Why Corporate Social Responsibility is BS
The biggest corporations that have been telling Americans how virtuous they are have been lobbying up a storm against Biden's social policy bill
In recent years, “corporate social responsibility” has been viewed by some as the answer to the multiple failings of capitalism. CEOs have responded to all sorts of problems -- worsening climate change, widening inequality, soaring healthcare costs, and so on -- by promising that their corporations will lead the way to solutions because they’re committed to being “socially responsible.”
Ninety-eight percent of this is rubbish. CEOs won’t do anything that hurts their bottom lines. They’re in the business of making as much money as possible, not solving social problems.
In fact, real social change would prevent them from doing many of the hugely profitable things they’re now doing. Which means they won’t change their ways unless they’re required by law to change (and even then, only when the penalty times the probability of getting caught is higher than the profits from continuing anyway). Their soothing promises of social responsibility are intended to forestall such laws.
I’ve seen this repeatedly. When I was Secretary of Labor, big corporations would violate laws on worker safety, wages and hours, and pensions whenever that strategy was cheaper than obeying the laws. And they’d fight like hell against such laws to begin with – all the while telling the public what wonderful citizens they were.
You may recall that in August 2019, the Business Roundtable (one of Washington’s most prestigious group of CEOs, on whose board sit the CEOs of Apple, Walmart, and JPMorgan) issued a widely-publicized statement expressing “a fundamental commitment” to the wellbeing of “all of our stakeholders” (emphasis in the original) — including their employees, communities, and the environment.
The statement was widely hailed as marking a new era of corporate social responsibility.
Since then, the Roundtable and its corporate members have issued a continuous stream of jejune statements about their dedication to such things as providing childcare and pre-K, making healthcare affordable, promoting community college and workforce training, alleviating poverty, and reversing climate change.
It turns out these are exactly the priorities in Biden’s $3.5 trillion reconciliation bill. But guess what? The Business Roundtable isn’t lobbying for the bill. It’s lobbying intensely against it.
Jessica Boulanger, a Roundtable spokeswoman, told the Washington Post that the Roundtable is engaged in “a significant, multifaceted campaign” to stop the tax increases that would finance the bill, and will “continue to ramp up our efforts in the coming weeks.” The group is launching a seven-figure digital advertising campaign to oppose the bill.
Hypocrisy? Only if you believed the Roundtable’s BS about corporate social responsibility. If you know the truth -- that corporations will do whatever they can to maximize their profits and share values, social responsibility be damned – there’s nothing surprising here.
Why didn’t business groups fight Biden’s infrastructure bill? Because government spending on infrastructure helps their bottom lines by lowering their costs of procuring supplies and getting their goods to market. Social responsibility had nothing to do with it.
It’s tempting to chalk all this up to “corporate greed.” But that makes sense only if you think corporations are capable of emotions, such as greed. They’re not. Corporations aren’t people (no matter what the Supreme Court says). They’re bundles of contracts.
The specific people who enter those contracts (on behalf of big corporations as well as thousands of people who run vast investment funds on behalf of millions of shareholders) are neither greedy nor are they socially responsible. They’re merely doing what they understand to be their jobs. Greed and social responsibility have been laundered out of these transactions.
If we want these transactions to change — to align better with public needs rather than private profits — laws have to change. For example, taxes on big corporations have to rise in order to fund public investments and safety nets.
But such laws won’t change as long as corporations continue to spend vast sums on politics. Corporate spokespeople like the Business Roundtable’s Jessica Boulanger, along with platoons of corporate lobbyists and influence peddlers, corporate lawyers and hired-gun economists, corporate political operatives and PR flaks, together form in effect a fourth branch of government, wielding huge and increasing political power. Approximately one out of every four people now working in downtown Washington fills one of these roles.
The result is clear. The most telling trends over the last three decades have been the growing share of the economy going into corporate profits – generating ever-greater compensation packages for top executives and ever-higher payouts for big investors (all of whom live off shares of stock) – and the declining share going to most Americans as wages and salaries. These two trends were evident even before Trump’s tax cut and regulatory rollbacks (see below).
The meaningless blather over “corporate social responsibility” is intended to mask these trends. Biden’s $3.5 trillion plan is aimed at reversing them. But big business is doing everything in its power to sabotage Biden’s plan. The only way to stop this sabotage is to ignore all mention of corporate social responsibility and make one hell of a ruckus in support of Biden’s plan.
I remember reading 19th century novels and being glad that America did not have the idle class like the British gentry. But that's what our investor class is, isn't it?
I take exception to the idea that the contract-enactors and others in companies (large or small) "are neither greedy nor are they socially responsible. They’re merely doing what they understand to be their jobs." Every one of us is responsible for our own behavior (both what we do and what we don't do). This notion that we are not is a primary accelerant of horrible behavior on a regular basis. To set it in high relief, "I was just doing my job" is merely a softer sounding version of "I was just following orders." How a company behaves is nothing more or less than the sum of how its people behave. This is the central problem with capitalism. We get into trouble with capitalism because we more or less treat it as if it is an everything-system when it is just a partial definition of an economic system, and people have more than economic needs. Since capitalism pursues profit at any cost, it should be entirely unsurprising that when left unchecked it will devour the planet, abuse workers, and even do harm to customers. Selling addictive drugs is well within the bounds of capitalism. So is murder. So is ecocide. What puts these things off limits is not capitalism itself, but non-capitalist forces imposed to constrain it. Ending slavery, or child labor, or choosing to sell widgets instead of cocaine ... these things are not products of capitalism. They are products of us imposing limits on capitalism. We have always constrained trade so that it complies with the wishes of some king or some congress or some unlegislated sense of decency, or some fear of retaliation. There is no actual debate on whether or not we should or will regulate capitalism. There is debate on what principles and methods will be employed. That debate is primarily populated by people leaning toward responsible behavior and those leaning hard away from it. We mustn't ever support the idea that people are not responsible for being irresponsible.