Why don’t businesses have social responsibilities? If they’re an invention by man, shouldn’t they serve best his interests and his goals? Shouldn’t we be able to create corporations which channel capital and manpower into something more than just relentless pursuit of profit?
This was something I struggled with my first few businesses. It seemed to me that, if I could think of a smart enough way, I could both build a business which both maximized profits and maximized goodwill returned to society.
I quickly learned that markets don’t respond primarily to morality, or goodwill. In fact, often times it’s quite the opposite.
Corporations cannot behave according to common human morality, because they are accountable to different systems. They must create profits simply to continue existing against entropy. Understand, they must maximize profit in the way we must breathe.
Granted, some corporations market themselves as being good for the environment, as being good for their employees, and as being good for their suppliers. This is really an excuse to charge a premium and maximize profits.
But let’s pretend we’re really serious, we want to change the world with compassionate corporations.
Here’s my question:
What makes you think you know what’s better than an entire world full of people choosing where to spend their dollars?
We have representative governments to impose moral order on the market.
As a business person, you need to have a second set of morals. Your business morality should look to profit maximization above all else.
Because the market doesn’t tell you the ways people imagine a fair world should work.
The market tells you the way the world actually works.
The beauty of the market is its amoral nature. We aren’t accountable to other people’s ideas of what we should be spending our money on.
Understand, when McDonald’s competes for your dollar, it is competing against hookers, drugs, and booze. Any morality it emanates has been engineered to extract more profit.
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To my knowledge, there are no direct democracies in current working governments. We use representative or republican systems instead, with those we represent being empowered to make better (or at the very least, different) decisions than the masses. In your analogy, the heads of companies are the representatives and the public votes through their decision to spend money on your company or another. Your beautiful-market, profit-knows-best argument is equivalent to representatives acting upon the word of the majority of their voters verbatim at all times, at which point it has become a direct, rather than representative, democracy, and there are reasons we don’t do that. Why do companies have a moral imperative to act otherwise? This is a typical, and typically thoughtless, moral rationalization for just wanting to make money and not have to think about all that troublesome stuff.
James,
First of all, thanks for your response.
Second of all, I agree, we do not have any direct democracies in current working governments. Our governments are something much different, and yes, very much broken. That being said, I’m not saying markets know best when it comes to moral situations. Instead, I’m saying markets could care less about morals, except to the extent with which prices can be raised based upon a “good” image.
As business owners, we cannot impose our own morality on what the markets decide is worth money. Our business dies, and we don’t get anywhere. Governments must create the atmosphere that defines what context within which business must be run.
Like it or not, trade on the open market is how society has decided to distribute power. This can be a beautiful thing.
I’d much rather have more small business owners aware of how the world really works, and create a distributed model of influence and power, than one in which people from above dictate where power and influence end up. This is what the market (potentially) gives us.