Neoliberalism, Instrumentalism and Moral Idealism Towards a Critique of Corporate Social Responsibility Marisol Sandoval1 University of Salzburg, UTI

I Research Group Uppsala University, Department of Business Studies

marisol.sandoval@stud.sbg.ac.at

Recipient of a DOC-fellowship of the Austrian Academy of Sciences at the University of Salzburg

Abstract This paper argues that the dominant discourse on Corporate Social Responsibility (CSR) is socially irresponsible. It shows that the idea of CSR can function as an ideological underpinning for neoliberal reforms as well as for corporate branding and marketing strategies that enhance a companys reputation and create competitive advantages in support of profit interests, and that it furthermore contributes to protecting and restoring corporate legitimacy which anti-corporate movements are increasingly trying to challenge. Based on the question how economic and social goals of the corporation are related a typology of CSR theories is constructed. Reductionist, projectionist and dualist approaches are identified and critically discussed. It is shown that reductionist CSR mainly consists of neoliberal rhetoric in disguise, that projectionist CSR theories instrumentalize social problems for satisfying profit interests, and that dualist CSR is limited to moralized and idealistic ideas of how to achieve a better capitalism. The critique of these approaches shows that the dominant discourse on CSR does not challenge corporate profit interest, but instead supports capitalist hegemony. The paper further argues that the consequence of this critique should not be to abandon the idea of social responsibility, but to critically redefine it. It concludes with some possible starting points for a critical redefinition. 1. Introduction Considering the vast amount of literature on Corporate Social Responsibility (CSR) that has been produced during the last 50 years, the number of critical examinations that question the validity of the concept is rather low. Apart from some authors that have made important contributions from a critical perspective (Banerjee 2007, 2008; Boje 2009; Hanlon 2008; Hanlon and Fleming 2009; Roberts 2001, 2003; Shamir 2004; Sklair and Miller 2010), discourse on CSR and defining social responsibility has been widely left to mainstream management scholars. A brief look at the most relevant handbooks on Critical Management Studies (CMS) further shows, that CSR is currently only on the margins of at the agenda of CMS. CSR is mentioned once in the handbook Studying Management Critically (2003) edited by Mats Alvesson and Hugh Willmott, and once in Christopher Greys and Hugh Willmotts Critical Management Studies (2005). Both books have not included the term in their indices. In the recently published Oxford Handbook of Critical Management Studies (2009) edited by Mats Alvesson, Todd Bridgman and Hugh Willmott, CSR as a term is included in the index and appears three times throughout the book. Considering the popularity of the concept today, it seems important to critically address the idea of social responsibility for critically engaging with the way the economy is organized today and the role corporations play in society. A critical approach to CSR should do both, critically discuss dominant understandings of CSR and develop ideas how to redefine this notion in a way that favours the interests of society over those of corporations. This paper wants to contribute to the former. This first requires gaining detailed insights into the way CSR is currently understood in management literature. Thus in section 2, a typology of approaches to CSR is constructed. Section 3 critically evaluates these approaches and shows that dominant understandings of CSR contribute to strengthen capitalist hegemony. Section 4 draws some conclusion and gives an outlook towards a critical redefinition of the concept of social responsibility. 2. A Typology of Approaches to CSR At the hart of the debate on CSR lies the question how business practices are related to the common good, to social and ecological sustainability. It is surprising that existing systematic discussions of CSR theories have not focussed on this issue: Existing typologies have shown the historical evolution of CSR theorizing (Carroll 1999, Lee 2008); have distinguished possible motivations for engaging in CSR activities (Salazar and Husted 2008); they have focused on the business society relation (Preston 1975; Sohn 1982; Garriga and Mel 2004) or the relation between a company and its economic environment (Secchi 2007). None of these systematizations of CSR theorizing has asked the question what different approaches to CSR conceive as being the responsibility of the economy in general and of the corporation in particular. This question relates to the purposes of economic operations. The typology constructed in this paper is thus based on the following question: What is the purpose of the economy? In capitalism, this question more specifically means: What is the purpose of the corporation? Does it consist in the

creation of profit? The provision of goods and services? Or should the economy contribute to human well-being in general? With the help of Wolfgang Hofkirchners (2002, 2003) distinction of ways of thinking, three main ways of answering this question can be identified. Hofkirchner distinguishes four possible ways of relating two phenomena with different degrees of differentiation: Reductionism, projectionism, dualism and dialectics. Reductionism reduces the side with the higher degree of differentiation to the side with the lower degree of differentiation (Hofkirchner, 2003: 133). Projectionism in contrast takes the higher degree of differentiation as its point of departure and extrapolates or projects from there to the lower degree of differentiation (Hofkirchner 2003, 133). Dualism separates both phenomena from each other and thus abandons all relationships between all of them by treating them as disjunctive (Hofkirchner 2003, 133). Dialectical thinking on the contrary integrates the lower and the higher degree of differentiation by establishing a relationship between them that, in particular, might be characterized by the following criteria: firstly, both sides of the relation are opposed to each other; secondly, they depend on each other; thirdly, they are asymmetrical (Hofkirchner 2003, 133). In respect to the relation of financial and social goals of the economy, the less differentiated phenomenon is the argument that the only responsibility of business is the generation of profit. The higher differentiated phenomenon is the view that business has not only an economic, but a wider social role in society and is responsible also for social, environmental, etc. issues. Within dominant CSR literature reductionist, projectionist and dualist approaches can be found: - Reductionism in regard to CSR means, that the responsibility of business is reduced to its economic aspects, i.e. the generation of profit. Based on this perspective it is argued that a corporation can best contribute to overall social well-being if it exclusively focuses on the maximization of profits without taking into account social issues. - Projectionism on the contrary considers ways of how socially responsible behaviour can be beneficial for a companys bottom line. - Dualism separates economic and social responsibilities without relating them to each other and argues that companies should achieve both, being economically successful and socially responsible. In the following these approaches will be examined in greater detail by giving some examples. 2.1 Reductionist Approaches to CSR Reductionist CSR theories argue that the only duty of companies is to maximize profit and stress that this would automatically increase general welfare. They thus incorporate the liberal idea of an invisible hand (Smith 1759/1976, 185; 1776/1976, 456) and a belief in a self-regulating capacity of the market (see for example Hayek 1978, 90; 1982, 109). Form this perspective, acting socially responsible at the expense of profits would be counterproductive. This standpoint has most prominently been advanced by Milton Friedman (1962/1982, 1970/2009). In his article with the programmatic title The Social Responsibility of Business is to Increase its Profits (Friedman 1970/2009), he argues that businessmen are only responsible to shareholders; In a freeenterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society (Friedman 1970/2009, 75). Friedmans argument that a corporation is only responsible to shareholders is based on a specific view of the role the corporation has in society: The corporation is an instrument of the stockholders who own it (1962/1982, 135). Thus, for Friedman the purpose of the corporation is not to provide necessary goods for all members of society or to contribute to common wellbeing but to just serve the interest of its owners. Already in the 1950s Theodore Levitt advanced a similar argument. He explicitly stressed his conviction, that making profit is the only task of business: Welfare and society are not the corporations business. Its business is making money, not sweet music (Levitt 1958, 47). He therefore argued for a single-minded devotion to profit (Levitt 1958, 49). Jensen (2010) holds a similar view. He criticizes stakeholder theory because it would challenge the value maximization principle by stressing the importance of paying attention to various different stakeholders instead of exclusively focusing on the interest of shareholders. This in turn would be dangerous as it would lead to corporate confusion and thus pose the danger of loosing in market competition (Jensen 2010, 32). Jenson adheres to the idea that market operations and striving for profit

