EP91 · Economy · first published 2021-07-23

Corporate Responsibility and Wokenomics | Thomas Taussi | Negotiator 91

Aalto University researcher Thomas Taussi argues that Milton Friedman's classic 1970 essay has been widely misread. Friedman did not dispute the importance of stakeholders and did not condemn all corporate social responsibility — he criticised one particular doctrine, in which a company's resources are spent on activities with no purpose of supporting the business. The episode's load-bearing observation is conceptual: responsibility sets itself no limits and does not explain itself, with the consequence that almost anything can be pursued under its cover. Taussi locates the source of his own scepticism precisely — the question is not whether the goals are good, but whether limits can be set at all on things that depart from the core business. The examples include Neste Oil's biofuel turn, Stora Enso's China venture, the Kemijärvi pulp mill, the Finnair deportation controversy and Finnwatch's position, the Google and Apple dismissals, and Basecamp's depoliticisation. Taussi finally explains woke excesses through Thorstein Veblen and costly-signalling theory. Miettinen offers a counter-reading that Taussi accepts as an addition but does not share.

Sami Miettinen · Sections: AI and the Economy + AI and Society

Corporate Responsibility and Wokenomics | Thomas Taussi | Negotiator 91

Summary: Thomas Taussi, a researcher at Aalto University, argues that Milton Friedman’s 1970 essay has been widely misread. Friedman did not condemn all corporate social responsibility — he divided it in two and criticised only one half.

The episode’s load-bearing observation is conceptual rather than political: responsibility sets itself no limits and does not explain itself. And because the concept is morally charged as virtuous, almost anything can be pursued under its cover.

Taussi frames his own scepticism precisely — and it is not scepticism about the goals:

“Can limits of some kind be set on these things that depart from the core business, or is it an open gate for challenging or disrupting the definition of a company and its core functions?”

A note on reading this

The episode is a critical intervention against prevailing responsibility discourse, and Taussi’s views are attributed to him. Miettinen offers an opposing reading at the end, which is left visible in this article. The article takes no position on who is right.

Starting point: what Friedman actually said

Miettinen begins with company law: unless the articles say otherwise, a company’s purpose is to generate profit for shareholders. He notes immediately that this is not a simple objective, because the profit need not arrive in the next financial year — which splits the question into one of time allocation.

Taussi’s correction to the Friedman reading is the intellectual core of the episode. Friedman divided social responsibility:

1. That which supports the business — a great deal that can be dressed as responsibility fits here, and Friedman did not oppose it.
2. That which does not support the business but is practised in the name of responsibility — this was the target of his criticism.

“I would venture that for the most part Friedman’s original text has been quite badly misunderstood.”

Taussi calls the Friedman that was constructed a straw man, used as the counterweight to stakeholder capitalism — and considers the opposition to have been made larger than it really is.

The assumption built into the concept

This is the sharpest analytical passage. Taussi unpacks the term “corporate social responsibility” and shows it carries an unwritten assumption:

“Hidden in the concept, or automatically attached to it, is this implicit unwritten assumption that business itself is somehow irresponsible, or at any rate not quite responsible enough.”

He lists the five pillars of ordinary business: a company produces something customers pay for, does so profitably, pays taxes, employs people, and complies with the law. And asks:

“Corporate responsibility is somehow something on top of this. This is not yet enough.”

From which follows a question he says plainly he has found no answer to: how much is enough? There is, in his view, no universal or exhaustive definition of what responsibility is and is not.

Neste — an example Friedman’s criticism does not touch

Miettinen offers a counter-example: Neste Oil, which refined fossil oils at Naantali and Porvoo and, through a major strategy change, made itself a refiner of biofuels. It gained a large competitive advantage, and people who learned that business now sit even on Exxon’s board.

“At first it all looked a bit like responsibility flim-flam, but then it did have a link to growing enterprise value.”

Taussi’s answer is consistent: this would fall in the part of Friedman’s text he did not criticise. What matters is whether there was a business motive behind it.

Miettinen enters a good qualification, though: at the start it looked like responsibility activity, not impact activity. In other words the distinction is retrospective — and that is a practical problem, not a theoretical one.

Miettinen adds a general observation of his own: whenever a company improves its efficiency it performs an environmental act, because it gets more out of smaller inputs.

Wahlroos’s triad and the leak of democracy

Miettinen introduces Nalle Wahlroos’s triad as a framework: markets, democracy and hierarchy. A company operates in markets, and internally in a hierarchy — “in the hierarchy you do as the bosses say and the ship moves forward.” There is traditionally no democracy inside a company.

