When I saw the op ed by Henry Manne below, I thought Rick had stumbled on something that Henry Manne wrote in 1976, not 2006. To my surprise, it was an op ed he had published very recently. Manne, the former dean at George Mason, is one of the founders of the law and economics movement, and was particularly influential in its application to corporate law. He was particularly disdainful of the notion of corporate social responsibility, which had only just begun to make a splash in the '70s. He elaborated Milton Friedman's old saw that the corporation's social responsibility was to make a profit. His new op ed shows that he is at least consistent. But that's about the best thing I can say it.
Where to begin? Let's start with his claim that the idea of "corporate social responsibility" (CSR) is being pushed by those "who do not like or appreciate the genius of corporate success stories." Apparently all of us who think that the idea has some traction are lefty ex-hippies who hate anyone who knows how to make an honest buck by starting a business. To be sure, there are plenty of reflexively anti-business lefties; probably about as many as there are reflexively pro-business rightwingers. But there are plenty of people like yours truly, who have spent plenty of time on corporate boards and representing entrepreneurs (and probably more then Dean Manne), who find his (and Friedman's) approach to CSR reductionist and, at least, incomplete. Manne's canard, which is one also used often by Michael Novak, is a way of (inaccurately) attacking the messenger rather than the message.
Another reason I thought this was an old piece was his claim that all this CSR stuff was the "essence of socialism". Is "socialism" still a dirty word? Are there still "socialists" around? I know there are still "socialist" parties around in Europe, though of a watered down type, but is anyone who talks about the CSR in the US really talking about state ownership of enterprise? I imagine that Manne's definition of socialist is so broad as to encompass any attempt to constrain private property through anything other than a minimalist conception of obeying the law.
But let's get to his real argument. According to Manne, the public corporation is private property that exists to make a profit for its owners. It must obey the law (misguided as those laws may be), but it has no moral responsibility to be "socially responsible" beyond that. Imposition of any legal obligation to be "reponsible", in that sense, is an attempt to undermine the sanctity of private ownership of private property, which he regards as the "essence of socialism." There is an intuitive sense in which Manne/Friedman are correct. There is strong philosophical support for the notion that a thing should be what it is, in this case a profitmaking entity, and not something else. And the private public distinction in business is an important one. The dismal failure of most state-owned business entities in Europe shows one of the reasons why. But even if there is an element of truth in the lapidary Friedman/Manne formulation, and an elegant simplicity that makes it appealing, it misses all the nuances that make the question of CSR more complicated than they believe.
First of all, there is a bit of a straw man in his argument. Manne seems to suggest, although he is not very clear, that government is imposing substantive requirements for CSR. If he is, I am not sure what he means. Most companies who choose to do things as a matter of CSR, do so not because required by law, but voluntarily. They usually adopt CSR programs not out of altruism, or even because they believe what they want to do is good, but because they believe that doing it will be good for business. Sometimes this is cynical pandering for publicity's sake; other times it is a sincere effort to build good will, to establish a reputation as a responsible citizen in the relevant community or because it will have positive internal effects on its work place. Hardly socialism, and hardly inconsistent with Manne's insistence on the primacy of the profit motive. Indeed, much of the current CST movement, especially in Europe, rests specifically on the CSR=Good Business equation. Hence there is a market for such things as "social accounting" and management techniques for determining the appropriate focus of CSR activities and assessing their impact. Actual government imposition on corporate governace of CSR requirements is quite rare, at least in the US. Those should not be confused with regulatory imitations on what corporations do -- environmental regs, OSHA requirements, antitrust laws etc. Perhaps Manne would like to get rid of them as well, but that's a different argument. This argument is about whether public corps should have a state-imposed legal obligation to pursue a " social good" unconnected to profit maximization. To be sure, there are a few instances of that sort of thing -- perhaps the community reinvestment requirements imposed on bank mergers -- but that is definitely not the legal norm.
Second, the Friedman/Manne "minimalist "law compliance" modelm of CSR is more than a little simplistic. A public corporation is not like a big dump truck that obeys the red light or not. First of all, thru political influence (remember your public choice theory), large public corporations influence what the law is. They try to decide what is "good" as a matter of policy. However, their conception of the good can be, in a word, narcissistic. I have written elsewhere about how Enron (just to use a well known example) affirmatively shaped federal law to insure that virtually all of its activities would escape any type of meaningful regulation. I am not arguing here about whether that is good or bad (it is inevitable, anyway), but to suggest that the corporation should be understood as passive subject of the laws is a bit naive. Second, the psychology of law compliance is extraordinarily complex, especially in institutions. As Robert Jackall as shown in his classic "Moral Mazes: The Moral World of Corporate Managers", an institutional culture of minimalist law compliance breeds a cynicism and opportunism that undermines the possibility of real compliance. The absence of any kind of ethos of social responsibility will exacerbate that risk. In other words, a CSR ethos may in fact facilitate law compliance, making it less necessary to rely on expensive regulation and enforcement efforts to constrain corporate illegality.
