Nowadays, it became a commonplace practice among many large companies in the West, to take pride in having incorporated the concept of Corporate Social Responsibility (CSR) into the very core of their operational philosophy. This practice, however, cannot be deemed thoroughly justified, because the main conceptual provisions of CSR happened to be utterly inconsistent with the foremost principles of the functioning of a free-market economy. In my paper, I will explore the validity of this suggestion at length, while promoting the idea that CRS is indeed best defined as not merely another form of PR, but also as something that is meant to divert people’s attention from the process of transnational corporations trying to take over the political power in Western countries.
As of today, there is no universally accepted definition of CSR. Nevertheless, just about every provided definition is based upon the assumption that, while striving to remain commercially competitive, businesses should proceed with reaching this particular objective in the thoroughly ethical and socially beneficial manner. For example, according to Reder, “An all-encompassing notion, corporate social responsibility refers to both the way a company conducts its internal operations, including the way it treats its workforce, and its impact on the world around it” (1994, p. 5). The main theoretical premise of CSR is that, by choosing in favour of conducting their operations in the socially responsible (ethical/environmentally friendly) way, companies are able to contribute towards increasing the rate of these operations’ long-term commercial sustainability. In its turn, this premise reflects the idea that, due to being rational agents, both: the affiliates/owners of a particular commercial company, on one hand, and the rest of community members, on the other, are equally interested in ensuring the long-term sustainability of their shared environmental niche. Hence, the main postulate of CSR – social welfare and corporate profitability are not only closely interrelated, but they in fact derive out of each other.
However, once subjected to a critical inquiry, the concept of CSR will appear being deprived of any rationale, whatsoever. The main reason for this is that the very idea that a particular company should benefit from investing in social projects, as the mean of proving itself a socially responsible commercial entity, contradicts the fact that, as of today, the debt-burdened economies of Western countries (particularly of the U.S.) become increasingly stagnant and vulnerable to financial crises. Such a development was bound to occur because, despite the fact that there were no any objective preconditions for this to be taking place, for the duration of the last few decades, the standards of living in the West continued to rise. In its turn, this was accomplished by the mean of prompting people/companies to apply for cheap loans. The cheapness of these loans, however, was nothing but the direct consequence of the fact that, throughout the same period, banks continued to increase the amount of ‘derivatives’ (financial contracts between two parties, backed by the financial obligations of the third party) in circulation. This created a paradoxical situation – while the individual risks of banks continued to be lowered, the overall risk for the whole economic system to lose its stability, kept on growing ever more heightened (Benatar, Gill & Bakker 2011).
The process culminated in 2008 – the year that marked the beginning of the worldwide financial crisis, which continues to gain a momentum even today (although in the somewhat subtle form). What it means is that the interest rate-‘fuelled’ economy of the West, as we know it, simply does not have any sustainable future, by definition – something that can be illustrated in regards to the fact that, as of 2014, the U.S. budget deficit has reached staggering $18 trillion. Given the fact that the main purpose of just about any commercial organisation is to generate profits, and the fact that, due to the above-mentioned, it is specifically the short-term commercial objectives that are now being now considered the only legitimate ones by most businesses, the concept of CSR cannot be referred to as such that holds much water. In this respect, we can only agree with Doane, who pointed out that, “Investments (in CSR) are particularly unlikely to pay off in the two- to four-year time horizon that public companies, through demands of the stock market, often seem to require… investments in things like the environment or social causes become a luxury” (2005, p. 25). Moreover, there is no good rationale to believe that the situation, in this respect, will improve any time soon. The reason for this is that, due to the on-going process of outsourcing, the actual generation of wealth has now been relegated to the Second and Third world countries, which in turn renders more and more people in the West nothing but a ‘social burden’ – even if they happened to be formally employed. Consequently, this exposes the fallaciousness of the very idea that it would be possible to turn Western countries into ‘welfare states’ in the future – without wealth, there can be no ‘welfare states’. Yet, it is specifically this idea that continues to serve as the conceptual justification for the adoption of CSR by companies/organisations (Aiginger 2006).
