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Claudine Gay has resigned as president of Harvard University, my alma mater.

This resignation and the reasons for it carry implications for civilized living in our times.

What are the moral and ethical qualifications for greatness in college and university education?

I would say that for decades, the examples of Harvard and Oxford were models for our world community.  Everywhere, colleges and universities were funded and enhanced to measure up to Harvard and Oxford standards.

If Harvard falls victim to narrowmindedness and prejudice, then something unexpected and untoward has happened to all of us.

These past few days, when thinking of the president of Harvard succumbing to the temptations of plagiarism in her academic writings, I wondered where in the Caux Round Table articulation of ethical principles we might find a standard to apply to Harvard in these circumstances.

First, I considered the stakeholder theory driving the Caux Round Table Principles for Business.  Harvard University is a business.  It has capital assets.  It produces products to sell.  It has customers.  It markets its services and reputation.  It hires employees and seeks investments (donations).

But what guidance does stakeholder theory provide for the governing body of Harvard University, the members of the Harvard Corporation?

Who are the owners of the business that is Harvard University?  Only the members of the corporation?

Who are its customers – students or their parents?  Who has a stake in its products?  What are its products, by the way?  Just degrees for those who pay tuition?  Who should care about the impact of its graduates on the economy, culture, politics and economy of wherever they might live and work?  Why not society at large as a customer or a consumer of what Harvard puts out to the public?

But who supplies Harvard’s business enterprise with its necessary inputs?  Who is its supplier stakeholder?  Society.  Harvard needs students to work on them and so shape them as a refined product.  What does Harvard owe society, its supplier, in the work it does in shaping its graduates?

In this business model, suppliers of students – mostly parents – pay the company to take in what it needs to succeed in the market.  The price paid by parents varies from student to student depending on scholarships provided by Harvard.

What are the externalities – positive and negative – of what Harvard produces?  What about its influence on the production of symbolic goods, such as thoughts and values?

Does civilization have a stake in what Harvard does or does not accomplish?

I would argue that Harvard has many stakeholders and must be responsible for affirmatively and constructively responding to their interests and aspirations, a tough balancing act to be sure.

Harvard’s stakeholder responsibilities demand seeking equilibrium among values and interests, not giving in to satisfy narrow rent-seeking by any one or two particular stakeholder constituencies.

In the Caux Round Table Principles for Government, we propose that those who hold power in service to society – such as universities – hold a public office and so shoulder public trust responsibilities.  This demands putting to one side personal prerogatives and intolerances in order to open-mindedly serve those who will benefit from a fair and just exercise of power.  The burden of disclosing self-seeking rests with the self-seeker holding such an office.

Further, our principles for government demand full and robust discourse as the process supporting decision-making.  Censorship and cancel culture have no place in discourse, which seeks to expose the truth without giving in to fear or seeking favor from the high, the mighty and the rich.

Former U.S. Supreme Court Justice Louis Brandeis remarked that “If there be a time to expose through discussion the falsehood and fallacies, to avert the evil by the processes of education, the remedy to be applied is more speech, not enforced silence.”

In Harvard’s case, these norms of meeting trust responsibilities and seeking truth should have long since supplanted racist prejudices and discriminations in admissions, curricula and teaching and in promotion of employees like Claudine Gay.

In a similar vein, our ethical principles for civil society institutions (CSI) hold that:

Fundamental Principle

Integrity

The actions of a CSI – whether small or large, local or global – will be consistent with its core service aspirations.  Its leadership and staff will not use their positions for personal advantage of any kind, including inappropriate, personal financial gain.  Fidelity to their trust and due care in the execution of their mission are the hallmarks of responsible CSIs.

Derived Principles

Public Benefit

A CSI will recognize that it and all its actions and endeavors reflect the interests and values of the people who fund, organize, operate or in any way support the organization, as well as the social, cultural, political, economic and environmental interests that such people seek to serve.  A CSI serves privately selected, but publicly acknowledged goals and objectives of common benefit and idealistic inspiration.  A CSI should promote a wider cause than its own continuity by seeking to achieve that which has wide social, cultural, community, environmental or historic benefit or otherwise contributes to social or natural capital.  In doing so, it must be aware of how its actions affect the peoples, communities and natural resources it seeks to promote or preserve, as well as the quality of life for society as a whole.

To sustain its status as providing quasi-public benefits, a CSI will always be open for dialogue and good faith engagement with objectivity, research and a diversity of moral and ethical points of view.

Care

A CSI will recognize that its policies and activities are a legitimate subject of public comment and analysis.  It is, therefore, willing to engage in reasoned discourse regarding its mission and objectives, values, principles, governance, actions and means used to achieve its objectives. When engaging in advocacy, a CSI will always, in good faith, present accurate facts and truthful information.  When planning its actions or executing its policies, a CSI will demonstrate enlightened care and concern for those whose interests will be affected by its contemplated actions.  In case a CSI inflicts damage upon a government, international organization, corporation or other party, it will be accountable for its actions.

