Corporate Boys Will Be Boys
Like any other human construction, Economics is not infallible. It assumes that human nature is characterised fundamentally by self-interest, which has implications on all social processes. It compels policy-makers to take for granted that corporations and governments will place profits and growth over long-term global sustainability and social responsibility. This complacency with corporate moral indolence first created and now fuels a culture of unaccountability.
Narratives shape us. A student studying at Plato’s Academy would not have the same notion of human rights as a student studying at Ashoka University today. Even in the same epoch, an Art Historian and a Philosopher would look at the world through vastly differing lenses.
The questions we are compelled to ask ourselves on a daily basis are dictated by the narratives around us. And these questions play an invaluable role in tracing for us the lines within which we think.
Of course, there are overlaps. But it is fascinating to note the influence of different narratives on varied approaches used to answer the same question.
On 17th and 18th September 2018, I attended the International Conference for Sustainable Trade and Standards (ICSTS) in Delhi. High-level plenaries and panels discussed the implementation of Sustainable Development Goals (SDGs). Notable parties included the Quality Council of India, Roundtable on Sustainable Palm Oil, the World Trade Organisation, ISEAL Alliance, IKEA, the World Wildlife Fund, and the United Nations Conference on Trade and Development.
The dignitaries at the conference were mostly in consensus on the general principles of sustainability. In fact, much of the first day was spent agreeing with one another that sustainable development was necessary.
The conference witnessed an exchange of answers from different narratives, highlighting the massive implications they have on the functioning of international society at large.
Manoj Bhatt (Country Director, GoodWeave India) made a fervent instruction that the time had come for consumers to step up and demand that corporates produced sustainably.
He implied that corporations would be profit-maximisers regardless of the hazardous consequences of their techniques. However, he also opined that assuming all corporations were immoral was fallacious. But by emphasizing that governments would not crack down heavily on immoral corporations if it meant losing business to another country, he took for granted that economic actors were profit-maximisers over moral actors.
Thus, his solutions for sustainable development were focused on mobilising the consumer to be a responsible global citizen; the world community must consciously incentivise corporations to produce sustainably. There was no mention of corporations having an inherent moral responsibility to the global community from whom they reap their benefits.
This narrative sounded familiar to me. In conversations with students of Economics about questions of corporate morality and income inequality, I have invariably found that two assumptions are implicit:
(1) That the current economic order is natural and inherent in human nature. (2) Consequently, large-scale actors are profit-maximisers and cannot be expected to privilege moral responsibility over increased profits without incentives.
A Roundabout Solution
The argument is an admission that demand can be influenced. Engela Schlemmer (Professor of Law, University of Witwatersrand) pointed out that Economics tends to characterise consumers as sovereign thinkers. And yet, it so happens that very often, a consumer’s demand depends on what the market makes them believe they need.
Take the fashion industry for instance. Big fashion corporates spend significantly on marketing new trends to customers, then immediately switching to newer trends. Through effective advertising, the corporation brings the consumer to believe they require the latest product.
To truly make consumption rather than production sustainability, it will have to be done by controlling advertising. This doesn’t just mean billboards & commercials but all visual media & celebrity culture. Consumers will have to be protected from manufactured needs through law & policy changes, which don’t come cheap. Moreover, buying advertising pits small-scale sustainable organisations against larger, mass-producing corporations, with the victorious one being those with the most funds.
Thus, working to make consumption rather than production sustainable does not sound like an efficient way to go.
The Economic Narrative — Assumed Inherence
Leaving aside practicality, the moral implications of the aforementioned Economic narrative itself are noteworthy. To those used to thinking within the questions Economics asks, this seems misleadingly logical.
The subject, as it is taught today, has been constructed around the contemporary market. For example, factoring land into production equations assumes individuals can own land. Similarly, factoring labour into production equations assumes labour can be bought and sold. These lead to the false notions that there can be no economic functioning independent of the land-ownership and/or the sale of labour i.e. that owning land and/or selling labour are natural and inevitable human conditions rather than particulars of only the current economic order. Such assumptions form the very foundation of Economic rationale today, thus becoming a narrative of assumed inherence.
Similarly, the assumption that profits naturally trump morality is a product of this narrative, thus not inherent and inevitable.
Humans do not inherently function the way the present economic order requires; rather, the market plays an insurmountable role in shaping human behaviour. Hence, while the claim that large-scale producers today function primarily as profit-maximisers may hold true, it doesn’t follow that such is inevitable. Economic actions are cultural & culture is malleable.
In the world outside classrooms, the assumptions that buttress Economics as a discipline have trickled into the way we structure our societies at large. The analysis of any social issue today at the policy level depends on economic principles and models. Adhering to the narrative of assumed inherence, stakeholders of national and international policy do not question the low importance of morality in corporate strategy.
Take the recent example of Formosa in Texas, with the international community essentially allowing the corporation to continue business undisturbed. At the conference, Joseph Wozniak blamed such inaction on the fear that corporations wouldn’t agree to adhere to sustainability standards at all if there was a risk of penalty.
Appeasement and moderation are the languages in which international authorities negotiate with corporations — sustainability standards must be made palatable to these corporations for the fear that they may refuse to cooperate entirely. This then, begs the question: Is CSR really mandatory?
A Narrative of Responsibility
The attendees of the conference — high-level dignitaries responsible for shaping our world — repeatedly implied these assumptions. Shamira Manwar (Director, International Justice Mission), for instance, praised companies such as Tata and Birla for living up to their Corporate Social responsibility (CSR). She cited the example of a European manufacturing corporation working proactively against exploitative labour, and made sure to emphasize how pleasantly surprised she was at this “gesture”. ‘Corporate Social Benediction’ would be a more appropriate term for the concept, given this attitude.
Corporations do not do the world a favour by not exploiting labour, by ensuring future generations have fuel, by contributing towards gender equality. They use resources that belong to the global community and their labour and revenue come from the same. Reciprocity in this equation mustn’t be treated as a “gift” but an obligation.
We need to treat corporations like we treat children.
We instill values and morality in little ones from the very moment they can understand language. For instance, we don’t let children run wild saying, “We’ll look into it if they ever hit someone.” Neither do we laud children who don’t go around hitting others. Children are supposed to keep their hands to themselves; it’s their duty.
Changing the Narrative
It is impractical to pool all resources towards changing our assumptions of human behaviour while ignoring necessary short-term corollary parts of the solution. These include encouraging Voluntary Sustainability Standards (VSS) as well as incentivising sustainable practices through certification and public awareness campaigns.
It is important to remember that narratives don’t change overnight, and the shift will not be easy; this is a long-term goal and not a stand-alone solution.
The concept of sustainability is, of course, far too nuanced to be resolved by one article. Factors such as SME involvement, tax havens, and lack of transparency have been omitted from this article for the lack of scope but remain integral factors to the discussion. A holistic debate will require years of discussion on all possible forums and concrete action on the part of large-scale economic actors.
But perhaps a good place to start is to locate the problem. Thus far, Economics has produced a narrative complacent with self-interest maximisation. Given the dire need for sustainable production practices, it is imperative that all stakeholders now engender a culture of collective social responsibility.
Originally published at https://thebastion.co.in/ in October, 2018.
