I worked 2 months in the Egyptian National Competitiveness Council (The ENCC). During this period I noticed that The ENCC Chairman was trying to promote the concepts of ‘Corporate Citizenship’ and ‘Corporate Social Responsibility’ in his company (Sekem Group) and in the EJB. Corporate social responsibility (so famous it has become abbreviated now to CSR) is a term that has become very popular and fashionable nowadays, a term that has many of the characteristics of the philosophies of our era.
For those of you who are not familiar with such an important term, it means, according to Klaus Schwab (the founder of the World Economic Forum, and a well-respected man in the ‘global’ community): the commitment of business to address the wider financial, environmental, and social impact of all that a company does.
Now, as you can see, on its face value this term looks benevolent, righteous, or in the worst cases: harmless. This is one of the things that term has in common with many of the philosophies of today.
There is a theory behind this term, called: The Stakeholder Theory. This stakeholder theory of corporate social responsibility stipulates that instead of working for the profit of shareholders, corporate managers are directed by this doctrine to act in the interests of a diverse group of "stakeholders," with the shareholder considered to be merely one of these stakeholders. And if you are not familiar with the implications of that concept, you might nod happily in agreement with its noble intentions.
This is why I think we need three things to know where we stand in this world:
- We need a clear-cut value system that is ours,
- we need good reasoning skills that can weed-out any illogical inconsistencies presented to us so matter-of-factly,
- And finally we need facts supported by our observations.
I do not have time to discuss all 3 now! But I’ll show you—as an example—how this term challenges all 3 bases for me and how therefore I wish I could triple reject it.
I will try to be as concise, and as simple as possible, but to cover this subject fairly, more needs to be said which, unfortunately, I cannot squeeze into the next few lines. In a nutshell:
· Basis 1 Facts:
1. In the US, corporate management has gained in recent years a lot of power and discretion apart from shareholders’ wishes due to new law provisions, called the poison bills[1], lobbied for by major corporate managers, and approved by the Congress despite obvious disadvantage to shareholders (who of course could not lobby as fiercely.) in the US hostile takeovers do not happen anymore, consequently corporate managers are less likely to be fired now.
There should be a lively market for corporate control, where corporate managers are subjected to: mergers, acquisitions, hostile or friendly takeovers. This prospect is what insures that the best person is always in the best position and that managers do not have any harmful power.
2. We have all seen governments bend the law to make them more favorable for big businesses and prohibiting for smaller business.[2]
So, it seems like corporate managers (and not corporations per se) occasionally have illegal powers, endowed upon them by the power monopolists, a.k.a.; Governments.
3. I cannot think of any case corporate mishap where government provisions or support was not involved.
· Basis 2: Logic
What is a corporation? The Corporation is not an independent entity. It is merely the aggregation of the will of shareholders who are willing to take the risk of putting away some of their savings into an enterprise hoping for a decent profit. They are you and me.
Managers should merely ‘manage’ our money, in a manner that is in our best interest, motivated by: reputation, credibility and—in some cases—losing their jobs due to bad performance.
The stakeholder theory implies:
a) There is going to be a conflict of interest between what shareholders want and what other desired ‘stakeholders’ want.
b) This conflict should be resolved in favor of stakeholders other than the real ‘owners’ of the company, the shareholders
c) If no conflict is assumed by this theory, and shareholders’ interests are the same as the stakeholders’, it wouldn’t have been necessary to make this distinction between the two, to begin with. [3]
d) I cannot see how this is empowering to ‘us’. It looks to me like something that will empower governments and special interest groups, and it will give more discretionary power to corporate managers who are no longer accountable to their shareholders, but they will have their own bureaucratized agenda to follow. 
· Basis 3: the Value System
It wasn’t moral when some corporate managers were given special privileges by the government, at the expense of other companies or at the expense of their own consumers and shareholders. Corporations should be answerable solely to their owners; the shareholders, and it is immoral for companies to use the capital entrusted to them by the owners in any other purpose other than profit-maximization. No outside interest group should have the power or the moral sanction to impose its will on the management of someone else’s property. This is outright stealing.
Should you find it ethical that people protect the environment or preserve the wild life or consume less frivolous, you are advised to tell them that they should do just that. Legislating morality is a contradictory term. Once you force morality on people, not only does it cease to be ‘morality’—since it did not stem from people’s own choices—but the act of enforcement itself is the worst evil, since not only do you strip people from their rights to choose, but you also claim a higher moral ground while doing so!
I believe we are all guilty of distorting philosophy, economics and political science. But I find intellectuals and philosophers to be the guiltiest ones of all, because they are the ones who were supposed to build a strong base beneath our feet to stand on, instead they failed us all with sophistry instead of philosophy and apologetic excuses instead of sound logical arguments.
[1] a variety of takeover defenses, most authorized by statute, that make corporate takeovers difficult for one who wants to acquire a corporation whose directors and managers decide to resist. The result: There are fewer corporate takeovers than there were in the 1970s and 1980s, before such statutes were passed, and before the poison pill was invented by the inventive corporate defense attorney Martin Lipton. The takeovers that succeed today are "friendly" ones, of which the target corporation's board of directors approves.
[2] In Egypt, we have prohibiting capital requirements for insurance companies, price ceilings for steel companies, outright monopoly on phone landlines, etc.
[3] See if you can find this question stated clearly and candidly in any of the glossy brochures on the wonders of corporate social responsibility — you will not.
