In a recent op-ed piece in The Wall Street Journal, my colleague Professor Aneel Karnani explained why he thinks corporate social responsibility (CSR) is at best irrelevant and probably socially damaging.

The heart of his argument lies in the assumption of a neat separation between markets and politics. In this idealized world, politics can be counted on to deliver the regulations needed to rein in corporate greed and malfeasance. Then corporations can safely be left in the hands of managers whose sole interest is maximizing profits.

I have a lot of sympathy for this perspective. If politics really worked as advertised, it would make perfect sense to leave social issues to the deliberation of our elected officials. The problem with this perspective is that government failure is just as common as market failure.

Certainly markets can fail because there are too few firms, consumers have inadequate information, or because pollution affects innocent bystanders who do not even buy the product that is polluting their air or water. But government can fail, too, sometimes because it is just too big and bloated to deliver what it promises.

Often, government fails because of the vigorous lobbying efforts of special interest groups. Sometimes these groups extract special favors that protect them from foreign competition (think sugar quotas that prevent Brazil from selling us cane sugar). Other times lobbying protects firms from regulations that would force them to pay for the environmental damage they cause (think former Vice President Cheney's "secret energy task force," which worked behind closed doors to ensure the views of the oil industry were enshrined in public policy).

Exxon -- until it was outed by Greenpeace -- funded research and advocacy by climate deniers who sought to raise doubt in the public mind regarding the reality of man-made climate change. Just as deviously, GM used to lobby against tighter fuel economy standards by lobbying in favor of a gasoline tax, pitting the (politically infeasible) best against the (politically threatening) good.

Face it -- we live in a country where Big Tobacco and Big Oil have covertly funded ideologically driven "science" and fed its biased results to politicians in the sway of local industries. For example, look at Senator James Inhofe, who claims climate change "is the biggest hoax ever perpetrated on the public." Many corporations have funded fake grassroots groups -- dubbed "astroturf" groups by Texas Senator Lloyd Bentsen -- in an effort to convince Congress that ordinary citizens share the political agendas of multinational corporations.

When corporations blatantly work to cause government to fail in its task of solving collective problems, how can we NOT demand CSR? How can we NOT support environmental activists who work to hold such corporations accountable? What else are citizens to do -- wait for CEO succession to deliver a firm into the hands of a boss too principled to dirty his hands in Washington?

Next Page: The myth about the separation of markets and politics.