Mr. Fred L. Smith, Jr. at the 2007 Acton Lecture Series

Mr. Fred L. Smith, Jr. of the Competitive Enterprise Institute was today’s guest speaker as part of the 2007 Acton Lecture Series here in Grand Rapids, speaking on the topic of The Irresponsibility of Corporate Social Responsibility.

Smith argues that Corporate Social Responsibility (CSR) has become the new rationale for old policies of transforming private firms into public utilities—and forcing them to perform whatever duties are politically attractive at any one time. The corporation is an extremely valuable way of organizing large numbers of people to produce goods and services efficiently—that is, to create wealth. That wealth then flows into the hands of shareholders, workers, customers, and suppliers, who are then empowered to advance their own individual goals and values. According to Smith, to “socialize” this process is to reduce the ability of individuals to advance their goals, placing the values of politicians as paramount. Nothing would do more to reduce the world’s ability to address poverty and pollution than to force CSR onto the world economy.

You can listen to his address by clicking here (7.4 mb mp3 file). We’ll be posting video of today’s event tomorrow, so stay tuned!

  • William Gissy

    Business is morally neutral. It is one thing to say that business isn’t immoral and quite another to claim that is constitutes a moral good. However, capitalism and markets would not exist without the protecting hand of the state to enforce contracts and define and protect property rights. Since the people are essentially the state (I love how right wingers try to make the state something external) the people have the right to decide what the rules will be. You wish to get wealthy and be a pig, fine but there will be a cost, pay or no play. However the greedy right wants to forever free ride, so endless is their lust for wealth.

  • Tony Branch

    Contrary to what some (possibly including Fred Smith) and certainly the Bush Administration seem to believe, we live in a democratic society. Corporations enjoy all kinds of special privileges from the state such as a lower rate of taxation, continuation beyond the death of individuals etc., and even an almost absolute right to free speech under Supreme Court rulings. They also enjoy the roads, infrastructure, legal system,l educational facilities for their future employees that indiviudal citizens have.

    Global Warming provides us with an object lesson. If corporatoins do not choose in their own best way to respond to this threat, then civil society has every right to demand greater regulation to insure that they are socially responsible by undertaking "green" initiatives.

  • http://www.hubsandspokes.com marc

    Yes, I suppose the concept of business itself is morally neutral. The morality of a business enterprise is determined by the decisions of the individual human actors who are engaged in that enterprise.

    And yes, the state does play an important role in maintaining an orderly society, and the state does have a role to play the maintenance of an orderly society in which a business venture can flourish. I know of no serious commentator or scholar – right or left – who argues that there should be no government at all. The basic argument between right and left revolves around the extent to which government should be allowed to regulate society, not whether or not there should be a government.

    And yes, I agree that the people are essentially the state. True. But it doesn’t then follow that everything that the state does is good, moral and right. For example, a good number of “the people” – perhaps even the majority – hold views about economics and wealth that are simply wrongheaded (for instance, your contention that getting wealthy makes an individual “a pig”) and would likely be disastrous for our economy if they were implemented as government policy. Consensus does not equal truth, and the state is not infallible.

    Why do you simply dismiss the idea that business – conducted rightly – provides many great goods to society? Is it morally suspect to desire to better your position in life? Is free exchange ethically problematic? Is wealth evil? At what level does it become evil? Is it wrong for an individual to grow a business from a small venture into a large one, employing many people and giving them the opportunity to enjoy a higher standard of living for themselves and their families? Why should such activity automatically be penalized by the state through high taxes, fees, and regulation?

    And why are you so trusting of the state? After all, those in charge of business and those in charge of government are all human and affected by the same sinful nature. The primary difference between the two arenas is that government power is not checked by the discipline of the market and competition, while business ultimately is. If anything, it would seem prudent to be more skeptical of the regulators, who don’t necessarily have to worry about this type of accountability.

    I note from some of your previous comments on this blog that you are a [url=http://tinyurl.com/35d48j]professor of economics[/url]. I have to wonder what you teach your students – some of whom, no doubt, intend to go into business careers – about the morality of business. Do you teach them that it is wrong to be successful? That there is grave moral peril in the production of wealth? Do you teach them that the rich are “pigs,” and to put their trust in the benevolent state to provide for their needs? The attitude of your comment makes it even less surprising that more and more students are [url=http://www.csmonitor.com/2005/0921/p02s01-ussc.html]seeking out conservative colleges[/url]…

  • Jude

    Can it be a mistake to have started off suggesting that profit making (MEANS) is central to business and human rights (or the human goods, ENDS we ought to secure) are peripheral? Would that explain why the lecture has ended up with rather extreme conclusions: that we should let people have lots of money to do whatever they want, and not what they reasonably ought to? I think in reason, whatever you should do (including promoting the good of your own life), you need, in this world, to avoid harming encironment where humans flourished. The last time I looked, Acton defended policies that cared for the environment, called the environmental stewardship. So your comparison of Acton and CEI left me a little confused. But I do very much appreciate the warning that CSR can be hijacked by state powers to promote their own agendas.