CSR and Risk Society
By Dagfinn D. Dybvig
HHB/UiN
Beck-style risk society (1986)
• Risk has to do with potential damage – it is
therefore ”invisible”
• Risk an ”invisible” product of the technological
and socio-economic system itself (systemic risk)
• Risk hard to assess because of complexity
• Potential damage may be catastrophic
• Potential damage may be irreversible
• Hard to separate risk from progress – boomerang
effect!
My Question:
How to deal with systemic risk in a
social contract – involving CSR?
The Social Contract tradition
Thomas Hobbes (1588-1679)
The father of modern Social Contract theory
Hobbesian Social Contract (I)
State of nature:
• No government, no laws, thus no private
property
• Life is a war of every man against every other
man; “nasty, brutish and short”
• Essentially the law of the jungle
Hobbesian Social Contract (II)
The Social Contract:
• Every individual surrenders its “natural liberty” to
a common centralized power, a Sovereign
embodying the State
• The Sovereign has a monopoly on the use of
force, and more generally, on political power
• The Sovereign defines and enforces what is legal
and illegal. Private property is thus constituted,
but subject to limitations imposed by the
sovereign, including confiscation
This contract generates a top-down
(not very liberal) social structure!
• The Hobbesian Sovereign personifying
the State, made up of individuals
• The sword and the staff symbolize secular
and religious power which is absolute
Bottom-up (=liberal)
Social Contract theory
Locke and Rousseau
Social Contracts and Economic Systems
Mercantilism
Classical Liberalism
(Small government protecting Private Property)
Social Liberalism
(Strong government expressing the General Will)
Contemporary Examples
Social Contract
Example
Type of Capitalism
Founding Idea
Hobbes
China
Neo-Mercantilistic State Capitalism
Sovereign Power
Locke
USA
Classical-Liberal Laissez-faire Capitalism
Private Property
Rousseau
Europe
Social-Liberal Welfare Capitalism
General Will
(Posing the question: If an American or European company is operating in China, which social contract should their behavior be judged by?)
Question:
Where does RISK and CSR
fit into this picture?
Assumption
CSR is essentially about the social
responsibility of business beyond what is
stipulated by law, i.e. a voluntary
responsibility.
(Cf. Carroll 1991/1999, Schwartz & Carroll
2003, Windsor 2006)
Basic observation
• The notion of CSR does not fit with the Hobbesian, Mercantilistic model beacuse in
this model the Sovereign arrogates all social power and thus all social responsibility.
• I.e. in the Hobbesian socio-economic model there is no room for a voluntarily
assumed social responsibility on behalf of private citizens and private firms. Why?
Because voluntary responsibility presupposes individual freedom, and in the
Hobbesian model there is essentially only one free individual (in a strong sense of
freedom), the sovereign.
• In this sense CSR appears to be an intrinsically liberal, post-Hobbesian notion. In
other words, CSR seems to be intrinsically linked to the political and economical
thought of the Enlightenment, emphasizing the freedom of the individual, including the
individual firm (corporate citizen.)
The Fundamental Principle of CSR
With freedom comes responsibility
I.e. CSR is essentially a liberal
(”bottom up”) project
This raises the question:
• What kind of freedom does companies in
liberal societies have to incur risk (financial,
environmental, etc)?
• What kind of social responsibility does this
imply according to (liberal) social contract
theory?
Some general observations
Risk and the Social Contract in a Classically Liberal Perspective
(Locke-style)
• The individual agent (firm) is allowed a wide scope of action as regards its
private property – freedom consists in being subject to limited regulation
• If action results in damage to another agent’s private property, the agent who
is responsible for the damage is morally and/or legally obliged to offer
compensation (Cf. Nozick’s in Anarchy State and Utopia)
•In other words, under this paradigm emphasis is upon assessment of and
compensation for actual damage (“visible”), not risk (“invisible”)
•Prima facie, this makes for an uncomfortable fit with a Beck-style risk society:
Private agents (firms) may be poorly positioned to assess and control systemic
risk, and to prioritize the public interest
•This is particularly crucial when the potential damage is catastrophic and
irreversible – implying that compensation after the fact may be too little too late
Some general observations
Risk and the Social Contract in a Social-Liberal Perspective
(Rousseau-style)
•
•
•
•
•
•
Scope of individual action significantly restricted in advance: regulation by centralized
government bodies expressing the general will – freedom consists in being part of the
political process that determines the regulation
Under this regulatory paradigm emphasis is on potential damage (risk) – damage that may
occur and should be forestalled
Incurrment of risk must be compensated by gain to society as a whole, including its weakest
members (cf. Rawls in A Theory of Justice) – call it the “just risk” paradigm
Compare: Environmental regulation, financial regulation
Prima facie this paradigm makes for a good fit with a Beck-style risk society: democratically
elected central authorities are arguably better placed than private agents to assess and control
systemic risk, as well as to act in the public interest
This makes sense especially when potential damage may be catastrophic and irreversible
What does this imply for CSR?
• Claim I: In face of a Beck-style Risk Society a
purely ”private” Classically Liberal legal or
ethical approach to Corporate Risk based on
compensation for actual damage makes little
sense – compensation for catastrophic and
irreversible damage is inherently too little too
late
• Claim II: Therefore CSR-related work on risk
should take the form of a public-private
partnership focusing on reducing systemic risk
per se (systemic risk must be reduced in a
systematic fashion)
• I.e. in a Social-Liberal Risk Society central
government should assess and control
systemtic risk (as part of the social contract),
but the socially responsible attitude of private
firms (within this social contract) is to help
government do so, also on a voluntary basis as
a quid-pro-quo for their freedom to do ”risky”
business
• In particular firms should volunteer their
knowledge of risk within their sectors, and
thus assist the regulatory process
• Indeed, this would be a case of exercising
freedom ”bottom up” within a Rousseau-style
Social Contract, and ought to be in the
Corporation’s own long-term interest
Thank you for your attention!