Corporate Conformism
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The Spring 2021 FC Talks series is dedicated to our late colleague, Patrick Harless. Patrick Harless was an economist who joined the Freedom Center in 2018. He was a dedicated educator who, although his work was highly technical, was able to teach economic topics all levels of students. This memorial series brings together talks by Harless's former PhD advisor, his co-authors, and our own faculty.
Saura Masconale is an Assistant Professor and Director of Outreach here at the Freedom Center. Saura is a PPEL scholar whose interests range widely, from corporate governance and the role of fairness in the corporation to, more broadly, the relationship between legal institutions, inequality and efficiency. Her most recent work examines the role of the public corporation as a producer of moral goods and aims at showing that a hybrid regime where both the government and corporations are in charge of producing such goods is desirable. For her FC Talk, Saura is going to present a paper on corporate conformism, which Patrick gave her valuable feedback on.
Abstract: Corporate social responsibility (CSR) has gone mainstream. The growing “demand for corporate morality” has prompted new optimism among scholars about corporations’ ability to cater to both our economic and moral preferences. However, while scholars agree that the production of “moral goods” may benefit society as a whole, they continue to disagree on whether it can be reconciled with economic efficiency. This talk suggests that the real cost of CSR is not economic but democratic. When a morality demand is introduced in competitive markets, there is no profitable deviation at the equilibrium for corporations as producers of moral goods, as not engaging in CSR would make them less competitive. This equilibrium prediction dispels concerns about economic efficiency—but implies a warning against the risk of “corporate conformism” and a loss of pluralism. This risk is a by-product of the divisive nature of moral goods, as a reflection of individuals’ often conflicting moral preferences. Attempting to capture a larger demand, corporations conform to the morality of the capitalist majority, even though it might represent just a minority of individuals. This threatens moral pluralism, potentially explaining why CSR engagement presently tends to have an almost exclusively progressive connotation. There are no easy answers to cure CSR’s overlooked democratic dysfunction, but the talk concludes by attempting to identify the several tough questions that need to be asked to that end.
This talk will be hosted on Zoom by Lucy Schwarz. Please contact Lucy for details if you are interested in attending or if you wish to be added to our listserv.