In a speech given at the University of California in September 1998, the Chairman of the Federal Reserve Bank, Alan Greenspan, commented, ‘Something must be done to protect the poorer nations from the instability in global financial markets.’ While Mr Greenspan still championed free-market capitalism and its continuing spread worldwide, he seemed to be cautioning the private sector against excessive exploitation of market imperfections, or at least suggesting that governments must act to curb such excesses.

Capitalism is premised on the free operation of markets that exact ‘efficiencies’ from those who choose to produce for and compete in them; the more efficient firm survives. However, capitalism also feeds on market imperfections, often leading to extraordinary profits. This condition is most evident in the developing countries where weak or faulty economic policies prevail. A good example is the collapse of Malaysia’s currency, where huge profits were made by currency hedge funds, particularly that of George Soros. Another is Russia, where extensive betting against the value of the rouble contributed to the catastrophic economic collapse.

Governments will in the final analysis have to try to curb private domestic and foreign firms’ behaviour. Arguably, this will meet with limited success, for the same reasons such efforts have failed in the past. Also, globalization of the economy necessarily limits what any single nation can effectively do to protect itself.

Is there anything that the private sector can do to ease the problem to which Mr Greenspan refers? Charles Handy notes that ‘seventy corporations now rank bigger than many a nation state — will they grow bigger still? Does that matter? ‘ Obviously it does. And being ‘bigger still’ increasingly imposes upon the private sector the need to define and adopt collective standards of global corporate behaviour.

It is naïve to assume that in the capitalist system firms will turn away from opportunities for profit occasioned by poorly designed economic policies. It is equally naïve for firms to assume that exacting inordinate profits from such situations will not lead to new restrictive behaviour by governments. Even if restrictive policies prove ineffective, no government can hope to stay in power by being silent.

Is it time for a world body of corporate leaders to be created and convened by those influential in the private sector to deliberate standards – in fact to set the private sector’s agenda with regard to capitalistic behaviour? Why not?

There are precedents. Dr Stephan Schmidheiny was instrumental in creating the Switzerland-based World Business Council for Sustainable Development in 1995 to develop business policies and standards that effectively lead to the private sector contributing to sustainable development through sound environmental and resource management practices. It has a membership of 125 international companies drawn from 30 countries and more than 20 major industrial sectors. Importantly, it is an example of proactive private sector behaviour that has proved quite effective.

I submit that the private sector does not have the luxury or the time to wait — either for someone else to convene a serious deliberative body on the sector’s behalf or for governments to return once again to the tried but not necessarily true policy tinkering approach. It is time for corporate leadership to perform its responsibilities in the large, and not just the small or self-serving.

Delwin Roy is a consultant on strategies for global corporate community involvement. From 1985 until 1988 he was President and CEO, The Hitachi Foundation.