You are on page 1of 10

^Chapter 15 Socially Responsible Capitalism (SRC)

and Globalization

_______________Warren Lucas, Mohit Mamudi, and Kooros Mahmoudi

A. INTRODUCTION

As the world population has now surpassed the six and one-half
billion human beings, it is increasingly apparent that our social and
economic activities are having an adverse effect on the planet’s natural
resources and its ecological integrity. It is now clear that in order for our
societies to maintain a balance between our demand for goods and
services, our ability to deliver these goods to consumers at affordable
prices, and maintain the systems of production, distribution and
consumption, we need to address environmental degradation issues
regarding our planetary system. Yet, the drive for growth is constantly
pushing the developing and developed nations alike towards more of the
same practices that have brought us to this point, in particular since the
industrial revolution.

Societies in all parts of the globe need greater knowledge bases and
better understanding of what impacts human beings will be having on
various ecosystems as a result of their economic activities. Whether such
activities are purely at a rudimentary sustenance level, or they reflect
substantially affluent life styles, or aspiration to more affluent life styles,
there are ecological consequences for irresponsible and wasteful
economic activities with so many stakeholders involved.

In this paper, we discuss Corporate Social Responsibility (CSR), in


the context of Socially Responsible Capitalism (SRC), within an ecological
model sensitive to resource management and use, and yet, committed to
enhancement of the quality of life for the less privileged societies. We will
also note moral issues of fair play in assessing the impact of our actions
upon the intricacies of ecological systems that make our existence,
survival, and longevity possible.

The premise of SRC (Mamudi 2006) is to elevate the concept of the social
responsibility of business, from the narrow definition within the
corporate environment (CSR) to a fundamental economic factor. In the
process, we examine the concept of growth as the cornerstone of today’s
economic performance and propose a new yardstick for measuring social
and economics progress; i.e. the socio-economic model of “improvement”
instead of “growth”.
We begin by the use of an ecologically interrelated and
interdisciplinary view that we refer to as the POET model to set the stage
for our discussion (Mahmoudi1973, 2001, 2004, 2007). The POET model
incorporates four variables: (1) population, (2) social organization, (3)
environment, and (4) technology. Pioneering efforts of sociologist Otis
Dudley Duncan isolated a combination of ecological complex variables
(1961) upon which our POET model is expanding. By focusing on these
four variables, the essential components that affect the relationships
between the people, the planet’s resources and their organized way of
resource utilization can be understood.

Factor P in the model refers to human populations. Typically reference to


P entails the number of people, their social and demographic
characteristics such as their age, sex, educational attainment level, labor
and occupation profile, as well as income and consumption patterns.
Factor O refers to social organization, meaning the modes of social and
cultural adaptations that people have created in relation to their natural
environment, or in short, their social institutions. Factor E refers to the
natural environment that provides human societies with all the vital raw
materials as well as the human created environments that are reflected
in structures such as cities, roads, etc. Finally, factor T in the model
refers to technology or our tools that have generated a redefinition of the
environment in the process of our adaptation to the ecological systems
that we inhabit.

B. SOME IMPLICATIONS OF POET

The integrative and holistic value of the POET model is to


understand both human social activity as well as societal impact on the
natural environment and frame a discussion of economic activities which
would have less harm to ecological systems and yet yield profit as well as
being pragmatic and useful rather than being destructive. Consider the
relationships that are inherent in the interaction between the four
variables. For example, as the level of technology (T) has increased and
innovations accelerated in recent human history, demand for energy has
exponentially increased as well. Thus, with industrialization, societal
needs for use of various forms of energy have created demand for
extraction of fossil fuels to supply the demands. Concomitantly, greater
production of energy has fueled greater generation of goods from food for
sustenance and home construction for shelter to geometric increases in
demand for transportation needs and infrastructures to accommodate
production. Greater affluence has meant greater needs for all types of
tools, utensils, infrastructural needs and toys. With enhanced
technology, thus, greater economic activity has ensued that has resulted
in massive social changes reflecting more complex patterns of social
organization (O) resulting in bureaucratic large scale systems of work
organization with impacts upon family organization, religious systems,
political alliances and the like. As a direct result, an explosion of human
populations (P) occurred during the Twentieth Century, never before
evidenced in civilization. Reduction of mortality was the main factor for
this rapid population growth augmented by improved public health
measures reflecting the improved technology as well as delivery of such
care through better patterns of social organization. All such changes in
population size, organizational complexity and technical advancements
have had quite an impact on resource extraction and utilization with
profound consequences for the environment (E). The phenomenal impact
of these changes on nature had not been fully comprehended until past
mid point of the Twentieth Century, thus the environmental awareness of
last few decades are now forcing us to rethink our treatment of our
planet’s ecological intricacies.

