Doing the Profitable Thing for the Profitable Reasons

Parsing "the right thing" in agriculture in our time

There’s an old BBC mini-series called “North and South.”

Among other things, it’s a glorious example of the very rare but impressive “CEO Redemption” arc. It subtly and adeptly turns the hero– a struggling cotton factory owner– into a working class ally, and in doing so, makes the case that all capitalists have the capacity to be successful and generous, if they only think about it rationally for a minute.

Source: Heritage Calling

It’s quite satisfying too, as the viewer, to watch this man invest in fans for his factory floor to reduce the amount of airborne (read: inhalable) cotton. After all, he insists, “sick workers are bad for business.” It’s less satisfying when he imports indentured Irish workers to break a strike (we don’t need to actually hear him say “strikes are bad for business” to know that he thinks it). He tells the story’s heroine that to feed and clothe the strikers is merely to prolong their suffering, and when she responds, “but surely it is just to give a dying baby food,” his answer is only, “you do them more harm than good.” But fear not, after the strike ends, he pays for the creation of a workers cafeteria so that his impoverished laborers can eat a meal in between their shifts.

My guy is, by all accounts, a real “neutral-order” type. He follows a rule that leads him occasionally to do good, but often to evil. The rule is– “Do what’s best for business.” And by the end of the story, the audience is meant to understand that he helps the people in his community not through charity, but through his hard-nosed commitment to profit, which ensures they have a factory to work in, and wages to earn. In other words, the CEO is not redeemed through emotional struggle and growth. Instead, the viewer’s perspective is shifted to see that he was doing the right thing all along.

Despite their squabbles, he and the heroine end up blissfully together in the end. There is a sense of cosmic justice in the fact that, purely due to luck, he ends up broke and she ends up rich, and she returns to share the inheritance she never earned, apparently forgetting all the poor and downtrodden friends she ever made. Well, she doesn’t “give” her money to him, she “invests” it in his cotton mill, so maybe her thinking is that she’s helping all her slum-dwelling friends by ensuring they can go on working to death in her future-husband’s factory.

Don’t get me wrong, I like the show (do I have bad taste?). But I shelve it in my mental library right next to “A Christmas Carol,” another easily misunderstood British tale about the follies of business, about doing things for business reasons, and about the conflation of morals, ethics, and The Profitable Thing.

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I came of age during the height of the “Doing Well by Doing Good” era. In my mind Unilever was the poster child for it, but in reality, it can’t be hung on any one brand. It was a defining idea for a generation of business leaders who wanted to paint themselves as ethical heroes rather than corporate windbags, and just about everyone was getting on board in one way or another.

The kernel of the idea was that charity was dead. Giving resources away was a bad solution, all the development research said. It led to waste, abuse, and other bad outcomes. But don’t worry, we have a solution! Instead of giving handouts to those living on a dollar a day or less around the world, we should all be focusing on handups. Don’t give people money, food, clothes, or toiletries. Do business with them instead! Make them customers, give them jobs, bring them in from the cold of informal economies and into the scalding light of the global commoditized marketplace.

I’ll be honest, I bought the hype. There was a lot of evidence that charity was a bad solution. I mean, look at the abuses of faith-based work in the Global South. Look at the lack of progress on any number of key development metrics. Look at global hunger, infant mortality, life expectancy. It felt right to blame these failures on the fact that the charity paradigm treated smart, resourceful people on every continent like helpless beggars in need of being saved.

But the “Doing Well by Doing Good” argument did not stop at international development. It was way too good a story for that. It spawned offspring– the most famous of which (I’d argue) is the “Triple Bottom Line–” the idea that companies should not just use their profits to evaluate success, they should be judged on their (beneficial) impact on people and the planet too.

As the story grew to encompass not just development but all kinds of “impact,” the idea of how it worked got squishier, even though the core remained the same. No one really questioned when “Triple Bottom Line” acolytes started to say that their companies could actually increase profit while investing in good outcomes for the planet and people. Nor did anyone find the next leap suspicious, when they started claiming that these win-win-wins could not only coexist, but that doing what’s best for the planet and/or people would inevitably lead directly to more profit.

This was the climax of the “Doing Well by Doing Good.” The essence of the whole movement was, “we can all get rich and save the planet while we do it.”

It’s a powerful drug– the promise of having it all.

