Corporate Social Responsibility Can't Happen By Itself
emphasis on short-term profitability stunts CSR’s ability to thrive in the market
Posted Oct 1, 10:40 pm in business, business models, culture, economics, ethics, finance, improvements, marketing, sustainability, unfinished thoughts
Regulation is a pretty hot topic. And when I say “hot,” I mean that it has an uncanny ability to divide a crowd. Progressives seem to generally favor regulations as a means of limiting the damage caused by corporate recklessness, and they have been quite vocal in pushing for greater government oversight in what companies can do, and how much they can do it before incurring serious penalties. Meanwhile, proponents of the free market maintain that the only fair and effective way to handle regulation is to allow the market to do the work; they believe in an efficient economic system that automatically controls problems that really matter (i.e. the problems most people care about). I personally can sympathize to some degree with both sides of this debate, but am not convinced that either can be implemented as solutions to the problems we currently face. What follows is my logic.
Before we can go on though, we have to face facts: it’s been obvious to those paying attention that market forces have not been effective in curbing devastating environmental damage caused by companies who have ignored the social costs of their operations. It’s not limited to environmental damages, either. The recent financial meltdown almost certainly would have been prevented with more oversight.
The traditional progressive (read: “liberal”) line about all this is that these corporations are just greedy and soulless, and don’t care about anything but profit. But this views corporate activity within a vacuum, and denies the economic realities underlying their behavior. In the absence of proper incentives, no company will behave in a manner consistent with diffuse, idealized social goals. Companies by their very nature act in ways that are most beneficial to themselves in the marketplace; even companies that try to do social good still have financial and publicity incentives underlying their behavior. Why? Because if they don’t, they effectively get punished by Wall Street and the market; remember that when we’re talking about the stock market, the bottom line is that public companies (i.e. the biggest organizations on the planet, who control the most money) pretty much need to post higher-than-expected profits consistently— or else. On Wall Street, nobody gives a hoot about how socially responsible you are— unless you’re making money from it. And tragically, our system is structured in such a way that companies really cannot afford to piss off Wall Street, for a number of reasons that go beyond the scope of this commentary.
Nevertheless, that is an economic reality; to condemn a company for being socially irresponsible overlooks the conditions that encourage the sort of reckless behavior that we hear so much about. In my opinion, it’s more of an indictment of our social and financial structure than it is of a company to say that they act irresponsibly. Like I’ve said before, we should think of corporations like organisms. They do what it takes to survive now. They typically can’t afford to think too far in the future, because Wall Street does not reward thinking far into the future; Wall Street rewards thinking about next quarter. Whose fault is that? I’d argue that it’s all of our faults. In an environment of high competition and high risk of market punishment, it’s unfair to blame companies for playing the game by the rules we ourselves constructed. Of course, it doesn’t make what they do ethically right, but like in any evolutionary context, the concept of justice doesn’t play a large role in behavioral decision-making; surviving does.
So yes, public companies do operate by almost strictly by financial motives, just like many progressives indignantly charge. But I would argue that this financial motivation should not at all detract from the actions of, say, Wal-Mart, who has done more than almost any other company in the world to enact serious green initiatives. True, they’ve done it for themselves, their own bottom line, and Wall Street— but still, they’ve done it. And if that’s the motivation they need to do it, then perhaps we should encourage that. Besides, if they were supposed to adopt a sudden conscience about their activities and rectify them, whose social goals are they supposed to strive for, anyway? Lots of different social factions have lots of different goals, and many of them have incompatible or actively contradictory goals.
For this reason, it seems fair to place the decision-making process in the hands of the public, through market forces. That allows a sort of collective decision-making process that is free from being regulated by “some guys on a board,” and allows for us to ostensibly have a shared voice in determining the direction that we take as a planet. Unfortunately, however, there are some problems that such market forces don’t resolve. For example, the economically well-endowed have a disproportionately large voice and thus the ability to unilaterally have a strong negative impact with their choices. And there’s still no guarantee that the aforementioned group will pay attention to social well-being if they’re still being held hostage by Wall Street demands. Free market economics as a means of regulation is dependent on not only market efficiency, but ethical, rational, and well-informed decision-making on the part of consumers— many of which are corporate entities.
