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CULTURAL PHENOMENA
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Before we delve into our understanding of modern compensation practices, we must look more deeply into the uniquely American phenomenon of extremely high executive compensation and the wide disparities in pay between managers and workers. Just as the power of capitalism seems to be stronger and more pronounced in America than anywhere else in the world, so does the propensity to pay certain people whether executives, movie stars, or sports figures exceptional amounts of money. American culture, like no other, is imbued with the value and the rewards of work. This can be traced back to the practical sayings of statesman and philosopher Benjamin Franklin. His philosophy such as the often quoted time is money espoused not only work and wealth, but also the downfall brought on by idleness. The concepts that work is good and the fruits of one s labors are blessings stem from a system of beliefs celebrating the spirit of capitalism. Working, earning, and amassing are not just God-given rights; they are evidence of heavenly benediction.
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The Protestant Ethic in America
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In his epic The Protestant Ethic and the Spirit of Capitalism, first published in 1904, Max Weber, a founding father of modern sociology, states that the Protestant ethic encouraged the development of capitalism in the West. Under this system of beliefs, not only was the pursuit of wealth encouraged, it was sanctified. While some people today may not see a direct link between business and religion, Weber saw strong correlations that can be carried through to the present time. The capitalistic economy of the present day is an immense cosmos into which the individual is born, and which presents itself to him, at least as an individual, as an unalterable order of things in
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PART ONE The Stock Option Problem
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which he must live. It forces the individual, in so far as he is involved in the system of market relationships, to conform to capitalistic rules of action. The manufacturer who in the long run acts counter to these norms, will just as inevitably be eliminated from the economic scene as the worker who cannot or will not adapt himself to them will be thrown into the streets without a job, Weber wrote. Thus the capitalism of today, which has come to dominate economic life, educates and selects the economic subjects which it needs through a process of economic survival of the fittest. Neither Weber, nor Franklin whom he quotes, had any trouble with the idea of the capitalistic nature of humankind. In their eyes we were put on Earth to work and be rewarded. Even the austere Pilgrims did not shy away from amassing land and fattening up the cattle. Indeed, it was all about harvesting the fruits of the earth over which humankind had been given dominion. But there was an even bigger belief behind the capitalistic system. The Protestant ethic saw financial and creature comforts in this life as evidence of having been blessed, and thus being a likely candidate for a heavenly reward. The connection between having the good life on Earth and being destined for a reward in the afterlife was a direct result of the Protestant Reformation. Rejecting the Vatican s views that the Church and its priests were the designated intermediaries between God and humankind, the Protestant movement averred that a direct relationship was possible. But how to distinguish between those who were chosen and therefore predestined for heaven (under a Calvinist view) and those who were not Early American settlers found proof in the appearance of abundance and fruitfulness. Those who were well-off were given the front pews of the New England churches and presumably a first-class ticket to heaven. Over the years the belief that abundance is direct evidence of a heavenly benediction has come to confirm or at least add a spiritual veneer to America s unbridled thirst for wealth and wellbeing. In fact the Protestant ethic is a strong theme that runs unspoken but well understood in our uniquely American system of work and meritocracy.
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