automatically generates general welfare: value maximization [] leads under most conditions to the maximization of social welfare (Jensen 2010, 35). He further stresses that 200 years worth of work in economics and finance indicate that social welfare is maximized when all firms in an economy attempt to maximize their own total firm value (Jensen 2010, 34). Similarly Levitt states: In a free enterprise system, welfare is supposed to be automatic (Levitt 1958, 47). Apart from the belief in an invisible hand of the market which entails the view that self-interested, profit maximizing behaviour would automatically guarantee common good, representatives of an reductionist approach further have in common that they argue against CSR because corporate executives would not have any democratic legitimization to decide which social need to be solved and how (Friedman 1970/2009, Jensen 2010); and they stress that managers who devote money to social purposes would violate the ownership rights of shareholders (Friedman 1970/2009, Jensen 2010). Representatives of a reductionist approach also share a general scepticism towards governments. They are sceptical not only of government interventions in markets, but of an active government in general. For them, a strong welfare state bears the danger of transforming into an authoritative regime (Levitt 1958, 44). Nevertheless, they reject the idea of CSR and prefer that the states take care of social issues instead of corporations. But government action for welfare purposes also affects corporations for example trough tax or labour market policies. Thus the liberal attitude towards government intervention, which aims at reducing it to a minimum, conflicts with their argument that the state should take care of welfare issues. Some other liberal authors have resolved this tension by stressing that it is possible to at the same time maximize profits and tackle social issues, which would make government intervention obsolete (see for example Drucker 1984, Davis 2005, Cogman and Oppenheim 2002): This would be possible by turning social problems into profitable business opportunities. Peter Drucker (1984) states that it will only be possible to solve the social problems of the future if this can be done in a profitable way. Thus these future problems can be solved only if seen and treated as opportunities. And the economic realities ahead are such that social needs can be financed increasingly only if their solution generates capital, i.e. generates a profit (Drucker 1984, 55). The task would be to privatize domains of social needs, with which governments can, according to Drucker, not deal adequately. His vision of a true mixed economy of the future (Drucker 1984, 58) is that companies should deal with social issues and the necessary money should be provided by private parties or by governments. This in fact would mean that government is funding private initiatives that primarily aim at maximizing profits. Public money would thus be turned into private profit (Drucker 1984, 58). Similar to Drucker also Davis (2005) stresses that dealing with social issues can be beneficial for a companys primary task of generating profit. Partly, the significance of social issues in business success (Davis 2005, 105), would consist in its function as an indicator for discovering new profitable spheres of investment: Social pressures often indicate the existence of unmet social needs or consumer preferences. Business can gain advantage by spotting and supplying these before their competitors do (Davis 2006, 107). Cogman and Oppenheim (2002) have advanced a similar reductionist approach to CSR. Like Drucker and Davis they treat social issues as potentially profitable spheres of investment: For some of these companies, however, this spending may well be a source of growth, since many of todays most exiting opportunities lie in controversial areas such as gene therapy, the private provision of pensions, and products and services targeted at low-income consumers in poor countries (Cogman and Oppenheim 2002, 57). Further areas which these authors see as potential future fields of profit maximization for example are health care and education (Drucker 1984, 58); HIV/AIDS in developing countries (Davis 2005, 107), and human trafficking (Cogman and Oppenheim 2002, 61). To sum up: Although Drucker, Davis and Cogman and Oppenheim stress that business should be concerned with social issues and thus disagree with the scholars cited earlier in this chapter (Friedman, Levitt, Jensen) who argue that business should not at all care for social issues, they nevertheless agree with them on that the only responsibility of business is to generate profit. Drucker (1984), Davis (2006) and Cogman and Oppenheim (2002) recommend dealing with social issues not because they consider it as a moral obligation or social necessity, but because they regard them as constituting potential areas of profit accumulation. CSR here is not an end in itself but a means for maximizing profit. Thus this is even a more extreme version of the reductionist approach: While Friedman, Levitt and Jensen simply ignore the existence of human misery, Drucker, Davis and

