http://www.nzbr.org.nz/documents/publications/p...
Pour ceux qui ne sont pas abonés, ou qui ne connaissent pas M. Stallman:
—-

Why 'corporate social responsibility' is not a welcome fashion

IT IS more than 200 years since Adam Smith observed that people enjoy
their daily bread thanks not to the benevolence of their baker, but to his
selfish pursuit of profit. In that observation and its implications lies
the case for market capitalism. In their economic lives, people behave as
though they had no regard for the public good. Yet the outcome, through
the operation of the invisible hand, serves the public good better than
any social planner could ever do.

Nowadays the triumph of the market is taken for granted. But this victory
is far from complete — because Smith's insight is, even now, not widely
believed. Social progress is still thought to issue not from
profit-seeking behaviour, nor even from enlightened government policy
(current orthodoxy, after all, frowns on too much of that), but from the
benevolence of the baker. Companies are enjoined to do more than serve
their customers and make money. Instead they must be 'good corporate
citizens'; they must attend to the needs of their 'stakeholders'; they
must contribute to 'sustainable development'; they must strive to 'raise
standards' at home and abroad. Increasingly, companies respond to these
admonitions, or affect to, with zeal.

So firmly has this view taken root that only a brave man would be willing
to go on record against it. In a new booklet for the Institute of Economic
Affairs*, David Henderson, formerly the chief economist at the OECD, has
dared to risk the wrath of right-thinking people everywhere. He is not
content to argue, as timid waverers might, that the new commitment to
corporate social responsibility is a sham, behind which the search for
profit carries on as before, leaving capitalism in good shape after all.
Still less is he willing to argue that paying lip-service to corporate
social responsibility may actually do some social good–albeit less than
its more enthusiastic supporters would advocate. Mr Henderson claims,
rather, that the fad for corporate social responsibility is doing real
harm. The appropriate response, in his view, is not to laugh at it or
tolerate it, but to recognise it for the danger it is and oppose it.

Part of the harm that the notion causes, according to Mr Henderson, is
intellectual. Advocates of corporate social responsibility–meaning the
explicit adoption by companies of economic, environmental and social
goals, as opposed merely to making profits for the company's owners–start
with a basic failure to understand why capitalism works. That provides a
foundation on which many other towering misconceptions can be constructed.
Thus, belief in corporate social responsibility goes hand in hand with
what Mr Henderson calls 'global salvationism'–an apocalyptic pessimism
about the planet's environmental prospects and the outlook for global
poverty. Capitalism is in crisis. The remedy is not government: that's
socialism, which is discredited, and governments are powerless these days
anyway, aren't they? The remedy is morality in the boardroom.

All this deflects attention from some important, if inconvenient, facts:
the planet is not approaching environmental catastrophe; the proportion of
people living in poverty has fallen faster thanks to capitalist
industrialisation than ever before in history; and governments still have
as much power to collect taxes and conduct social policy as they ever did.
Advocates of corporate social responsibility reply that they have no
choice but to respond to society's more demanding expectations of them.
That might be a fair point, were it not for the fact that their
capitulation to anti-profit ideology, their pandering to anti-capitalists
and their preference for 'enlightened co-operation' over ruthless
competition, is powerfully helping to shape those very expectations.

But the problem, Mr Henderson emphasises, is not merely that the fad for
corporate social responsibility is intellectually wrong, or that it
poisons opinion against market capitalism. It also promotes policies that
are directly welfare-reducing. Applying principles of corporate social
responsibility raises costs and prices. Whether it also reduces profits
depends on market conditions. Adopting new systems of social and
environmental accounting imposes further burdens. If companies succeed in
persuading or forcing their partners and suppliers to do the same, costs
rise still further. 'Good corporate citizenship' does not come cheap–and
the cost is borne by society at large, not necessarily by the managers or
owners of the firms in question.

The marriage of corporate social responsibility and global salvationism
is especially pernicious. It favours additional regulation (which is no
less harmful for coming, in the first instance, at firms', rather than
governments', behest). When firms set themselves up as 'good global
citizens', the next step is to demand common international standards on
labour practices, pollution, and what have you. In a profoundly
non-uniform world, uniform standards are a bad idea, especially for the
poorest countries, which may be unable to support them economically. In
seeking a level regulatory playing-field based on their ethical insights,
rich-country 'good global citizens' limit competition, worsening the
performance of the global economy as a whole and putting developing
countries at a particular disadvantage.

It is no advance for democracy when public policy is 'privatised', and
corporate boards take it upon themselves to weigh competing social,
economic and environmental goals. That is a job for governments, which
remain competent to do it if they choose. And when it comes to business
ethics, it is worth remembering that managers do not, as a rule, own the
companies they are directing. Their first duty is to serve the people who
are paying their salaries, so long as they stay within the law and the
canons of ordinary decency. In the political arena, the chief executive of
the biggest multinational has just one vote–and that is how it should be.

