JETTISONING LABOR RELATIONS: CORPORATE SOCIAL RESPONSIBILITY AND THE

RISE AND FALL OF AMERICAN HEGEMONY

ABSTRACT

The literature on Corporate Social Responsibility (CSR), produced largely by American

business school academics, has, over the last generation, ignored an empirical record of

corporate irresponsibility, especially in the area of employment relations. This neglect is

puzzling given the skepticism of previous generations of CSR scholars and the importance these

placed on labor-management cooperation. Arrighi’s (1994) theory of the rise and fall of

hegemonic societies can explain this shift in perspective. According to Arrighi, American global

economic hegemony emerged a century ago powered by its multi-divisional corporations, but the

extraordinary autonomy exercised by this organizational form stimulated demands for the

responsible use of its economic power. When American hegemony was still new and based on

industrial development, the discourse on CSR focused on “the labor question” in order to insure

productivity and social peace. As the nature of American hegemony expanded after World War

II, academic views on appropriate corporate responsibilities broadened accordingly, and CSR

embraced a pluralistic perspective capable of competing with other systems. Once American

hegemony began its decline, and new competitive and financial pressures shook the stability of

its institutions, the field of Business and Society adopted a managerialist version of CSR that

relied on nonconsequentialist ethical abstractions. This contemporary perspective has had no

measurable impact on corporate behavior, and as American hegemony dissipates, any future

version of CSR will necessarily be less ethnocentric, perhaps originating within other societies.

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A specter of irrelevance is haunting the study of Corporate Social Responsibility (CSR), a

subject long associated with the predominantly American academic field of Business and

Society. Despite the grandiose scope implied by the field’s name, Business and Society

scholarship has primarily focused on hypothesizing, discovering, or evaluating the social

responsibilities of businesses. Yet, despite generating a vast literature that claims to investigate

various dimensions of corporate social responsibility (CSR), the field has had little to say in

recent decades about a number of trends that would seem pertinent and even unavoidable in any

serious discussion of the topic. Rare is the contemporary Business and Society academic who

weighs the empirical record of corporations with regard to the treatment of employees,

deregulation, government subsidies, union avoidance, or the role of the military- and prison-

industrial complexes within an allegedly free market economy.

Part of this neglect might be the product of self-censorship. Business and Society

academics are primarily housed within American business schools, and an examination of

corporate performance with respect to these neglected issues would support at least a prima facie

case that the people running American businesses and financial institutions have actually become

less responsible over time in dealing with employees, governments, or even investors (Marens,

2004), a result that could not be expected to win approval from either business school

administrators or the business community itself. Furthermore, this dismal record was generated

by American corporations despite decades of promoting CSR by many colleges of business with

the enthusiastic encouragement of their accrediting body, thus implicitly criticizing the field’s

own pedagogical record (Cheit, 1991). Nonetheless, attributing the field’s neglect of the

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empirical record to practices of self-censorship can not explain why earlier generations of CSR

scholars proved more willing to criticize corporate leaders or express skepticism regarding their

good intentions (e.g. Bowen, 1953; Chamberlain, 1973; Galbraith, 1958; Dale, 1960; Kaysen,

1957; McGregor, 1960; Levitt, 1958; Selekman and Selekman, 1956). More specifically,

contemporary scholars have shown relatively little interest in either labor unions or general

employment policies, with the occasional exception of the plight of third world workers, safely

removed from having to discuss employment practices within the core itself (e.g. Arnold and

Bowie, 2003). Yet, employee relations were traditionally placed at the very center of the

American discourse on corporate responsibilities, and it is not obvious why the treatment of this

particular issue changed so radically.

This paper attempts to solve this mystery by offering an explanation based on Arrighi’s

(1994) theory of the evolution of hegemonic capitalist societies. It will demonstrate, using

Arrighi’s model, that this most recent generation of scholars narrowed their approach to CSR for

essentially the same reason that the post-war generation expanded theirs from its original focus

on labor and employment relations. In both cases, scholars were responding to changes in the

nature of an evolving American capitalistic hegemony that is based on the triumph of the

autonomous American corporation, a hegemony that has required a periodically changing view

of what responsibilities should attach to this dominant organizational form. During those

decades when American leadership was still primarily defined by its industrial might, questions

of corporate responsibilities logically focused on relations of production. As American

hegemony spread and deepened after World War II to encompass the military, political, and

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cultural spheres, and the American corporation was increasingly held out as a model for

emulation, discussions concerning appropriate corporate responsibilities broadened accordingly.