Cogman and Oppenheim argue for making profit out of it. Private wealth should be generated at the cost of those who are already underprivileged. Both arguments presented here are reductionist in that the purpose of the economy is reduced to the generation of profit. All of the cited authors stress that striving for the maximization of profits contributes to common well-being. While some (Friedman, Levitt, Jensen) argue that this can best be achieved without taking into account social issues, others (Drucker, Davis, Cogman and Oppenheim) argue that social problems can be turned into new spheres of capital accumulation and profit maximization. 2.2 Projectionist Approaches to CSR Projectionist approaches to CSR stress that in order to secure the conditions for future profit generation, companies have to consider the effects their actions have on their environment. While reductionist approaches radically dismiss every corporate concern with social issues at the expense of short-term profits, projectionism argues that caring for social issues can be economically beneficial for companies in the long-run. Thus projectionist theories approach CSR in a very instrumental way: dealing with social issues apart from a companys core business, is considered legitimate as long as it matches the long-term economic interests of the corporation One example for a projectionist approach is Thomas M. Jones instrumental theory of stakeholder management (Jones 1995, 405). Instead of arguing that business can best achieve its economic goals when refraining from dealing with social issues, Jones highlights that acting in a responsible ways can create competitive advantages and thus be beneficial for a firms profit interests: This instrumental theory of stakeholder management essentially turns the neoclassical theory of the firm upside down. It implies that behaviour that is trusting, trustworthy, and cooperative, not opportunistic, will give the firm a competitive advantage (Jones 1995, 432). The idea that dealing with social problems not necessarily runs counter to profit interests, but can in fact contribute to achieving profit goals, has during the last decades contributed to the increasing popularity of the CSR concept (Lee 2008). In the course of this development ethical arguments became less important while managerial outcomes moved to the centre of analysis (Lee 2008, 56). In this context Falck and Heblich (2007) point out that companies have an opportunity to do well by doing good (Falck and Heblich 2007, 252). Used well, it [CSR] is a way of actively contributing to the societys basic order and, in doing so, enhancing the companys reputation. From a supply-side perspective, a good reputation is necessary to attract, retain, and motivate quality employees. From a demand-side perspective, a good reputation increases the value of the brand, which, in turn, increases the companys goodwill (Falck and Heblich 2007, 248). Burke and Logsdon (1996) term such an approach strategic corporate social responsibility (S-CSR): corporate social responsibility (policy, programme or process) is strategic when it yields substantial business-related benefits to the firm, in particular by supporting core business activities and thus contributing to the firms effectiveness in accomplishing its mission (Burke and Logsdon 1996, 496). Furthermore many empirical studies have investigated the relationship between a companys financial and social performance. Margolis and Walsh reviewed empirical studies on the relationship of social and financial performance. They found that from 1972 to 2002 127 empirical studies concerning this question were published (Margolis and Walsh 2003, 273), 19 of them were published in the 1970s, 30 in the 1980s, 68 in the 1990s, and 10 from 2000 until 2002 (Margolis and Walsh 2003, 273f). This review came to the result that studies that show a positive correlation between social and financial performance prevail (Margolis and Walsh 2003, 277). Similarly Orlitzky, Schmidt and Rynes conducted a meta-analysis of 52 studies on the relation of financial and social performance. They conclude The results of this meta-analysis show that there is a positive association between CSP and CFP across industries and across study contexts (Orlitzky, Schmidt and Rynes 2003, 423). Orlitzky et al. further stress that their findings suggest that with CSP; the case for regulation and social control by governments (acting on behalf of society or the public) is relatively weak because organizations and their shareholders tend to benefit from managers prudent analysis, evaluation, and balancing of multiple constituents preferences. Therefore, these actions are most likely adopted voluntarily (Oritzky, Schmidt, Rynes 2003, 424f). Thus, these results support the argument that if companies take into account social issues, governmental regulation becomes obsolete and CSR therefore is in the long-run financial interest of corporations.

Making the decision whether to engage in CSR activities dependent on its positive or negative influence on profit, is a fundamentally instrumental approach to CSR. It is projectionist because it only looks at the economic potentials of CSR: Taking care of social issues is transformed into a part of a companys strategic economic operations. What projectionist approaches to CSR have in common is that they treat social issues as an economic, managerial factor that is subject to strategic considerations in the interest of long-term profit and a stable capitalism. 2.3 Dualist Approaches to CSR Dualist approaches to CSR distinguish various tasks of the corporation such as maximizing wealth, taking care of the environment, respecting human rights, adhering to laws, caring for employees and local communities etc. without relating them to each other. From this perspective CSR is seen as a viable means for creating a greener, a socially just, a sustainable, a better capitalism. A company is considered to be able to be profitable and socially responsible at the same time. Representatives of this approach neglect to consider how different tasks they assign to companies are related, affect, and may stand in conflict with each other. Dualist views can be found in many definitions of CSR. According to this view a company should strive for profit and in addition take care of social issues. McGuire (1963) for example stresses that a company has economic, legal and social obligations: The idea of social responsibilities supposes that the corporation has not only economic and legal obligations, but also certain responsibilities to society which extend beyond these obligations (McGuire 1963, 144). Similarly Davis and Bloomstrom (1966) stress that CSR goes beyond economic and technical interests of a company: Social responsibility, therefore, refers to a persons obligation to consider the effects of his decisions and action on the whole social system. Businessmen apply social responsibility when they consider the needs and interest of other who may be affected by business actions. In doing so they look beyond their firms narrow economic and technical interests (Davis and Blomstrom 1966, 12). Likewise Keith Davis (1973) refers to social responsibility as one element of a companys responsibilities besides of economic, technical and legal responsibilities. According to him CSR refers the firms consideration of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm (Davis K. 1973, 312f). Another example is Backmans (1975) definition of CSR, which also stresses that social issues should be addressed in addition to economic goals: social responsibility usually refers to the objectives and motives that should be given weight by business in addition to those dealing with economic performance (e.g. profits) (Backman 1975, 2). Similarly also Sun, Stewart and Pollard (2010) stress that CSR goes beyond a companys economic and legal obligations: Basically CSR is concerned with corporate attitudes and behaviour towards its responsibility beyond its immediate profit gain and other benefits pursued by its owners, beyond its limited legal obligations and liabilities, and beyond the passive benefits brought from business operations to society (Sun, Stewart and Pollard 2010, 5). Also Archie B. Carroll, who has introduced the very influential model of corporate social performance, refers to various duties of the corporation: The CSR firm should strive to make a profit, obey the law, be ethical, and be a good corporate citizen (Carroll 1991, 43). What these definitions have in common is that they refer to various corporate responsibilities economic, legal, technical, social without considering interrelations and possible conflicts between them. Apart from these definitions, many influential CSR models are based on a dualist perspective, such as the corporate social performance (CSP) model (see Carroll 1979, 1983, 1991; Wartick and Cochran 1985), parts of stakeholder theory (see Freeman 1984, 1999, Freeman and Phillips 2002, Clarkson 1995) and the concept of the corporate social policy process (see Epstein 1987, 2007). The CSP model for example stresses that business has various responsibilities economic, legal, ethical, philanthropic, but never addresses the question how these responsibilities are related and does not take into account potentials conflicts between them (see for example Carroll 1979, 1983, 1991; Wartick and Cochran 1985). Furthermore certain versions of stakeholder theory can be characterized as dualist. According to the stakeholder model corporations are not only responsible for satisfying stockholder interest but have to take into account various stakeholder interests. Clarkson (1995) for example stresses The economic and social purpose of the corporation is to create and distribute increased wealth and value to all its primary stakeholder groups, without favouring one group at the expense of the others. Wealth and value are not defined adequately only in terms of increased share price, dividends, or profits (Clarkson 1995, 112). Similarly Freemans and Phillips model of

stakeholder capitalism also is dualistic in character. This model is about the possibility that business becomes a fully human institution. [] It sets a high standard, recognizes the common sense practical world of global business today, and asks managers to get on with the task of creating value for all stakeholders (Freeman and Phillips 2002, 345). This equal recognition of all stakeholders would also allow for abolishing the separation between business and ethics (Freeman 1999, Freeman and Phillips 2002). Freemans approach suggests that managers should equally consider the interests of all stakeholders. As it stresses the importance of considering various stakeholder interests without relating them to each other, this approach is dualistic. It thus fails to recognize that interests of different stakeholders can fundamentally contradict each other. Measures for rationalizing production and increasing productivity, to give an obvious example, are likely to result in conflicts between workers and shareholders. From the perspective of worker a rationalization of production might constitute an existential threat as it could make part of the workforce obsolete. Thus it is likely that they will oppose it. Shareholders on the contrary could argue that they have to compete with other companies that have already rationalized their production and therefore were able to reduce their production costs, which allows them to sell the same product at a lower price and thus gives them a competitive advantage. Competition would thus require rationalizing production. The interests of shareholders in this example fundamentally contradict the interests of employees. Dualist approaches do not suggest measures of how to resolve such inevitable conflicts between different stakeholders. They put forward the idea that corporate social responsibility is a means for reforming capitalism and reducing its negative social and environmental effects. Table 1 summarizes the main arguments and representatives of the discussed approaches.
Approach to CSR Reductionist Main arguments - The purpose of the economy is generating profit - Maximization of profits leads to the common good - Business has to act in a way that secures the conditions for generating profit in the future - Engaging in CSR activities can result in competitive advantages and thus creates a win-win situation - Generating profit and acting socially responsible can be achieved simultaneously - CSR can bring about a more sustainable and just capitalism Representatives eg Levitt 1958; Friedman 1962/1982; 1970/2009; Drucker 1984; Davis 2005; Cogman and Oppenheim 2002; Jensen 2010 eg Jones 1995; Burke and Logsdon 1996; Falck and Heblich 2007;

Projectionist

Dualist

eg McGuire 1963; Davis K. and Blomstrom 1966; Davis K 1973; Carroll 1979, 1983, 1991; Backman 1975; Freeman 1984, 1999; Epstein 1987, 2007; Wartick and Cochran 1985, Clarkson 1995; Sun, Stewart and Pollard 2010; Freeman and Phillips 2002

Table 1: Summary: Approaches to CSR Form the perspective of reductionism and projectionism the main purpose of the economy and the corporation is to produce profit. They use different arguments: While reductionists argue that striving for profit creates general well being and thus automatically contributes to solving social and environmental problems, projectionist approaches turn the argument around and stress that caring for social and environmental problems contributes to achieving the main corporate goal of generating profit. Dualist approaches argue that both, profit goals and social goals are important. While reductionist and projectionist approaches to CSR do not at all challenge the growth based and profit maximizing logic of capitalism, dualist approaches aim at reforming capitalism. In the following section a critique of these approaches to CSR will show that reductionist and projectionist approaches are in fact socially irresponsible and that the dualist approach is unlikely to fulfil its intention of contributing to meaningful social change. 3. Critique: Neoliberalism, Instrumentalism and Moral Idealism