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It actually wasn’t that long ago that I learned the contemporary context of Charles Dickens’ holiday classic. It’s easy to get the story wrong, without the proper historical lens.

Today, we see “The Christmas Carol” as a story about a greedy, cold-hearted man softened by memories, empathy, and the threat of loneliness and isolation. Ebenezer Scrooge is our foil for the modern executive– cruel not out of hate or derangement, but simply because cruelty pays.

But that is not actually the message Dickens was serving up in “The Christmas Carol.” For the time, actually, Scrooge would have been perceived as a distinctly ethical business owner. The wage he pays Bob Cratchet might seem egregiously small, but it was actually decent pay at the time, and a business owner would not have been perceived negatively for paying much less. This is the real lesson of “The Christmas Carol–” that business ethics are not sufficient for a good and moral society. Fair and just dealings and charity are required, Dickens argues.

Maybe if Dickens were alive today, he would use the word “equity.” He certainly did it as best he could in his day. That’s the point of showing Bob Cratchet’s big family, and the state of Tiny Tim. Because then as now, Scrooge bore no ethical responsibility for the fact that the Cratchet’s had so many children, or the fact that one of them was sickly. He was Mr. Cratchet’s employer, after all, not his benefactor. But the point Dickens wanted to make is not that Scrooge had an ethical obligation to the family because of their financial relationship, but that he had a moral obligation to do something, because from those who have the most, the most is expected.

That idea, that those with the most resources should contribute the most to the common good, is not an ethical idea. It is a moral one. It is the kind of idea that a person usually learns in church, or kindergarten, not in an MBA program (are they even teaching ethics in MBA programs anymore?). It’s generally not the kind of thing laws or regulations are made of, it’s the kind of thing we punish and/or reward informally, through social and emotional validation. And threats and promises of the “fire and brimstone” variety.

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I can’t say exactly when the idea that we could all get rich and save the world at the same time started to die. Probably at the end of the Obama administration, that feels right. Sometime after Kony 2012, after we realized Elon isn’t Iron Man, after Toms Shoes, and the countless “Tom Shoes for X” copy-cats. Today, I rarely hear about triple bottom lines, about business models that center philanthropy, or even about “Doing Well by Doing Good.”

I’m sure there are many reasons, both complex and simple, that the whole “altruistic entrepreneurship” trend fell out of favor. But I’ve always been partial to the idea that we, quite simply, wised up.

On the one hand, I see what people loved about the idea of “Doing Well by Doing Good.” It was the idea that handsome British men in top hats could install fans in their factories and open a cafeteria for their workers, not because they were big-hearted and charitable, but because it was good business. In a moment (post-2008) when we knew there were many immoral but highly profit-driven men at the top of multinational corporations and institutions, at least we could convince ourselves that they don’t need to be moral, because there are many good, moral things that are also good for the bottom line.

The mistake that we made was right there at the end– believing that moral action is good for profit. This has, in case after case after case, proven to be untrue. In fact, the vast majority of the time, it costs money to do the right thing. It is cheaper to do the wrong thing, especially if you can get someone else to bear the cost (see: the entire concept of externalities). We could look at countless cases where this is true, but it’s me, so let’s look at food and ag.

Take the example of landscape health. The “Doing Well by Doing Good” argument goes that companies don’t want to destroy the farmland where the wheat or meat or berries they sell are grown. That would be “bad for business.” So obviously any food or ag company with an ounce of business acumen would be invested in protecting the long term agricultural viability of, say, American farmland. That’s how we convinced ourselves that food and ag companies must be deeply invested in regenerative ag, in soil health, in water conservation, and more. Because it’s good business to invest in your suppliers and the places where your customers live.

It does not take much digging to discover that this last supposition is simply not the case. The problem is that wheat, meat, and berries (and most things, with a few critical exceptions), grow in many parts of the world. Therefore it is not necessary, and certainly not financially compelling to almost any company, to deeply invest in the productive preservation of any one landscape. Because if the U.S. corn belt somehow became a wasteland, there’s always Brazil’s hundreds of millions of acres. If U.S. wheat was somehow devastated, there’s Russian wheat, Australian wheat, even Turkish wheat. When U.S. blueberries have a bad year, there’s always Peru’s crop. Not to mention, those aren’t the company’s acres! Food and ag companies rarely own farmland directly (again, with a few notable exceptions). That means that they can outsource the costs, either the costs of their bad actions or the costs of making improvements, to someone else (farmers, nearby communities, the federal/state government, etc.). In short, there is no need for the average U.S. food or ag company to “Do Good” on the American landscape, or any other. They can “Do Well” either way, because they can diversify their ingredient sourcing to mitigate their risks.

