Thursday, March 13, 2008

Former Labor Secretary Reich: CSR "A Pale Substitute" For Regulation

The Alonovo Review looks at the debate around Robert Reich's new book. Reich, a professor at UC Berkeley and Secretary of Labor under President Clinton, recently published "Supercapitalism: The Transformation of Business, Democracy, and Everyday Life." In his book, Reich argues that "reliance on voluntary 'corporate social responsibility' is a pale substitute for effective laws against corporate misconduct. The only remedy is to purge corporate cash from the political system." In addition, Reich believes that we should not view corporations as entities with rights and responsibilities but rather hold the people behind them accountable.

Stanford Law Professor and social entrepreneur Lawrence Lessig challenges this notion, arguing that "there are times when it does make sense to think about the corporation as an entity and to allocate responsibility in that way." However, Lessig agrees that "there is something fundamentally wrong with trusting (corporations) to restrain the drive for profits in the name of doing the right thing... It is government's job to set the appropriate limits on corporations (and individuals) so that... they will not harm a public interest."

On the other hand, Roger Lowenstein questions the wisdom and likelihood of going back to regulation in order to tame the market and some of The Economist critics fear that Reich's approach is merely naive, ignoring the long history of government failures when it tries to, again, catch the government's own tail.
And CSR folks--from the right as well as from the left--respond that corporate social responsibility can satisfy both camps: it is about businesses genuinely becoming more attuned to social and environmental concerns just as much as it is about making a profit.

No comments: