Corporate Moral Responsbility v. Corporate Social Responsbility: Friedman was Right

CORPORATE MORAL RESPONSIBILITY V. CORPORATE SOCIAL RESPONSIBILITY: FRIEDMAN WAS RIGHT

Presented to the Annual Meeting of the Society for Business EthicsAugust 9, 2015

Kendy M. Hess, JD, PhDCollege of the Holy [email protected]

It all began with a little honest confusion….

… so I did some research (not much help) …

… so I came up with my own answers.

This is always dangerous.

How I got here: a short story.

How I got here: a short story.

My preliminary conclusions:

1.There are moral obligations that apply in a business context, and hence moral responsibilities. Of course.

2.There are some pieces of CSR-stuff left over once you take out all the stuff that’s just moral obligation, so we’ll call those the social obligations – hence social responsibility.

3.The stuff that’s left over to be corporate social responsibility is really problematic – very “government-y” without any of the protections.

My sudden realization:

OMG, this is Friedman.

Thus, a preliminary note This is not an exercise in Friedman scholarship, an effort to discover or develop his “true” position.

My only commitment regarding Friedman is that those three claims are present – explicit or implicit -- in his two primary statements about CSR.

I am not suggesting he would actually agree with the position(s) I end up with – far from it. He’ll be rolling over in his grave by the time I’m done.

The plan.

Three claims in Friedman A massive – yet totally justified – extension

The move from CSR to CMR The problematic remainder

Three Claims in Friedman

Three claims in Friedman

(1)Business activity ought to meet moral standards.

there are moral responsibilities in a business context

just … no “dirty hands” exemption for business

Note: focuses on executives, but presumably applies to lower-level members as well

focuses on avoiding fraud and deceit, but doesn’t claim that these are the only relevant moral obligations (that would be pretty awkward to justify)

Three claims in Friedman

(2)“Social responsibility” is something different

from the more familiar moral responsibility.

Three claims in Friedman

(3) The suggestion that there are also “social responsibilities” is deeply problematic.

Note: “CSR” meant something very different when Friedman was writing from what it’s come to mean now

the language suggests that the business sector act in a governmental role

shades of fascism (?)

The Extension(s)orFriedman rolls over in his grave

The Extension(s)

(1)If some moral obligations apply, then all moral obligations apply.

not a controversial claim (I don’t think) again, rather extraordinary to claim otherwise

(2)If individual actions are subject to moral standards, then so are collective actions.

a more controversial claim still … there’s this “moral laundering” problem

a morally impermissible action does not become morally permissible simply because it’s distributed

The Extension(s)(3)If collective actions in business are subject to

moral standards, then “corporate actions” are subject to moral standards.

“corporate actions” here = “members acting collectively qua members” (or close enough, for now)

again, just means that a morally impermissible action does not become morally permissible if it’s distributed

(4)If corporate actions are subject to moral standards

then “corporations” have moral obligations. Corporations are moral agents.

Ta-da. Now that’s a controversial claim.

The Extension(s) Obviously, Friedman would reject this suggestion , and arguably has. note subtitle re: “rolling over in his grave” not going to argue for it here

Instead, I want to suggest that making this move –

acknowledging that corporate (collective member) behavior is governed by moral standards, however you get to that point –

puts us in a really interesting position.

The Move from CSR to CMR... which is really just MR

The move to CMR

The CSR literature is hopelessly scrambled and conflicted. no agreement on terminology, standards, justifications – all barriers to progress

thus, no agreement on practice

No criticism to the scholars! lots of great people doing lots of really good work

just haven’t found a framework that brings it all together

The move to CMR Acknowledging that all we’re really talking about here –mostly – is moral responsibility goes a long way towards solving this problem.

We have thousands of years worth of work developing the frameworks, the terminology, the standards, the justifications, and the applications the govern the obligations of moral agents.

Moreover the frameworks of moral philosophy are well established broadly familiar widely accepted

The move to CMR Best of all, with the holist insight that the firm can be understood as a moral agent, all the frameworks of moral philosophy become relevant.

Basic questions already have well-developed literatures and, in some cases, clear answers. May a moral agent pursue its own self-interest? Should a moral agent obey the law? Should a moral agent fulfill its moral obligations? Should a moral agent engage in oppression, exploitation, cruelty, environmental destruction? Keep promises, fulfill obligations (to investors, employees, others)?

The move to CMR I’m not suggesting that this move miraculously resolves all questions about corporate practice.

the theoretical aspects are controversial, and applications are more so

moreover, there are obvious differences between human moral agents and corporate moral agents – possible that those differences might be relevant to the agent’s moral obligations

What it does – again – is provide a well-developed, widely familiar, and broadly accepted set of terms and standards to guide future work.

The Problematic Remainder: Back to Friedman

The problematic remainder There are still some pieces of CSR that aren’t captured by traditional moral theory. specifically, the pieces that Friedman objected to so vehemently

suggestions that actors from the business sector should move to address certain distinctively “social” issues

The move to traditional philosophical categories reveals that these issues are governed not by moral theory, but by political theory.

So … should corporate agents participate in political action – in the sphere reserved for governmental action under traditional political theory(ies)?

The problematic remainder Governmental obligations differ by theory, but generally include broad obligations to ensure the health, safety, and well-being of citizens. addressing poverty, unemployment, environmental exhaustion and degradation

ensuring basic services (power, water, education, health care) managing larger systems (environmental and economic)

Governmental authority (thus) generally extends to setting the larger ends at which the society as a whole will aim, as well as the methods by which it will do so.

With all this, there are (usually) numerous safeguards to ensure transparency, accountability, answerability, etc. these safeguards are – as Friedman pointed out – notably absent in non-governmental contexts

The problematic remainder Without those safeguards, it seems reasonable to conclude that no non-governmental actors –corporate or human – should act in this governmental role.

It is, as Friedman claimed, an abuse of power to do so – an usurpation of governmental authority no matter who does it. still permissible for the government to engage the skills, knowledge, and power of non-governmental agents, human or corporate, for governmental purposes

So … Friedman was right.

Friedman was right.

Friedman acknowledged 1. the presence of traditional moral

obligations in the business sphere,

2. a distinction between moral and social responsibility, and

3. the inappropriateness of “social” responsibility.

He was right about all three.

Friedman was right. My only caveat is that he grossly underestimated the true scope of those moral responsibilities.1. He didn’t realize that all moral obligations apply.2. He didn’t realize that moral obligations apply at the

level of the collective.

As a result, the CMR (that he’s stuck with) extends to encompass much – if not all – of what’s currently included under the label “CSR.”

Approaching it this way gets us most of what we CSRians want, a better framework, and a basis to rein in some of the more egregious extensions

Friedman was right.

Seems worth doing.

Plus I got to write a paper with this title.

Thank you. [email protected]