|Montréal, 9 juin 2001 / No 84
by Edward W.Younkins
Should a corporation be socially responsible? The debate over this question can be simplified once we have reduced the issue to a pair of foundational but contrary world views – communitarianism and individualism. The purpose of this article is to consider the idea of social responsibility by examining the persuasiveness of these opposing perspectives.
According to communitarianism, society is more than the sum of the individuals in it. The community is organic. Society exists prior to any particular individual's existence. The corporation, a possession of the community rather than of individuals, holds a social contract with society from which it derives its power and, therefore, serves a constellation of interests. The communitarian ethic is based on the view that, in a socially interdependent society, no manager can act ethically without considering the claims of others. While managers have direct obligations to stockholders and employees, they must also recognize other claimants (e.g., customers, suppliers, and the community itself from which the corporation derives its existence).
Communitarians view communities and society as living organisms existing independently of their individual members and believe there is a general common will separate from the wills of the individuals comprising them. For some communitarians, the general will is the will of the state as Leviathan – the earthly equivalent of God. Communitarians believe that communities and society have moral significance and rights that are at least equal to the rights of individuals and that sometimes and somehow override individual rights. They fail to realize that a community or a society is not a being, is not capable of self-directed thought or action, and, therefore, cannot possess rights.
They often speak of balancing the rights of individuals with the rights of the community. In addition, they tend to view the state as the agent of social betterment and support laws that force people to serve communities and society by taking part in programs that some intellectuals, speaking for the community, have declared to be for the common good or in the public interest. Communitarianism stifles the decision making power of individual persons by subordinating their preferences to community purposes which tends to be the same as majority rule. The communitarian vision of self-interest is thus often defined in terms of community service.
Communitarianism is closely related to social contract theory and emphasizes the social nature of the corporation which exists as the result of a highly implicit and flexible contract that determines its duties and rights. The corporation is portrayed as responsible to and subject to the will of society (i.e., the people). Both the state and the law are creatures of society. Since, from the perspective of communitarians, corporations are created by the government which, in turn, owes its existence to society, it follows that corporations are actually made by society and are responsible to the public to serve whatever is deemed to be in the public interest or for the common good. Since the corporation only exists because of social permission, society is said to be able to legitimately demand that a corporation perform certain activities that the owners and managers do not wish to perform.
During the 20th century, society has been reassessing its expectations of corporations and has pressured them to balance profit-making with social responsibility. Communitarians believe that corporations should be socially responsible both out of gratitude for their existence and a moral sense of reciprocation for benefits received from society, including the purchase of their goods and services and the access to, and use of, public goods. In essence, the corporation is viewed as more like common property than as private property. Some communitarians even propose that the corporation be brought under government control to assure the common good.
Individualism is the more realistic view that each person has moral significance and certain inviolable natural rights. Each person exists, perceives, experiences, thinks, and acts in and through his own body and therefore from unique points in time and space. It is the individual who thinks and has the capacity for original and creative rationality. Individuals' minds can interrelate but thinking requires a specific, unique thinker. The individualist assumes responsibility for thinking for himself and for acting on his own thought.
Under individualism, knowledge tends to be viewed as fragmented and widely dispersed. Each person is free to choose among systemically produced rewards, punishments, and opportunities arising from other free persons without being subject to the articulated judgments imposed by the state or other collectivities. Individualists rely upon the power of historically-evolved, unarticulated social processes such as free markets, tradition, language, values, common law, etc., which are evaluated based on their systemic features such as incentives and methods of interaction. While exhibiting little faith in social processes intentionally designed by any one individual or council, individuals do respect the experience of the ages as embodied in systemic processes.
Assigning primary emphasis to the individual does not devalue social cooperation. Humans are not only distinct individuals but also social beings. Cooperative action affords growth possibilities and brings benefits which otherwise would be unattainable by isolated individuals. Man's rationality allows him to cooperate and communicate with others. In a free society, all cooperative social ventures are entered voluntarily. In fact, individualism provides the best theoretical basis for a genuine community that is worthy of human life. The uniqueness and worth of the human person is affirmed when membership in a community is freely chosen by the individuals that comprise it.
Individualism denies that a community or a society has an existence apart from the individuals that make up that community or society. A community or society is a collection of individuals – it is not some concrete thing or living organism distinct from its members. To use an abstract term such as community or society is to refer to certain persons sharing particular characteristics and related in specifiable ways. There is no such thing as the general will, collective reason, or group welfare apart from, and other than, that possessed by each individual in a group. A community or a society is simply the association of persons for cooperative action. Coordinated group action is a function of the self-directed and self-initiated efforts of each person within the group.
Individualism involves the idea that society is no more than the sum of individuals comprising it. Created by the interaction of individuals, society is what individuals make it. The social contract is a fiction. Corporations are viewed as expressions of individual freedom, do not derive their power from society, owe nothing to the community, and need only pay taxes and adhere to government regulations. Closely related to individualism are the ideas of equal opportunity and contract.
True social reponsability: Respect for individual rights
It follows that the social responsibility of the corporation, through its directors, managers, and other employees, is simply to respect the natural rights of individuals. Individuals in a corporation have the legally enforceable responsibility or duty to respect the moral agency, space, or autonomy of persons. This involves the basic principle of the noninitiation of physical force and includes: the obligation to honor a corporation's contracts with its managers, employees, customers, suppliers, and others; duties not to engage in deception, fraud, force, threats, theft, or coercion against others; and the responsibility to honor representations made to the local community.
In an individualistic society all contracts are entered into voluntarily. Each person is free to associate with others for their own mutually agreeable purposes. The corporation is a form of property created by individuals in the exercise of their natural rights. The corporation is thus the result of a contract between individuals who wish to combine their resources and, if desired, delegate a portion of the authority and responsibility for managing and using these resources. Managers therefore have the obligation to use the shareholders' money for specifically authorized shareholder purposes which can range from the pursuit of profit to the expenditure of funds for social purposes. If managers use this money for activities not authorized by the shareholders, they would be guilty of spending others' money without their consent, failing in their contractual obligation to the owners, and, therefore, violating the rights of the shareholders. Owners have a property right in the corporation and a correlative right to engage in profit-making, if so desired. It follows that those who act in their behalf (i.e., the managers) have a duty to carry out the wishes of the owners, who usually invest to make a profit.
Customers, employers, suppliers, and others autonomously negotiate for and agree to contract with the corporation. If managers were to break an agreement with the shareholders to maximize profits in order to give one or more groups more benefits than they freely agreed upon, they would not only be violating the rights of the owners, but also would not be respecting the autonomy of individuals within other groups. Corporations and their managers are obligated to respect the rights of individuals within each group but the rights are limited to the rights of parties in market transactions. The social responsibility of corporations is limited to respecting the natural rights of all individual parties.
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