The New York Times reported
that President Obama urged American businesses on February 7, 2011 to “'get in
the game' by letting loose trillions of dollars being held in reserves, saying
that they can help create a 'virtuous cycle' of more sales, higher demand and
greater profits that will put people back to work and turn around the sluggish
economy.” Obama continued, “If there is a reason you don’t believe that this is
the time to get off the sidelines — to hire and invest — I want to know about
it. I want to fix it.” In the speech at the U.S. Chamber of Commerce, Mr. Obama
said that companies have a responsibility to help the economy recover. The
trouble is that responsibility is a rather vague term that can
be variously applied. This is one reason why the corporate social
responsibility concept could mean providing society with the products and
services that are sought via the marketplace (e.g. Milton Friedman of the
Chicago school) while meaning for others increasing corporate philanthropy to
alleviate a society problem such as poverty. In other words, responsibility can
be made concrete in various ways that can accommodate and indeed reflect the
ideologies of those applying the term.
It could be predicted,
therefore, that the President's application of responsibility might have
differed from some of the business managers in the audience. Indeed, Obama’s
suggestion that businesses could help the economy recover by spending their
reserves was met, according to The New York Times, “with skepticism
by some in the audience.” For example, Harold Jackson, a executive at Buffalo
Supply Incorporated (a medical supply company), called the President's
suggestion naive. “Any business person has to look at the demand to their
company for their product and services, and make hiring decisions,” Jackson
said. “I think it’s a little outside the bounds to suggest that if we hire
people we don’t need, there will be more demand.” In effect, Jackson was
defending Friedman's application of corporate social responsibility from that
of the President's.
To President Obama's
assumption that American businesses were still sitting on the sidelines, it can
be asked, in what sense? The President was pointing to what he viewed as
excessive retained earnings. Yet John Schoen of MSNBC reported the same day
that the American manufacturing sector was “roaring back” after the recession.
Schoen reports a sustained rise in factory orders in five of the last six
months, which prompted manufacturers to boost hiring. The Commerce Department
had reported a few days before Schoen's report on February 7, 2011 that the
manufacturing sector had added 49,000 new jobs in January. Yet this is hardly a
roaring comeback in terms of new jobs. Schoen reports that businesses have
figured out how to make more widgets with the same number of workers, resulting
in higher productivity and profits. Investing reserves in automation, for
example, raises productivity by making products faster and better. According to
Schoen, “Productivity is a pretty simple concept: It’s a measure of how much
stuff a worker makes in a given number of hours. . . . Productivity has also
risen as American manufacturers have moved to specialize in more valuable
products, sending manufacturing of cheaper goods overseas where wages are
lower. As the value of American-made products has risen, so too has the average
level of output per worker when measured in dollar terms.” Schoen reports
that according to the U.S. Labor Department, the level of output per hour
worked rose by 2.6 percent in the last three months of 2010. Even if it is not
in the interest of labor, such improvement is in line with the logic of
business, given how business is designed and how a competitive marketplace
works. Spending retained earnings beyond that which can be expected to raise
productivity simply does not make sense to a business practitioner.
In general terms, the (nearly)
“jobless recovery” can be seen as pointing to a major difference between the
interests of business and society—the latter being represented by the President
at the Chamber of Commerce. Given the nature of business enterprise in a
competitive market, it is only natural for managers (and boards) to work toward
(and reward) greater efficiency (i.e. productivity). Business managers thus
understand or apply responsibility in this way. As per Harold
Jackson's point, to hire labor beyond the optimal efficiency point in order to
solve the wider societal problem of unemployment would run against a firm's telos, or
goal. Ultimately, such over-hiring would compromise a company's continued
viability (which could result in the loss of even more jobs).
One cannot blame a manager for
thinking in line with his or her company's logic, or raison d'etre, any
more than one can blame a shark for hunting for food and eating like a shark. A
shark is a shark, and a business can also be viewed as a feeding machine. To
posit or impose responsibilities onto a machine does not make sense either to
the machine or to those who operate it (in their functioning as operators). To
an operator, responsibility means operating well—which,
by the way, is virtue in the ancient Greek sense. The President's use of
responsibility extrinsic to a business calculus simply would
not register. It would be like trying to get ought out
of is. Even within business functionality, responsibility even as
in fiduciary duty to the stockholders is simply translated into “try to get as
much profit as possible, now or later.” In other words, ought does
not compute in a business technical vocabulary. The term is extrinsic, like
societal problems and goals. To come from a societal standpoint and impose “be
responsible” to a business practitioner is like shouting at a deaf person. The
business person is apt to simply look curiously at the person as if wondering
why he is speaking in a foreign language while assuming he is being understood
nevertheless. “How odd,” is perhaps the most honest response that
one could give to such a display.
The difference between the
President's application of responsibility and that of Jackson can also be
understood as the difference between the interest of a subunit and the system
as a whole. It is only natural for a part of a whole to operate in the interest
of the part itself rather than necessarily the whole. The interests of the latter
can thus fall through the cracks. Government regulation is an attempt to plug
such cracks, but regulations, like firms, are particular. On the issue of
unemployment, the societal question is whether even a fully-operational
economic system can supply full employment. If not, it may be the government's responsibility to
supply the surplus employment, directly or indirectly via subcontracting.
Crucially, this supply must be designed such that it does not reduce the
employment provided by the private sector. The surplus jobs must be functions
that the private sector does not and would not address. The President's error
in his speech to the Chamber of Commerce could be that he was assuming this
surplus is the responsibilities of “parts” of the system (i.e. individual
companies) rather than of the system itself (i.e. the government).
In sum, responsibility is
a dubious concept to apply to business; the term is too vague to have much
traction in discussing such vital matters as affect our economic livelihoods
and the related viability of our economy. It seems to me that the priority
ought to be that every able-bodied and minded adult has a job (or, otherwise, a
means by which he or she can have sufficient economic wherewithal to survive in
this interdependent society), whether through business, non-profits or
government. Ideologies, including responsibility itself,
ought to be relegated as luxuries with which we can play on the margins once
full employment has become a fait accompli.
That is to say, ideologies might contribute to improving full employment,
rather than being depended on to reach it or allowed to keep us from it. Of
course, it could be countered that ideologies are part and parcel of this
entire discussion and thus cannot be dissected from it. That may well be. Even
so, I submit that ideologies such as laissez faire and
corporate social responsibility ought not be allowed to thwart us in how we
constitute full employment as a societal fact. That is to say, we ought to
direct full employment by whatever means necessary then
work from there (once attained) to improve it. Simply put, for some reason, we
don't treat full employment as necessary.;
rather, we treat it as a goal. "How odd,"
an alien from another galaxy might say (in its own language, of course), should
one visit us and want to study us.
Sources:
Michael D.
Shear, “In
Speech to Chamber of Commerce, Obama Urges Businesses to ‘Get in the Game,’”
The New York Times, February 7, 2011.
John W. Schoen, “Factories
Boom, but with Few New Workers,” February 7, 2011, NBCNews.com.
