Nowadays, private morals have been made less relevant in public life. The West relies upon external rather than internal restraints. The hope is that institutional checks and balances will control those who are in power rather than self-imposed ethical limits. But rules and regulations can only go so far and no further in catching unethical business/political practices. To work effectively, good institutions should be strengthened by matching moral values held by the majority of the population.
Gandhi considered as futile the modern quest of trying to make institutions so perfect that they would obviate the need for the individual to be good. A person in public life has to be a person of character exercising self-restraint all the time. Gandhi believed in self-imposed internal ethical control as against institutional restraints imposed from the outside by society on one’s behaviour, especially when in public life. Gandhi emphasises moral and individual change as necessary for social and economic change. He said:
Unfortunately a belief has today sprung up that one's private character has nothing to do with one's public activities. This superstition must go. Our public workers must set about the task of reforming society by reforming themselves first. This spiritual weapon of self purification, intangible as seems, is the most potent means for revolutionising one's environment and for loosening external shackles.
This reliance on inner strength rather than external institutional control was because Gandhi believed that such external controls are easily subverted resulting in the abuse of power that we see around us. Practicing self-restraint is more sustainable and irreversible. If a person has taken a conscious decision to be in public life, he or she has to exercise self-restraint in private behaviour. Both perfecing individuals and perfecting institutions are impossible tasks but Gandhi believed that the former was a better gamble.
What’s very important is that no amount of “good institutions” will stop people from cheating. No matter how well-designed rules are, and how good is the system of sanctions forcing people to follow the rules, if everybody is a rational agent maximising their own material benefits, the system will not work. Crooks will pay the cops to look the other way, while judges would decide in favour of who pays them more. Good institutions will only work when they are strengthened by appropriate values and preferences of the people who occupy them. In Anna Karenina, Leo Tolstoy wrote about what it means to be "honest":
. . . when they talk of an "honest" politician, an "honest" writer, an "honest" newspaper, an "honest" institution, an "honest" tendency, meaning not simply that the man or the institution is not dishonest, but that they are capable on occasion of taking a line of their own in opposition to the authorities.
How well a society functions depends on its package of social norms. Adam Smith said that it’s our automatic norm following — not our self-interest or our cool rational calculation of future consequences — that often makes us do the “right thing” and allows our societies to work. In the period leading up to the financial crisis, some asset managers on Wall Street and mortgage lenders who sold toxic assets knew they were toxic and were proud of their ability to exploit unsuspecting investors. Institutions like SEC, The Fed or the banks proved ineffective.
Two behaviours that have become devalued in modern times are guilt and shame. Feeling shame is about wanting to hide; feeling guilt is about wanting to make amends. Consistently ignoring the need to examine one’s own actions reduces the moral credibility needed to persuade others to make sacrifices to defend shared values. They reflect our judgments of our actions and the kind of person we think we are. These emotions tell us that there is something wrong in our lives and relationships that we must correct.
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