Banks, Bonuses and Capitalism

The concept of the bonus is the problem, not its size. It fosters lazy management, indiscriminate sales, bad salesmanship and is irreducibly divisive; hostile to teamwork and destructive of team spirit. The bonus is based upon a cynical contempt for people: that they can only be motivated by greed and cannot take pride in recognised performance for its own sake. The bonus represents a superficial conception of performance which corrupts individuals and the organisations that offer them. It is a degraded self-fulfilling, recognition of achievement and commitment to a common cause.  Bonus-driven reward systems are bureaucratic and always unfair – to those functions without which the salesman, the negotiator and the trader could not close sales, deals and contracts.

The Sub-Prime mortgage scandal demonstrates many of the above principles. The corrupting, dehumanising effect of the bonus was perfectly dramatized in David Mamet’s Glengarry Glen Ross (1992) and to a lesser extent the currently released Margin Call. In the documentaries The Corporation (2003) and Inside Job (2010) the corrupting nature of current capitalism is revealed by it most prominent exponents and therefore victims.

The bonus concept is a cancer at the heart of the generally accepted view of Capitalism. Any serious effort to make free market capitalism an activity to be proud of; into which we should encourage our brightest and best young people, must look to relationships and values internal to the conduct of business not the external objectives which it can serve. We will tinker pointlessly until we understand that it is a matter of fundamental importance how a business is run, how it makes profits, how it treats its customers and its competitors.

Sincerely,

Filed under: Letter