The International Writers Magazine: Commerce and Values
Over forty years ago Milton Friedman declared that corporations have no social responsibility. It is an idea that gradually spread through the Anglo-American world and is now unquestioned by millions of people.
The view that corporations owe responsibility only to their shareholders is now so widely regarded as true that it is seen as a basic element in our value system. However, far from seeing it as beyond question, I consider the notion as indefensible in a democratic society.
Philosophically, it is a worm in the apple of our culture and will eventually destroy the fruit. It is a notion that gave birth to the crisis of 2008, and continues its insidious erosion of values that have contributed over generations to our becoming liberal democracies. As I write, we hear the news that several banks have been fined £billions for manipulating foreign exchange rates, and we are assured by a government spokeswoman that such behaviour will not be tolerated. Others claim that the problem lies with a few rogue dealers, the same excuse that arose after the 2008 crash. Sort out the bad apples, and all will be fine.
That is a very simplistic view of the problem. We are faced here, not simply with a few cowboys, but with a deeply embedded philosophy that has its roots in Friedman’s remark. Far from being responsible only to its shareholders, many of which are themselves corporate, corporations have a responsibility to their customers and their employees. That duel responsibility makes it imperative that corporate heads accept responsibility for developing positive values in the workforce.
When an organisation spends large sums of money on trying to convince the consuming public that the customer is at the very centre of their business, that claim needs to be credible to both customers and employees. If the latter are instructed or encouraged to squeeze every cent they can from customers, irrespective of need or utility, it takes little time for employees to become cynical. They either leave, or become cowboys, and that process is not confined to banks.
Writing in ‘Management Decision’ magazine in 1994 I said “The values promoted in many organisations are the antithesis of those held privately by ordinary, decent people. Compassion, trust and humility are out, while greed, selfishness and cynicism are definitely in. Such outfits get and retain the employees they deserve.” I went on to describe a situation in which an employee fiddled his expenses, so robbing his company.
Twenty years later, little has changed. That erosion of our values has spread beyond the gates of the corporations and has entered wider society. Many people now expect to be ripped off when dealing with corporations, whether they be banks, energy companies, or big business in general. Trust and compassion have been on the retreat as we developed into a dog-eat-dog society.
Also in that 1994 article I asked how employees might cope with the clash between their personal values and those of their employer, and suggested that many would “…segment themselves, placing an impermeable membrane between the two lives. The role is donned like a cloak, not touching the real self. Responsibility lies elsewhere, with the boss.” Yet such segmentation is illusory. The barrier is not impermeable and the habits we develop in the workplace follow us beyond the gates. They gradually affect us in roles other than that of employee, as parents and friends for instance.
This notion that corporations have no social responsibility is a toxin in our society, infecting individuals as employees and consumers, poisoning social relationships by replacing trust with cynicism. Instead of questioning why we should tolerate corporate values and behaviour that we would not tolerate in our personal relationships, many have come to see that lack of social responsibility as the norm that we expect from others.
That process is accelerated when we see that people in other leadership roles, politicians perhaps, have clearly accepted the more toxic corporate values. It is when greed and cynicism becomes apparent there that we perhaps approach the point of no return for a democratic, ethical and compassionate society.
We need more than some tinkering with the mechanics of the financial markets or corporate law to turn things around. I have said on numerous occasions that there is no sense in seeing economics, politics and philosophy as disconnected, unrelated disciplines. They are symbiotic. As well as getting away from the idea that the market mechanism is a law unto itself, we need reform of the way we do politics, bringing decisions closer to those affected by them, but most of all perhaps we need a conscious change in our philosophy. Sadly, that requires determined leadership by example. What we appear to have is a leadership that adopts the techniques of corporate public relations: that suggests acceptance of the corporate values of which I complain.
© Tom Kilcourse Nov 13th 2014
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