“Who says corporations and businesses should give back something to communities!?” This was essentially the question asked in a famous 2005 opinion piece in The Economist.
Admittedly, it’s common to hear language about “corporate responsibility.” And when we watch some business executive hand over one of those oversized checks at a televised charity event, it’s typically accompanied by the words, “We at IBM/Shell/Whatever Inc. feel it’s important to give something back…”
But The Economist writers’ point is that this whole framework presumes—falsely!—that businesses are value-extracting. That is, the fallback position is assumed to be one in which businesses take from communities. And this then leads to the conclusion that it is good and right that businesses “give back.”
Some marketplace defenders, following the lead of The Economist, have pushed back against this framework, insisting that businesses are not value-extracting. They are instead value-giving. Admittedly, it’s true that some businesses lie about unsafe working conditions or illegally dump harmful chemicals into rivers. But when businesses obey the law and act in reasonably good faith with employees and consumers, they tend to have a variety of very positive effects on the wider community. In short, businesses are value-giving to the wider community.
Specifically, marketplace defenders point to at least six ways that businesses serve the common good.
- Making employees better off. To start with an obvious point, employees are given money which they can then use to buy things that improve their lives, as well as the lives of their families. Further, employees certainly think the trade-off between their work and the wages they earn is a net benefit to them. (Otherwise, they wouldn’t be working.)
- Making customers better off. Likewise, customers also think they are gaining something of value when they make purchases. Even when customers complain about the high price of some product, they still think that they are gaining overall value by parting with their money in exchange for the product. Otherwise, they wouldn’t be purchasing the product.
- Peaceably providing a way for the free exchange of goods and services. Thankfully, gone are the days (at least in our developed societies) of marauding bandits pillaging the next town whenever they needed something. Businesses of course aren’t the ones who keep marauding bandits in check. But the point is that there must be some peaceful mechanism for getting goods, or the alternative would be simply to demand it from others if you had to have it. Or at least, the alternative would be uncertain and apprehensive commodity exchanges—the kind that black market dealers make in back alleys, accompanied by armed protection. Businesses provide a peaceful, public, dependable mechanism for exchanging goods, which societies need if they are to function well.
- Fostering relationships. In the natural working of the market, a variety of relationships are fostered: relationships between employers and employees; between businesses and their customers; between businesses and their suppliers; between entrepreneurial partners; and so on. Human interactions occur in a huge number of cooperative ways within the everyday running of businesses. As networks of relationships are fostered, and hopefully strengthened, communities as well are strengthened.
- Facilitating widespread wealth creation and economic growth. The modern market makes at least a decent amount of wealth creation available for much, much larger percentages of the population than previously occurred. Long ago, it was the kings—and perhaps a few of his key helpers—who would own everything. The average person would own next to nothing at all. Even a few hundred years ago, think of how the arts—and in many places even the churches—were controlled by a few wealthy patrons. But in the modern economy, with a middle class and at least some moderate amount of wealth having been created for so many people, we all can contribute to, and have a hand in shaping, the arts; and we can all take joint ownership in our local churches. Surely this “collective” approach has greatly strengthened societies; and again the modern business model has made this possible.
- Providing a way for the very poor tolift themselves out of poverty. The key here is that the poor have a chance to lift themselves out of poverty. Businesses provide a mechanism for earned success. Of course, greater flourishing and well-being doesn’t always happen, even for a hard-working poor person. The vagaries of the market system still exist. But at least there’s a mechanism for the poor to attain much greater flourishing and sustainable meeting of family needs by working hard. And businesses of course are what provide this mechanism.
Although I think these points have significant force, I also think there is scope for significant pushback in places. In the next post, I want to ask: Even if we accept these 6 points wholeheartedly, can businesses still fail to promote the Common Good?