Business and Social Responsibility

Back to my old punching bag, The Economist. I probably ought to put the magazine on my shit list but they do do some damn fine reporting (one of the few major magazines to consistently cover the problems in Darfur and call for action too). I guess it's the blatant ideological bent of the thing that pisses me off but I guess it's good to be up front about that. At any rate, they're running a piece in this week's edition on business and corporate responsibility. It's becoming all the rage now for companies to issue statements of Core Social Responsibility (CSR) or even manifestos as Wal-Mart recently announced (in a douche baggy announcement, mind you). The report is good but I take issue with the editorial that preceded it.

The editorial made a fine point of noting that doing good is not always good for business- fair enough- and that profit should remain the purpose of business. Again, no real issue there. It ended by making a good argument that business should remain in the business of making money and governments ought not be fobbing off their duty to fix social ills onto business. Governments ought to govern. Fair point again but I think there is something missing in all of this.

I applaud the growth and relevance of CSRs in corporate America (and Europe) even while I am quite aware of the potential for 'Green Washing,' as a good chunk of most CSRs is all about the environmental impact of a given corporation. It's all too easy for a company like BP to change its logo to look environmental (a beautiful green that clearly evokes a blooming flower) yet do little to actually mitigate its impact on the environment. And this is one strength of the editorial; it clearly sees a role for government in regulating industry, setting strong environmental standards, and clearly enforcing them. Business cannot, and should not, be trusted to regulate itself. Yet the business community remains a powerful entity and has made it its business to get governments to regulate them less. Every major environmental legislation put up in this country is fought hard by the relevant business group.

Moreover, if we look at it globally we see a long trend towards neoliberalism, a fuzzy ideology that sees the best government as one that governs least. The anthropologist James Ferguson has noted this trend in the notion of good governance, which, while democratic, clearly envisions a smaller role for government. It's an upending of the traditional view of citizenship wherein there is a social contract between the citizen and the government to protect the former's rights and ensure freedom. Here the government is seen as the one thing that stands in the way of that very freedom. Hence, the best government is one that governs least. The logic goes that individuals ought to be free to seek out their best interest in the market free of any government restriction (e.g. taxes or regulations). This is not citizenship where we are voters and members of a state or nation; this is citizenship where the citizen is defined as a consumer. Once we see the citizen as consumer the logical path is to free up that which serves the consumer: Business.

The business community has long lobbied the world's governments to lower taxes, eliminate regulations, and in general let business do what it wants in the name of profit. If governments have been getting out of the business of governing it is in part because of a collusion between them and business. Is this a secret pact hammered out in smokey backrooms? No. Or, at least it's not likely the case. The fact is that this ideology (or world-view, if you prefer) brings easy converts. Businesses bring jobs, bring taxes (sometimes), and spread wealth in a country so why not let them go unfettered? What's good for GM is good for America, right? Wrong.

This is the point missed by the editorial. Business has made it its business to seek out profits and in doing so have eroded the ability (or at least the will) of governments to take up their social duties. Think I might be going too far? Well, take this into account. The 1970s saw heavy lobbying by the finance industry to reduce government restrictions on financial flows and bank to bank interaction. The result?: The Savings and Loans crisis in the 1980s. The government not only lessened its rules but lessened its oversight under the SEC, which led to a massive financial crisis when the market soured. The result was a massive government bailout to the tune of hundreds of billions of dollars.

Similar problems began to arise in the 1990s when the government again failed its oversight duties (again at the prodding of business, which saw the SEC and various other oversight entities as onerous burdens to profit growth) but this time it was in the mortgage sector. University of Connecticut's Prof Glassberg long ago noted the problems with what she termed 'predatory lending' practices on the part of banks. The result?: Well, you're living through it. We're on the verge of a recession and thousands of Americans are losing their homes.

Businesses want the government out when the good times roll and cry for its help when their shit hits our fan. The Economist is right we do need governments to start doing their job. But they sure as shit missed the point that it's because of business that governments haven't been doing their jobs.

Oh, and Lieberman is still a Douche Bag!