But as consumers we are neither rational nor omniscient. We are sometimes ethical. But we can’t know everything about all the downstream effects of all our purchases at the time of purchase. This makes it pretty hard to argue the point that the market will be able to curb environmentally damaging business practices through selective consumption.
That may seem like a slam dunk for regulation, and many on the political left would love to see this happen. But it’s not that easy. The problem of regulation is complex, and it is difficult to enact regulation in a way that appears fair to everyone. Here’s the main problem: if there are regulations, who gets to call the shots?
Some might argue that we should use science to guide our regulatory policy, at least with regards to environmental concerns. But what science? Even science can have an agenda. The more you look into scientific research, the more you see how there is a chain of funding. Funding is a political process. People conducting research are subject to biases. No matter what the science says, or the preponderance of evidence suggesting one thing or another, when it comes down to drafting law, there will almost always be some arbitrary component about implementation (e.g. exactly how many tons of CO2 a company can release per year; exactly what chemicals a company can and can’t produce). And those people whose economic interests are being impinged will no more welcome the validity of the science or the arbitrary lines being drawn than a liberal would welcome Sarah Palin’s views if she was placed in charge of preserving endangered wildlife. Ultimately, any laws will be seen as political tools with embedded agendas.
Though it is debatable how much this might change corporate attitudes towards CSR, I think part of the fix is to change the nature of Wall Street. It does not serve companies or society to have such a heavy focus on short-term profitability. This structure denies companies the opportunity to act in ways that favor their own long-term efficiency, the public’s best interest, and the well-being of the planet. If companies didn’t have to keep impressing Wall Street, they could better take actions that could, over the long term, make their operations more efficient, streamlined, and less wasteful. That would be good for their bottom line and for environmental concerns. But that takes time, and it might require a few consecutive quarters of what may appear to be subpar financial performance. Right now, this is a highly risky strategy that most companies wouldn’t consider because they will not be rewarded for it.
Weirdly, even amidst all the talk about reform in the financial industry, I have not heard any talk about this. Admittedly, I’m not sure if anyone has worked out the details about how a “new and improved” stock market system would work, or if anyone has suggested a better set of economic incentives for waste reduction, but perhaps it’s time we started a national dialogue about it. It seems rather important.
Comment [12]
The Youthful Search for Authenticity
in which we borrow images to ‘forge’ ourselves
Posted Jul 16, 11:57 am in consumerism, culture, experiences, human nature, postmodernism, semiotics, unfinished thoughts
People of my generation despise authenticity, mostly because they’re all so envious of it.” – Chuck Klosterman, “Killing Yourself to Live”
The above passage is from a chapter of a book called “Killing Yourself to Live” in which music writer Chuck Klosterman discusses the Great White nightclub fire in Rhode Island a couple years ago, in which 100 people died due to a pyrotechnic mishap. Being that this was in a small, lower-middle-class town, the crowd was made up of blue-collar types who were actually (perhaps unbelievably) fans of the band. Klosterman was contrasting this audience profile with those of the many big city shows he’d been to where washed-up bands like Great White would play long after their primes to crowds half full of hipsters who were just there “ironically” so they could mock the music and scoff at those who were genuinely into it. Klosterman suggests that these hipsters scoff at these true-blue fans because they want to express being above liking things, because they can’t stand to be genuine.
The sentiment expressed in the quote is an interesting one, but I’d make a slight, but significant alteration; the word “despise” should really be “crave.” This, of course, renders the phrase a considerably more obvious one. Yet, for the most part, Klosterman’s observations resonate with me; I’ve noticed that people of our generation often have weirdly amorphous personalities and images, shifting wildly based on social circumstances and how those circumstances can be manipulated for social capital. Our generation seems fixated on self-awareness as its own virtue, and is highly obsessed with carefully controlling and crafting our images in the eyes of others through symbols whose meanings likely did not carry so much symbolic weight in identity construction just a few generations ago (clothes, vehicles, online personalities, musical taste, etc.).
