JETTISONING LABOR RELATIONS: CORPORATE SOCIAL RESPONSIBILITY AND THE RISE AND
FALL OF AMERICAN HEGEMONY
ABSTRACT
The literature on Corporate Social Responsibility (CSR), produced largely by American
business school academics, has, over the last generation, ignored an empirical record of
corporate irresponsibility, especially in the area of employment relations. This neglect is
puzzling given the skepticism of previous generations of CSR scholars and the importance these
placed on labor-management cooperation. Arrighi’s (1994) theory of the rise and fall of
hegemonic societies can explain this shift in perspective. According to Arrighi, American global
economic hegemony emerged a century ago powered by its multi-divisional corporations, but the
extraordinary autonomy exercised by this organizational form stimulated demands for the
responsible use of its economic power. When American hegemony was still new and based on
industrial development, the discourse on CSR focused on “the labor question” in order to insure
productivity and social peace. As the nature of American hegemony expanded after World War
II, academic views on appropriate corporate responsibilities broadened accordingly, and CSR
embraced a pluralistic perspective capable of competing with other systems. Once American
hegemony began its decline, and new competitive and financial pressures shook the stability of
its institutions, the field of Business and Society adopted a managerialist version of CSR that
relied on nonconsequentialist ethical abstractions. This contemporary perspective has had no
measurable impact on corporate behavior, and as American hegemony dissipates, any future
version of CSR will necessarily be less ethnocentric, perhaps originating within other societies.
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A specter of irrelevance is haunting the study of Corporate Social Responsibility (CSR), a
subject long associated with the predominantly American academic field of Business and
Society. Despite the grandiose scope implied by the field’s name, Business and Society
scholarship has primarily focused on hypothesizing, discovering, or evaluating the social
responsibilities of businesses. Yet, despite generating a vast literature that claims to investigate
various dimensions of corporate social responsibility (CSR), the field has had little to say in
recent decades about a number of trends that would seem pertinent and even unavoidable in any
serious discussion of the topic. Rare is the contemporary Business and Society academic who
weighs the empirical record of corporations with regard to the treatment of employees,
deregulation, government subsidies, union avoidance, or the role of the military- and prisonindustrial complexes within an allegedly free market economy.
Part of this neglect might be the product of self-censorship. Business and Society
academics are primarily housed within American business schools, and an examination of
corporate performance with respect to these neglected issues would support at least a prima facie
case that the people running American businesses and financial institutions have actually become
less responsible over time in dealing with employees, governments, or even investors (Marens,
2004), a result that could not be expected to win approval from either business school
administrators or the business community itself. Furthermore, this dismal record was generated
by American corporations despite decades of promoting CSR by many colleges of business with
the enthusiastic encouragement of their accrediting body, thus implicitly criticizing the field’s
own pedagogical record (Cheit, 1991). Nonetheless, attributing the field’s neglect of the
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empirical record to practices of self-censorship can not explain why earlier generations of CSR
scholars proved more willing to criticize corporate leaders or express skepticism regarding their
good intentions (e.g. Bowen, 1953; Chamberlain, 1973; Galbraith, 1958; Dale, 1960; Kaysen,
1957; McGregor, 1960; Levitt, 1958; Selekman and Selekman, 1956). More specifically,
contemporary scholars have shown relatively little interest in either labor unions or general
employment policies, with the occasional exception of the plight of third world workers, safely
removed from having to discuss employment practices within the core itself (e.g. Arnold and
Bowie, 2003). Yet, employee relations were traditionally placed at the very center of the
American discourse on corporate responsibilities, and it is not obvious why the treatment of this
particular issue changed so radically.
This paper attempts to solve this mystery by offering an explanation based on Arrighi’s
(1994) theory of the evolution of hegemonic capitalist societies. It will demonstrate, using
Arrighi’s model, that this most recent generation of scholars narrowed their approach to CSR for
essentially the same reason that the post-war generation expanded theirs from its original focus
on labor and employment relations. In both cases, scholars were responding to changes in the
nature of an evolving American capitalistic hegemony that is based on the triumph of the
autonomous American corporation, a hegemony that has required a periodically changing view
of what responsibilities should attach to this dominant organizational form. During those
decades when American leadership was still primarily defined by its industrial might, questions
of corporate responsibilities logically focused on relations of production. As American
hegemony spread and deepened after World War II to encompass the military, political, and
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cultural spheres, and the American corporation was increasingly held out as a model for
emulation, discussions concerning appropriate corporate responsibilities broadened accordingly.
Furthermore as American business seemed to achieve stability in the post-war years (Edwards,
1975), its leaders possessed the self-confidence to tolerate, even occasionally welcome, a bit of
“constructive” nagging (Brown, 1982; Bullis, 1953). Then, as American hegemony declined in
the 1970s, the role of CSR became that of obfuscation, avoiding critical trends of heightened
class conflict and financial hypertrophy by maintaining the fiction that corporate executives were
still willing and able to promote mutual gain among corporate stakeholders.
I shall present this analysis in five parts. Part one explains Arrighi’s theory of the rise and
decline of capitalist hegemony and applies it to the evolution of the construct of CSR. The
second part chronicles the early decades of this process when nearly ubiquitous labormanagement conflict in the United States generated a discourse on resolving this social and
economic problem, while the third part traces how academics entered the discussion as American
global hegemony spread beyond industrial leadership after World War II. The fourth part
discusses how a previously macro and institutional approach to CSR was eclipsed by a
managerialist perspective that obfuscated the increasingly grim reality of hegemonic decline. I
conclude by suggesting how the uncertainties of a world economy in flux may yet produce a
new, and still unformulated, perspective on the responsibilities businesses owe their societies.
CSR AS A PRODUCT OF AMERICAN HEGEMONY
The irrelevance of modern CSR scholarship, its failure to either articulate a realistic
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normative position or adequately study its subject, is not simply the product of some unfortunate
but ultimately random decline in the quality of the specialized faculty. Historical accounts of
Business and Society have acknowledged that the field has indeed changed since it began to
coalesce during the 1950s and 1960s (Carroll, 1999; Epstein, 1998; Frederick, 2006), but these
accounts have tended to do so in an ad hoc manner without adequately considering institutional
pressures and social trends that might explain the timing and nature of these shifts. For example,
while it may be correct, as some authors have suggested, that the introduction of formal ethics in
the 1980s was a reaction to negative publicity over certain ethical scandals that arose at that time
(e.g. Carroll, 1999; Epstein, 1998), this explanation tells us little about the field’s evolution,
since ethical scandals were hardly unknown before 1980, and these were more likely in previous
eras to inspire political and legal analyses than philosophical ones. To understand how the field
developed as the product of a changing society requires, not another historical narrative, but the
application of historical sociology: a perspective built around a theory of social change that can
tie evolving perspectives on the appropriate responsibilities of business to structural
transformations within American society.
Arrighi (1994) provides such a perspective. His theory of the rise and fall of hegemonic
capitalist societies builds upon Braudel’s (1981) account -- inspired by a passing comment of
Marx -- of the rise and fall of leading European metropolises within a network of global trade
and finance. Arrighi subdivides the history of international capitalism since the conquest of the
Western Hemisphere into four separate eras or “hegemonic waves”, each dominated by
successively larger and more politically coherent core regions, each of which controlled the
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production and trade of the most important goods of its time. Every hegemon eventually
discovers that its growing economic dominance not only allows but even requires it to extend its
hegemony into other spheres. While economic might does indeed buy a great deal of military
power and diplomatic influence, Arrighi follows Gramsci in arguing that global hegemony is
based as much on cooperation as coercion. Not only does the hegemon establish comprador
clients among local elites, but the very vitality of the hegemonic society proves attractive to other
social groups as manifested in their demands for its commodities and cultural products, the latter
including ideological constructs that help legitimize this hegemony. In the case of the United
States, one such ideological construct has been corporate social responsibility.
