A Sign of Hope
By Peter Block
Much has been
written and said about how corporations have lost their connection to
communities. They move from place to place depending on tax breaks and
labor costs. They externalize social costs so that, for example, someone
else pays the price of environmental decay. They have led the attack
against government regulations, which represent the interests of the
larger social good.
I recently heard a corporation executive make some statements that
caught my attention. It was a small sign of hope that businesses might
get more deeply involved in building community and become bigger players
in solving social problems. This is no small matter in a time when
economics and shareholder value reign supreme. The question of whether
anyone in this culture is in a position to solve social problems is a
good question. For the most part, the primary measure of value for
businesses is their stock price, while their social responsibility has
been a marginal interest.
A Cry for Help
We are in a period where the loudest cry for government is to get
smaller and quieter. And where businesses have been about shareholder
value, individuals are into householder value. The people who ran the
election campaigns believed that we would vote for President of the
United States based on whether we would get another $500 deduction for
our children, a $100 tax refund and pay less for our prescription drugs.
Who is to say they were wrong?
If we care about how we build and sustain our communities, and what we
do about the large social and economic inequities between rich and poor
people and rich and poor cultures, then businesses have to become a
bigger force. After all, transnational corporations are larger than
countries, large corporations seem to have a lot to do with picking our
politicians and directing our laws, plus political leaders now feel
honored when they spend time with business leaders.
Getting business to place real priority on societal concerns is no
easy task. The pressure on businesses for shareholder value runs deep.
It is so intense that famous economist, Milton Friedman, speaking for
many economists, has said for years that if a company spent any money on
solving community or societal problems this was a violation of their
compact with shareholders and he personally would consider suing the
management for dereliction of duty.
Enter Mr. Levin
Something happened, though, this August at an Aspen Institute
conference on "Understanding Globalization." Gerald Levin, Chairman and
CEO of Time Warner, was a member of a panel discussing globalization and
culture. He made a statement along the following lines: He said that we
have reached the point where corporations have to start operating in the
public interest as well as the interest of the shareholders. Since
corporations hold so much of the wealth and resources in society they
are going to have to take responsibility for such social issues as
poverty, the digital divide and the well-being of the "third world."
He argued that social and community values have to be built into the
center of companies, on an equal footing with shareholder values. He
also spoke to the need for corporations to respect national cultures and
stall the homogenizing impact of globalization. He went on to
acknowledge the existence of American economic imperialism, and included
himself in that category. As actions, he recommended we:
1. Change the laws.
2. Wake up the financial marketplace to social responsibility.
3. Develop new corporate leadership among government, academic,
non-government organizations and private foundations.
Granted, his
statement was buried in an obscure panel discussion and carried over
unwatched C-SPAN, but he did make the statement. Importantly, he said
that not only will business have to play a more significant role in
worldwide education and poverty, but that this role should stand at the
center of a business' concerns. This would mean that social and
community well-being would shift from being on the edge of concern,
where it now resides, to a central concern. The social fabric and health
of communities would then no longer be an act of philanthropy, but would
be directly aligned with the essential purpose of a business.
This is radical. It does not matter if Mr. Levin really means what he
said, nor whether Time Warner becomes a leader in the social
responsibility of business. The fact is, he said it. He voluntarily used
strong language and he is part of the ruling class. That is worth
marking on your calendar.
If corporations do not shift their thinking and action, then social
equity and strong community, both of which seem important to sustain
democracy, will continue to deteriorate in the face of our abundance.
Giving Back
Now, you might
think that corporations already do their fair share, through foundations
such as Lucille Packard, Ford, Carnegie, Rockefeller, Kellogg and the
like. But these foundations are financed more through the individual
wealth of the families. Businesses themselves give mostly lip service to
community and society concerns. For example, one of the largest donors
to social services is State Street Bank in Boston. While they rank among
the largest donors around, and are rightly proud of their leadership,
they return only 5 percent of their profits back to the community-hardly
on par with what they return to shareholders. And please, do not argue
that businesses contribute to community through the jobs they create or
the employee hours they contribute. These are valuable, but hardly meet
the criteria of making larger human needs central to the business.
There is no reason not to believe that Mr. Levin was sincere in his
vision of a more responsible social role for the transnational
corporation. In fact, I think we should all write to Mr. Levin at Time
Warner and thank him for his comments. We should let him know we look
forward to hearing how he plans to follow up on his comments. He is in
the position to lead the way: He is the boss of CNN, Time Inc.
Publications and vast motion picture resources, and with AOL as his new
partner, he has the reach to create important changes to the thinking
and values of the private sector.
Granted, if he really made poverty, hunger and the economic well-being
of the underclass a central immediate concern of his corporation, he
would be questioned, and perhaps even sued by the financial community
and Mr. Friedman (or his successors), but maybe that would not be so
bad. It would bring the question more into the mainstream debate. Plus,
I am hopeful that C-SPAN would carry the trial and solve the problem of
what TV show to watch in those long early morning hours.
This
article appeared in
News for a Change published by AQP in November-December 2000
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