Corporate Social Responsibility and Ethics

Corporate social responsibility is a reflection of societal ethical norms. There is some disagreement in our society what the norms for corporations should be. A corporation is comprised of people, but the norms for corporations seem to be different from the norms for the people that comprise the corporation. This paper will explore these ideas to determine what corporate social responsibility is, and should be.

A corporation is a legal entity, but without the people that run it, a corporation is nothing. Thus, a corporation being a legal entity rather than a living entity -- the apparent exception to this reality in the United States notwithstanding -- a corporation cannot make decisions. It has no ability to conceive of anything, to have ethics, or indeed even to behave. In that sense, the idea of corporate social responsibility is an absurdity. A corporation has no greater capacity to make an ethical decision than does a cloud, an asteroid or a stapler. It is only the people who control the assets of a corporation that could ever have such capacity.

The people controlling the assets of a corporation can be viewed in two different ways. The first is that they are human beings, and being of free will they have the capacity to understand ethics, in particular the ethics of any society to which they belong. Thus, their behaviors should always be bound by the ethics and norms of their society. Any act that would be deemed unacceptable in society for an individual cannot be condoned simply because the assets involved were corporate, given that an individual must still have made the decision. Morally, ethically, there is no distinction between the actions of individuals and those of corporations because a corporation cannot undertake an action. Legally, this is a different matter altogether, and evidently in the United States under law corporations can make these decisions on their own; they are people. This is indefensible idiocy, and a clear thinker should never conflate the legal world and reality, because they are by no means the same. Corporations cannot make decisions.

The second lens through which to look at the issue is that the people who make decisions on what to do with corporate assets are acting as proxies, for the shareholders presumably. This view, as espoused by Milton Friedman (1970), makes the case that managers should be solely concerned with using corporate assets to increase shareholder wealth. The corporate form has assets, and the corporate form was created for the purpose of earning returns for shareholders. Friedman did put constraints on this, that the managers should act within the confines of the laws and mores of their society. His paper was not advocating profit at all costs, but rather that corporations -- or more precisely the managers making decisions with respect to corporate assets -- are not assigned the task of anything other than earning profit, and thus any other task such as charitable work is a dereliction of duty to the shareholders.