HUMAN GOVERNANCE
IN A NEW ECONOMIC MODEL
NATIONAL ACCOUNTANTS
CONFERENCE 2009
KUALA LUMPUR
CONVENTION CENTRE
13 – 14 OCTOBER 2009
Aziuddin Ahmad, PhD
Professor of Risk Management
Univeristi Putra Malaysia
Themes & Questions
 Economics Model: the Original model (ought to /“Fitrah”) vs. the
reality of the conventional Western-based model (what is)
- Is the economic system built on sand?
 Man & The Universe
- What aspect did we play in what went wrong?
 About Being Human
- What have we learned about us as human beings?
- What does it mean to be human?
 Man & Economics: The Need to Return to Origin
- Where and/or how did we change from a sacred man to a secular
homo economicus?
ACCOUNTING & GOVERNANCE IN THE “FITRAH” ECONOMIC MODEL
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Economics Model
The Original / Fitrah State
• Broadly, economics deals with man in his
environment
• The sentient man & the enchanted environment
• Man cannot be separated from his environment
• His consciousness is inextricably linked with his
surroundings, physical and social
• He adapts himself to his social environment as
well as his physical environment.
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Western Civilization
• Formulated by Thomas Aquinas, quoting Aristotle –
the slenderest knowledge of the highest things is
more desirable than the most precise knowledge of
the lower things.
• In other words, there was a vertical scale
• René Descartes came along and said that only such
knowledge is worth having as can be absolutely
precise. The model for this was geometry and
mathematics, which automatically confines attention
only to the lower things. Only these things can be
mathematized.
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Western Civilization (2)
• But the mysterious factors like life or consciousness, or,
at a human level, self-awareness, the kind of
consciousness that recoils upon itself and thereby
opens all doors, can never be mathematized.
• They cannot be known with precision. They can only
be known to the extent that we can mobilize inside
ourselves the quantities necessary for knowing.
• So, there can be no question of complete precision, let
alone measurement.
• And this was the great moment when Francis Bacon
said that, in the words of Descartes, we shall make
ourselves the masters and possessors of nature.
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Galileo’s Shadow
• Primary Qualities – exist without need for
human presence, hence imbued with
objective reality
• Secondary Qualities – needed presence of
man and his sense organs
• What counts as evidence?
• Measure – Quantity
• Experiential – Quality
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Cosmos & Psyche
• Worldview creates world
• Primal man views natural world as ensouled –
no separation between subject & object
• In contrast modern man experiences a
fundamental division between a subjective
human self & an objective external world
• Underpinning Reality – Oneness, parts related
to whole, whole present in the parts
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ONENESS
The deep-level connectedness in quantum physics
entails that human choices although personal in
meaning, transcend the individual to have an
‘instantaneous effect’ with far away entities with whom
the individual has interacted at some time in the past.
Henry Stapp (1997)
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ONENESS
The universe is like a single organism whose parts are in
instantaneous communication
The recognition of this deep unity of nature makes
rational the belief that to act against another is to act
against oneself
Henry Stapp (1997)
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Rational Man – Mechanistic?
• Galileo: responsible for world of nature to go
out of step with new science
• Fragmenting life led to the disconnect
between issues of ethics/morality in worship
with the day to day life of man
• Man became consumer
• Man became commodified
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(Dis)Enchanted Environment
• So too environment
• No link to spirituality as practiced by the
ancient, indigenous belief systems
• Bacon – Nature to be conquered
• Descartes – Mechanistic conception of nature
& mistook mathematics of nature for
philosophy of nature, leading to positivism
replacing the philosophy of nature
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Man – Desacralised?
• Questions of value (other than shareholder) or
of rightness (other than what is lawful) or of
wisdom (other than what is practical) need
not arise
• Theology once arbiter of commercial morality
• Now the heartlessness of reason & the
tyranny of machine man
• Nature reduced to numbers devoid of soul
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Man’s Place in Universe
• In what we do, what matters is not so much
the end we reach as our manner of reaching it
• Bringing back the sentient man into the centre
• Need metaphysics, epistemology & ontology
to recover man’s position
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What Does it Mean to be HUMAN?
• Natural vs. Artificial/Legal person
• The spiritual is what makes human, human (Salleh
& Ahmad, 2008 & Stapp, 2008)
• Physical is for locomotion
• Human’s drive is towards inspiration, meaning &
purpose
• Purpose – Ad Dhariyat Quran (51:56)
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What Does it Mean to be HUMAN?
