Dear John,
In recent years, “corporate social responsibility” has been viewed by some as the answer to the multiple failings of capitalism. Chief executives have responded to all sorts of problems – worsening climate change, widening inequality, soaring healthcare costs, and so on – by promising 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. [[link removed]]
In fact, real social change would prevent them from doing many of the hugely profitable things they now do. 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 doing so 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 corporate groups, 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 members have issued a continuous stream of jejune statements about their dedication to such things as providing childcare, pre-K, and affordable healthcare, promoting community college and workforce training, alleviating poverty, and reversing climate change.
It turns out these are exactly the priorities in Joe 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 spokeswoman, told the Washington Post the Roundtable is engaged in “a significant, multifaceted campaign” to stop 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 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 the president’s infrastructure bill? Because government spending on infrastructure helps their bottom lines by lowering their costs of procuring supplies and getting 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 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 must change. For example, taxes on big corporations must rise in order to fund public investments and safety nets.
But such laws won’t change if corporations continue to spend vast sums on politics. Corporate spokespeople like Boulanger of the Business Roundtable – 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 power. About 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.
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, as well as laws to reduce the power of big money in politics.
Thanks for reading,
Robert Reich
Inequality Media Civic Action
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