CSR is becoming a series of empty buzzwords

The 'good business' brigade needs to stop ducking difficult issues if it wants to knock capitalism into shape, says Matthew Taylor.

by Matthew Taylor
Last Updated: 09 Feb 2016

This article may be self-harming. From time to time I earn a little holiday money by chairing events on corporate social responsibility (CSR) for large companies. Also, the RSA, the organisation I run, occasionally benefits from such companies giving financial support for our broadly progressive work. So it's almost certainly a very bad idea for me to point out that the whole good business narrative is looking increasingly unconvincing.

Thomas Huxley once apologised for 'the slaying of a beautiful hypothesis by an ugly fact'. The problem for CSR is the evidence. The last few years have provided an arsenal of ammunition for class warriors. So here's my top five reasons to become an anti-capitalist in 2016.

The global financial crisis: We are still suffering from the after-effects of the 2008 crash while at the same time drifting back into similar asset bubble conditions that gave rise to it. Financial capitalism in particular seems neither able nor willing to change.

Gross inequality: I am writing this article on the day the High Pay Centre has rather niftily designated 'Fat Cat Tuesday'. By the end of the day, the average FTSE 100 executive will have already have earned the same in 2016 as the average UK worker will receive by 31 December. This is just one example of the trend of the top 1% breaking free from the rest.

Class oppression: Growing inequality reflects the fact that over the past 25 years the proportion of company earnings that go in executive pay and shareholder dividends has risen, while the proportion going to wages has fallen substantially. Economists now increasingly agree it is this, rather than the effect of technology or trade, that has led to stagnant living standards in countries like the US and UK.

Corporate tax dodging: Regardless of public opinion most of our major corporations - and especially those hip dudes in Silicon Valley - use all their financial skills and their political lobbying power to make sure they don't have to make a fair contribution to public revenues.

Monopoly power is back: In fact it never really went away. Despite the best attempts of Milton Friedman et al - the evidence that excessive market power is rife and that it damages the interests of consumers is steadily growing. Arguably, the world has never seen corporations with the global financial and political power of the likes of Google, Amazon and Apple, not to mention the fast-rising new kids like Uber and Airbnb. And, as the esteemed George Akerlof and Robert Shiller point out in their recent book, Phishing for Phools, for large parts of capitalism fleecing the customer is the business model.

I challenge you to read this list and then feel reassured by the next corporate leader talking about his commitment to generate profit by making the world a better place. The gulf between rhetoric and reality isn't so much yawning as screaming. And there's the rub.

There is a perfectly intellectually defensible argument that acknowledges my five points but counters them by saying that over the long run capitalism is by far the most effective way the world has ever found to make itself happier, richer and healthier. Even the majority of employees in developed countries, who have seen little or no improvements in their incomes over recent decades, can now utilise the wonders of technology to open up opportunities undreamt of by their parents. 'Yes,' so this argument goes, 'if capitalism is free it can be ugly, stupid and selfish but without that freedom we'd still be living in wooden huts and dying at 40.'

No wonder politics in so many countries is polarising. The anti-capitalists and the red-in-tooth-and-claw capitalists have the best arguments, while those of us who espouse the virtues of a kinder, gentler type of business bob around in a becalmed sea of warm words. What makes it worse is that instead of being honest about how weak the good business arguments are, we spend most of our energies finding ever smaller differences to distinguish one CSR approach from another. A day doesn't go by without a new initiative being unveiled combining the word 'business' with buzzwords like 'ethical', 'responsible', 'caring', 'sustainable', 'sharing', 'bloody adorable' (yes, alright, I made up the last one).

Yet having said all of this and despite the fact that some CSR events - including ones I have chaired - make me want to bite my own face, we have no choice but to keep at it. Like that great old Marxist Antonio Gramsci said to his Italian followers, we must combine 'pessimism of the intellect with optimism of the will'.

But can we please try a little harder? The responsible business community spends so much time talking to itself, it is convinced it is winning the argument. But we aren't. Instead of ducking the hard questions such as executive pay, tax dodging, unsustainable consumption and the sheer dysfunctionality of most massive corporate bureaucracies (Volkswagen anyone?), we need to own them. Making progress on capitalism's sinful issues is harder than the anti-capitalists claim but more necessary and urgent than free market fundamentalists admit.

So, I'm still available (at a reasonable fee) to chair CSR events but - and capitalism, this really is for your own good - now the gloves are off.

Matthew Taylor is chief executive of the RSA. Follow him on Twitter: @RSAMatthew

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