Saturday, May 16, 2015

The changing priorities of corporations

John Kay makes an insightful point,
The good corporation — like the good smartphone or the good school — can be identified by what it achieves. It pays workers a living wage; it does not engage in aggressive tax avoidance. It develops the skills and capabilities of its employees and does not bewilder customers with complex tariff structures. It earns profits, reinvests some and pays a dividend to shareholders. Its executives spend more time walking around offices and shop floors than sitting in the meeting rooms of investment banks. The good corporation contributes relevant expertise to the formation of policy but does not engage in lobbying on a scale that corrupts political decision-making.
The political and social legitimacy of the market economy, and of the corporations through which it functions, cannot simply be asserted — as it has been in the market-fundamentalist rhetoric that has dominated economic policy for the past three decades. Its legitimacy has to be earned by the behaviour of the leading economic institutions. That social contract has too often been broken in recent years. And drawing attention to that breach, and the measures needed to regain trust, is an agenda that is not hostile but rather friendly to the long-term interests of the business community.
There may be a point about social internalization here. Each of those priorities indicated above - tax avoidance, confusing customers with complex tariff structures, gambling with financial products, lobbying that verges on corrupt deal-making, and so on - would have been considered outright illegal two or three decades back. Today, they are all accepted as integral to a business enterprise. In fact, the interpretation of tax non-compliance by drawing the distinction between tax evasion and tax avoidance is itself a recent phenomenon. 

I am not very optimistic about whether we can do much to realign our social moral compass. But merely being aware of this insight when taking decisions or positions on various issues can itself help us take a more balanced view of such issues. 

No comments: