Is There Room for Morality in Capitalism?

Princeton's WordNet defines "moral" as "concerned with principles of right and wrong or conforming to standards of behavior and character based on those principles." In other words, we're talking about good and bad, righteous and evil, Rebel and Imperial. The age-old showdown.

But how do morals fit into the world of business and commerce? It's at the heart of a fiery debate I ignited a couple of weeks ago with an article titled "Why Are Homeowners Idiots?" and stoked last week with a follow-up piece.

While the debate began about whether homeowners should be able to voluntarily walk away from their mortgages, the larger theme that has developed is whether there is a code of conduct over and above rules, regulations, and laws that all economic participants should adhere to.

Sure doesn't look like it
You don't have to venture far in the business world to find companies that could be put in the hot seat when it comes to questions of following a higher moral code.

An easy one to start with is tobacco merchant Altria (NYSE: MO  ) , the company behind brands like Marlboro, Parliament, Virginia Slims, Skoal, and Copenhagen. While the company isn't doing anything legally wrong, its sole business is selling products that are known to be addictive and and known to cause cancer.

From there we could move on to some of the major U.S. oil companies for more easy pickings. Chevron, for example, has found itself in the sights of Amnesty International for shady practices and trashing the environment in areas like Nigeria and Ecuador. Fellow big-oil player ExxonMobil (NYSE: XOM  ) fought tooth-and-nail for nearly 20 years to try and avoid punitive damages to Alaska fishermen after the Exxon Valdez oil spill.

Meanwhile, Wal-Mart Stores (NYSE: WMT  ) is under constant scrutiny over its employment practices, while major insurers' denying coverage for pre-existing conditions is a big part of why many lawmakers are pushing so hard for health-care reform. And of course we can't leave out financial firms like Goldman Sachs (NYSE: GS  ) , JPMorgan Chase, and Morgan Stanley, who are right back to risky trading and awarding massive bonuses shortly after being bailed out of a near-death state by American taxpayers.

Heck, even the revered Berkshire Hathaway (NYSE: BRK-A  ) has come under fire for things like its investment in PetroChina and subsidiary PacifiCorp's dams on the Klamath River.

In most cases, these companies aren't doing anything illegal -- they're simply operating within the rules of our system. However, it would stand to reason that if there was a "higher order" of rules that should be followed in the economy, they may be sorely underperforming.

Just because everyone else is doing it ...
But there are some great counterexamples to the bleak list above. The Motley Fool, for example, organizes an annual Foolanthropy campaign to raise money for charitable organizations. The company also goes over-and-above when it comes to its employees. Which is probably why it shows up in "Best Places to Work" lists in local publications.

Privately held burger chain In-N-Out, meanwhile, voluntarily pays its employees well above minimum wage. Whole Foods (Nasdaq: WFMI  ) and its outspoken CEO, John Mackey, are known for employee-friendly practices which include limiting executive compensation to 19 times the average hourly wage of $16.98. Not that this impacts Mackey -- he makes only $1 per year.

Google (Nasdaq: GOOG  ) , the "don't be evil" company, wanted to do its part to combat global warming and installed 9,212 solar panels at its corporate headquarters. Other companies, including Comcast, Eli Lilly, and Oracle, donate hundreds of millions, if not billions, of dollars to charitable causes.

Certainly, many companies take actions specifically to polish up their corporate image, but it would probably be considered a bit cynical to suggest that every supposedly good and moral action taken by a company is for public relations.

But who cares?
No, really, who cares? Do you? Does any of this good and bad matter at all to you as an investor? Or do you simply look for companies that seek to make the most money possible while operating within the rules of the legal system?

Log your vote in the Motley Poll below and then head down to the comments section to explain why it does or doesn't matter whether companies go over and above to be good and moral.

Berkshire Hathaway and Wal-Mart Stores are Motley Fool Inside Value recommendations. Google is a Motley Fool Rule Breakers choice. Berkshire Hathaway and Whole Foods Market are Motley Fool Stock Advisor recommendations. The Fool owns shares of Berkshire Hathaway and Oracle. Try any of our Foolish newsletters today, free for 30 days

Fool contributor Matt Koppenheffer owns shares of Berkshire Hathaway, and Eli Lilly, but does not own shares of any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool. The Fool's disclosure policy has never once been caught with its pants down. Of course, it doesn't actually wear pants ...


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Comments from our Foolish Readers

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  • Report this Comment On February 09, 2010, at 10:37 AM, jwrdi25 wrote:

    The question could just as be be posed: Is there room for morality in politics, socialism, labor unions, etc., etc.