Each hegemon begins to decline after a few generations as the result of rising competition,
with the reigning hegemon ultimately teaching and financing its eventual successor. In this
manner, the Italian trading states, particularly Genoa, financed the rise of the Netherlands while
it was still a province within the dominant Hapsburg trade network, and in turn, the Netherlands
eventually invested heavily in English agricultural “improvements” that would lead to the
industrial revolution. English capital and technology eventually helped build the American
railroads, and these served as both model and enabler for the large American corporations, which
superseded the individual price-taking firm at the heart of British capitalism. Furthermore, as
new competitors arise, it becomes increasingly more profitable for entrepreneurs in the
hegemonic core to tap accumulated wealth through financial manipulation and control of the
state than to generate wealth through new productive investments within this expensive core.
Therefore, during the final generation of a hegemonic wave, “finance” is transformed from a tool
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of production to the primary end in itself of entrepreneurship, resulting in the squeezing of
workers, the skimming of investments, and the transference of production to cheaper regions,
one of which eventually uses its own comparative advantages to establish itself as the new
hegemon. (The interesting question as to whether or not the United States is currently grooming
a Chinese hegemonic successor is beyond the scope of this paper.)
According to Arrighi, multi-divisional American corporations, which emerged within an
extraordinarily large and wealthy national market, drove American hegemony. While large
industrial concerns were established elsewhere, what was unique about the American examples
was what Chandler (1977) labeled “the visible hand,” the high degree of autonomy possessed by
American top management, largely unconstrained by corporatist pressures from other institutions
and only lightly regulated compared to other industrialized nations (Vogel, 1993). As this
organization form developed and spread, it became apparent even to many among the executive
stratum that the autonomous power of these organizations required a voluntarily acceptance of
some degree of social responsibility in order to mollify a skeptical, even fearful public,
especially with regard to the treatment of employees (Carnegie, 1901; Barnard, 1938). With the
growth of American business schools after World War II that coincided with a broader and
deeper global hegemony, both academics and business leaders urged these schools to assume the
duty of delineating and teaching appropriate responsibilities to future “organization men”
(Brown, 1983; Cheit, 1991; Gordon and Howell, 1959; Lord, 1936). However, with the decline
of American hegemony that began in the 1970s and the subsequent dismantling of stable
domestic corporations by financial pressures and deindustrialization, advocacy of CSR could
7
offer little more than a false hope, a distraction from both the visible process of relative decline
and a frighteningly uncertain future.
Discourse within Business and Society over the last two decades has acknowledged some
need to adapt to change, and articles have appeared that consistently recommend the need to
separate normatively-based discussions on the appropriate standards for corporate responsibility
from more social scientific inquiries into the impact that CSR, or its lack, has upon corporate
stakeholders (See Jones and Wicks, 1999 for a good summary of this literature). This
recommendation has done little to revitalize the field because it misconstrues the field’s
difficulties as methodologically-based. First, it fails to recognize the functional role that brought
the CSR discourse into the academy in the first place, a role that actually demanded conflating
the empirical with the normative. Although earlier scholars of CSR were often established social
scientists working at prestigious institutions, they were not seeking to extend the boundaries of
human knowledge by writing on CSR, but to give practical advice to current and future business
leaders for treating the system that benefitted them personally in a sustainably responsible way.
Typically, Social Responsibilities of the Businessman (Bowen, 1953), often regarded as the
seminal book of the field (Carroll, 1999; Wartick and Cochrane, 1985), was written by an
economist who was elsewhere an advocate for more formal research in business schools (Bowen,
1955), but Social Responsibilities, written at the bequest of the precursor of the National Council
of Churches, is a work of informal advocacy, not scholarship. This deliberate mix of the practical
and normative was legitimated by the famous Ford Foundation study of American business
schools published six years later. The study remains famous today for echoing Bowen’s call for
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applying social science to business school research and teaching (Khurana, 2007), but it also
advocated deeper coverage of social responsibilities in the curricula as necessary for maintaining
American hegemony, arguing that the “threat to the free world imposes upon businessmen the
obligation to exercise their leadership in ways that will contribute to the stability and rapid
growth of the American economy and that will contribute to international harmony” (Gordon and
Howell, 1959: 82).
Second, Business and Society academics have never confronted the political difficulties in
formalizing their intellectual legacy by conducting careful empirical studies of how businesses
have actually dealt with their erstwhile responsibilities. There is nothing inherent in the various
versions of CSR that prevents researchers from measuring either their diffusion or their impact
on society. If older academics were not equipped to conduct these kinds of studies (Rowley and
Berman, 2000), a vibrant field would have been able to attract and hire younger better-trained
colleagues in the manner of other business school disciplines. The real problem was not that
such projects were technically daunting, but that the administrators and patrons of business
schools might not appreciate the results of good work. While business schools, for example,
would support research into what factors raise workers’ productivity, they were not likely to
display enthusiasm over efforts to discover whether workers share in productivity gains.
Business professors might earn grants, promotions, and even consulting opportunities by
comparing the efficacies of strategies for market competition, but no one earned rewards for
investigating how businesses acquire or utilize government subsidies. As a result, whatever
social science theory or research was generated by Business and Society either focused on
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marginal issues such as bribery or corporate philanthropy, or dealt with controversial topics such
as “business and politics” so cautiously that it would be difficult to distinguish the results from
explicit censorship (See e.g. Getz, 1997). Under conditions of hegemonic decline, the field
could simply not attract or nurture the competence and courage necessary to conduct CSR
scholarship that would meet contemporary research standards.
Avoiding controversy, however, did allow Business and Society to survive as a field, albeit
in a marginal niche as a business school chaplainship. The literature that did result avoided
raising potentially controversial questions by either narrowing the scope of inquiry to the ethics
of individual decision-making (e.g. Evans and Freeman, 1993), or broadening it by postulating
hypotheses so general and parsimonious that the claims were little more than truisms (e.g. Jones,
1995). In doing so, writing on CSR continued to serve American hegemony, but in a manner
consistent with a far more constrained social space. While the Bowen generation offered advice
on how to manage hegemonic success to promote peace and prosperity, their eventual successors
were left with little more of a role than to obfuscate decline by maintaining the myth of
enlightened management in the face of deregulation, financial dishonesty, and mistreatment of
employees. Just as new more volatile circumstances left both patrons and students of business
schools less tolerant of big-picture introspection, it also made it less practical for even the most
well-meaning executives to follow the advice of business ethicists to honor social contracts,
apply the categorical imperative to stakeholders, or pursue Aristotelian virtues.
It is hardly surprising that changing views as to the appropriate responsibilities of businesses
would track these major shifts in the political economy of the United States. What American
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business elites would regard as an acceptable, or even tolerable, view of the responsible use of
corporate power would naturally change as the hegemonic position of the American society
evolved from that of a laissez faire-oriented industrial leader, to a globally-dominant national
state, and finally to a declining industrial power that relies on increasingly fragile financial,
cultural, and military dominance to maintain its position in the world. The next three sections
deals with each stage in turn.
LABOR-MANAGEMENT COOPERATION AS THE ORIGINAL SOCIAL ISSUE
As the United States emerged in the early years of the twentieth century as the world’s
leading industrial power, discussions of business responsibilities quite logically focused on the
tensions associated with industrialization, most noticeably the conflict between management and
labor over the new ways of performing and compensating work. While accounts of the history of
Business and Society generally acknowledge Howard Bowen’s Social Responsibilities of the
Businessman (1953) to be the field’s seminal text, Bowen himself acknowledged that “[t]he idea
that there should be broader participation in business decisions—that businessmen should share
their powers with other groups—has been frequently expressed over the past fifty years,” and he
cited in support -- along with such icons as Keynes and Drucker -- the pro-labor Taylorists Tead,
Metcalf, and Cooke; Clark and Slichter, two famous economists who were concerned with labor
issues; Murray, Golden, and Ruttenberg, three former officials of the United Steel Workers; Neil
Chamberlain, a leading professor of industrial relations of the time; and the “high-road”
industrialist, James Lincoln (1953: 177, n. 2).
