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Licensed Unlicensed Requires Authentication Published by De Gruyter April 28, 2020

Corporations as the Outgroup?

Ryan H. Murphy EMAIL logo
From the journal Man and the Economy

Abstract

Because the evolutionary competitive process found in the market selects firms whose practices most closely maximize profits, as in Alchian (1950), members of society correctly perceive that firms will defect when it aligns with their long-run profitability. This holds regardless of the intentions of those running the firm. But in terms of moral psychology, members of society subsequently consider firms to be members of the outgroup, deserving of ostracism. However, because conventional economic analysis already assumes that firms maximize profits, the observation that firms only act “ethically” when it is in their rational self-interest to do so does not have policy implications that are not already contained in neoclassical economics.

JEL Classification: Z10; M14; G30

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Published Online: 2020-04-28

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