Furthermore as American business seemed to achieve stability in the post-war years (Edwards,

1975), its leaders possessed the self-confidence to tolerate, even occasionally welcome, a bit of

“constructive” nagging (Brown, 1982; Bullis, 1953). Then, as American hegemony declined in

the 1970s, the role of CSR became that of obfuscation, avoiding critical trends of heightened

class conflict and financial hypertrophy by maintaining the fiction that corporate executives were

still willing and able to promote mutual gain among corporate stakeholders.

I shall present this analysis in five parts. Part one explains Arrighi’s theory of the rise and

decline of capitalist hegemony and applies it to the evolution of the construct of CSR. The

second part chronicles the early decades of this process when nearly ubiquitous labor-

management conflict in the United States generated a discourse on resolving this social and

economic problem, while the third part traces how academics entered the discussion as American

global hegemony spread beyond industrial leadership after World War II. The fourth part

discusses how a previously macro and institutional approach to CSR was eclipsed by a

managerialist perspective that obfuscated the increasingly grim reality of hegemonic decline. I

conclude by suggesting how the uncertainties of a world economy in flux may yet produce a

new, and still unformulated, perspective on the responsibilities businesses owe their societies.

CSR AS A PRODUCT OF AMERICAN HEGEMONY

The irrelevance of modern CSR scholarship, its failure to either articulate a realistic

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normative position or adequately study its subject, is not simply the product of some unfortunate

but ultimately random decline in the quality of the specialized faculty. Historical accounts of

Business and Society have acknowledged that the field has indeed changed since it began to

coalesce during the 1950s and 1960s (Carroll, 1999; Epstein, 1998; Frederick, 2006), but these

accounts have tended to do so in an ad hoc manner without adequately considering institutional

pressures and social trends that might explain the timing and nature of these shifts. For example,

while it may be correct, as some authors have suggested, that the introduction of formal ethics in

the 1980s was a reaction to negative publicity over certain ethical scandals that arose at that time

(e.g. Carroll, 1999; Epstein, 1998), this explanation tells us little about the field’s evolution,

since ethical scandals were hardly unknown before 1980, and these were more likely in previous

eras to inspire political and legal analyses than philosophical ones. To understand how the field

developed as the product of a changing society requires, not another historical narrative, but the

application of historical sociology: a perspective built around a theory of social change that can

tie evolving perspectives on the appropriate responsibilities of business to structural

transformations within American society.

Arrighi (1994) provides such a perspective. His theory of the rise and fall of hegemonic

capitalist societies builds upon Braudel’s (1981) account -- inspired by a passing comment of

Marx -- of the rise and fall of leading European metropolises within a network of global trade

and finance. Arrighi subdivides the history of international capitalism since the conquest of the

Western Hemisphere into four separate eras or “hegemonic waves”, each dominated by

successively larger and more politically coherent core regions, each of which controlled the

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production and trade of the most important goods of its time. Every hegemon eventually

discovers that its growing economic dominance not only allows but even requires it to extend its

hegemony into other spheres. While economic might does indeed buy a great deal of military

power and diplomatic influence, Arrighi follows Gramsci in arguing that global hegemony is

based as much on cooperation as coercion. Not only does the hegemon establish comprador

clients among local elites, but the very vitality of the hegemonic society proves attractive to other

social groups as manifested in their demands for its commodities and cultural products, the latter

including ideological constructs that help legitimize this hegemony. In the case of the United

States, one such ideological construct has been corporate social responsibility.

Each hegemon begins to decline after a few generations as the result of rising competition,

with the reigning hegemon ultimately teaching and financing its eventual successor. In this

manner, the Italian trading states, particularly Genoa, financed the rise of the Netherlands while

it was still a province within the dominant Hapsburg trade network, and in turn, the Netherlands

eventually invested heavily in English agricultural “improvements” that would lead to the

industrial revolution. English capital and technology eventually helped build the American

railroads, and these served as both model and enabler for the large American corporations, which

superseded the individual price-taking firm at the heart of British capitalism. Furthermore, as

new competitors arise, it becomes increasingly more profitable for entrepreneurs in the

hegemonic core to tap accumulated wealth through financial manipulation and control of the

state than to generate wealth through new productive investments within this expensive core.

Therefore, during the final generation of a hegemonic wave, “finance” is transformed from a tool

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of production to the primary end in itself of entrepreneurship, resulting in the squeezing of

workers, the skimming of investments, and the transference of production to cheaper regions,

one of which eventually uses its own comparative advantages to establish itself as the new

hegemon. (The interesting question as to whether or not the United States is currently grooming

a Chinese hegemonic successor is beyond the scope of this paper.)

According to Arrighi, multi-divisional American corporations, which emerged within an

extraordinarily large and wealthy national market, drove American hegemony. While large

industrial concerns were established elsewhere, what was unique about the American examples

was what Chandler (1977) labeled “the visible hand,” the high degree of autonomy possessed by

American top management, largely unconstrained by corporatist pressures from other institutions

and only lightly regulated compared to other industrialized nations (Vogel, 1993). As this

organization form developed and spread, it became apparent even to many among the executive

stratum that the autonomous power of these organizations required a voluntarily acceptance of

some degree of social responsibility in order to mollify a skeptical, even fearful public,

especially with regard to the treatment of employees (Carnegie, 1901; Barnard, 1938). With the

growth of American business schools after World War II that coincided with a broader and

deeper global hegemony, both academics and business leaders urged these schools to assume the

duty of delineating and teaching appropriate responsibilities to future “organization men”

(Brown, 1983; Cheit, 1991; Gordon and Howell, 1959; Lord, 1936). However, with the decline

of American hegemony that began in the 1970s and the subsequent dismantling of stable

domestic corporations by financial pressures and deindustrialization, advocacy of CSR could

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offer little more than a false hope, a distraction from both the visible process of relative decline

and a frighteningly uncertain future.

Discourse within Business and Society over the last two decades has acknowledged some

need to adapt to change, and articles have appeared that consistently recommend the need to

separate normatively-based discussions on the appropriate standards for corporate responsibility

from more social scientific inquiries into the impact that CSR, or its lack, has upon corporate

stakeholders (See Jones and Wicks, 1999 for a good summary of this literature). This

recommendation has done little to revitalize the field because it misconstrues the field’s

difficulties as methodologically-based. First, it fails to recognize the functional role that brought

the CSR discourse into the academy in the first place, a role that actually demanded conflating

the empirical with the normative. Although earlier scholars of CSR were often established social

scientists working at prestigious institutions, they were not seeking to extend the boundaries of

human knowledge by writing on CSR, but to give practical advice to current and future business

leaders for treating the system that benefitted them personally in a sustainably responsible way.

Typically, Social Responsibilities of the Businessman (Bowen, 1953), often regarded as the

seminal book of the field (Carroll, 1999; Wartick and Cochrane, 1985), was written by an

economist who was elsewhere an advocate for more formal research in business schools (Bowen,

1955), but Social Responsibilities, written at the bequest of the precursor of the National Council

of Churches, is a work of informal advocacy, not scholarship. This deliberate mix of the practical

and normative was legitimated by the famous Ford Foundation study of American business

schools published six years later. The study remains famous today for echoing Bowen’s call for

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applying social science to business school research and teaching (Khurana, 2007), but it also

advocated deeper coverage of social responsibilities in the curricula as necessary for maintaining

American hegemony, arguing that the “threat to the free world imposes upon businessmen the

obligation to exercise their leadership in ways that will contribute to the stability and rapid

growth of the American economy and that will contribute to international harmony” (Gordon and

Howell, 1959: 82).

Second, Business and Society academics have never confronted the political difficulties in

formalizing their intellectual legacy by conducting careful empirical studies of how businesses

have actually dealt with their erstwhile responsibilities. There is nothing inherent in the various

versions of CSR that prevents researchers from measuring either their diffusion or their impact

on society. If older academics were not equipped to conduct these kinds of studies (Rowley and

Berman, 2000), a vibrant field would have been able to attract and hire younger better-trained

colleagues in the manner of other business school disciplines. The real problem was not that

such projects were technically daunting, but that the administrators and patrons of business

schools might not appreciate the results of good work. While business schools, for example,

would support research into what factors raise workers’ productivity, they were not likely to

display enthusiasm over efforts to discover whether workers share in productivity gains.

Business professors might earn grants, promotions, and even consulting opportunities by

comparing the efficacies of strategies for market competition, but no one earned rewards for

investigating how businesses acquire or utilize government subsidies. As a result, whatever

social science theory or research was generated by Business and Society either focused on

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marginal issues such as bribery or corporate philanthropy, or dealt with controversial topics such

as “business and politics” so cautiously that it would be difficult to distinguish the results from

explicit censorship (See e.g. Getz, 1997). Under conditions of hegemonic decline, the field

could simply not attract or nurture the competence and courage necessary to conduct CSR

scholarship that would meet contemporary research standards.

