The Case Against Corporate Responsibility

Jeffrey Ballinger meet Aneel Karnani.

Ballinger is the father of the movement to tame Nike.

In 1992, he wrote the first expose of Nike’s abusive labor policies.

Ballinger believes that the corporate social responsibility movement undermined Nike contract workers’ demands for a decent wage.

Aneel Karnani is an associate professor of business strategy at the Ross School of Business at the University of Michigan.

Last month, the Wall Street Journal published a long article by Karnani titled – “The Case Against Corporate Social Responsibility.”

In short, Ballinger is a labor activist.

And Karnani is a capitalist.

They come at the issue from different angles – but they end up at the same place.

“Nike did a remarkable job of reversing its sweatshop image at a relative bargain basement price compared to having contract sweatshops pay its workers a living wage,” Ballinger told us recently. “They did this through corporate social responsibility hoo-ha costing maybe $15 million a year.”

I read the Ballinger quote to Karnani.

And amazingly, he agrees.

“Corporate social responsibility has been used by companies to ward off both the activists and to reduce the probability of more onerous government regulation,” Karnani told Corporate Crime Reporter in an interview last week.

“It’s greenwash. The United Nations has something called its Global Compact. It’s their version of corporate social responsibility. Many people call that bluewash, because blue is the color of the United Nations.”

“And companies pretend to be socially responsible, but they really don’t do very much. This keeps the activists at bay. And it might serve to keep government regulators at bay by saying – see, we are doing it on our own.”

“We should not expect companies to be socially responsible on their own if it is going to reduce their profits.”

“And that’s always the case in market failures. And there we need government intervention.”

The famed economist Milton Friedman argued in a seminal paper that “The Social Responsibility of Business Is to Increase Its Profits.”

Aneel Karnani agrees with Friedman – unless the market fails.

When the market fails, Karnani would impose government regulation.

“Milton Friedman underestimates these situations where there are market failures,” Karnani said.

“So, I would diverge from Milton Friedman. There are many situations where markets fail. And when markets fail, we cannot rely on the invisible hand to provide social welfare. We need to intervene – we meaning the government. We need to intervene to achieve social objectives.”

So, you like Ralph Nader? Crack down on corporate crime and violence?

“I wouldn’t go that far,” Karnani says. “Ralph Nader is too far left. I don’t want to intervene that much. I am a capitalist. Many of my colleagues think I’m too far to the left because I see market failures. But I don’t see them everywhere.”

“Food is an interesting example. There are market failures in food. And we do need regulation. But I don’t want the government to ban McDonald’s. There are people who choose to eat at McDonald’s. Knowing that eating burgers everyday is going to make you fat is no secret. And I don’t see that a law is necessary to prevent people from eating burgers.”

What about increasing the budget to crack down on health care fraud from one tenth of one percent of health care expenditures to one percent?

“I think that’s a good idea. I’m not familiar with the numbers on health care fraud,” Karnani says. “But the government needs to play a larger role. Free markets by themselves are not going to work. That’s where Milton Friedman and his followers underestimate market failures. In the modern society, market failures have increased.”

“There is more potential for market failures and therefore a larger role for the government. But we need to make the government more competent. We cannot continue with the same inefficient, corrupt, incompetent government.”

“The dumbest thing to do is to have laws that we don’t enforce.”

I read to Karnani a strategy put forth by the public relations spy firm Mongoven, Biscoe and Duchin (MBD).

MBD works to divide and conquer activist movements, MBD believes that activists fall into four distinct categories: radicals, opportunists, idealists, and realists. MBD outlines a three-step strategy: isolate the radicals, cultivate the idealists and educate them into becoming realists, then co-opt the realists into agreeing with industry.

“This seems even more cynical than I am about corporate social responsibility,” Karnani says. “This is good grounds to be even more cynical. Companies have figured out how to isolate the activists.”

RUSSELL MOKHIBER is the editor of the Corporate Crime Reporter.

[For a complete transcript of the Interview with Aneel Karnani, see 24 Corporate Crime Reporter 34(10), September 6, 2010, print edition only.]

More articles by:

Russell Mokhiber is the editor of the Corporate Crime Reporter..

Weekend Edition
March 22, 2019
Friday - Sunday
Henry Giroux
The Ghost of Fascism in the Post-Truth Era
Gabriel Rockhill
Spectacular Violence as a Weapon of War Against the Yellow Vests
H. Bruce Franklin
Trump vs. McCain: an American Horror Story
Paul Street
A Pox on the Houses of Trump and McCain, Huxleyan Media, and the Myth of “The Vietnam War”
Andrew Levine
Why Not Impeach?
Bruce E. Levine
Right-Wing Psychiatry, Love-Me Liberals and the Anti-Authoritarian Left
Jeffrey St. Clair
Roaming Charges: Darn That (American) Dream
Charles Pierson
Rick Perry, the Saudis and a Dangerous Nuclear Deal
Moshe Adler
American Workers Should Want to Transfer Technology to China
David Rosen
Trafficking or Commercial Sex? What Recent Exposés Reveal
Nick Pemberton
The Real Parallels Between Donald Trump and George Orwell
Binoy Kampmark
Reading Manifestos: Restricting Brenton Tarrant’s The Great Replacement
Brian Cloughley
NATO’s Expensive Anniversaries
Ron Jacobs
Donald Cox: Tale of a Panther
Joseph Grosso
New York’s Hudson Yards: The Revanchist City Lives On
Is It Really So Shocking?
Bob Lord
There’s Plenty of Wealth to Go Around, But It Doesn’t
John W. Whitehead
The Growing Epidemic of Cops Shooting Family Dogs
Jeff Cohen
Let’s Not Restore or Mythologize Obama 
Christy Rodgers
Achieving Escape Velocity
Monika Zgustova
The Masculinity of the Future
Jessicah Pierre
The Real College Admissions Scandal
Peter Mayo
US Higher Education Influence Takes a Different Turn
Martha Rosenberg
New Study Confirms That Eggs are a Stroke in a Shell
Ted Rall
The Greatest Projects I Never Mad
George Wuerthner
Saving the Big Wild: Why Aren’t More Conservationists Supporting NREPA?
Norman Solomon
Reinventing Beto: How a GOP Accessory Became a Top Democratic Contender for President
Ralph Nader
Greedy Boeing’s Avoidable Design and Software Time Bombs
Tracey L. Rogers
White Supremacy is a Global Threat
Nyla Ali Khan
Intersectionalities of Gender and Politics in Indian-Administered Kashmir
Karen J. Greenberg
Citizenship in the Age of Trump: Death by a Thousand Cuts
Jill Richardson
Getting It Right on What Stuff Costs
Matthew Stevenson
Pacific Odyssey: Puddle Jumping in New Britain
Matt Johnson
The Rich Are No Smarter Than You
Julian Vigo
College Scams and the Ills of Capitalist-Driven Education
Brian Wakamo
It’s March Madness, Unionize the NCAA!
Beth Porter
Paper Receipts Could be the Next Plastic Straws
Christopher Brauchli
Eric the Heartbroken
Louis Proyect
Rebuilding a Revolutionary Left in the USA
Sarah Piepenburg
Small Businesses Like Mine Need Paid Family and Medical Leave
Robert Koehler
Putting Our Better Angels to Work
Peter A. Coclanis
The Gray Lady is Increasingly Tone-Deaf
David Yearsley
Elliot Sperber
Aunt Anna’s Antenna
March 21, 2019
Daniel Warner
And Now Algeria