The Invisible Hand is Covered in Blood - When Moral Decay Yields Returns

Is Conscience Becoming Expensive?

Growing up, we may have seen a particular statistic stating that 21% of senior leaders exhibit significant levels of psychopathic traits (Brooks, 2016). It is a public secret that the market can be brutal, filled with backstabbing, ruthless work hours, and some would call it toxic. Maybe we’ve even experienced it or heard about it from someone else describing a hypercompetitive, ruthless, and demanding environment, and thought to ourselves, “This is lowkey dehumanizing!” Or worse, we heard it from the news where the most soulless and depraved people, like the people on the Epstein list, seem to be favoured by the system and are financially successful.

We are taught to be a ‘good and successful person’ in our lives, but as we grew older and got more exposure to the corporate world, the truth seems to ‘enlighten’ us with the truth that more often than not, being virtuous and successful in the corporate world is all about finding the balance to compromise one of them, and the higher the position in the corporate world, conscience seems to be ‘expensive’. This pattern seems to make us question ourselves, “Are they simply lucky? Or their non-existing morals simply fit the system?” As we search for the truth, it leans towards the latter. Another question arises, “Is the system built for the most evil and depraved people? Why?” Some people try to explain this phenomenon through the lens of behavioural economics, game theory, and psychology. And surprisingly, the answer seems to be embedded in human nature and how we as a species corrupted a seemingly ‘neutral system’.

When Human Nature Corrupts

We must realize that the system itself is built around the presumption that the agents (stakeholders) and the system are voluntary, meaning that they have a ‘choice’ to be in the industry and can freely enter or exit it. With that, it can be concluded that the system itself is made to be morally neutral. However, as Thomas Hobbes once described the aggressive, selfish state of human nature with four words, homo homini lupus est,  or as we know it now, “man is a wolf to man”, referencing Titus Maccius Plautus, a Roman Playwright who coined the phrase, he seemingly captures perfectly how the natural egotistical, competitive, and potentially destructive human nature set the tone of the rest of the corporate system.

The main driving force of the system is the competitive nature of humans. This nature tends to make rivals, a subset of competition characterized by heightened psychological stakes, which is defined as a relationship between actors in which the subjective importance of competitive outcomes is elevated by virtue of the prior history between them (Deutsch, 1949; Porter, 1980). Kilduff, G.J., Galinsky, etc. wrote about this phenomenon, hypothesizing that rivalry will produce greater unethical behavior than non-rival competition. In its findings, the paper provides evidence that the mere presence of competition lowers the threshold for ethical boundaries, which elevates unethical behaviour even in unrelated domains, with the reasoning of the subjective importance of winning. These effects are distinctly psychological, rather than an economically rational effect. When speaking about his company’s primary rival, Oracle CEO Larry Ellison said, “I want them on their knees. Begging for mercy, pleading for their Lives. Confessing every sin. Kill! Kill! Kill!”

Andrei Shleifer, an American economist, argued that ethical behaviour acts as a ‘normal good’, something actors value and are willing to pay for, but declines as income falls. When profit margin and prices fall, and competition seems to become more prosperous, the need for ethical practice also seems to decline (child labor, corruption, etc), and this results in setting the tone for the practice throughout the market. Ironically, this helps explain the unethical and evil practice of people who manage billions of dollars and have income well over the millions, far beyond what the average person needs, putting themselves in the elite of the elite, and only solidifying how the greedy and competitive human tendency seems to corrupt a ‘neutral’ system.

While all these explanations may seem ‘incomplete’ in explaining the incomprehensible evil in the industry, if we reflect on ourselves, we experience it daily through the phenomenon known as ‘loss aversion’, a cognitive bias where the pain of losing is about twice as intense as the pleasure of winning an equivalent. Confirming the argument that critics have long argued that bad instincts and desires are more powerful than good ones. We as humans hate to fail, and try our best not to fall into it, and from that fear, we chase pleasure all our lives, a concept known as ‘pig philosophy’, which may also help us understand how our tendencies corrupt a seemingly neutral system.