As it was implied earlier, yet another important fallacy of those who promote CSR, is concerned with these people’s insistence that there is a positive correlation between corporate wealth, on one hand, and social welfare, on the other. If anything, it is rather the other way around. The validity of this statement can be illustrated, in regards to yet another country, which with the help of the U.S. Department of State, adopted neo-Liberalism, as the theoretic foundation for the economy’s continual development – Ukraine. A few Ukrainian oligarchs own about 95% of the country’s economy, with the overwhelming majority of Ukrainians continuing to live in the state of extreme poverty. The reason why these oligarchs are not being in any rush to invest in social projects, is that from their perspective, this does not make any logical sense. Why bother, if there are too many ‘unnecessary’ people in this country, as it is, and if there are no governmentally enforced regulations, in respect to how businesses should go about contributing to these people’s welfare? Therefore, contrary to the provisions of CSR, Ukraine’s oligarchs are not being concerned with strengthening the country’s social infrastructure. Instead, they preoccupy themselves with organising their own private armies – in full accordance with the main principles of how the deregulated free-market economy operates.
What also does not allow us to refer to CSR in terms of a well-thought-out policy, is that the concept in question may be subjected to many different and even mutually contradicting interpretations. After all, it will not be much of an exaggeration to suggest that there can be as many definitions of what the term ‘responsibility’ stands for, as there are people in this earth. However, as we are being well aware of, the main precondition for the process of organisational change to prove successful, is one’s clear understanding of what will account for the whole scope of consequences, triggered by the adoption of CSR. The smaller is the role of interpretation, within the context of how the would-be deployed policies are being designed, the higher is the likelihood for the deployment of these policies to prove an asset. This allows us to come up with yet another explanation to the fact that, despite being essentially deprived of any rationale, whatsoever, GSR continues to be referred to as a thoroughly appropriate approach to increasing the operational effectiveness of companies/organisations – the concerned policy provides a legal cover for the tax-evasion forms of organisational corruption. This suggestion is consistent with the findings of many empirical studies, which aimed to assess the commonly overlooked effects of CSR, such as that of Hoi, Wu and Zhang. According to the authors, “Using a large sample of U.S. public firms over the period 2003–2009, we find that firms with… excessive irresponsible CSR activities in a given year, have a higher probability of engaging in tax sheltering” (2013, p. 2027). Therefore, the adoption of CSR by companies and organisations does make a certain sense, which, however differs rather drastically from the originally intended one.
Finally, the fact that the concept of CSR is not discursively legitimate can be shown, in relation to this concept’s yet another important postulate, concerned with the assumption that, in order to prove a success, the adoption of CSR (as one of the operational principles of business) should appeal to both: producers and consumers. The surrounding socio-economic reality, however, points out to something opposite. Specifically, to the fact that, contrary to what the promoters of CSR claim it to be the case, the idea of sustainable (ethical) consumption has very little to do with the de facto realities of modern living. After all, as the relevant statistical data indicates, when it comes to buying a particular item, most people do not bother with making any ethical inquiries into what were the qualitative aspects of this item’s production. As Carrigan and de Pelsmacker noted, “Consumers worldwide resist giving up what they feel to be either an established high quality of life, or the promise of one, and this is not helped when choices are presented by some sectors of the media in a stark ‘either-or’ scenario between the benefits of modern life or saving the planet” (2009, p. 684). This simply could not be otherwise – the most fundamental laws of economics predetermine the continuation of the described state of affairs. Therefore, rather than being a practically applicable principle of business, CSR is in fact more of a pretentiously sophisticate buzzword. It is definitely not what this concept’s promoters would like us to think of it.
This, of course, raises a legitimate question – if the very conceptual premise of CSR is utterly fallacious, then how come this practice continues to be praised, as something that is indeed being capable of turning this planet into a better place to live? The answer to this question can be formulated as follows: CSR is nothing but just another form of PR, which along with being deployed by companies/organisations, in order to improve their public image, also serves as the justification for the advocates of neo-Liberalism to persist with promoting the idea that there should be no governmental control over the functioning of businesses. In it is understood, of course, that the majority of ordinary citizens will never consider this idea even slightly appealing. The reason for this is that these people intuitively know that there can be no limits to one’s irrational sense of greed and that, when allowed to operate in the ‘self-regulative’ mode, privately owned companies will necessarily end up aspiring to attain a monopoly, and to consequently become thoroughly unaccountable, in the social sense of this word.
