The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

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Thursday, November 16, 2017

Strategic CSR - Self-interest

The article in the first url below is an excellent analysis by David Brooks of the current administration's view of America's place in the world – in particular in relation to its decision over the summer to withdraw from the Paris Accord. On that particular decision, there is not much I can say that won't get me into trouble, but I think the article in the second url below by Bill McKibben, the founder of 350.org, is particularly eloquent.
 
The purpose of this Newsletter, however, is to comment on Brooks' column. While I agree with almost all of what Brooks writes, I disagree with his equating "self-interest" with "selfishness." I have thought a lot about self-interest and its role in motivating human behavior and, in particular, in generating optimal outcomes. I have two responses that, in my thinking, allow the pursuit of self-interest to lead to optimal outcomes for society, but in a way that also incorporates all of the good points that Brooks raises.
 
First, "self-interest" does not equal "selfishness." My self-interest can be served by making the community around me stronger – by contributing, rather than taking away. I can easily justify paying higher taxes as in my self-interest, for example, if I know the extra funds will be reinvested in education or healthcare or providing a safety net for those most in need (and as long as I value those things, which I do). Conversely, I can see the harm done to me individually if I refuse to contribute to the common good simply because I want to increase my personal income in the short term. It is against my self-interest, for example, to refuse to contribute to funding the police if, as a result, crime increases and my personal property (or safety) is jeopardized as a result.
 
Second, the idea or "rational self-interest" is a misnomer, a core feature of classical economics that has produced highly constrained theoretical models founded on warped assumptions that lead to misinformed public policies. Humans pursue their perceived self-interest, not their actual self-interest. That does not mean these two things cannot be the same thing, on occasions. In my experience, however, more often than not, they are different (even assuming someone's 'actual' self-interest can be identified). The difference between the two is accounted for by the emotions, biases, morals, and values that make us human (and flawed, on many levels).
 
It is the combination of these two points at the intersection of economic theory and human psychology that, in essence, differentiates strategic CSR (or sustainable value creation) from mainstream discussions of CSR and sustainability. Understanding how humans actually make decisions, rather than how we wish they made decisions (what they are, rather than what we wish they were), is essential to understanding how our economic and social systems work. Once we agree on that, we can begin to discuss how to build a more sustainable economic system, but that discussion is pointless if it is based on false or unrealistic assumptions.
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
The Axis of Selfishness
By David Brooks
June 2, 2017
The New York Times
Late Edition – Final
A25
 
Trump's Reckless Climate Decision
By Bill McKibben
June 2, 2017
The New York Times
Late Edition – Final
A25