Can big business help the poor?

In February, VOX ran a LIVE online conversation between business leader John Foong and development expert Reuben Coulter. John, from Australia, lived in Dublin for 16 years, working with Google before moving to America six months ago.  Reuben headed up Tearfund Ireland for many years before moving to Switzerland 15 months ago to work with the World Economic Forum.  Editor Ruth Garvey-Williams hosted the conversation exploring business, poverty and justice. Here’s a taste of what they had to say:

Ruth:  At the Rubicon conference in Dublin, John suggested big business can have a significant contribution to issues of poverty and justice.  Tell us more.

John: For 20 years, I’ve been grappling with what I do with my life.  At 15, I felt convicted to become a pastor. That was always the plan, but I really enjoyed doing business. I became a management consultant and a colleague said, “You think what you are doing is just helping companies make more money but by making companies effective, you are actually making a difference in the world.”  Big business has been more effective than many other groups in alleviating poverty and addressing issues of justice.

Big business has been more effective than many other groups in alleviating poverty and addressing issues of justice.

Reuben: I started out working in public health in Darfur, Congo and Liberia, seeing the devastation poverty causes in people’s lives.  Despite my best work, it often felt like a drop in the ocean. I began to appreciate there are multiple actors in this ecosystem. Government provides infrastructure.  Business allocates goods efficiently and hopefully fairly. The not-for-profit space ensures the gaps are plugged.
Multinationals have incredible power. For example, General Electric has an economy larger than New Zealand!  When any one entity has too much power, injustice inevitably follows. I believe that business can and should do good. But I don’t believe that is an inevitable result of business.

I believe that business can and should do good. But I don’t believe that is an inevitable result of business

 

John:  Big business can be an unstoppable force that builds, creates and makes things happen. Often that tips over into income inequality and injustice. The role of good government and the public is to make sure that doesn’t happen.
Businesses have the ability to produce externalities - costs that the general public pays. Pollution is a classic example. A company making profit may cause pollution but the people paying the price are future generations. 

Reuben: We need to create a global framework, providing accountability and ensuring that businesses cannot opt out of their responsibility.  Companies should be measured on the triple bottom-line: not just profit but also environmental and social impact.  Christian businesses should also consider their spiritual impact.  And these need to be measured over the long term. 

Ruth:  What is the role of the consumer in keeping businesses accountable?

John: If the supply chain is not moral or if the company is doing things or treating their workers in a way that is not ethical, the consumer has a responsibility to speak up.  I believe consumers also need to consume the best products.  The capitalist system only works if people buy the best things, thus driving the market to make those things.

Reuben:  That poses a wider question about the value of endless consumption capitalism.  We create more demand and become more and more unsatisfied.  As Christians, we need to consider, what is the role of consumption in our lives and how do we moderate it?  
I agree the consumer has an important role but it is difficult because of the lack of transparency.  Some companies are profiled for their poor supply chains but many others do similar things but we don’t know about it.
An eye-opening moment happened when I visited my pension advisor. I asked what stocks made up the fund he suggested and the list was a vast array of drinks, tobacco and weapons manufacturers.  When I said, “I can’t invest in this; do you have any ethical pensions?”  He said, “In 30 years, you are the first person who has ever asked me about an ethical pension.” People who call themselves Christians spend their money and don’t consider the impact of what they are doing.

John:  I don’t necessarily see that it is the role of business to set standards, but we as a society (the consumers, the media and the government) need to decide what laws can help keep businesses accountable.

Ruth:  Does this mean that business has no responsibility?

John:  Not if you put it that way!  It is hard to force businesses to do what they should.  However, there is a great opportunity for business to set standards.  Businesses that are seeking to make a profit may actually find it will give them an advantage if people see they are acting ethically.

Reuben: Business and capitalism have lifted millions out of poverty.  When China opened up and conducted economic reforms, that helped to address poverty.  However, it left a strong legacy of injustice.  Unfettered business has consequences such as the degradation of the environment.
Legislation is often in place, but businesses move to avoid it. If an American business does [something bad] in its own backyard, it will be held to account.  But if it does this in China, the people can’t hold it to account for a product sold to the American consumer.  

John:   Sometimes it does work.  Apple is based in America and does business buying and selling in China. The Chinese government and the citizens held Apple to account for abuses in Foxconn, and Apple apologised because of their economic dependency on China.

Ruth:  What are positive examples of the contribution of business?

Reuben:  Christians have an opportunity to bring their faith into daily life. Whether I work in a multinational company or I’m an entrepreneur or a small shop owner, I need to ask, “How can I bring my values into what I do every day?” We need to start thinking about transformational business. 

John: Most big companies have corporate social responsibility, giving time and money to doing good work. That is fine but, it does not mean they are acting morally or ethically for the remaining 99% of the time.  
Work brings dignity. Unemployment is debilitating, sapping motivation and self esteem.  As big business becomes more successful, it hires more people and provides more interesting jobs through innovation. That brings dignity to those involved and ultimately reduces unemployment.

Ruth: Does the drive for profit negate the positives?  Surely the profit motive can lead to cut corners?  

John: Most companies report quarterly. They are traded up or down based on whether they make a profit this quarter. That leads to cut corners. Wouldn’t it be better to report quarterly on the triple bottom line?  I think the profit motive is essential for spurring innovation and providing rewards to people who innovate, take risks and work hard, yet I’m concerned about income inequality.
The purely capitalist part of me asks, “What is the government going to do? Place a limit on profits or pay?”   At the same time, there are real issues around how income is distributed, not necessarily evenly but fairly, and how we stop the rich becoming richer at a faster pace than others.

We’ve lived for decades on the steroids of cheap credit and easy growth.

Reuben:  Inequality is increasingly topical.  We see the results in social tension and chaos.  This affects long-term sustainability.  It is not good for a business if society collapses.  In our relentless drive for short-term profit, we undermine the very goal we are setting out to achieve.  As a Christian, there is an incredible role for transformed hearts. When people’s hearts are transformed, they no longer want to exploit others.

I may not be able to change my own company, I am one leader among many, but I can start with me.

John:  The Christian sense of stewardship says we are here to make the world a better place.  I see that DNA in a lot of companies.  It is a powerful recruiting tool because people want to work for a company that is changing the world and not just making profit.

Reuben:  The world needs to decide what sort of future we want for our children and grandchildren. We’ve lived for decades on the steroids of cheap credit and easy growth. I’m excited about the role that Christians can play.  

John: I may not be able to change my own company; I am one leader among many, but I can start with me.  I want to focus on how as a manager, employer and consumer I can treat others with dignity.  I want to think about the decisions I make.  How do they affect future generations? Do they leave the world a better place?