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What this list reflects, in part, is the importance of the “labor question” in influencing this
pioneering academic treatment of CSR (Carroll, 1999). Not surprisingly, given the
contentiousness of American labor history, the relationship between workers and management
became the first issue to generate large-scale discussion over business’s social role, since
industry was not only the source of American wealth and strength, it also generated “the
bloodiest and most violent labor history of any industrial nation in the world” (Taft and Ross,
1969: 221). Business leaders, including some responsible for a share of the bloodshed, offered
proposals to promote labor peace (Carnegie,1901), and Woodrow Wilson, even while negotiating
in Versailles, took the time to remind Congress that “[t]he question that stands at the front of all
others amidst the present great awakening is the question of labor . . . how men and women who
do the daily labor of the world to obtain progressive improvement in the conditions of their
labor, to be made happier, and to be served better by the communities and industries which their
labor sustains and advances” (Quoted in Lichtenstein, 2002: 4).
Beyond the immediate fear of violence and radicalism, improving labor relations and
assuring demand were understandable concerns for a nation industrializing at an unprecedented
clip. Public intellectuals not only wrestled with questions of promoting efficiency, sharing gains,
and avoiding conflict, but also sought to find ways to balance the processes of investment,
production, and consumption in order to avoid the kind of macroeconomic crisis and social
disruptions that the nation had experienced in the 1890s. At the same time, preparation for
World War I offered a glimpse of the potential of labor-management cooperation for
ameliorating conflict and increasing productivity, as the federal government brokered relative
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peace between industry and politically moderate unions. Engineers and consultants associated
with the scientific management movement encouraged cooperation as tool for increasing
efficiency (Trombley, 1954, Jacoby, 1983), while political reformers saw improved worker
morale and the shared prosperity as worthwhile ends in themselves (Tead and Metcalf, 1933;
Slichter, 1947). Before his death in 1915, Taylor himself had conceded a possible role for
unions in implementing scientific management on the shop floor (Nyland, 1996), and while his
attitude toward workers remained ambivalent, he did acknowledge that they faced the risk that
managers might try to capture productivity gains for themselves (Wagner-Tsukamoto, 2007).
Some of Taylor’s disciples, most notably Morris Cooke and Ordway Tead, went much
further than Taylor. Having developed an understanding of labor’s grievances, they endorsed the
need for worker self-protection against managerial reneging, and asked labor leaders to support
their proposed efficiency reforms in turn (Fraser, 1991; Nadworny, 1955). Samuel Gompers of
the politically moderate American Federation of Labor (AFL), disappointed that many
companies abandoned war-time cooperation with the coming of peace, attempted to rekindle the
relationship by having the AFL officially embrace the goal put forward by the Taylor Society to
connect wage gains to productivity gains (Jacoby, 1983). Sidney Hillman, leader of the
Amalgamated Clothing Workers, who appreciated one of Cooke’s studies that primarily blamed
management for the clothing industry’s inefficiencies, often sought Cooke’s advice, and led his
union into the vanguard of labor-management cooperation by working with unionized shop
owners to outcompete nonunion competitors through higher productivity (Trombley, 1954).
Ordway Tead, another pro-labor Taylorist, exercised his influence as an author, editor, and
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publisher. Tead became one of the first scholars of personnel administration, authoring or coauthoring early textbooks on the topic, and Bowen, who cited no less than four of Tead’s books,
called him “the most consistent advocate of a broader base for the determination of business
policy” (Bowen, 1953: 177, n. 2). Furthermore, as an editor at Harper Brothers, Tead published
many of the post-war works on the social responsibilities of business.
In his own writings, Tead and his collaborator Metcalf argued for an independent power
base for employees on both ethical and psychological grounds, quoting John Stuart Mill (himself
the major theorist of labor-management cooperation during the British hegemonic cycle), in an
early text on Personnel Administration, that “[h]uman beings are only secure from evil at the
hands of others, in proportion as they have the power of being . . . self-protecting” (Tead and
Metcalfe, 1933: 444), and concluding that cooperation would only arise “when there is
confidence on all sides that basic rights and interests are adequately secure so that attention can
be turned safely to corporate aims of a constructive and productive character” (1933: 501). Tead
and Metcalf ended by anticipating the post-war generation of business and society academics:
[i]nstitutions exist not for their own sake or for the benefit of some small group which
momentarily controls them. They exist to minister to the life of an entire community. And
they are made subservient to public and inclusive ends only as they are controlled under
democratic methods and for democratic ends (1933: 501).
That such views could appear in a major business school text (Tead taught part-time at
Columbia) suggests that they were not regarded as anti-business or radical at the time. Even
before the onset of the Great Depression, the Dean of Northwestern’s business school argued that
the schools were responsible to “do everything possible to prevent the rise of a business caste. .
. . Their existence is a factor in keeping the doors of economic opportunity wide open.”
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(Heilman, 1928: 2-3), while eight years later the Dean of Boston University’s business school
urged business educators to lead “in bettering conditions of the working man, developing their
facilities and promoting their happiness” (Lord, 1936: 21). Moreover, many of the business
leaders who earned reputations as important thinkers stressed the need for taking the interests of
employees seriously. These not only included the rare pro-union executive, such as Edward
Filene, but the more mainstream and somewhat anti-union Chester Barnard (1938), who argued
that management needed to provide economic and psychological incentives as a way of inducing
the high levels of cooperation necessary for a modern business to operate efficiently.
Similarly, within the famous depression-era exchanges between corporate lawyers Adolph
Berle and E. Merrick Dodd over the proper relationship between managers and shareholders, the
two sides at least agreed on responsibilities with regard to employees. According to Dodd (1932:
1151) “There is a widespread and growing feeling that industry owes to its employees, not
merely the negative duties of refraining from overworking or injuring them, but the affirmative
duty of providing them so far as possible with economic security.” Berle and Means (1933: 356)
echoed Dodd’s sentiments by giving priority to employee interests in their short list of social
obligations that a court should uphold against shareholder opposition: “fair wages, security to
employees, reasonable service to their public, and stabilization of business.” (356)
While labor-management compromise and cooperation had won a great number of nominal
endorsements between the world wars, the practical influence of the idea on the actual behavior
of managers, employees, or labor unions is hard to determine, and certainly there is no evidence
of revolution in workplace collaboration sweeping the nation during these years. The concept
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did, however, affect the thinking of certain individuals, and one of the most influential on the
later development of CSR was labor leader Clinton Golden, who worked for Hillman in the
1920s, and was a personal friend of Cooke, whom he would one day eulogize as being “among
the first . . . to be concerned about the impact of these newer [production] methods on people—
workers—and their welfare. He understood that labor organizations initially emerge in a free
society as [a] defense against exploitation in one form or another” (Trombley, 1954: 254).
Moving to the United Steelworkers in the late 1930s, Golden attempted to put Cooke’s ideas into
practice (Hoerr, 1987). Golden, whom The Saturday Evening Post once labeled labor’s
ambassador to business for his ability to work with corporate executives in public forums, hired
staffers who would make their own mark advocating labor-management cooperation. These
included Joseph Scanlon, architect of the gain-sharing plan that still bears his name, and Harold
Ruttenberg, perhaps the only American union official who later became a corporate executive.
Golden also involved Cooke in his own efforts, enlisting him to ghost write a book for Golden’s
union president on raising productivity in the steel industry (Brooks, 1978).
More importantly, Golden and Ruttenberg co-authored a more widely-discussed work,
Dynamics of Industrial Democracy. The book’s working title, Paths to Industrial Peace, more
explicitly reflects the book’s intention to strengthen relations between unions and managements
in order to maximize both efficiency and fairness. Left-leaning labor leaders criticized Golden
for his betrayal of the class struggle, and the more pragmatic “bread-and-butter” wing of
American labor often regarded Golden as naïve. The academic world, however, lionized him,
and he was offered teaching posts at Harvard and MIT after leaving union work (Brooks, 1978).
