All large businesses today practice corporate social responsibility (CSR), so Douglas Eichar's claim that CSR is in retreat appears to contradict our everyday experience. But the kind of CSR that exists today is significantly different from previous versions. U.S. corporations now spend more than ever on education, health, and infrastructure programs in developing countries, and they take their environmental responsibilities more seriously. But large corporations do not deploy their resources to raise the living standards and security of American workers. Instead, large businesses treat labor as a commodity, just one of the costs that businesses feel they must control. Today, raising wages and offering job security provoke strong resistance from shareholders and disapproval from the business press.
Since the Reagan revolution of the 1980s, two ideas have become ascendant: corporations exist primarily for their shareholders, and businesses succeed by competing for customers. Not surprisingly, shareholders and consumers have benefited disproportionately from the globalization of labor and capital. Meanwhile, the problems that plague American workers—job insecurity, stagnating pay, and declining benefits—go unsolved, with business owners and managers no longer feeling any responsibility for tackling them. Quite the reverse: in the 1980s and 1990s, large corporations formerly at the vanguard of welfare capitalism laid off large numbers of their American workforces, sometimes for no reason other than to remain “competitive.” The imbalance among stakeholders can be seen in the statistics. “From 1989 to 2010, productivity in the U.S. grew by 62.5 percent. Corporate profits also soared. . . . However, real hourly wages grew by only 12 per cent in the same period” (p. 309).
Eichar argues that CSR, or what he terms “voluntary responsibility,” has always been the weakest pillar in a tripartite structure that also includes “mandated responsibility” (government regulations) and “negotiated responsibility” (labor unions). Together, these three pillars constrain what corporations can do. Eichar makes no secret of the fact that he distrusts CSR. Compared to government regulations and negotiated contracts, voluntary efforts are inherently fragile, hard to monitor, and hard to enforce. The scale of CSR continues to be far too modest to tackle society's thorniest problems. Even more fundamentally, Eichar considers CSR practices to be little more than a tactic that corporations have used to ward off unions and government regulation (particularly of labor practices). CSR, he writes, is “best understood as the outcome of struggles that pit the heads of corporations attempting to protect the prerogatives of ownership against reformers attempting to both control large corporations and tether them to broader social purposes” (p. 7). Eichar therefore sees little difference in CSR activities through the ages. All stem from the desire of management to maintain the upper hand.
To understand fully the dialectic between capitalists/managers and reformers requires knowing the history of how the corporation has evolved since the late nineteenth century—and so, Eichar devotes much of this volume to some well-trodden historical material. This is frustrating for historians who already know the broad outlines of the history of big business, but it is helpful for the vast majority of the book's potential readership.
Despite some well-publicized clashes with organized labor, writes Eichar, owners and managers went largely unchallenged until the Great Depression, when the federal government placed robust constraints and mandates on corporations for the first time. The government also legitimized unions with the National Labor Relations Act (1935). However, the New Deal reforms were conservative at heart; based on market principles, they left a great deal of space for CSR to continue growing. More corporations offered pensions and health insurance, in part because of new tax exemptions for employer-provided benefits. (The largess was restricted to industries dominated by a few large corporations. Extremely competitive and fragmented industries such as textiles and apparel were less able to offer benefits.) True to the overarching theme of his narrative, Eichar interprets the growth of CSR during the Depression as part of a longer pattern: CSR allowed managers to preempt further intrusions by the federal government and curtail the rise of unions.
After World War II, government contracts went mostly to big businesses, and international trade agreements opened up markets for the goods and services these corporations produced. During the Cold War, the federal government suppressed pro-communist, anti–free market dissent. Meanwhile, nonunion businesses turned to the new science of human relations, especially the work of Elton Mayo, who sought to harmonize the interests of management and workers. More tax exemptions for employer-provided benefits resulted in the significant growth of pensions, life insurance, and other perquisites. The period from the 1950s to 1980 represented the heyday of worker-oriented CSR.
Since then, however, globalization has weakened the bargaining power of workers while enhancing the “structural” power of large corporations, which can now base their businesses anywhere in the world. Today, Eichar writes, the power of corporations still poses a problem for American democracy. His proposed solution is to rebuild the pillars of government regulation and unions. “There is no reason to believe,” he concludes, “that we have reached some end state in our political culture where the large corporation is somehow inoculated from society's efforts to control it” (p. 336).
Eichar's skepticism about CSR contrasts with the more sanguine views of another recent history of the subject: Archie B. Carroll et al., Corporate Responsibility: The American Experience (2012). Far from distrusting management's motives, the authors of Corporate Responsibility see these voluntary programs as upholding the American tradition of checks and balances. “The genius of democratic capitalism,” they write, “is its ability to coordinate the wellbeing of the individual and the community through mechanisms such as markets, politics, and ‘voice’ (that is, the free and open expression of public opinions and ideas).” Corporate responsibility can be regarded as a kind of self-expression, or “the living out of an organization's values, beliefs, and principles.” Doing good can also be “a form of moral and ethical innovation” as in Michael Porter's formulation of creating shared value, or CSV.
But for all their optimism, Carroll et al. cannot deny that corporate responsibility programs of the recent past have failed to improve the lot of America's workforce. “By the early 1990s,” they write, “the social contract between America and the ‘good corporation’ was disappearing. . . . The corporation's economic performance is no longer measured in jobs created, but in financial wealth generated for shareholders” (p. 14). The two books begin from very different premises, but they reach the same disturbing conclusion. Corporate (social) responsibility, one of the key mechanisms for constraining corporate power and correcting the abuses of capitalism, has badly let down the workers of America.
