Re language, history and culture >>Professor Barry appears to misstate stakeholder theory. This language is problematic. So called "stakeholder theory" has an entirely different meaning in the European region of Transylvania. There they prefer "shareholder theory". The holders of the shares, apparently some ancient guild associated sheep and goat farming; got a percentage of all returns in investment income. In rent times in the land of the Union Jack, stakeholder theory has been associated with Tony Blair and the theory of the "Third Way". This modification of the neo-classical theory can have an effect of assisting some of the beneficiaries of "thatcherite wealth redistribution regime" by legitimating the refusal to return of the largess expropriated off the citizenry under the auspices of the privatising State driven Structural adjustment programme. Its slogan is "you can' turn the clock back". one of its earlier theoreticians was Will Hutton, the current editor of the Observer and an ex-Guardian Weekly economics columnist. Like all late 20th Century politico-economic commentary, its potential has been outweighed by the realism of its implementation phase.. In addition to the Golden Rule there now exists the Golden parachute. This Blairite strategy designed to avoid scaring the capital markets has been a hall mark of "New Labour". It is not to be confused with the "turd way", which is an economic programme where the holders of the stakes are ritually screwed in a manner of speaking as the rate wealth transfer and reallocation is both locked in and intensified. -----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of Ian Ritchie Sent: Friday, June 25, 1999 3:57 PM To: Ian Ritchie Subject: [PQList] Businesses' Social Responsibilities FYI Businesses' Social Responsibilities -------------- Profit maximisation inadequate sole goal DICK HUBBARD, in reply to Norman Barry, argues that collective ethics should be more robust. NZ Herald, 23 June 1999 Professor Barry ("Ignorance, misunderstanding drive business ethics moralism") appears to ignore the major changes occurring in thinking and practice throughout the Western world. Senior managers and directors of large corporations are embracing a form of business that no longer concentrates on the maximisation of shareholder wealth as the only reason for business. When such multinational giants as General Motors, BP Shell and IBM adopt a radical new way of approaching business one has to take note - likewise when such an august institution as the British Institute of Directors does a rethink on business social responsibility. Organisations such as Business in the Community, Social Venture Network, Businesses for Social Responsibility, Environmental Business Network, the Natural Step and the Business Council for Sustainable Development are being formed, not by academics and not by anti-capitalist elements, but by practising business people. Since the Milton Friedman days of the 1960s we have moved extremely rapidly from a shortage of labour and an abundance of resources to a world-wide surplus of labour and a shortage of resources. It has been calculated that we would need three globes to provide the physical resources to give everyone the same standard of living as Americans have now. The Barry model of business would have us use these resources in the pursuit of profit, regardless of the scarcity for future generations. It is not possible to agree with him that "the solution to many environmental problems is a clear definition of property rights." Central to the argument for social responsibility is the concept of stakeholder. Professor Barry appears to misstate stakeholder theory. It is not company directors and managers handing control to the competing demands of stakeholders. Rather; it is the realisation that managers have moral and ethical responsibilities to all stakeholders in a business and that the shareholders are not the only stakeholder. The theory is that shareholders are investors, not owners, and this redefinition removes some of the arrogance from the concept of ownership. Professor Barry is also concerned about the new business ethics and morality. Again he appears not to realise the changes that have occurred. Large corporations can now easily span the world, moving money, resources and goods from country to country at will. This may be a good thing. However; many corporations are now considerably larger than the governments of sovereign countries, particularly of small countries. Bill Gates is wealthier than New Zealand. These corporations do not have the transparency or accountability of democratic governments. Without a sense of morality and ethics, they can disadvantage large sections of the world to benefit their shareholders. Some of the management excesses associated with these corporations suggest that sometimes they are not even fully accountable to shareholders. Professor Barry argues that companies are not obliged to have ethical standards beyond those of the average person. Yet corporations are groups of people collectively able to produce goods and services that could not be produced by an individual. If companies can produce goods and services more efficiently than the individual then surely it is not unreasonable to argue that they should have standards of morality and ethics above those of the individual. Collective standards of ethics and morality should be more robust than those of an individual. Professor Barry appears to have no understanding that ethical and moral standards in the business world and in the community at large are linked. Senior business people are leaders and behaviour models whether they like it or not. If business leaders push the limits in environmental, tax, social or other matters, individuals will tend to do so too. Increasing numbers of business people appear to be finding that by embracing stakeholder theory they are enhancing shareholder wealth. Pressure to take a moral position is not seen as blackmail, as suggested by Professor Barry, but rather as a business opportunity. Social responsibility to staff does wonders for the workplace. Social responsibility in the environment can often produce dramatic savings. Social and environmental responsibility is being given the thumbs up by consumers. There is growing realisation of a business paradox - if corporate managers take their eye off profit maximisation as the only reason for their existence, then long term they tend to be more profitable and stable. Companies such as Johnson & Johnson clearly demonstrate that. Social responsibility and sustainable business practice are, of course, no guarantees of success. Socially responsible companies fall if management practices are not sound. It is facetious to suggest, as Roger Kerr did recently, that the problems of Levi Strauss Ltd are a result of its social responsibility. A combination of good business practice with social responsibility and sustain able business practice will give advantages not only to shareholders but to other stakeholders. Professor Barry's model of business may be correct in theory but it is obvious that it is not working in practice and is not sustainable. There is evidence that socially responsible and sustainable business is working in practice - it just has yet to be proved in theory. Dick Hubbard is the chairman of New Zealand Businesses for Social Responsibility. -------------------------------------- http://www.geocities.com/~ubinz/press/19990623HeraldHubbard.html ---------------------------------------------------------------------- If at anytime you wish to leave this list, simply send a letter to [EMAIL PROTECTED], with the following as the body of the letter unsubscribe pqlist . 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