Avoiding controversy, however, did allow Business and Society to survive as a field, albeit

in a marginal niche as a business school chaplainship. The literature that did result avoided

raising potentially controversial questions by either narrowing the scope of inquiry to the ethics

of individual decision-making (e.g. Evans and Freeman, 1993), or broadening it by postulating

hypotheses so general and parsimonious that the claims were little more than truisms (e.g. Jones,

1995). In doing so, writing on CSR continued to serve American hegemony, but in a manner

consistent with a far more constrained social space. While the Bowen generation offered advice

on how to manage hegemonic success to promote peace and prosperity, their eventual successors

were left with little more of a role than to obfuscate decline by maintaining the myth of

enlightened management in the face of deregulation, financial dishonesty, and mistreatment of

employees. Just as new more volatile circumstances left both patrons and students of business

schools less tolerant of big-picture introspection, it also made it less practical for even the most

well-meaning executives to follow the advice of business ethicists to honor social contracts,

apply the categorical imperative to stakeholders, or pursue Aristotelian virtues.

It is hardly surprising that changing views as to the appropriate responsibilities of businesses

would track these major shifts in the political economy of the United States. What American

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business elites would regard as an acceptable, or even tolerable, view of the responsible use of

corporate power would naturally change as the hegemonic position of the American society

evolved from that of a laissez faire-oriented industrial leader, to a globally-dominant national

state, and finally to a declining industrial power that relies on increasingly fragile financial,

cultural, and military dominance to maintain its position in the world. The next three sections

deals with each stage in turn.

LABOR-MANAGEMENT COOPERATION AS THE ORIGINAL SOCIAL ISSUE

As the United States emerged in the early years of the twentieth century as the world’s

leading industrial power, discussions of business responsibilities quite logically focused on the

tensions associated with industrialization, most noticeably the conflict between management and

labor over the new ways of performing and compensating work. While accounts of the history of

Business and Society generally acknowledge Howard Bowen’s Social Responsibilities of the

Businessman (1953) to be the field’s seminal text, Bowen himself acknowledged that “[t]he idea

that there should be broader participation in business decisions—that businessmen should share

their powers with other groups—has been frequently expressed over the past fifty years,” and he

cited in support -- along with such icons as Keynes and Drucker -- the pro-labor Taylorists Tead,

Metcalf, and Cooke; Clark and Slichter, two famous economists who were concerned with labor

issues; Murray, Golden, and Ruttenberg, three former officials of the United Steel Workers; Neil

Chamberlain, a leading professor of industrial relations of the time; and the “high-road”

industrialist, James Lincoln (1953: 177, n. 2).

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What this list reflects, in part, is the importance of the “labor question” in influencing this

pioneering academic treatment of CSR (Carroll, 1999). Not surprisingly, given the

contentiousness of American labor history, the relationship between workers and management

became the first issue to generate large-scale discussion over business’s social role, since

industry was not only the source of American wealth and strength, it also generated “the

bloodiest and most violent labor history of any industrial nation in the world” (Taft and Ross,

1969: 221). Business leaders, including some responsible for a share of the bloodshed, offered

proposals to promote labor peace (Carnegie,1901), and Woodrow Wilson, even while negotiating

in Versailles, took the time to remind Congress that “[t]he question that stands at the front of all

others amidst the present great awakening is the question of labor . . . how men and women who

do the daily labor of the world to obtain progressive improvement in the conditions of their

labor, to be made happier, and to be served better by the communities and industries which their

labor sustains and advances” (Quoted in Lichtenstein, 2002: 4).

Beyond the immediate fear of violence and radicalism, improving labor relations and

assuring demand were understandable concerns for a nation industrializing at an unprecedented

clip. Public intellectuals not only wrestled with questions of promoting efficiency, sharing gains,

and avoiding conflict, but also sought to find ways to balance the processes of investment,

production, and consumption in order to avoid the kind of macroeconomic crisis and social

disruptions that the nation had experienced in the 1890s. At the same time, preparation for

World War I offered a glimpse of the potential of labor-management cooperation for

ameliorating conflict and increasing productivity, as the federal government brokered relative

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peace between industry and politically moderate unions. Engineers and consultants associated

with the scientific management movement encouraged cooperation as tool for increasing

efficiency (Trombley, 1954, Jacoby, 1983), while political reformers saw improved worker

morale and the shared prosperity as worthwhile ends in themselves (Tead and Metcalf, 1933;

Slichter, 1947). Before his death in 1915, Taylor himself had conceded a possible role for

unions in implementing scientific management on the shop floor (Nyland, 1996), and while his

attitude toward workers remained ambivalent, he did acknowledge that they faced the risk that

managers might try to capture productivity gains for themselves (Wagner-Tsukamoto, 2007).