  • Report this Comment On February 09, 2010, at 10:53 AM, sid2286 wrote:

    This is the first time I've read an article on company morality that haven't brought up Nestle. I think that the whole first part of the article could have been written just about them.

  • Report this Comment On February 09, 2010, at 10:53 AM, mglenfest wrote:

    The premise of this article, "Capitalism is Immoral", is laughable. The argument that corporations seek profits without any regard for morality is based in socialist ideology and the real motivation of the article is to slander capitalism. The premise that Tobacco companies are immoral because they sell products that people want is obtuse. Is Hostess immoral because it sells food that makes people obese? Ever heard of individual responsibility? People make themselves fat by eating too much of the wrong things and people give themselves cancer by smoking. Chevron and ExxonMobil are very generous companies and ExxonMobil voluntarily paid dearly for the Valdez accident. Corporations have the right in a free country to pay their executives whatever they wish. Man made Global Warming is a Hoax designed to defeat capitalism.

    Matt Kopenheffer is clearly a liberal Obama supporter, advocating policies that are baseless and proven to fail every time they are tried. Capitalism and the free market have enabled the USA to become the greatest most generous nation on earth. Why the Motley Fool empowers him to trash the very system that allows companies like itself to flourish makes no sense whatsoever

  • Report this Comment On February 09, 2010, at 11:47 AM, ikkyu2 wrote:

    Look, this is why we have regulation and laws. Like most people who read the Fool, I am an investor; I am not a regulator nor a lawmaker.

    The tendentious debates are just chaff that has to be waded through to get to the investment analysis. Every time you post an article like this, trolling for knuckleheads who want to spout off, you make the Fool less valuable to your investor readers.

  • Report this Comment On February 09, 2010, at 11:49 AM, whereaminow wrote:

    Capitalism is the condition that occurs when people are allowed to exchange freely.

    There are evil Businessmen, just as there are shady Dentists and violent Garbage Men. It's just a part of life that people are both good and evil, and capable of both.

    David in Qatar

  • Report this Comment On February 09, 2010, at 12:03 PM, kurtdabear wrote:

    Getting into the underlying definitions for "right" and "wrong" in different ethical structures would take volumes, so let me just pose a question to you:

    Is it more moral for Altria to sell a legal product that has a health warning label on it to an adults-only audience, or is it more immoral for Merck to pedal a dangerous drug like Vioxx under the guise of "helping" people while they're busy hiding test results and telling their salespeople to lie to doctors?

    I feel much more comfortable morally investing in a tobacco company, a brewery or a gambling company than in most pharmaceutical companies. (Disclaimer: As a former 4-pack-a-day smoker, I consider dividends from tobacco companies to be refunds. Where does that fall on your moral scale?)

  • Report this Comment On February 09, 2010, at 12:04 PM, miteycasey wrote:

    I think you only touched on half the issue.

    You can't forget the individual responsibility that falls onto the customer.

    People know cigarettes kill so why do people still smoke, or start smoking?

    How about food companies making people fat?

    If customers were responsible these companies would be out of business.

  • Report this Comment On February 09, 2010, at 12:36 PM, jm7700229 wrote:

    Once again, this author demonstrates his inability to understand the difference between questionable business practices and breaking a contract.

    My question is, "would you enter into a contract with this man, knowing that if he can get away with breaking it, he will?"

    All this crap about how some companies behave is nonsense. My kids learned a long time ago that "but everyone else does it" got them nowhere.

    I love the comparisons:

    1. There are people who speed, therefore, we are all idiots to go the speed limit.

    2. The guy down the block doesn't keep his property up, therefore we are all idiots for maintaining our own.

    3. There are parents who allow their kids to cut classes, therefore, we are all idiots for getting our kids to school on time (listen, there's no consequence to me if my kids end up homeless, and it's the most selfish level of self-interest that the author is promoting).

    I keep clicking on these headlines hoping to see one from Motley Fool disassociating itself from the opinions of people who have no honor. I don't do business with people I can't trust.

  • Report this Comment On February 09, 2010, at 12:40 PM, umichleclair wrote:

    Companies that operate with a deep sense of immorality run the eventual (very eventual) risk of the government actually standing true and cracking down on certain practices. Politics is far too murky for this to occur any time soon though.

    I find it good to stick with moral companies because they seem to have loyal investors and customers.

  • Report this Comment On February 09, 2010, at 1:06 PM, milleniumfalcon wrote:

    The larger question here is what is "good?" Is morality universal, as in Kant's categorical imperative or the 10 commandments? Or is morality utilitarian, i.e., "the greatest good for the greatest number?" While many of us personally attempt to live by universal norms of morality, companies in late capitalism fall under neither of these moral typologies.

