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The current fad for “corporate social responsibility” carries with it the not-too-subtle message that corporations left to themselves are not socially responsible. Some pressure groups, including Christian Aid and War on Want, have joined with trade unions and other vested interests to establish the “Corporate Responsibility Coalition” (Core) to lobby for laws restricting the way that businesses operate overseas. Given the known anti-business stance of many of them, including full-page ads depicting business as a suit-clad pig riding on the back of a peasant, this is hardly a surprise.
Fundamentally these film-makers and lobbyists are anti-capitalist. They equate business activity with greed. They would probably be happier in a world where everyone worked in the public sector, and no one made any profits. We have seen this world, those of us who remember it. It was called communism and it reduced the human condition to squalor and servitude.
The business corporation, by contrast, is one of the most benign institutions ever created by humankind. Men and women have banded together and risked some of their wealth to create new wealth. In the process they have generated employment, trade and opportunity. They have not usually done this by theft and trickery, but by offering people goods and services they will freely pay for. In doing so many of them have made themselves richer, but they have made humankind richer still.
At the heart of this dislike of business is a complete misunderstanding of how it works. There is a primitive and naive view that one person can only get rich at someone else’s expense, and that if a business is making money, someone else must be losing it. This “zero sum game” fallacy completely misses the point, which is that business activity creates wealth instead of just redistributing it.
When people trade with each other, they create wealth. When specialists produce goods better and cheaper than their customers could make themselves, they create wealth. It is this wealth — the result of business and trade — that has transformed the lives of people in the developed world, and is even now doing the same for those in the developing world. Last year hundreds of millions of people were lifted from poverty, more than at any time since human beings first began to walk upright, and it was the activity of businesses, especially in China and India, that did that.
It is all very well for film-makers and NGO zealots to sneer at business, but it is businesses that bring the food to their tables and make the drugs available when they are sick. It is the large corporations that add cultural richness to our lives by enabling, say, a recording of folk-singers from Mali to be downloaded on to an iPod in Sydney. It is big business that liberates people to widen their horizons by jumping on a jumbo jet to a far-flung part of the world. It is the large corporations that have diminished domestic drudgery by providing vacuum cleaners, microwaves and refrigerators. For that matter, it is large corporations that help to finance, produce, distribute and market anti-corporation movies, watched on TV screens or cut on to DVDs made by big businesses.
Why, then, if business activity has done so much for us, do people distrust and despise its practitioners? Certainly there are rotten apples, as there are in most barrels. Where there is money there will be crooks. Willie Sutton, when asked why he robbed banks, replied in astonishment: “Because that’s where the money is.” But the rotten apples do not define the activity.
Business is an easy target because much of it seems faceless and anonymous. We can evaluate people with whom we deal on a face-to-face basis; we can empathise and recognise kindred spirits. But the dark-suited shadows of the boardroom are too easily caricatured into sinister and threatening figures. Part of the problem might lie in a need for villains. Movie-makers certainly do. Since the fall of the Soviet Union they have been groping about for bad guys that their heroes can overcome.
Colombian drug lords will take you only so far, as will sinister right-wing conspiracies. Business is a different matter, though. It is all around us and seems to involve mysterious dealings with vast sums of money. “Business” as an abstraction works as a movie villain because most people don’t know how it works, or how overwhelmingly beneficial are its activities.
The NGOs are probably a bigger threat to business than the movie-makers, though. Many of them dislike the spontaneous nature of economic activity, and the free trade and choices that it brings. Many of them seek a world that conforms more to what they think it should be, rather than the world that emerges when people act independently.
But it is business, not pious posturing, that is making poverty history. Hilary Benn, the Secretary of State for International Development, criticised the anti-business rhetoric of some of the more vociferous campaigners, saying: “This is not in the interests of poor people.” He is completely correct. It is not, but business is. We should salute the achievements of business, rather than allow anti-capitalist campaigners to demonise them.
Madsen Pirie is the president of the Adam Smith Institute
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