“Is the ‘Respectable Merchant’ Still Up-To-Date?”

As part of the WHU Speaker Series, on November 29, Professor Dr. Edda Müller, Chairwoman of Transparency International Germany, gave a lecture on corruption in the global market.

Right at the beginning of her lecture, Professor Müller answered the question around which her lecture revolved: “Yes, we need the ‘respectable merchant’ more than ever before in the global market.” For her, however, the main concern was the underlying “why.” Why is the ‘respectable merchant’ up-to-date today? To approach an answer to this question, the speaker first defined what corruption was; corruption is the “abuse of entrusted power for private benefit or gain.” Corruption typically manifests itself in the form of bribes and kickback payments. While bribes are small amounts of money paid to government officials to obtain benefits to which a person is already entitled, kickbacks constitute corruption on a larger scale.

Professor Müller warned against the consequences of corruption: “Corruption is a threat to democracy. Political corruption fuels skepticism toward politicians and politics.” Corruption can drive entire economies into a downward spiral. “Socially speaking, that’s what makes corruption completely irresponsible,” the speaker concluded. The social dangers are manifold: it widens the gap between rich and poor, fuels criminality and diminishes faith in law and order.

In an effort make corruption visible and curb it in the process, Transparency International began publishing the “Corruption Perceptions Index” more than 20 years ago. This index measures bribery of public officials and lists the currently 176 countries reviewed by the degree of corruption in the public sector. The numbers are also a reflection of the success of anti-corruption measures. As Professor Dr. Edda Müller pointed out: “The systems that are particularly successful are the ones characterized by credibility in the fight against corruption. Georgia is a good example of this.” The introduction of credible punitive measures in politics in that country has led to a noticeable improvement in everyday corruption.

The image of the “respectable merchant” is already many hundreds of years old and manifests itself in Robert Bosch’s saying: “I would rather lose money than trust.” Edda Müller summed up the values that distinguish a “respectable merchant:” honesty, reliability, integrity and decency. She based her list on the rational ethics of German philosopher Immanuel Kant. Today’s economic thinking, however, is still strongly influenced by David Ricardo’s Law of Comparative Advantage. This leads to major problems in international trade, such as violations of workers’ and human rights, social dumping and a customs policy that, for example, does not permit processing industries in exporting countries and encourages the exploitation of raw materials.

The current situation is determined by the application of “soft law,” for instance initiatives that take the form of a recommendation and are difficult to understand and enforce, especially across national borders, such as OECD Guidelines, G7 and G20 decisions or UN Guiding Principles. The situation is particularly difficult for companies that try to adhere to all the recommended criteria, but whose competitors do not. “Unfortunately we have not yet reached the point at which we have reliable mechanisms in place,” Professor Dr. Edda Müller admitted.

While it is difficult to achieve unanimity in the EU on corruption, for example, the concept of legality needs to change areas such as tax law, the speaker said. There is a need for improvement in labor law and in the legal classification and treatment of business and trade secrets, in Professor Müller’s view. Since there is no way to discover corruption in companies from the outside, there is a need for significant improvement in the protections extended to insiders and whistleblowers. She saw room for major improvement in corporate criminal law as well. Finally, appealing to her academic and student audience, she pleaded for making ethics a compulsory subject in management education. She finished her remarks with an appeal: “The ‘honorable merchant’ is not a thing from five hundred years ago – this is a concept that belongs in our time.”

About the speaker:

Professor Dr. Edda Müller was born in 1942 in Sorau, in Lower Lusatia. She is Honorary Professor at the German University of Administrative Sciences in Speyer. After working in the German Federal Ministry of the Interior, the Federal Chancellery, the Federal Environment Agency and the Federal Ministry for the Environment, she was Minister for Nature and Environment in Schleswig-Holstein from 1994 to 1996 and Vice-Director of the European Environment Agency in Copenhagen from 1998 to 2000. From 2001 to 2007 she was Chairwoman of the Management Board of the Federation of German Consumer Organizations. From 2005 to 2010, she belonged to the Advisory Board of Transparency International Germany and has been its Chairwoman since 2010.