Social Impacts and Social Problems

While reading chapter 5 of Drucker, “Social Impacts and Social Problems” I was somewhat shocked that there are politically active men and women (an example is Ralph Nader) who promote unlimited social responsibility for big business. They have asked themselves, “should businesses bear the burden of having both responsibility and authority in all matters of social problems occurring in their communities and societies?” And their answer has been an emphatic, “yes, responsibility in all matters.”

This philosophy necessarily urges businesses to assume a position of authority in the realm already served by other (non-profit) institutions. For example, to say that Du Pont is responsible for using its economic success to push for racial equality, health care reform, and the improvement of public schools is to say that Du Pont should usurp a large amount of authority outside its area of expertise. Du Pont should take over the role of several non-profits- including the government- that already concentrate on these issues and prove themselves a boon to society by accepting all authority to solve these problems.

The first problem with this expectation to me is a glaring probability of conflict of interest. The implication of a profit-biased company running multiple “noble” efforts to curb and correct social problems, is that each correction must ultimately be profitable or it becomes doubly a cost to the business. If Du Pont believes (correctly or incorrectly) that promoting racial equality will decrease the quality of workers it can hire in its factories, the company must pay to run a program for racial inequality and it must pay the cost of decreased profits from poorer quality workers. To expect such a sacrifice from a company in a capitalist economic system is unrealistic in my mind. It immediately brings the danger of insincere and damaging social authority by businesses to replace the clear-minded goals of non-profits.

Although putting all responsibility of social problems squarely on the shoulders of big business is not reasonable, it is always important for companies to be mindful of social problems surrounding their customers, as this can be directly linked to their effectiveness as an institution. If the main objective of a business is to create a customer, it should behoove the business to see customers coming from the pool that is the local community as living in a society that has problems. I do not feel like it is good or possible to separate the needs of a customer (or potential customer) from his or her relationship to the society that has problems that affect everyone. Although Drucker made a good point by stating that some social problems can be seen as economic opportunities, and thus the connection to the customer make sense, the connection of the customer to problems that are not solvable by business innovation are just as important or more important to consider. It seems that these problems, because they are less likely to be “solved” in a defined and specific way, are going to be a part of the customer’s everyday context for some time into the future, which influences the wants, needs, practices, and habits of the customer.

So, is Ralph Nader correct for pointing out that companies neglect social problems too much and congratulate themselves for positive social impacts too much…probably. Is Ralph Nader right in demanding complete responsibility for correcting social problems from big business… for the ultimate good of society, probably no.