Corporate Responsibility's Detractors Present a False Choice: Business Have, Can, & Should Do Well by Doing Good

Prof. Aneel Karnani of the University of Michigan lays out his case against corporate social responsibility (CSR) in a Wall Street Journal podcast.  The WSJ editors themselves chime in declaring, "Corporate social responsibility is either irrelevant or ineffective. Take your pick." Both Prof Karnani and the WSJ editors entirely miss the point. In the end Karnani restates Friedmanism declaring that companies should seek profits and regulators alone should chase down bad-actors.


First off, regulations set floors. Corporate Responsibility is about ceilings -- raising the bar for what we define as good corporate behavior. We need both: floors and ceilings. I really wish we could get off this false choice of it's either all free markets or all regulations. We need both and we need companies, organizations, and individuals willing to advocate for doing more than just the bare minimum.


Moreover, the whole history of capitalism is the history of companies pursuing more than just profits. From the British East India Company to Standard Oil to the big Detroit automakers, many companies throughout history have pursued non-financial, social goals. They had implicit and explicit objectives to improve society through their own versions of CSR relevant to their own time in history. The last 30 years of Friedmanism are the exception, not the rule.


The Karnani argument is great if you assume that shareholders, customers, employees, and regulators are stupid or don't care and only politicians are intelligent and care.

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