Liberalism as an economic thought has a relatively new history compared to other schools. Even though the financial crisis of 2007 was what brought a new wave of attention to liberalism, it can be traced back as far as Victorian times (Davies, 2014). However, neoliberalism differs from the original liberalism in several aspects. The main distinction is that the state is expected to be a real force, imposing specific ethical rules on the market instead of just relying on it. The 2008 crisis brought some serious concerns regarding the future of neoliberalism, and Lachmann (2016) states that neoliberalism might “turn out to have been just a short episode in the long history of capitalism” (p. 5). One of the reasons for that is that liberalism is not seen as a democratic force in politics (Crouch et al., 2016). Therefore, several scholars believe neoliberalism is losing its’ position.
However, some researchers see the benefit of business to society. In their work on corporate social responsibility, the Center for ethical business cultures (2010) suggests that free-market results in economic prosperity and political freedoms. There are four main types of CSR theories: instrumental, political, integrative, and ethical (Garriga and Melè 2004). However, Garriga and Melè (2004) also argue that those four types are interlinked, and academics need to develop a new theory to connect them. According to Carroll (2003), CSR’s four principal dogmas: companies must be profitable, obey the law, be ethically responsible, and be philanthropical. In the same work, the author concludes that it is beneficial for a business to comply with the law, be charitable and follow ethics (Carroll, 2003).
Some scholars are not as optimistic in their views on CSR. For example, Banerjee (2008) notices that most modern companies and businesses are more interested in their obligation to stakeholders than society. In another work, Banerjee (2014) also states that it is unrealistic to expect companies to strive towards socially significant improvements because it can often be contradictory to their financial interests. While corporate social responsibility theory tries to justify business by stating that it may be helpful to society, such a claim is not always realistic.
It is vital to discuss the influence of stakeholders on a company’s policy and decision-making. As mentioned above, there is an idea that companies are more obliged to their shareholders than to the public. There are several arguments in favor of such an approach. First of all, Kaler (2006) says that stakeholders in a way own a company, and serving public interests would violate property rights. Another argument is economic efficiency, which increases if a company is only obliged to stakeholders (Kaler, 2006). However, there are objections to both of those arguments. The first one is whether or not shareholders own companies; the second one is that the second argument does not consider customer loyalty, community support, and some other factors (Kaler, 2006).
When talking about CSR, it is also essential to mention the role of CSR consultants. In their work, Brès and Gond (2014) say that consultants play three main roles: “social and environmental issues translators,” “market boundary negotiators,” and “responsive regulations enactors” (p. 1358). The first type of consultant observes the public and social movements to help companies form their policy (Bres & Gond, 2014). As boundary negotiators, they shift boundaries to protect a company or increase its influence (Bres and Gond, 2014). Regarding the responsive regulations enactor’s role, Bres and Gond (2014) say that “consultants may play a central role in the enactment of regulations and shape the socio-cultural regulative environment of corporations through a variety of processes” (p. 27).
Good examples of how CSR forms the image of an organization are WTO and IMF. In an essay on these two organizations, Chorev and Babb (2009) state that WTO is more likely to still play a role in the international economy than the IMF in the current neoliberal crisis. He argues that this is likely to happen thanks to the organization’s equal representation strategy (Chorev & Babb, 2009). On the other hand, Ostry et al. (2016) state that IMF is the most concerned with the neoliberal agenda and where it might lead.
Another aspect important for establishing a company’s reputation is its reports to investors. Corporate reporting is what allows investors to make an opinion regarding a company and decide whether they want to invest in it or not. In work on integrated reporting, Dumay et al. (2016) argue that it requires some harmonization, meaning that reporting processes should become more transparent. This is because, at present, the public is becoming more concerned about whether it is suitable for companies only to seek profit.
Finally, the last point regarding organizations and the neoliberal crisis are global problems, such as poverty, human rights, and climate change. In a paper on sustainable development, Rockström et al. (2013) suggest that the most likely scenario countries will be developing is “business as usual” (p. 5). It means that states will compete for limited resources while not paying much attention to planetary boundaries (Rockström et al., 2013). However, sometimes a state’s policy is limited by international business. A good example is Australia which introduced a carbon tax, which led to significant confusion in the global market (Kumar et al., 2020). This case explains why business is often somewhat hesitant to adopt new policies regarding climate.
To conclude, liberalism is an economic school with a lot of influence on the modern economy. It also provokes arguments in the international community regarding the role of the state in limited companies and the role of international organizations, such as IMF and WTO, in guiding world trade. One of the biggest concerns is how the lack of restrictions may affect global problems, especially climate change.
References
Banerjee, S. B. (2008). Corporate social responsibility: The good, the bad and the ugly. Critical Sociology, 34(1), 51–79.
Banerjee, S. B. (2014). A critical perspective on corporate social responsibility: Towards a global governance framework. Critical perspectives on international business.
Brès, L., & Gond, J. P. (2014). The visible hand of consultants in the construction of the markets for virtue: Translating issues, negotiating boundaries and enacting responsive regulations. Human Relations, 67(11), 1347-1382.
Carroll, Archie. (2003). The Four Faces of Corporate Citizenship. Business and Society Review. 100. 1-7.
Center for ethical business cultures. (2010). Corporate social responsibility – The shape of a History, 1945-2004
Chorev, N., & Babb, S. (2009). The crisis of neoliberalism and the future of international institutions: A comparison of the IMF and the WTO. Theory and Society, 38(5), 459-484.
Crouch, C., Porta, D. D., & Streeck, W. (2016). Democracy in neoliberalism?. Anthropological Theory, 16(4), 497-512.
Davies, W. (2014). Neoliberalism: A bibliographic review. Theory, Culture & Society, 31(7-8), 309-317.
Dumay, J., Bernardi, C., Guthrie, J., & Demartini, P. (2016, September). Integrated reporting: A structured literature review. In Accounting forum (Vol. 40, No. 3, pp. 166-185). Elsevier.
Garriga, E., & Melé, D. (2004). Corporate social responsibility theories: Mapping the territory. Journal of Business Ethics, 53(1), 51-71.
Kaler, J. (2006). Evaluating stakeholder theory. Journal of Business Ethics, 69(3), 249-268.
Kumar, S. S., Banerjee, B., de Paiva Duarte, F., & Dadich, A. (2020). The business–government nexus: Impact of government actions and legislation on business responses to climate change. Journal of Management & Organization, 26(6), 952-974.
Lachmann, R. (2016). Crisis of Neoliberalism, Crisis of the World?. University of Albany.
Ostry, J. D., Loungani, P., & Furceri, D. (2016). Neoliberalism: Oversold?-Instead of delivering growth, some neoliberal policies have increased inequality, in turn jeopardizing durable expansion. Finance & Development, 53(002).
Rockström, J., Sachs, J. D., Öhman, M. C., & Schmidt-Traub, G. (2013). Sustainable development and planetary boundaries. Sustainable Development Solutions Network.