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IN BETWEEN PEOPLE AND PROFIT

BY SETH BOLLINGER

Very few teachers in my life have been more influential to me than my eleventh grade economics teacher, Mr. Hagen.

As an incoming junior stressed about keeping my grades in the A range, any untouched subject for me was immediately met with resistance. Stepping into Room 208 for the first time, with its orderly beige desks pointed towards the front of the room and posters of famous economists hung sparsely on the walls, I felt confused about the subject I was about to start learning. Economics, to my understanding, was only about money. As class began, a shorter man with wiry glasses and a buttoned up plaid shirt walked to the front of the room, hands in his pockets.

“Welcome to Macroeconomics!” he declared in his nasally voice as he pointed to the PowerPoint slides he had created. After class logistics were discussed, we dove straight into the material, beginning with the definition of what economics truly seeks to study:

‘Economics is the study of scarcity and choice.’

With that, I was thrown into a world of supply and demand graphs, classical and Keynesian economics, and a study that I soon realized could be applied to nearly every part of society, assuming each person makes decisions acting in their own self-interest, which is referred to as  “rational” behavior. We debated philosophical ideas on morality and political ideologies. Some days after school, I would sit in Mr. Hagen’s room, and because he was also a Christian, we would discuss topics of theology and human nature. I would ultimately choose to study business and marketing because of our various conversations.

Of course, one of the most fundamental tenets of economics rests on the idea that the main desire of each and every firm or corporation is to make the most money, known as “maximizing profits.” And while this idea makes sense when modeled with marginal cost curves, a global pandemic suddenly made this a much harder goal. Corporations were not only unable to rake in as much cash, but they also found themselves in a dilemma of social responsibility. Social responsibility, in business terms, refers to the balance between economic growth and the welfare of society and the environment. Understanding different frameworks for how profits and social responsibility can be handled enables us to see the strengths, and ethical flaws, of the current business world.

“What is the social responsibility of business when the world is raging with a deadly virus?”

The COVID-19 pandemic and resulting shutdowns forced the world to make a new distinction: which jobs are essential and which are not? Essential workers—hospital staff, grocery store clerks, and farmers—were lauded, as they continued to work for the betterment of society in a time of death and peril. But many other corporations hung in the tension, with layoffs for thousands of non-essential workers, little profit, and an uncertain future in their hands. They were faced with the fundamental question of economics; with scarcity of people and revenue, how should the corporation choose to open or stay closed? In other words, what is the social responsibility of business when the world is raging with a deadly virus?

In answer to this question, Nobel Prize-winning economist Milton Friedman believed that “the social responsibility of business is to increase its profits,” as he wrote in a 1970 essay of that same name. [1] Friedman argues for the importance of a corporation to maximize profits for those who invest in the company, called shareholders, because he comes from a free market capitalist perspective. The thinking behind this idea is that as the company makes more money, shareholders also make money and then have the power to decide how to spend it—potentially by helping others through personal charity donations and other social programs. These benevolent shareholders may create a bigger social impact than the corporation itself; they have what is known as a “comparative advantage.”

In theory, this concept of social responsibility ultimately puts a lot of trust in individuals to be charitable. While individuals have the ability to be charitable, they often are not, and the social problems of the world persist—inequality based on race, gender, and class is evident in society today. There are certainly positive reasons for being charitable, such as tax deductions, that can encourage individuals to give more of their wealth rather than hoard it. And hopefully the care of others and betterment of society is part of the equation as well.

This view can also seem to promote business behavior that is unjust or hurts workers, all to make an extra buck. However, this need not be the case. Russ Roberts, a research fellow at Stanford’s Hoover Institution and host of the podcast EconTalks (not to be confused with ClariTalks), clarifies that Friedman saw a balance between people and profit.  Roberts states that Friedman believed, “Businesses that treated their workers and customers well would survive the competitive process. Poor performers would lose customers and workers and eventually go out of business.” [2] Maintaining this balance would enable the corporation to have the biggest social impact.

This is a lot of economic jargon grounded in a 50 year-old free market manifesto. Friedman wasn’t addressing an economy that was corrupted with a worldwide virus or the devastating effects of climate change on third world countries. The definition of social responsibility may change as each decade brings with it advancements and reveals new societal issues. A contrasting view of social responsibility holds that businesses should focus on what is called the “triple bottom line:” people, planet, and profit. Rather than believing that individuals are able to impact others in these areas, the corporation is seen to have a responsibility to pour its resources directly into communities or causes, and holding that as equally important to making money.

Take Starbucks, for example. Howard Schultz, the founder and former CEO, created Starbucks’ mission statement in opposition to Friedman’s perspective. It read: “We wish to be an economic, intellectual and social asset in communities where we operate.” [2] These initiatives included providing part-time baristas with health care and tuition-free college and helping impoverished youth find first jobs. Starbucks isn’t the only company to provide these types of corporate social responsibility programs (normally called CSR). IKEA, Microsoft, Disney, and basically any large corporation nowadays invests in different areas of sustainability, poverty reduction, anti-racism, and more. 