Some of Taylor’s disciples, most notably Morris Cooke and Ordway Tead, went much

further than Taylor. Having developed an understanding of labor’s grievances, they endorsed the

need for worker self-protection against managerial reneging, and asked labor leaders to support

their proposed efficiency reforms in turn (Fraser, 1991; Nadworny, 1955). Samuel Gompers of

the politically moderate American Federation of Labor (AFL), disappointed that many

companies abandoned war-time cooperation with the coming of peace, attempted to rekindle the

relationship by having the AFL officially embrace the goal put forward by the Taylor Society to

connect wage gains to productivity gains (Jacoby, 1983). Sidney Hillman, leader of the

Amalgamated Clothing Workers, who appreciated one of Cooke’s studies that primarily blamed

management for the clothing industry’s inefficiencies, often sought Cooke’s advice, and led his

union into the vanguard of labor-management cooperation by working with unionized shop

owners to outcompete nonunion competitors through higher productivity (Trombley, 1954).

Ordway Tead, another pro-labor Taylorist, exercised his influence as an author, editor, and

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publisher. Tead became one of the first scholars of personnel administration, authoring or co-

authoring early textbooks on the topic, and Bowen, who cited no less than four of Tead’s books,

called him “the most consistent advocate of a broader base for the determination of business

policy” (Bowen, 1953: 177, n. 2). Furthermore, as an editor at Harper Brothers, Tead published

many of the post-war works on the social responsibilities of business.

In his own writings, Tead and his collaborator Metcalf argued for an independent power

base for employees on both ethical and psychological grounds, quoting John Stuart Mill (himself

the major theorist of labor-management cooperation during the British hegemonic cycle), in an

early text on Personnel Administration, that “[h]uman beings are only secure from evil at the

hands of others, in proportion as they have the power of being . . . self-protecting” (Tead and

Metcalfe, 1933: 444), and concluding that cooperation would only arise “when there is

confidence on all sides that basic rights and interests are adequately secure so that attention can

be turned safely to corporate aims of a constructive and productive character” (1933: 501). Tead

and Metcalf ended by anticipating the post-war generation of business and society academics:

[i]nstitutions exist not for their own sake or for the benefit of some small group which momentarily controls them. They exist to minister to the life of an entire community. And they are made subservient to public and inclusive ends only as they are controlled under democratic methods and for democratic ends (1933: 501).

That such views could appear in a major business school text (Tead taught part-time at

Columbia) suggests that they were not regarded as anti-business or radical at the time. Even

before the onset of the Great Depression, the Dean of Northwestern’s business school argued that

the schools were responsible to “do everything possible to prevent the rise of a business

caste. . . . Their existence is a factor in keeping the doors of economic opportunity wide open.”

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(Heilman, 1928: 2-3), while eight years later the Dean of Boston University’s business school

urged business educators to lead “in bettering conditions of the working man, developing their

facilities and promoting their happiness” (Lord, 1936: 21). Moreover, many of the business

leaders who earned reputations as important thinkers stressed the need for taking the interests of

employees seriously. These not only included the rare pro-union executive, such as Edward

Filene, but the more mainstream and somewhat anti-union Chester Barnard (1938), who argued

that management needed to provide economic and psychological incentives as a way of inducing

the high levels of cooperation necessary for a modern business to operate efficiently.

Similarly, within the famous depression-era exchanges between corporate lawyers Adolph

Berle and E. Merrick Dodd over the proper relationship between managers and shareholders, the

two sides at least agreed on responsibilities with regard to employees. According to Dodd (1932:

1151) “There is a widespread and growing feeling that industry owes to its employees, not

merely the negative duties of refraining from overworking or injuring them, but the affirmative

duty of providing them so far as possible with economic security.” Berle and Means (1933: 356)

echoed Dodd’s sentiments by giving priority to employee interests in their short list of social

obligations that a court should uphold against shareholder opposition: “fair wages, security to

employees, reasonable service to their public, and stabilization of business.” (356)

While labor-management compromise and cooperation had won a great number of nominal

endorsements between the world wars, the practical influence of the idea on the actual behavior

of managers, employees, or labor unions is hard to determine, and certainly there is no evidence

of revolution in workplace collaboration sweeping the nation during these years. The concept

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did, however, affect the thinking of certain individuals, and one of the most influential on the

later development of CSR was labor leader Clinton Golden, who worked for Hillman in the

1920s, and was a personal friend of Cooke, whom he would one day eulogize as being “among

the first . . . to be concerned about the impact of these newer [production] methods on people—

workers—and their welfare. He understood that labor organizations initially emerge in a free

society as [a] defense against exploitation in one form or another” (Trombley, 1954: 254).