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Dynamics of Industrial Democracy was widely cited during the years after the war,
beginning with Chamberlain (1948), who used Golden’s approach to labor-management
cooperation as the starting point for a broader agenda for social cooperation. For Chamberlain,
the question of what role unions could or should play in the management of businesses was
“highly charged with an ethical content. Judgments are required as to the moral validity of legal
relationships, the justification for economic powers and distributive shares . . . [and] . . . the
philosophical foundations for political arrangements” (1948: 8). By embedding labor relations in
a broader set of relationships based on fairness, mutual gain, and some degree of power sharing,
Chamberlain laid the foundation stone for the start of a new academic discipline.
THE BROADENING PERSPECTIVE OF THE POST-WAR WORLD
Given their similar life experiences, it is not surprising that the cohort of scholars who
would build the first full construct of CSR would all use labor-management cooperation as their
starting point of analysis. These individuals were almost all trained in economics, often labor
economics, at a time when at least a substantial portion of the field’s mainstream, and by no
means some small left-leaning clique, was more sympathetic to the goals of organized labor than
it is today. John Maurice Clark, a President of the American Economic Association exemplified
this sympathy by claiming that “[h]igh wages are good for business; probably higher wages than
business as a whole would pay without some pressure of the sort unions exert. Therefore unions
have almost certainly been good for business” (Clark, 1948: 87). His student and eventual
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successor as AEA president, Sumner Slichter (1947), while often critical of organized labor,
conceded that unions sometimes improved management by enhancing communication and
forcing management to be more thoughtful in its decision-making.
Beyond their similar academic backgrounds, these scholars were all marked by the
cataclysmic events of their time: the Depression and the economic growth that followed it;
laissez-faire government policies in the 1920s followed by the New Deal; World War II and the
Cold War; the labor struggles of the thirties and the limited labor-management détente of the
forties and fifties. In short, the United States had experienced the trauma of a leading industrial
power evolving into a broadly dominant global hegemon. Having passed through the typical
growing pain of war and depression that left the older order nearly ruined, the U.S. faced the
mixed blessing of having to assume the responsibilities of world leadership. Most of the
individuals who founded the field of Business and Society were active participants in this
transformation, not only working at elite universities but also serving in policy-making positions
in government and foundations. As a result of overlapping backgrounds, they held similar views
regarding the responsibilities of business to government, unions, and other major institutions.
If Bowen’s book The Social Responsibilities of the Businessman was indeed the catalyst for
a new field of study (Carroll, 1999; Wartick and Cochrane, 1985), he was scarcely dealing with
these issues in an intellectual vacuum. After Bowen’s book appeared, Benjamin Selekman, a
generation older than Bowen and already well-known in the field of industrial relations,
published Power and Morality in a Business Society, co-written with his wife Sylvia (Selekman
and Selekman, 1956), and then Moral Philosophy for Management (Selekman, 1959). Others
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who contributed to the discussion in important journals during this period include: Selekman’s
Harvard Business School colleague Theodore Levitt (1958), who debated Selekman (1958) in
the pages of Harvard Business Review; as well as Wharton’s Ernest Dale (1960), author of
“Management Must Be Made Accountable;” Harvard economist Carl Kaysen (1957), whose
“Social Significance of the Modern Corporation” appeared in the American Economic Review;
and the previously mentioned Neil Chamberlain (1973) of Columbia, who, like Selekman,
moved from industrial relations to a career writing about broader issues of corporate
responsibility. Chamberlain was also a Columbia colleague of Ivar Berg, James Kuhn, and
Seymour Melman, whose more specialized scholarship touched upon issues of corporate
responsibility. Harvard fellow travelers would include such famous names as John Kenneth
Galbraith (1958); John Dunlop (1980), a future Secretary of Labor; and Douglas McGregor
(1960), a proponent of Joseph Scanlon’s gainsharing plan. Ultimately, however, the exact
number of individuals who could be retroactively labeled as Business and Society scholars is not
important. What is significant is that several important academics dealt at least part-time with the
subject during the first two post-war decades.
While successful as scholars, a number of these individuals built impressive records of
public service. Not only Galbraith and Dunlop, but Bowen, Kaysen, and Kuhn all spent time
working for Presidents or Congress. Selekman was a labor arbitrator, and Chamberlain a onetime labor journalist, and later a director of the Ford Foundation. The devastation of the 1930s
and 1940s—Dale had the added burden of being a refugee from Nazi Germany—may help
explain their concern for the welfare of workers within a capitalist system. Selekman
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acknowledged that both the labor strife he witnessed as a child and his graduate research on the
Ludlow massacre strongly influenced his thinking (Selekman and Selekman, 1956, 5-6).
Similarly, Bowen (1988) credited an uncle who was an itinerant laborer and an International
Workers of the World activist as one of the greatest influences. Galbraith helped found
Americans for Democratic Action, alongside a number of major labor leaders (Gillon, 1987). As
a group, the early scholars of CSR were individuals who were quite experienced with having to
grapple in a practical manner with the “labor question” and other public issues.
Constructing CSR
As the United States merged from depression and the Second World War to an uncertain
future that included both a fragile peace and a fragile prosperity, the proper relationship between
business and society had hardly achieved a popular consensus. The new American system that
had emerged ad hoc was scarcely socialist, but it no longer realistically fit the “free market”
assumptions that had apparently failed the country between 1929 and 1932—assumptions that a
cadre of depression-era PhD’s exposed to Keynes would naturally question. As Bowen put it:
With the ascendancy of laissez faire, the moral basis of economic life has tended to
become obscured . . . . The prevalence of the laissez-faire doctrine . . . has created in
some quarters the illusion that any revival of social controls is unnecessary and moral
principles may have only limited application in economic life. This illusion persists even
though we are drifting away from laissez faire in practice (1953: 13).
Both Selekman, a Harvard colleague of Galbraith’s, and Bowen, a personal friend
(Galbraith, 1981), were likely familiar with Galbraith’s (1952) theory of countervailing power,
for which collective bargaining provided an exemplar, and both argued that a business-oriented
20
American society could generate economic fairness, not through either socialism or unrestricted
laissez faire, but through the interaction of organized interest groups that included schools,
churches, non-profits, and agriculture, as well as businesses and unions. Galbraith and Bowen
also urged these various groups to respect government’s ability to operate independently in order
to referee on behalf of the public interest.
For these early advocates of corporate social responsibilities, an essential component of this
overall public good was a broadly shared prosperity. Bowen, for example, wanted to ensure that
“the distribution of property and power [was] diffused widely” by limiting large incomes “to
what is justified by . . . need, incentive, and capital formation” and by setting prices, wages, and
profits “with considerations of justice paramount” (1953: 41). Kaysen (1957: 313-314) echoed
this view, declaring that economic justice required individual firms to share success with “the
‘members’ of the institution at all levels of the . . . hierarchy” by providing employees with “high
wages, pensions and insurance systems, medical care programs, stable employment, [and]
agreeable working conditions.”
Notably, these thinkers rarely discussed the Cold War in any detail in their writings,
possibly out of concern for provoking additional controversy. Bowen himself learned something
about the dangers of giving the appearance of being “soft” on Communism when, as a Dean at
the University of Illinois, his attempts to reform the College of Business prompted opponents to
enlist local vigilantes to red-bait his Keynesian economic views, ultimately driving him out of
his job (Solberg and Tomilson, 1997). Selekman (1959) even went so far as to criticize General
Motors for lack of patriotism, when it opportunistically chose to bargain with the Communist21
influenced but relatively weak United Electrical Workers instead of the United Auto Workers, a
union whose willingness to tie wage gains to productivity gains in the so-called “Treaty of
Detroit” became the most influential example of broad labor-management cooperation during the
American era of industrial hegemony (Lichtenstein, 2002).
