Monday’s Mtg: The case for and against corporate social responsibility

Good timing. As Ed pointed out at the Meetup site, the second largest industry trade group in the country, the Business Roundtable, just issued a new policy statement calling on its 200 member corporations to alter their core purposes to include more social responsibility.

Corporate social responsibility (CRS) can have two distinctly different meanings. The first is a purely voluntary private business model that links the economic and environmental welfare of society—or specific segments within that society—to a business’ own welfare. This is what the Business Roundtable’s statement called for. Member companies will be “encouraged” by the trade group to deemphasize shareholder value (stock price and quarterly profits) as the sole corporate objective. Instead, they will be asked to adopt a more “stakeholder based” model; one in which firms take more seriously their obligations to fairly compensate their own workers, treat contractors justly, adopt a more long-term focus for their companies’ futures, and operate in an environmentally sustainable way.

It is very easy to be skeptical about the Roundtables’ sudden change of heart. First, it may just a preemptive strike in case the Dems take control of the govt again next year and try to pass a law mandating some of this The Roundtable has not uttered a word of protest as the Trump Administration gutted regulation after regulation that served the public good, including last week when it basically nullified the Volker Rule, that Obama-era, rule that would have limited banks’ ability to make risky trades for their own benefit with federally-insured deposits. Other business groups, like the Chamber of Commerce and all of those dark money suppliers want nothing to do with any corporate responsibility movement.

Skepticism that corporations will ever voluntarily serve the public good has led progressives to use the moniker corporate social responsibility to mean something quit different. They want to mandate socially-responsible corporate behavior by law and enforce it with regulations. As some off the articles below explain, some on the left would go even farther and rewrite the rules of American capitalism so that corporations are mandated to advance the public interest and serve the public good.

So, on Monday we can discuss a few key matters, such as:

1. What does it mean for a corporation to act responsibly? There are many different ways of defining corporate responsibility, from how they treat employees and contractors and customers to their actions pertaining to the environment, undocumented immigrant labor, etc.
   à How about their political donations and support of plutocratic laws and policies?
2. Why should corporations be expected – or forced to – act his way? What if do-gooderism endangers profits, spooks investors, lowers growth, etc.  What is a corporation’s “job” in 21^st century economy and who is to say?
3. Should corporate social responsibility be voluntary and encouraged by boycotts and such, or codified in law and regulation and be enforced?
4. What about “rewriting the rules of capitalism” to fundamentally alter corporations’ role in our society?

Here are some background readings arguing for and against whether we can ask (or compel) private, for-profit companies to act as agents of social change, including both sides’ of the debate and the Business Roundtable’s letter.

OPTIONAL BACKGROUND READINGS –

• Corporate Social Responsibility – a brief history.
• Business Roundtable comes out against shareholder primacy.
• Short: Shareholder model of capitalism is wrong. Time to mandate some version of stakeholder-based system.  Recommended.
• Longer:  Maybe read one.
  • We should [link fixed] fundamentally restructure U.S. big business to serve the public interest. Stakeholder responsibility should be the core of capitalism. Long but an important read, although I disagree with some of it.
  • Only rebuilt public power can overcome and tame big corporate dominance of our society.
• The case AGAINST CSR (WSJ via another site that lets you bypass WSJ firewall). Recommended.

NEXT WEEK: Does U.S. history show us to be a melting pot or a mosaic?
(A great topic for Labor Day.)