Can Corporations Solve Social Problems?

Can solutions to social problems really be found by the forces that help create them?

I just finished reading Michel Kingsely’s Creative Capitalism: A Conversation with Bill Gates, Warren Buffett, and Other Economic Leaders. A pervasive argument of the articles in the book is that a healthy political economy maintains incentives for profit, while at the same time developing organic capital to solve social problems.

Bill Gates and others argue that public recognition of businesses and theirs leader can be a strong incentive for doing good. The need to be recognized, strikes me as ego-driven and probably something that is likely to produce more ego than social solutions if used as a strategic tool to get businesses to act responsibly.

The problem with this line of thinking about social change is that it keeps profit in control, and does not change the sociology of who decides.

Whoever the donor is most comfortable with becomes the benefactor and the corporations maintain an oligarchy of control. There is very little participation from the people who suffer the problems. It simply reaffirms the corporate function of power.

The charitable work of technology billionaires via the Gates Foundation, Armedia, and the Skoll Foundation, and the trend of social reform incentives for business in general, is positive. But to consider this kind of giving an ultimate solution would be naive.

The book, Ecological Intelligence, by Daniel Goleman goes to the other end of the spectrum and looks to solutions through consumers. With more information, Goleman says, consumers can make better decisions and change what is produced through what they chose to buy or not. Goleman’s argument is that consumers can affect the ecosphere more effectively in this way, because public policy takes so long.

Neither focus, both of which benefit social justice by being consciously engaged, will be enough. I don’t think there is any effective way to cut governments out of the loop of creating social change. Citizens could accomplish more viable solutions by operating in the political realm, swaying governments to act as their representatives.

In the history of recessions, for instance, whenever there is a serious crisis, you need government intervention. You give aid to the producers, and you pump money into the system to encourage consumers to spend more. A better alternative would be to increase spending by increasing the minimum wage. If wages were increased at the same time as a national health insurance was introduced, it would actually lower costs for employers.

So there are ways that public policy driven by the needs of citizens could deal effectively with the prospects of recession, and partner with business to enhance its contribution to the polity and to the economy.

When public policy brings consumers and producers together in the public interest, it is a sight to behold. Consider the modest example of seat-belts. The fact that they today are required to exist in all cars, is the result of a major government intervention to reduce the risk to life of driving. Advocates gathered information that showed how many lives they save, and the insurance industry required them. Big Auto put in the harnesses. Caracciola . And all this was even more effectively applied to requiring baby seats in rental cars, taxicabs, and private vehicles.

Public and corporate behavior changed as a result of government intervention. The solution was provoked by the democratic participation of people through government, public education, and public activism.

Left to their own devices, industries have been culpable of environmental disasters, asbestos, nicotine poisoning, and even bad software. With the best of intentions and the largest of treasuries, corporate charity and social change initiatives may well add value to the public interest, and egos might well be stimulated and satisfied, but this is a far cry from adding the social condition of the poorest among us to the bottom line of the corporate balance sheet. It takes more than private wealth and a hungry ego to achieve sustainable and large-scale social change.

The public, through its elected representatives and its activism, will be the main agent of change. In a democracy with social equity in mind, philanthropy must above all support and nurture that capacity.

Book Links:

• Creative Capitalism: A Conversation with Bill Gates, Warren Buffett, and Other Economic Leaders, by Michael Kingsley
• Ecological Intelligence, by Daniel Goleman