Interdependence of POET
Technology Environment Organization Population

Growing,
healthier,
More longer
complex -living
social and population
Need for economic
greater institutions
resource
Innovation and utilization
industrialization

While we keep the holistic features of the POET model as a back drop to
our discussion, we can further elaborate on the issue of Socially
Responsible Capitalism (SRC) to add yet another dimension to the factor
O in the POET. Globalization and capitalism have become intricately
interrelated in today’s economic activities. Modern neo-liberal capitalism
has laid heavy emphasis on profits, especially those generated by multi-
national corporations and conglomerates. Growth has been a driving
force to increase profits and growth has meant not only more raw
material extraction but also more consumption. As a result, the endless
pursuit of an expanding economic system founded on a growth model
has had some devastating effects on the environmental health of our
planet. Issues such as global warming, the greenhouse effect,
deforestation, pollution of waterways, lakes, seas and oceans, to name
but a few are becoming paramount in our social consciousness.

An emerging question for all 6.7 billion of us will ultimately


become: Where do we go from here? Indeed, how could we resolve an
array of environmental and sustainability problems unless we also begin
to reexamine our fundamental economic processes?

C. SOCIAL IMPACT ASSESSMENT AND MORAL PRAGMATISM

As a framework and action plan for thinking about and


communicating the messages of CSR and SRC, we suggest a linkage to
two pertinent areas of Social Impact Assessment and Social Control.
Social Impact Assessment provides the rationale and methodology for
governments’ guidance and actions with regards to sustainability of
economic and environmental issues, while the Social Control literature
provides directions for articulating the value judgments that are made in
such governmental and corporate endeavors.

Kurt Finsterbusch, in an article entitled, "In Praise of SIA - A Personal Review


of the Field of Social Impact Assessment: Feasibility, Justification, History,
Methods, Issues," reminds us of the relationship between the government and
its citizens in a democratic society. He points out that the modern
governmental systems are derived from the ideas contained in the social
contract and that these systems demand an examination of their actions and
results to determine their overall value to the society. (Finsterbush 1995, pp.
233-234) Today, for a governmental entity’s own survival and to provide its
citizens with a check on its power, decisions can not be made without
examining the social and environment implications of those decisions for the
inhabitants of the affected area, both locally and globally.

The concept of Socially Responsible Capitalism, and by extension Corporate


Social Responsibility, both represent a logical extension of the reasoning
behind the social contract. Social Impact Assessment provides a way to keep
the idea of a social contract in the forefront. For either corporations or
governments to ignore social and environmental concerns would be
tantamount to a breech of the social contract. Breech of contracts would not be
in the best interests of any of the stakeholders concerned, government and
corporations included.
Burge and Vanclay’s position that “…the SIA itself cannot, and should not,
judge the worthiness of a particular project... It can merely report on how the
different segments of the community are likely to respond to development
projects or policies, and advice on appropriate mitigation mechanisms,” focuses
on how the SIA provides for a broader discussion of issues involved. (Burge and
Vanclay 1996, p.75) As they indicate, “The SIA goes beyond just the economics
of the project. It calls for the collection of social variables that will be affected
by the project.” (Burge and Vanclay 1996, p.80) With the inclusion of these
variables in the assessment process, decision makers will be forced to examine
and, perhaps, expand the value system that is influencing their decisions. This,
in the long run, will benefit corporate entities as well as governments to clarify
their value system relative to the decisions made. Should governing entities
make decisions that the larger society feels to be contrary to their best
interests, a forum for the discussion of these issues will emerge. “SIA achieves
its greatest benefit to society through its ability to advise on mitigation of
impacts.” (Burge and Vanclay 1996, p.79)

In his book, Lives of a Cell: Notes of a Biology Watcher, Lewis Thomas points
out that it would be best to view the earth as a single living cell. Homo Sapiens,
being a significant component of that cell’s ecosystem and having the ability to
reason and perceive this cell’s existence, should, perhaps must, assume
stewardship with regards to this living entity. This implies a responsibility to
act in ways that would provide for the continued good health of the organism,
without which, we would not be able to exist. What framework can we use for
guidance in our responsibility to this living organism? Perhaps the ideas
articulated by Stanley Cohen regarding Moral Pragmatism can provide an
answer.

Although Stanley Cohen originally wrote his book, Visions of Social Control, as a
way for academics and citizens to view and approach the problem of crime and
its control, his reasoning could just as well be applied to social, environmental,
and sustainability issues. If we were to broaden the scope of his Moral
Pragmatism reasoning to include the topics of sustainability or improvement of
the human condition, we can then begin to apply this approach to the concept
of Socially Responsible Capitalism. Key components of Cohen’s perspective are
the concepts of “Doing Good” and “Doing Justice”. For sustaining or improving
the ecosystems or economic productivity through SRC the need for some type
of social control or action on the part of local and global governmental agencies
as well as corporations emerges. Applying moral pragmatism reasoning to a
variety of social/environmental/sustainability issues might give us insights
into how to communicate these issues to a larger body politic.