Moving to the United Steelworkers in the late 1930s, Golden attempted to put Cooke’s ideas into

practice (Hoerr, 1987). Golden, whom The Saturday Evening Post once labeled labor’s

ambassador to business for his ability to work with corporate executives in public forums, hired

staffers who would make their own mark advocating labor-management cooperation. These

included Joseph Scanlon, architect of the gain-sharing plan that still bears his name, and Harold

Ruttenberg, perhaps the only American union official who later became a corporate executive.

Golden also involved Cooke in his own efforts, enlisting him to ghost write a book for Golden’s

union president on raising productivity in the steel industry (Brooks, 1978).

More importantly, Golden and Ruttenberg co-authored a more widely-discussed work,

Dynamics of Industrial Democracy. The book’s working title, Paths to Industrial Peace, more

explicitly reflects the book’s intention to strengthen relations between unions and managements

in order to maximize both efficiency and fairness. Left-leaning labor leaders criticized Golden

for his betrayal of the class struggle, and the more pragmatic “bread-and-butter” wing of

American labor often regarded Golden as naïve. The academic world, however, lionized him,

and he was offered teaching posts at Harvard and MIT after leaving union work (Brooks, 1978).

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Dynamics of Industrial Democracy was widely cited during the years after the war,

beginning with Chamberlain (1948), who used Golden’s approach to labor-management

cooperation as the starting point for a broader agenda for social cooperation. For Chamberlain,

the question of what role unions could or should play in the management of businesses was

“highly charged with an ethical content. Judgments are required as to the moral validity of legal

relationships, the justification for economic powers and distributive shares . . . [and] . . . the

philosophical foundations for political arrangements” (1948: 8). By embedding labor relations in

a broader set of relationships based on fairness, mutual gain, and some degree of power sharing,

Chamberlain laid the foundation stone for the start of a new academic discipline.

THE BROADENING PERSPECTIVE OF THE POST-WAR WORLD

Given their similar life experiences, it is not surprising that the cohort of scholars who

would build the first full construct of CSR would all use labor-management cooperation as their

starting point of analysis. These individuals were almost all trained in economics, often labor

economics, at a time when at least a substantial portion of the field’s mainstream, and by no

means some small left-leaning clique, was more sympathetic to the goals of organized labor than

it is today. John Maurice Clark, a President of the American Economic Association exemplified

this sympathy by claiming that “[h]igh wages are good for business; probably higher wages than

business as a whole would pay without some pressure of the sort unions exert. Therefore unions

have almost certainly been good for business” (Clark, 1948: 87). His student and eventual

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successor as AEA president, Sumner Slichter (1947), while often critical of organized labor,

conceded that unions sometimes improved management by enhancing communication and

forcing management to be more thoughtful in its decision-making.

Beyond their similar academic backgrounds, these scholars were all marked by the

cataclysmic events of their time: the Depression and the economic growth that followed it;

laissez-faire government policies in the 1920s followed by the New Deal; World War II and the

Cold War; the labor struggles of the thirties and the limited labor-management détente of the

forties and fifties. In short, the United States had experienced the trauma of a leading industrial

power evolving into a broadly dominant global hegemon. Having passed through the typical

growing pain of war and depression that left the older order nearly ruined, the U.S. faced the

mixed blessing of having to assume the responsibilities of world leadership. Most of the

individuals who founded the field of Business and Society were active participants in this

transformation, not only working at elite universities but also serving in policy-making positions

in government and foundations. As a result of overlapping backgrounds, they held similar views

regarding the responsibilities of business to government, unions, and other major institutions.

If Bowen’s book The Social Responsibilities of the Businessman was indeed the catalyst for

a new field of study (Carroll, 1999; Wartick and Cochrane, 1985), he was scarcely dealing with

these issues in an intellectual vacuum. After Bowen’s book appeared, Benjamin Selekman, a

generation older than Bowen and already well-known in the field of industrial relations,

published Power and Morality in a Business Society, co-written with his wife Sylvia (Selekman

and Selekman, 1956), and then Moral Philosophy for Management (Selekman, 1959). Others

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who contributed to the discussion in important journals during this period include: Selekman’s

Harvard Business School colleague Theodore Levitt (1958), who debated Selekman (1958) in

the pages of Harvard Business Review; as well as Wharton’s Ernest Dale (1960), author of

