Tuesday, November 01, 2005

On Beer, Benevolence and Markets

Kanika T. Bhal, is associate professor, Department of Management Studies, IIT Delhi, writes in today’s Business Standard, New Delhi, India (1 November!) on the “Social Responsibility of business” on Corporate Social Responsibility (CSR) and includes the following:

“Asking businesses to show proof of social responsibility assumes that business as an institution falls below the “ethical standards” unless demonstrated otherwise. The perception of a business leader as selfish and exploitative and the belief that profits serve only businessmen, require businesses to make conscious efforts to step up CSR activities and make them more visible. Ironically, this perception is held not only by CSR advocates but also by business executives themselves — a fact evident in their public speeches, annual reports, and proclamations of charity. This assumption, however, needs to be checked. When Adam Smith, a professor of moral philosophy, talked about the benevolence and self-interest of the butcher and the baker, he knew that benevolence was in short supply but self-interest abound. Ideologically, markets translate the interests and values of the majority into business activity and serve the utility of “maximum good of maximum numbers”, through participation and inclusiveness — much revered contemporary values.”

Professor Kanika T. Bhal quotes Smith, as many do in the Middle East and Asia, and refers to a truncated duo of the “Butcher and the Baker”, dropping reference to the “Brewer”. I assume this has something to do with religious prohibitions on alcohol, though it appeared in Smith’s sentence in “Wealth of Nations”, and he considered beer an integral part of the diet of a common labourer, such was the paucity of other food in the mid-18th century for such people (the majority). I cannot agree to such censorship; writing the word 'alcohol' does not man you are drinking it or approve of it, any more than writing the word ‘killing’ means you kill people.

However, the point he makes is partly right. It was the shortage of benevolence caused by the shortage of the means of being benevolent (economic goods are scarce compared to the many needs of others) that made reliance on benevolence for dinner, and all other requirements, a futile quest. This did not stop acts of individual benevolence, or the virtue of beneficence, from being offered by virtuous people.

Smith regarded benevolence as being the supreme virtue. Perfect benevolence would enable a divine to communicate with the ‘Deity’ (TMS VII.ii.3.2: page 300), but only the Deity, who controlled everything and required nothing external to Him, could be permanently benevolent, while “so imperfect a creature as man” is inadequate to the task because his “existence requires so many things external to him, [he] must often act from other motives” and, therefore, he fell far short of such heights of perfection ("Moral Sentiments", VII.iii.3.18: page 305).

I am not sure how “Ideologically, markets translate the interests and values of the majority into business activity and serve the utility of “maximum good of maximum numbers”. Markets are the outcome of the uncoordinated actions of uncounted numbers of humans and they have no ‘ideology’ to ‘translate’. They are not mysterious or miraculous, as Smith shows in "Wealth of Nations", Book I).


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