January 25, 2011

The Corporate Duty to Rescue

Here's a nice example confirming a thesis I'm arguing in a research article in progress. The view is that with great power comes great responsibility. And just as natural human persons have a moral duty to rescue, that is, to come to the assistance of others in distress, so do artificial corporate persons. Several companies, including Wal-Mart, FedEx, and Office Depot did so in the aftermath of hurricane Katrina, for example.

Now Wal-Mart has pledged to make its food much healthier and reduce the price of fresh fruits and vegetables over the next five years. Furthermore, the company says it is covering those costs itself. It says it is doing so essentially because it is moved by the appeal of Michelle Obama's public-interest campaign against obesity. It hopes to recoup the costs over the longer term in increased sales. Presumably, this means attracting more educated health-conscious consumers to its shelves.

This is a perfect example of enlightened self-interest. But I would go further to argue that it is also a moral obligation. For as the article above aptly states:
"Some say the company has almost as much power as federal regulators to shape the marketplace.
“A number of companies have said they are going to make voluntary reductions in sodium over the next several years, and numerous companies have said they are going to try to get trans fat out of their food,” said Michael Jacobson, executive director of the Center for Science and the Public Interest. “But Wal-Mart is in a position almost like the Food and Drug Administration. I think it really pushes the food industry in the right direction.”
With great power comes great responsibility. And just as we frown on bad samaritans who do nothing but the barest moral minimum in their everyday lives, we should frown on bad corporate citizens that do the same, especially on those who possess great power yet flout much of their corresponding greater social responsibilities.

Particularly, persons have a moral obligation to come to the rescue of persons in distress, if they can do so relatively easily, by say, wading into a pool where a child is drowning. For example, a young man in France (which has the strictest duty to rescue laws of up to 5 years in prison) is now serving time for fleeing the scene of a car accident in which the driver ended up dying for lack of timely medical assistance. Similarly, corporations--especially those with great power and influence--have a moral obligation to counteract major social ills such as those befalling public health (obesity) and the environment (global warming).

For to stand idly by is to exhibit a shocking disregard for others' interests, and ultimately even to one's own longer-term interest. For a society in which no one looks out for anyone but him or herself is not a society much worth living in, or defending. Ultimately, we are social beings and our happiness is bound together with that of others. And the degree to which we are all concretely dependent on what major multinational corporations do (or fail to do) now to avert great harms currently befalling the global climate and public health, is embarrassingly evident.

Michelle Obama justly praises Wal-Mart for this initiative. The company has also done a great deal lately to lower its carbon footprint. But the point I want to underscore here is that such actions are not merely altruistic and optional good deeds. They are basic moral obligations. And governments are within their rights to force them to do such deeds if they do not do them voluntarily. And there has been some of this here as well. For it is surely the threat of impending regulations limiting trans fats and sodium that has helped bring Wal-Mart to this point. ConAgra has also pledged to reduce the sodium content of its foods by 25% by 2015.

Research shows that we often rise to the ethical occasion through a combination of intrinsic and extrinsic reasons. Social and governmental forces can offer helpful extrinsic pressures. But ultimately, these should mostly serve to strengthen our moral hearts within.


  1. Corporations are comprised of people.

    And people have varying degrees of a moral sense - including some with high moral standards and those that buy into the power/responsibility proposition that you cite.

    But corporations - by charter - have a single, adumbrating mission, mistake it not: to maximize shareholder value. (It is somewhat passe' - tho I myself have recently stated it thus - to identify the mission as "to maximize profits". Certainly, maximizing profits should lead to maximizing shareholder value. But that is not the only way to accomplish it, as the M&A and private equity fever has demonstrated. A corporation can lose money and still maximize shareholder value by assenting to a lucrative acquisition, which acquisition may make sense for varying motives, including tax reasons and accounting legerdemain...)

    As such, there are real constraints as to what a corporation can and cannot do. A corporate leader who - swayed by a larger moral sense - champions or implements changes that negatively affect the bottom line will not last long, no matter how noble their purpose. Of course, privately held - closely privately held, as in family or owner-owned - concerns can put morality over shareholder value at will. That may or may not be the case with Walmart. But more often than not, such concerns are more like Newscorp than the Rockefeller Foundation...

    And any implicit or explicit believe that "the market will punish immorality" we should have been disabused of after the recent events of 2008 thru the present. American consumers are completely dependent on credit. There is a much more stringent limit as to what we are allowed to walk away from. If GM can't cut it in the US domestic auto market, it can now walk away from us - not we from them - and survive just fine, thank you. Boycotts and "voting with our feet" - in this case, our discretionary spending, which shrinks by the day or is at best fueled by tremendous debt, which has strings - has become a very debased currency.

    That Walmart has decided "on its own" (perhaps...) to endorse the sale of healthier food content is not laudable - it is what I would consider, from a moral standpoint, about time!

    And it should be noted - we don't see the "entire ledger", as it were, of Walmart. We don't know how the decision was really made, what offsetting moves have been made in the shadows to make up for what might be lost revenue in deference to some lofty moral purpose, or what deals have been concocted on the side (Subway for McDonalds - was it really that much of an advance? What is the net-net of that deal? Has anyone investigated?). And this is to say absolutely nothing of the fact that Walmart doesn't have to push by itself the processed products so effectively pushed in the media without them lifting a finger - soda, snacks, prepared meals and the like. Those things will fly off the shelves - all Walmart has to do is stock 'em.

    Our standards have become so debased that something as limp wristed as this should be the recipient of our lauds. It is like the widow of the recipient of the ill-gotten gains from his Madoff investments being lauded for returning what was, after all, stolen money. Would we laud Dillinger or Al Capone were they to have returned their stealings - but only some! - with a note that read, "Hey, um, sorry 'bout that!"

    I am not swayed by this argument. As with so much else, the frame has shifted so far off the beam that we view high crimes and misdemeanor as SOP, and simple larceny as virtue.

  2. Indeed Gavino, we don't know "how the decision was really made, what offsetting moves have been made in the shadows to make up for what might be lost revenue in deference to some lofty moral purpose, or what deals have been concocted on the side."

    But from what is being reported and what many long-time observers including myself gather, the reasons are likely the ones given here in my blog. It's essentially enlightened self interest. It would have been more enlightened if it had come sooner, i.e. before the company had saturated the low end market and needed to expand to the more educated health-conscious and environmentally-aware consumer.

    Still, it's a gamble. For it's not clear that demographic is really being attracted to the stores any more now that the company has already made itself much greener for example. So this is why I call it "enlightened self-interest." It's a calculated gamble toward the greater good, which of course includes the economic interest of the shareholders, first and foremost.

    But that should be the case for most business deeds.

    As it is for most human deeds.

    The only qualm I have with this model is that it sees the shareholder interests as primary. My argument is that as a major multinational corporation, indeed the biggest employer in the country, it has uncommonly great power, and thus a correspondingly greater obligation to the collective social good.

    If we continue with the person metaphor, it's essentially like a superhero, who also has a greater responsibility than an ordinary person to use his/her powers for the greater good.

    We could thus imagine all the major MNCs as corporate superhero characters.

    Wal-Mart's main superpower is the ability to make essential retail goods available to the struggling lower classes, in a single bound!

  3. Truth! Justice! And the American Way!!

    What you say that is unchallengeable, in my view, is that corporations, especially the "super hero" ones, wield ...

    "uncommonly great power, and thus a correspondingly greater obligation to the collective social good."

    I agree that they have that obligation.

    What I doubt is that they will pay heed to that obligation.

    In theory, the dialectic, if I may, of the interests of the shareholders and those of society at large, which they ostensibly are part of, should militate towards "better" behavior.

    The problem with this is the assumption that those shareholders a) have power beyond ratifying the insensate striving to maximize profits, as narrowly defined; and b) are genuinely part of OUR society at large.

    Gated communities, private schools, privately paid for services (sanitation, security, even transportation) and amenities (aka, health care) all work to undermine the spirit of "we're all in it together" and reinforce and ethic of "every man for himself".

    In such a sphere of existence, any force or agency that is done directly acting in their narrow interest is anathema; and service performed that does not yield per dollar benefit is seen as theft.

    We, therefore - us schlubs in the "society at large" - and our protective constructs, usually called "the gumment" - are rightly viewed as the enemy.

    The response, therefore, is to co-opt the govt from being a protector of the commonweal to the scourge of God - or, rather, in the context you set out with the superhero meme, the scourge of the gods-on-earth.

    This, of course, is human history in a nutshell. It was an accident that the American middle class arose to such proportions, that wealth (and power! Let's not forget power!) should be so widely distributed as it was. A cynic might thus claim that all that's going on is a return to Standard Operating Procedure.

    Hope springs eternal, tho, and one can only hope that what you are seeing might be the beginning of a trend.

  4. The question of whether it will happen is rather empirical, and certainly salient.

    But the point I am making here of course is primarily ethical.

    Still, it does seem that it is germinating in the wider corporate consciousness however slowly, given polling and the reasons given lately by several MNC initiatives.

    I am trying to encourage this view by giving it some relatively concrete philosophical grounding in ethics and justice theory, that may stand the test of time.

  5. Yes, well, the ethical argument is dead on sound.

    And your efforts to push it are sound - and needed - as well.

  6. Very interesting. Looking forward to checking out the article you're working on.

  7. I agree with Gavino that the powerful are trying to make sure the rise of the middle class was an abberation. These people have a general disdain for poor and middle class. I am hopeful that we will all at some point wake up to reality of what is happening. It should have happened by now though.

  8. Yes, well Brad, what is going on right now in Wisconsin and in the Midwest generally, using private funding (Koch bros.) to dismantle public employee unions is a perfect example I'm afraid. Here is a nice analysis on that: http://www.newyorker.com/talk/comment/2011/03/07/110307taco_talk_hertzberg

  9. Julian are you saying with the conclusion, that Wal-Mart is doing this in part because of government regulations?
    Then in developing countries that the government doesn't impose such regulations or there isn't a Michelle Obama campaign. Do you think they will carry the same moral responsibility to do these actions?

  10. Yes to your first question. I expect the company is doing this in large part to stay ahead of possible government regulations. And thus I expect that Wal-Mart will not carry the same level of moral responsibility elsewhere. However, the company has also gone out of its way at times entirely out of its own moral consciousness. So it's really hard to say.