Ben & Jerry's
Melting Corporate Responsibility

Dennis Fox

December 29, 1999

Ben Cohen and Jerry Greenfield started making ice cream in 1978, guided by their consciences along a profitable and socially responsible path toward high-fat heaven. But when they started selling stock in Ben & Jerry's Homemade Inc., their primary legal obligation changed. Now they might sell their Vermont-identified company to the buyout-hungry Pillsbury/Nestle partnership that makes rival Haagen-Dasz. The takeover drama should remind us that corporate social responsibility can only go so far.

Ordinary Americans have long objected to the fundamental incompatibility between corporations and the public good. After the Revolutionary War, people understood the difference between the neighborhood shopkeeper earning a living and vast concentrations of wealth and power controlled from distant places. When approving corporate charters to serve public functions, state legislatures limited not only corporate size but corporate longevity. When corporations caused harm, shareholders paid part of the damages.

Things have changed. Nineteenth century judges favoring a Big Government-Big Business alliance made the common law more corporation-friendly. By the end of that century the Supreme Court announced, without offering any justification, that corporations were "persons" with constitutional rights. Legislatures caved in, despite populist and progressive protest.

A century later, legislatures no longer require corporations to meet a public need. Corporate power and wealth are essentially unrestricted, crossing international borders at will, a problem magnified by the World Trade Organization and similar global arrangements. When corporations destroy communities, exploit workers, and encourage environmentally destructive consumerism, shareholders receive dividends, not bills for the damage. Today's corporations are filled with managers and workers legally obligated and psychologically attuned to do what's best for the stockholders rather than what's best for the public.

Some investors hoping to avoid such messiness put their money in self-described socially responsible corporations. But common definitions of corporate responsibility are as slushy as a melting pint of Ben & Jerry's. Thus, socially responsible mutual funds invest in many of the same corporations favored by more traditional funds--Wal-Mart, Microsoft, AT&T, and the like. Socially responsible? Only if you overlook vast size and power, undemocratic decision making, cultural homogenization, and other consequences of corporate life.

Ben & Jerry's typifies corporations that emphasize significant forms of responsible behavior so long as they are still controlled by their founders and remain relatively small. Once they grow, however, such companies typically junk their quaint constraints. In the old days, Ben & Jerry's trumpeted concern for workers, customers, communities, and the environment. But in 1995 it abandoned its relatively egalitarian wage structure to attract a Fortune 500 CEO. It's paid fines for violating sewage disposal regulations. It still fights its workers' unionizing efforts.

And now they may have to sell themselves to the highest bidder unless a new Vermont law allows them to refuse on the grounds that a takeover would damage the state's economy or the company's workers and suppliers. Like it or not, Ben & Jerry's Homemade's purpose in life is not to make great ice cream or make Vermonters proud or save the rainforest. Their obligation is to make their shareholders a lot of money or face a lawsuit. That's what corporations are all about.

But that can change. Let's start the new millennium with a push for extensive corporate reform. We can begin by beefing up laws like Vermont's and not just allow but require corporate decision makers to satisfy local interests. We can make corporate charters once again meaningful, with democratically devised restrictions on corporate size and power. We can make corporations accountable for preventable but unintended damage. We can even once again hold shareholders liable for corporate harms.

And then we should go even further, with a substantial public debate about whether the corporate form really belongs at all in our dreams of a better society for all.

An appeal to Ben and Jerry's own consciences might work this time around, but in the long run it has to fail because the Ben & Jerry's Inc. they created is not supposed to have a conscience, and Ben & Jerry's will outlast Ben and Jerry. That's worth mulling over the next time you dive into a pint of Cherry Garcia.