Business has a moral responsibility to society

‘Businesses are there to make lots of money for their shareholders.  They are not there to care’.  OK, I’ve paraphrased, but basically that’s what the economist Milton Friedman meant when he said: ‘The social responsibility of business is to increase its profits.’

Friedman’s view has arguably been the dominant attitude of much of the business community and a fair swathe of political opinion for the past 30 or 40 years.  But it would appear that the Prime Minister does not agree with it.  

In a recent speech David Cameron suggested that business also has a moral responsibility to society. He lauded some of the businesses which he believes are showing moral leadership, and gently urged the business community to be more transparent and honest about this.  He claimed that corporate social responsibility (CSR) has made great strides in recent years.

In fact he went even further in asserting that ‘Business is the most powerful force for social progress the world has ever known’.  Well, certainly it has a massive social impact, but I’d part ways in describing it as ‘social progress’.  I’m clearly not alone - 86% of our enews readers also disagreed with the PM in our recent enews survey. 

So wishful thinking – perhaps aspirational rhetoric at best.  I think I’d share much of his ambition but question most of his assessment. On the whole I just don’t see the evidence of the sea change that he was talking about.  

Doesn’t the recent financial collapse illustrate that the corporate business world has suffered a kind of ethical meltdown?  The institutions at the very top of the business system – banks, insurance companies, investment funds – clearly lost their way to such an extent that they nearly bankrupted not only themselves, but also the country and much of the planet.  Governance? Failed.  Leadership? Failed. Wealth creation? Failed. In fact, much of the ‘wealth’ turned out to be electronic funny money based on not very much of anything.

Of course there is plenty of blame to share around.  Government let it happen, and our insatiable consumer desires ultimately made it possible.  But look at who is now paying the cost for this failure - poor single mums, isolated older folks, people living with disabilities, sick children.

Clearly, there is a serious need for the ethical and moral framework of business to be refreshed, renewed, reinvigorated.  What is needed is a more fundamental reboot – not a PR makeover.

What would that look like?  Is it truly and genuinely on offer?  We can and must do far better than the frankly lame Every Business Commits document the Prime Minister mentioned in his speech.  

Too many of the debates about CSR and corporate philanthropy at the moment are just asking the wrong questions and will get the wrong answers as a result.  To argue that in order to demonstrate moral responsibility business needs incentives, to be shown ‘what’s in it for them’, or that charities need to ‘argue the business case’ for support is completely the wrong place to start.

Such approaches are symptomatic of the current disease, not the recipe for a cure.  For us, they reflect how far the compass has swung in the wrong direction, not the way forward.  Instead, we need to appeal not to the self-interest of business, but to the moral interest of the people who own, manage and work for them.

It’s important to be clear: business people are not necessarily any less moral than the rest of us who work in other spheres.  Millions of business people across the country remain responsible and valued citizens, who care for others. They help bring prosperity to our communities and are our charity donors, volunteers, trustees.  

DSC’s argument is that to achieve real change, we need to appeal to the moral values these people have as human beings – to their sense of caring, of altruism.  It’s a profound mistake to assume that business people are one-dimensional creatures who are only interested in money or gaining some kind of strategic advantage for their organisation.  And if those are our expectations, isn’t it more likely that the behaviour will follow?  

In the wider society, we also have to counter the notion that the drive for profit gives the business community as a whole – and our biggest corporations in particular – an opt-out clause when it comes to acting in a morally responsible fashion. In fact, being in a position of great power should mean we should expect a higher moral standard from these organisations and the people who run them.  We should expect them to be paragons of generosity and civic dedication.