Social obligations

Corporations fulfilling a duty of due care over communities they impact

Just as legally a company is treated as a separate individual so it should also carry much the same social obligations as members of the broader community

 

OF THE ONE-HUNDRED largest economies in the world, about half of them are not countries at all – they are corporations. Huge companies like these have far deeper pockets than many of the member-states at the UN. They can lobby the governments of those countries for, basically, whatever suits them. And yet their leaders tend to be completely unelected. It used to be that increased power and wealth were viewed as a route to individual well-being. But one of the most important inventions of Capitalism has been the Company, which in law is typically treated as if it were an individual in its own right (legally distinct from the people who work within it or who own it). As a result, the power and wealth of a corporation is now often viewed as an end in its own right. Corporate success is seen as the route to securing a corporation’s well-being – not directly aimed at any particular individuals at all.

It is that detachment that is heavily contributing to many examples of global crises (ranging from Banking and Media abuses to industrial pollution, overfishing and increasing obesity). To help counter these threats, international business must become more closely aligned with the collective smooth-running of the nations they cut across. However, there is something very important that must be recognized about such a shift: Big Business realigning itself with its host nations is ultimately in its self-interest. That is because Big Business has probably already become too powerful and too independent otherwise to avoid a concerted public and government backlash against it to stop it being allowed to continue to act as a leaderless independent state in its own right. As a result – ultimately for their own benefit – major corporations must realign their activities explicitly to include the additional strategic goal of Unelected Responsibility.

The guiding principle of Unelected Responsibility is based on the recognition that – just like human beings – corporations are part of a community, even if that ‘local community’ has become so large that it is now in effect the whole of global society. That places responsibilities on a company that are greater than merely maximizing shareholder profit. In an isolated rural society, it would be impossible for even a powerful family to get away with consistently acting too selfishly – for example, risking the survival of the community as a whole by polluting the river upstream of where other villagers drew water. It would be no defense for the family to claim that the river was a common resource available to everyone to use in whichever way they chose.

Whatever ‘the law’, it is basic common sense largely to play fair in a tight community. We learn the same unwritten rules about how to fit into a community when we are at school – again, the overall social dynamics are pretty obvious. But the more abstract it is that people’s relationships become, the easier it feels to disregard what under different circumstances would be basic rules of community living. Once someone gains a position within a corporate top-team it is easy to become so detached that it feels positively exhilarating to fixate on profit above all else – even if few around the table would necessarily choose to behave like that in front of their friends and family or in their local community. Having participated in many such meetings myself, I can confirm that on some of those occasions it is practically possible to smell the testosterone in the boardroom. It is the closest that most of the participants ever get to being in a war just before battle.