The critique of CSR has first and foremost highlighted the ideological dimension of the concept. It has been stressed that CSR is a deliberate strategy to mystify and obscure the reality of capitalist globalization (Sklair and Miller 2010, 492), that it functions as an ideological smoke screen designed to either soften the image of firms engrossed in the rampant pursuit of profit (at any cost) or a way to deflect attention away from an unsavoury core business model (Hanlon and Fleming 2009, 938). The same points of criticism have been raised regarding business ethics in general. Roberts fears that all this talk of ethics is just that talk (Roberts 2003, 250); Boje stresses that it serves as a shield to hide unethical practice (Boje 2008, 8), that it forms ideologies imposed upon the oppressed (Boje 2008, 19), and constitutes ideological masks to cover up dirty business and market forces with ethics plaques (Boje 2008, 19). According to these criticisms, CSR as an ideology presents the market as the only solution to social problems such as poverty, inequality, environmental devastation etc. It would thus function as a strategy of resistance against all solutions to these problems that might negatively affect corporate profit interests. From a critical standpoint it has furthermore been stressed that one central problem in the discussion about CSR is that it never challenges the primacy of profit and the interests of capital (Sklair and Miller 2010, 475). This is what Roberts calls ethics of narcissus, which means that CSR is used for creating an image of corporate goodness, while operational practices remain entirely untouched (Roberts 2003, 257) and thus constitutes a corporate response serve only to facilitate business as usual (Roberts 2003, 257). Treated like this CSR becomes a commodity and a factor of production (Hanlon 2008, 159) and thus supports rather than challenges profit maximization. Similarly Shamir highlights that corporations transform the idea of social responsibility into a marketing device and into a commodity that conceals the power relations that underlie the relationship between global capitalism and social inequality, social harm, and social wrongs (Shamir 2004, 684). In this context Banerjee stresses that the discourse on sustainability has been hijacked by corporate interests (Banerjee 2008, 64). Taking into consideration this integration of CSR in profit-maximizing pursuit of business, it has been criticised as being part of the problem instead of the solution to social and environmental problems (Sklair and Miller 2010, 483). Sklair and Miller for example stress that CSR can be seen as a set of globalizing practices carried out by the four fractions of the TCC [Transnational Capitalist Class] in the interest of capitalist globalization (Sklair and Miller 2010, 484). Regarding CSR, Roberts stresses that the prime beneficiary of this manufacture of appearance is the corporation itself (Roberts 2003, 257). Similarly Hanlon emphasizes that CSR will help to make money from the problems businesses have helped to create, thereby improving shareholder value (Hanlon 2008, 169). To show whether and why this radical scepticism against CSR is appropriate or not is the aim of this chapter. A closer look at the different approaches on CSR that have been presented in the previous chapter shall contribute to a nuanced and comprehensive critique of CSR. First reductionist (section 3.1), projectionist (section 3.2) and dualist (section 3.3) approaches to CSR are critically discussed, before some conclusions are drawn about the role of CSR research in contemporary capitalism (section 3.4) 3.1 Reductionist CSR: Neoliberalism Reductionist arguments on CSR are based on the conviction that the purpose of the economy is the maximization of profit and that individual self-interested behaviour does not only result in individual, but also in common well-being. Business should thus focus on its economic operations and refrain from activities that do not directly contribute to profit maximization. As a consequence, some representatives of this position argue to just ignore social issues (see for example Friedman 1962, 1970; Levitt 1958, Jensen 2010), while other stress that they should be turned into profitable business opportunities (Drucker 1984, 59; see also Davis 2005, Cogman and Oppenheim 2002). Instead of incorporating aspects of social well-being into business operations, the latter perspective argues for extending the logic of business to all further domains of social life such as education, health care, the pension system, etc. Within the framework of the Fordist welfare state, these domains of social welfare were, due to their fundamental importance for social security and inclusion, were consciously protected from the competitive logic of the market. The logic of a capitalist market is that on the one hand profit is generated trough the appropriation of surplus value and on the other hand that access to products and services is restricted to those who have enough money to afford them and thus is inherently exclusive. Privatization, which means the extension of the market logic on areas that

were until then regulated though other mechanisms, thus is an extension of the already existing unequal access to means of economic, social and cultural life. Privatizing in the domain of education and health care means that basic social welfare is not guaranteed to every member of society, but only to those who can afford it. In the case of health care, exclusion can literally be a matter of life and death. A private health care system that works according to market principles at the same time means death for the losers, and profit for the winners of capitalist competition. The idea of solving social problems by imposing on them the competitive logic of markets seems not only paradoxical but also cynical and anti-humanist. Critical scholars have highlighted neoliberal implications of the debate on CSR. Sklair and Miller see CSR as part of a corporate strategy to resist regulation: The practice of CSR is, in other words, intertwined with the overall strategies of the corporations to resist regulation and to ensure voluntary outcomes (Sklair and Miller 2010, 491). Shamir highlights the ideological importance the principle of voluntary CSR has for supporting neoliberal logic: The principle of self-regulation has become the corporations most crucial frontline in the struggle over meaning and an essential ideological locus for disseminating the neo-liberal logic of altruistic social participation that is to be governed by good will alone (Shamir 2004, 677). Similarly Hanlon and Fleming stress the significance of the concept of CSR for creating legitimacy for corporations in an era neoliberal deregulation (Hanlon and Fleming 2009, 937): CSR has entered into the mainstream discourse of large corporations and governmental policies. The new corporate form coincides with a certain change in the cultural logic of capitalism. We argue that CSR mysteriously appeared to fill the legitimating breach left in wake of a reconfigured state (Hanlon and Fleming 2009, 942). Apart form being used as an argument for preventing government intervention in market operations, CSR can be used for supporting neoliberal arguments also in a second way: The idea of the corporation that deals with social, political and environmental issues in a responsible way provides also legitimacy to the argument of privatizing formerly state controlled sectors that are important for general social welfare such as health care or education (see reductionist approaches to CSR). In a situation, where neoliberal policies have lead to a reduction of public welfare expenditures, which have put many areas of social welfare under financial pressure, responsible companies are presented as the far more flexible, unbureaucratic and efficient way of organizing social welfare (see for example Drucker 1984). Paradoxically neoliberal CSR is presented as the solution to problems that were mainly created by neoliberal policies. The reductionist approach feeds on the ideological argument that markets are more effective than governments and that their unregulated operation guarantees best possible outcomes not only for business, but for society as a whole. Counter to this assumption, statistics show that the introduction of neoliberal policies of deregulation and privatization are connected to growing inequality in society. For example when Margaret Thatcher, who is known for her neoliberal political strategy (Harvey 2005), was in power in the UK, inequality dramatically increased: This can be shown by examining the development of the Gini coefficient, which measures the deviation of income distribution from perfect equality. It can range from 0 to 1, whereby 0 means perfect equality and 1 means perfect inequality2. In the United Kingdom it has increased from 0.28 in the mid 1970s to 0.37 around 1900. This strong increase of inequality coincides with the government of Margaret Thatcher and the introduction of neoliberal economic policies.

See OECD Glossary of Statistical Terms: http://stats.oecd.org/glossary/detail.asp?ID=48429).