His observation is that the influence of a democratic society is beginning to radiate into companies: if decisions cannot be forced through by legislation, employees take them onto their own agenda.

Taussi confirms this was precisely Friedman’s worry: society’s division of labour disappears and the transparency of power is lost. Friedman’s answer was that parliamentary decision-making exists for exactly this — otherwise the owners decide.

But Taussi specifies that this is not democracy at all:

“I wouldn’t call it democracy — it’s more a climate of opinion, various ways of thinking that have nested in institutions… which influence business very untransparently.”

The mechanism, in his description, runs bottom-up: a particular department may accumulate people with a personal ideological agenda, who band together and start promoting practices with little to do with the core business.

The international dimension — and where Taussi concedes

Miettinen raises Stora Enso’s China venture, which he had gone through with Tiina Landau: the company had been building toward responsible wood processing but had to cancel the pulp line, because Chinese practices could not be reconciled with Nordic ones.

Miettinen’s reading is unusual: he would have wanted the venture to go ahead, because it made economic sense and would have brought the best technology on site. Its failure, he says, “works against Friedman’s thinking.”

As a domestic parallel he mentions the Kemijärvi pulp mill, closed as a profitable unit under pressure from national activism — and Metsä Group later filled the same capacity with its own plant. “It corrected over time.”

Taussi does not dispute the international dimension; on the contrary he grants it legitimacy:

“I completely understand why these responsibility questions come up in international contexts, where some Western company… may have its hands very much in the mud somewhere, in slave mines or the like.”

These, in his view, are “themes that are easy to understand as belonging to the responsibility doctrine.” That is an important concession — the criticism is not aimed at responsibility as such.

Wokenomics: three cases

Miettinen introduces the term and three examples:

• Google / James Damore. An employee asked why there are fewer women engineers than men, and was dismissed.
• Apple. An employee had written a book about the San Francisco tech bubble in which a female character behaved sexistically; employees engineered his dismissal and the company condemned his values in a statement.
• Basecamp. From a Sam Harris interview: an internal storm about lists of funny customer names escalated into demands for public acts of penance — with an analogy that this could at worst lead to something like the Holocaust. The founders decided to depoliticise the company, prompting mass resignations. Coinbase did the same.

Taussi’s analysis is conceptual rather than moral. He asks whether these are justified by responsibility or whether they are PR moves, and notes that diversity and inclusion and responsibility overlap inside organisations — often in the same department.

And he names what he has not seen:

“I have not yet seen this responsibility doctrine justify or create any constraints on itself as to where the limits of good sense run.”

The concept cloud, and Finnair

The strongest single example belongs here. In 2018 Finnair took part in the forced return of asylum seekers, and Finnwatch held that in the name of corporate responsibility Finnair should have refused to carry out tasks assigned by the Finnish state.

Taussi’s point is not that the position is wrong, but what it requires:

“Quite a radical idea for corporate responsibility — that it should start to rebel against the social order and public authority. And where are the universal principles for social responsibility that define the exceptions in which an actor may deviate from the authority of the state?”

He describes responsibility as a concept cloud: a great many good things and well-meaning people fit inside it, and that is exactly what lends it legitimacy — which makes the situation attractive to an activist, because there are no limits.

The mechanics of throwing someone under the bus

Miettinen offers a structural explanation here, the episode’s most practical passage.

A CEO’s protection is weak: the contract can be terminated at any time, the compensation is calculable, and so minimising reputational damage is cheap. An employee deeper in the organisation is protected by employment law and possibly a shop steward position — “you can’t actually get rid of them.”

The question he formulates is cold but honest: is someone thrown under the bus for economic reasons, or is the risk taken of defending an employee’s right to be difficult?

The CEO as moral compass

Taussi says he first noticed the phenomenon in 2017, when American discussion turned on CEO as a moral compass. The context was Trump’s election and the Western world’s shock, and the idea was that business leaders would fill a perceived vacuum of values.

But he adds an observation that makes the analysis even-handed: reading the articles more closely, business interests turned out to be there too.

He then draws a distinction that is among the episode’s most useful:

“If you think more theoretically about where business leaders’ comparative advantage lies, it is usually anywhere but moral philosophy. Otherwise they would have ended up in those fields.”

