Like the Harvard course, the London course asks students to examine cases in recent business history in which CSR has been front and center, such as Nike and the sweatshop debate, or Shell oil and human rights in Africa. And while the readings generally support the ‘doing good is good business’ view of CSR, students, at both institutions, are also exposed to the Milton Friedman view, as well as the conflict between being responsible to shareholders vs. being responsible to all of “society”. So what’s missing?
One problem is that this type of MBA course — and there are many others out there — attempts to deal with a political subject in a non-political way. For instance, the corporate campaigns waged by non-government organizations are a key reason why corporations come to embrace CSR in the first place: think McDonald’s or Wal-Mart. Yet the technocratic point of view favored by business schools does not equip students with the ideological perspective that is necessary to understanding either CSR’s supporters or its opponents.
In the case of the Harvard course, the professor endorsed an ideological position — I believe CSR is good because it helps the world — but would not allow that position to be examined. Instead, a student is to assume its validity from the start, and focus on how a business leader can most effectively manage its various “stakeholders”, that is, shareholders, employees, suppliers and NGOs.
The usual response, then, is that the professor should offer the Friedman position — the social responsibility of business is to increase its profits — as an alternative and to stress the role of the manager as agent of the owners of the corporation (the shareholders).
But this, too, is insufficient. Under the Friedman view, a corporation can use every means within the law to increase profits for its shareholders, such as lobbying the government for special favors or to support new industry regulations that will fall most heavily on the competition.
Perhaps what is needed is to rethink the way ‘business ethics’ is taught; such that an ethical businessman is one who is responsible not to shareholders or stakeholders, but to the free market system and its components, including private property rights, voluntary exchange and competition. Generally, this is the Friedman view, but broader. It suggests that the role of business is not only to follow the rules of the game, but to not use the law to alter the rules of the game in ways that impede the functioning of the market. Isn’t this the true social responsibility of business?
Isaac Post is a Policy Analyst at the Competitive Enterprise Institute, a think tank located in Washington, D.C.