Monday, February 01, 2010

Remember, the money doesn’t belong to you!

At a lunch party in Delhi recently I was confronted by a woman in a pink sari who effectively pinned me down while she lectured to me on the importance of corporate social responsibility. No one came to my rescue for ten minutes and I began to fret. I wondered how to get away from her without causing offence. Then I remembered some advice from a Bengali friend who had mentioned that in such situations a white lie is one’s best ally. So, I glanced over my overbearing tormentor’s shoulder as though someone had distracted me. I whispered loudly, ‘Coming, coming!’ to the imaginary person. Then I lied brazenly to my oppressor, ‘Ah, what a pity, I am being dragged away’ and I moved on shaking my head reluctantly.

At first I felt guilty for having lied but soon I realized that I had done a good deed. The Mahabharata tells us about honest Kaushika, who is accosted by a gang of robbers, demanding to know where the witness to their crime is hiding. Kaushika unwisely tells the truth and promptly gets the witness killed. To his surprise, Kaushika ends up in hell where he learns that in this case his duty to ahimsa, ‘non-injury’ trumped his duty to satya, ‘truth’. In the same spirit I feel that that by lying I had saved my tormentor from the pain of learning that she is a bore. I am convinced that white lies are the basis of civilization.

What troubles me, however, is the presumption of the woman in pink. I ask myself why no one lectures doctors, lawyers, or even journalists on their social responsibility. Why rage only on the social responsibility of business? Business persons do seem to arouse much more hate, fear, and contempt. They are blamed for making us materialistic and consumerist, for promoting selfishness and greed. The market is reviled for debasing our taste through advertising, for making us buy things we do not need. Capitalism is denounced for alienating workers, for creating unjust inequalities, for corrupting the government and for ruining the environment.

It is true that in India our animus against capitalism has diminished in recent years as our economy has risen and we have tasted the fruits of reform. Communism’s fall has also helped. While people have begun to believe that markets deliver greater prosperity, they do not think that capitalism is a moral system. We still think that morality must somehow depend on religion. Corporate social responsibility (CSR) is supposed to be the answer to alleviate the guilty conscience of business persons for having made a profit. CSR has a nice ring to it and it has been a buzz word for over a decade. There are CSR departments in companies, CSR courses in business schools and CSR reporters in newspapers. And yet, why does something so worthy and high-minded leave me profoundly uneasy?

The premise of the lady in pink is that that a firm is obligated to ‘give something back’ to those that make its success possible. Her image of a firm is a free rider, unjustly enriching itself at the community’s expense. Hence, good deeds are necessary to redeem firms and transform them into good citizens. But why should firms be obligated to give something back when they give so much already? Rather than enslave their employees, they pay them wages and benefits. Rather than steal from customers, they deliver goods and services that people value and pay for. Rather than ride freely on public services, they pay taxes.

According to my friend, Parth Shah, the CSR movement is trying to get the market to perform the function of the civil society or the state. Society consists of the state, the market, and civil society, and the individual is variously a citizen (of a state), a customer (in the market) and a member of a community. It is often difficult to define the separate the three domains. Historically, the state has protected life, liberty, and property. Civil
Society, through voluntary organizations, self-help groups, religious communities and charities provided education, healthcare and supported the needy. Alexis de Tocqueville celebrated this vibrant social sector in his wonderful travelogue, Democracy in America and regarded it as the foundation of democracy.

Under the ‘fatal conceit of socialism’ (in Hayek’s words), the state began to usurp the functions performed by the market (the mercantilist state) and civil society (the welfare
state). The fall of communism has forced the state to withdraw from the domain of the market, and many countries as a result have experienced unprecedented prosperity in the past two decades. The state still controls the functions of civil society and hopefully one day it too will gain freedom from the state.

‘The social responsibility of business is to make a profit,’ said Milton Friedman, the Nobel Prize winner, in a famous article in the New York Times. He explained that in making a profit a company creates thousands of jobs, both directly and indirectly through suppliers, distributors and retailers. It imparts valuable skills to its employees. It pays millions in taxes. It improves the lives of millions of satisfied customers with its products and services. This is an enormous service to society. If some shareholders get rich along the way, does it really matter? Companies should focus single-mindedly on their competence, providing goods and services better than their competitors, and not get distracted by extraneous activity. A company’s social responsibility is to make profits legally, not to harm nature, and uphold the highest standards of governance.

