In recent years, the free market has gained much respect. Few any longer view the politically controlled planned economy as a superior path to either individual freedom or wealth creation. Moreover, the success of the free market has permitted the extension of prosperity and consumer choice to billions of individuals throughout the world. This accomplishment has been a triumph for the business community; yet, surprisingly, business today faces greater criticism than perhaps ever before. In part, this reflects the view that having done much, markets can readily do everything, achieving the utopian future that we all desire. The result is a series of attacks whenever some nation somewhere falls short of this ideal – and corporations are generally blamed. Corporations, it is alleged, seem to relish opportunities to despoil the environment, suppress human rights, practice racial discrimination, avoid profitable inner city investments, raise infant mortality rates – anything for increased profits. Though such charges have little objective merit, the media, politicians, academics and litigating attorneys raise them with increasing success. Business has responded defensively (seeking to stonewall its opponents) and/or apologetically (seeking to appease its opponents). Neither approach has been effective. Neither Bill Gates’ aggressive insistence that Microsoft alone determine how best to market and package its software products nor Royal Dutch Shell’s capitulation to Greenpeace’s demand that the Brent Spar oil platform not be sunk at sea gained either firm much credit.
These attacks on the business community are serious. In today’s political world, a firm that loses its moral legitimacy, that finds itself classified as a “pariah” industry, can too easily face crippling regulations, taxes or lawsuits. The current plight of the U.S. tobacco industry illustrates that situation clearly. Yet, tobacco is merely the most severely impacted industry to date – the automobile sector, biotechnology, the petrochemical industry, all extractive industries (mining, forestry, even agriculture), insurance, banking and other financial sector firms – all stand accused to a greater or lesser degree of crimes against humanity, the planet. This disturbing trend threatens to undercut many of the gains that freer markets and increased competition have generated in recent years. What can be done?
This seminar will explore the reasons why this crisis has emerged and suggest strategies for communicating the value of business activities in the political world. The thesis of this talk is that the modern business operates in both the private and the political world, but operates well, only in the former. I will explore the intellectual animus against business, the nature of the charges against business and why these criticisms find such ready audiences, why the rational nature of the corporate culture makes it more difficult to deal with these attacks and discuss a communication and outreach strategy that would provide a better defense of the multinational corporation in an increasingly politicized world.
For different reasons, members of the dominant intellectual class and politicians have come to view the modern multinational as an ideal attack target. Politicians have found it increasingly difficult to sustain the modern welfare state via general tax revenues; thus, alternative approaches such as industry-specific “sin” taxes and off-budget industry regulations have gained favor. Such policies are most successful when aimed at politically vulnerable targets – “pariah” firms. The modern multinational corporation with its cosmopolitan outlook and its diverse global operations, including plants in nations whose environmental, human rights or labor policies fail to meet the criteria of western elites, becomes a logical target. That anti-multination political dynamic is reinforced by the general resentment of the intellectual class against entrepreneurial capitalism more generally. That phenomena was well documented by the Austrian economist, Joseph Schumpeter, in his article, “Will Capitalism Survive?” (His answer: “No” because the moral legitimacy of the market, critical for its survival in a democratic society, would be undermined by a hostile intellectual class.) . The combination of popular ill will towards pariah companies and government activism can have severe consequences.
The tactics of Shell and Microsoft share a common flaw- the failure to recognize the distinction between the private and political communication. In the private world – when dealing with customers, workers, suppliers and neighbors – the successful business must convey information to customers about the value of its products, to investors about the expected gains from proposed capital expansions, and to groups living in proximity to its facilities that it will be a “good neighbor.” In such a setting, fact-based communication strategies have great value; the audiences involved have a rational reason to spend time to listen. The more they know about these issues; the better off they are. Thus, in the private world people are rationally informed. Things are very different in the political world where firms seek to defend themselves against charges of pollution, racism, violation of human rights, imperialism. Knowledge acquisition is no easier in the policy field than in the private field, but that effort gains the individual less. As a result, most people in the political sphere are rationally ignorant.
In politics, people aren’t stupid because they’re stupid – they’re stupid because they’re smart. When business seeks to make them smart – business is being stupid!
The session will explore strategies whereby business might better convey its positions in this world of rational ignorance where emotional, moral and value based arguments are dominant.
The first step in managing the political side of the modern corporation is to adjust to its rhetorical framework. The political world trades in values rather than goods. Before one can defend the various errors and shortfalls of even the best managed firm, one must first establish its political “value”, its moral legitimacy. Firms which lack moral standing become the focus of public derision, and thus vulnerable to political attack. Business must develop a value-based communication strategy – focusing on the ways in which the modern multinational corporation has expanded freedom, increased wealth, and most importantly extended these benefits far more broadly than any prior system. Markets have proven instruments of egalitarian justice as well as simple wealth creation.
But, for the business community to argue these points itself may well fail. Attaining moral legitimacy may well require allies. It is difficult for any economic entity to assert its moral legitimacy directly. One of GM’s less successful public relations slogans: “what’s good for GM is good for the U.S.A.” Third party groups may well be a more effective channel for the modern business to legitimize itself. That role is played by the evolution of the think tank, an institution representing a point of view (ideological in that sense) and arguing on intellectual and moral grounds the relevance of that perspective in the policy debate. Think tanks and other policy groups are well positioned provide principled foundation upon which a considered corporate communication policy may be constructed.
