Markets have feelings too.
Ben & Jerry’s wants to help us “lick global warming.” That was the message of company co-founder Jerry Greenfield at a speech delivered in Toronto last month. It came on the tail of a trip to Britain, where he unveiled Fair Trade products for the UK market and stopped by the company’s second annual Summer Sundae festival, billed as a “weekend of music, sun and hedonistic ice cream indulgence.” It was also a venue for Greenfield to speechify about and the role his company would play in icing global warming.
Climate change, Fair Trade vanilla cups, and music festivals: It’s all about caring. “The more caring Ben & Jerry’s has been, the more successful it has been,” Greenfield told the BBC. “It’s good for business.”
Not everyone is buying. Writing in the Guardian, Jacques Peretti called it “kooky capitalism.” “It’s the norm now for companies to rebrand themselves as ethical, people-orientated cottage businesses rather than faceless behemoths driven by profit,” he snarked. “The message is clear: we’re pure, we’re you, we’re nothing to do with those evil money-grabbing capitalists from the 70s and 80s.”
A copout it may be, but it’s an impressively thorough copout. Greenfield took the Care Bear routine so far that he insisted to the Beeb that he didn’t know the price of his company’s products. Let’s repeat that for emphasis: A company boss boasted about his ignorance of the value of his own wares. Preposterous, right? At best, an elaborate put on; at worst, a dangerous dismissal of profits as petty and irrelevant. After all, isn’t profit the whole point of a business?
That was the rousing message delivered by Nobelist Milton Friedman more than 35 years ago when he denounced businessmen like Greenfield as “unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.”
Forget “promoting desirable ‘social’ ends,” said Friedman. The single social responsibility of a business is to “use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game…” A company should, therefore, make the most money it could without cheating people. Friedman would charge that what Ben & Jerry’s does is leave good money on the table, and worse. By steering resources toward feel-good causes, they are frittering away profits, which is a sin against the Invisible Hand.
Who’s right? Greenfield or Friedman? Should businesses be about the caring or the cash? That’s one way of looking at the issue but we prefer a more catholic approach. Either/or is bound to lead to the usual dreary dead end. It’s more useful here to think in terms of the good old both/and.
For instance, in his bestselling book Crunchy Cons, Birkenstocked Burkean Rod Dreher mentions that he and his wife purchase meat at Whole Foods and from organic livestock farmers in the area. “Does it cost more?” Dreher asks. Answer: “Sure. But we want to trust that the meat is clean, and we feel good about paying a little more to avoid being complicit in the factory-farming system that ruins landscapes and traditional farming communities.”
Let’s unpack that a bit: “want to trust”; “feel good”; “avoid being complicit.” These are immaterial concerns not in the sense that they don’t matter but in the sense that they are principally psychological. These days, that means they matter a lot.
Maximizing profit used to be an easier calculation. Hire some employees, produce goods and/or services, tot up the cash drawer at the end of the day, take one last look at the ticker as the NASDAQ closes, and then go out for a nightcap after.
But Greenfield and Dreher are not the first observers to note that people’s perceptions of profits are changing. Who we choose to do business with is a more murky calculation than it used to be. It’s no longer limited to balance sheets and bond ratings. Values matter. People increasingly factor what economists call emotional capital or psychic income into the mix. Welcome to the world of feel-good capitalism.
Granted, feeling good isn’t always the same as doing good. To the extent that Peretti is correct, that feel-good companies are simply trying to distance themselves from “those evil money-grabbing capitalists from the 70s and 80s,” they are grappling with the man who wasn’t there. Cypress Semiconductor CEO T.J. Rodgers has pointed out that, Enron sensationalism aside, “only about 10 to 20 public corporations have been justifiably accused of serious wrongdoing. That’s about 0.1 percent of America’s 17,500 public companies.” Even those less “with it” American companies are usually trustworthy and certainly not evil, and don’t deserve the grief that their more enlightened competitors encourage.
Granted, some of the causes that feel good franchises support are bad for business generally. If Greenfield’s proposed anti-global warming fixes were made law, for instance, the lower carbon emissions would take a huge bite out of bottom lines everywhere, and probably lead to worldwide recession and certain doom.
But it doesn’t follow that because some corporations are going to pursue dumb initiatives that every company that wants to try its hand at evolving standards of good corporate citizenship should be discouraged. The corporation is one of the most dynamic and effective institutions ever created — only organized religion and the nation state rival it — in part because it provides a vehicle for non well-heeled individuals to try out larger initiatives, and in the other part because those initiatives are constrained by company revenues.
For corporations, the bottom line will always matter, feel-good protests notwithstanding. Ultimately, if there is not a market for something, businesses will stop selling it, including a company’s pet causes. Whole Foods, Ben & Jerry’s, and others are adding value to their wares by selling emotional wellbeing to willing customers. That’s not kooky. If there’s a market for it, it’s just good business.
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