, educational opportunities, and other vital human needs and privileges simply be allocated to the highest bidder. In the words of the French prime minister, Lionel Jospin, ‘We are not against market-based economy, but market-based society’”.

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The COVID-19 crisis has revealed many weaknesses in economies and societies. Healthcare systems in most countries have not been able to cope with the pandemic: The crisis was too large and too sudden. However, countries with stronger public health systems, such as Vietnam, for example, seemed to have managed far better than those with large, and very well-equipped, private health systems, such as the USA. Countries with universal social safety nets, like the Scandinavian countries, Japan, South Korea and Germany, seem to be managing the effects of the economic breakdown on the poorer sections of their populations much better than the countries without universal social security, like India.

COVID-19 has revealed the deep fissures in economics, between the school of economics that has dominated public policy across the world since the 1980s — the “free market” school that the authors of Good Work refer to — and another school which said that the needs of human beings must trump the needs of business in economic policy, and not the other way around. The profession of economics must be reoriented. Societal (and environmental) well-being must be the goal of economic policies, not the size of the GDP. Citizens’ “ease of living” must become more important than “ease of doing business”. No doubt, the health of businesses and the economy is good for the health of a society. However, the growth of businesses and the economy must not be allowed to harm societal and environmental well-being.

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All professional institutions including businesses, are built on three fundamental structures, according to the authors of Good Work — mission, standards, and identity. Mission is the purpose of the institution in society. A healthcare institution’s purpose is to improve the health of all citizens; and a news institution’s purpose is to reveal the truth to society. In contrast, a business institution’s purpose can be a very selfish one, of producing wealth for its investors, especially when it is run on the principle that “the business of business must be only business”, which has become the dominant view since the 1990s.

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Professionals are expected to maintain high standards in their work and in their conduct, such as the Hippocratic Oath that all the medical professionals swear to. The standards can be voluntarily determined and applied by the professionals themselves, as accounting firms do — or are supposed to. Otherwise, they must be imposed on them by the public they claim to serve through government regulations.

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Identity, according to these psychologists, comprises of a person’s own values and traits, adding up to “a person’s deeply felt convictions about who she is, and what matters most to her existence as a worker, citizen, and a human being”.

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The lockdowns following COVID-19 have caused many people to introspect about the purposes of their lives, and the purposes of the enterprises they serve. It has also provided an opportunity to reset the course of economies. Business associations, and those who lead them, should use this crisis to determine how they must reform their associations to not merely lobby for the ease of doing business, and how they will regulate the conduct of their members. Or else, business will have to be regulated more firmly by the government for increasing citizens’ ease of living.

This article first appeared in the print edition on June 26, 2020 under the title ‘First, ease of living’. Maira, former member of the Planning Commission, is author of Reforming Capitalism: Improving the World for Everyone

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First published on: 26-06-2020 at 03:04:46 am
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