A Moral Loophole

In their book, Babiak and Hare (2006) argued that the corporate system rewards antisocial tendencies, sometimes even actively looking for them, misinterpreting those behaviours such as impulsivity, domination, and a ‘backhanded’ charisma, as good leadership characteristics. While we now know that the systems are very competitive, those misinterpretations and the concept known as moral neutralization help us understand agents within the system who try to justify their immoral actions.

Moral neutralization is a psychological mechanism where individuals try to justify, rationalize, or minimize immoral or unethical behavior to relieve guilt and align actions with their internal values. There are three foundational assumptions underlying standard organizational ethics programs. First, the belief that ethical training is enough to equip leaders and employees for moral dilemmas. Second, the assumption that persons of strong moral character will reliably behave ethically under pressure. Third, that codes of conduct sufficiently protect organizations from internal wrongdoings. Kvalnes, in his book, argues that even if an organization satisfies all three conditions, they are still vulnerable to moral wrongdoings, because these assumptions collectively neglect the role of social circumstances, incentive structures, and collective justification in corruptive decision-making.

We may have heard the phrase, “It's nothing personal, just strictly business.”, this phrase helps an individual temporarily suspend their ethical standards to justify wrongdoing, which they actively deny their responsibility, claiming that there are forces beyond one’s control (order from superiors, market imperatives), denying injury, denying their victims, and condemning people who condemns them (anti-critics). Their moral neutralization is also based on the belief that this has been the norm for their peers or competition, where low ethical thresholds are the cost of doing ‘business’. Shleifer also helps to explain how this happened indirectly using game theory, where a single firm’s adoption of unethical cost-reducing practices (bribery, corruption, child labor) gives an incentive to competition to either follow the same practice or face elimination, directly falling into the logic of a prisoner’s dilemma. In it, each actor would collectively be better off if all refrained from the unethical practice, yet each faces a dominant individual incentive to break from the ‘promise’ of not doing immoral practices because it is far more profitable if they do so, producing a Nash equilibrium where every actor chooses to do deceptive play. This belief, combined with the greedy nature of humans, creates a vicious cycle where some economists argue that, over time, the moral standards in the market will be worse.

A moral utilitarian view also has been used to justify depraved action, acting upon a false ‘greater purpose’ where many businesspeople say that they are making job opportunities for people who needs while realizing that the mission involves using sweatshops and child labour. While all these ‘moral justification’ processes help us understand how depraved practice and reasoning behind the low moral standards, as we know them, are simply a false illusion and a way to not feel accountable for their actions.

Ultimately, the corruption of moral standards and how the system seems to reward the immoral isn’t accidental. It is the predictable output of systems built around competitive human tendency, false psychological justification, and structural incentives that reward defection over ethical restraint. The common competitive rivalry elevates the psychological stakes of winning to the point where ethical boundaries dissolve, even in domains unrelated to the original competition. In a place where ethics and morals are treated as a normal good, it is suddenly ‘low demand’ when the papers show red and forces actors into a prisoner's dilemma where the theoretically best decision is for all actors to leave their morals behind. People also rationalize their way into these actions through moral neutralization by denying responsibility, denying victims, and appealing to higher loyalties. While we can call them ‘psychopath’ or ‘monster’, we ourselves show signs of these irrational behaviours through bias, such as loss aversion. Combined with the corporate misreading of psychopathic traits as leadership virtues. The phrase "nothing personal, just business" became a justification for evil to prosper.

REFERENCES

Babiak, P., & Hare, R. D. (2006). Snakes in suits: When psychopaths go to work. HarperCollins.

Becker, Gary., & Landes, William., eds. (1974). Essays in the Economics of Crime and Punishment. NBER

Kilduff, G. J., Galinsky, A. D., Gallo, E., & Reade, J. J. (n.d.). Whatever it takes: Rivalry and unethical behavior. Unpublished manuscript. New York University; Columbia University; University of Cambridge; University of Birmingham.

Kvalnes, Ø. (2019). Moral reasoning at work: Rethinking ethics in organizations (2nd ed.). Palgrave Macmillan / Springer Nature. https://doi.org/10.1007/978-3-030-15191-1

Shleifer, A. (2004). Does competition destroy ethical behavior? American Economic Review, 94(2), 414–418.

Sykes, G. M., & Matza, D. (1957). Techniques of neutralization: A theory of delinquency. American Sociological Review, 22(6), 664–670.