NickLawDebatePaper1

Nicholas Lawrence Do Corporations Have Social Responsibility The corporate model has always had one main goal: profit. Consumers create a demand for some product and the corporation then provides that product for monetary compensation. The corporation is responsible to the shareholders; they’re legally bound to create profit for them. Everyone wins; the corporation makes money and the consumers enjoy their new TV or car. This has been the dominate view of the market until recently. The effects the corporation has on the consumer go way beyond just providing a service; the corporation has an effect on the environment and the health of the people around it. This raises the question of is increasing profits the only responsibility of business? Do companies have more social responsibilities? The stakeholders in this issue are corporations, shareholders, employees, consumers and people who live near factories or industrial areas. Some sub-issues that will be addressed are the responsibilities of the CEO, capitalism and product responsibility.

The yes position is supplied by Milton Friedman. He argues that corporations have no responsibility beyond that to its shareholders. A company is an artificial person and may have artificial responsibilities yet to say it has additional social responsibilities is wrong. For a CEO to be responsible social responsibilities of the business as a whole is in direct interference with his contract to his employers, the shareholders. For him to act socially responsible will either cost the shareholder, the employees or the customer money. If the CEO applies company money differently than any of the three groups aforementioned, then he is in essence taxing them and determining how the taxes will be spent. This here is the main crux of Friedman’s argument for this is taxation which is a government function. The business man “ is to be simultaneously legislator, executive and jurist.” [1] He in effect becomes a civil servant while being employed by a private company. And the proper way to elect civil servants is through a political process. This entails bringing government into market decisions and requires the acceptance of socialist ideals instead of capitalist ones. Friedman then makes the point that even if a CEO could get away with spending money on social responsibilities, how is he to know what to do? The CEO by definition knows how to run the company and make money. He is unqualified for social decisions. And how much should he “tax” the shareholders, employees and customers? [1] A last point in Friedman’s argument is that social responsibility is hurting the free market [1]. Because of the social climate, companies often mask activities that are for the companies’ own good will as an act of social responsibility. This damages the foundation of a free society by making businessman make decisions that are good for their company in the short run but bad for businesses in general in the long run. In conclusion, corporations have a responsibility only to their shareholders, anything beyond that would damage the free market and invite socialist ideals into capitalist economy [1].

Friedman makes a logical case in the beginning about the roles of the CEO. It’s his job to make money for the stockholders. For him to not do that would probably get him fired. However, just because it is logical doesn’t mean that it is the right thing to do. I also fail to see exactly the danger to the free market from social responsibility. I also fail to see the invasion of socialist policies and how they are damaging the economy. I feel he says that negative things will happen because of social responsibility without really linking social responsibility to them. I feel also that socialist threat is overstated and isn’t really a threat. Once again he fails to link how social responsibility invites socialism, which then hurts the free market. Also, calling social responsibility a form of taxation without representation isn’t an accurate analogy. If a CEO uses a company’s money for some sort of environmental cleanup and yet, the company still makes money for its shareholders; is anyone really being “taxed”? Social responsibility may make a company less profitable but a decline in profits is not a form of taxation. Lastly Friedman never addresses the environmental tragedies and pollutions companies’ cause. He never addresses the criminal activity that companies commit nor does her address the issue of externalization. Also he assumes what is good for the company is good for society as a whole. Overall its six pages of ideological argument with very little factual evidence presented.

Joe JesDardins however argues that corporations do have social responsibilities. He makes his argument for the sustainable business. Instead of just a concern for profit, a business should have other concerns such as the sustainability and impact of their company. Businesses should be based on the three pillars of sustainability: economic, ecological and ethical. A company based off these three pillars dramatically shifts the corporate responsibility. Economic development on a global level is directly connected to social justice and environmental impacts [2]. JesDardins is clear to make the distinction that he’s not arguing for getting rid of economic growth or everyone moving onto farms. He wants to replace economic growth with economic development. Not all economic growth is good. More isn’t better and businesses need to reflect this. Also acquiring profit isn’t necessarily opposed to sustainability. Sustainability often means producing less waste and increasing efficiency of energy use; all which can save money. He then goes onto tackle the issue of consumerism. Businesses shape consumer demands. Very often companies turn out products and then create a market for them. Rather continue the cycle of increased consumerism companies should instead market sustainable products to their customers. Consumers can’t demand for products they’re ignorant of. If companies take the lead and market sustainable products, then consumerism can be put to some good use. JesDardins also argues that companies should take responsibility for where their products come from. Companies should manage their products from cradle to grave since they are the ones best positioned to do that. Once a product is purchased the company still has a responsibility for it. If the product has toxic chemicals the company is responsible for its disposal. To fulfill this life cycle responsibility companies need to dematerialize their product (use less material) [2]. This trend can already be seen in cars, computers and phones. This idea may seem harmful to profit but can actually cost less by the savings in material and increased efficiency. JesDardin also makes the parallel between consumers and where companies buy their raw materials. If we hold consumers responsible for the things they buy, we should also hold companies responsible for the things they buy from suppliers [2]. They are artificial persons after all. In conclusion a company is responsible for the affects it has on the communities surrounding it and the consumers that buy their product. Just because companies have the goal of making money doesn’t mean they can externalize anything that gets in the way of profit. The sole economic model of a company needs to be replaced with the idea of the sustainable company for the betterment of the companies themselves and their consumers.

