People Or Profit
Every ethical vision begins with the instinctive drive to codify our behavior. The individual, daily, embodies corporate norms, and must recognize his or her responsibility for them, even as the corporation takes us and our agenda forward. The synergy institutionalizes our goals and accomplishes what we cannot accomplish alone – that’s still the best reason to incorporate, a system worth globalizing.
I was in my sixth day of seminars in mainland China, when one of my participants, a manager and part-time MBA who I’ll refer to as Bill, raised his hand and asked, “Why is the system like it is?” We were discussing Cameron Crowe’s feature film “Jerry Maguire.” It is the story of a sports agent who, in the midst of an apparently very successful career, decides he can no longer live with himself and his work practices. One sleepless night, Jerry writes a mission statement he then delivers to his colleagues: “Fewer clients. Less money.” They applaud his courage, but see the writing on the wall, and a week later Jerry is out of a job. The “system” has kicked in.
So, why is the system the way it is? In short essays on the balance of family and work life, many of Bill’s 60 companions that night noted they often work overtime during the week and on weekends—a circumstance they take for granted. They also believe that pushing their employer for greater transparency externally and more equitable work practices internally will likely land them in trouble, a fear they share with counterparts elsewhere in Asia, as well as in Europe and North America. Given such fatalism, how can and should we incorporate notions of corporate social responsibility into our daily business practices?
In “The Social Responsibility of Business is to Increase its Profits,” a much-quoted 1970 essay in The New York Times Magazine, the economist (and later Nobel laureate) Milton Friedman argued that management has a responsibility to increase its profits for the benefit of shareholders. Any other aim constitutes a “tax” on some constituency of corporate management, whether shareholder, employee, supplier or community. In our post-Enron concern with poor corporate behavior, it’s hard to remember that we have had the debate about corporate responsibility before; and yet, Friedman’s manifesto marks just one recent phase in a perhaps cyclical pattern dating back centuries.
True, Friedman mocks the thinking that characterizes much CSR, both now and at the time of his article. His definition of corporate social responsibility, summarized in his essay’s title, seems designed to shock CSR proponents into recognizing a conundrum: profit maximizers think about the benefit of a single group, and rely on market forces to generate social welfare—where’s the larger society, or individual responsibility, in that? However, they can and do lay claim to the ethical high ground, just as much as do stakeholder-oriented theorists of corporate citizenship who argue management should consider everyone affected by their operations.
The libertarian thinker argues that we should let the shareholder decide how best to spend corporate profits, distributed as his or her dividends. That alone constitutes ethical practice for the executive focused on what the firm does best: providing a product or service. After all, the business of business is business. The believer in stakeholder value, by contrast, can draw on a long and broad history of philosophical and religious wisdom, from Plato and Aristotle and Confucius to the Bible and the Koran, to make the case that focusing on money alone voids the notion of good citizenship, individual or corporate. Usury is not an acceptable practice, and the narrowly-gauged concern with wealth acquisition is equally suspect; in the Politics, Aristotle calls it “unnatural.”
Today’s ethics wars seem to force a choice between money and people, strategy and sympathy. Understandably, the busy businessperson wants an ethical formula that doesn’t require him or her to spend a lifetime thinking about, rather than doing, business. “Fewer clients. Less money.” Jerry Maguire is in a tough spot, and his shortterm solution to severe psychological stress, while ethically admirable, looks doomed to fail. What viable business will seek to minimize its clientele and its profits, even in the name of better professional service?
Yet Crowe’s film suggests a positive outcome, one confirmed by people engaged in the business of business, rather than its artistic representation. In a 1997 essay from The Atlantic Monthly entitled “The Capitalist Threat,” the financier George Soros argued that laissez-faire capitalism is an ideology much like the totalitarian schemes it once opposed: Nazism and Marxism-Leninism. In an extension of physicist Werner Heisenberg’s “uncertainty principle,” Soros claims our notions of market forces actually help shape those forces; the concepts underlying laissez-faire economics enable its practice, but distort reality to do so.
Soros would say to my Chinese businessman the system is “like it is,” in part because we, as thinkers and economic agents, make it that way. Soros offers an antidote to the distortion of economic conditions in his “open society,” a place free of ideologies of the political left or right. In a more modest way, we can argue that corporate social responsibility emerges from neither of the easy oppositions of people before profit or profit before people. Without monetizing life, CSR can and should recognize the interplay of material and human interest, and locate ethical behavior at the intersection of the two.
Every ethical vision begins with the instinctive drive to codify our behavior. The individual, daily, embodies corporate norms, and must recognize his or her responsibility for them, even as the corporation takes us and our agenda forward. The synergy institutionalizes our goals and accomplishes what we cannot accomplish alone —that’s still the best reason to incorporate, a system worth globalizing.