Chapter 3: The Corporation, The Real American Idol Part 14
Let me be clear: I think corporations are fantastic at creating goods and services – they enlist cooperation on a level not possible with any other system. However, even Adam Smith, who coined the term “The Invisible Hand Of the Market” understood that free markets were good for maximizing economic value, and not moral value. A corporation is created to make money, i.e. increase revenue and minimize costs. Just as a real person will strive to survive and thrive in the fiercely competitive natural world, the artificial person seeks to survive and thrive in the highly competitive economy. But there is one key difference: a person’s struggle for survival is tempered by our capacity for moral reasoning, while a company is incapable of any moral agency.
Let me give you an example that seems obvious today: child labor. I don’t know when the first moral issues about child labor were raised, but in the United States, the first state to make child labor illegal was Massachusetts in 1832. At the Federal level, child labor was not illegal until 1938. So what happened in between? According to The Child Public Education Labor Project “Growing opposition to child labor in the North caused many factories to move to the South. By 1900, states varied considerably in whether they had child labor standards and in their content and degree of enforcement.”
Lets unpack this: there were a heterogeneous set of laws, and presumably child labor was less expensive or more productive than adult labor. So a factory in a state where child labor was illegal was at a disadvantage when compared to a state without regulations. Based on the numbers, the business case was strong to move the factory. The only thing to keep it behind would be a moral argument. But in my experience, it is hard for a morality-based argument to beat a numbers-based business case, especially if inaction could threaten the future viability of the business.
Now, I grant that some companies have cultures that do try to adhere to standards other than the numbers. (I reject the notion that there are “good” companies on the same grounds that I reject the concept of “evil” companies.) But whatever company you are in, I would not trust them to set my moral compass. They simply cannot detect moral issues. Asking a company to do the right thing is like asking a blind person to pick out the blue shirt. They can pick a shirt based on size or texture, or maybe even a label that says “blue” in brail. But they do not have the sensory apparatus to know the difference between blue and red.