Corporate responsibility is a conservative cause

Many conservatives believe corporate responsibility is a liberal idea. But the roots of corporate responsibility stretch back to ancient, biblical truths.

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    Management guru Peter Drucker, seen here in this 2005 file photo, was a conservative who advocated corporate responsibility in a post-capitalist society.
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Not long ago, a libertarian paper asked me to write for it. But after I began by writing about the social responsibility of business, the publisher and editor stopped answering my e-mails.

I understand. As a conservative who agrees with the biblical notion that wealth creators have a responsibility to neighbors and the needy, I've learned that this old notion now strikes many on the right as very progressive, even new age. And I think it illustrates the emerging chasm between true conservatives, who value what humankind has learned over the millenniums, and today's libertarians, who value new and radical ideas that prize self-interest and denigrate all but the narrowest forms of responsibility.

I chalk this up to the current infatuation, among many on the far right, with the ideas of Milton Friedman (for business) and Ayn Rand (for individuals). Dr. Friedman, a Nobel laureate, believed that the only social responsibility of a corporation was to make money for shareholders. Ms. Rand, who wanted to be remembered as the greatest enemy of religion ever, once wrote "it is only in emergency situations [like shipwrecks] that we should volunteer to help strangers." She added we owe them nothing upon reaching shore. But before Mr. Friedman's libertarian business philosophy and Ms. Rand's similar new morality of atomistic individualism became fashionable, other conservatives were writing about social responsibility in a positive way.

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Perhaps chief among them was Peter Drucker, legendary management consultant and author, who conservative magazine publisher Steve Forbes once described as having an "uncanny" ability to foresee the future. In his 1993 book entitled "Post-Capitalist Society," Dr. Drucker suggested that social responsibility would replace power as our central organizing principle when we tired of selfish democratic capitalism on the part of politicians and CEOs serving special interests. "There is no one else around in the society of organizations to take care of society itself." But he prudently added: "Yet they must do so responsibly, within the limits of their competence, and without endangering their performance capacity."

That nearly 20-year-old vision may finally be coming true today, though not for traditional moral reasons. Forbes magazine has seemed to favor Friedman over Drucker in recent decades. But its Sept. 26 cover story was entitled: "Social power and the coming corporate revolution. Why employees and customers will be calling the shots." Regarding the social media, which has organized the Occupy Wall Street movement in recent weeks, Forbes told CEOs: "This social might is now moving toward your company. We have entered the age of empowered individuals, who use potent new technologies and harness social media to organize themselves. You'd better get out of their way – or learn to embrace them." It added that all companies will soon become "social enterprises," so, contrary to Friedman, CEOs had better concern themselves with interests beyond their own and that of shareholders.

Properly managed, a revolutionary return to old moral sentiments might actually reduce animosity among America's political leaders. That's a crucial element in our political economy as trust was the lubricant of pre-Friedman and pre-Rand capitalism. Today's selfish activities by elites are grit in that lubricant. So here's a modest example of how we might get ahead of the curve in rebuilding trust in our organizations.

America's global corporations are aggressively lobbying their friends in Congress to reduce or eliminate the taxes on what they earn overseas. They currently keep that money overseas to keep it from being taxed. Some CEOs have publicly echoed Friedman by arguing they are simply acting in the best interests of shareholders. Such corporate moves irk many progressives, including President Obama, because they see such acts as socially irresponsible in an age of federal deficits, joblessness, and record poverty. They also argue that the last tax amnesty on such "repatriated" profits did nothing to curb CEOs from reaping big bonuses by laying off even more Americans in the name of productivity and efficiency.

But what if progressive politicians and conservative business leaders agreed to a deal that would help America without punishing shareholders with supposedly onerous taxes? Corporations might repatriate their profits with the 5 percent tax rate used during the last amnesty as long as they used the money to create jobs in the United States. Companies, not government, would decide what new jobs make economic sense. If it made no sense for a company to hire in the US, it wouldn't repatriate any profits, creating more wealth overseas, which is socially responsible in the larger sense.

The benefits of such a deal might be spread far and wide. More working Americans might then have money with which to buy, a favorite cause of progressives. Small US businesses, which used to be important engines of job creation but can no longer get financing for such, might win as major corporations could invest in more capital goods to equip those workers. Or major corporations might make loans to capital starved small businesses that are critical suppliers. The federal government might actually benefit as more people escape welfare and pay taxes. That broadening of the tax base is a favorite cause of libertarians anyway. Our young people might begin to believe America has a future after all. Our older people might invest in their future again.

The cost for all this? There might be some short-term taxpayer subsidy, since the Internal Revenue Service might have gotten more money (in theory, at least) from repatriated profits, assuming corporations had a change of heart and repatriated it despite the taxes. But the major cost would simply be surrendering the radical and selfish moralities of Friedman and Rand for the old conservative tradition of both personal and social responsibility. As Drucker understood, loving one's neighbor as oneself in business and politics is actually a sound organizing principle for any society.

Gary Moore, an author and investment counselor based in Sarasota, Fla., runs financialseminary.org, which seeks to build bridges between the economic, political, and moral communities.

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