Stop Me Before I Vote Again

How to catch the conscience of the king -- King Kong Inc's Joh Fredersen, that is?

In my never ending pursuit of our great American corporations' limited liability spore trail, may I present to you this delightfully sugared-up turdpile from Harvard's Kennedy school of soft knocks?

They call it CSR for short -- corporate social responsibility -- and it's a topic to ponder, if you happen to work for one of corporate America's castrated brethren, i.e. a nonprofit outfit like a social-change foundation, or, at the other pole, a vulgar... B-school.

"Much of what has been written on this question has been both confused and confusing. Advocates, as well as academics, have entangled what ought to be four distinct questions about corporate social responsibility: may they, can they, should they, and do they."

Sorta like the three evil monkeys, plus one -- and now watch as the four knots are shrewdly untied:

1) "May firms sacrifice profits in the social interest-given their fiduciary responsibilities to shareholders?"

Legally, the protecting gimmick for the executive suite, if it's stricken by the greater-good disease, is an enchanted cloak worthy of a Hellenic diety: "business judgement": Okay, says the wily tower troll, the press likes me 'cause I play it up green. Well, it's secretly 'cause i got business judgement. You see, my bottom line -- err, the corporation's bottom line -- in the long run of course -- will be bigger than if we stay brown.

Obviously this isn't really a conflict, since profits, far from being "sacrificed", are in fact being increased.

2) "Can firms sacrifice profits in the social interest on a sustainable basis, or will the forces of a competitive market render such efforts transient at best?"

Seems if you can pass the sacrifice through to your customers, the answer is yes. If not -- errrr, ummm, no.

3) "Even if firms may carry out such profit-sacrificing activities, and can do so, should they -- from society’s perspective? "

That question morphs quite nicely into this question: "Under what conditions are firms’ CSR activities likely to be welfare-enhancing?"

Guess what the Kennedy school answer to that one is:

"CSR activities are more likely to be welfare-enhancing if firms pursuing CSR strategies are doing so because it is good business -- that is, profitable."

I kid you not, privateering fans. The wisdom of Adam S rediscovered.

But 230 years have taught us something more than that old Scotsman knew. Feature this add-on caveat:

"In the case of companies that behave strategically with CSR to anticipate and shape future regulations, welfare may be reduced if the result is less stringent regulatory standards."

In other words, if my 'how green is my company' corporate campaign is really to pre-empt optimal regulatory actions -- and it succeeeds -- well, even the Kennedy crew will cry "foul".

4) "Do firms behave this way?"

In a word -- no. As Captain Kirk said in episode 27, 'Return of the Gorn' -- "Bones, the smartest way to gamble is to load the dice."