Third, Manne lists a number of CSR concerns that he seems to feel are being thrust upon corporations. From the list, he seems to be talking about the kinds of things that are the subject of shareholder proposal that SEC regs may require to be presented in the corporation's proxy statement. The government is hardly forcing the corporation to actually do anything about those concerns; they merely require them to be brought to the attention of all shareholders, who then, theoretically, might use their votes to require the corporation to do something about them (although they usually don't). We can argue about whether the SEC concept of shareholder democracy makes sense in terms of the proper economic roles of shareholders and managers; we cannot argue that they reperenent an SEC endorsement, and hence imposition, of any shareholder's concept of social responsibility.
Fourth, and perhaps most important, Manne implicitly but utterly rejects the vision of the corporation implicit in Catholic social thought, which cannot be reduced (pace Steve Bainbridge and Michael Novak) to the liberal (in the classic economic sense) vision of the public corporation as a species of private property, defined exclusively (or essentially) by contract and devoted to shareholder wealth maximization. Recent work has produced linkages between CST and CSR that are incompatible with Manne's "law compliance" approach. This new movement goes beyond the CSR=Good Business approach mentioned above; It would justify CSR not because it is potentially profitable, but because it helps corporations ahieve solidarity and serve the common good in the CST sense. I can hear Manne laughing about those concepts, but that only shows the profound philosophical gap. In any event, I've written about much of that elsewhere, so will end this response to Rick's invitation to a smackdown here.
--Mark
I just had the opportunity to listen to the oral arguments held at the Supreme Court a few weeks ago on the new partial-birth abortion case, Gonzales v. Carhart. It was ear and eye opening to listen to how highly intelligent people relied on euphemism (e.g., “fetal demise”) to escape coping with the reality of what is at the core of the case and, therefore, at the heart of abortion itself—human life. I hasten to add that some of the participants would periodically indicate or otherwise suggest that two human lives are involved in every abortion case that is litigated; however, others could not or would not make this concession.
Very early on in the oral argument the listener hears a discussion about dismemberment, but what is being dismembered is not mentioned. The object/subject of this procedure is left to the imagination of the listener to identify. But, with patient listening, the identity of the object/subject becomes clear; however, with the increase in this clarity, the efforts by some to fortify the conclusion that it is not human, or at least outside the scope of Constitutional protection, intensify. Some of the presentations are concrete when they focus on “the health of the woman (mother?)”; however, they become more abstract when the “other entity” is mentioned.
I was particularly struck by Justice Steven’s remark about whether the “other entity” is identified as a child or as a fetus might depend on whether it is more than half-in or half-out of the woman just prior to the moment of “cranial evacuation.” It was also sobering to hear Justice Ginsburg note that any “medical procedures” take place inside of the woman’s (mother’s) womb are permissible since they cannot be considered infanticide. These particular discussions introduced two other phrases that captured my attention: the “spatial line” and the “anatomical landmark”. In other words, the geographic location (something which I have previously addressed in earlier discussions about abortion and the law) may have a bearing on the legality or illegality of the abortion procedure and the “rights” under review by a court. However, I find that this preoccupation with geography dismisses the reality that this and all abortion cases ultimately deal with the lives of two human beings rather than one. The problems that geography poses for Constitutional law has been previously demonstrated in cases like Dred Scott v. Sanford. Moreover, I find that the legal fictions built upon these troublesome euphemisms mask the awkward reality that one human being, in the minds of some lawyers, can be sacrificed so that the other human being, the woman, may have a better chance at survival in some hypothetical situation. This point becomes all the more poignant when one realizes that what challenges the survival of the second may itself be a fiction—but a fiction which nonetheless permits the sacrifice of the first human being in any case.
It was also sobering to hear the lawyer from the Center for Reproductive Rights, who argued the case on behalf of the plaintiffs, state that some abortion procedures can lead to “consequences [that] are devastating.” Devastating for whom, I might ask? Any abortion procedure—be it completed inside the womb or outside the womb—is always devastating for the baby. In this regard, I found Justice Stevens’ characterization of the partial-birth (D&X method) abortion dealing with an entity “inches away from becoming a person” perplexing. Again, the legal fiction that defies fact still carries the day for some. I found Solicitor General Clement’s different formulation—“inches away from being born”—more accurate. For some of those involved with the oral argument, there also seemed to be confusion about whether the entity that could be sacrificed is in fact “living.” This confusion became evident in the discussion about “fetal viability.” A brief consult with any basic medical textbook on human embryology will clarify the matter: the fetus is a human life—it is not some tissue or anything else. It is and remains human life, the very human life that we all represent. How the Court will decide this case remains to be seen. But the conclusion reached by Dickens’ Mr. Bumble about the law on certain matters suggests something more clear and tangible about the law when it relies not on fact but on a fiction that defies objective fact. And, from my perspective, this is something that the law cannot afford to be when human life is at stake. RJA sj
