IEA Blog

“Today we invite you to come with us on a special journey; to open your eyes and look at poverty. Open your ears and listen to the voices of poor people! Open your heart and meet people! Open your mind and understand that we are all human persons!”

With these colourful words, the president of Caritas Europa launched his organisation’s campaign “Zero Poverty”. At a time when personal insolvencies, housing repossessions and unemployment figures are at extremely high levels, one should assume that such an initiative must be a worthy endeavour.

So what exactly is Zero Poverty about? The presentation on the campaign website is ambitious:

“Our vision is Zero Poverty. No one should live in poverty. [...] Anyone can help to make the ZERO POVERTY vision a reality. You can find out how on our website.”

The “how” refers to 13 missions specified by the initiative. Supporters are advised, for example, to buy Fair Trade coffee and flowers. They are also asked to buy local products, both because it “guarantees jobs in the area”, and because “they are often organic products”. Further, saving energy is recommended, because the world’s poorest are most affected by climate change. Suggestions include “one minute less in the shower every day” and to “use less water for cooking”.

Nobody denies that Caritas’ work on the ground is extremely valuable. However, their attempts to appear fashionable by sounding like a campus workshop are less impressive. We learn from their campaign materials that minimum wages and welfare payments are too low, that globalisation leads to downward-pressures on wages and working conditions, that executive pay is excessive and therefore a strengthening of corporate social responsibility is required, and that the “female perception of the role of women is not matched by an equivalent change in attitudes among many men”.

Caritas’ targets are not just potential volunteers or potential donors. While the importance of civil society actors is mentioned, this is immediately qualified by adding that “this does not mean that governments can leave it up to ‘everybody’ to alleviate poverty; on the contrary they have to take up their role.”

This role is a highly extensive one, according to Caritas. Governments should increase child benefits, sickness benefits, welfare benefits, pensions, plus spending on healthcare, social housing, homecare, public employment and many other programmes.

With its impressive network of social service providers, the unique strength of Caritas is their vast local knowledge and long-standing experience in the day-to-day practice of poverty mitigation. In their field, there could hardly be a more authoritative voice. That is precisely what makes it so disappointing that Caritas engages in a campaign which reminds one of a school teacher who attempts to imitate teenage slang to appeal to his pupils.

One of the more irritating suggestions that people make in the debate about “corporate social responsibility” (CSR) is that “businesses should put something back into society”. Entered into google as a string, the phrase produces 21.7 million hits, with small variations producing many millions more.

I sometimes wonder, when I go to the local newspaper shop and purchase a newspaper for £1, whether I should say to the vendor before I leave – “having sold me a newspaper, I hope that you will now put something back into society”. Getting up at 5am, taking risks with very little capital to fall back on and providing communities with newspapers at a reasonable price is not enough it would appear.

Of course, when people use that line of argument, they are not talking about the corner shop, they are talking about Tesco, or Starbucks or PC World. But the argument is the same. Why if Tesco profits from selling a newspaper is it time for them to “put something back into society” whereas if the corner shop sells a newspaper people appreciate that they are providing a good service at a reasonable price?

The raison d’etre of a business is to put something into society by being a business. The provision of cheap and plentiful food in good condition; the development and supply of computers with ever-greater functionality; the provision of a cup of cappuccino that does not involve the buyer having to go through the expensive and laborious process of buying the machinery and making the coffee himself are all activities that put something into society. Why is it that businesses are caricatured as “taking out of society” when they behave as businesses but “putting something into society” when they spend money on community projects and the like?

More generally in the debate on corporate social responsibility, there should be no reason for businesses to make a special effort to be “social”. Business, by its nature, is a social activity. Businesses are free associations of persons put together for a common objective. That common objective, furthermore, can only be achieved by interacting with others in the community – mainly by providing goods and services that people wish to buy.

Should businesses be responsible? Of course they should. All individuals and all organisations should behave in a civil and responsible manner. However, this does not require businesses to have specific objectives that might, indeed, undermine their whole purpose. In fact, proponents of corporate social responsibility – that is proponents of businesses having specific programmes and objectives that explicitly promote aims other than maximising owner value – seem to want businesses to undertake tasks for which they are not suited but towards which other corporations and associations are, in fact, specifically oriented.

The latest edition of Economic Affairs covers these issues in more detail with articles from Elaine Sternberg, David Henderson and Stephen Copp, with Sushil Mohan and Alistair Smith writing specifically about fair trade. Enjoy Christmas, but please don’t campaign for businesses to behave like Santa Claus.