Thursday, May 14, 2009

Environmental Protection and the Social Responsibility of Firms

there's a book called Environmental Protection and the Social Responsibility of Firms written from economic, business and legal viewpoints. it explores the questions of whether a capitalist firm can be environmentally friends and should be environmentally friendly.
the answer is that at times they can be and probably should be, but most of the time, they shouldnt be and cannot be. and in fact, most firms are not.

a firms main goal should be to make a profit to it's shareholders. every once in a great while, being environmentally friendly will go hand in hand with this goal, but it is rare.

firms are able to do costly environmentally friendly things only if they are not in a competitive environment, for example, a monopoly can be environmentally friendly. however, in a competitive market, if one firm takes on extra costs of being environmentally friendly, other firms will drive the green firm out of business.

basically, unless it is profitable, firms wont/shouldnt/cant be environmentally friendly. and in the real world, most firms arnt.


it is nice to come across books like this where obvious capitalists admit that a free market isnt gonna do much good for the environment.

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