    For one they - as amalgamation of various stakeholders - are not individuals (despite what the idiots in the majority of the Supreme Court say). Therefore there should be no expectation that they follow universalist ethical principles.

    Secondly, companies cannot - by law - be utilitarian. The idea of the greatest good for the greatest number would go against the sole reason for their legal existence - to create wealth for their stockholders. Legally, other stakeholders - employees, customers, community location - have no place and are really of no concern. Of course companies often do treat these constituencies well, since It is good PR that in the long run helps the bottom line.

    What has happened in corporations is that nepotism (even if it in non-familial) has bred an amazing amount of disingenuous sympathy for the "hard-working CEOs" even if their hard work is more like junk science than actual progress. It is almost the inverse of what Smith outlined in Theory of Moral Sentiments. Smith said that we bestow favors, gifts, etc, on others less fortunate than ourselves. Inside corporations, however, boards and executives bestow favors on the already fortunate.

    Smith was definitely right about one thing for sure: distance does not make the heart grow fonder. He feared that the further removed people got from other people, the more likely they would be to stop caring or in our current economic vernacular - to screw them.

    Companies are neither moral or immoral. They are amoral.

    And that is what makes them so dangerous.

  • Report this Comment On February 09, 2010, at 2:31 PM, TMFKopp wrote:

    @jwrdi25

    "The question could just as be be posed: Is there room for morality in politics, socialism, labor unions, etc., etc."

    Of course you could, but that's not the question at hand here...

    @mglenfest

    "The argument that corporations seek profits without any regard for morality is based in socialist ideology and the real motivation of the article is to slander capitalism."

    I think you're jumping to conclusions. Fact is, I own stock in a few companies that people could raise issues about -- including Philip Morris International and Coca-Cola. The question wasn't whether capitalism itself is immoral, but rather whether participants in the capitalist system should be held to higher standards than laws create.

    Past that, I was curious whether investors actually care whether their company operates under some sort of higher moral code or whether they're just looking for whatever companies make the most money.

    "The premise that Tobacco companies are immoral because they sell products that people want is obtuse."

    Is it really? Many people want cocaine, marijuana, and heroin, but it's illegal to sell them. Presumably, then, you'd be in line to invest in a cocaine manufacturer the minute the drug was legalized. The point is that nicotine is known to be dangerous and yet these companies make money basically on the demise of their customers and only include that warning on the packet because they're legally obligated.

    "Ever heard of individual responsibility?"

    How about the individual responsibility of the people running these companies?

    "Chevron and ExxonMobil are very generous companies"

    Check out what Amnesty International has to say about Chevron... http://www.amnestyusa.org/business-and-human-rights/chevron-...

    Matt

  • Report this Comment On February 09, 2010, at 2:41 PM, TMFKopp wrote:

    @whereaminow

    "There are evil Businessmen, just as there are shady Dentists and violent Garbage Men. It's just a part of life that people are both good and evil, and capable of both."

    So when you invest, do you focus on companies that "do the right thing?"

    @kurtdabear

    "or is it more immoral for Merck to pedal a dangerous drug like Vioxx under the guise of "helping" people while they're busy hiding test results and telling their salespeople to lie to doctors?"

    I see your point, but what Merck did was actually illegal...

    @miteycasey

    "People know cigarettes kill so why do people still smoke, or start smoking?"

    In many cases because they're young and impressionable and they see people on TV and in movies smoking. Or else they think it's part of being a "grownup" or some such combination of factors. In most cases, we're not talking about a fully realized 35-year-old making the decision to take up smoking for the first time. As for people still smoking... I'd guess that's because it's a highly addictive chemical.

    @jm7700229

    Ok, no offense but I got a chuckle out of your examples -- they were very far from the point of either this article or the ones that you're really referring to.

    I'm curious to hear your answer to the question actually posed here. When you invest do you only invest in companies that have a similar set of high moral standards as yourself?

    Matt

  • Report this Comment On February 09, 2010, at 2:47 PM, TMFKopp wrote:

    @umichleclair

    "I find it good to stick with moral companies because they seem to have loyal investors and customers."

    Good feedback! And you're correct, companies doing questionable things do run a risk of legal changes (though they fight hard against that with lobbying money).

    Care to share what companies you like and how you go about finding companies on the up-and-up?

    @milleniumfalcon

    "For one they - as amalgamation of various stakeholders - are not individuals (despite what the idiots in the majority of the Supreme Court say). Therefore there should be no expectation that they follow universalist ethical principles."