D. MORAL PRAGMATISM

Individuals, groups, corporations, and governments make decisions all the


time. In today’s world, change, rather than static conditions, seems to be the
norm. Projects designed to alter the present state are being developed and
implemented both locally and globally. In order to scrutinize these projects and
evaluate their impact on the economic and ecological systems, we must begin
to instill values that: 1) Reflect the need for such securitization; and 2) Clarify
the values that various projects are reinforcing. In the clarification of these
values, Cohen suggests that actions, policies, and projects be evaluated in
terms of “Doing Good” and “Doing Justice”.

By “Doing Good”, Cohen is not just speaking in terms of an individualistic


approach, but would also include a fundamental commitment to the reform of
the structural policy causing the problem. (Cohen 1985, p.252) In terms of
CSR and SRC, if any corporation, fixating exclusively on profits, is causing
environmental harm and we have determined (through social and
environmental impact assessments) that this orientation is lessening our
“quality of human life” in some way, discussions about a new approach will
begin to occur. This new approach will also be monitored in order to assess its
impact on the social and natural environments. The importance that social
and environmental data gathering and assessment should play in this regard
should be emphasized. Applied both globally and locally, the installing of social
impact assessment programs along with the profit concerns of corporations
could bring a new dialog and methodology to the forefront. Not all segments of
any society or global entities may adhere to our position on the need for the
collection and use of pertinent sustainability data. Yet, over time, projects
engaging in such activities would be seen as making informed decisions about
the corporations, governments, and the planet’s health. Plans that are well
formulated and documented with empirical evidence that are seen as just,
pragmatic and responsible would naturally emerge as superior. In each specific
instance, persons must decide what “good” is. However, the very fact that these
decisions are being made and that new variables are entering into the equation
will be a tremendous step forward in our stewardship of economic entities and
the planet. As more individuals, governments, and corporations become
involved in such assessments, positive changes, relative to the ecosystem
would occur.

By “Doing Justice”, Cohen is urging people to evaluate actions based upon a


sense of “rightness” and “fairness”. In a society founded upon the principles of
a social contract, the individual and collectivity must reflect on what is “right”
and “fair” by taking into account various perspectives with regard to the action
to be taken. By corporate and governmental entities monitoring these events,
with regards to the effect such actions may have on certain stakeholders, we
will come to understand that, with the right preparation and planning, honest
attempts are being made to hear the voices of all concerned.

As indicated above, “doing good” and “doing justice” are not absolute positions.
Rather, they represent the value judgments individuals or collectivities make
that are relative to time and place. Each action taken toward a project must be
viewed in this context. Except for the most extreme romantic position, there is
never a case that can be made for a particular individual’s (corporation’s) rights
exceeding those of the collective. (Cohen 1985, p.242) However, by taking a
morally pragmatic position, Cohen believes that rational and humanistic
decisions can be made avoiding the premature closure of inquiry that
sometimes arises when radical or conservative absolutist positions are taken.
Taking these positions will only lead to an adversarial role that will demand a
closure of intellectual inquiry and result in either "analytic despair" or
"adversarial nihilism".

Note that “doing good” and “doing justice” are not necessarily complementary
concepts. However, it is by examining these alternatives, that the values of the
society begin to be clarified and the reasoning behind certain actions or
positions become clearer.

E. THE CASE FOR “IMPROVEMENT” INSTEAD OF “GROWTH”

Considering the social and environmental challenges facing the human race in
the 21st century and building on POET and Moral Pragmatism as value based
concepts that propose greater application of judgment in economic decision
making, there is a case for a fundamental change in our perception of
economic prosperity. The authors believe there is an urgent need for replacing
that most sacred of 20th century economic values, numerical growth, with a
more qualitative and sustainable measure of Economic Improvement (EI).

The growth focused capitalism, especially in the second half of the 20th century
has promoted the corporate culture of more production; the consumers desire
for more consumption; the investors’ aim of more profit, all leading to greater
and faster exploitation of natural resources. In other words, a drive toward
indefinite growth based on finite resources!
Capitalism, Globalization & the Growth Model
Greater Higher More Greater Higher
Increased
Consumption Production Resource
Value Profits Sales Utilization

In this familiar model, Growth is represented by greater


shareholders value, driven by higher sales leading to increased
profits. It also means continuously greater resource utilization!

William Rees in his Ecological Footprints and Bio-Capacity: Essential Elements in


Sustainability Assessment suggests that “by a fairly conservative estimate,
humanity had already ‘overshot’ the long-term human carrying capacity of the
Earth by about 20% in 1999—the whole planet is in deficit,” and concludes
that “to bring just the present world population up to, say, North American
material standards with prevailing technology would require four additional
Earth-like planets!” (Rees 2006).

