The Economist takes what it calls a “sceptical look at corporate social responsibility” in this editorial (subscribers only) and a survey that is guaranteed to induce dizziness and nausea.
The Economist is usually a good bit better than this, but these two items and a couple of other recent weak entries make me wonder if they’ve hired some inebriated college libertarians as interns.
As with most self-consciously “politically incorrect” writing, these pieces are laced with smugness. Economics geeks love to think they’ve one-upped the do-gooders. But in this case, the ethics aren’t the problem. It’s the logic.
A sampling of logical problems:
- The survey outlines four types of CSR (corporate social responsibility) and notes the existence of “win-win” situations. Mysteriously, that segment concludes that CSR “invariably” leads to harm.
The claim that reserves for oil and other commodities have increased despite high usage is intriguing. But it defies all reasoning to think that these reserves are going to keep going up. Economists love to look at an upward line on a graph and assume they’ve discovered a pattern that must continue. Life doesn’t work that way, especially when we’re talking about finite resources. (You simply can’t use supply-and-demand charts to guess future supply when that “supply” isn’t produced or restored by humans!)
- The survey glosses over the point that economists could easily use to justify most CSR activity — it’s good advertising. In fact, several ads in that issue of The Economist tout companies as good international citizens. Consumers have responded to companies with good public profiles. It’s strange to see the free-market Economist trying to tell consumers not to reward this sort of behavior. You’d think they’d be happy that consumers, not governments, are driving good works.
- The whole argument is based on the premise that businesses are spending money that should rightfully go to the stockholders (apparently, ignorant stockholders who don’t realize the company is spending all this cash). By that reasoning, anything a company does to improve its own image — advertising, glossy showrooms, good customer service, etc. — is a waste of stockholders’ money.
That should be enough to smash The Economist’s argument. But there’s a related issue worth considering — is guilt a good thing?
I was raised to be skeptical (back to U.S. spelling) of guilt as a motivator. On the other hand, I was raised in a strict church and sent to YMCA camps, so I was raised to feel guilt.
I don’t think it’s such a bad thing. Guilt inspires many good works, especially among great philanthropists. It makes our own malfeasance difficult to accept.
All things in moderation, of course, but if you compare guilt to shame — the other motivator some folks in the current culture war want to employ — I think guilt is far better. Shame simply inspires us to find fault in others. Guilt inspires us to push ourselves to do better.