The Benevolent Corporate Dictator Should Worry You More Than The Callous One
At the end of the year, all of the business and finance publications do their year roundup, going over the events of the last 365 days and trying to discern some theme or trend that has emerged. While it is hardly the first time (arguably it was an echo of the 2015 ESG hype), the theme of “businesses being concerned with more than profit” emerged as a common 2019 theme, largely due to a manifesto of sorts put out by the Business Roundtable which essentially said “Businesses should be concerned about all ‘stakeholders’: suppliers, workers, and communities, not just investors.” Some have even been so bold as to describe this as the end of the hegemony of the Milton Friedman idea of business that has been in place for the last four decades.
Others of course have expressed skepticism to this idea. Nothing the Business Roundtable has said is enforceable. There has been no major legislation passed in the United States or elsewhere that will enforce or even encourage this new set of priorities. I myself find the reports of agency theory’s demise to be overstated — especially in the rapidly developing economies outside the US, the trend has been towards rather than away from prioritizing return to investors.
But there is nevertheless an important concept for socialists to consider in what is at least an aesthetic shift for corporations. Which is simply this: what if corporations replaced the government in social welfare provision?
Assume for a second that the Business Roundtable implements it’s proposal. Let me be very clear about one fundamental assumption on my part: power is largely exclusive. Whether directly or indirectly, power exercised by an entity excludes the exercise of power by others. Take for example the Bill and Melinda Gates Foundation: their exercise of power in the field of health research has shaped that field and excluded others, including sadly public health experts, from shaping it, at least as much as they could were it not for the Foundation taking up space.
The world of benevolent corporations scares me far more than the current world does. We don’t need to speculate on the effect — it has already played out in regards to fighting climate change. Governments have generally been hamstrung from doing anything they need to in order to avert climate change due to the private sector essentially saying “Don’t worry y’all, we got this.”
The problem is that the profit motive is not a choice that corporations can simply make or not make. Nor is it a force that can be reconciled neatly with other social aims, like turning a profit while also averting climate change. Profit is the jealous god of capitalism, and competition is the band of zealots enforcing it at the barrel of a gun. Any profit will not sate this god — the profit must be competitive. Those who spurn these commandments are condemned to perish. This dynamic is key to capitalism maintaining the accumulation of capital by capital’s owners.
In fact, the “socially responsible corporation” is merely another bit of terrain in the competitive wars between companies. Another way to draw consumption and investment and thus profit and returns. This “social responsibility” being terrain in real competition gives it two important characteristics: first, it is subject to a constant imperative of cost cutting. You want your social responsibility to be cheaper than your competitors, both to increase your own profit margins and ideally to be able to set prices in a way that fucks with their profit margins. The second important characteristic is that social responsibility is out the window once it doesn’t carry its weight. Just like a product or an employee, a corporation is going to ditch or replace its social responsibility if it isn’t helping the bottom line.
In a world where corporations are “socially responsible,” the government has been muscled out of the services it provides to the public (something we know can quickly happen from the experience of the neoliberal era). The government services have been replaced by bargain basement corporate charity, social provision more focused on its use as marketing for the corporation than as effective alleviation of poverty or other social ills. Some former government programs may be dropped entirely. “We are sorry,” Amazon might say one day, “But Food Bucks Prime is just too expensive to run, especially now that it’s accomplished it’s primary objective of signing up all of its users for Amazon Prime.” There will be outrage, outrage that will run up hopelessly against corporations that, unlike the government, do not need to answer to the people other than when the government or unions force them to.
Again, “do-gooder corporations” is currently more of a marketing scheme than an actual shift in business practices. But for all of our sakes, we better make sure it stays that way.