Two and a Half Cheers for Conscious Capitalism

In recent years, the idea of conscious capitalism has emerged as an important alternative approach to the problems confronting American capitalism. Embraced by a number of corporations and prominent business leaders, it represents a new strategy for reconciling business and social and environmental objectives. While this movement is an inspiring one and worthy of admiration, we believe the assumptions that underlie it suffer from a number of important limitations that make it unlikely for the movement to achieve the ambitious promises of its proponents. In fact, it is often difficult to do well by doing good and few firms have been able to sustain superior social performance over the long run. Moreover, reconciling the interests of all the firm's stakeholders is often hard to achieve in practice. Most importantly, the adherents of conscious capitalism overlook the critical role that governments must play in reconciling corporate interests with broader public objectives.