Business is a force designed to make the most money at the least cost for the benefit of its shareholders. That is its sole purpose and its legal duty. It has no inherent reason to be green, good or socially just and it is unreasonable to expect it to be. It is by nature amoral – as indeed is the press which is also a business and will only be ‘moral’ in so far as perceived ‘morality’ attracts readers. There is no ‘ought’ in enterprise.
By far the most important force obliging it to behave well is the government or international regulation. It is one of the paradoxes of the CBI state of mind that keeps clamouring for less ‘red tape’ and ‘regulation’, yet capitalism can only work well under the thumb of firm, fair and efficient government regulation. That’s why it never thrives where governments are weak and corrupt: Africa’s poverty exists because no one will invest in countries with governments that can’t guarantee basic property rights or enforce legal contracts.
The CBI resisted the minimum wage, predicting dire consequences. In fact most big companies with large low-paid workforces welcomed it – so long as it was strictly enforced on everyone. If all had to pay the same, there was a level playing field and it would drive out seedy employers engaging in unfair competition by paying below a fair wage.
Good government can and must regulate business for its own sake as well as everyone else’s. ‘Light touch regulation’ was not a good idea for the banking sector when Northern Rock went bust. Who saved the day? Government guarantees – let no one forget it. Out of control borrowing had to be rescued by the state and the taxpayer, but don’t hold your breathe for the Institute of Directors to recognise how much businesses of every kind rely on strong government and ‘red tape’.
Otherwise, only self-interest will ever divert business from its primary duty to make profits. Anita Roddick sold virtue in her delightful little Body Shop bottles. There is a growing market demand for fair trade and green goods – and there should be more of it. If the public demands virtue from business, they will get it. We will all only get goodness from business if we buy it.
The trouble is, people go on buying from bad businesses – reading Murdoch newspapers, for example. There could and should be a lot more public clamour against bad employers. It often takes surprisingly little public action to name and shame companies behaving badly to damage their bottom line, at which point virtue suddenly becomes a business necessity. London Citizens, a community group combining trade unions, local churches and others, gets results by local pressure and publicity in its campaign for employers to pay a living wage rather than the sub-survivable minimum wage.
Private businesses or mutuals might choose to be good for their own virtuous reasons, with private owners moved by charitable considerations or mutual members willing to forgo profit for virtuous purposes. But companies with shareholders by law always need to prove that everything is done for sound commercial reasons. Shareholders – or these days their legal representatives in pension funds – need to know a company’s virtue is either made by money or was imposed on them by regulations.
So business will only ever be as good as we make it be – either by the government we elect or by the strength of the collective EU’s will to enforce higher standards for all, which sadly British governments repeatedly veto or opt out of – as is currently the case on the agency workers directive. There is no ‘should’ for business to promote social justice. It is for us as voters and consumers to tell it what it must do.
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