Professor Bhagwati on corporations social responsability and Rio+20


The flavor of the week in Rio is “sustainability indexing” for corporations, by way of corporate social responsibility (CSR). Such indexing is being compared to accounting standards. But the latter are “technical” and gain from standardization; the former are not and must reflect variety instead.

Corporations can, of course, be asked to conform to a “don’t” list – don’t dump mercury into rivers, don’t employ children for hazardous tasks, etc. But what they practice as “do’s” by way of altruism is surely a matter of what they consider virtuous to spend their money on.

The notion that a self-appointed set of activists, in conjunction with some governments and international agencies, can determine what a corporation should do by way of CSR contradicts the liberal notion that we should ask for virtue to be pursued, but not in a particular way. At a time when the world is emphasizing the importance of diversity and tolerance, it is effrontery to suggest that corporations should standardize their notion of how they wish to promote good in the world.

Jagdish Bhagwati in Rio’s Unsustainable Nonsense

Yeah. Variety. Diversity. Tolerance. Liberty. For whom, may I ask?

To answer Professor Bhagwati, one of the most preeminent schoolars of our time, I could emphasize the gains deriving from cooperation, deriving from the alignment of social responsabilities in order to create a new kind of social responsability, the kind capable of achieving greater, more effective results (results which, by the way, the current system has proven unable to deliver). Cooperation equilibria. Externalities. Economies of scale. Synergies. Spillovers. I could. But I’m not qualified to do it properly. And I would fail the point anyway.

I could also go another other way, and talk about moral commitment, social justice or equity. Philosofical stuff, I mean. I’m not the right person to do it either, at least at my current level of knowledge and experience.

I could even affirm that Corporations are embedded in social and natural contexts they must preserve in order to promote their agenda and achieve their objectives. Natural and social contexts that, simultaneously, depend on and influence corporations activies and results.

But, Professor Bhagwati, I will only say it in one word. This word that seems to be erased, forever, but erroneously, from the modern liberal vocabulary. There’s this word, Community. As I see it, the first liberals used to call it Fraternity. I belive it is a lot like being part of a team, working together towards a common goal: the sustainability of our economic systems and of our economic activities. And you don’t do that without coordination. Without direction, without sacrifice. Without specific roles. Without some degree of standardization. But nobody expects such a notorious liberal to consider that, of course. Old habits are hard to change.

Community. Model that.

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