Need to break away from the economic man
– the social animal
The Economic Man, represents a rational human being
formalized in certain social science models, especially in
economics, who acts in self-interest to achieve in a goaloriented manner.
The edifice of modern economics is built on the
foundation of the Economic Man, where the behavior of
this creature is assumed to be ascertained in the
positivist tradition of social science. He is a social
animal.
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What Does it Mean to be HUMAN?
Need to break away from the economic man
– the social animal
As John Kay puts it, "He is self interested, materialistic,
and obsessed with calculating his worth." In the world of
economics textbooks, "... he is the mainstay of economic
life.“
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What Does it Mean to be HUMAN?
Human Within Organisation – The Soul
“We are all spiritual beings. To leash the whole capability
of the individual – mind, body, and spirit – gives
enormous power to the organization. It truly empowers
members of the organization to devote their entire beings
to the ultimate purpose
forOrganisation
which the
organization
exists,
Human Within
– The
Soul
which is to serve others. That’s what I believe is
‘spirituality in the workplace’: to unlock the real sense of
significance of the organization’ s purpose.”
William George,
Chairman of Medtronic
World’s largest producer of medical electronics
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What Does it Mean to be HUMAN?
The Islamic Man, is to be distinctive from the Economic
Man. The Islamic Man is to cultivate himself to eventually
become INSAN KAMIL.
He is a spiritual man, INSAN – sentient being
But Spiritual Man based on moral, spiritual & historical
principles is overpowered by economic man & his
corporation.
A spiritual man – thought to lack scientific legitimisation
But recently, Quantum Physics has brought back spiritual
man to centrality
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Human & Perception Devices
• Humans are born with three devices/ faculties
of sense perception, intellection &
contemplation
- findings of new science
• Do we want to limit to sense perception only?
• All words have spiritual underpinning BUT
current words have been made devoid of the
“vertical element”
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Faculty/Device
WOMB
H
E
A
R
T
BABIES TO
TODDLERS
H
E
A
R
T
ADULTHOOD
PHYSICAL
SENSES &
THE MIND
HEART
OLD AGE
H
E
A
R
T
The Heart has its Reasons which Reasons knows not
– Pascal
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NOT THE PUMPING HEART
The Muslim Qalb & Chinese Xin
• The source of emotion, courage & wisdom
• Acts as though has a mind of its own – neurocardiology
– Brain in the Heart
• Profoundly influencing clarity of perception & response
•
effectiveness
• Heart affects intelligence & awareness
• A thinking & feeling organ
• Heart transplant & cellular memory
Meaning and purpose only appear in
the heart
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Facts about BRAIN & HEART
- Scientific Findings
• HeartMath Institute
– Heart has 40,000 neurons vs
brain
(100 billion neurons each
capable
of 10,000 connections)
– Heart emanates EM energy
• Edinburgh University
– Infant communication
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Heart EM Field
Source: Institute of HeartMath
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About the Heart - Snippets
SCIENTIFIC DISCOVERY ABOUT Heart
• Presence of “heart brain”
• Heart Electrical field (ECG reading) is about 60 times
greater in amplitude than brain waves (EEG measure)
• The magnetic component of the heart’s field too is found to
be 5000 times stronger than that produced by the brain
• Heart’s EM field permeates all parts of human body &
emanates up to 10 feet
• Heart initiates communication between 2 individuals, then
only detectable in brain
• Heart plays a major role in forming own experience and can
influence others too
• Heart EM field – felt by every cell in body
• Role as global internal synchronizing signal
• Cells in human body including heart have cellular memory
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HADO Water - Emoto
Tap water before chant
After chant
THE MESSAGES FROM WATER ARE TELLING US
TO LOOK INSIDE OURSELVES
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HADO Water
Radiation-leaked well water before chant
“I will kill you”
After chant
“I love you”
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About Intention (Niat)
SCIENTIFIC DISCOVERY ABOUT INTENTION
• Intention & prayer capable to affect other events
• Reach back into time
• Power of collective prayer “Laser light power”
• powerful because it is “coherent”
• its waves are in complete balance, synchronization and
focus
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Man & Economics
• Return to origin
• Economy works for man, not man slave of
economy
• Interconnectedness & subjectivity rule
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Conventional Economics – Obsolete?
•
•
•
•
•
•
Pretense of knowledge by being scientific?