    Well, I suppose they could hide behind that when it comes to moral questions, but in the end, every private company in the U.S. is owned and operated by individuals. So in the end, business practices at any given company are decided by individuals.

    "Smith was definitely right about one thing for sure: distance does not make the heart grow fonder. He feared that the further removed people got from other people, the more likely they would be to stop caring or in our current economic vernacular - to screw them."

    Well put!

    Matt

  • Report this Comment On February 09, 2010, at 2:57 PM, TMFKris wrote:

    Is there a level of moral standards below the highest? Maybe that thought ties in with others who have talked about the universality (or lack thereof) moral standards. I want the company I own stock in to adhere to the "highest" moral standards, but if the CEO's morals include not lying to the point of telling a buyout target that the first offer really isn't the highest he will go, well that's nonsense.

  • Report this Comment On February 09, 2010, at 3:35 PM, TMFKopp wrote:

    @TMFMiloBreathed

    "Maybe that thought ties in with others who have talked about the universality (or lack thereof) moral standards."

    I think the universality issue is key... I don't think there's one template that we're all working off of, so laws, which I guess we could say capture some sort of "majority rules" on morality, leave a lot of room for businesses and individuals to take actions that some people would consider immoral.

    Matt

  • Report this Comment On February 09, 2010, at 4:08 PM, USNHR wrote:

    Whole Foods (Nasdaq: WFMI) and its outspoken CEO, John Mackey, are known for employee-friendly practices which include limiting executive compensation to 19 times the average hourly wage of $16.98.

    $16.98 x 2080 hours x 19 = $671,049.60.... I assume that doesn't include company car, company plane use, stock options, other fringe benefits, medical and dental plans, etc... In the end those executives get the moola, otherwise they would move on to another company that can "show me the money".

  • Report this Comment On February 09, 2010, at 4:15 PM, TMFKopp wrote:

    @USNHR

    "In the end those executives get the moola, otherwise they would move on to another company that can "show me the money". "

    Or maybe they enjoy working for a company they believe in.

    Matt

  • Report this Comment On February 09, 2010, at 4:35 PM, outoffocus wrote:

    Theres always room for morals. We just tend to allow our foolish self interests to crowd morals out.

  • Report this Comment On February 09, 2010, at 6:34 PM, artistx wrote:

    I believe one's investing habits mimic their personal beliefs. It's no wonder we have global warming, obesity, addiction, poverty, etc. A vast majority of investors don't care as long as it's "legal". I think all companies should have social and environmental reports along with the 10-k. I want to buy stocks from companies that are going to help the planet, not destroy it. The problem is, as long as it's "legal" to destroy the planet, most will.

  • Report this Comment On February 09, 2010, at 6:35 PM, artistx wrote:

    I believe one's investing habits mimic their personal beliefs. It's no wonder we have global warming, obesity, addiction, poverty, etc. A vast majority of investors don't care as long as it's "legal". I think all companies should have social and environmental reports along with the 10-k. I want to buy stocks from companies that are going to help the planet, not destroy it. The problem is, as long as it's "legal" to destroy the planet, most will.

  • Report this Comment On February 09, 2010, at 8:02 PM, TMFKopp wrote:

    @artistx

    Interesting viewpoint. I'd agree that it's probably difficult to find companies that are sparklingly clean.

    I'm curious to hear what stocks you do invest in? Or do you invest at all?

    Matt

  • Report this Comment On February 09, 2010, at 8:39 PM, DDHv wrote:

    There is a society on one of the pacific islands, the Dobu islanders if I recall correctly, that operates largely on the social pattern of each for himself. I understand that the natives prefer to work elsewhere when they can.

    We aren't perfect. But it can be argued that the level a civilization can reach depends partly on how much we can trust each other.

    The greatest commandment is to love God with all of yourself. The second is to love your neighbor. Anyone who honestly aims at these two is a builder, not a destroyer.

  • Report this Comment On February 09, 2010, at 10:47 PM, culcha wrote:

    I couldn't answer this poll, since the only option that mentioned moral standards referred to "the highest moral standards," which sounds like some kind of ideal that doesn't exist in the real world. So, if I insisted on the "highest moral standards," I'd never invest in any company.

    I'd also like a company that I invest in to pay its workers decent wages, not "the highest wages." Why not an option that mentioned decent moral standards? (That's a concept that may be difficult to specify, but so too is the concept of "the highest moral standards.")

  • Report this Comment On February 09, 2010, at 11:12 PM, AvianFlu wrote:

    A more appropriate question would be, "Is there room for morality in statism?"