Joe JesDardin’s argument overall sounds very appealing and he makes a convincing case. His argument is not overly ideological like the article by Friedman. It is this that I find to be JesDardin’s strong point, for his article goes into the detail about the way business should act and handle corporate responsibility. And he doesn’t go into name calling or generalize complicated issues like Friedman. However there are some drawbacks to JesDardins argument. In some parts of his argument he talks about increasing corporate responsibility, such as cradle to grave life cycle responsibility. Yet he never talks about how such a policy is to be enacted and enforced. Some business may voluntary adopt such a policy but what about the rest? Is the government going to enforce it? Also he never addresses the fact that a CEO is only bound by law to make a profit for the shareholders. How to overcome this legality is never addressed in his argument. I also doubt that business will want to try and limit the rate at which their customers consume their products. Such concept is in direct odds with their primary goal: profit. Overall he outlays what a sustainable company would look like and some reasons why current business will switch over to such a model. Yet business have very little moral conscious now and he never addresses where this moral conscious is going to come from. The third article I reviewed is the most recent of the three being published in 2009. This article argues that corporate social responsibility is vital to survival. This article is from The Independent, an online news outlet. No author is cited for the article. As one would expect from the title this article extends the no position. This article begins to make up for the lack of detail in JesDardins argument regarding why business would switch to a sustainable model. This article argues that the time has come for corporate social responsibility (CSR). Public and political opinion has begun to sway in the favor of CSR. The European Commission’s Vice President, Günter Verheugen, says that, “that CSR is good in good times, but an undeniable must to cope with bad times.” [3] This also brings up another point that article makes that having CSR provides stability to company in economic recessions. CSR is actually better for companies, through their image and increased worker loyalty. A study from 2002 to 2007 by Business in the Community has shown that companies that have responsible principles and business practices outperformed other companies on shareholder return by 3.3% to 7.7% per year [3]. Pressure from customers, government and environmental organizations is forcing companies to start adopting sustainable practices. Overall the article makes the case that the traditional business model won’t work anymore. The profit driven model has never fully worked for society as a whole and now instead is causing direct harm.

My own views on the matter coincide with the Sustainable business model. Many sustainability problems stem from the production and consumption of goods. The want for more money or more things is what drives the corporate machine and poisons and pollutes the environment around us. By forcing corporations to consider the impact they have on the environment and people’s lives will cause them conduct business ethically. Economic growth, gaining profit, has no conscience. No moral compass which gives companies the ability to externalize things and people without guilt. But, adopting corporate responsibility will give business that much needed moral guidance. However, to foster corporate responsibility onto the business community is not going to be easy. Ideally political reform through federal law would be the best way to force companies to “be good”. However this would very difficult due to the enormous amount of money and influence corporations has in policy makers. So what I suggest as a start is to strengthen the environmental acts already in place. For example, to not exclude gas and oil companies from the Clean Water Act and the Clean Air Act. There should be no exceptions to these laws. Enforcing theses laws to the letter will force the industry to become more sustainable. Still, that is a political process which has its own difficulties. That’s why the most important thing is creating consumer awareness and getting the public to call out companies that do social harm. Public opinion has already influenced companies to become more sustainable; we just need to keep up the pressure. By creating public awareness and getting the public invested in sustainability will cause pressure that the companies and politicians can’t ignore. That’s the way I believe corporate responsibility will be achieved; through public education.

Work Cited
 * 1) Joe, JesDaardin. "Business and Professional Ethics Journal." //Business and Environmental Sustainability//. N.p., 2005. Web. 3 Oct 2011. http://sustainabilityproblems.wikispaces.com/file/view/DesJardinsBusiness-and-Environmental-Sustainability.pdf


 * 1) MIlton, Friedman. "New York Times Magazine." //The Social Responsibility of Business is to Increase its Profits//. N.p., 1970. Web. 3 Oct 2011. http://sustainabilityproblems.wikispaces.com/file/view/FriedmanTheSocialResponsibilityofBusiness.pdf


 * 1) "Corporate social responsibility is vital for business survival." //The Independent//. N.p., 2009. Web. 3 Oct 2011. []