Exclusion of role of human
Morality & ethics are inseparable from human
Disenchanted
Cartesian Newtonian
Contest of clashing values between society &
capitalism
• Human society surrenders its deepest values
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How Human Lost the Sacredness
BEING
Profane & Sacred
Secular & Spiritual
fictively separated
Secular Being
Natural Person
Artificial Person
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Science of Economics
• Lessons from Isaiah Berlin,
Frederick Hayek?
• Hazel Henderson et al?
• Economic model that maps reality
• Going beyond numbers &
definitions
• Experiential as evidence
• Man in Eddington’s analogy the
mesh of the net, determining what
kind of fish we pull from the sea.
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Human in Economics
•
•
•
"I am certain that after the dust of centuries has
passed over our cities, we, too, will be
remembered not for victories or defeats in battle
or in politics, but for our contribution to the human
spirit."
John F. Kennedy
"We are part of the whole which we call the
universe, but it is an optical delusion of our mind
that we think we are separate. This separateness is
like a prison for us. Our job is to widen the circle of
our compassion so we feel connected with all
people and situations."
Albert Einstein
"In times of crisis, people reach for meaning.
Meaning is strength. Our survival may depend on
our seeking and finding it."
Victor Frankl
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Hazel Henderson
• Economics is 'politics in disguise‘.
The primary purpose of
'economics' is to articulate and
legitimize political choices
• Current economic theory is not
working because it is based on at
least two fallacious assumptions:
– The 'free market' is the ONLY
economy
– 'The Market' will 'naturally
balance itself out'
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Economic
Subsystems
Focus
Being
Doing
Financing
Private sector
Profit
Self
Work
Private Banks
Public sector
People
Others
Relationships
National Bank
Environment
Earth
All
Meaning
Public/Private/
Partnerships
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Emil Brunner on Capitalism
• He declared his contempt more than 70 years
ago: ‘This system is contrary to the spirit of
service.’ he meant Christian service. ‘It is
debased and irresponsible; indeed we may go
further and say it is irresponsibility developed
into a system.’
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Milton Friedman
• A generation or so later he put a different spin
on Brunner’s observation. Irresponsibility,
Friedman explained, is what makes capitalism
succeed. ‘So the question is’ Friedman once
said, ‘do corporate executives, providing they
stay within the law, have responsibilities…
other than to make as much money for their
stockholders as possible? And my answer is,
no, they do not.
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If unchecked - Future Direction?
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E. F. Schumacher
• We need a nobler economics that is not afraid
to discuss spirit and conscience, moral
purpose and the meaning of life, an
economics that aims to educate and elevate
people, not merely to measure their lowgrade behaviour
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Accounting
•
•
•
•
For Profit – Market
For People – Wellbeing
For Environment – Sustainability
What does it mean ‘to account’?
– Quantitative?
– Primary Quality?
– Qualitative?
– Secondary Quality?
– Rise of Subjectivity
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Accounting (2)
• Accounting creates reality?
• Leaving out the unwanted from the maps
• Nothing really counts in society unless it can
be quantified
• But the things that really matter cannot be
quantified
• Galileo reload!
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William Greider on Accounting
• But the accounting principles are clear: A firm
need not accept responsibility for collateral
damage to society. Unless criminal acts are
involved, there is virtually no accountability for
that kind of corporate behaviour, not to the
communities where the company operates nor
the larger society. This freedom from
responsibility is described by business friendly
economists as one of American’s system great
virtues.
• So why are we surprised at the past years events?
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William Grieder on Balance Sheets
• A corporation may split off elements of itself into
SPE, and these off-balance-sheet entities permit a
kind of dematerialized accounting. Bank loans
become revenue on the company books. It’s
debts turn into assets. The illegitimacy of these
legal deceptions is made obvious if one asks:
What if families tried to arrange their financial
affairs or tax returns in this manner? They likely
would be prosecuted.
• So why are corporate persons treated so much
more generously than living breathing persons?
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Governance of Man
• Not more external legislation?
• To Nevit Ergin we are addressing the shadow
– Since man’s behaviour is the shadow of his
essence, all attempts to change the direction of
the shadow are considered illusionary
•
•
•
•
Should address the essence – man
Internal code?
What Marker?
Compliance- compared to values-based
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G N M Tyrell – Nature of Human Personality
• He put forward two classes of problems:
– Convergent & Divergent
• To distinguish problems which cannot be solved
by logical reasoning from those that can.
