The Economic Rationality of “Doing Good to Do Well” and Three Critiques, 1990 to the Present

Abstract

This chapter explores the recent decades’ rapid spreading of a discourse which says that business and profitability can be combined with ethical conduct and social concerns. The idea of combining business with “doing good” can be theorised as a new “spirit” of capitalism: the spirit of a “civic” capitalism where corporations are discursively constructed as socially responsible (virtuous) citizens in society. The idea that corporations can “do well” by “doing good” challenges the traditional economic rationality of business, most famously summarized by Milton Friedman who declared that “the business of business is business.” But by arguing that there is a business case for “doing good,” the proponents of “civic capitalism” offer a new economic rationale in two ways, related to two dimensions of economic rationality. First, they argue for the direct economic rationale behind social activities (that they pay). This is why Milton Friedman would find less to worry about if he could revisit the debates today. Second, by making a dedifferentiation between a business and a social rationale, “civic capitalism” embodies a new economic rationality in the sense that it offers a social legitimacy of business. Critics of this spirit of civic capitalism draw on at least three types of criticism: a reality check, asking whether corporations actually practice what they preach; an ethical check, asking about which kinds of ethics is typically assumed in e.g. mainstream CSR or corporate philanthropy; and a democratic check, investigating the spread of e.g. CSR in the context of overall distribution of responsibilities between business, state, government and civil society.