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Wednesday, March 12, 2014

Strategic CSR - Market morality

Two quotes from a recent David Brooks column in The New York Times (the article in the url below) got me thinking about the morality of the market. The first quote highlights the percentage of the global population who have emerged from poverty as a result of economic advancement:
“… the percentage of people in the world living on $1 a day has declined by 80 percent since 1970s, adjusting for inflation. That’s the greatest increase in human possibility in human history. The primary cause is globalized capitalism.”
The second quote, in contrast, reflects on the recent Facebook acquisition of WhatsApp for $19 billion:
“When Facebook entered a deal to buy WhatsApp this week, it agreed to pay a price equal to $345 million per WhatsApp employee. Meanwhile, the share of the economic pie for the middle 60 percent of earners nationally has fallen from 53 percent to 45 percent since 1970.”
Brooks’ takeaway from these two statistics is that, while the market in abstract terms has enormous potential to deliver societal advancement, the market as currently structured is failing to deliver on that potential:
“The real moral health of an economic system … can be measured by how well it helps all people make an enterprise of their life. Whether they work at odd jobs or at a nongovernmental organization or at a big company, do they get to experience the joy of achievement? Do they know that their work amounts to something?”
The reasons for this disparity are largely structural and the Facebook deal is a perfect example—lots of wealth that is increasingly concentrated and, as a result, excludes a large percentage of people who it would be in society’s better interests to keep more engaged:
“This economy produces very valuable companies with very few employees. Meanwhile, the majority of workers are not seeing income gains commensurate with their productivity levels. This puts a strain on the essential compact that you can earn your success. … the middle class is being proletarianized, and the uneducated class is being left behind.”
The article also argues that the policy solutions that are being advocated, from both the right and the left, are failing to address the core problem:
“Republicans need to declare a truce on the social safety net. They need to assure the country that the net will always be there for the truly needy. Then they need to point out that it is the web of middle-class entitlements, even the home mortgage deduction, that really threaten benefits to the poor. … Democrats embrace a raise in the minimum wage that could drive another half-million workers out of the labor market. Much better … would be to expand the earned-income tax credit or maybe use direct payments or loans to help people move to opportunity.”
Take care
David Chandler & Bill Werther
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Capitalism For the Masses
By David Brooks
February 21, 2014
The New York Times
Late Edition – Final