I find that many executives and businessmen do not value what they do and hence are attracted to guilt allaying, often hypocritical PR programs of corporate social responsibility. Managers must first take pride in making a profit. Second, they must remember that the company's money does not belong to them but to shareholders. So, the only CSR activities that are justified are those that increase profits.

Individuals, however, should engage vigorously in philanthropy. It is immoral to spend the company’s money but it admirable to spend your own money on charity. It is a theft against Reliance’s shareholders if the company embarks on building hospitals, but it is admirable if Mukesh Ambani does. Hence, Tatas do their charity work through their trusts. CSR should be relabelled ISR, Individual Social Responsibility, and each of us, as individuals ought to feel the need to give back.
-----
Gurcharan Das is the author of ‘The Difficulty of Being Good: On the Subtle Art of Dharma’

90 comments:

B K Singh said...

nicely said... yes the social responsibility is the responsibility of the individual... also one don't have to give money to be socialy responsible... but doing once duty honestly and paying his taxes honestly is a good starting point... one can also contribute to the soiciety by giving some time to needy... all in all i do agree with you... one should focus of ISR and not CSR...

Suresh Kr Pramar said...

The title is very correct. It was Gandhi who said that businessmen should hold their excessive wealth in trust for the welfare of the people. Gurcharan has expressed his view like a true capitalist since he is now on the board of several companies.

Should companies be satisfied by just creating jobs, treating their employees well and paying their taxes.Do they not owe anything to the society or community wherein they operate. Let us not forget that companies start their journey to business success on doles, tax rebates, subsidies and land at acquired prices.

Most of these tax concessions and subsidies come out of funds which could well have been used to finance welfare schemes for the poor and the deprived. In almost all the states governments are acquiring land for industrialisation and inviting investment by offering large concessions. The people whose land has been taken away have been deprived of their only means of an income income.Jobs are promised but few get these because they do not have the qualifications or experience the company is asking for. In state after state the condition of those whose lands have been acquired for industrialisation live in poverty and deprivation.

Gurcharan Das needs to remember that Freidman's theory has few takers worldwide. Companies undertaking CSR are not doing favours they are investing in their long term survival

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Anonymous said...

Very well put Mr. Das. The worst is the corporates that do some charity want it to be mentioned in all media.
Case in point Mr. Mukesh Ambani forgoing his hike in salary or taking a salary cut...big deal he owns the biggest company in India & has zillions of shares so taking a pay cut for a Mr. Mukesh Ambani is inconsequential - yet the media made such a saint out of him. I'd have thought the media would have applauded Mr. Ambani's move had he offered the cut in pay towards sponsoring some well deserved Engineering/doctor candidate from an EWS of society.

I fully endorse the view that csr should be ISR.
Rashmi

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shwetank sharma said...

I support. The social service which is very much an integral part of a civilization is already rendered by any company/organization once it starts hiring people. More than that, to ask, would be akin to the behavior of 'Communist' characters of Ayn Rand.
I contend this because recently i witnessed something which stands as a clear witness to what 'corporates' do for the general public. I work in an MNC and frequently visit Indore and Bhopal for business purpose. Needless to say that Indore is an outstanding example of a Tier-2 city with vast business opportunities. On my last trip i visited Nagda, a town near Indore(around 125 Kms.) Apart from being a railway junction Nagda has nothing in its kitty to give to its inhabitants. The place boasts of two major industrial units of Grasim( Aditya Birla group) and Lanxess( erstwhile Gwalior chemicals). Majority of the residents in Nagda are employed in the aforesaid units. Many of them proudly tell, that they took a VRS after working for 20-25 years in the same unit. Their children went to an English medium school run by the same corporate(aaditya birla). Their are small hotels which are available for stay in Nagda , only because it is frequented by executives who have come to visit these units. Hence here is another occupation taken up by some of the Nagda inhabitants. There is a stretch of Truck/heavy duty vehicles workshops operating near these 2 units, because trucks regularly ply on these roads to ship manufactured products to different parts of India.
So this is what all only 2 industrial units provide to the public as a social service, irrespective of the fact that the end product in Grasim(i.e. expensive cloth material ) is not being consumed by Nagda people.
Also, there is a small aerodrome which is being maintained by Birla for private usage. The same aerodrome is , sometimes, also used by politicians who visit the area.