So on one hand, there’s the fact that it’s possible, and often quite easy, to “Do Well” without “Doing Good” (which of course means that, if you want to defeat a competitor on the only bottom line that really matters, you just stop that costly “good” work). On the other hand, there’s the faulty assumption that companies somehow simply want to do good.

This gets tricky too, of course, because within companies are individuals– sustainability professionals, local residents, and moral individuals– who want to “Do Good.” But the problem inevitably is that companies, especially the biggest, most impactful (read: publicly traded) companies, are not at the mercy of these do-gooders. They are required by law to maximize profits for their shareholders. It’s one of the few truly binding regulations most companies face. So despite the fact that big companies might be populated by people who want to “Do Good,” even at the highest levels, these actions are literally off-limits if they don’t lead to maximum profit.

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I’m of the perhaps unpopular opinion that the “Doing Well by Doing Good” era actually did more harm than good. Or at the very least, it coincided with an era of moral erosion.

From my perspective, the idea that we could “make money and save the world” was a key part of this erosion, because it seems to me that before that time, there was a much more limited expectation that businesses would have a role in doing good. “Saving the world” was for social workers, superheroes, activists, public servants, and do-gooders of all stripes, not for startup founders and C-suite executives. By linking the ideas of “making money” and “saving the world,” we blended them in an existential way, suggesting that if the two prove not to be linked, then saving the world is clearly the less important goal and should rightfully be abandoned in favor of making money.

What’s more, “Doing Well by Doing Good” told us that we should be compensated for acting morally, and that if we aren’t, we should stop acting morally, because it’s not worth it. In effect, we cemented the idea that money is the only true marker of value– that moral actions that cost us financially are not valuable, and therefore perhaps not actually moral at all.

More than anything, I think, this is the part that would have Charles Dickens’ rolling over in his grave. At least Scrooge understood the concept of charity, even if he didn’t at first partake in it himself. And at least when he chose to act charitably, it wasn’t because he was convinced he was somehow going to make more money by doing it. He gave because he was moved to give, because he recognized it as the right thing to do. Profit was, rightfully I think, not part of his calculation.

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Now more than ever, I find myself making moral appeals. The time has come. We simply cannot slip any further into a reality where any action required to avoid cost or make profit is defensible or understandable. It is not.

What is right and what is wrong might be hard to pin down in some situations, but demanding that we and others adhere to an ethic of keeping our word and doing no harm should not be controversial. In fact, those two ideas provide the ideological foundations for our legal system (civil and criminal, respectively).

An example: Environmental groups should not be arguing that companies should avoid damaging the environment because, “you’ll see more profit in the long run if you protect ecosystems now.” First, because it’s a piss-poor argument– I could poke 100 holes in it off the top of my head. The appropriate argument for an organization looking to act in the public interest is that companies should avoid damaging the environment because it is wrong to make profit while causing harm, whether that harm is to people, to plants and animals, or to the planet and its future generations. More and more frequently, groups shy away from making these moral arguments, in part because companies ask them to.

“I can’t take moral arguments to my board,” these companies say, and so activists and environmentalists reply, “we’ll look for a way to make saving the world profitable for you then.” This is a fool's errand. A big part of the game of capitalism is externalizing your costs onto bystanders like communities, workers, and environments. Putting that cost back on the company will always cost more than doing nothing. They don’t want to pay these costs, and by law, the company’s fiduciaries have to avoid paying them to the best of their abilities.

The only real answer to “I can’t take moral arguments to my board” should be, “No worries then, we’ll go ahead and change the regulations, we’ll protect the [environment, community, workers, etc.] by statute, and then you’ll have to comply with the regulation or get fucked.” That’s something any executive can take to their board. It’s a cost they can’t avoid, and one that might actually curb their actions. See, we don’t have the ability to make “Doing good” more lucrative, but we do have the ability to make “Doing evil” very, very expensive. And we should do that as often as we can.