Anyway, as I see it through Klosterman’s lens, the reason the indie kids of this generation can’t stand to be genuine is because they grew up entitled, in sheltered environments in which they never had to endure hardships. Their entire personas were cobbled together by borrowing images they liked, never borne organically from their own experiences. These images they adopt are never their own; they are fashion objects, constantly subject to the winds of change and shifting public opinion.
Because of the postmodern focus on image and its central import in identity, choosing images and consumer goods to be associated with are critically important decisions; no one wants to be associated with images that may turn out unfashionable or appear to suggest that a person is, in fact, a loser. Therefore, it’s easier to just reject them all (at least publicly), or to simply adopt them “ironically.” But clearly, we can’t be free of symbols entirely. The ubiquity of symbolism in nearly all consumer goods is an unavoidable byproduct of a post-modern era; everything we see forces us to think about “what kind of person would own that” and form schemas about these individuals.
Therefore, such individuals bitterly resent those whose life experiences are more “authentic” (read: difficult and uncomfortable) than their own, because such trying experiences are never unfashionable, and those who have endured them are never subjected to the plaguing self-aware scrutiny that everyone else has to deal with. Living through hardship engenders respect, never mockery. Thus, these entitled kids want nothing more than to have had some hardships— “grit” as Klosterman puts it— to confer them authenticity. There is nothing authentic, as these people see it, in their comfortable upbringings. Their lack of unmolded identity is a source of inner conflict because it forces them to constantly question their symbolic choices.
The ubiquity of multiplicities of divergent images, tropes, and cultures has given us license to treat our personalities like clothing that can be switched at will. On one hand, this allows a sense of psychological freedom to be whatever we want to be; but on the other hand, I think many people born into this postmodern world feel like they don’t have a “baseline” self that is grounded in anything that wasn’t calculatingly copied from something else they perceived as authentic or identity-conferring in a categorical sense (e.g. “punk”, “skater”, etc.).
There are some people who lead the way in cultural transformation, but they account only for a small fraction of individuals. Most of the rest are what academic and sociologist Doug Holt describes as “feeders”— basically, people who crave brushes with authenticity, and who just copy what the innovators are doing, often without the understanding of where those ideas came from. Since they can’t lay claim to the authenticity, having been deprived of the experiences that created them, they settle for the next best thing: adopting the symbols of it. And since the symbols are the easiest way for outsiders to categorize people (e.g. torn jeans and a mohawk means ‘punk’), that works out just fine for feeders.
This generation’s youth craves authenticity, but rarely one that they can have (that is, one they are genuinely entitled to through experience); it’s always someone else’s authenticity that they wish they could have.
But perhaps it’s not limited to youth; we engage in such activities largely as a means of arriving at a manufactured authenticity that constitutes our ‘image’ at any given point in time; the bevy of images we’ve been presented with for all our lives through media have, ironically, taught us not to want the real authentic with respect to ourselves, but instead to want something we can’t have, but which we can fake well enough to convince others. Our true self, it seems, can be manufactured through symbols.
Comment [10]
How to Self-Servingly Play to Cultural Anxieties and Tensions
the stories we tell can frame how we are perceived
Posted Jun 5, 11:02 am in human nature, unfinished thoughts
A couple of weeks ago, I was watching an interesting biopic called “Shattered Glass” about a disgraced journalist named Stephen Glass. Glass, who is a real person, worked in the late 90s for a number of high-profile magazines, including the New Republic, George, Harper’s and Rolling Stone.