On a personal note, I am both saddened by the failure of Harvard in recent years to allow its corporate culture and practices to deteriorate as they have and relieved that a crisis has occurred to bring this decline in institutional virtue to public attention.

When I was an undergraduate, the college, to me, was open, inclusive, intellectually vibrant, with your mind so often being challenged and growing every day by those you would meet willy-nilly.  My class had members from many ethnic and national backgrounds, each of whom we credibly assumed was personally up to the challenge of working hard to gain knowledge.

We never worried about saying only what others expected us to say about politics, culture, entertainment or the social need to self-censor.  If we spoke or acted without grace, compassion or intelligence, we could be challenged, but would very rarely be demeaned or ostracized.  We learned through discourse and the ups and downs of friendships.

Now, Harvard gives undergraduates an average grade of 3.8.  Back then, getting a 2 was satisfactory and the norm for many of my classmates while getting a 4 (A) – really, really, hard to do.  It’s a different place now, not one that I respect; all for show, no grit.

To be frank, I have been skeptical of the ESG movement and ESG investment funds.  I saw ESG metrics to measure company performance to be vague, vapid and superficial.  I could not find specifics on what was “social” and how to measure “governance.”

For example, would “social” include a balance sheet asset for the “social capital” provided by the company’s culture and employees or for “human capital” the value-adding capacity of its employees?  Or would “social” include a company’s contribution to the remediation of income inequality in a given community or country?  Or the size of its charitable contributions to educational institutions or churches?

It was notable to me that the ESG movement did not seek to learn from the Net Impact’s approach being developed in The Netherlands by ABN AMRO and others.

The Wall Street Journal recently reported that in the U.S., the fund management community is quietly closing ESG funds or changing their names.

During the last quarter, more sustainability funds either were liquidated or removed ESG criteria from their investment decisions than were added to the sustainability category of funds.

Investors put money into sustainability funds starting in 2019. Such investments collapsed in 2022.  So far this year investors have withdrawn $14 billion from sustainability funds.

Once again, in open markets, demand trumps supply.  The driver of business success, of capitalism, is consumption – what people want to pay for.  Goods and services that no one wants to buy will not, in fairly short order, be produced.

Goods and services that fulfill wishing and hoping are for charity or government subsidies.

Wishing, good intentions, pious hopes and idealism don’t create wealth, as Adam Smith so concisely noted.  Reality can and does.

The returns on sustainability funds were unimpressive, especially as interest rates rose.  And the U.S. Securities and Exchange Commission has adopted rules to restrict mere virtue signaling (or greenwashing) in the use of fund names.

According to ChatGPT, moral capitalism is alive and well!

As colleagues have been consulting ChatGPT and sending me its thoughts, I wondered if moral capitalism might have standing in its universe of words.  I asked ChatGPT “What is moral capitalism?” and was pleasantly surprised at the almost immediate response, which is here:

“Moral capitalism” refers to an approach to economic and business activities that seeks to integrate ethical considerations and moral values into the capitalist system.  Capitalism, as an economic system, is primarily characterized by private ownership of the means of production, market-driven competition and the pursuit of profit.

Moral capitalism emphasizes the importance of aligning economic activities with ethical principles and social responsibility.  Proponents argue that businesses should not only be concerned with maximizing profits, but also with promoting social and environmental well-being. This approach encourages businesses to consider the broader impact of their operations on society, workers, customers and the environment.

Key elements of moral capitalism may include:

1. Social Responsibility: Moral capitalism promotes the idea that businesses have a responsibility to contribute positively to society.  This may involve actions such as philanthropy, community engagement and ethical labor practices.

2. Ethical Business Practices: Companies operating within a moral capitalist framework are expected to adhere to high ethical standards.  This includes honesty in advertising, fair treatment of employees and transparency in financial dealings.

3. Environmental Sustainability: Consideration for environmental impact is a significant aspect of moral capitalism.  Businesses are encouraged to adopt environmentally sustainable practices to minimize their ecological footprint.

4. Stakeholder Value: Instead of solely focusing on shareholder value, moral capitalism emphasizes the importance of considering the interests of various stakeholders, including employees, customers, suppliers and the local community.

5. Fair Trade: Moral capitalism may advocate for fair trade practices, ensuring that workers receive fair wages and work in safe conditions, especially in industries with a history of labor exploitation.

While the concept of moral capitalism has gained attention and support from various quarters, there are debates about the extent to which it is achievable within the existing capitalist framework.  Critics argue that the pursuit of profit may inherently conflict with certain moral goals and systemic changes may be necessary to fully integrate moral considerations into the economic system.