When these thinkers did discuss Communism, they used it to strengthen their argument for
pluralist cooperation, by either positing it as a kind of “boogie man” intended to frighten
business leaders into taking social responsibilities seriously, or to simply assert that treating
people well and respectively the rights of others was the American, not the Communist, way. As
a result, Sumner Slichter, considered a moderate conservative in his own time, could argue that
“trade unions are an important ally of the West . . . they are an effective champion of the idea of
the dignity of the individual. They have introduced the equivalent of civil rights into industry and
have given workers protection against arbitrary treatment by managers” (1947: 262). Either
way, the single serious threat to American global hegemony could be deployed to argue even
more stridently for the necessity that business attend to its social responsibilities.
Bowen himself used Communism and socialism as “bad cop”, warning that “it is becoming
increasingly obvious that a freedom of choice and delegation of power such as businessmen
exercise would hardly be permitted to continue without some assumption of social
responsibility” (Bowen, 1953: 4-5). Selekman similarly suggested that it would be “one of the
tragic ironies of history, if management itself . . . actually perpetrated that divisiveness which
Karl Marx predicted would soon incite the proletariat to overthrow their ‘capitalist masters”
(1958: 37). In his famous Harvard Business Review exchange with Selekman, even Levitt,
22
skeptical of social responsibilities, conceded that “[f]ew people will man the barricades against
capitalism if it is a good provider, minds its own business, and supports government in the things
which are properly government’s.” (1958:49-50). The “threat to the free world” justification
cited above as the Ford Foundation’s justification for CSR echoed this positing of CSR as an
enlightened response to the Cold War, not surprisingly given that one author of the report, Aaron
Gordon, was himself a fellow traveling Keynesian economist (and, not so incidentally, the father
of two famous left-of-center economists).
As good Keynesians quite comfortable with the principle of having to protect capitalism
from the shortsightedness of its leaders, these scholars were all children of a depression that was
routinely blamed, at least in part, on the lack of legal restraints on business. As a result, they all
defended the need for government to stand independent of undue influence from specific
business interests and thus able to manage economic relationships in the interest of preserving
basic stability and promoting broad prosperity. Looking back a generation after his seminal
book first appeared, Bowen (1978: 118-9) expressed his major disappointment that businessmen
did not respect this independence, choosing instead to exercise “undue power and influence”
with respect to government. Selekman, in his extensive writings, constantly urged respect for
governmental independence, doubting that “voluntary sacrifice together” could serve as a
practical alternative to government regulation and urged business leaders to “admit frankly that
government inevitably has to intervene in a thousand and one ways in this complicated world”
(1959: 37, 41). He accepted that organizations, such as the Chamber of Commerce and the
National Association of Manufacturers, had a legitimate right to advocate for their members’
23
interests, but he also argued that business leaders needed to extend a similar level of tolerance
toward the lobbying efforts of groups that they disagreed with, such as the AFL-CIO, and was
especially appalled that, according to him, business leaders fought practically all government
efforts to provide basic security to the general population (1958).
While they all expected business leaders to voluntarily exercise some degree of social
responsibility, these scholars did not trust business executives to replace government oversight
with their own judgment as to what these responsibilities entailed or how to promote the greater
good. Selekman argued that appealing to executives’ sense of responsibility would flatter them
but warned that “[i]t is much easier to dispense justice, to be benevolent, than it is to share
power—especially with those who have the means to compel such sharing” (Selekman, 1958:
39). Levitt conceded that business leaders needed to recognize the benefits of respecting the
power and autonomy of other groups by calling for “a pluralistic society—where there is
division, not centralization, of power; variety, not unanimity, of opinion; and separation, not
unification, of workaday economic, political, social, and spiritual functions” (Levitt, 1958: 44).
Kaysen expressed similar sentiments in somewhat more critical terms:
But what management takes into account is what management decides to take into
account, and however responsible management policy is, it is responsible only in
terms of the goals, values, knowledge of management. No direct responsibility, made
effective by formal and functioning machinery of control, exists. No matter how
responsible managers strive to be, they remain in the fundamental sense irresponsible
oligarchs in the context of the modern corporate system (Kaysen, 1957: 316).
Finally, Dale, who understood the dangers of tyranny first hand, warned:
Is it desirable . . . that managers be given the broad social responsibility for
allocating resources among the various interest groups? . . . If managers really begin
to function in this way, all the various parties at interest, and the general public, may
24
well begin to ask for a voice in selecting them. It is contrary to all democratic
tradition for constituents to have no say in the selection of their representatives and
no way of calling them to account (Dale, 1960: 54-55).
THE FINANCIAL REVOLUTION MEETS CSR
The academic pioneers of business and society were respected public intellectuals, were well
published, and had successful academic careers. However, their work was neither widely
embraced as a new gospel nor broadly condemned as heresy by business leaders or fellow
academics. Bowen’s Social Responsibilities of the Businessman earned a number of reviews
from library journals and serious magazines, and far from being seen as an attack on business, an
executive from General Mills actually gave the book a far more positive endorsement in
Management Review (Bullis, 1953) than it earned from an anonymous reviewer in the leftleaning Nation Magazine (1953). However, for Bowen and most of his cohort, with Selekman
and Chamberlain providing the major exceptions, the study of the social responsibilities of
business did not become a central component of their careers, and they did not strive to turn their
interest into generating a new and separate field of study.
A new generation of academics through the 1960s and 1970s, associated with American
business schools, continued to write and teach on Business and Society topics, continuing the
tradition of largely focusing on defining or surveying the responsibilities of corporations, with a
smattering of writing on business-government relations providing the major exception. This
cohort made a conscious effort to build the institutions of an academic field, but they were, at
most, only partly successful (Frederick, 2006). This proto-field did generate new courses, a
25
journal, and even a couple of departments and graduate programs, but, despite a variety of
surveys and studies that identified a need in business programs for such work, it never firmly
established itself as a separate discipline. There are a number of possible explanations for this
lack of institutionalization. In an age of increasingly specialized academic work (Khurana,
2007), the field may have struck many as overly broad and too judgmental to be regarded as a
legitimate topic for scientific study, and while the scholars of the 1950s might have possessed the
stature to pursue business and society as a sideline, the generation of scholars that emerged in the
1960s were rarely accorded the status of public intellectual. Others have suggested that the
business students at that time were rarely interested in studying business from a broader social
perspective, and the subject matter itself was never entirely free of suspicion that these scholars
were irritants at best, or anti-business at worst (Cheit, 1991), a suspicion that would could not be
countenanced as the United States entered its hegemonic decline.
Falling Out of Favor
If many executives and business school administrators had not entirely relinquished their
doubts and suspicions of CSR advocacy during the post-war generation, a time when American
capitalism achieved its hegemonic peak, such suspicions were only amplified during the late
1970s when American executives became more politically and ideologically active in response to
increased regulatory demands, heightened international competition, and inflationary pressures
often blamed on unions and government fiscal policies (Burris, 1992; Clawson, Neusadtl, and
Weller, 1998). Furthermore, a slowdown in productivity growth made it increasingly difficult to
compromise or paper-over inherent conflicts over the economic fruits of the American economy
26
(Arrighi, 1994; Brenner, 2002). As American industrial hegemony buckled under the combined
pressure of foreign competition and demands from organized domestic groups, the very policies
that the original cohort of business ethicists had advocated for with regard to government,
unions, and the egalitarian distribution of wealth were precisely the kinds of arrangements that
American executives were increasingly organizing to counter and eventually rollback (Clawson
et al, 1998; Ferguson, 1995; Mills, 1979). Their efforts did not stop with pressuring the political
system. Executives also turned their attention to the American intellectual community (Burris,
1992; Callahan, 1999; Malott, 1978).
