Hacker News Reader

Comment by wolverine876 | Hacker News Reader

I don't think you agree with the GP. The point is that companies are responsible for more than maximizing profit, just like all of us. We all live in the world and our communities and are responsible for far more than maximising our own lives. It's partly enlightended self-interest - if we don't take care of the communities, we lose out - and partly just not being sociopaths.

The claim that companies should be sociopaths with no enlightened self-interest is commonly repeated, by companies and investors themselves, but has no ground to stand on. Why they heck should they get to do that?

View on HN

Yes, this.

Once upon a time (a few dozen years ago at most) a company was expected to not only provide for its own longevity, but to provide tangible benefits to its community (good paying jobs that allowed their employees to support their families being one such benefit). We look back on the historical exceptions (AT&T, Standard Oil Co., etc.) because they were exceptions (and because of how they were dismantled by the government - another lesson companies should take).

People now assume that 'maximizing shareholder value' is the natural and only law of corporations, that to act otherwise is unnatural perversion, and should be suppressed. But it is just a philosophy, mostly in the US and UK, developed in the 1970s primarily by Milton Friedman in this famous essay,

https://www.nytimes.com/1970/09/13/archives/a-friedman-doctr...

and by Michael Jensen and William Meckling in their paper, "Theory of the Firm".

These days it is widely rejected afaik. First, anything taken to an extreme is absurd on its face; of course shareholder value is important, but it's not the only priority. Second, it's not hard to see how conveniently self-serving the idea is to powerful, wealthy, sometimes egocentric individuals who own a lot of shares - 'yes, the purpose of the world is to maximise my value! Milton Friedman said so!' Third, there are many other models that work very well, such as the German one.

You're personifying companies as wanting to be responsible, moral citizens. I agree that this is a beneficial perception for a company to have, but it doesn't make sense to me when you go beyond public perceptions.

A company is a complex web of self-interested individuals maximizing their own value functions within the constraints of the overall function of maximizing shareholder value. Most of those inside individuals will make decisions with their morals weighted in. But if it interferes too much with the overall function of maximizing shareholder value, then they'll be replaced with other individuals who either have a different moral code or don't weigh certain things as important.

For example, would you characterize a big cigarette company as a psychopath? Are the shareholders psychopaths? Do only psychopaths apply to work for them? It's just a web of individuals who happen to maximize their value functions in a way that suits the cigarette business, and just to the extent that society tolerates.

If a company wants free speech and other rights normally granted to people, they can and should be held to moral standards in the same way we hold people to moral standards. And we, in fact, often do. We're holding Disney responsible for its actions based on a moral stance here. We support (or decry) Namecheap for it's actions in disallowing Russian citizens access to its services.

I'd go so far as to say those who do not pit Disney's actions against their own moral code "because profits" are the outliers, the outliers who are only louder when there's little cause for evaluating a company's morals.

Now then, do I characterize cigarette companies as sociopaths? You bet I do. Advertising to children, interfering with inquiries into their safety for people in general, and profiteering off addiction can all be linked to sociopathic tendencies.

EDIT:

This: "But if it interferes too much with the overall function of maximizing shareholder value, then they'll be replaced" is demonstrably not true.

Target and Costco, as two examples, have policies in place that prevent them from paying unreasonably low wages (like Wallmart does). This directly lowers "shareholder value" since it reduces profit dramatically, yet they haven't replaced all of Target or Costco's leadership.

Amoral behavior is a choice, not a directive.

> they can and should be held to moral standards in the same way we hold people to moral standards.

Of course they are. If the public perceives a company as immoral, then they'll refuse to buy from them. If a company has a bad enough reputation, they'll have to close down. Why? You see how it all goes back to profitability in the end?

I would argue that Target and Costco are trying to capture a certain demographic by paying/treating employees better. They could use that to get a better margin, for example. Or, maybe they see value in having a higher quality staff. Or maybe it's really just about getting brownie points for doing the right thing, and capitalizing that reputation.

Companies have to thrive in the world; you don't sh-t where you eat. They need thriving communities and economies, to provide customers, employees, wealth, roads, air travel, legal systems, etc. etc. etc.

Also, companies are run by human beings, and human beings care about others and have morals, and will to a degree act on them regardless of profit. It's interesting that people expect humans do other unprofitable things, especially corrupt ones, but insist we won't do moral unprofitable things.

> A company is a complex web of self-interested individuals maximizing their own value functions within the constraints of the overall function of maximizing shareholder value.

Maximising shareholder value is just one philosophy, popular mostly in the US and UK, and no longer so popular. It's not some universal truth or natural law. My other comment goes into more detail:

https://news.ycombinator.com/item?id=30646400

> self-interested individuals maximizing their own value functions

The rational self-interested econo-human is just a simplified abstraction useful for easily modeling economics. It's not meant to describe real people or be a normative recommendation for living.

Real humans are much more than self-interested; we are social beings who are defined - who experience the world - by caring (trigger word!), cooperating, or just giving. The theory of selfishness is provocative and widely repeated, but doesn't hold up to even a little scrutiny. Most of what humans do is for others. Humanity has supported almost no religious or moral philosophy that preaches self-interest rather than duty to others. People support Ukraine right now with little self-interest; the whole democratic and free world - the most successful political philosophy in history, with no competitors - is built on freedom for others (everyone always believed in freedom for themselves!). Scientists, soldiers, teachers, open source software ... so much is done by people not maximizing their personal value function, but because they naturally care about the others. Anyone who has really made love knows, beyond a doubt, that it is about the other person's joy. That is the psychologically normal, healthy state.

It's good news - great news! It's really that good. But it's threatening to worldviews and that's why always some people have rejected gospel[0].

[0] gos spell - good spell - 'good news', and yes meant here as double entendre.

> Real humans are much more than self-interested; we are social beings who are defined - who experience the world - by caring (trigger word!), cooperating, or just giving. The theory of selfishness is provocative and widely repeated, but doesn't hold up to even a little scrutiny. Most of what humans do is for others.

Yeah this is where we disagree philosophically. I'm in the egoism camp. That is to say that when people care, cooperate, and give, it's really about them seeing that these actions result in the most benefit for themselves in the long run. We live in a society where if you're seen as selfish and uncaring, people can make your life miserable, and will no longer cooperate with you. Or they'll straight up attack you.

There's also painful feelings of regret and guilt when we fail to act in a way we've learned is the right, good way. And perhaps some of those emotions were ingrained into us from millennia of evolution, since groups that help one another are more likely to survive. The point is that avoiding these feelings of guilt is a powerful motivation, but it's still about how I will feel if I help someone.

Reply on news.ycombinator.com