Wednesday, September 23, 2009

Adam Smith On CSR

Shellie Karabell in “On Adam Smith, Gordon Gecko and controls on self-interest” writes about the views of H. Landis Gabell and Filipe Santos in an article on INSEAD Knowledge HERE that presents the corporate social responsibility case, much in line with Adam Smith’s views in Moral Sentiments: “On Adam Smith, Gordon Gecko and controls on self-interest”, which I recommend to readers.

Gabel (Emeritus Professor of Economics and Management at INSEAD ) looks to ‘rules of behaviour’ rather than “hard laws and regulations” to inculcate “voluntary compliance with social codes”.

Given Adam Smith’s suspicions about what “merchants and manufacturers” were up to when able to influence events by lobbying legislators, I fail to see why purists throw up their hands in horror. There are already laws and regulations available to curb, and punish, evasions of “social codes” – we don’t need more of them; every prosecution and law sentence is good news for capitalism. The certainty for exposure for shameful conduct (witness the expenses row among parliamentarians) is a salutary encouragement for “good behaviour”. I have long admired the US practice of appointing judges for “life and good behaviour”.

Filipe Santos, INSEAD Assistant Professor of Entrepreneurship, says Adam Smith knew this, and wrote about it in his book Theory of Moral Sentiments as a professor of moral philosophy. “Smith believes that decisions are better made in a decentralised way by people, rather than dictated by one person or one central group,” adds Santos. “Instead of relying on the government for the allocation of resources, Smith believed it was better to let widespread market forces do it. The problem today is not Adam Smith’s philosophy, but the way in which a few of his ideas have been enacted by the business community as dogma.”

Both academics are contributory authors for Wiley’s book ‘Mainstreaming Corporate Responsibility’. Sounds good to me.



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