Indeed, businesses today pride themselves upon their charitable, humanitarian and environmental efforts. Indeed, the very concept of "social" and "corporate responsibility" is built around this. Businesses today are recognizing the importance not only of functioning at an optimal profit margin, but also of doing so in a way that recognizes themselves as part of a larger and integrated whole in terms of human beings and the environment.
Kenneth Lux adds a further dimension to these ideas. Rather than directly disagreeing with Smith, as was my first instinct to do, Lux analyzes the specific elements in what Smith says and identifies a specific oversight. Firstly, Lux notes that Smith does not give due consideration to the paradigm of cheating. Cheating is self-serving, but does not serve the public good and is certainly not beneficial for the economy. Indeed, if Smith's assertions about self-servitude were to be believed, not cheating would be irrational (p. 47). While Smith's view is that competition is the element that prevents cheating, Lux however demonstrates that cheating can destroy the competitive element and concomitantly serve the interest of the cheater.
To further demonstrate how self-interest does not promote public or economic good, Lux mentions the example of the environment. It is the prevalent self-interest existing from the Industrial Revolution to date that has led to the environmental crisis the world faces today. It can therefore not be that self-interest or egoism promotes beneficence in the sense that Smith saw it. Clearly pure self-interest tends to be destructive rather than constructive.
According to Lux, the fundamental paradigm of promoting social and economic good is not self-interest, but rather a sense of morality in the human heart. In addition to honesty, Lux mentions fairness, integrity, reasonableness and justice (p. 50) as examples of principles that guide business ethics and practice. In this, Lux makes an important distinction between pure charity as a paradigm to promote the public good, and the business...
Smith makes a fundamental mistake in attempting to separate business from the paradigm of beneficence. Lux then adds these principles to expand Smith's definition: beneficence is not only charitable actions, but also actions of integrity and honesty within the business paradigm itself. At its most fundamental level, Lux's argument is then against Smith's idea that purely egoistic and selfish actions could lead to the public good.
In this, I agree with Lux on several levels. Firstly, it takes only observation and investigation to see that businesses today tends towards beneficence rather than self-interest. Indeed, businesses today are required by the societies they serve to publicly declare their work towards the good of society and the economy. Dishonesty is severely frowned upon, and public scandal can ruin a business permanently, as seen in the case of Enron and several others.
A further paradigm of morality and integrity in business today is care for the environment. Businesses no longer unscrupulously damage and destroy natural resources. Instead, the paradigm today is one of conservation and sustainability. This in turn serves the self-interest of continued survival not only for the business, but for the human race.
As Smith notes, acts of beneficence could indeed serve the self-interest of businesses in that they gain a favorable image in the eyes of the public. This is however not the only reason for being moral in terms of business. Having a favorable public image integrates with self-interest, but also with the public good. Indeed, business persons gain the satisfaction not only of increased business as a result of their public morality, but also of working together for the good of all. While this might be somewhat idealistic in terms of general business paradigms, the fact remains that self-interest is not the only driving force behind sound and successful business; it is also dependent upon the businessperson's function within the society he or she serves.