I was reading a learned presentation of rabbinical Jewish thought on the Noahide laws, seven righteous principles which are implicit in Yahweh’s covenant with Noah that applies to all humanity.  The author made reference to a famous 1918 essay of German sociologist Max Weber on “Politics as a Vocation.”

Weber wrote at the beginning of the Weimar Republic, which came into power after Germany’s defeat in World War I and the collapse of the German Empire.  Weber was not optimistic about Germany’s future:

“Not summer’s bloom lies ahead of us, but rather a polar night of icy darkness and hardness, no matter which group may triumph.”

Sounds like our times.

I was then triggered to think about what is needed to activate moral capitalism, day by day, firm by firm, decision by decision.  Could it be some charisma, rising up within us each, so that we bring forth leadership in our time?

In criticism of “politicians” that applies in the U.S. today to both Donald Trump and Joe Biden, Weber insisted that:

“… daily and hourly, the politician inwardly has to overcome a quite trivial and all-to-human enemy: a quite vulgar vanity, the deadly enemy of all matter-of-fact devotion to a cause and of all distance, in this case, of distance towards one’s self.”

Weber concludes with a demand for responsibility in the face of crisis and despair:

“Certainly, all historical experience confirms the truth that – man would not have attained the possible unless, time and again, he had reached out for the impossible.  But to do that, a man must be a leader and not only a leader, but a hero, as well, in a very sober sense of the word. And even those who are neither leaders, nor heroes, must arm themselves with that steadfastness of heart, which can brave even the crumbling of all hopes.  This is necessary right now or else men will not be able to attain even that which is possible today.  Only [those have] the calling for politics who [are] sure that [they] shall not crumble when the world from [their] point of view is too stupid or too base for that they want to offer.”

The charisma necessary for such leadership and such heroism is found in the ethics of responsibility, when one concludes that, “Here I stand.  I can do no other.”

The November 20 issue of The Economist has two articles gushing about the good that can be accomplished by removing CO2 from our atmosphere.

For several years now, I have been advocating carbon capture as the way to minimize global warming.  It seems sometimes as the effort has been no more than a small voice crying in the human wilderness of experts and doomsayers.

My thinking, I hope, has been informed by the Caux Round Table approach to problems – what we have done to ourselves, we can undo with application of our inventive genius and our moral sense.  Thus, if the technology of industrialization put too much CO2 and other greenhouse gases in the atmosphere, different, newly invented technology can take it back out.

A fixation on successful carbon capture and removal for reuse or sequestering would be a most constructive outcome of the COP28 meeting in Dubai.

Since producing too much CO2 creates a public “bad” – a non-rivalrous negative dynamic threatening all of humanity – its removal from the atmosphere would be a public “good.”  In conventional thinking about how to create public goods for all of us to enjoy simultaneously, we have long looked to the production of such goods by public utilities.  So, why not have governments fund and operate carbon removal facilities as public utilities, charging society for the costs of improving our lives in common?

Opening up such a possibility, The Economist said:

Few of those who have mouthed commitments to net zero appreciate how central greenhouse-gas removal is to the notion; of those who do, few recognise quite how vast the challenge is.  Emission cuts of 90% would still see enough gas entering the atmosphere for a balancing level of removals to be a huge undertaking.

Studies by the Intergovernmental Panel on Climate Change suggest that if the planet is to stand a decent chance of staying below the 2°C limit on warming, it would be wise to plan on removing an additional 5bn tonnes of carbon dioxide from the atmosphere every year.

.. humankind’s transfer of fossil-fuel carbon from its quiet rest in the solid Earth to the hurly-burly of the atmosphere.  Roughly 1trn tons of carbon dioxide have accumulated there thanks to human activity.  The total is growing by a bit less than 20bn tons a year.

… the rate at which the world’s biosphere photosynthesises is almost exactly the rate at which life’s other processes return carbon dioxide to the atmosphere.  With carbon dioxide from fossil fuels added to the natural emissions, photosynthesis has valiantly tried to keep up, sucking back down as much as it can.  But it cannot do enough.  It only absorbs about a third of the emissions from human industry and agriculture.

In Notrees, in a remote corner of the Texas oil patch, 1PointFive, an arm of Occidental Petroleum, an American oil firm and of Carbon Engineering, a Canadian startup backed by Bill Gates has built the world’s first commercial-scale “direct air capture” (dac) plant.

Like a tree, dac sucks carbon dioxide from the air, concentrates it and makes it available for some use.  In the natural case, that use is creating organic molecules through photosynthesis. For dac, it can be things for which humans already use CO₂, like adding fizz to drinks, spurring plant growth in greenhouses or, in Occidental’s case, injecting it into oilfields to squeeze more drops of crude from the deposits.