• Life is kept going by divergent problems which
have to be ‘lived’.
• Physical sciences & mathematics are concerned
exclusively with convergent problems.
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Higher Purpose
•
•
•
•
Addressing tension of opposites
Egality – legislated
Liberty – legislated
Fraternity – brotherhood CANNOT legislate
but balances the two opposites
• Allelonomy – the coexistence of opposites, of
mutual consultation & deliberation, the truth
of human reality
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Role of Religion in Economy
• Richard P Sloan Paper February 2009
• Krieger & Seng (2005)
• 82% of the world population believe in or follow
a religious or spiritual tradition (Encyclopedia
Britannica Book of the Year mid-2003)
• BBC Radio 4 programme
• Malaysians are adherents to religion too
• Malaysia in a unique position to actualize this
• Religion has been shown to impact economy
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Spirituality in Workplace
• Spirituality, at heart brings meaning &
purpose in business
• Connects one another and all living things,
addressing the human relationships that make
up the company
• It’s a human-centric economic philosophy
manifesting the centrality of spirit in man
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Value, Values & Governance
• Limitation of valuing only what can be measured
• A CLASH! There is tension between human values &
performance oriented value
• But ONENESS & INTERCONNECTEDNESS is a given
• NEED new measures to measure what is meaningful
NOT the measurable only – Einstein
• Need to balance continuum of paradox (yin yang)
• Need a NEW GOVERNANCE STRUCTURE
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Need
•
•
•
•
•
Governance that:
Goes beyond sense perception / experience, to
intellection (mind/brain) & contemplation
(heart/consciousness)
Regain Human Centrality
Bring back the ‘Vertical’ Dimension
Human Integrity – Ihsan & Adab/Akhlaq
Corporations/Legal persons CANNOT mimic Human
Beings
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Governance
Governance moves from the most internal
dimension to the external, from invisible to
visible and from spiritual to physical.
Thus, when we speak of the insan as the
foundation, we refer most fundamentally to
the internal character and spiritual
awareness of the individual.
Individual governance is primarily a matter
of spiritual development.
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LIMITATIONS OF CORPORATE
GOVERNANCE – WHY?
• Mechanistic Structure
• Corporate Governance structure is already broken
• Cannot be repaired by patching / gluing through
more regulations or legislation or policy changes
• Reinvent / redesign
• Need a NEW structure
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What is Human Governance?
• The actuator/actualizer to felicity & tranquility
• In decision making, human governance
integrates as one the act, process, spirit,
substance, outcomes with praiseworthiness
• Human governance is the vehicle (mode)
towards achieving WELL BEING
• Human governance is about INTEGRITY,
about living out a muhsin, always in constant
state of worship seeking to do good, to be
righteous
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What is Integrity?
• Integrity: Latin integritas - integer, whole
number, purity, be in oneness – AL TAWHID
• Integrity is about integrating religion, moral
values, native tradition and legislation
• Integrity is a state of being whole &
connected with universe, united & unifying
• Integrity is about knowing & practicing the
righteous thing even when no one is looking
• The HEART is the source of one’s integrity
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How to Actualise Human Governance?
– Take Home Message
• Accepts the need to have the correct world
view of reality & that science has moved back
to parallel religion and indigenous belief
system & tradition
• Accepts the reality of the universe
• Oneness
• Material : Non-material  (about 5% :
95%)
• Intersubjective vs objective
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How to Actualise Human Governance?
– Take Home Message (2)
On Human
• Needs redefinition – back to origin
• Humans are neither machines nor social
atoms
On Human Governance
• Internal journey from rule-based to
principle- & values-based
• Personal to holder
• Act as if can see God, even if we cannot
see Him, He can see us
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copyright©Aziuddin Ahmad & Arfah Salleh, 2009
Conclusions
 Economics Model: the Original model (ought to / “Fitrah”) vs. the
reality of the conventional Western-based model (what is)
- Is the economic system built on sand? YES
 Man & The Universe
- What aspect did we play in what went wrong? DESACRALISATION
 About Being Human
- What have we learned about us as human beings? MICROCOSMIC
- What does it mean to be human? SPIRITUALITY
 Man & Economics: The Need to Return to Origin
- Where and/or how did we change from a sacred man to a secular
homo economicus? GALILEO’s SHADOW, THE TRIGGER
ACCOUNTING & GOVERNANCE IN THE “FITRAH” ECONOMIC MODEL
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