Defending the Virtue of the Business World at Home and Abroad

A new CNBC/Burson-Marsteller poll on attitudes toward business in both developed and emerging economies reveals some troubling findings. While business leaders in the U.S. and other developed nations view themselves and their firms favorably, the public’s view is less positive. More striking is the gap in public opinion with more positive views in developing nations—even supposedly socialist ones—than in the West.

Eighty-four percent of the Chinese public view corporations as a source of “hope,” while in America only 36 percent do. About half of the American public view strong firms as “bad” even if they promote innovation and growth, while in China 74 percent view such firms as “good.” Moreover, while almost half of Americans view corporate leaders as “among the most powerful people in society,” only about 9 percent find them “among the most respected.” Lacking such respect, business leaders also lack the credibility needed to mount a moral defense of their firms. The sad conclusion is that capitalism’s material success does not translate into moral legitimacy.

This story was told long ago by economist Joseph Schumpeter who foresaw that capitalism’s material success would create a powerful anti-capitalist intellectual class—from the 19th Century muckrakers to Michael Moore and Naomi Klein today—that has produced a steady stream of anti-business narratives, in which business leaders are portrayed as criminal, inept, and indifferent to societal concerns. The market is seen, at best, as a productive but amoral institution.

Initially, productivity improvements have provided free markets with a positive image in the developing world. But, as wealth increases, the connection between greater well-being and the benefits of capitalism becomes less obvious, and political space opens for anti-capitalist policies. Schumpeter foresaw these trends and feared capitalism’s demise.

Reversing such trends will prove difficult. The survey findings suggest that an adequate defense requires more than the pragmatic arguments that “capitalism works.” Creating wealth, adding jobs, and advancing consumer welfare are all good things, but these arguments ignore the way capitalism addresses the myriad non-economic concerns of society. This should not be difficult. Capitalism has done more than any other system to expand freedom, increase economic wealth, and democratize privileges once restricted to elites. But businessmen have failed to communicate these virtues.

When businesses are seen to lack moral legitimacy, they become increasingly vulnerable to political predation. And such legitimacy will not be gained through the mea culpa apologetic messages that are all too common today. Consider the recent pledge by beverage firms to reduce the caloric content of their products by 20 percent by 2025, a pledge that they hope will gain them applause from society’s bien pensants. It will not, of course. Critics who consider soft drinks merely sugared water, laced with additives, and a source of wasteful packaging and litter will not be appeased. Seeking to gain legitimacy by acknowledging that you’ve done bad things but promising to do them less will get you nowhere.

Corporations spend billions on advertising their products, but practically nothing on how the public views the business itself. Ads appealing to self-interest often increase sales. People generally like their cars, their appliances and their preferred soft-drinks. But, while such a self-interest approach often works with individuals as consumers, it works less in reaching individuals as citizens. We may love our car but also favor regulations that make cars more expensive and less safe.

That’s because as citizens, we are generally rationally ignorant—we have little reason to devote our scarce time to learn about the impacts of a given firm, its products, or public policies affecting them. Time is scarce, and even were we to educate ourselves, we’d have little influence. What then should business leaders do?

One approach is suggested by cultural theorists who argue that citizens rely upon their core cultural values as heuristic filters to form the opinions they hold. Of course, in our diverse culture, people hold different values and weigh them differently: libertarians value freedom highly; conservatives place greater emphasis on stability, progressives on justice and fairness. Market critics emphasize how capitalism poses threats to those values. If cultural theorists are right, the CNBC/Burson-Marsteller poll clearly shows that pro-market advocates have not made their case to the public.

Note that the poll shows that businesspeople still respect their own vocation and their peers. Yet, they’ve failed to convey why they believe that respect is owed. Ads are rarely used to illustrate how a product advances societal as well as self-interest.

If capitalism is to flourish in the emerging economies and survive in the developed world, it is critical for business leaders to speak to the individual as both consumer and citizen. Responding to those attacks requires going on the offensive to show how free markets empower individuals to advance and protect the values they hold most dear.