* 'Misguided Virtue: False Notions of Corporate Social Responsibility',
by David Henderson. Hobart paper 142. Institute of Economic Affairs,
London. ’£12.50.

http://www.nzbr.org.nz/documents/publications/p...

http://www.nzbr.org.nz/documents/publications/publications-2001/misguided_virtue.pdf
Pour ceux qui ne sont pas abonés, ou qui ne connaissent pas M. Stallman:

Why ‘corporate social responsibility’ is not a welcome fashion

IT IS more than 200 years since Adam Smith observed that people enjoy
their daily bread thanks not to the benevolence of their baker, but to his
selfish pursuit of profit. In that observation and its implications lies
the case for market capitalism. In their economic lives, people behave as
though they had no regard for the public good. Yet the outcome, through
the operation of the invisible hand, serves the public good better than
any social planner could ever do.

Nowadays the triumph of the market is taken for granted. But this victory
is far from complete — because Smith’s insight is, even now, not widely
believed. Social progress is still thought to issue not from
profit-seeking behaviour, nor even from enlightened government policy
(current orthodoxy, after all, frowns on too much of that), but from the
benevolence of the baker. Companies are enjoined to do more than serve
their customers and make money. Instead they must be ‘good corporate
citizens’; they must attend to the needs of their ’stakeholders’; they
must contribute to ’sustainable development’; they must strive to ‘raise
standards’ at home and abroad. Increasingly, companies respond to these
admonitions, or affect to, with zeal.

So firmly has this view taken root that only a brave man would be willing
to go on record against it. In a new booklet for the Institute of Economic
Affairs*, David Henderson, formerly the chief economist at the OECD, has
dared to risk the wrath of right-thinking people everywhere. He is not
content to argue, as timid waverers might, that the new commitment to
corporate social responsibility is a sham, behind which the search for
profit carries on as before, leaving capitalism in good shape after all.
Still less is he willing to argue that paying lip-service to corporate
social responsibility may actually do some social good–albeit less than
its more enthusiastic supporters would advocate. Mr Henderson claims,
rather, that the fad for corporate social responsibility is doing real
harm. The appropriate response, in his view, is not to laugh at it or
tolerate it, but to recognise it for the danger it is and oppose it.

Part of the harm that the notion causes, according to Mr Henderson, is
intellectual. Advocates of corporate social responsibility–meaning the
explicit adoption by companies of economic, environmental and social
goals, as opposed merely to making profits for the company’s owners–start
with a basic failure to understand why capitalism works. That provides a
foundation on which many other towering misconceptions can be constructed.
Thus, belief in corporate social responsibility goes hand in hand with
what Mr Henderson calls ‘global salvationism’–an apocalyptic pessimism
about the planet’s environmental prospects and the outlook for global
poverty. Capitalism is in crisis. The remedy is not government: that’s
socialism, which is discredited, and governments are powerless these days
anyway, aren’t they? The remedy is morality in the boardroom.

All this deflects attention from some important, if inconvenient, facts:
the planet is not approaching environmental catastrophe; the proportion of
people living in poverty has fallen faster thanks to capitalist
industrialisation than ever before in history; and governments still have
as much power to collect taxes and conduct social policy as they ever did.
Advocates of corporate social responsibility reply that they have no
choice but to respond to society’s more demanding expectations of them.
That might be a fair point, were it not for the fact that their
capitulation to anti-profit ideology, their pandering to anti-capitalists
and their preference for ‘enlightened co-operation’ over ruthless
competition, is powerfully helping to shape those very expectations.

But the problem, Mr Henderson emphasises, is not merely that the fad for
corporate social responsibility is intellectually wrong, or that it
poisons opinion against market capitalism. It also promotes policies that
are directly welfare-reducing. Applying principles of corporate social
responsibility raises costs and prices. Whether it also reduces profits
depends on market conditions. Adopting new systems of social and
environmental accounting imposes further burdens. If companies succeed in
persuading or forcing their partners and suppliers to do the same, costs
rise still further. ‘Good corporate citizenship’ does not come cheap–and
the cost is borne by society at large, not necessarily by the managers or
owners of the firms in question.

The marriage of corporate social responsibility and global salvationism
is especially pernicious. It favours additional regulation (which is no
less harmful for coming, in the first instance, at firms’, rather than
governments’, behest). When firms set themselves up as ‘good global
citizens’, the next step is to demand common international standards on
labour practices, pollution, and what have you. In a profoundly
non-uniform world, uniform standards are a bad idea, especially for the
poorest countries, which may be unable to support them economically. In
seeking a level regulatory playing-field based on their ethical insights,
rich-country ‘good global citizens’ limit competition, worsening the
performance of the global economy as a whole and putting developing
countries at a particular disadvantage.

It is no advance for democracy when public policy is ‘privatised’, and
corporate boards take it upon themselves to weigh competing social,
economic and environmental goals. That is a job for governments, which
remain competent to do it if they choose. And when it comes to business
ethics, it is worth remembering that managers do not, as a rule, own the
companies they are directing. Their first duty is to serve the people who
are paying their salaries, so long as they stay within the law and the
canons of ordinary decency. In the political arena, the chief executive of
the biggest multinational has just one vote–and that is how it should be.

• ‘Misguided Virtue: False Notions of Corporate Social Responsibility’,
  by David Henderson. Hobart paper 142. Institute of Economic Affairs,
  London. ’£12.50.

http://www.nzbr.org.nz/documents/publications/publications-2001/misguided_virtue.pdf