Corporate Social Responsibility

"Normal Dan" Dan Liechty

Somewhere along the line, we seem to have swallowed the idea that the sole purpose of corporations is to maximize profits for their shareholders. Recently, I even heard Robert Reich, being interviewed by Bob McChesney, make that very statement as if it were completely self-evident. http://will.illinois.edu/mediamatters/show/september-4th-2011 Apparently, McChesney thought the same; at least he didn’t challenge the statement at all.

I am really concerned about this. This is certainly NOT the view of corporations we have always held in the American social dialogue. It is, I fact, a relatively recent view, and I would like to see it challenged more often than it is.

Corporations are not entities sui generis. Corporations are granted the right to exist by the public, and the public has every right, therefore, to expect that corporations will contribute to the PUBLIC GOOD in exchange for the right to exist. The current view is only defensible, therefore, if we assume that the public good is exhaustively defined by maximization of profits for corporation shareholders. This is abjectly absurd and absolutely false on the face of it.

We can imagine circumstances in which this might be less absurd and false – for example, when corporation shareholders comprise most, if not all, of the local community in which the corporation functions and does its business. By its very nature, the capitalist system is one in which, through its myriad market processes, value is extracted from one area and bestowed upon another (even the so-called expanding economic pie does not expand in a vacuum.) There is always a tradeoff between what is created and what is destroyed in the process of that creation. When the extractions (what is destroyed) come from largely the same people as those on whom the benefits are bestowed, as with locally functioning and marketing businesses and corporations, the system is defensible.

But this is not the case at all for large national and multinational corporations. The corporations are geared toward extracting value from anywhere, anyone, anyway, anyhow, and bestowing it on shareholders (who, of course, richly reward corporation executives for the favor.)

Would we tolerate among us a group of people who make it very clear that they are constantly scheming to take your valuables from you? Would we gratefully work for such people, thankful that through them we have a paycheck, right up to that day when we come home and find our own home plundered and empty? I don’t think so. I think we would very quickly turn to the law for protection!

Which brings us to a final point. As long as we could expect that corporations had “being good citizens” as at least part of their mandate (which, believe it or not, was once the case) it made some sense to give them leeway on the legal regulatory front. But these corporations now have completely shed even lip service about citizenship responsibilities. They have made it very clear, and we have bought the line, apparently, that their sole purpose is to maximize profits for their shareholders.  It has come to the point that their willingness even to obey existing laws have become subject to the executives’ cost/benefit analysis, weighing longer term chances of being prosecuted and prospective fines against  the value to be extracted and grabbed up in the immediate.

In such circumstances, we citizens have nowhere else to turn for protection than to the regulatory function of the State, a function that must be strengthened and seriously pursued. Allowing corporations to claim that maximizing profits for their shareholders is their sole purpose (justifying even law transgression if the cost/benefit analysis indicates this as the most likely path for maximizing profits) and at the same time weaken and undermine the regulatory regime of the State is a certain recipe for disaster. We need to challenge this assumption at its root.