WSJ: Be Evil

Of course corporations have no business trying to be anything but evil, except when it’s more profitable to be good. Such is the thrust of “Why Companies Shouldn’t Worry About Doing Good,” an op-ed masquerading as a special report on the front page of a special section of today’s Wall Street Journal. University of Michigan business professor Aneel Karnani frames a ghastly argument one could only really expect to find in the paper’s rapaciously capitalistic opinion pages. But his case against corporate social responsibility is only pernicious insofar as it is clear and pointed, and fortunately for readers who, unlike Karnani, at least pretend to have a conscience, the piece rails against the straw-man cliché of “corporate social responsibility,” and ends up chasing its tail into an argument in favor of the status quo.
On his trip from polemicism to banality, Karnani takes care to throw in the requisite attention-grabbing blanket statements: “The idea that companies have a responsibility to act in the public interest and will profit from doing so is fundamentally flawed.” Furthermore, the concept of corporate responsibility is “an illusion, and a potentially dangerous one.”
Cue groans from the fuzzy-headed anti-capitalists. Listen for the sound of organic-food eaters and Prius drivers gathering their pitchforks and torches. Karnani is so evil! The Wall Street Journal and its readers must be stopped.
But hang on. As sure as these sentences are to offend people who already loathe American corporate culture (and in the wake of the utter collapse of the world’s financial system and the BP oil spill, there are many who do), they aren’t novel; they read like principles espoused by high-school microeconomics teachers and instructors of Libertarian Philosophy 101. In other words, principles that govern the way democracy and capitalism in the U.S. is supposed to work today. In fact, it’s hard to find a moment in the article where Karnani actually advocates for a change in the status quo. Instead, he rifles through a series of extant alternatives: government regulation, watchdogs and advocacy groups, corporate self-control and financial calculation.
Karnani points out that companies have only been able to achieve social good to the extent that it has been profitable. Fast food got healthier only because companies could make money selling healthier food; fuel-efficient vehicles only came to market when they became profitable. Both of these things are true, but it’s because consumers shifted their expectations of companies that these changes took place. If no one had ever said that eating Big Macs was bad for you or that it’s hard to breathe smog, no one would’ve asked for anything different, and companies wouldn’t have changed their evil ways. Contrary to Karnani’s point, consumers’ demands for more socially responsible products have indeed make the world a better place.
To summarize:

  • Government regulation is good because it’s binding, but it isn’t perfect and is subject to official corruption. (True!)
  • Watchdogs and advocates have an insufficient impact on CEOs. (Yeah, it’s hard to imagine any robber baron mending his ways because Greenpeace sent him a letter.)
  • Industries should agree on best practices and implement them. (We find it extraordinarily hard to argue with that; sounds an awful lot like “corporate social responsibility.”)
  • Financial calculation: “The only sure way to influence corporate decision making is to impose an unacceptable cost – regulatory mandates, taxes, punitive fines, public embarrassment-on socially unacceptable behavior.” (Karnani just said all the things that are already in place to check corporate evil, things the Journal tends to complain about daily.)

In the end, we suppose what Karnani is saying is that “corporate social responsibility” is a lie, and companies shouldn’t lie about themselves. They’re there to horde money and will only bend to the social good when forced to by the market or the bludgeon of government intervention. Which is as solid a defense of the unbridled profit motive as we’re likely to see in the Journal.