PARTICULARLY SINCE THE 2007- FINANCIAL CRISIS, banks, hedge funds, insurance firms and corporations at large have become objects of public criticism, and continue to be subjected to regulatory efforts, undertaken by governments across the globe. At the heart of these developments seems to be the steadfast belief in corporate social responsibility, commonly referred to as CSR. In what follows, I question the applicability of CSR to corporations, and suggest that it circumvents underlying perils.
Amid an age in which man looms large, and God dwells in the shadow of man, equality dominates public sentiments at the expense of liberty; needless to say, equality could never have entered into the mind of man in the absence of liberty. Meanwhile, communications and transportation generate the misleading impression that the world and its proceedings are observable in aggregate, can be navigated, designed and conducted.
This state of affairs, and the ideology by which it is accompanied, has led man to primarily perceive corporations as a force for good rather than mere components of market-commerce, presently referred to as capitalism–a term in which the Marxian critique of the customs of capital accumulation is inherent; thus, it is a term whose application implies the opinion of market commerce held by those who employ it; of course, most tend to utilize the term without realizing its actual connotation.
Regardless, corporations are sheer venues, perhaps even instruments, that enable individuals to partake in the interplay of demand and supply. In fact, financial institutions are the foundation of market-commerce; without the medium of exchange these institution harbor as well as the accumulation and allocation of capital for which these entities allow, market commerce could not unfold, at the expense of society.
Milton Friedman, whose prudence could have safeguarded man from the kind of welfare state that begins to lose it feasibility across Europe, where the few young are neither willing nor capable of providing for the numerous elderly, rightly argued that corporations are incapable of responsibility. Corporate agents serve shareholders, whose interests span from value creation to profit elevation; social work is not an objective.
The responsibility of corporate agents lies in serving shareholders; it is in accordance with shareholder interests–so long as these comply with positive law, or at least are perceived to do–that corporate agents have to operate. The interests of shareholders are, moreover, not necessarily opposed to public well-being–which has yet to be defined–but can, in this respect, be associated both with material security and comforts.
This is explained by a sheer detour to the dynamics of demand and supply; individuals hold various material desires, which other individuals strive to fulfill by employing corporations as their operating venue and instrument. Banks and likewise financial institutions provide the medium of exchange as well as the capital that market commerce presupposes, allowing for the accumulation of the latter in public interest.
Of course, the agents that operate through corporations are capable of manufacturing material desires, in order to then cater to these longings; especially in an era during which communication is borderless, such manufacturing unfolds with relative ease.
Yet are those exposed to whatever communication conveys not responsible for its informed processing? And are those who are inadequately informed to process the conveyed mere victims? Should flows of communication and information cease, so to protect those who cannot digest either? –Responsibility primarily rests with the individual who desires, not those who deliver accordingly, serving the individual.
If those who are part of the delivery apparatus–employees of corporations–were to assume responsibility for interests other than those of the shareholders to which they are accountable, they would transcend the scope of their agency. Hence, the operating model of corporations would disintegrate, and be replaced by individual choice–however noble, however perilous or imprudent. Mighty man would soon descend into the abyss.
Responsibility, thus, rests not with corporations, and the agents these employ, but with regulators and consumers. Regulators must strive to devise positive law in such a way that it minimizes misconduct and its effects; similarly, they must set out to cultivate the values and norms that are conducive to accordingly devised positive law, or form the basis of positive law. Consumers must seek to be informed, and ruminate about their choices, however difficult and inconvenient this may be amid a world in flux.
Thereby, regulators and consumers can determine the characteristics of market-commerce as well as of the various agents and entities on which such commerce relies. As a consumer, I may ask: do I base purchase decision solely on price, or do I take other factors into account? As a regulator, I may wonder: do we compensate the unemployed with a set amount, or do we strategically provide them with allowances? And within a corporation, I may question: do we cut costs at the expense of reputation?
Of course, possible answers to such and likewise questions are not easily derived, due to the complexity and dilemmas these involve. The idea that individual intellect, sensible politics, and reactive corporate management can solve the array of challenges, and realize prevalent opportunities, is utopian–in case of an optimistic characterization of man–and dystopian–in case of a pessimistic characterization of man. Yet there is no shortcut to paradise on earth–to an endurable level of material security, in addition to whatever little exceeds this level, translating into material and psychological comfort.
The challenge before us is, and will be, intellectual; even though this challenge transcends the capacity of man, even as he looms large enough to cast God into his shadow, the conscious acceptance of this challenge can improve the state of world affairs. Education is the prerequisite for such conscious acceptance; the learning must be enabled to temporarily rise above the day-to-day, so to observe and assess its past, present and future from an elevated vantage point; to conceive and sculpture it anew.
Not corporations, and the agents that directly steer them, threaten society; the public–whether regulators or consumers–who indirectly drive them through the values and norms they uphold, and the hope they allow themselves to be guided by, form a threat to society, so long as the wisdom of great works of the past, and ability to pause, crumble under the largess of man. While the past can merely be revisited, the future can be envisioned; and so long as vision prevails, hope remains, and improvement persists.
In politics, if not in policy, simplicity was a virtue. –Cynically and rightly noted by Barack H. Obama in The Audacity of Hope