Is the only responsibility of business to increase profits?

If one were approaching the question from the viewpoint of neo-classical economics, one could answer with an almost trivial ‘yes’. The creation of profit is primary, and indeed sole, responsibility of a business. Indeed, it is an underestimation to say 'responsibility’ when 'purpose’ would be more accurate. However, as we are considering moral theory, we can take a moral holistic approach to such matters; asking the normative questions of whether profits 'ought’ to be the only, or even primary, motive of a modern business. Perhaps an entirely new hierarchy of rights and responsibilities could be found? This essay will examine such questions.

As it stands, the question does seem to be stacked (as with many essay questions containing this word) against a positive answer, as 'only’ generally infers that there are, at the very least, numerous viable alternatives. Are there? Or, to look at it in a different way, it is sensible to assume that taking profit as a sole responsibility would be a negative for the business, community or society? At the business level, if we taking the business as a private, profit-desiring venture; then it seems that seeking increased profits would inherently be a good thing. Bigger profits bring bigger dividends for shareholders, easier access to capital, more opportunity for expansion, etc. It is instead at the community or societal level that theorists question the positive nature of capitalist profit. However, as initially agreeable a position as it may seem, the notion that 'pure’ profit seeking will be 'bad’ for society is not beyond debate. Without delving too far into the historical record, we are currently sitting on a system which has provided the most successful economic position of recorded human life. More people can more often afford more things than even their parents could have dreamt of, under the guidance of a capitalist mode of production. Of course, one could argue about the consumerist nature of current desire, but that is beyond the scope of this essay. It suffices to say that if we can assume that increasing the economic performance of an area or state, on balance, is a morally good thing. It could be negative if, say, exploitation of others was involved, but the various theories of trade in modern economies all point to such coercion being unnecessary. In short, everyone can get richer. Under such an assumption, why not focus on increasing profits? If we choose to examine the issue as a zero-sum game, then it might be assumed that focusing on profit generation will naturally damage other areas, such as worker safety or product quality. But, ultimately, the companies that bring in the greatest long-term products do not do so by cutting corners. It may be a way forward in the extreme short term, but in a modern media and public relations climate, the risks almost always outweigh the gains. In America, long seen as the champion of business-friendly policy, has shown its teeth with regard to corporate malpractice. The most famous case of the last decade, the collapse of the Enron Corporation, brought a 24-year jail term and $50 million fine for the Chief Financial Officer, Jeffrey Skilling. This highlights the downside, not often mentioned, of cutting corners, whether in safety or accounting.

Leaving the possibility of cheating to one side, is the focus on profit-generation inherently bad? I believe not. As mentioned, profit has been the primary driving force behind capitalism, arguably (along with a capital-friendly formulation of liberalism) the dominant ideology of our time. In saying that businesses shouldn’t seek to maximise profits, we are essentially arguing against success, of which profit’s role (or one thereof) is to be a marker. Google Inc., for example, had an operating income of $8.3bn in 2009, because it provides an immensely useful service to humanity; i.e. the sorting of the world’s online information into human-searchable indices. Putting a price tag on the social value of such an operation is exceedingly difficult, but it would almost certainly exceed Google’s revenue of $23.7bn. How can this be possible? The service Google provides, and from which it receives such large benefits, forms part of a multiplier effect within the internet ecosystem, allowing the operation of other services, which allow the operation of others, and so forth. These networks of services, branching out from the relatively simple tools provided by Google, provide innumberable social benefits, while all ultimately emanating from a profit-driven company. Clearly, Google forms just one example, but I believe the common mistrust of profit is (in part) based on a misunderstanding of economic fundamentals.

Are there any arguments to be made for a company being concerned with other goals, possibly even to the detriment of the profit motive? Leaving aside the possible damage to the capitalist mode of production, there are a few things to say in the idea’s favour. To use Google as an example again, their stated goal is to 'organise the world’s information’. It seems unlikely from observing their corporate actions that they have any intention of forsaking major profit in search of other goals, but such a company policy may be of benefit. We could certainly argue that the policy enthuses staff members who may be uncomfortable with the profit motive, or see the organisation of data as incomparably more important a goal. Most certainly, it has advantages in public relations, where Google is (rightly or wrongly) seen as 'more’ than 'just’ a company.

