Adam Smith, just commercial society and corporate social responsibility

Abstract

This paper engages Adam Smith’s reflections concerning the moral and economic dimensions of business–society relations in the context of the Multinational Corporation (MNC). The paper argues that Smith formulates a pronounced moral criticism of prevailing corporate business practices, which emphasize profit while de facto undermining the moral underpinnings and social cohesion of commercial society. Rather than simply promoting selfish profit maximization by individuals, businesses, and society at large, Smith’s work reveals a deeply entangled analysis of the complex interplay between material interests, moral aspects of human behavior, and Smith’s overall goal of broad socioeconomic welfare. The balancing of moral and material motivations requires the social embeddedness of economic exchange within normative community frameworks. In this context, the sociopsychological process of moral approbation via Smith’s impartial spectator mechanism has the potential to temper humans’ tendency for excessive (material) self-love. Smith’s scrutiny of internationally active corporations problematizes a range of institutional and governance issues and their implications for the moral bonds between individuals, MNCs, and global society. Most importantly, Smith worries about the potentially negative impact of increasingly anonymous and emotionally distant economic relationships between market participants on their ability to reckon with the moral consequences of their actions. Building on Smith’s entangled perspective, the paper proposes a normatively grounded framework to critically contend with contemporary efforts to redefine corporate citizenship in the global economy.

Keywords:

• Adam Smith
• society–business relations
• multinational corporations
• corporate social responsibility
• corporate citizenship

Acknowledgements

The author would like to thank his wife, Professor Allie Terry-Fritsch, as well as the editors and reviewers of RIPE for their extensive and constructive feedback on how to improve this paper. Any remaining errors are entirely his.

Notes

1 Although liberal economic and political thought undeniably are characterized by great diversity, Gilpin summarizes the commonly shared liberal traits as commitment to the free market and price mechanism for organizing and managing the market economy, domestically and internationally, “in order to achieve maximum efficiency, economic growth, and individual welfare” (Gilpin, 1987, p. 27). Liberal political thought is first and foremost committed to “individual equality and liberty” (Ibid.), which also includes an individual’s right to own property (MacPherson, 1973). This played an important role in Smith’s moral philosophy.

Additional information

Notes on contributors

Stefan Fritsch

Stefan Fritsch is Associate Professor of International Relations at Bowling Green State University. His research focuses on issues of international relations, international political economy, and comparative politics. He is particularly interested in the relationship between technology and international affairs, the political economy of technological innovation, theories of International Political Economy, Multinational Corporations, and European integration.