Corporate social responsibility erode the power of major corporations

Proponents of democracy have become concerned over the increase of the power privately run corporations hold in the world economy and, consequently, in people’s everyday lives. Has global political power become something that can be measured by the thickness of one’s wallet? Is this trend irreversible? Not necessarily, according to Teivo Teivainen, Professor of World Politics.

“Major corporations may have opened a door to democracy by embracing corporate social responsibility. Nobel-winning economist Milton Friedman, whose Finnish counterpart could be considered to be libertarian multimillionaire Björn Wahlroos, warned companies of the trap of corporate social responsibility as early as the 1970s, dubbing it a revolutionary doctrine,” Teivainen explains.

Responsibility increases control

According to Friedman, a corporate leader who has assumed social responsibility takes on the role of a public body, an official. And how should officials be treated in a free society? They must be controlled, publicly and democratically.

“Today, all major corporations claim to have social responsibility. By Friedman’s logic, their operations and undemocratic administrative models should be open to evaluation on the same political and moral scales that are used on other public institutions.”

This means democratic control may be demanded of major corporations.

“Corporations have a complex game to play – they must appear to be responsible without exposing themselves to the accountability that is implied in admitting to social responsibility. The corporations would naturally prefer to control themselves voluntarily using their own moral code, but indications of coming legally binding provisions can be seen around the world," Teivainen states.

Governments are becoming more democratic, so why not companies?

Teivainen does not consider the democratisation of corporate power an impossible scenario. Undemocratically run public institutions can sometimes become quite rapidly democratised. This is apparent in the recent history of a number of Eastern European countries.

“One significant step that the Eastern Bloc countries took towards democracy was when dictators succumbed to international pressure and granted minor tactical concessions, such as allowing human rights monitors into the country, or permitting political demonstrations. The Berlin Wall fell.

“When companies use social responsibility to flirt with democracy, it may become possible to do to major corporations what we did to the DDR.”