“Allowing large corporations to impact society rather than individuals can allow for greater changes to happen within supply chains or even political systems”

One could look at this view of the social responsibility of business and think that it seems much more effective than Friedman’s viewpoint. Allowing large corporations to impact society rather than individuals can allow for greater changes to happen within supply chains or even political systems. Friedman looked at this idea and called it socialism, but some may look and call it progress. Regardless, allowing large corporations to make heavy investments into bettering society runs the risk of letting corporate interests dictate what is right and wrong within society. Instead of individuals having the freedom to choose whatever way they want to impact society with their funds, corporations, with their billions of dollars, are able to choose which areas of society they deem ‘worthy’ of their investments. 

Businesses and business people today face this tension of social responsibility. They face scrutiny if all they attempt to do is maximize profits, and can be caught in the productivity-driven metrics of corporate social responsibility projects. Is there middle ground in this “in between” space?

Perhaps the tension between methods of social responsibility isn’t asking the right question. Too often, organizations drive to seem ethical in their business dealings, trying to meet needs and make simple donations that can affect small portions of society. Of course being ethical is important, but it is also a baseline standard, the bare minimum necessary, for businesses to survive. If a business doesn’t engage in ethical behavior, such as dealing honestly with others or creating a simplistic sustainability plan, it may have a hard time finding a large customer base. But there was one man long ago that didn’t believe that we should act ethically for the sake of maintaining profitability or corporate self-interest. In fact, He taught us that living morally is just the beginning; living redemptively is our true calling. 

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John 9:1-7

Jesus Heals a Man Born Blind

1  As he went along, he saw a man blind from birth. 2 His disciples asked him, “Rabbi, who sinned, this man or his parents, that he was born blind?”

3 “Neither this man nor his parents sinned,” said Jesus, “but this happened so that the works of God might be displayed in him. 4 As long as it is day, we must do the works of him who sent me. Night is coming, when no one can work. 5 While I am in the world, I am the light of the world.”

6 After saying this, he spit on the ground, made some mud with the saliva, and put it on the man’s eyes. 7 “Go,” he told him, “wash in the Pool of Siloam” (this word means “Sent”). So the man went and washed, and came home seeing.

The New Testament book of John tells the story of Jesus, fully human and fully God, healing a man who is born blind. A blind man in that time was often a societal outcast, reduced to begging outside of buildings while being disowned by their families. Giving money to the poor was the morally upright action to take, but most people would walk by, securing their wealth for themselves. But when Jesus walked past this blind beggar, He did more than the morally right—He chose to kneel down and heal the man, giving him sight again, and ultimately changing his life forever.[3] This was not an act of self-interest to boost the sales of Jesus’ ministry, nor was it a way to maintain his status within the Jewish culture of the day. Jesus healed and redeemed not out of “rational” selfishness, but out of “irrational” love and grace. This un-economic miracle was not an isolated incident, either. Jesus repeatedly chose not just to treat those who are hurting ethically, but to redeem them from their struggles and give them a new beginning.

“Our redemptive calling goes beyond being socially responsible.”

Our redemptive calling goes beyond being socially responsible. According to Andy Crouch, partner for theology and culture at the Christian venture firm Praxis, “Redemptive thinking goes beyond honest individuals to the kinds of actions that actually could restore trust in whole systems.” [4] Jesus gives a framework for this. Creating real transformation goes beyond our standard methods of social responsibility. It requires a heart posture of giving up the desires of oneself to help another. It requires thinking creatively about how to restore broken systems within our business structures. It requires loving others with the love of Christ, not the love of corporate sponsorships. The mentality of a Christian business person should be focused around redemptive work, not merely profit maximizing or socially responsible work. There is a deeper call in our lives. 

“Redemptive thinking requires creativity and immense sacrifice, but businesses such as these show that making a profit is also extremely doable. ”

Redemptive businesses already exist and are making important impacts in the lives of many. Cladwell, a software company that gives outfit suggestions, has a goal of reducing people’s wardrobes in order to eliminate excessive materialism. [5] Copper is a network that seeks to challenge the loneliness caused by social media by making it easy to set up virtual book clubs. [6] Thrive Market offers subscription boxes of specialty food items for people with challenging allergy needs, all while being carbon neutral and using zero-waste packaging. [7] Redemptive thinking requires creativity and immense sacrifice, but businesses such as these show that making a profit is also extremely doable. 

COVID-19 required businesses to make tough decisions regarding people, profit, and the balance between them. Within the frameworks of Friedman’s view of social responsibility and the many CSR programs of today, there is always a component lacking: a redemptive calling. All of these models are conducive to creating societal change, but the redeeming power of the gospel is the only model that can truly create powerful change by addressing people’s hearts and asking for true altruism, love, and sacrifice. Economics allows us to model how we think about scarcity, but the redemptive power of the gospel leaves us lacking in nothing.

SETH BOLLINGER

Seth Bollinger is a junior from Lancaster, Pennsylvania studying AEM. He enjoys working on the ClariTalks podcast and managing his own freelance videography projects while trying to convince others he is not a business snake.