And if we discuss the lives of people in Nagda; they are grateful to these 2 units as these are helping them to earn a living respectfully. However, only concern they have is for electricity supply. On an average electricity is off for 8-10 hours a day. Sadly, these 2 units cant help them in this cause because electricity is being handled only by government.

The school ,mentioned before , was not started by Birla as a social service initiative. It was built because Birla wanted its employees to send their children to good schools and hence stay assured of their children future. These would in turn enhance the employee performance and thus accrue more profits for the corporate. So whats wrong in striving for a profit through a unit Nagda?

In a nutshell, Nagda is living a peaceful life because of the two corporates. Hindus, Muslims and Sikhs are the religions in the region and all of them strive for money. This habit of them might make them greedy but it ensures they stay humane and happy !

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no signal said...

You made interesting points. Liked this article. Recently read your book India Unbound.

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Unknown said...

gurcharanjee
i think people expect doctors to give free treatment, lawyers to fight cases without fee, engineers to contruct roads and buildings without charge and politicians to govern the country out of love. hence the expectations of the lady in pink that businessmen should happily part with their wealth. if we want doctors to only cure our ills, lawyers to win our cases, engineers to give us reliable structures, politicians to abolish poverty and crime, then we should be happy that a businessman creates jobs and rewards skills. why expect the capitalist to do charity when the other professions are expected to do what is required of them in their capacity as professionals and nothing more? i don't want doctors to dictate where i should go for my holidays, my lawyer to tell me what i should eat, my engineer to tell where i should put my flowerbeds. each to his own. our country would be so different if every citizen performed his own duties well, without interfering in others' areas.

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partisanofliberty said...

I am saddened to learn that a champion of freedom does not have the courage to face up to pink intellectuals. Why do you have to run away, Mr Das? Why should you be ashamed for saying that capitalism is good.
Capitalism is the natural state of economy; it is not a contraption like communism, fascism, and other isms which are conceived by philosophers in their flights of fancy. In India and many other countries, generations have been tutored into believing that capitalism is based on ‘profit-making’ and it necessarily involves ‘exploitation of man by man.’ The fact is that it is the only system in which there is no exploitation of man by man. Feudalism, socialism, communism, Nazism—all are predicated on coercion. It is only capitalism in which men and women enter into economic activity on their own volition.
The overemphasis on CSR is a hallmark of rampant hypocrisy in our country. Literature, cinema, popular culture, folklore, public discourse—the rich are always bad and the poor, good. We all pontificate about the transient nature of wealth, maya. But when we look for a groom for our daughter, sister, or niece, the first and foremost consideration is financial!
You rightly said that “no one lectures doctors, lawyers, or even journalists on their social responsibility.” The people who make such lectures also harangue against the evil multinational corporations. But they all desire their sons and daughters to become employees of MNCs; for this they would even their right hand.
Apart from general hypocrisy, there is sanctimoniousness associated with middle class intellectuals. What these bigmouths mean when they talk about distribution or redistribution of wealth is that Mukesh Ambani, Ratan Tata, and Sunil Mittal should their fortunes with me, but I won’t share my bank balance with my driver and my maid.

Jassal J S said...

I partly agree with your thought process, however, I feel that should we always give disclaimers? Why should the corporates not go a step forward and help? Hospital's or health service providers, as they are called, are now mostly corporates, as Govt. has failed to deliver quality health, but they do not provide services to BPL, similarly, educational institutes are becoming privatised, are they providing education to the staff children, it is not happening even in Delhi.
I know of corporates who have setup facilities in "backward" areas, whatever that may mean, the condition laid down was, creation of jobs, infrastructure, etc. The jobs did not go to locals, since they were not trained, so these corporates transferred employees from existing facilities,poisoned the rivers.
The point I am trying to make is this,
(a)corporates are better placed to start awareness in hygiene,pollution (specially discourage plastics), careful driving (BPO drivers are the most reckless), training, etc, with the objective of improving the quality of resources,
(b) They can sponsor movements for organ donation,
(c) Educate and train workers "challenged" children. etc.
More than CSR it is a matter of Corporate Patriotism, why shy from it?
We all must do our bit, individually or otherwise.
the corporates should start a

Varun said...

I don't really agree to all points made in the post. And that'd just be my opinion. It's true that not only corporates/business people should be encouraged to act upon CSR, but others performing major roles should also play a nice and credible part as a part of their CSR program.

