A few summers back, I at last got around to reading a book that the late Neil Postman—prolific author, social critic, and professor at New York University—had autographed and given me. The central message of Building a Bridge to the Eighteenth Century is encapsulated in its opening epigraph:
Soon we shall know everything the 18th century didn't know, and nothing it did, and it will be hard to live with us.[21]
Postman's book presents an impassioned defense of the old-fashioned liberal humanitarianism that was the hallmark of the Age of Reason. His aim was to restore the balance between mind and machine, and his principal concern was our move away from the era in which the values and character of Western civilization were at the forefront of the minds of our great philosophers and leaders, and when the prevailing view was that anything that's important must have a moral authority.
To Postman's way of thinking, truth is invulnerable to fashion and the passing of time. I'm not so sure. While that is the way things work in the long run—of course reality ultimately prevails—perception often wins in the short run. Indeed, I would argue that we have moved away from truth—however one might define it—to (with due respect to television commentator Stephen Colbert) truthiness, the presentation of ideas and numbers that convey neither more nor less than what we wish to believe in our own self-interest, and persuade others to believe, too. This self-interest on the part of the wealthiest segments of our society, in turn, has been used to justify what I described in The Battle for the Soul of Capitalism as a "pathological mutation" from owners' capitalism to managers' capitalism in our business and financial systems—in corporate America, investment America, and mutual-fund America alike, the book's three principal targets.
But I fear, too, that this pathological mutation has spread more broadly across society, into the texture of so many of our lives. With Wikipedia at our fingertips and Google waiting online to serve us, we are surrounded by information, but increasingly cut off from knowledge. Facts (or, more often, factoids) are everywhere. But wisdom—the kind of wisdom that was rife in the age of this nation's Founding Fathers—is in short supply.
When I first expressed this skepticism about our Information Age more than a decade ago, I naively believed that it was an original thought. But there is nothing new under the sun, and I was delighted to learn recently that T. S. Eliot had expressed the same ideas—much more poetically, of course—in The Rock (1934):
Where is the Life we have lost in living?
Where is the wisdom we have lost in knowledge?
Where is the knowledge we have lost in information?
The cycles of Heaven in twenty centuries
Bring us farther from God and nearer to the Dust.
To paraphrase Neil Postman's essential message, soon we shall know everything that doesn't count, and nothing that does.
The Age of Reason that Postman applauded—what we now often describe as the Enlightenment—centered in the eighteenth century, and became central to western philosophy and society. The great intellectuals and philosophers who then populated western civilization didn't always agree with one another, but together they managed to implant in society a reliance on reason, a passion for social reform, and the belief that moral authority is integral to the successful functioning of education and religion as well as to commerce and finance.
These thought leaders also believed in the primacy of the nation-state and the liberty of human beings, exemplified by two of Thomas Paine's powerful and influential tracts, The Age of Reason and The Rights of Man. Paine's impassioned essay Common Sense played an important role in the founding of our nation, helping to awaken the American colonists to the understanding of the absurdity "in supposing a continent can be perpetually governed by an island," to the need for "a government that contained the greatest sum of individual happiness with the least national expense," and to the understanding that "the more simple anything is, the less liable it is to be disordered."[22]
Like Paine, Thomas Jefferson and Alexander Hamilton spoke eloquently of reason, rights, and reform. The correspondence of John Adams, George Washington, James Madison, and others among our Founding Fathers is punctuated with the values of the Enlightenment. These men were strongly influenced by its proponents in Great Britain and throughout Europe, a "who's who" of the era, including Edmund Burke, David Hume, Immanuel Kant, John Locke, Sir Isaac Newton, Jean-Jacques Rousseau, and Adam Smith.
The ideas of those philosophers sprang, in turn, from their predecessors of yore, another Hall of Fame that stretches from Homer, Sophocles, Socrates, Plato, Aristotle, and Virgil, to Dante, William Shakespeare, Sir Francis Bacon, and John Milton—all great thinkers and writers who expressed their ideas with a force and clarity that continues to impress us to this day. The eighteenth-century heroes of the Age of Reason stood on the shoulders of these earlier heroes, and it is hard to imagine our modern world without their contributions.[23]
Perhaps the paradigm of the eighteenth-century man was Benjamin Franklin. I cite him here not only as a remarkable illustration of the values of the Enlightenment, but also as the most famous citizen of my adopted City of Brotherly Love.