The realities of today’s living are fully consistent with the latter prediction, “It is becoming clear that the neo-Liberal model of economic development with its roots in globalisation of capitalism, is the cause of ever-more out-of-control consequences – on one hand, the accumulation of capital by only a few, and high unemployment and severe poverty, on the other” (Golob, Podnar & Lah 2009, p. 626). Therefore, in order to put a ‘friendly face’ on the process of private businesses becoming the masters of their own, which in turn results in the lowering of living standards within the society, the advocates of neo-Liberalism came up with the idea of CSR. This, of course, once again suggests that CSR cannot be discussed in terms of a ‘thing in itself’ – rather it should be discussed as the form of PR. Moreover, as practice indicates, the practical implementation of this particular form of PR often proves detrimental to the overall well-being of the society, in which CSR-practicing companies operate.
To illustrate the validity of this suggestion, we can refer to the recent CSR-based campaign to raise funds for a number of charitable organisations in Dublin, Ireland, initiated by one of Britain’s main grocery-retailers – Tesco PLC. The idea was to encourage customers to provide the company with their own considerations, as to how Tesco is supposed to share money between the charities in question. The technical aspect of the process involved customers casting blue tokens (provided upon a purchase) into the box, assigned to each of these charities, “Every six weeks the Tesco branch will divide €1,000 between the three charities according to how many blue tokens they have in their pot” (Lord 2014, p. 1). This did allow Tesco to increase with the rate of its popularity with its loyal customers and to expand the boundaries of its customer-base even further. At the same time, however, the society sustained much harm from the fact that, as it was revealed later, it was namely the animal shelter, which received the largest amount of money, whereas, the shelter for homeless women has fallen way behind, in this respect. In its turn, this contributed rather substantially to the process of needy people being increasingly dehumanised in the eyes of ordinary citizens – something that can hardly be considered beneficial to the strengthening the society’s structural integrity.
Because the integration of CSR into the company’s operational philosophy is always expected to yield only the positive results, Tesco’s experiment with ‘charity tokens’ cannot be discussed within the notion’s theoretical framework. Instead, it should be defined as merely the element of the deployed PR-strategy, on the part of Tesco
Before concluding this paper, we will need to summarise its main discursive claims, which have been substantiated throughout the paper’s entirety. They are as follows:
- The concept of CSR stands in opposition to the most fundamental principles of economy. The main of them stresses out that there can be no other discursively legitimate business-objectives, but the ones solely concerned with the generation of profit.
- CSR cannot be what it claims to be, because the hypothetical benefits of the integration of this practice into the company’s corporate culture can only become apparent in the long-term perspective. However, in times of economic uncertainty (as it happened to be the case nowadays), it is specifically the ensuring of its short-term competitiveness, which becomes the main focus of just about any business.
- As of today, the concept of CSR serves mainly the purpose of allowing large businesses to divert people’s attention from the actual issues of substance, within the context of how these businesses operate. In this respect, CSR can be best defined as the emotionally charged propaganda-strategy for justifying the exploitative realities of Capitalism. That is, CSR is indeed the form of PR.
I believe that the earlier deployed line of argumentation, in regards to the discussed subject matter, is fully consistent with this paper’s initial thesis. Apparently, CSR is best described in terms of an artificially created and maintained myth, which is there to help legitimising the main conventions of neo-Liberalism that promote the complete deregulation of economy in the West and in other parts of the world, where Western countries happened to have their geopolitical interests.
References
Aiginger, K 2006, ‘Competitiveness: from a dangerous obsession to a welfare creating ability with positive externalities’, Journal of Industry, Competition and Trade, vol. 6, no. 10, pp. 161–177.
Benatar, S, Gill, S & Bakker, I 2011, ‘Global health and the global economic crisis’, American Journal of Public Health, vol. 101, no. 4, pp. 646-653.
Carrigan, M & de Pelsmacker, P 2009, ‘Will ethical consumers sustain their values in the global credit crunch?’, International Marketing Review, vol. 26, no. 6, pp. 674-687.
Doane, D 2005, ‘The myth of CSR’, Stanford Social Innovation Review, vol. 3, no. 3, pp. 23-29.
Golob, U, Podnar, K & Lah, M 2009, ‘Social economy and social responsibility: alternatives to global anarchy of neoliberalism?’, International Journal of Social Economics, vol. 36, no. 5, pp. 626-640.
Hoi, C, Wu, Q & Zhang, H 2013, ‘Is Corporate Social Responsibility (CSR) associated with tax avoidance? Evidence from irresponsible CSR activities’, Accounting Review, vol. 88, no. 6, pp. 2025-2059.
Lord, S 2014, Tesco and the myth of corporate social responsibility, Web.
Reder, A 1994, In pursuit of principle and profit: business success through social responsibility, Putnam, New York.