10 Propositions on Ethical Capitalism

(This is one of a series of "10 Propositions....")

(Following a meeting organised by The New Economics Foundation, at the Institute for Contemporary Arts, London, 15 January 2002)

1 Good is done by firms involved in cigarettes, animal research facilities, oil, chemicals, landfills, drink, pornography, 'sweatshops”, and flowers grown in the tropics. Much less good is done by organics, windmills, 'fair' trade suppliers, 'development' NGOs.

2 It is a matter of debate what production systems and goods and services produce good, so it pays us to remember that describing CSR or ethical business is contested territory. Firms going for 'corporate social responsibility” can much more easily achieve political correctness than real good.

3 NGOs do not have a monopoly on understanding virtue. NGOs are romantic, idealist and propagandist. The public, media and corporations have been unwise to sub-contract so much ethical thinking to them.

4 Firms, instead of claiming to be 'ethical”, should say they are catering to a particular fashion, taste or market sector. The owners, managers and staff may share that taste, but they should remember that there will be others who, perhaps rightly, think them fools.

5 Ethics is like politics. I believe in the market as a force for good in rather the way a Conservative might think that self-reliance is good for the poor; I believe 'leftist' reform often does damage. Similar cases can be made for capitalism 'red in tooth and claw' vs 'Third Way' capitalism incorporating an NGO agenda.

6 Firms’ main responsibility is to speak truthfully to their realities. They may do good when they keep a simple profit-driven bottom line, they may do harm when they adopt a 'triple bottom line”. They almost certainly do good when they are honest.

7 Ethical production often means 'deliberate inefficiency', for instance paying more to some producers (usually of small scale, or 'organic'), or refusing the cheapest suppliers. Such policies can do harm by distorting markets and need to be discussed realistically.

8 Because so much nonsense is believed by so many people, firms are tempted to align themselves with the new language of 'corporate social responsibility” to keep the enthusiasm of key workers. This is no better than is talking ethical nonsense to consumers.

9 Western firms have many reasons to "export" some element of Western standards to Third World suppliers, and that can do real good and may deserve the label "corporate social responsibility". It is discussing the real limits to such "deliberate inefficiency" which ought to be a feature of firms' honesty .

10 Young people are very sophisticated. They understand that as consumers and employees they are in a morally challenging arena but will not 'buy' unchallenged the arguments of previous generation of hippies and do-gooders.