But should Google be forced (for example) to live up to its mantra of “Don’t Be Evil”? This calls into question the moral status of a corporation, which is strongly debated to this day. As far as Western legal systems are concerned, the corporation is a person, existing quite separately from its constituent managers, shareholders, workers, contract holders, etc. To assume that a company should follow a moral code is to say that either the company ought to act in a moral way, or its guiding members ought to. In terms of the latter, it is hard to see (beyond a strict legal sense of the term), how we can ascribe moral responsibility to a company. A corporation is an artificial construct, created for the better and more efficient pursuit of business. At its most simple, the company cannot murder, steal or lie. It has no existence beyond its members, who (collectively) control its every move. Morally, this is quite different from (say) a human being with severe brain damage, who may be said to have lost their moral status as they don’t fit many of the definitions we would use of 'human’. However, it is doubtful one can say the same about the corporation. It has never had a corporeal existence, nor has it ever had independent thought. To ascribe it moral status seems to require either an overly legalistic view of morality, or treating 'company’ as synonymous with 'stakeholders’, a linguistic cheat.

To consider the second option properly, that the collective members of a company (shareholders, managers, workers) should act morally seems to begin on a stronger footing. Whatever moral codes we might argue that act on the individuals will still act, whether de-ontological, utilitarian or other. Whatever cinema might have us believe, one does not leave one’s personal morality in a coat cupboard every morning. To be sure, dealing with a group of people both as individual moral agent and collectively-responsible representatives of the company is difficult, but I believe these can be overcome with some nuance. Each person will have their own code of conduct, even if not codified in their own minds as a formal 'moral theory’. It would be a good rule-of-thumb for business, along with moral interaction, to not ask a subordinate employee to engage in a practice antithetical to his most fundamental moral values or beliefs. But how can we deal with the group collectively? How does one divide blame for a problem; equally between person, weighed by power, weighed by input, etc? The most obvious condition would be to weigh the blame by closeness to the problem in question, but that is often not possible. In the case of the recent crises at major financial institutions, trades of derivative products were happening which were entirely irresponsible, and in some cases outright illegal. But due to the extreme specialisation of tasks in modern finance, the apportioning of blame would be almost impossible. If a nebulous team form a report that Asia-Pacific should be investigated, another team points to Japan, another to a specific sector, yet another to a company; then a myriad of traders and salesmen actually execute the movements, who should we blame? If not simply 'the last trader who actually pulled the financial trigger’, that seems entirely contrary to our fundamental conceptions of justice. But what alternative is there? Follow the chain, possibly for years into the past and people who may be ex-employees, to find such a historic responsibility? Or, of course, the third option would be 'political’ style of leadership, for most blame (or praise) to lie with the Chief Executive Officer and his surrounding team, however little input he/she may have had into the product into question. This too seems as morally arbitrary as punishing the last person to execute the trade, expecting an unreasonable level of personal responsibility and continual awareness of company minutiae. To my mind, the only sensible option is some variant of collective responsibility, where every employee who might have been involved is punished for problems or complaints within that area.

It should be noted here that the question asks for the moral position of 'business’, uncounted noun referring to general sectors. While we may come to the sensible conclusion that a focus on profits is the way to go for individual corporations, this conclusion may not hold when we move the focus to the general business community. As noted, profit serves numerous purposes, such as signalling opportunities to other firms. But, within business as a whole, there is no 'other’ to take advantage. Other than the profit motive driving innovation and improvement, it seems that we could be left with a rather cold, self-serving system. Also, when we are considering business on this level, we have to consider the impact of scale on how business reacts to other concerns, such as political and cultural necessities. In each sector, a single corporation is generally fairly powerless to control many aspects of the market, getting price and quantity of its goods largely from the market and conducting its business accordingly. However, for business as whole, there is great power. The moral responsibility of all enterprise for, say, environmental concerns is great. It may well be that, even though each business can individually see that cutting carbon emissions would be their long-term interest as extreme climate change is avoided, none act due to fear of inaction by others, and therefore a loss of competitive advantage. In this case, there would be a role for enacting a formal moral responsibility across the business community, though the level at which it would be best placed is unclear. Arguably the individual is the actor most able to influence every step of the company’s performance, but individual change is extremely hard to accomplish. More realistic may be political constraints on the company as a whole, for example setting a cap on the carbon intensity of production, or the amount of carbon to be imported each year in the form of foreign-manufactured goods. Neither of these schemes would be ideal, imposing costs for both the company and state or individual, but in moral theory singular considerations often have to take precedence. Whether utilitarian, de-ontological or virtue ethicist, one can see that the business community’s reaction to the possible impact of climate change will be a major test of the concerns voiced above.