by Amelia Peterson
In recent weeks, the press in England (or Britain) has been full of stories of the fallout from a startling revelation: At various points over the past five years, Barclays bank has been fiddling with the LIBOR rate. LIBOR, or the London interbank lending rate, (in theory) reflects the interest rate banks are charged when they borrow from each other. The rate is set by banks all self-reporting the charge they have had to pay in recent weeks. However, the rate then goes on to influence the short term interest rate for loans all around the world, so it is of some import that it be an accurate estimate.The scandal is idiomatic of most cases of corporate wrongdoing: it is unclear who should be deemed ‘responsible’. As is usually the case in Britain, the CEO, in this case Bob Diamond, has left. Most commentators appear to have favour this ‘buck stops at the top’ approach.
A more diffuse picture of responsibility appears in comments that this scandal is yet another sign that the ‘culture’ of financial services must change. I fully acknowledge the power of norms, but I wonder if the LIBOR case is not an important opportunity to highlight individual responsibility throughout an organisation. In the Financial Services Authority report of the case, the individual traders, managers and rate submitters whose e-mails evidence the action are referred to only by letters of the alphabet. Yet it is these individuals who should be facing questions from MPs. In his session, Bob Diamond could claim repeatedly, ‘I did not know’, and the MPs could press him no further. But the traders and submitters would have had to provide some answer for their actions, some account of what they were thinking and why they did it.
Ultimately, this scandal came about at the level of individual decisions. We may trace those decisions back to wider factors about industry norms and incentives but further missteps will only be avoided if in the future an individual bank worker steps back and thinks: I do have another option here; and if I choose to participate in a fraud, I will be and should be held fully culpable.
So far I’ve described only one particular model of responsibility– one where we are responsible for what we directly cause. There are other understandings of responsibility. Journalist Deborah Orr here describes Bob Diamond and Barclays as symptomatic of a private sector that, on the one hand, calls for small government but, on the other, does not take ‘responsibility’ for meeting society’s needs. This view presents a picture where we all share in responsibility for a good society. Likewise a current series of articles on ‘sustainable business’ asks about the limits of corporations’ responsibility, posing the question in terms of environmental concerns. This is responsibility as taking heed of the long-term view and ‘doing your bit’ to help us get there.
We would do well to endorse as broad a conception of responsibility as possible, but there is also a liability in the above approaches. In defining responsibility too widely, companies can pick and choose which areas they will take a stand on, and which they will quietly shirk. ‘Corporate social responsibility’ is often mocked as a cover for greater sins, and sometimes this stance seems warranted. Barclays had a very comprehensive CSR policy under the banner of ‘citizenship’. By some comparative measures it was doing well with regards volunteering hours and environmental impact. But this strand of corporate citizenship cannot discount wrongdoing in another domain – its primary domain, its professional core – that has caused unnecessary losses in the wider society.
A lack of clarity about our spheres of responsibility makes it harder to ascertain when someone has been negligent. In a modern world where individual decisions can have complex—sometimes worldwide– impacts, it is increasingly difficult to decide what we should hold each other accountable for. This makes it easier to take actions which, if we were forced to account for, might be hard to justify. Dan Ariely’s recently published The Honest Truth About Dishonesty offers a comprehensive take on our capacity for self-deception and the extent to which dishonesty is rationalized away at the personal level. There is an interesting side consideration here about the impact of bringing all these tendencies to our attention: I always wonder whether the behavioral psychology of ‘irrationality’ only gives us another tool with which to placate our conscience – it’s okay, everybody suffers from ethical fading. As Ariely has explained in press interviews, the response to this heightened awareness must be to put more effort into reminding ourselves of moral responsibility.
To be responsible has two sets of connotations: on the one hand responsibility is a burden, a weight that we bear more or less reluctantly. Yet on the other it is a mark of adulthood. To be responsible is to be mature, trusted. It may be that foreseeing the consequences of our actions in the modern, complex world is in many cases beyond our cognitive powers. If, to use a phrase of psychologst Robert Kegan’s, we are ‘in over our heads’, how should we think about responsibility?
To start with, we must think differently about risk when others would lose from a bad outcome. Secondly, lack of foresight can no longer be a blanket excuse: the default must be that organisations are responsible for indirect as well as direct effects. Lastly, as far as possible specific individuals should held accountable for the outcomes of specifically theiractions. As we understand more and more about our behavior as social animals, we hold onto the notion of individual responsibility by a thread. We cannot afford to lose it—indeed we must strengthen this fiber and make it a seamless part of our working lives.