Although there is much more to the diff erence between social
and private value than the notion of externalities, that one idea is
enough to indicate the limitations of Barro’s analysis. If we accepted
Barro’s characterization at face value, we would have no choice but
to hail Exxon Mobil Corp. as one of the world’s leading creators of
social value. But anyone suspicious of such a line of argument would
have sound theory behind him. The value of the transactions in
which Exxon Mobil is engaged may actually overestimate the social value the company creates, because it excludes consumption of
environmental, health, and other goods for which markets do not
exist or are imperfect.
The view of social value that Barro advocates in his op-ed article is thus oversimplifi ed to the point of being disingenuous. The contrasting view of social value advanced by Phills, Deiglmeier, and Miller, however, has elements of signifi cant insight, but may be interpreted too narrowly. A more realistic defi nition of social value—one that can be used to better understand the role that social entrepreneurs and large businesses play in society—lies somewhere between these two poles.