Note: A few days ago I inadvertently posted portions of the following paragraphs as a comment. I include them in this post in response to a number of issues raised by other forum participants over the past few days.

In the course of many years in practice, like most lawyers, I often found myself sitting with clients as they struggled to make hard decisions. On one occasion the CEO of a major corporation was facing a very difficult choice. He looked at me and asked, “How can I make this decision? What can I possibly do?” I replied, “In the end you need to do what you think is right.” He responded, “If only I could, but I don’t have that luxury. I have a company to run.” Fast forward several years to a law school classroom. It’s near the end of the semester in Corporations class, and we are talking about corporate ethics and social responsibility, specifically the fiduciary obligations of corporate directors facing a decision whether to expand the company’s business into an area that is legal but morally objectionable to many – e.g., a children’s video game company offered an opportunity to increase profits significantly by making “adult” videos featuring pornography and violence against women. As others have pointed out in recent postings, students are hesitant to address the moral and ethical issues. When we finally begin to do so, a student raises his hand and says, “I’m a very religious person. Don’t get me wrong. From a personal perspective I would never approve of pornography or violence against women, but faith is faith, and business is business. Corporate decision makers need to make and sell the products consumers will buy, regardless of their personal beliefs.”

I often reflect on the similarity between the views expressed by the CEO and the law student. Too often people are suspicious of the notion that a personal moral compass has a place in corporate law or in business generally. As others have noted in recent postings, too often business people, lawyers, and even law professors take the shareholder primacy norm so much to heart that they fail to see the connections between individual belief systems and behavior in the business world. Yet, when corporate decision makers put aside personal belief systems in favor of the “morality of the marketplace,” they do not achieve neutrality. Instead they set the stage for allowing the market alone to determine the ethics of production, sales and myriad other aspects of business behavior. This approach is quite appealing in many ways, principally because it offers an ostensibly neutral framework for decision-making that can be measured by profits and other economic indicators. At times, this focus on purely monetary measures serves to promote the public good. For example, the business community’s realization that embracing diversity in hiring and marketing is good business helped to promote a more equal society.

But the apparent neutrality of the market can be counterproductive, too. When business and legal decision makers allow the market to serve as a personal moral compass, ethics and morality can become subservient to the passion for profits on the part of some and to a misplaced sense of obligation to the single goal of maximizing pecuniary benefit on the part of others. It then becomes even more difficult to make critical decisions on matters such as risk management, product safety and employment policies. When profit alone becomes the guiding light for decision makers, morality and ethics fade into the background, and too often greed – on a personal and corporate level – emerges as the critical criterion for decisions. Decision makers rationalize avoidance of moral and ethical questions on grounds that their businesses are simply responding to the demands of consumers, bargaining effectively with labor, or appropriately reducing all kinds of risks to monetary calculations. Over time, corporate decision makers – as well as law students – can get caught up in the notion that people have a right to whatever they are willing to pay for, and that shareholders have a right to expect managers to give it to them -- so long as there is profit in supplying whatever it is that consumer want and, as Milton Friedman would say, their actions do not violate the rules of the game.” Unfortunately, these “rules” are often murky.

It seems to me that if we are to find a way to make it clear that faith offers corporate decision makers a legitimate alternative to relying solely on marketplace morals we need to demonstrate that the neutrality of the market is often a false notion. We need to continue challenging the idea that the shareholder primacy norm is the only available guiding light and , perhaps most importantly, begin to fashion ways of measuring the validity of the decisions made by corporate directors and officers that do not rest on profit maximization alone. As Lyman Johnson and Richard Colombo have pointed out, this requires us to tackle tough issues such as the question of the roles of objective and subjective components in corporate decision making. This endeavor promises to be both challenging and exciting.

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