On the other hand, this is not entirely agreeable point that businessmen needs to focus only on profit making and must not be concerned with such jobs as an corporate entity. The company grows by absorbing resources from the society and it makes profit from society and not from an individual. So, it becomes a moral obligation of a company as an entity to pay off to the entity (society here)

Unknown said...

Dear Mr. Das, I wonder at the coincidence - "ISR" was a something we at Dun & Bradstreet TransUnion strated in 2007 as against conventional CSR. Check out ww.idotrust.org

Thank you for the sensitive and sensible portrayal of "social responsibility" aspect of business!

Best regards,
N.T.Arunkumar
CEO, D&B TransUnion
(www.dnbtransunion.com)

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Anonymous said...

Dear Gurucharahji,
just reading your book "Difficulty..". i have no words to describe the awsomeness and the quality of the matter in it. every page sets u thinking and relating about your own life. never before "Mahabharat" had such a perspective before.
however, in one chapter of "Yudhishitira's Duty"(pg 81) i found that you have translated "tit -for -tat " as "nehle pe dehla" which i think is not very proper. i would rightly call it as "Jaise ko Taisa" "Nehle Pe Dehla" is revenge one up. what say?

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Dear Gurucharahji,
just reading your book "Difficulty..". i have no words to describe the awsomeness and the quality of the matter in it. every page sets u thinking and relating about your own life. never before "Mahabharat" had such a perspective before.
however, in one chapter of "Yudhishitira's Duty"(pg 81) i found that you have translated "tit -for -tat " as "nehle pe dehla" which i think is not very proper. i would rightly call it as "Jaise ko Taisa" "Nehle Pe Dehla" is revenge one up. what say

Dhruv Rajashekaran said...

"I am convinced that white lies are the basis of civilization."

I think that White Lies AND Reciprocity are the basis of great civilizations. Reciprocity being that force that breeds trust between individuals and consequently allows for a smoother and easier flow of Dharma. You would be the best person to articulate such an argument in it's fullness if you haven't done so already :)

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Unknown said...

Dear Mr. Das: I respect you as a person who has seen India in transition and from multiple viewpoints as you travelled down the country and up the company. Let me try and paint a picture of why so much is expected of capitalism and of companies.

As you stated a while back that India's policies are based in the socialist ideals of Russia and the socialist zeal of a newly independent country. Those socialist ideals have hindered freedom of commerce- what we know as capitalism. Amen to that, but that truth needs to be seen as part of the larger pattern across a longer time-span.

Monarchy was one of the first forms of government for large numbers of people, and to some degree-first form of civilized existence as a community. But it was based on brute power and lineage. Society criticized monarchies as inaccessible and threatening.

Communism was born as the caring doctrine for the people where everything would be taken care of by the leaders- the state. The umbrella of socialist care and leadership included schools, companies, commerce, defense and included deciding where one would live and what occupation one would be involved in the rest of their lives. Absolute power and faith was given to the leaders. People didnt quite scream "I love my freedom, I love my life".Companies were unmotivated, uninnovative, and broke.

So the pendulum has swung once again and society has evolved a new form of governance- lets have the citizens elect a government. At the very basis of democracy are two values-
a. that every person has a vote and that
b. there shall be an equitable distribution of wealth or there should be a damn good effort to do so!
The government is answerable to the people. The companies are answerable to the people.

Is it extreme? Maybe; this is still an experiment in progress. But we do know that the version of capitalism that has been in play has been more akin to the monarchies of the yesteryears than the promise of democracies today. Freedom of market is not freedom of people. Social responsibility- caring for more than yourself- is what will move civilization forward as a whole. Corporate Social Responsibility is a token acknowledgment of that.

Are there people who dont look out for more than themselves? Absolutely. But those are the ones who will sink the boat, the ship, and the planet.

I believe in capitalism. But I am waiting for capitalism 2.0.

