Government, Society and Business – People Organisations


Dominic Lawson, writing in today’s Sunday Times, has a good go at attacking Corporate Social Responsibility – CSR. His claim is that business (to paraphrase Milton Friedman) is there to make profits and reward shareholders and it is to Government (through the taking and use of taxation) that goes the rigors of social responsibility.

Lawson’s simplistic assessment of business in society (the article is a reaction to David Cameron’s speech at the Business in the Community awards last week) fails to understand the complexity of the economy and society and the role of the three main parties involved in making the economy and society work.

From his article, anyone would think that there are only two parties in charge – Government (hopefully, elected) and business. Underneath, there appears the mass of the population – deriving their income from either one or the other and buying the means to life and living from one or the other.

What is forgotten in this simplistic overview (and a short article is all Lawson has to work with, so some excuse there, I guess) is that society is not just made up of the two leaders and the proletariat underneath. Society is a complex mix of individuals, groups, associations, lobby groups, small businesses, medium-size businesses, large / multinational businesses, local government, regional government, national government, export markets, importers, international governments – the list goes on.

Lawson’s simple simulation of reality misunderstands society in the same way that economics misunderstands economics. Macro and micro-economics stand uneasily in the same story (for economics is more a story that a science) and have never coalesced.

Business in itself is complex. Recent arguments over bonuses have shown how managers (in a business world where ownership and management are widely separate) have managed so often to take the profits out of the business before shareholders (now operating primarily through a secondary marketplace or via agents such as pension plans – themselves run by managers, themselves divorced from ownership and direct responsibilities) can obtain what Milton Friedman may have believed was rightfully theirs.

This complexity is expanded hugely in relation to business’s relationship with the society that provides them with their reason to exist. Market economics (and I am pro the market economy – any centrally driven economy is doomed) required businesses to be within a complex national and international environment and for governments (operating on behalf of the people) to ensure that they act properly.

This means that government have to ensure that pressures on business allow them to be competitive nationally and internationally BUT that society’s needs are properly considered as part of the trade-off for all the other protections and benefits offered. The latter includes education, infrastructure (roads, railways and the like), banking system, laws that work.

So, while outside the City of London businesses don’t get a vote (the fact that they still do in the City is not just a 19th Century throwback but one much older) they get a huge lobby through trade associations like the CBI. This influences governments of all types and makes the Dominic Lawsons of this world lose sight of the complex, adaptive world in which we live.

The fact that certain companies or their leaders cozy up to the CSR community is rather a cheap, anecdotal simplification in a complex world where businesses, like all “living” things, have to continuously adapt to meet the changing environment and conditions they find themselves in. Society is highly complex and the over-simplification (which we all love to do because we can then mislead ourselves into thinking we understand the issue as a result) too often leads to decisions that are completely wrong.

We live in a complex society where we have to make changes that reflect the complex mix of the various parties involved. There is no such thing as “business” – it is made up of many strands and people and interactions. Governments set the laws and implementation, only people can work within them. Businesses are mere technical constructions that people form – people then have to live with other people. They have to make the decisions not some artificial construct called a business – no matter how we construct its form in law.

Lawson seems to believe that people don’t exist – or, if they do, that major organisations have a precedence. For so many reasons, he misses the complexity. CSR may not be the answer, but it is an attempt to develop relationships between organisations of people (businesses) with others (local communities, consumers or whatever). People and people – not some simulation of them.

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