    After thinking about the USSR, Chairman Mao, Cuba, Venezuela, East Germany, Nazi Germany, Mussolini's Italy, the Kmer Rouge, North Korea and scores of other all-powerful states who punish and control the individuals in their country I firmly believe the answer is no.

    In a purely capitalist system you are free as an individual to choose who you want to do business with, or not. You can also choose whose stock you want to purchase, or not. Capitalism is more moral because it allows more freedom for the individual.

  • Report this Comment On February 10, 2010, at 7:38 AM, atlasbooks wrote:

    I read most of the posts and did not see a few points that need to be made. Your morality depends on what you give ultimate value to. Our nation was founded on the moral principle of giving value to the individual human life. To live you need freedom to pursue your own happiness. In this respect, we were the first moral nation ever founded. Being free to trade is the definition of Capitalism, which is a political system, not an economic system. That said, it has been a long time since we could be truly considered a Capitalist nation. What we have had since the 1930s is a statist nation. This process is now accelerating. If you study the philosophy behind Capitalism, you learn that humans have never had a right to any "thing." We only have a right to ACT to gain the things we need. Your right to life is not dependent on any government, except that it should be the guardian of your rights. Your right to life is independent of any government. It is a right by being a member of the human species. We are all equally human. Therefore we all have the same rights. If none of this sounds familar to you, then read "Atlas Shrugged" or "Capitalism: The Unknown Ideal" by Ayn Rand.

  • Report this Comment On February 10, 2010, at 1:04 PM, TMFKris wrote:

    In a related vein, if anyone wants to take a look, today the Fool has "Keep Your Values and Still Beat the Market" by Fool Dan Caplinger. The article looks at "socially responsible" funds, how they perform, and how they have changed over the years. For instance, going from not investing in companies that supported apartheid to looking for companies that understand their social and environmental impacts.

    http://www.fool.com/investing/mutual-funds/2010/02/10/keep-y...

  • Report this Comment On February 10, 2010, at 2:13 PM, TMFKopp wrote:

    @atlasbooks

    Fair point, but then the question is even stronger... With less government intervention should companies be holding to some higher standard of conduct? And do you look for companies like this when you invest?

    Matt

  • Report this Comment On February 10, 2010, at 11:19 PM, thidmark wrote:

    "Or maybe they enjoy working for a company they believe in."

    Matt

    If only Rahodeb could let us know ...

  • Report this Comment On February 10, 2010, at 11:20 PM, thidmark wrote:

    "Or maybe they enjoy working for a company they believe in."

    Matt

    If only Rahodeb could let us know ...

  • Report this Comment On February 11, 2010, at 12:37 PM, AnonymousLove wrote:

    The idea "Capitalism" is great. Even the idea "Communism" is great. However, neither does, or ever will, exist. The former relies on a 100% honest monetary system and medium of exchange. The latter relies on absolute love from all and for all.

    I'd love to see either.

  • Report this Comment On February 12, 2010, at 11:23 AM, richmacmf wrote:

    Your survey is flawed.

    Non of the choices fits me and I assume that might be true for others.

    Something between the first and second options fits my view.

    I do feel there is room for morality and "doing the right thing" in Capitallism.

    I would answer from an investing standpoint as a part time investor with a full time family and career commitment, that I look for companies who have a social conscience to invest in who also make money and I think there are plenty of those.

    I will not invest in companies that I believe have violated the basic tenants of "do the right thing".

    The profit motive and capitalism are great and the best economic system ever invented. It and freedom and democracy are in trouble if we all don't commit personally to "Do the right thing". It is not that complicated. Leaving that to government is going to kill us.

  • Report this Comment On February 12, 2010, at 11:32 AM, xetn wrote:

    No body is as immoral as a politician or a government because they can only exist by legalized theft at the point of a gun.

    Laissez Faire capitalism is the most moral system because all transactions benefit from free exchange or the transactions would not take place. Too bad we don't have such a system. Instead, we have a centrally planned money/banking system and an ungodly amount of government intervention into ever facet of business and private lives.

  • Report this Comment On February 12, 2010, at 12:09 PM, njdo wrote:

    Do oil companies have the right to dump toxic waste in the Amazon? How about in North Carolina or in the state where you live. How about in your neighborhood. Would you feel good about short term gains in your portfolio if your kids were dying from cancer caused by one of the companies you invested in? How do feel about gas drilling companies that are contaminating groundwater with fracking fluids? How about long term (forever) environmental pollution caused by depleted uranium weapons? The fact is that most people's greed knows no bounds and some very powerful people will cause any amount of damage for their own short term gains. Wealth won't protect you against the psychopathic behavior of individuals or societies. You can have millions in the bank,but if the economy spins out of control causing massive inflation, econoic disruption or war, your millions could be worthless like in Germany before the Second World War and the US could return to barbarism. People should consider long term sustainability of the economy and the environment when they invest. Otherwise you are subsidizing the wrong people to gain more power and control. Wake up before it's too late. It has happened before and it is happening now.