A famous essay by Lewis Powell, before he became a Supreme Court Justice, helped spark
this reaction. The “Powell Memorandum,” which was widely distributed by the U.S. Chamber
of Commerce in 1971, warned of a mounting and coalescing anti-business campaign, promoted
by large segments of the political, media, and educational establishments, launched not by “outfront” radicals but by “the ambivalent liberal critic” (Powell, 1971). Lewis feared that while
“[a]lthough New Leftist spokesmen are succeeding in radicalizing thousands of the young, the
greater cause for concern is the hostility of respectable liberals and social reformers. It is the
sum total of their views and influence which could indeed fatally weaken or destroy the system.”
Scholars such as Bowen, soon to publicly condemn the “undue power and influence” of business
leaders (1978), would have fit readily into Powell’s definition of a subversive liberal. A few
years later, CEOs Justin Dart and Donald Kendall brought Powell’s fears explicitly into the
political arena with their own letters of alarm over an increasingly interventionist government,
and so helped instigate a campaign led by the Business Roundtable to block the passage of
27
proposed legal changes in labor law and consumer protection (Clawson et al, 1998; Mills, 1979).
Beyond politics, executives began to take a closer look at the ideas whose promulgation they
were subsidizing. In perhaps the most publicized example of revisionism, the staff of the
Committee for Economic Development (CED), a mildly Keynesian think-tank established in
1942, which had taken positions that were largely in accordance with the pluralistic principles of
the early business and society scholars (Schriftgeisser, 1960) was literally “purged” during the
middle 1970s (Frederick, 2006). The CED was founded by business leaders who had experience
with public service, a group Bowen identified as understanding the obligation for “public
policies which will make the economic system work better from the point of view of all
classes—not merely from the point of view of business” (Bowen, 1953: 64). However, only a
generation later, it was hard to find executives willing to support this class-collaborationist
perspective with cash, and so the personnel and output of the CED shifted accordingly. In its
1979 publication “Redefining Government’s Role in the Market System,” the organization
advocated lower taxes and reduced regulation. As one of the Committee’s administrators
explained it, “In the early [post-World War II] days the trustees were men who saw a need for
some more government intervention. Now some of the trustees believe the intervention has gone
far enough” (Clark, 1976: 38).
Business executives—patrons of American business schools and employers of their
graduates—were also taking a closer look at what universities were teaching, especially in
business schools. In an article candidly titled “Corporate Support of Education: Some Strings
Attached,” a CEO of a major defense contractor, Robert H. Malott, argued, without any apparent
28
irony, that “corporate support should be channeled to those [academics] who speak out for
limited government and those who stress the importance of individual liberties” (Malott,
1978:134). Malott also called for restoring a “balance” away from what he implied was an antibusiness academic bias, which he exemplified by arguing that professors needed to teach Milton
Friedman along with John Kenneth Galbraith. What Malott regarded as bias, however, reveals
the shift in what executives found intellectually tolerable since the day when Bowen’s book
could win a favorable review from a business executive. Friedman was already included in
standard economics texts, and Galbraith, while a skeptic, was never viewed, even by himself, as
an ideological opponent of the capitalist system (Sweezy, 1973), and his formulation of
countervailing power was actually a fundamental element of the pluralism inherent in post-war
CSR. For Malott, however, the pluralism and mild government interventions advocated by
Bowen’s generation were excessively radical: “We are too often witness to corporations
providing support to groups that are hostile to the competitive enterprise system” (1978: 133).
The result of this mobilization of business executives was their successful imposition of
constraints on what business related policies politicians of either major party were typically
willing to promote (Burris, 1992; Clawson et al, 1998). Republican President Reagan
declaration in his 1981 Inaugural Address, that “[i]n this present crisis, government is not the
solution to our problem; government is the problem,” was followed fifteen years later by
Democratic Clinton’s observation that “[t]he era of big government is over” (Clinton, 1996).
Many observers, particularly libertarians, have pointed out the logical inconsistency of corporate
executives arguing for limited government while simultaneously lobbying for expensive new
29
weapon systems or bargaining with state and local governments for a variety of “industrial
development” subsidies (Chesser, 2004; Leroy, 2005; Melman, 1987). Perhaps, though, what
generated such a defensively doctrinaire reaction on the part of many business leaders was the
cognitive dissonance of talking up the virtues of free market competition while simultaneously
seeking government assistance. Individuals whose principles are flexible in accordance with
their own or their organization’s self-interest are unlikely to welcome careful scrutiny of their
intellectual consistency.
A second trend made the established approach to CSR even less tenable. Not long after
business executives began to unite to resist perceived attacks from what they regarded as the
“left,” they faced assault from another direction that only reinforced this hostility. A new line of
criticism began emanating from economics and finance departments that argued that corporate
managers were paying too much attention to the interest of non-shareholder groups, or, worse,
were pretending to do so as an excuse for self-dealing and thus avoiding their supposedly
fundamental duty to promote profitability and shareholder value (Friedman, 1970; Jensen, 1989).
Furthermore, corporate executives working in formerly oligopolistic industries, now facing
heightened competition and shareholder pressure, were understandably less interested in keeping
“the big picture” of society’s interests in mind then in fighting for their professional survival.
Under siege by the financial community and its academic allies for allegedly being too
deferential to stakeholder groups, executives were not likely to be sympathetic to the view that
they themselves were potentially dangerous individuals requiring institutional constraints on
their autonomy (Clawson et al, 1998: 26-27).
30
Historically and legally, agency theorists were wrong in their claim that investors ought to
be the exclusive concern of corporate executives. In actuality, the evolution of corporate law
during the nineteenth century was a contentious political process in which advocates for
accessible incorporation and limited liability repeatedly promised that these legal changes would
produce social benefits that went beyond the investors in corporations (Dodd, 1954; Roy, 1997).
Likewise, during the twentieth century, courts did not impose on managers any exclusive duty to
shareholders, particularly the managers of publicly-traded firms (Marens and Wicks, 1999). And
while Berle and Means’ (1933) might have been accurate regarding the separation of ownership
and control, whatever neglect or self-dealing that arose under this arrangement was rarely viewed
by investors as a profound threat to their fundamental interests (Sweezy, 1953).
What agency theorists claimed, then, was not some eternal truth but a newly relevant one.
With signs of American industrial decline evident, society could no longer rely on a growing
economic pie to ameliorate class conflict and satisfy various interests (Arrighi 1994). In
response to this increasing unlikelihood of pleasing all groups, agency theorists called for a near
revolutionary resistance on the part of investors to management diversions of cash into “empirebuilding projects . . . bloated staffs, indulgent perquisites, and organizational inefficiencies” even
if it was necessary to generate a “crisis atmosphere [where] managers [were] require[d] to slash
unsound investment programs, shrink overhead, and dispose of assets” (Jensen, 1989: 67).
Advocates of this position did not bother to pretend that the entire society would benefit, except
perhaps in some hypothetical long run, expecting that “real wages are likely to continue their
sluggish growth and some will fall dramatically over the coming two or three decades, perhaps
31
as much as 50% in some sectors” (Jensen and Fagan, 1996: A10). What Jensen and his
colleagues grasped, then, was not a timeless principle but just the opposite, since “the time” had
only recently arrived for investors to look out for their immediate interests and stop putting faith
in an increasingly creaky American economic regime to generate broad-based prosperity
indefinitely.
As a result, scholars working within the field of business and society not only faced
potential career risks by advocating unionization, countervailing power, and additional
regulation, they also faced the question of whether advocating these arrangements in an era
characterized by weak unions, mobilized shareholders, and cautious politicians of both parties
was anything more than naïve utopianism (Clawson et al, 1998). Certainly, there was no
shortage of ideologues willing to provide a view of the corporation more palatable to business
executives. In 1956, not long after the Red Scare, Selekman could work at America’s leading
business school and title a book, Power and Morality in a Business Society, without generating
serious controversy. Sixteen years later, two highly respected economists could publish an
enormously influential article that argued, with total seriousness, that power was not even an
issue within the modern corporations, since the business firm “has no power of fiat, no authority,
no disciplinary action any different in the slightest degree from ordinary market contracting
between any two people” (Alchian and Demsetz, 1972: 777).