Franklin's extraordinary accomplishments as Founding Father, framer, statesman, diplomat, scientist, philosopher, author, master of the epigram, and fount of earthy wisdom are widely known and justly celebrated. But his astounding entrepreneurship—remarkable for any era—offers the greatest contrast in some ways with our own age.
In today's grandiose era of capitalism, the word entrepreneur has come to be commonly associated with those who are motivated to create new enterprises largely by the desire for personal wealth or even greed. But in fact entrepreneur simply means "one who undertakes an enterprise," a person who founds and directs an organization. At its best, entrepreneurship entails something far more important than mere money.
Please do not take my word for it. Again heed the words of the great Joseph Schumpeter. In his Theory of Economic Development, written nearly a century ago, Schumpeter dismissed material and monetary gain as the prime mover of the entrepreneur, finding motivations like these to be far more powerful:
(1) The joy of creating, of getting things done, of simply exercising one's energy and ingenuity, and (2) The will to conquer: the impulse to fight, . . . to succeed for the sake, not of the fruits of success, but of success itself.
There is a difference, then, between entrepreneurs and capitalists. As Franklin biographer H. W. Brands put it, "Had Franklin possessed the soul of a true capitalist, he would have devoted the time he saved from printing to making money somewhere else." But he did not. For Franklin, the getting of money was always a means to an end, not an end in itself. The other enterprises he created, as well as his inventions, were designed for the public weal, not for his personal profit. Even today, Dr. Franklin's idealistic eighteenth-century version of entrepreneurship is inspirational. When he reminded us that "energy and persistence conquer all things," Franklin was likely describing his own motivations to create and to succeed, using Schumpeter's formulation, for the joy of creating, of exercising one's energy and ingenuity, the will to conquer, and the joy of a good battle.
Franklin's creation of a mutual insurance company was the classic example of his community-minded approach to entrepreneurship. In the eighteenth century, fire was a major and ever-present threat to cities. In 1736, when barely 30 years of age, Franklin responded to that threat by founding the Union Fire Company, literally a bucket brigade that protected the homes of its subscribers. In a short time, other Philadelphia fire companies had formed and begun to compete with one another, so in April 1752, Franklin joined with his colleagues in founding the Philadelphia Contributionship, which continues today as the oldest property insurance company in the United States. And he didn't stop there. He also founded a library, an academy and college, a hospital, and a learned society—none for his personal enrichment, all for the benefit of his community. Not bad!
Like many entrepreneurs, Franklin was also an inventor. Once again, his goal was to improve the community's quality of life. Among other devices, he created the lightning rod and the Franklin stove (to say nothing of bifocals and swim fins). He made no attempt to patent the lightning rod for his own profit, and he declined the offer by the governor of the Commonwealth for a patent on his Franklin stove, the "Pennsylvania fireplace," his 1744 invention that revolutionized the efficiency of home heating with great benefit to the public at large. Benjamin Franklin believed that "Knowledge is not the personal property of its discoverer, but the common property of all. As we enjoy great advantages from the inventions of others, we should be glad of an opportunity to serve others by any invention of ours, and this we should do freely and generously."
As the first decade of the twenty-first century comes to a close, Franklin's noble eighteenth-century values stand in bold contrast to the bitter patent wars of today, to the obscene salary demands of the executives of our giant corporations and the enormous compensation paid to hedge fund managers (often whether they win or lose, or even survive), and to the nonmutuality, if you will, of so much of our civic life. In fact, the differences verge on the appalling.
As much as Benjamin Franklin is the personal embodiment of the Age of Reason, his eighteenth-century contemporary, Adam Smith (17 years Franklin's junior), is surely the intellectual embodiment of how economies work. Smith's analogy of the invisible hand and how it moves the economy, described in The Wealth of Nations, remains an important element of economic philosophy to this day.
As Smith wrote:
Every individual intends only his own security; by directing his industry in such a manner as to produce its greatest value, he intends only his own gain but is led by an invisible hand to promote an end which was no part of his intention . . . promoting the interests of the society more effectively than when he really intends to promote it.
The invisible hand remains almost universally known to this day. But in our time, Smith's "impartial spectator," which first appears in his earlier Theory of Moral Sentiments, is today almost universally unknown. Yet the impartial spectator uncannily echoes the values by which Franklin lived.
