Going beyond the business view of social responsibility

Check out Milton Friedman was wrong by Alan Murray

Here’s how it starts:

“Business needs to pay attention to social problems, or else…

In an interview this summer, Microsoft MSFT 0.21% CEO Satya Nadella was asked whether he thought companies creating technology had a responsibility to consider the effects of that technology on social equity.

The late Milton Friedman had a ready answer. “The social responsibility of business,” the economist often said, “is to increase its profits.” Period.

But Nadella took a different approach: “I think we don’t have a long-term business if we don’t address the inequities.”

As I’ve argued before in this space, capitalism is under attack. Having won the great ideological struggle of the 20th century, it faces a new and more diffuse challenge in the 21st. The quarter-century since the collapse of Communism has seen the greatest alleviation of poverty in human history. But it has also created deep pockets of disaffection in developed countries, where workers have been displaced by overseas labor. And it has fed rising inequality within countries. This year’s pro-Brexit vote and the Trump and ­Sanders insurgencies provide powerful punctuation to the trend.

My friend Dan Yergin, whose book The Commanding Heights documented the triumph of free-market faith at the end of the last century, cites four reasons for the current rebellion. The first is the aftershock of the 2008 financial collapse, which undercut confidence in markets. The second is rising inequality within countries. The third is the realities of global trade, which creates losers as well as winners. And the fourth is fading memories of the old order. Socialism sounds better to a generation that has no memory of its legacy of poverty, thwarted opportunity, and oppression.

And there is a fifth reason: the failure of governments. The 20th century assumed it was the job of government to address most social problems. The 21st century has witnessed too much ­corruption, incompetence, and political gridlock to ­assume the same.

For all these reasons, an ever-growing group of business leaders have come to believe that they must take up the mantle. The best businesses, of course, have always put purpose at the center of their strategies. But members of this new group realize that restoring public trust is essential to their long-term ­success. Increasingly, they are building intentional efforts to address social problems into the core of their business plans…”

.. (read more)

While you’re at it you might want to visit

The Lesson Behind Fortune’s ‘Change the World’ List by Michael E. Porter , Mark R. Kramer

My problem with both of the approaches offered is that they do not go deep enough.They fail to address basic questions of ownership and reciprocity.  Ownership is a matter of who controls and, therefore, has the right to benefit from a natural resource, institution, product or service. Reciprocity describes that social obligations that tell us who should do, exchange or give what to whom. The ‘what’ may be goods, services, loyalty, and emotional support, among other human productions. Both ownership and reciprocity are culturally defined and it is easiest for us to interpret right and wrong through the lens of our home culture.

One historical example of the ownership issue can be seen in what we might call the European land grab. Europeans who immigrated to Africa and the Americas in the 17th and 18th centuries encountered peoples whose cultures didn’t include private ownership of land. “Well, if no one owns it, I can take it,” they thought. This belief was used to justify forcible expulsion of millions of people from their ancestral homelands.

Today, at least two critical cases of ownership need to be addressed: ownership of non-renewable natural resources and ownership of an individual’s labor in the face of growing robotic an artificial intelligence capacity (which I’ll address in a later blog).

The topic of ownership leads directly to reciprocity. If the chief of your tribe “sells” your ancestral land, the means by which your forefathers survived for five thousand years, to a corporation that now plants coffee to be marketed around the world, who should benefit from the profits of that business? The stockholders? The employees, a few of whom may be of your tribe? The distant consumers? Is it enough that the corporation subsequently provides your extended, but now impoverished, family with a new school building, some medical supplies, or the raised expectations that you will be able to buy previously-unheard-of commodities? Does monetary payment for the land combined with these acts of ‘social responsibility’ fulfill the corporation’s obligation to reciprocate? In small-scale, usually isolated, societies reciprocity is dictated by tradition. Tradition tells community members who can use how much of the common resources, who cares for the young, sick and disabled and who can be either killed by or expelled from the group for what offenses. Our large-scale, global society is a mash-up of conflicting traditions that offers us few overarching guidelines for reciprocity.

We do have some vaguely religious or secular moral notions of ‘brother’s keeper’, familial obligation and noblesse oblige. But these are often obliterated by a constant chanting about the importance of financial success, consumerism, competition, economic growth and actualizing our individual potential. No wonder so many of us are confused, depressed to the point of suicide, cynical and suffering from unmet expectations. Of course we are choosing to escape into that bottomless time and energy sink, entertainment. It’s not surprising that we are politically divided to the point of governmental paralysis.

It’s time, way past time, to pull our eyes, ears and minds away from our flickering screens and address two questions:

1) Where will we been in 50 years if we continue on the economic path we are now following?

2) What are the elements of a positive alternative vision for humanity?

Current economic thinking will not get us to a positive future because it begins with a set of assumptions that preclude understanding the forces driving contemporary human behavior. Yes, Milton Friedman was wrong. And Fortune’s Change the World List Companies won’t do it either because their notion of reciprocity is still based in buying and selling. Economics, as we know it, is rooted in the concepts of scarcity and demand. It cannot cope with conditions of abundance and free exchange — conditions that we can create if we can free our thinking from its economic box.

There is a growing chorus of thought-leaders like Alan Murray who are challenging us to examine our ideals and bring our economic behavior beyond the standard of one who “maximizes the net present value of their preferences” in monetary terms. But leaders who venture too far beyond the conventional wisdom are likely to find themselves without followers. Let’s be courageous thinkers and forge ahead with new (and perhaps ancient) conceptions of ownership and exchange. Having crafted such a vision we can take action to create more viable and sustainable communities, locally and globally.

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