  • Report this Comment On February 12, 2010, at 12:34 PM, langco1 wrote:

    some more news on the recovery in the US. 1 in 8 americans are now on food stamps.thats a real sign of how well the country is doing..the american people need to end this disgrace and they can start by putting obama and his family on food stamps. it is time to demand a midterm election and bring in someone less interested in being a small time celebrity than running the country...

  • Report this Comment On February 12, 2010, at 1:49 PM, anittanylionsfan wrote:

    I find it mildly amusing that 44% of people who have taken the survey (so far) want to invest only in companies that demonstrate the highest degree of morality while just slightly more (48%) invest in companies operating within the boundaries of the law. I guess I wonder how the companies used as examples in these articles can be so incredibly profitable and have such a huge amount of trading volume if almost half of people surveyed claim to only want to invest in highly moral companies? My theory - I think we'd all like to believe that we only support ethical organizations but when it comes right down to it we're all out for what makes sense for us (some people call it being selfish but I call it reality) Some of us have come to grips with that fact and admit it. Others are still trying to live in a world that doesn't exist - the one where everyone cares about everyone else and no one breaks any rules and the rules...well they are just intuitively obvious and accepted by everyone of course!

    My personal philosophy - If a company is operating legally then let it be but that doesn't mean that I'm going to put my money behind it as a consumer or as an investor. And, if enough people find something distasteful then they can vote in politicians that can change the laws to more closely reflect societies values.

  • Report this Comment On February 12, 2010, at 2:53 PM, oncebyten wrote:

    To say an action is "legal" is the last defense of the guilty. We don't have laws to define immorality. We have laws to define how much immorality you can get away with. And those laws are paid for, written by, and exist to protect the immoral.

  • Report this Comment On February 12, 2010, at 3:26 PM, ooba wrote:

    Companies and groups that act morally are *more* successful in my opinion, so yes to me there is a place for it and I look for it to find investments with a better $ return.

    Regardless of whether its in a capitalist, socialist, religious-political area of the world.

    I don't look at whether Companies give away spare cash on good-looking-stuff. That's PR. I look at what their product actually does for and to their current customers and potential customers (community).

    Nobody's perfect but being constructive (building value for both current and potential customers so more of them are happy to pay) versus destructive (spinning a line to trick customers out of their money) reflects morals to me, the old good versus bad thing.

  • Report this Comment On February 12, 2010, at 4:20 PM, stockguru100 wrote:

    "Capitalism and the free market have enabled the USA to become the greatest most generous nation on earth. Why the Motley Fool empowers him to trash the very system that allows companies like itself to flourish makes no sense whatsoever."

    Clearly, you've forgotten your American history. America flourished for centuries due to free slave labor, under the banner of capitalism. Morality was not part of the scenario event though those who were enslaved were not paid for their efforts which propelled this country forward. Encorporating moral standards is what makes us a better country and companies benefit from that. The lack of morality is what gives companies a black eye, along with the greed factor.

  • Report this Comment On February 12, 2010, at 5:26 PM, zonadude wrote:

    I think that many of the commenters here are confusing capitalism as an economic construct with that of a social system. According to Milton Friedman, capitalism is amoral; there is no inherent provision for morality in the basic premise of capitalism. Debating this is like comparing apples and oranges (even to the extent that we will barter different amounts of apple for orange at different times -- we value them separately and for different reasons).

    So if capitalism can't be moralistic, then can your morals include capitalism? Yes, this would be a more utilitarian, economizing worldview. This is certainly why so many of us are so concerned with protecting the sanctity of an effective capitalistic system, or rather I prefer to use the term free market in place of capitalism -- for not all of us need be capitalists in a free market. But we do believe that a free market is the most efficient way to deliver goods and services.

    So there are only two ways for morality to enter the free market system:

    Either, as this poll suggests is a realistic measure, because enough of the market will indeed demand certain "moral" behaviors on the part of companies and their leadership. While none of us can argue the merits of this if it indeed takes root, our temperaments often change to reflect our preference for different qualities, not always including a consideration of a company's social policy.

    Or, a social construct, such as a government-appointed regulatory agency, can enforce the people's will for certain moral behaviors. In lieu of government, perhaps mob rule or a warlord can fulfill this role in order to maintain a social contract with fellow members of society. But in any sense it's the same: people circumvent the market to enforce certain behaviors that they deem desirable.