That impartial spectator, Smith tells us, is the force that arouses in us values that are so often generous and noble. It is the inner man, shaped by the society in which he exists—even the soul—who gives us our highest calling. In Smith's words, "It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct."
[The impartial spectator] calls to us, with a voice capable of astonishing the most presumptuous of our passions, that we are but one of the multitude, in no respect better than any other in it; and that when we prefer ourselves so shamefully and so blindly to others, we become the proper objects of resentment, abhorrence, and execration. It is from him only that we learn the real littleness of ourselves. It is this impartial spectator . . . who shows us the propriety of generosity and the deformity of injustice; the propriety of reining the greatest interests of our own, for the yet greater interests of others . . . in order to obtain the greatest benefit to ourselves. It is not the love of our neighbour, it is not the love of mankind, which upon many occasions prompts us to the practice of those divine virtues. It is a stronger love, a more powerful affection, the love of what is honourable and noble, the grandeur, and dignity, and superiority of our own characters.
Smith's magnificent cadences can hardly help but inspire us citizens of this twenty-first century with the very values that we are ignoring and in danger of completely losing. The impartial spectator is one of the central metaphors that define those values, the high values of the eighteenth century.
The evidence suggests that the values held high by Franklin and Smith were not uncommon among the businessmen of that era. Indeed, it seems almost providential that the very same 1949 issue of Fortune that inspired my Princeton University thesis included a feature essay entitled "The Moral History of U.S. Business." Although I had no clear recollection of the contents of the essay when I reread it a few years ago, I'm certain that I read it at the time. Still, I quickly found myself reflecting on Vanguard's founding principles, which seem to me to be related to the kind of moral responsibility of business that was expressed in that ancient Fortune essay.
The essay began by noting that the profit motive is hardly the only motive that lies behind the labors of American business leaders. Other motives include "the love of power or prestige, altruism, pugnacity, patriotism, the hope of being remembered through a product or institution." Even as I freely confess to all of these motives—life is too short to be a hypocrite—I also agree with Fortune on the appropriateness of the traditional tendency of American society to ask: "What are the moral credentials for the social power that the businessman wields?"
The Fortune article quotes the words of Quaker businessman John Woolman of New Jersey, who in 1770 wrote that it is "good to advise people to take such things as were most useful, and not costly," and then cites (almost inevitably) Benjamin Franklin's favorite words, industry and frugality, as "the means of producing wealth and receiving virtue."
Moving to 1844, the essay cites William Parsons, "a merchant of probity," who described the good merchant as "an enterprising man willing to run some risks, yet not willing to risk in hazardous enterprises the property of others entrusted to his keeping, careful to indulge no extravagance and to be simple in his manner and unostentatious in his habits, not merely a merchant, but a man, with a mind to improve, a heart to cultivate, and a character to form."
I found Parsons' definition of merchant and man, set out more than 160 years ago, to be more than inspiring; it seemed aimed directly at me. The words about the prudence, trustworthiness, and simplicity of the enterprising man struck me as apt descriptions of the goals of my own career and my life. And the three qualities that defined the merchant as a man were, I think, equally appropriate. As for the mind, I still strive every day—I really do!—to improve my own mind, reading, reflecting, and challenging even my own deep-seated beliefs, and writing about the issues of the day with passion and conviction.
As for the heart, no one—no one!—could possibly revel in the opportunity to cultivate it more than I, having discovered that diamond of a new heart more than a dozen years ago. And as for character, whatever moral standards I may have developed over my long life, I have tried to invest my own soul and spirit in the character of the little firm that I founded all those years ago.
On a far grander scale than just one human life, these standards of mind, of heart, and of character resonate—as ever, idealistically—in how I hope the leaders of our productive businesses and our financial managers will again seek to manage the trillions of dollars of capital entrusted to their stewardship, putting the will and the work of our business and financial enterprises in the service of others.
My fear—and part of what compels me to continue to press on in my chosen mission of returning capitalism, finance, and fund management to their roots in stewardship—is that in this computer-driven, information-overloaded age, we have forgotten the old truths that so successfully guided us in the past. But while our society's commitment to eighteenth-century values continues to fade, that commitment is hardly nonexistent. I'm heartened by the few—but strong—voices rising to the defense of those values.