“Management Must Be Made Accountable;” Harvard economist Carl Kaysen (1957), whose

“Social Significance of the Modern Corporation” appeared in the American Economic Review;

and the previously mentioned Neil Chamberlain (1973) of Columbia, who, like Selekman,

moved from industrial relations to a career writing about broader issues of corporate

responsibility. Chamberlain was also a Columbia colleague of Ivar Berg, James Kuhn, and

Seymour Melman, whose more specialized scholarship touched upon issues of corporate

responsibility. Harvard fellow travelers would include such famous names as John Kenneth

Galbraith (1958); John Dunlop (1980), a future Secretary of Labor; and Douglas McGregor

(1960), a proponent of Joseph Scanlon’s gainsharing plan. Ultimately, however, the exact

number of individuals who could be retroactively labeled as Business and Society scholars is not

important. What is significant is that several important academics dealt at least part-time with the

subject during the first two post-war decades.

While successful as scholars, a number of these individuals built impressive records of

public service. Not only Galbraith and Dunlop, but Bowen, Kaysen, and Kuhn all spent time

working for Presidents or Congress. Selekman was a labor arbitrator, and Chamberlain a one-

time labor journalist, and later a director of the Ford Foundation. The devastation of the 1930s

and 1940s—Dale had the added burden of being a refugee from Nazi Germany—may help

explain their concern for the welfare of workers within a capitalist system. Selekman

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acknowledged that both the labor strife he witnessed as a child and his graduate research on the

Ludlow massacre strongly influenced his thinking (Selekman and Selekman, 1956, 5-6).

Similarly, Bowen (1988) credited an uncle who was an itinerant laborer and an International

Workers of the World activist as one of the greatest influences. Galbraith helped found

Americans for Democratic Action, alongside a number of major labor leaders (Gillon, 1987). As

a group, the early scholars of CSR were individuals who were quite experienced with having to

grapple in a practical manner with the “labor question” and other public issues.

Constructing CSR

As the United States merged from depression and the Second World War to an uncertain

future that included both a fragile peace and a fragile prosperity, the proper relationship between

business and society had hardly achieved a popular consensus. The new American system that

had emerged ad hoc was scarcely socialist, but it no longer realistically fit the “free market”

assumptions that had apparently failed the country between 1929 and 1932—assumptions that a

cadre of depression-era PhD’s exposed to Keynes would naturally question. As Bowen put it:

With the ascendancy of laissez faire, the moral basis of economic life has tended to become obscured . . . . The prevalence of the laissez-faire doctrine . . . has created in some quarters the illusion that any revival of social controls is unnecessary and moral principles may have only limited application in economic life. This illusion persists even though we are drifting away from laissez faire in practice (1953: 13).

Both Selekman, a Harvard colleague of Galbraith’s, and Bowen, a personal friend

(Galbraith, 1981), were likely familiar with Galbraith’s (1952) theory of countervailing power,

for which collective bargaining provided an exemplar, and both argued that a business-oriented

20

American society could generate economic fairness, not through either socialism or unrestricted

laissez faire, but through the interaction of organized interest groups that included schools,

churches, non-profits, and agriculture, as well as businesses and unions. Galbraith and Bowen

also urged these various groups to respect government’s ability to operate independently in order

to referee on behalf of the public interest.

For these early advocates of corporate social responsibilities, an essential component of this

overall public good was a broadly shared prosperity. Bowen, for example, wanted to ensure that

“the distribution of property and power [was] diffused widely” by limiting large incomes “to

what is justified by . . . need, incentive, and capital formation” and by setting prices, wages, and

profits “with considerations of justice paramount” (1953: 41). Kaysen (1957: 313-314) echoed

this view, declaring that economic justice required individual firms to share success with “the

‘members’ of the institution at all levels of the . . . hierarchy” by providing employees with “high

wages, pensions and insurance systems, medical care programs, stable employment, [and]

agreeable working conditions.”

Notably, these thinkers rarely discussed the Cold War in any detail in their writings,

possibly out of concern for provoking additional controversy. Bowen himself learned something

about the dangers of giving the appearance of being “soft” on Communism when, as a Dean at

the University of Illinois, his attempts to reform the College of Business prompted opponents to

enlist local vigilantes to red-bait his Keynesian economic views, ultimately driving him out of

his job (Solberg and Tomilson, 1997). Selekman (1959) even went so far as to criticize General

Motors for lack of patriotism, when it opportunistically chose to bargain with the Communist-

21

influenced but relatively weak United Electrical Workers instead of the United Auto Workers, a

union whose willingness to tie wage gains to productivity gains in the so-called “Treaty of

Detroit” became the most influential example of broad labor-management cooperation during the

American era of industrial hegemony (Lichtenstein, 2002).

