Occupiers and Pirates - a reprise (updated)

I'm going to link the two movements again because they both represent a shift in thinking. They know what they are against but haven't yet figured out what they are for.

Today Peter Shergold tells us that what the Occupiers hate about business is the "unconstrained pursuit of high-risk short-term profits." For him the solution is just a nice dose of good old fashioned "Corporate Social Responsibility" (or CSR).

I wondered how he went pitching this to John Howard when he was Secretary in PM&C. Then I remembered that Howard did have a go at promoting corporate philanthropy, but as Shergold points out that is not the same thing. That is the activity that does usually get short shrift as "launch, lunch, logo." Shergold sumarises it as;

The challenge for those of us who believe in market economics is how to restore business legitimacy. The 'licence to operate' needs to be rearticulated. Business must be able to exhibit its societal value, not to trade-off against the social and environmental costs of economic success but as integral to the supply-chain by which goods and services are produced. 'Giving back' is no longer sufficient. Charity won't save capitalism.

But Shergold does nothing to rebuff the most compelling counter-argument from Milton Friedman, who argued The Social Responsibility of Business is to Increase its Profits.

Yes there are good examples of CSR or triple bottom line - but as one blogging former exec notes individual KPIs still reflect revenue growth well above the CSR stuff.

There is a logical case that CSR in fact drives better financial performance long-term, but the issue remains the focus on short-term results. Short-term results have become significant through the inadequate response to the principal-agent issue; that is tying managers to the interests of shareholders.

The interests of shareholders - especially those whose retirement savings are invested - is in long term returns not short-term share price. As I commented before a way of dealing with this issue is by changing the remuneration basis of executives.

But Shergold also has to deal with the unfortunate facts of capitalism in America. Decades of focus on economic efficiency over equity have resulted in a dramatically less equitable society. CSR might knock the unpalatable edges off business, but will it change the equity trend?

I think the answer is "no.' I think that change requires a fundamental reset of the values espoused in public policy - away from "economic efficiency" and towards "growth and equity". They are very very different things.

Finally, the Pirate Party in Germany grapples with the question of what next from a totally different stance. In a discussion about the fact the party is very male oriented the political director (a female) said;

We don't keep track of our members' gender. We believe true equality starts when we stop counting women.

That is possibly the best indication that we are now in a "post-sixties" generation. Popular movements from the mid 1960s on have built on the themes of peace, environmentalism, and feminism. The current generation of "young radicals" take these as given - whether rightly or not. They may not be universally accepted across society, but they are almost universally adopted in the younger persons value set. They aren't, therefore, worth campaigning about.

Update: Ross Gittins this morning offered an interesting take of the failure of most economists to address some of the issues. He cited a book The Economics of Enough. A quick "thumb through" of the copy I just bought for my "Kindle for PC" (don't you just love that immediacy) says it is a very good book written from the basis of an orthodox economist recognising some of the empirical results (inequality, recession) and other theoretical work (institutionalism, behavioural economics). It deserves a more thorough read.

Novae Meridianae Demetae Dexter delenda est