    I think you'll find that both ways can work incrementally, and in targeted areas. However, the fact that we have an almost even split over whether we should require moral actions from companies demonstrates why we don't see more government enforcement along these lines. Instead, government intervention more often takes the form of enabling market efficiency when it comes to investments -- also a good cause, but an entirely different issue. Or we see these government agencies like the EPA, which often impact businesses even though they were not created for this purpose.

    Meanwhile, certain companies that subscribe to principles like the triple bottom line tend to become immensely successful when well run (I've got nothing to say for the overly idealistic types who forget that they compete in a market environment and thus fail to properly manage their business operations or offer desirable products). And this is because, as is demonstrated in this very poll, roughly half of us tend to support these practices. And guess what: that half tends to be pretty devoted, and therefore a highly profitable market.

    So as an investor concerned with overall branding and execution of concept, I will indeed support a company that does a great job of demonstrating that it behaves in a way that its most loyal customers want. I see this as a great investment opportunity when I can catch it before it becomes overvalued or overleveraged due to rapid expansion.

  • Report this Comment On February 12, 2010, at 5:45 PM, zonadude wrote:

    Back to the question of moral conduct in commerce as it relates to our attitudes about contracts, I've observed a perfectly efficient and acceptable way to navigate this issue in my commercial real estate experience.

    I prefer getting to know people with whom I do business so that I can determine whether we can agree to a handshake deal or if everything needs to be in writing. While I certainly value the former, I have no problem with the latter (and usually get there anyhow in some fashion). But when I'm dealing with a faceless entity, where there is no personal connection, I see it as my duty to get absolutely everything in writing -- all the way down to the default clause.

    I want to know what will happen if and when one party fails to act, knowing that it may very well happen for any number of reasons. And in a well written contract, there should always be an acceptable outcome for both parties, whether they move forward as described is the plan or otherwise.

    Would I do business again with someone who defaults on a contract? Yes, as I have done in a couple of cases. If I perceived that they defaulted for dishonest reasons (or wasted my time, etc.), then I will certainly be more guarded about future dealings. But that's it. Life goes on.

  • Report this Comment On February 12, 2010, at 5:50 PM, etdiii wrote:

    articles like this make me wonder why I subscribe to MF services. The author has selected a hot button topic and pepper it with sound bites and urban myths. It is a waste of time. The three "vote" choices are about as logical as the question "Can God make a rock so big that God can't life it?"

  • Report this Comment On February 12, 2010, at 7:58 PM, Gardnermiles wrote:

    I feel the same as NJDO. These companies know they are contaminating our WORLD. With their knowledge they still continue to ignore future consequences. At some point you would think that the person in authority would realise that his morals and character would soon be on the line. Improper moral standards may temporairly produce fortunes but ultimately these companies will fail. CEO's and those upper echelon employees with too much greed have further to fall and create great damage to themselves, their families and above all their Country

  • Report this Comment On February 12, 2010, at 8:20 PM, mhonarvar wrote:

    Expected Costs of producing the Pinto with fuel tank modifications:

    Expected unit sales: 11 million vehicles (includes utility vehicles built on same chassis)

    Modification costs per unit: $11.00

    Total Cost: $121 million

    [= 11,000,000 vehicles x $11.00 per unit]

    Expected Costs of producing the Pinto without fuel tank modifications:

    Expected accident results (assuming 2100 accidents):

    180 burn deaths

    180 serious burn injuries

    2100 burned out vehicles

    Unit costs of accident results (assuming out of court settlements):

    $200,000 per burn death*

    $67,000 per serious injury

    $700 per burned out vehicle

    Total Costs: $49.53 million

    [= (180 deaths x $200k) + (180 injuries x $67k) + (2100 vehicles x $700 per vehicle)]

    Thus, the costs for fixing the Pinto was $121 million, while settling cases where injuries occur was only $50 million. With such a difference in costs, Ford decided to manufacture and market the Pinto without fuel tank modifications.

    fast forward 40 years...and you have Toyota with massive recals after months of evidence of problems.

  • Report this Comment On February 13, 2010, at 12:22 PM, ET69 wrote:

    I couldn't vote for any of the choices as the notion that "morality" plays a role in capitalism is an oxymoron in my view. I think MilleniumFalcon above was on the right track in that this is a philosophical question and we need to define our terms carefully or we will all be confusing apple and oranges. Its good to see some references to philosophers like Kant the German Idealist but but Milton Friedman and Ann Ryan? Please- these folks are more properly classed as ideologues..not serious philosophers.Frankly I would recommend Marx's Capitalism and especially Engel's The Origin of the Family, Private Property, and the State.

