THE INTERNAL SOCIAL RESPONSIBILITIES OF INDUSTRY1
| Date | 01 March 1966 |
| Published date | 01 March 1966 |
| Author | Allan Flanders |
| DOI | http://doi.org/10.1111/j.1467-8543.1966.tb00916.x |
THE INTERNAL SOCIAL RESPONSIBILITIES
OF
INDUSTRY1
ALLAN FLANDERS*
Is it a good thing for industry to bother about its social responsibilities?
For
a
long time it ignored them and found
a
rationale for this neglect in the
‘dismal science’ of economics. When, after the work of Elton Mayo and his
colleagues, these intellectual defences were breached and ‘the end of
economic man’ had been proclaimed, industry became increasingly
concerned with questions of morality and with its obligations towards its
employees and the community.
A
few years ago the inevitable reaction to
this trend set in, when the influential
Harvard
Business
Review
published an
article on the dangers of business attempting anything other than to
maximize its profits. ‘In the end,’ wrote its author, ‘business has only two
responsibilities, to obey the elementary canons of every day face-to-face
civility and to seek material gain.’ When companies interested themselves
too much in their social responsibilities they were liable to transform ‘an
important and desirable economic functional group into an all-knowing,
all-doing, all-wise father on whom thousands became directly dependent
for cradle to grave ministration. This
is
the kind
of
monolithic influence
the corporation will eventually have after it becomes so occupied with its
social burden, with employee welfare and the body politic.’2
This attack cannot be brushed aside
as
being merely an exuberant ex-
pression of a belief in ‘free enterprise’ which is part ofAmerican folklore. The
dangers to which it refers are real. Theories have been developed which
taken to their logical conclusion raise totalitarian claims on behalf of the
business corporation: either alone or in conjunction with the trade union,
it
is
expected to provide the worker with his ‘society’, one that will satisfy
all his basic social interests outside the family.3 At a practical level, too, it
INTRODUCTION
*Faculty Fellow of Nuffield College and Senior Lecturer in Industrial Relations, University of
Oxford. Industrial Relations Adviser to the National Board for Prices and Incomes.
1
This article is
a
revised version of a paper prepared for an International Seminar on ‘Social
Responsibilities of Business’ held at New Delhi in March
1965
under the auspices of the India
International Centre and the Gandhian Institute of Studies.
I
am indebted to Alan Fox for many
helpful suggestions and comments.
*
Theodore Levitt, ‘The Dangers of Social Responsibility’,
Haruard
Business Review,
Sept
.-
Oct.,
1958
3
Wallace B. Donham in his foreword to Elton Mayo’s
The Social Problems
of
an
Industrial
Ciuiliza-
lion,
Harvard U.P.,
1945,
p. ix) suggested this work showed ‘that it is within the power of industrial
administrations tocreate within industry itself a partially effective substitute for the old stabilising
effect of the neighbourhood. Given stable employment, it might make of industry (as of the small
town during most of
our
national life) a socially satisfying way of life as well as way of making
a
living.’ Frank Tannenbaum in
A
Philosophy
of
Labor
(Knopf,
1952,
pp,
198-9)
envisages
a
similar
result being achieved
by
the merging of the business corporation and the trade union (‘the only
true society that industrialism has fostered’),
so
that they ‘cease to be
a
house divided’ and
‘a
common identity may once again come to rule the lives of men’.
I
2
BRITISH JOURNAL
OF
INDUSTRIAL RELATIONS
is alarming in the extreme to see big business using the immense funds at
its disposal to propagate for commercial motives its views on what is right
personal or social behaviour. When this
is
accompanied by deliberately
strengthened material ties of dependence which encourage uncritical
acceptance of these views, even by political manipulation masquerading
under the guise ofhigh ideals, the prospect is more repulsive than the brutal
but open forms of economic exploitation we have known in the past.
One can readily agree that ‘the business of business is business; economic
business to create economic values and to minimize economic
Industry is made up of associations with economic ends
-
not political,
social or cultural ones. Regardless of differences in their legal form or
underlying reality, all business enterprises are constituted chiefly for the
purpose of distributing incomes by producing marketable goods or services.
They have therefore to survive tests of economic viability whether these are
imposed by the markets in which they operate or, in the case of public
enterprise, partly by the state. Similarly, the work which people perform
in industry is undertaken primarily for its material rewards, not for its own
intrinsic interest; to enable them to earn their living or, if they are fortunate,
to accumulate wealth.
This has to be stated clearly if we are to see industry’s social responsibili-
ties in their proper perspective. To recognize that industry has such respon-
sibilites does not imply that
it
should be run as a charity or
to
serve some
social cause. Its social responsibilities arise, in fact, out of its choice of
means rather than its choice of ends. Every society, even during the heyday
of
laissez-faire
capitalism, has always set some social, and by implication
moral, limits to the means that might be employed in the pursuit of econo-
mic values. Apart from excluding the use of violence, dishonesty and fraud
were invariably penalized to greater or lesser extent. Today, moreover,
there are few societies without some protective labour legislation to fix
minimum standards, especially for the employment
of
women and children,
or which do not seek to curb manifest public nuisances such as the pollution
of rivers or other industrial hazards to safety and to health.
To act responsibly, however, means to take into account the consequences
of one’s action for others
as
well as for oneself
-
all
the reasonably foresee-
able consequences. Whether
a
nation in its law takes a broad or a narrow
view of what it regards as anti-social activities on the part of industry, we
can be sure that the mere observance of its legal obligations
is
never
a
sufficient acknowledgement by industry of its social responsibilities; often
the things most worth doing no law can demand, still less effectively
enforce. The full scope of these responsibilities is only revealed by the facts
of the situation. These show in what ways the means employed in the
pursuit of economic values have other than economic results, how they
affect the whole of the life of man besides his material welfare.
One way in which the decisions of a business enterprise are seen to have
4
Michael
P.
Fogarty,
Personnel
Management,
March
1963
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