Figure 1: UK Income Distribution Gini Coefficient. Data Source: OECD StatExtracts: Income distribution inequality, Gini coefficient (after taxes and transfers) www.oecd.org/els/social/inequality [accessed on May 15, 2011] The reductionist version of CSR serves as an ideological underpinning for the neoliberal desire for the expansion of markets and the search for new spheres of profit accumulation. The reductionist, neoliberal view of CSR perverts the idea of social responsibility. Instead of increasing social justice it reinforces inequality and injustice. 3.2 Projectionist CSR: Instrumentalism Projectionist theories of CSR approach this topic in a very instrumental way. From this perspective ethical and responsible behaviour should be incorporated into business operations as long as it does not negatively affect profit interests. CSR is regarded as a tool for enhancing profit. A vast amount theoretical and mainly empirical studies approach CSR from this perspective (see chapter 1.2.2), arguing that CSR can be used for enhancing a companys reputation and thus leads to competitive advantages. CSR is thus conceived as a mere instrument, the use of which is subject to strategic considerations under the primacy of the bottom line. It thus incorporates what Max Horkheimer (1947/2004) once called instrumental reason as the reduction of reason from a means for defining ends, to the mere regulation of the relation between means and ends (Horkheimer 1947/2004, 7), to an executive agency concerned with the how rather than with the what (Horkheimer 1947/2004, 38). In a similar way, projectionist, or instrumental, CSR does not engage in a discussion whether ethical and socially responsible behaviour is desirable, it just uses it as an instrument for achieving a given end: profit. The idea of social responsibility is degraded to a tool, for it derives its meaning only through its connection with other ends (Horkheimer 1947/2004, 25). Roberts (2001) stresses that an instrumental approach to CSR and business ethics, actually has nothing to do with ethics at all. Form an instrumental perspective the aim is only to be seen as ethical instead of being ethical, to maintain good image and reputation (Roberts 2001, 110f). The consequence for Roberts is that the work of ethics can go on purely at the surface of the corporate body, leaving its operational interior free to pursue financially driven operational imperatives (Roberts 2001, 123). This instrumental approach to CSR is closely related to what Boje (2008) calls managerialism. He describes managerialism as as ethics seen trough the viewpoint of managers, the owners agents of capital (Boje 2008, 7). This means that ethical behaviour is subordinated to the interests of capital. According to Boje managerialism is a reification of the multifaceted panorama of logics and worldviews of diverse stakeholders (Boje 2008, 7). This reification means that social issues that relate to a companys conduct are treated as things that are subject to strategic planning. In order to assist managers in developing successful CSR strategies, many consulting books for mangers have been published that try to illustrate how CSR can be beneficial for the bottom line. The consulting literature includes titles such as When principles pay: Corporate social responsibility and the bottom line (Heal 2008); Just good business: The strategic guide to aligning corporate social responsibility and brand (McElhaney 2008); CSR strategies: Corporate social responsibility for a competitive edge in emerging markets (Urip 2010); The HIP investor: Make bigger profits by building a better world (Herman 2010); Green to gold: How smart companies use environmental strategy to innovate, create value, and build competitive advantage (Esty and Winston 2009); Stirring it up: How to make

money and save the world (Hirshberg 2008). All of these titles try to establish a connection between profit and CSR that creates the impression of maximizing the former by means of the latter: These titles promise to achieve bigger profits by building a better world, explain how to use Corporate social responsibility for a competitive edge of how smart companies should use environmental strategy for creating a competitive advantage. A common motif for the instrumental view of social responsibility is also incorporated in the ambiguous meaning of the phrase good business, which contains the idea of the good as the profitable business. Furthermore, the fact that these books that supposedly are about CSR, in their title all use buzzwords for economic success and profit, such as bottom line, competitive edge, competitive advantage, bigger profits, make money, highlights their instrumental approach. Following this logic also business consultants are increasingly focussing on CSR and sustainability. Most of them follow an instrumental logic and stress financial benefits and competitive advantages resulting from a good CSR strategy: One example is CSR consulting Ltd., which promises that CSR has positive effects on sustainable growth of the company.3 Another example is plosion branding that focuses on the integration of CSR in brand development for helping their customers to gain an edge in the marketplace and create a stronger brand.4 GoodValues wants to assist companies in exploiting the opportunities from social and sustainability issues in order to create competitive advantages.5 Similarly GoodCorporation Ltd aims at protecting the most valuable asset of its clients: good reputation.6 The language these consulting firms use for describing their services shows, how the ideas of social responsibility and sustainability are appropriated and defined in accordance with corporate profit interests: Reputation is turned into an asset, sustainability becomes a category for successful economic growth, sustainability issues turn in something that can be exploited, and CSR turns into a matter of risks and opportunities for the firm. CSR that is pursued under this premise is very likely to be highly selective and superficial. In this sense whether or not a company acts responsibly becomes a matter of calculating cost and benefits. Banerjee in this regard points out: What happens if environmental and social issues do not result in growth opportunities remains unclear (Banerjee 2006, 66). Companies that follow the instrumental logic of the arguments described here are likely to drop the idea of CSR as soon as cost outweigh benefits, that is as soon as CSR can only be pursued at the expense of profit. Thus, this way of thinking about CSR might successfully contribute to sustainable economic growth, but not to achieving a sustainable society. 3.3 Dualist CSR: Moral Idealism In contrast to reductionism and projectionism, dualist approaches to CSR see a necessity to reform capitalism. Dualists aim at establishing a more just, sustainable or better capitalism through the help of business ethics and CSR. The desired changes in the way the economy operates are however constrained by the framework of capitalism. This means that dualists want to reform capitalism, but not transcend it. As I have argued in chapter 2.3, dualist approaches such as stakeholder theory or the corporate social performance model identify various purposes and responsibilities of the corporation without considering that these might fundamentally contradict each other. Banerjee in regard to the stakeholder models argues: While stakeholder empowerment is indeed a noble goal, one wonders

