<The generic argument that business is self-regulating because of fear of negative consequences doesn't take into account that risk-benefit analysis is a natural part of any business decision, including decisions about whether to break the law or sell defective products (in the case of the latter, projections of lawsuit costs are built into the price in a grim calculus of the value of human life as a business expense).

This is absolutely true. Capitalists may not view corporations as the unredeemable fiends that leftists view them as, but few objective capitalists would believe that businesses are universally honest either, which is why we still need laws against force and fraud.

But more importantly, we need competition in those private organizations which police companies in areas outside the criminal jurisdiction. Like you say, companies can't always be relied on to police themselves, but if your competitors make more money if they catch you cheating, they're going to be doing the policing. This might be hard in accounting, where a competitor would have to access your books to catch you at something, but in consumer protection or drug testing, it would often simply require them to duplicate your tests to see if you got the same answers.

When something is uncovered, then it may move into the legal arena.