A Better Account of Corporate Social Responsibility

It was Milton Friedman who said: “a corporation’s responsibility is to make as much money for the stockholders as possible.” Despite his Nobel Prize, Friedman definitely hasn’t persuaded our business schools of that. In fact much of the literature on the social responsibilities of business was produced as a retort to that 1962 assertion of his. Business ethics courses today are dominated by Corporate Social Responsibility Theory (CSR). And out in the real world, major companies, and many small ones, too, advertise their CSR efforts on their websites.

CSR typically boils down to the claim that beyond what a company is legally obliged to pay to the state in taxes, there exists a moral obligation that a company use its private property to address society’s ills. This idea of a social justice mortgage on the holding of large private property enjoys weighty support from leading liberal theorists such as Peter Singer and John Rawls.

It is the egalitarian doctrines of Singer and Rawls that are regularly cited in business ethics textbooks as the deep logic of CSR. Rawls speaks of property as a “common asset” meant to serve the least advantaged. Singer believes his formulation of the guiding principle of utilitarianism—the greatest happiness for the greatest number—proves there is a moral obligation to radically curb luxury business and reallocate that money to the poor.

But what a canard it is that people on the Right—whether libertarians or conservatives—don’t care about the poor. Of course they do. They care about other things, besides. After 9/11, the executives of FedEx, which was founded by an ex-Marine and Vietnam veteran, believed their company had a public duty to aggressively ramp up the scrutiny of packages, and far more than other American carriers absorbed the costs of security training for staff at the expense of higher shareholder profits.

If conservatives and libertarians are likely to think this should qualify as CSR, egalitarians are sure to see it as quite beside the point, for it hasn’t any bearing on steering management to pursue social equality goals.

Interestingly, two Italian fashion houses are pushing back against the simplistic CSR that is trotted out in our business schools. Late last year, Prada released a new CSR statement in the form of a charming film. With no mention of the poor, the piece declares that Prada’s CSR consists in the preservation of craft, land, and high culture. This is all the more startling once it is known that Miuccia Prada, a designer and highly successful businesswoman with a net worth of some $11 billion, is also a PhD in political science and a one-time member of the Italian Communist Party.

From his 14th century castle vantage, Brunello Cucinelli can look over the Umbrian hills that surround Solomeo, the formerly dilapidated Italian village restored to life through his eponymous fashion label. Fields that had gone to ruin are now home to sheep tended for his trademark cashmere; abandoned houses are now the workspaces and homes of seamstresses; and forlorn streets now bustle with young students leaving classes at the school for artes mechanicae recently established by Cucinelli.

Cucinelli’s inspiration is political: he wants to revive the Italian “age of communes,” a conscious affirmation of the Italian social and physical landscape shaped in the Middle Ages by self-sufficient trading communes distant from the authority of Pope and Emperor.

Theoretical support for the CSR of these Italian fashion houses comes from a philosopher I’ve mentioned before in this space, Max Scheler (1874-1928). A highly influential German philosopher, especially in European conservative and Catholic circles, he is the author of “Christian Love in the Twentieth Century,” a 1917 essay that develops a model of business organization: the estate.

The first thing one might think of in this regard is a country estate, a manor with surrounding lands, cultivated for food or sport. Scheler’s idea does not exclude such estates—or, say, monasteries that brew beer or produce other crafts or wares—but he defines an estate as any business organized around place, history, and self-sufficiency for itself and its workers. The estate—a place where knowledge is gained, innovation exercised, and a space that is also a web of sympathies—cements the dignity of the people who inhabit it. It is a place of work, a property that fosters a standing in the community. It provides a role for self-regulating human effort. Linked to a community, it is a concern of families in a locality.

Here is how Scheler puts it:

An estate is something stable, a standing or status, something wherein a man is self-sufficient, but which he nevertheless does not freely choose like a profession, since he merely finds himself “placed” there. But to know one’s estate is to be truly at home in the State, at home in the consciousness of firmly defined and assured lawful rights on which no one may trespass.

This is not a vision of work that we moderns share. We think of anonymous office blocks, mega-factories in China, or contract workers toiling in vast warrens of cubicles. Such images convey the idea of a worker having a function but no role: a mere body able to be slotted into changing conditions of work and replaced rapidly if necessary. By contrast, an estate is the seat of work that shapes a person’s identity.

In the fashion world, design houses always depend on the liberal arts. The “grammar” of fashion is history, narrative, art, and geometry, but Cucinelli has supplemented these with a “School of Craftsmanship,” with the cost of attending borne by his company. The crafts of mending and linking, cutting and assembly, tailoring, masonry, and gardening, along with philosophy and ethics, are taught. These mechanical arts are about history and place. They express and reinforce the long life of the village of Solomeo: they build upon the physical memory of the thousands of villagers who built and rebuilt their homes there.

These arts also assert the independence of the village, its competency to shape full lives for its young and old. They make a place “dense,” alerting other citizens, and the government, that deference is due to lands and lives organized around traditional skill and innovative work. The estate is an identity, a confidence.

A five-minute video, “A Man and His Dream,” offers Cucinelli’s ambitious philosophy, and mentions one of his motivations: his father, a villager who went to the city to work in a factory and there endured ridicule from his coworkers for his village ways. Cucinelli, dubbed by the Wall Street Journal as the “King of Cashmere,” swore he would seek a business model that would guarantee the dignity of his staff—of employer and employee alike. His video shows seamstresses at work in a well-lit and nicely appointed room, and shows him discussing his intellectual role models. From his reading, he says, he gathered what was necessary: From Immanuel Kant, he learnt both the importance of physical and moral beauty; from Jean-Jacques Rousseau, the worth of village life; and from St. Benedict, the role of the abbot father who manages others but always with an eye to the confirmation of their dignity.

“Humanist enterprise” is Cucinelli’s term for his brand of capitalism. His business, with no debt and more than $300 million in net revenues, clarifies that CSR can profitably be built around tradition, land, and nobility. In light of the examples of Prada and Cucinelli, and the theoretical principles of Scheler, it would be possible for companies like Chanel, Cartier, Hermès, Jaguar, and Ferrari, to name a few, to take heritage—the idea of craft and place—seriously. If they did, they could affirm that their core trade meets the obligations of CSR rightly understood.