Companies achieve sustainable growth most successfully when they integrate their corporate values with robust CSR related policies, processes and reporting throughout their organisation, encompassing good governance, business ethics, human capital management, supply chain management, environmental, health and safety, and community engagement CSR consulting Ltd. Online: http://www.csr-consulting.com/ 4 We develop, brand, and communicate Corporate Social Responsibility programs for companies that desire greater integration between their brand and their CSR programs. By helping companies build strong CSR communications we help them gain an edge in the marketplace and create a stronger brand Plosion branding. Online: http://www.plosionbranding.com/index.htm 5 We help our clients manage the risks and exploit the opportunities from social and sustainability issues, to create positive stand out and gain a competitive business advantage from their CR strategies Goodvalues. Online: http://www.goodvalues.co.uk/ 6 GoodCorporation helps its clients to protect their most valuable asset good reputation. GoodCorporation: http://www.goodcorporation.com/about-us.php

how this would affect the economic performance of a firm when the stakeholders it is supposed to empower, have opposing agendas to industry (Banerjee 2008, 64). Dualism thus, in an idealistic manner assumes that it is possible to satisfy profit interest, and social and environmental needs at the same time. It does not take into account that fundamental injustice arises from the profit motive itself. Karl Marx (1867/1976) criticized capitalism as a system that is based on the division between owners and non-owners of means of production, whereby those who posses means of production exploit the labour power of those without property in order to accumulate profit. In order to survive, those without property have to sell their labour power to capital owners (Marx 1867/1976, 272). Marx argued that labour is the only source of value and that generating profit thus always requires the exploitation of surplus-value produced by the worker. According to Marx, surplus value can only be generated through the specific qualities of labour-power as a commodity. Marx argued that labour power is the only commodity whose use-value possesses the peculiar property of being a source of value, whose actual consumption is therefore itself an objectification of labour, hence a creation of value (Marx 1867/1976, 270). Surplus value is generated through the exploitation of the labour power of workers, who produce commodities that contain more value than the sum of its parts (that is constant capital plus variable capital) (Marx 1867/1976, 257). This relation of capital and labour lays the foundation for fundamental injustice: Political economy starts from labour as the real soul of production; yet to labour it gives nothing, and to private property everything (Marx 1844/2007, 81). Generating profit always involves wage labour and exploitation as a result from the separation of owners and non-owners of means of production. From this perspective, the relationship between capital and labour constitutes one fundamental antagonism of capitalism that cannot be easily resolved. Based on Marx analysis, contemporary critics of capitalism argue why capitalist logic of exploitation, accumulation and competition generates inequality, injustices, poverty, human suffering, restricts freedom, limits the flourishing of human capacities, fuels political conflicts, imperialism and militarism, and poses a fundamental threat to the natural environment (see for example Callinicos 2003; Hardt and Negri 2000, 2004, 2010, Harvey 2010; Olin Wright 2001; Robinson 2004; Saad-Filho 2003, Samir 1998). iek (2009) identifies four main antagonisms of contemporary global capitalism: first the threat of an ecological catastrophe; second, challenges regarding the relation of private property and intellectual property, third, socio-ethical implications of techno-scientific development and forth, new forms of apartheid (iek 2009, 91). While the last antagonism describes the establishment of new divisions between the excluded and the included, the first three ones refer to the commons of society being privately appropriated (iek 2009, 91). iek stresses that the antagonism between the excluded and the included is the central antagonism that gives the others a subversive potential (iek 2009, 98). It furthermore would be the only antagonism that refers to questions of justice while the others are issues of the survival of humanity (iek 2009, 98). This means that the first three antagonisms can be resolved within capitalism, while the last one poses a fundamental challenge to the existing social and economic system. It is this fundamental antagonism, which a dualist perspective on CSR neglects. In this context, iek states: One can sincerely fight to preserve the environment, defend a broader notion of intellectual property, or oppose the copy right of genes, without ever confronting the antagonism between the Excluded and the Included (iek 2009, 98). This is exactly what characterizes the dualist approach. As such it might be successful in reducing certain problems of contemporary society, but it will never solve the antagonisms between the excluded and the included and between capital and labour and thus never fully abolish injustice. In ignoring fundamental antagonisms of capitalism, dualist approaches tend to explain problems under capitalism by referring to a lack of morality and social responsibility. The idea that problems of capitalism can be resolved by introducing business ethics and CSR overlooks and mystifies the structural immorality of the capitalist system. This moralizing ideology has also been a central argument in the context of the 2008 financial crisis. iek highlights the ideological dimension of this moralizing argument: Over the last several months, public figures from the pope downwards have bombarded us with injunctions to fight against the culture of excessive greed and consumption. This disgusting spectacle of cheap moralization is an ideological operation if there ever was one: the compulsion (to expand) inscribed into a system itself is translated into a matter of personal sin, a private psychological propensity (iek 2009, 37). The dualist approach thus is itself contradictory: One the one hand it might in some contexts and specific situations alleviate misery or improve the living conditions of certain individuals. It

