Saturday, January 16, 2010
We have long defended business around here, not only for its utilitarian advantages -- what other institution has done so much good for so many? -- but as a creative act fully as worthy of respect as any fine or performing art. Imagine our delight, then, to have come across this nifty essay on the subject (from a longtime reader):
[D]efenders of business have advanced two arguments. The first is that many firms are devoted to good works. They routinely trumpet their passionate commitment not just to their various stakeholders (such as workers and suppliers) but to the planet at large. Timberland puts “green index” labels on all its shoes. GlaxoSmithKline makes HIV drugs available at cost to millions of Africans. Starbucks buys lots of Fairtrade coffee.
The second argument is more hard-headed: that businesses have done more than any other institutions to advance prosperity, turning the luxuries of the rich, such as cars a century ago and computers today, into goods for the masses. General Electric’s aircraft engines transport 660m people a year and its imaging machines scan 230m patients. Wal-Mart’s “everyday low prices” save Americans at least $50 billion a year.
The problem with the first argument is that it smacks of appeasement. Advocates of corporate social responsibility suggest that business has something to apologise for, and thus encourage its critics to find ever more to complain about. Crocodiles never go away if you feed them. The problem with the second argument is that it does not go far enough. It focuses exclusively on material well-being, and so fails to engage with people’s moral qualms about business.
This is doubly regrettable. It is regrettable because it has allowed critics of business to dominate the discussion of corporate morality. For all too many people it is now taken as a given that companies promote greed, crush creativity and monopolise power. And it is regrettable because it has deprived the business world of three rather better arguments in its defence.
The first is that business is a remarkable exercise in co-operation. For all the talk of competition “red in tooth and claw”, companies in fact depend on persuading large numbers of people—workers and bosses, shareholders and suppliers—to work together to a common end. This involves getting lots of strangers to trust each other. It also increasingly involves stretching that trust across borders and cultures. Apple’s iPod is not just a miracle of design. It is also a miracle of co-operation, teaming Californian designers with Chinese manufacturers and salespeople in all corners of the earth. It is worth remembering that the word “company” is derived from the Latin words “cum” and “pane”—meaning “breaking bread together”.
Another rejoinder is that business is an exercise in creativity. Business people do not just invent clever products that solve nagging problems, from phones that can link fishermen in India with nearby markets to devices that can provide insulin to diabetics without painful injections. They also create organisations that manufacture these products and then distribute them about the world. Nandan Nilekani, one of the founders of Infosys, put the case for business as well as anyone when he said that the computer-services giant’s greatest achievement was not its $2 billion in annual revenue but the fact that it had taught his fellow Indians to “redefine the possible”.
A third defence is that business helps maintain political pluralism. Anti-capitalists are fond of arguing that companies account for half of the world’s 100 biggest economies. But this argument not only depends on the abuse of statistics—comparing corporate turnover with GDP (which measures value added, not sales). It also rests on ignorance of the pressures of business life.
Read the whole thing, and pass it around.