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hello there,interesting read but a few points or objections,
@“an excessive and unhappy self-regard” : I do not think Ayn Rand shared it, it is merely a speculation
@ “Ironically, Rand would become famous for celebrating honesty and integrity as indispensable virtues of the capitalist hero”…there is no irony here. You cite this one incident, n question her integrity. It is overgeneralization and selective abstraction!! Anyways, she has never projected herself as a Rama from Ramayana or a Harishchandra, for her heros too, honesty and integrity meant giving your best and not compromising on your talent, and pursuing your best ability truthfully and with discipline irrespective of the circumstances or opposition…if u do that, u r no longer dependent on other’s appreciation or validation…all this she pursued in her life as well as thru her heros, a very important thing is : all the above is much more difficult and requires more talent than speaking truth on every single occasion….not undermining the latter, but without former, latter is useless,… you see even people with the borderline IQs or so called “ seedha” in Punjabi, will speak the truth and are not clever to lie…. merely stating the facts on every occasion cannot be called the ultimate truth
@ “Later she continued to invent, exaggerate,…. where small deceptions were a matter of survival”
That was an exaggeration itself and an overstretch , to which the first five lines of your blog referred …no need to explain, as you would know.
@ “I quickly forgot Ayn Rand when I went to college and read serious philosophy” :the word serious can be replaced with “ structured”
@ “She would have been more effective if she had distinguished between ‘self-interest’ and ‘selfishness’.”…when I checked oxford dictionary, the definition of selfish nowhere mentions it as “trampling on other’s interest”…yes in ordinary English it does, but I guess ayn rand never wanted to be or do ordinary….it also shows that over a period of time, we have becum biased in using a word in a particular way, selfish is almost synonymous with being mean and so many movie/story characters who are selfish arouse in us a feeling of dislike….but I see the ayn rand’s usage of term as doing justice in terms of dictionary meaning ..also it re-defined the way the word was used, like never before…u being a writer wud know, being able to do that is a kind of phenomenon in itself…yes, in many academic or social situations, I too tend to use “milder” words just to be polite or not to attract undue criticism for being harsh, but I won’t ask or expect an ayn rand to do so.
@ why do u agree with her only in matters of economic policy…as far as I think a basic philosophy or principle is the governing factor and rest is outcome…but u agree with the outcome and dismiss the principle...e.g why one should be sent on a military training compulsorily and not taxed heavily for running a factory?

p.s: (i do n't know the answer on this last one). I am nor a writer, not a philosopher, not read any of ur books, though heard abt them...am in medical profession, came across ur blog while searching fr ayn rand and wrote a few observations.

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In continuation of above, one more thing,
Fun reading the incident where she said "u cannot not take sides..u r either with him or against me",
there is nothing wrong with her not speaking with that person in her life...it may not be because she found no use of such a person in her future interations who cannot or will not take a side...nothing wrong with that!! We should not expect diplomacy from her.
another thing is
one should not connect too much the writer's personal life with the body of work (....it is the latter which matters or does not matter on its own, there is no point bringing personal life events to one's rescue while discussing ideological issues

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My son Mohan Murti, gifted me your book "The Difficulty of Being Good: On the subtle art of dharma".

Wonderful and unique effort,and will be read by millions. I have some comments with which one is free to disagree.

Dharma transcends everything else, even the cosmos and the Gods. Anything perceivable is its derivative and ajectival, be it good bad or ugly. Its clearest translation - though incomplete - is rhythm (surprisingly in sanskrit also), a sort of ' equilibrium', a complimentarity in the cosmos and beyond. All aspects and laws of nature, all Gods, life systems, thoughts, words, actions derived from it and must conform.

The sun rises and sets, the solar and other astral systems revolve with nano-level perfection, the tides and waves of the ocean, the weather, wind, all life, must uphold it to perfection. Even distortions seen at times is an integral part. Generally, these are expressed as bio-rhyhtm, eco-rhythm and astro-rhythm. For a beneficial synthesis of these three, is the invocation 'Om Shanti, Shanti, Shanti'.

Dharma as understood in common parlance is inadequate to answer the many questions for the killing of Bhishma, Dhrona, Karna, etc. Vyasa himself fell into the error, as seen from his exasperation, quoted at page 302 of the book (XVIII-5-49).

In Vyasa's companian volume Srimad Bhagavatam book 1, chapters IV to VII, Narada helps him lo locate wherehered and reconciles perceptions and Dharma. Krishna never killed. He only redeemed and absorbed into himself ! All legitimate questions of the Mahabharata, I think, are answered in Bhagavata and, I recommend its study.


Best regards,
K.V.Narayanmurti
Advocate
'Visalakshy'
New Kalpathy,
Palakkad, Kerala
website: www.narayanmurti.com

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