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Corporate Social Responsibility versus Personal Responsibility

Who is to Blame for the Economic Mess?

I have previously blogged about corporate social responsibility. The time seems right to expand the discussion to include the viewpoints of those who started the “Occupy Wall Street” movement. That movement arguably has helped President Obama to gain greater traction in the upcoming election because, as a skilled politician, he has used the rants against corporate greed to espouse an “us against them” mentality, or the 99%ers versus the 1%ers. And, his mantra of the rich need to pay “their fair share” has caught on with many in the public.

I’m not going to opine about the Occupy movement. I’ve touched upon that topic many times before. Here is one piece you might be interested in that I wrote for the Pacific Coast Business Times. My focus is whether corporate America is living up to its social responsibilities.

Milton Friedman is widely credited for initiating a discussion about CSR. In his seminal piece on this topic that was published in The New York Times Magazine on September 13, 1970, Friedman challenged the idea that businesses had responsibilities beyond maximizing profits for the benefit of shareholders. In his book Capitalism and Freedom, Friedman posits that "there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

Friedman did not buy into the spreading belief during the 1970s that business should not be concerned merely with profit but also with promoting desirable “social” ends; that business has a 'social conscience' and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and other socially desirable goals.

John Mackey, the founder and CEO of Whole Foods, disagrees with Friedman. In 2005, Mackey voiced his opinion in Reason magazine against Friedman’s view and emphasized the humanitarian dimension of capitalism. He believes a corporation should try to create value for all of its constituencies. While acknowledging the mantra of profit maximization for the benefit of investors as the driving force behind capitalism, Mackey points out that is not the purpose for other stakeholders--for customers, employees, suppliers, and the community. Each of those groups defines the purpose of the business in terms of its own needs and desires, and each perspective is valid and legitimate.

According to the Corporate Social Responsibility network, CSR is about how businesses align their values and behavior with the expectations and needs of stakeholders - not just customers and investors, but also employees, suppliers, communities, regulators, special interest groups and society as a whole. CSR describes a company's commitment to be accountable to its stakeholders by managing the economic, social and environmental impacts of their operations to maximize the benefits and minimize the downsides. Key CSR issues include governance, environmental management, stakeholder engagement, labor standards, employee and community relations, social equity, responsible sourcing and human rights.

Some have argued that the discussions of the "social responsibili­ties of business" are notable for their analytical looseness and lack of rigor. According to this view, only people can have responsibilities not businesses that are artificially-created entities. If we accept that assertion as being true, then it is not that far of a stretch to claim that top management has social responsibilities as flesh and blood representatives of the corporation. The decisions and actions of top management potentially affect all stakeholder groups.

So, are the views of the original occupiers (not those today who have morphed into personal agendas) correct that greed on Wall Street and in corporate America fueled the financial meltdown of 2008? It’s difficult not to agree with this position. However, the economic problems we have today go much deeper. We, as citizens, also have social responsibilities to act as responsible citizens. I call this civic virtue. How many of us accepted subprime loans without reading the fine print and making sure that we could afford our mortgages? How many of us over-spent and built up debt all the while buying into the idea that the good times would always roll? We can’t just blame corporate America, and/or Wall Street, and/or the government for what has happened to so many of our fellow citizens. Personal responsibility is just as important as corporate social responsibility.

Blog posted by Steven Mintz, aka Ethics Sage, on December 30, 2011