For example, listen again to the widely respected businessman Bill George:
Authentic leaders genuinely desire to serve others through their leadership . . . are more interested in empowering the people they lead to make a difference than they are in power, money, or prestige for themselves . . . are as guided by qualities of the heart, by passion and compassion, as they are by qualities of the mind . . . lead with purpose, meaning, and values . . . build enduring relationships with people . . . are consistent and self-disciplined. When their principles are tested, they refuse to compromise.
As George shows in his best-selling book, Authentic Leadership, these are more than stirring words. Authentic companies led by authentic leaders create solid business performance, building the intrinsic value of the enterprises they lead. These leaders build moral integrity into the fabric of the organization, and they create not just stock-price spikes but sustained growth in revenues and earnings per share. "The best path to long-term growth in shareholder value," George writes, "comes from having a well-articulated mission that inspires employee commitment and the confidence and trust of clients."
Listen, too, to legendary Boston College law professor Tamar Frankel in her impassioned book Trust and Honesty: America's Business Culture at a Crossroad:
The real test for an honest and productive society is not what a society has achieved, but what it aims to achieve. It can put honest people on a pedestal even if they do not maximize their personal benefits and preferences . . . and discard and shun as models of failure dishonest people who achieve their highest ambitions by fraud and abuse of trust.
That echo of the impartial spectator helps provide the perspective we need. Bill George and Tamar Frankel exemplify the voices that will allow us to blend the best ideals of the eighteenth century with the compelling realities of the twenty-first century. These are the kinds of thinkers who will lead us to perhaps the most forgotten of all the qualities of that long-ago century—the central characteristic that those eighteenth-century versions of entrepreneurship, mutuality, and invention for the public weal have in common: virtue.
Today, virtue is a word that tends to make us uneasy. But it surely didn't embarrass Benjamin Franklin. In 1728, when he was but 22 years of age, he tells us that he "conceived the bold and arduous project of arriving at moral perfection. . . . I knew, or thought I knew, what was right and wrong, and I did not see why I might not always do the one or avoid the other." The task, he tells us, was more difficult than he imagined, but he ultimately listed 13 virtues—including temperance, silence, order, frugality, industry, sincerity, and justice—even ranking them in order of importance. He began each day with "The Morning Question: What Good shall I do this day?" and ended with "The Evening Question: What Good have I done today?" It is hard to imagine a philosophy of self-improvement cast in a more ethical fashion.
Even viewed through the lens of twenty-first-century cynicism rather than eighteenth-century idealism, I confess a sense of wonder at the young Franklin's moral strength and disciplined self-improvement. While few of us in today's society would have the will to pursue a written agenda of virtue, Franklin had established, in his own words, the "character of Integrity" that would give him so much influence with his fellow citizens in the struggle for American independence.
That character was also central to his dedication to the public interest, so easily observable in his entrepreneurship, in the joy he took from his creations and from exercising his ingenuity, his energy, and his persistence. And that character also found its expression in Franklin's ongoing struggle to balance pride with humility—a battle that in this age of bright lights, celebrity, and money we seem to have largely abandoned. As Franklin wrote in his autobiography:
In reality, there is, perhaps, no one of our natural passions so hard to subdue as pride. Disguise it, struggle with it, beat it down, stifle it, mortify it as much as one pleases, it is still alive, and will every now and then peep out and show itself; you will see it perhaps often in this history; for even if I could conceive that I had completely overcome it, I should probably be proud of my humility.
In candor, these words serve to remind me that my own pride too often peeps out and shows itself, and that my own humility could use a little more development.
Franklin's mind is indeed the eighteenth-century mind at work—a model for our times. It is a contrast that reminds us that we have steeped ourselves quite enough in twenty-first-century values, driven largely by self-interest, and not nearly enough in the values of the eighteenth century, when the impartial spectator was our guide and a sense of common purpose pervaded our society.
[21] While we met only once, Postman knew enough about my own values to inscribe his book: "To Jack, whom I am delighted to have met in the 21st century, but who hasn't forgotten the glorious 18th century. A toast to common sense!"
[22] You'll recognize, I think, the frequent appearances in this book of these final two themes.
[23] I believe that without The Federalist Papers, numbering some 85 essays, our Constitution would have failed to gain approval by 9 of the 13 states that was required for its adoption. (It was ultimately ratified by all 13, although often by paper-thin margins.) Alexander Hamilton, author of 52 of the essays, chose the pen name Publius, after one of the founders and great generals of the Roman republic, whose name came to mean "friend of the people."