The Right Coast

February 08, 2006
Corporate social responsibility
By Tom Smith

My friend Steve Bainbridge has an interesting column up at TCS on corporate 'cowardice' and corporate social responsibility, prompted partly by Google's recent (in IMHO fairly shameful) dealings in China.

I have been thinking about corporate social responsibility, as it is rather awkwardly called, for a while, trying to develop my position on it. I think I may disagree somewhat with Steve; I know I do with some people. I should probably write a short essay about it, and if I can conquer sloth and disorganization, I will.

My starting point would probably be an essay which the philosopher Thomas Nagel, whom I consider to be a very, very smart guy, wrote probably 30 years ago called "Ruthlessness in Public Life." He wrote it during the Vietnam War era, and it sounds like it, but I remember thinking he was essentially right. His basic point was, I took it, that just because you are in a position of great power in no way diminishes your moral obligations, or somehow entitles you to a different set of morals, under which you are allowed to be more ruthless than we would think appropriate for private persons. I think something like this approach makes a lot of sense when applied to corporations.

Whether as a result of applying the "shareholder value maximization" norm, or some other desideratum, corporate officials and scholars sometimes speak as if they have a duty to maximize profits that somehow trumps other moral duties that individuals and organizations usually do or may have. That is what I disagree with. Corporations are free to maximize profits just as individuals are free to maximize their income, if that is what they want to do. Because corporations want to entice investors to buy their securities, they obviously have strong incentives to stress to investors just how important profits are to the corporation. But that changes nothing as far as the moral restrictions and duties corporations are subject to. A corporation is no more entitled than you or I to do something wicked, just because it is necessary to maximize profits. Indeed, the idea is so absurd, it is hard to believe anybody really makes that claim, and I am not sure anybody does, though sometimes it seems like they are implying it. A move sometimes made, perhaps e.g. by Milton Friedman, is that corporations are not real entities and therefore cannot be subject to moral duties or restraints. This strikes me as very silly, and I doubt anyone who is serious about morality at all really believes it. The idea that a bunch of people coordinating their actions are somehow suddenly released from moral restraints is ridiculous on its face. True, there is lots of work to be done in clarifying what it means to say, XYZ Corporation has a duty not buy Third World babies and turn them into dog food (to take a lurid example), but the bottom line is going to be, the agents of XYZ Corp. just cannot do that morally, whether it is legal or not, even if it would be a very profitable enterprise.

So with Google, I have no problem saying, it was immoral for them to cooperate in the efforts of the PRC government to keep their people from getting informed about human rights and related topics, so as to postpone the day of their liberation from Communism. Yes, if someone can tell a convincing story that that day is actually made nearer by Google's decision, that is another story. I don't see any reason for believing it, however. Tyrannies can find technology very useful, the hopes of starry-eyed techno-libertarians to the contrary. It makes no difference whatever to the rightness or wrongness of their or its actions that Google was only trying to maximize profits. Ve vere only trying to maximize ze profits! is not even the beginning of an excuse. Indeed, we normally take the desire to make money as an aggravating factor when it is the motivation for a bad action. It is hardly an excuse that you killed somebody for money, rather than for some other reason. It is no different for corporations. It is legitimate for them to try to make money, just as it for you or me to do so. That is their primary purpose, often. But it has to be done within moral constraints. I also think it is just fine for corporations to have other goals in addition to making money, such as Patagonia, Inc. wanting to be all tree-huggy and green, and why shouldn't they be?, and Ben & Jerry's wanting to be kind to animals or whatever it is they are. But that is another argument.