This brings into focus the fallacy that environmental sustenance is possible
while improving the quality of life of the poorer societies, and yet maintaining
the developed nations thirst for continuous economic growth. On this point,
Rees further argues that “Indeed, wealthy market economies like those of the
US, Canada, most Western European countries and Japan appropriate two
to five times their equitable share of the planet’s productive land/water (and
20 times or more per capita) than the chronically impoverished. By contrast,
low-income countries like Bangladesh, Mozambique and even China, use
only a fraction of their equitable population-based allocation. The growing
income disparity between rich and poor is dramatically reflected in the
corresponding eco-footprint data.

To “do good” and “do justice” requires reassessment of the present concept of
universal economic growth and an evaluation of whether growth in itself,
given the existing parameters, is sustainable. Moving towards Socially
Responsible Capitalism we need to look at what is “good” for our planet earth
(E), and what is “just” for the most deprived segments of the human race (P),
using the available and evolving technologies (T) and enlisting not just the
corporations, but the existing or new organizations (O) capable of conducting
the required Social Impact Assessment. The following suggests relative
values for some key components of the Economic Improvement Index.

10 Global Uniformity

Non-renewable Raw Materials


Improvement Index

Transparency & accountability


Wage-gap Index
Energy Consumption

Growth
1 10
Performance/Utilization

The improvement scale shown here proposes a number of components where;


Growth – has a constant value in the improvement index;
Energy Consumption – has a negative value in the sense that positive
contribution to the improvement index will come from year on year
energy conservation.
Wage-gap Index – is the earning of the lowest paid employees in the
organization as a percentage of the highest paychecks;
Transparency and Accountability – reflects the annual improvement in the
corporation’s governance and responsiveness;
Non-renewable Raw Materials – represent a company’s lack of
commitment to recycling and use of renewable, thus carry a negative
weight;
Global Uniformity – should measure the corporations’ sense of fair play
and good citizenship wherever they operate.

This is not supposed to be an exhaustive list of the component of the EI Index,


but rather a starting point for other scholars to take the concept further and
build a comprehensive model for socially fair and environmentally sustainable
economic prosperity on a global scale.

CONCLUSION

Rather than a top down economic model that focuses solely on growth and the
economic gains to be realized by the company proposing a project and the
political or geographical entity in which that corporation is based, we suggest
the pragmatic model of Economic Improvement Index, utilizing the values of
“doing good” and “doing justice”. Amongst the components of EI index would
of course be a measure of greater profitability and growth, but that, alongside a
number of other factors which would provide adequate tools to measure the
company’s commitment to socially responsible behavior, not just at a local level
but also globally.
The result should be a new form of socially responsible capitalism where the
ever-growing gap between the haves and have-nots could be checked and the
threat of the total collapse of the earth eco-system brought under control.

BIBLIOGRAPHY

Burge, Rabel and Vanclay, Frank, "Social Impact Assessment: A Contribution to the State of the
Art Series" Impact Assessment, Vol. 14 No, 1, March 1996.

Cohen, Stanley, Visions of Social Control, Polity Press: Cambridge, 1985.

Duncan, Otis D. “From Social Systems to Ecosystems”. Sociological Inquiry, 31:140-149.

Finsterbusch, Kurt, "In Praise of SIA - A Personal Review of the Field of Social Impact
Assessment: Feasibility, Justification, History, Methods, Issues," Impact Assessment, Vol. 13 No,
3, September 1995.

Mahmoudi, Kooros M, “Social Change, Population, Environment, and Globalization” in


Sociological Inquiry (9th edition) Mahmoudi and Parlin (eds),
Pp. 97-102. Kendall/Hunt Publishing Co. 2007.

Mahmoudi, Kooros M. “An Integrative and Holistic Model for Teaching Environmental Issues”,
THE INTERNATIONAL JOURNAL OF HUMANITIES AND PEACE, 2004:Pp. 39-42

Mamudi, Mohit. “Towards a Universal Platform for CSR – The role of Communication in Global
Corporate Social Responsibility”. Global Business & Economics Anthology, Vol. II, December
2006.

Rees, William R. “Ecological Footprints and Bio-Capacity: Essential Elements in


Sustainability Assessment”, Chapter 9 in: Jo Dewulf and Herman Van Langenhove, eds.
Renewables-Based Technology: Sustainability Assessment. Chichester, UK: John Wiley
and Sons (2006).

Mills, C. Wright, The Sociological Imagination, New York: Oxford University Press.1959.
Thomas, Lewis. Lives of a Cell: Notes of a Biology Watcher,

You might also like