acknowledges the existence of non-profit goals of the economy but fails to problematize their relation to profit interests. Thus on the other hand it overlooks problems that result from the very foundation of the capitalist system. It overlooks that inequalities arise from the fact that capitalism is always based on the separation of individuals in owners and non-owner of means of production; that every profit rest on exploitation which is means the appropriation of surplus value produced by workers; that as a competitive system capitalism necessarily has to produce winners and losers; that capitalism always has to follow an expansive logic because for its preservation capital has to be constantly accumulated and thus capitalism has to expand, to strive for growth and to permanently find new spheres of accumulation; that those who are not willing to follow the capitalist logic are most likely to loose in the competition and thus will be excluded, etc. In reducing existing problems of capitalism to a matter of morality, even supposed critiques of the system do not at all question its basic operation. 3.4 CSR as Social Irresponsibility As this critical evaluation of approaches to CSR has shown, none of them reflects on capitalism and the way it operates as an economic system. They all have in common, that the relation of economic and social, environmental etc. goals of the corporation is framed as the relation between profit-goals and non-profit goals. Profit remains the central category, its maximization the central purpose of the economy, which only in the case of dualism should be supplemented by a sense for social and environmental concerns. Behind this focus on profit lies the often implicit assumption that the creation of profit is necessary for general wealth and well-being and also for covering the costs which social and environmental problems are causing. Drucker has explicitly stressed this assumption when arguing that the first social responsibility is to make enough profit to cover the costs of the future. If this social responsibility is not met, no other social responsibilities can be met (Drucker 1984, 62). The idea that profit is necessary for paying for social problems is a consequence of a fetishist understanding of profit. Karl Marx (1867/1976) in the first volume of Capital has introduced the idea of commodity fetishism for describing the fact that under capitalism social relations tend to be mystified and to appear as things. The fact that individual producers produce for each other constitutes a social relation. In capitalism this social relation only becomes visible as a relation between things that are exchanged on the market. Thus the sociality of production becomes reified and appears as a relation between things, between commodities: It is nothing but the definite social relation between men themselves which assumes here, for them, the fantastic form of a relation between things (Marx 1867/1976, 165). Likewise the value produced trough the labour power of workers, appears as an objective quality of the commodity: The mysterious character of the commodity-form consists therefore simply in the fact that the commodity reflects the social characteristics of men's own labour as objective characteristics of the products of labour themselves, as the socio-natural properties of these things (Marx 1867/1976, 164f). Thus commodity fetishism obscures that labour is the actual source of all value and profit is only possible as an appropriation of the surplus value produced by labourers. The assumption that profit is necessary for covering social and environmental costs fetishizes profit because it regards profit as the source of wealth, rather than as the specific form of how wealth is appropriated under capitalism. It thus presents profit as a natural and necessary quality of the economy. The fetishist view of profit constitutes a naturalization of capitalism. From this perspective, thinking beyond capitalism is impossible as abolishing profit would mean to abolish wealth and value in general. Critical scholars have tried to disconnect wealth and profit and to counter this naturalization by highlighting that the contemporary way business organizations are organized (as private corporations) is historical. Banerjee for example shows that the development of the modern corporation in the 19th century was based on a political process that fostered the separation of economic from social issues and established the corporation as an organization that serves not the public, but private interests (Banjeree 2008, 53f). The review and discussion of the state of the art in CSR research has shown that not even the discussion on business ethics and the social responsibility of business attempts to think beyond the boundaries of capitalism. Existing problems are believed to be solvable from within either trough market-based solutions, which refer to the classical idea of the invisible hand (reductionist approach) or trough introducing ethical guidelines for business operations (dualist approach). Thus Hanlon is right when he asserts that CSR ensures that subversive alternatives suffer the fate of utopias they are dismissed as impossible however attractive we find them (Hanlon 2008, 167). As it describes all social and environmental problems as not resulting from systemic features of capitalism,

but from a lack of morality or even from restricting market operations, the debate on CSR makes thoughts about possible alternatives to capitalism even more unlikely: In contemporary global capitalism, ideological naturalization has reached an unprecedented level; rare are those who dare even to dream utopian dreams about possible alternatives (iek 2009, 77). In its current form, the debate on CSR is part of this ideological naturalization of capitalism and thus strengthens capitalist hegemony. This naturalization limits thoughts about social responsibility and constrains the discussion about what is best for society and not just for corporations and its owners. It forestalls the question whether an alternative way of organizing the economy might be more compatible with social and environmental sustainability. The contemporary debate on CSR at best asks how profit can be generated in a more responsible way, but at worst it discusses how to capitalize on social and environmental problems, which perverts the idea of social responsibility. A debate that deals with social responsibility in regard to economic operations that does not even reflect on the foundations and mechanism on which these are based, but treats them as given, fixed and unchangeable, is socially irresponsible. 4. Conclusion and Outlook: Redefining social responsibility CSR fits well into the contemporary condition of capitalism. The idea of CSR serves as one of the ideological underpinnings of neoliberalism. CSR is also used for corporate branding and marketing strategies that enhance a companys reputation and create competitive advantages that support profit interests. It furthermore also contributes to protecting and restoring corporate legitimacy, which social anti-corporate movements are increasingly trying to challenge. Hanlon and Fleming therefore are right when they state that CSR is more than propaganda (Hanlon and Fleming 2009, 937), it more generally reflects shifts in the nature of late capitalism (Hanlon and Fleming 2009, 937). Although there are exceptions, the majority of contemporary academic contributions to the field of CSR supports neoliberalism and the power of capitalist corporations more than it is challenging it. At the same time, talk about socially responsible corporations contributes to restoring corporate legitimacy. From a critical perspective, it is thus important to not just abandon the concept and leave its definition to shareholder, managers, marketers, PR-agents, etc, but to critically redefine the idea of social responsibility. Starting points for a critical approach to social responsibility for example are: - A shift of the focus of analysis from the social responsibility of the corporation to the social responsibility of the economy in general. - Developing ideas about how a socially responsible economy could look like, and to thereby think beyond the boundaries of capitalism. - Revealing and highlighting the social irresponsibility of capitalist business practices with the help of independent NGOs, watchdog organizations and critical media (as for example http://www.transnationale.org or http://www.corporatewatch.org) A critical redefinition of social responsibility might contribute to the establishment of a counterdiscourse that highlights in which respect, despite claims of CSR, capitalism is not socially responsible and that challenges the naturalization of capitalism as the only possible way of organizing the economy. Critically redefined the idea of social responsibility, instead of functioning as an argument for privatization of economic sectors and regulation, might for example show that in order to come closer to a socially responsible economy it is important that services such as health care and education are not exploited for profit interests, but on the contrary are freely accessible for all members of society; that in order to alleviate poverty the concentration of material wealth has to be challenged trough redistributive measures; that the fight against environmental destruction requires regulations and can not be left to corporations that are competing for profit and market shares; that worldwide legal minimum wages and laws against sweatshop and child labour are necessary and need to be strictly controlled and enforced; that strong, publicly funded, independent civil society watchdog organizations are important to reveal socially irresponsible corporate actions; etc. It is about time to develop a critical notion of social responsibility that can be used for developing alternative visions of a socially responsible economy that goes beyond capitalism as well as for supporting progressive political demands that might contribute to social empowerment and challenge corporate power. References Alvesson, Mats and Hugh Willmott. 2003. Studying Management Critically. London: Sage.

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