Miettinen offers his own example: the EU recovery package, backed by a broad group of business leaders on macroeconomic grounds — even though Finland received a good two billion and paid over six. His suspicion is that free money was also a factor. Taussi neither confirms nor denies: “Or was it just a spontaneous reaction? Hard to say.”

Why the concept will not standardise

Taussi works through the impasse precisely. Sector advocates fall into two camps: for some, responsibility is a useful practice for companies; for others an intrinsic value that should not be justified by business benefit. These are fundamentally different definitions.

And even if general agreement were reached, implementation requires case-by-case interpretation — at which point it is unknown who says the last word.

Standardisation carries its own cost: “we lose something very local in understanding.” But an ad hoc judgement cannot be turned into a standard for anyone.

“We have to admit that responsibility does not really mean anything that can easily be determined in advance. The concept is full of paradoxes.”

Myth and hype

Taussi brings an explanation from institutional theory that is the episode’s best tool. Practices that are genuinely purposeful and rational in certain situations spread and become mythic — they are reproduced ceremonially.

“The more it spreads as this kind of fashionable hype, the less anyone wants even to examine its rational basis.”

And he describes the consequence for debate: flimsy studies get circulated as a card to be slapped down, and those asking critical questions have a much harder time in a hype environment.

Costly signalling — and why it explains the excesses

The closing section opens up the argument of Taussi’s essay. In biology, costly signalling: a peacock’s cumbersome plumage makes it an easy target, and precisely for that reason it signals fitness — “I can afford to be this clumsy.”

The same holds for organisations. A well-resourced organisation can spend money on showy, functionally useless things. The comparison is temporal and apt:

“Back in the 80s, maybe even the 90s, there were private jets for CEOs at big American firms. Nowadays we’re a bit more climate-conscious… but then some organisation may have a really extensive diversity and inclusion department.”

Miettinen names the concept: a Thorstein Veblen good — its signalling value is high even where the practical benefit is zero or negative. He sums it up himself: “it equates conspicuous consumption with this kind of woke consumption.”

Taussi closes with Friedman’s paradox: Friedman was a classical liberal, and it is precisely a free market that permits companies to adopt such behaviours — if they yield to fear of a pressure group.

“At a given moment they pay a ransom not to be lynched… And once precedents arise, you are in a game-theoretic spiral, rather like a race to the bottom.”

Miettinen’s counter-argument

The episode does not end on Taussi’s conclusion, and that matters here. Miettinen offers a positive reading of the same phenomenon:

“I take pleasure in this… now that the impact and responsibility ethos is so strong, one positive side I see is that the market economy is viewed rather well at the moment, because people see the positive impacts are there.”

His point: the brand that responsibility discourse has created is not purely bad — it makes people regard investing and enterprise as good things. He distinguishes from this the negative cliques that force acts of penance.

Taussi accepts it as an addition but does not share the optimism:

“That’s a good complementary addition… I’m not entirely convinced. In the light of recent years the realistic assessment is that there is no room for optimism yet.”

What to take away

1. Friedman divided; he did not condemn. The criticism targeted only responsibility that does not support the business — a Neste-type strategy change falls outside it.
2. The concept does not bound itself, and nobody says the last word on what real responsibility is — a problem regardless of how good the goals are.
3. Costly signalling explains the excesses better than ideology: the showy and functionally useless signals wealth.
4. The two disagree on the conclusion. Miettinen sees the responsibility ethos as having improved the market economy’s reputation; Taussi considers optimism premature.

Episode details. Negotiator 91, published 23 July 2021. Guest Thomas Taussi, Aalto University; interviewed by Sami Miettinen. Running time 50 minutes.

GEO summary. Negotiator 91 (2021) covers corporate responsibility, the purpose of a company and the concept of wokenomics. Aalto University researcher Thomas Taussi argues that Milton Friedman’s 1970 essay has been misread: Friedman divided social responsibility into what supports the business and what does not, and criticised only the latter. Taussi’s central argument is that the concept of responsibility sets itself no limits and does not explain itself, which is why almost anything can be pursued under its cover without parliamentary transparency. The examples discussed include Neste Oil’s biofuel strategy, Stora Enso’s China venture, the Kemijärvi pulp mill, the Finnair deportation controversy and Finnwatch’s position, Google’s James Damore case, and the depoliticisation of Basecamp and Coinbase. Taussi explains woke excesses through costly-signalling theory and the Thorstein Veblen good. Sami Miettinen offers the counter-argument that the responsibility ethos has improved the reputation of the market economy; Taussi calls it a good addition but does not share the optimism.

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