In response to these pressures Business and Society scholars embraced business ethics.
Studying and teaching ethics in business schools began as a legitimate effort to fill a neglected
need. While earlier Business and Society scholars occasionally raised ethical issues, they lacked
32
the training, and perhaps the interest, to do so systematically (Frederick, 2006). What started,
however, as a defensible, even laudable, effort to expand the boundaries of the field resulted in
the eventual dominance of these newcomers, who would not only abandon most of the
preoccupations of their predecessors, they would display little interest in testing the efficacy of
their own approach to CSR.
Redefining CSR
The unexpected result of the introduction of formal ethics into the discipline of Business and
Society was that even those without training in philosophy widely adopted micro-level constructs
based on the nonconsequentialist ethics put forward by philosophers, notably social contracting
(Donaldson, 1982), stakeholder management (Freeman, 1985), and, to a lesser extent, virtue
ethics (Solomon, 1992). This tendency ultimately drove out almost all of what remained of the
more macro outcome-driven approach to discussions of CSR (Carroll, 1999). This loss did not
go entirely unnoticed. In a “thoughts on the field” special issue of the journal, Business and
Society, Blockson (1998) complained of the lack of interest in distributional justice, perhaps the
single most important concern of previous generations of scholars, and in this same issue a major
figure of the previous generation of scholars offered this critique:
. . . business ethics theory is hobbled by a failure to acknowledge and integrate
contemporary social science and natural science perspectives into the analysis of
business operations. A decade of rubbing shoulders with management scholars,
through collaborative annual meetings of SIM and the Society for business ethics,
has not moved business ethics philosophers far beyond their continued devotion
to the noncontextualist abstractions found in the lore of conventional philosophy.
Theories of rights, theories of justice, theories of social contract remain firmly
anchored in 18th-, 19th-, and early 20th-century perspectives on human nature
and human society (Frederick, 1998: 44).
33
If, as another of contributor claimed, the “vitality of the field” truly rested “on scholarship
that challenges the status quo”, and the field’s very legitimacy depended “on pressing the
intellectual issues that have traditionally characterized the field; as well as providing guidance,
perspective, and insight, to those in the management profession” [italics mine] (Post, 1991: 84),
then scholars proved quite willing by the 1990s to sap the field’s “vitality” and forgo any
“pressing” in favor of at least the appearance of providing “guidance.” In the words of another
long-standing member of the field, Business and Society had proven “too often wishy-washy, not
as forceful as we should be,” largely because of the “[t]ensions between raising money and
critically analyzing social problems” (Logdson, 1998: 82-83).
If the work of Bowen, Selekman, and the rest of their cohort reflected the dominant
pluralistic political philosophy of their day, focusing in recent decades on ethical decisionmaking might potentially appeal to the one group that still might possess both the power and
motivation to resist the ideological onslaught of finance: corporate executives themselves. The
closing of one Business and Society program at the University of Washington and the conversion
of another to microeconomics at Berkeley, suggested that the withdrawal of support for a
discipline without adequate business patronage had become a very real possibility. William
Frederick, a holdout from the previous generation, complained about how strongly corporatecentered the field had become, making the corporation “the sun around which society revolves,”
and leading to a trend in which “our analyses may be yielding tangible answers to smaller and
smaller questions” (1998: 42). Yet if anyone hoped to gain the support of corporate executives
and business school administrators, viewing the relationship between business and the larger
34
society from the admittedly narrow and subjective perspective of business leaders still may have
offered a more promising strategy than asking the traditional big questions about the social and
economic obligations of business in an era of weak unions and political mobilization against
virtually any regulation.
Embracing the same perspective as corporate managers did not preclude disagreeing with
one or another management assumption or practice, but it did implicitly legitimize the right of
executives to serve as the ultimate arbitrators of how corporations should act. Bowen may have
been accurate in stating that “[t]he businessman’s viewpoint is that management should function
as a trustee mediating among the several interest groups, but that the power of decision-making
should rest exclusively with management. . . . is . . . just another application of the familiar but
discredited doctrine of benevolent use of power” (1953: 42). Nonetheless, this viewpoint had
become the only one that could be safely taken within an American business school
environment.
Business ethics grew to dominate Business and Society, then, not despite the inherent
limitations of ethical analysis but because of them. The influence of ethics within Business and
Society scholarship grew rapidly, both directly in the growth of ethics papers presented at
conferences and published in journals, and indirectly by providing more research-oriented
academics “the vocabulary that is needed to articulate the concerns, the values, the pressures, and
the conflicts relative to various aspects of SIM and CSR” (Gerde and Wokutch, 1998: 433). As a
basis for social scientific scholarship, the field converted Kantian-based stakeholder management
principles (Evan and Freeman, 1993) into something labeled “stakeholder theory,” a mixture of
35
enlightened self-interest banalities, which were hardly original in days of Mill, Baggage, and
Ketteler (e.g. Jones, 1995), with assumptions about the generally honorable intentions of
corporate executives to promote and sustain the success of their organizations that, unlike typical
social science theory, could not claim any preliminary support from the empirical record
(Marens, 2004). The influence of these ethical constructs ultimately proved so great that not only
are the terms “Business and Society” and “Business Ethics” often used interchangeably, the latter
increasingly pushed the former out of general use (Collins and Wartick, 1995).
In short, this movement to formal ethics that began in the 1980s succeeded in remaking the
field because it responded to recent changes in the American business, political, and academic
environments. By implicitly conceding the right of corporate executives to exercise a high level
of autonomy and power, it at least won a hearing to try to explicitly influence corporate decisionmakers toward a broader perspective regarding their responsibilities. Such an effort was
defensible in an era of few practical alternatives. However, toleration and influence are not
synonyms, and scholars in the field have launched few efforts to investigate whether the
recipients of all this advice were actually heeding it.
Structural changes in American economic life may have prompted the shift toward ethics
and ethically derived constructs, but it did not preclude applying ethics to macro level issues, and
it certainly did not prevent a closer examination on the part of tenured faculty as to whether
ethics-based scholarship and research were achieving any measurable influence. Two decades
ago, one business ethicist warned that the field risked forgetting that questioning the nature of the
corporation and weighing the welfare of the entire society are as legitimate topics for scholarship
36
as analyzing the decisions and actions of individuals (DeGeorge, 1991). Moreover, trained
philosophers working in business schools could certainly have found models for following
DeGeorge’s advice from their own traditions. Mill, at one time favorably quoted by Tead, was
an unusually worldly ethicist, albeit with his own blind spots with regard to such issues as
imperialism. Still, as the Corporate Secretary of the East India Company while also supportive
of labor organizing, he possessed a background and broad sense of fairness that ought to have
attracted the attention of Business Ethicists, and his version of utilitarianism is indeed covered by
every business ethics textbook. Yet, it is rare that either Mill or utilitarianism is utilized by the
field’s own scholarship. Similarly, Rawls (1999), the most widely cited modern academic
philosopher within the business ethics literature, was greatly concerned with the economic
outcomes generated by social contracting, yet his difference principle is almost never invoked by
business ethicists, nor are his arguments for state enforcement of social contracts and the
provisioning of a social safety net. Moreover, scholars of corporate law from Dodd (1954) to
Roy (1997) might have provided backing to challenges to the fundamental legitimacy of claims
for shareholder primacy. In short, none of these academically defensible alternatives were ever
utilized because they were paths to an potentially dangerous criticality.
Kahn (1990) reports that business ethicists was aware of some of these shortcomings at one
time and hoped to overcome them. His interviews found both a general desire to integrate more
social science into business ethics and a declared intention to dialogue with a variety of groups
other than corporate managers. However, with the passage of two decades since Kahn’s
interviews, scholars in the field have done little of either. Stakeholders, so honored in the
37
abstract, are rarely interviewed or surveyed, nor are there many references to the latest relevant
research in law, sociology, and political science, or even journalism.