Like Janet Cook before him and Jayson Blair after him, Glass was found to have substantially fabricated or outright made up stories that he submitted as factual. At least 27 stories that were published are now considered to be either partially or totally untrue. Another 14 stories are strongly suspected to be fraudulent. When fact checkers tried to substantiate his stories before they were published, the stories always checked out because Glass knew the fact checking process and how to subvert it. He was able to do this by forging notes, making fake websites, signing up for fake phone numbers for sources, and employing friends and relatives to pretend to be persons interviewed.
When Glass was exposed, it was because pieces of a story he had written about a 15 year old hacker who was bringing a big software company to its knees just wasn’t checking out; a writer from a competing magazine was not able to locate the company or hacker in question, and brought it to the attention of Chuck Lane, Glass’s editor. Glass apparently never confessed to fabrication at the time, but he was nonetheless fired from The New Republic, and his shameful story became national news. Glass lost his name, his status, and his career; he was forced into relative seclusion and will possibly live out his days in disgrace.
But as I considered this depressing tale of deceit, I realized that things didn’t have to end this way for Glass at all. In a way, Glass’s contrition and subsequent silence was really what cemented the public reaction to him. Sure, no one considered him a hero— not that they necessarily should have; after all, he was a manipulator whose actions were couched in a desire to be accepted and admired by his peers, and whose values made a mockery of journalistic integrity.
Unfortunately for Glass’s career (and possibly for the public**), he went on the record to say that the reason he did the things he did was to be loved and respected by others, not to demonstrate the media’s obsessive and reckless pursuit of sensational stories. But had he spun his story to play into the cultural anxieties about the mainstream media, the public’s perception of Stephen Glass may have been completely different.
Suppose for a minute that instead of acting shamed, Glass embraced his actions, flaunting what he did, and effectively screaming “NYAH NYAH, I TRICKED THE SMARTEST PEOPLE IN THE WORLD!” Say he went on all kinds of talk shows and did a barrage of magazine interviews promoting how it was all a giant prank played at the expense of some of the biggest movers and shakers in the country. I would expect that rather than being cast as some kind of deranged sociopath, Glass would instead be heralded as a sort of vigilante folk-hero who finally knocked the elitist media from their pedestals. And, I think, he’d probably get his own talk show, book deals*, and new career as a media pundit.
Currently, the pages of Digg and Reddit are filled with venom towards mainstream media outlets; in fact, so acrimonious is the attitude towards the mainstream media in these outlets that the derisive acronym MSM is used regularly without explanation, and it almost always has a very negative connotation. Stories from independent news sources and blogs about mainstream media failures (underreporting, overreporting, sensationalization, misreporting, etc.) are quite popular, and get a lot of play on these outlets. Glass would have been a hero to people whose attitudes towards mainstream media exhibited distrust, anger, and dismissiveness. This Glass guy played them all for fools.
Think about the difference in reactions of Bill Clinton and Barack Obama when each was asked about their youthful marijuana usage. Clinton, thinking about the implications on his political career, attempted to dodge: “I didn’t like it [so] I didn’t inhale.” Obama, by contrast, said, “I inhaled. Frequently. That was the point.” One of these responses caters to the mainstream opinion on the issue; drugs are bad, and anyone who does them is not a morally sound individual. On paper, you would expect this to be the one that went over well. But the other plays to the cultural tensions of people constantly having to put on masks and pretend to be people that they aren’t, and to abide by the diffuse moral standards of society. And moreover, it plays to the tiredness of people towards slippery, hypocritical politicians.
In both of these cases, which of the stories is more culturally salient, and better addresses the unvoiced frustrations of everyday people?
Just a thought.
*Glass actually did get a book deal at the time; he received a reported six-figure advance for his “novel” The Fabulist, which is essentially an autobiography (the main character’s name is Stephen Glass and he is a journalist who makes stuff up and gets caught doing it). The book suffered from poor reviews.
**Despite the fact that his actions were not part of a grand plot to demonstrate the fallibility of the print media, saying it was might have had some kind of positive impact on how the media perceived itself and how it might have taken action to avoid future incidents of a similar nature.