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Corporations: moral, immoral, or amoral?

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Is the free market moral? To hear its opponents describe it, the free market is an unethical system that exploits workers, consumers and the environment to make a quick buck. To critics such as Marx, capitalism leaves “no other bond between man and man than naked self-interest,” replacing human connections with cost-benefit analyses and supply-and-demand charts.

Despite its detractors, capitalism is a system that allows for the continued growth of wealth across the globe, and to quote Jonah Goldberg of the National Review, “the best anti-poverty program ever conceived.” If one considers lifting the poor out of poverty as moral, he or she may begin to see the free market as a “moral” system after all.

Despite its material benefits to the global society, the free market in and of itself is not a moral actor. Rather, the market reflects the moral choices of consumers and producers.

The free market, simply put, is a system based on the competing desires of consumers who want to use their wealth as efficiently as they can. It is comprised of workers who want to make the most money they can and providers who want to make the largest profit they can. Each of these competing desires, like the three branches of the American government, works to offset the power of the other two. In the correct circumstances, which usually involve the state getting out of the way, this system provides for the wages and products necessary for individual and family life, as well as the capital necessary for the continued growth of business and global wealth.

Such a system is neither a panacea nor a treacherous system of exploitation in and of itself, but rather a trio of competing self-interests. Even so, it is not exactly amoral, either. In a free market system, consumers have the ability to choose with whom they wish to do business, and these decisions are usually not solely based on an economic determinism of finding the best deal. Meanwhile, employees, executives and stockholders often come to the table with their own scruples regarding their company’s use of capital. In short, corporations are not moral actors, but the decisions of those involved with them determine their morality.

Because of this, companies in the free market are mirrors of the morality and opinions of both their clientele and their decision-makers. Take, for instance, Walmart, the ubiquitous symbol of corporate efficiency. According to an article by The Wall Street Journal, Walmart has undertaken several morally-motivated actions, such as ending the sale of Confederate-themed merchandise and opposing a bill that would allow religious belief-based discrimination against LGBT customers, as a deliberate part of their CEO Doug McMillon’s plan to make Walmart the world’s “most trusted retailer.” In other words, Walmart has taken a stand on these issues not due to something inherent within the company, but rather due to a combination of its CEO’s beliefs and an attempt to garner support from like-minded consumers.

Walmart’s market-based moralizing is not an outlier. Who hasn’t seen “fair trade” products advertised in their local coffee shop, or donations to a particular charity taken from the price of a good? Corporations make these decisions based on the whims of their executives, stockholders or customers, not because of an inherent sense of duty to do the right thing. In other words, companies seek to accomplish what their stakeholders see as “good,” whatever that may be.

Companies parrot the opinions of the people involved in them, and this is an ever-present reminder that the market is not by itself a wholly sufficient solution to society’s problems. Companies are not, in and of themselves, moral actors; your local fast-food franchise will not be espousing political opinions or performing philanthropy without a push from customers or decision-makers within the company.

To return to the question: Is the free market moral? The answer is complicated. Corporations are the greatest mechanism for economic growth, but at their worst they also have the potential to be a severely damaging influence on society. For this reason, both decision-makers and customers have an obligation to guide the decisions of corporations. When enough customers disavow themselves from a company, it must change whatever it has done that customers find morally unacceptable, or pay an economic price. Likewise, executives and stockholders guide corporations towards doing good when their decisions have a moral component as well as fiscal. Properly understood, corporations are extraordinary tools for the growth of prosperity worldwide, but like all tools, people must make the right decisions on how to use them.

 

 

(Photo credit: Benoît Prieur – CC-BY-SA)

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Canaan Harris is an executive intern for The Acton Emerging Leaders Program. He is studying Global Affairs at Yale University in Connecticut.

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