Yet, some of the 500,000 tonnes of CO₂ that the Notrees plant will capture annually, once fully operational in 2025, will be pumped beneath the plains.

Carbon Engineering and its rivals, like Climeworks, a Swiss firm, Global Thermostat, a Californian one and myriad startups worldwide, are attracting capital.  Occidental plans to build 100 large-scale dac facilities by 2035.  Others are trying to mop up CO₂ produced by power plants and industrial processes before it enters the atmosphere, an approach known as carbon capture and storage.  In April, ExxonMobil unveiled plans for its newish low-carbon division, whose long-term goal is to offer such decarbonisation as a service for industrial customers in sectors like steel and cement, where emissions are otherwise hard to abate.  The oil giant thinks this sector could be raking in annual revenues of $6trn globally by 2050.

Svante, a Canadian startup, uses inexpensive materials to capture CO₂ from dirty industrial flue gas for around $50 a tonne (though that excludes transport and storage).  Other companies are converting the captured carbon into products which they then hope to sell at a profit.  CarbonFree, which works with U.S. Steel and BP, a British oil-and-gas company, takes CO₂ from industrial processes and turns it into speciality chemicals.  LanzaTech, which has a commercial-scale partnership with ArcelorMittal, a European steel giant and several Chinese industrial firms, builds bioreactors that convert industrial carbon emissions into useful materials.  Some make their way into portable carbon stores, such as Lululemon yoga pants.

One obvious way to promote the industry would be to make carbon polluters pay a high enough fee for every tonne of carbon they emit that it would be in their interest to pay carbon removers to mop it all up, either at the source or from the atmosphere.

Buyers of carbon credits are starting to line up.  Tech firms, keen to burnish their progressive credentials, are leading the way.  On May 15, Microsoft said it would purchase (for an undisclosed sum) 2.7m tons of carbon captured over a decade from biomass-burning power plants run by Orsted, a Danish clean-energy firm and pumped underneath the North Sea by a consortium involving Equinor, Shell and TotalEnergies, three European oil giants.  On May 18, Frontier, a buyers’ club with a $1bn carbon-removal pot bankrolled mainly by Alphabet, Meta, Stripe and Shopify, announced a $53m deal with Charm Industrial.  The firm will remove 112,000 tons of CO₂ between 2024 and 2030 by converting agricultural waste, which would otherwise emit carbon as it decomposes, into an oil that can be stored underground.

Big tech is not alone.  NextGen, a joint venture between Mitsubishi Corporation, a Japanese conglomerate and South Pole, a Swiss developer of carbon-removal projects, intends to acquire over 1m tons in certified CO₂-removal credits by 2025 and sell them on to others.  It has just announced the purchase of nearly 200,000 tons’ worth of such credits from 1PointFive and two other ventures.  The end-buyers include SwissRe and UBS, two Swiss financial giants, Mitsuoki Lines, a Japanese shipping firm and Boston Consulting Group.  On May 23, JPMorgan Chase, America’s biggest bank, said it would spend over $200m in the coming years on buying credits from carbon-removal firms.

Also in recent days, taking advantage of the attention focused on COP28, the consulting firm McKinsey published a report on the status of carbon capture, which you can find here.

According to McKinsey, a CDR industry capable of delivering gigaton-scale removals at net-zero levels could be worth up to $1.2 trillion by 2050.  This industry would require input and support from a range of players, including investors, suppliers, buyers, traders and other intermediaries, with substantial potential value pools estimated for each.

As you may know, a few months ago, I published a book on how Henry Kissinger, in early 1971, personally decided to abandon the South Vietnamese nationalists to “fate.”

For me, that decision of his, which was compounded in infamy by the abandonment of the Cambodians to the Khmer Rouge and the Lao and the Hmong to oppressive subjugation, should define his flawed use of power as a substitute for morality, as we assess, in retrospect, his contributions to global affairs.

As I noted in my book, he gave new efficacy to the ancient Athenian boast that “The strong do what they can; the weak suffer what they must.”

If you want to know the facts and “dot the i’s and cross the t’s” on his sabotage of Vietnamese nationalist aspirations, please consider reading my book, Kissinger’s Betrayal: How America Lost the Vietnam War.

You may buy the book or audio version here.

Additional information can be found here.

I would like to share with you a recommendation of mine to boards of directors which has just been published by Directors&Boards in the U.S.  I attempt to fit the Caux Round Table’s advocacy of the importance of intangible capitals – social and human, in particular – to successful and lasting wealth creation by capitalism firms into board of directors best practices.

You may read my argument, published today, on how to improve valuation of company wealth creation here.