  • Report this Comment On February 13, 2010, at 12:32 PM, langco1 wrote:

    google the online phone book has become so desparate to maintain its failing status that almost every day it comes out with its own version of its rivals better ideas.google is burning up its money chasing behind other companys but does not even realize you cant get ahead by following! googles founders have seen the writing on the wall and have begun massive sales of their stock holdings...google the online phone book has become so desparate to maintain its failing status that almost every day it comes out with its own version of its rivals better ideas.google is burning up its money chasing behind other companys but does not even realize you cant get ahead by following! googles founders have seen the writing on the wall and have begun massive sales of their stock holdings...

  • Report this Comment On February 13, 2010, at 5:51 PM, bottomtroll wrote:

    Turn the table. Why not ask if there is room for corruption in socialism! Were it not for the fact that capitalism was essentially voted out when FDR was voted in, capitalism may have had a chance. Even before FDR, the establishment of the Fed (as a palatable alternative to a central bank) had its hand in the demise of THE most moral of all politico-economic systems contrived by man.

    All the above proponents who DISfavor the evils of capitalism don't even realize it no longer exists. They are actually disfavoring the corruption which follows the advent of socialism which has sneaked in the back door, riding on the coat-tails of the minds which brought man into the 20th century.

    And now what do we have? An entire socialistic planet on the verge of total collapse and violent chaos, increasingly in debt because that's the only way they can think of to keep it floating. Just take away the gold and spend your way to prosperity!

  • Report this Comment On February 14, 2010, at 12:16 PM, RanchBurger wrote:

    Capitalism by nature is not a 'moral' system. Morals are an invention of man and are not built into capitalism, but must be enforced by laws. If capitalism were followed to the letter, survival of the fittest would consume our lives, murder and theft would be legal because these are simply the acts of stronger or more cunning humans. Strong regulation of the markets is a necessity for any sort of moral code to be enforced.

    I will however admit, that Goldman has on multiple occasions, acted on the fringes of legality. During the 2008 oil price spike Goldman would openly suggest to anyone that would listen that oil could hit $200 a barrel. Was it really a surprise when it became apparent that commodity trading generated a significant percentage of Goldman's revenue over the following months? Goldman's size gives it the power to move markets with just a few words. Does Goldman have a responsibility to keep it's mouth shut to avoid the so-called 'dumb-money' from blindly jumping on the wagon? I don't know. What I do know is that it is best to avoid taking on the beast at its own game. Invest for the long term and many of the big boy's advantages fade away.

    ----------------------

    www.intelligentinvestingtips.com

  • Report this Comment On February 14, 2010, at 11:29 PM, WileyCyote wrote:

    Is there room for morality in capitalism? YES!

    True capitalism IS a moral and desired way to live.

    What we are living through now IS NOT CAPITALISM.

    It is a conniving treacherous condition devoid of any real moral principles of any kind.

    When someone like Barney Frank can come on camera and state positively "Fanny Mae and Freddie Mac are not in financial crises" (and get away with it) somethig is dreadfully wrong. Both John Snow (the Treas Sec) and later Fed Chair Greenspan sent up flares and once again those who had their own private agendas at stake made sure that NOTHING HAPPENED.

    We had better FIND once again a moral financial path or face an even more dire future than we see now. It would be nice if Wall street and Washington sat down and read Adam Smith, von Mises and Hyack.

  • Report this Comment On February 16, 2010, at 9:03 AM, AnonymousLove wrote:

    "Even before FDR, the establishment of the Fed (as a palatable alternative to a central bank) had its hand in the demise of THE most moral of all politico-economic systems contrived by man."

    "THE most moral of all politico-economic systems" was falling before the "Federal" Reserve picked up and may have began its demise as early as Alexander Hamilton, but your point is still good.

    "Both John Snow (the Treas Sec) and later Fed Chair Greenspan sent up flares and once again those who had their own private agendas at stake made sure that NOTHING HAPPENED."

    The "Federal" Reserve IS A PRIVATE ENTITY. Your ignorance of this matter exemplifies America as a whole.

  • Report this Comment On May 07, 2010, at 1:01 AM, ambersoller wrote:

    Mmmm.... nah, not really. Capitalism has no morals we all can agree with that. I mean, look at the porno industry. It along with video games and movies that showcase violence as entertainment for profit should say something about Capitalism.

    But hey, that's how our capitalist society works. Just watch out for people like Jack Thompson and the Concerned Women for America who say are "conservative" when really they're a bunch of liberals out to destroy the dreams of entrepreneurs who want to be prosperous, be it through selling sex or violence.

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