Capitalism is a system built upon profits. As Adam Smith noted centuries ago, profit incentives, rather than oaths and vague promises, drive individuals in the corporate world. As the American public has long witnessed, moral philosophy classes and a professional code among lawyers has not halted the perpetuation of an ugly image of the profession. It has not slowed the thousands of attorneys who defend corporations in opposition to the public interest. It has not slowed the trite lawsuits that clog America’s legal system. Why? Because the financial rewards are often worth the ethical sacrifice.
Business is no different. Executives are rewarded, often very lavishly, by boosting company sales and profits. Is it any surprise they act accordingly? The nature of capitalism, and of capitalists, is to treat labor, natural resources, and financial capital as inputs for a gigantic profit machine. Shareholders can only lose when their company pursues an agenda of social justice to its own financial detriment, and so they recruit talent accordingly.
The key to real change is to alter the reward structure within the system. Extraordinarily harsh punishments for corrupt behavior, coupled with legislation that alters market incentives are the most efficient and bulletproof methods of fixing crony capitalism. As long as the rewards for irresponsible behavior remain, an oath will accomplish only one change – it will turn socially irresponsible executives into socially irresponsible hypocrites. Governments must aggressively prosecute business professionals who have breached the law while also creating markets for the externalities not normally reflected in the price of goods – pollution and greenhouse gas credit markets, for example, as well as taxing wasteful behavior, such as driving SUVs or throwing away potentially recyclable material. These are the kinds of incentives that truly alter human behavior. Society has had enough empty promises, and what it needs today is substantive change.