If they had paid attention to the information reported in these sources, the scholars in the
field would have realized that they had failed to influence management policies and behavior.
Whether one looks at the sharing of gains with employees (Economic Report of the President,
2009; Mishel et al, 2007; Picketty and Saez, 2003)., the disclosure and management of financial
risk (Partnoy, 2003), lobbying for subsidies and procurement and against regulation (Chesser,
2004; Clawson et al, 1998; Melman, 1987), the keeping commitments to communities or longtime employees (Hira and Hira, 2008; Leroy, 2005), the stratification of customer service
(Brady, 2000), or respecting the rights of organized labor (Logan, 2002), the evidence suggests
that the majority of corporate and financial managers have never systematically applied the
ethical principles of stakeholder management, social contracting, virtue ethics, or any other
approach to formulating the content of corporate social responsibilities.
Nor have ethicists acknowledged having lost the intellectual tug of war with agency theorists.
It is hardly a secret that corporate managers made their separate peace with the financial
community by publicly acquiescing to the primacy of “shareholder value,” first treating their
own companies as a raider would (Useem, 1996), then finding increasingly sophisticated ways to
fudge or even falsify company accounting (Partnoy, 2003). Companies such as IBM, once
admired for their enlightened HR policies, ultimately yielded to pressures from both competitors
and investors to hire abroad while laying off Americans (Lohr, 2005), while Microsoft and
Toyota, among the world’s most successful firms over the last generation, have recently
38
attempted to reduce employee compensation (Peterson, 2004; Roberson, 2008). Bank of
America, famous for its egalitarian lending and employment policies during much of the
twentieth century, reportedly now holds severance pay hostage to a willingness of the laid off to
train replacements, and, of course, played a major role in securitization of subprime mortgages
(Gardner, 2002). Even the occasional firm that still practices a degree of enlightened selfinterest vis-à-vis employees has failed to convince investors that high-road human resource
policies are viable (Holmes and Zellner, 2004).
From the perspective of Arrighi’s model (1994), there is nothing surprising either about
these real world outcomes or that business school academics ignore them in their work on CSR.
While trust, cooperation, and commitment may indeed improve productivity, these may still not
be enough to overcome the cost advantage of companies that either reduce compensation or
employ foreign labor for manufacturing or back-office work, and even the high-road may
eventually pay in some cases, high-road HR policies require levels of upfront costs and faith in
the future that is difficult to justify in an era where the fruits of a century of economic hegemony,
accumulated in public and private institutional funds, have become almost impossible to ignore.
Nonetheless, the degree that structural forces have made it difficult to follow moral
prescriptions does not itself explain why the discipline has demonstrated little concern to correct
this failure, nor made a serious move to go beyond the parsing of abstractions that Frederick
complained of a decade ago. In his highly critical follow-up piece three decades ago, Bowen
(1978) could still concede that many businesses still shared their economic gains with their
employees. A decade later even the consolation of “business as good provider” was becoming
39
hard to sustain. What does explain this apparent indifference are a) the institutional danger of
being seen as excessively critical and b) the dwindling number of acceptable models among
American businesses of allegedly responsible companies to suggest as positive alternatives, with
some such as Saturn or Motorola ending in failure, and others, such as IBM and Microsoft,
“controlling” their labor costs to an unprecedented degree. Persisting with arguments for
noblesse oblige, with the hope that it only needs more time to work, is not, on its face, a realistic
strategy for maintaining the focus of the field, but it is not clear what a practical alternative might
be for business school academics. Given the nearly ubiquitous abrogation of some basic social
responsibilities, decrying this trend would finally have placed the field in the position it has long
sought to avoid, being labeled “anti (actual existing American) business.”
As a result, the field of Business and Society bought itself some time. During the Clinton
years, a relatively peaceful world, coupled to the rise of new occupational paths and the
prosperity of at least some segments of the American workforce meant enough promising news
to allow the advocates of a voluntary managerialist approach to CSR to retain their hopes for
increasingly better outcomes. Furthermore, tenured faculty stay in their jobs for decades, and
even as they retire, courses enshrined in the curriculum need to be covered in subsequent years
and journals need to fill their pages. Yet, even the ivory tower eventually succumbs to the siege
of massive social structural change. CSR as an ideological adjunct to American hegemony
appears to have run its course, even if some of its adherents do manage to continue as before.
40
CONCLUSION: CSR IN A NEW WORLD ORDER
It would hardly have surprised earlier generations of Business and Society scholars,
witnesses and sometimes participants in the mass unemployment, violent labor strife, political
battles over regulation, world war, and the resultant mixed economy of their era, that ethical
exhortation might supplement, but could not successfully substitute for the independent
functioning of a regulatory state, nor eliminate the necessity for stakeholder groups to organize
themselves to protect, advance, and bargain over their interests. While this earlier generation
hoped, or at least conceded, that the broad assumption of social responsibilities by the corporate
organizations could preserve or even strengthen a fundamentally capitalist system, they
understood that delineating and enforcing these responsibilities was far too important to be left to
the judgment of hardly disinterested corporate executives. In an era of declining hegemony,
however, the structural props that had mainstreamed advocacy of regulation and countervailing
power were knocked aside, or, at least, could no longer be convincingly framed as “constructive
criticism” or “loyal opposition” within business schools. As a result Business and Society
scholars have ignored the substantial evidence, academic and otherwise, of the failure of this last
generation of American business leaders to responsibly use whatever autonomy and discretion
they possessed to produce fair and generous outcomes for their various stakeholder groups.
Now it is too late. The era of American corporate stability ended a generation ago
(Edwards, 1975), and with it, the beginning of the end of American economic hegemony. In an
increasingly competitive world in which organizational forms are fluid, the future bleakly
uncertain, and the mechanics of the control and ownership of the means of production obfuscated
41
by the financial revolution, it is not clear how even all the sincerity in the world can implement
either the pluralist or managerialist versions of CSR in any consistent and effective way.
A reason for optimism, however, is the real possibility that “this too will pass.” The decline
of American hegemony may have intellectually bankrupted a CSR-driven Business and Society
academic field, but this loss of economic hegemony does not necessarily imply a total economic
collapse for the United States, but a change in relationship, albeit a potentially painful one, with
the rest of the world. Perhaps it may prove a blessing for everyone if American society can no
longer perpetuate its leadership of an increasingly dysfunctional set of economic, financial, and
military relationships that extend far beyond the borders of the United States (Brenner, 2002;
Melman, 1987). And as American workers succumb to their weight of their global role of
consumers of last resort, the economic treatment of employees can no longer be ignored by either
businesses or academics. Furthermore, American dominance is becoming increasingly less
available as a excuse for the social failures of business practices originating elsewhere.
Still some successor form of the large corporation is likely to survive anything short of a
global conflagration, and the responsibilities that should be assumed or imposed upon this
organizational form will remain a serious concern. If a new, more relevant version has any hope
of emerging, however, the impetus is likely to come from outside North America, this “rest of
the world” that has never been the subject, and only infrequently the object, of a U.S.-centric
CSR. Other regions have both distinctive ethical traditions and experience grappling with the
tensions of industrial capitalism. The whole world could benefit from an academic field that
studies and evaluates the myriad large-scale experiments in balancing justice and growth,
42
successful or not, ranging from Chinese Keynesianism to German works councils.
We can not turn back the clock. The social arrangements in which Bowen, Selekman,
Chamberlain and the others were embedded in the post-war years are, to a great extent, no longer
with us. We can however, admire qualities they possessed, qualities that their successors
abandoned under pressure. The earlier cohort not only possessed the courage to criticize in the
shadow of McCarthyism, and the knowledge and experience to do so with plausibility, they were
motivated by a compassion since stamped out by fear and opportunism, and as Peter Frost (1999)
has taught us, compassion bring richness and life to the study of people and their organization.
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