July 25, 1996

July 25, 1996 | Commentary on Political Thought

ED072596c: Socially Responsible Business

The tragic ValuJet crash this spring, according to critics of corporate America, shows once again how the profit motive devalues and debases our society. If only ValuJet management hadn't cut corners to squeeze every possible nickel out of the system, the critics argue, the tragedy never would have happened.

Against this backdrop, let me recommend a new book to you: John Hood's "The Heroic Enterprise: Business and the Common Good," published a few weeks ago by the Free Press. Hood's book continues an important discussion launched some 35 years ago by the late John Chamberlain in "The Enterprising Americans." Chamberlain's book was a portrait of the towering figures of American enterprise -- the "robber barons," some called them -- who made America the great innovative industrial power it remains today: Eli Whitney, Samuel Morse, Cyrus McCormack, Cornelius Vanderbilt, Henry Ford, Andrew Carnegie, John D. Rockefeller, J. P. Morgan.

Chamberlain's point was simple: That the achievements of American business should inspire all of us, as he put it, "not because the pursuit of business is a sanctified end in itself but because it palpably makes the achievements of higher ends possible."

But do GM, Hewlett-Packard, K- Mart, TWA, Wendy's and other U.S. corporations have a responsibility to society beyond providing goods and services and generating profits?

Advocates of corporate "social responsibility" -- popular on college campuses, in Ben & Jerry's ice cream parlors, at Grateful Dead smoke-ins, and in government regulatory agencies -- argue that companies have an obligation to fight injustice, promote the public's health, diversify the workplace, eradicate poverty and save the planet, either directly, through corporate philanthropy or (most typically) by order of Big Brother.

While most of these are worthy goals, Hood demonstrates, as Chamberlain did before him, that business does more good for more people in more ways simply by sticking to business. In a Policy Review article previewing his book, Hood put it like this: "The corporate social-responsibility movement harbors an unrealistic, ahistorical view of commercial activity," focusing on disasters and villains, while ignoring "the revolutionary ways in which corporations have improved the everyday lives of Americans over the past half-century."

Consider just one small example: the U.S. gold-mining industry. As economist Michael Evans of Northwestern University's Kellogg School of Management noted in a recent Las Vegas Review-Journal article, "private investment, new technologies and enlightened management" have turned the state of Nevada into the world's fourth-largest gold producer over the past 15 years.

The industry now provides nearly 60,000 high-paying jobs in the state, is known for its "unmatched educational, health and other benefits," and pays some $120 million per year in state and county taxes. The industry also has spent billions of dollars on equipment built by other U.S. companies, generating additional jobs in other states. With the world demand for gold soaring, even better days could lie ahead.

Except for one fact: Washington doesn't appreciate the contributions of this "heroic enterprise." The government has restricted exploration, discouraged investment and placed a variety of other regulatory burdens on the industry. The net result: If current policies are not reversed, 40,000 mining-related jobs will disappear over the next decade. In two decades, the industry itself will disappear, according to Evans' research.

In many ways, the corporate social-responsibility movement is a red herring. As Hood notes, the best corporate citizens are those who create the jobs and amenities we enjoy and "the innovations that make our lives safer, healthier and happier."

I hope you will read Hood's "Heroic Enterprise." It will restore your faith in our system.

Note: Edwin J. Feulner, Ph.D. is president of The Heritage Foundation, a Washington-based public policy research institute.

About the Author

Edwin J. Feulner, Ph.D. Founder, Chairman of the Asian Studies Center, and Chung Ju-yung Fellow
Founder's Office