When these thinkers did discuss Communism, they used it to strengthen their argument for

pluralist cooperation, by either positing it as a kind of “boogie man” intended to frighten

business leaders into taking social responsibilities seriously, or to simply assert that treating

people well and respectively the rights of others was the American, not the Communist, way. As

a result, Sumner Slichter, considered a moderate conservative in his own time, could argue that

“trade unions are an important ally of the West . . . they are an effective champion of the idea of

the dignity of the individual. They have introduced the equivalent of civil rights into industry and

have given workers protection against arbitrary treatment by managers” (1947: 262). Either

way, the single serious threat to American global hegemony could be deployed to argue even

more stridently for the necessity that business attend to its social responsibilities.

Bowen himself used Communism and socialism as “bad cop”, warning that “it is becoming

increasingly obvious that a freedom of choice and delegation of power such as businessmen

exercise would hardly be permitted to continue without some assumption of social

responsibility” (Bowen, 1953: 4-5). Selekman similarly suggested that it would be “one of the

tragic ironies of history, if management itself . . . actually perpetrated that divisiveness which

Karl Marx predicted would soon incite the proletariat to overthrow their ‘capitalist masters”

(1958: 37). In his famous Harvard Business Review exchange with Selekman, even Levitt,

22

skeptical of social responsibilities, conceded that “[f]ew people will man the barricades against

capitalism if it is a good provider, minds its own business, and supports government in the things

which are properly government’s.” (1958:49-50). The “threat to the free world” justification

cited above as the Ford Foundation’s justification for CSR echoed this positing of CSR as an

enlightened response to the Cold War, not surprisingly given that one author of the report, Aaron

Gordon, was himself a fellow traveling Keynesian economist (and, not so incidentally, the father

of two famous left-of-center economists).

As good Keynesians quite comfortable with the principle of having to protect capitalism

from the shortsightedness of its leaders, these scholars were all children of a depression that was

routinely blamed, at least in part, on the lack of legal restraints on business. As a result, they all

defended the need for government to stand independent of undue influence from specific

business interests and thus able to manage economic relationships in the interest of preserving

basic stability and promoting broad prosperity. Looking back a generation after his seminal

book first appeared, Bowen (1978: 118-9) expressed his major disappointment that businessmen

did not respect this independence, choosing instead to exercise “undue power and influence”

with respect to government. Selekman, in his extensive writings, constantly urged respect for

governmental independence, doubting that “voluntary sacrifice together” could serve as a

practical alternative to government regulation and urged business leaders to “admit frankly that

government inevitably has to intervene in a thousand and one ways in this complicated world”

(1959: 37, 41). He accepted that organizations, such as the Chamber of Commerce and the

National Association of Manufacturers, had a legitimate right to advocate for their members’

23

interests, but he also argued that business leaders needed to extend a similar level of tolerance

toward the lobbying efforts of groups that they disagreed with, such as the AFL-CIO, and was

especially appalled that, according to him, business leaders fought practically all government

efforts to provide basic security to the general population (1958).

While they all expected business leaders to voluntarily exercise some degree of social

responsibility, these scholars did not trust business executives to replace government oversight

with their own judgment as to what these responsibilities entailed or how to promote the greater

good. Selekman argued that appealing to executives’ sense of responsibility would flatter them

but warned that “[i]t is much easier to dispense justice, to be benevolent, than it is to share power

—especially with those who have the means to compel such sharing” (Selekman, 1958: 39).

Levitt conceded that business leaders needed to recognize the benefits of respecting the power

and autonomy of other groups by calling for “a pluralistic society—where there is division, not

centralization, of power; variety, not unanimity, of opinion; and separation, not unification, of

workaday economic, political, social, and spiritual functions” (Levitt, 1958: 44). Kaysen

expressed similar sentiments in somewhat more critical terms:

But what management takes into account is what management decides to take into account, and however responsible management policy is, it is responsible only in terms of the goals, values, knowledge of management. No direct responsibility, made effective by formal and functioning machinery of control, exists. No matter how responsible managers strive to be, they remain in the fundamental sense irresponsible oligarchs in the context of the modern corporate system (Kaysen, 1957: 316).

Finally, Dale, who understood the dangers of tyranny first hand, warned:

Is it desirable . . . that managers be given the broad social responsibility for allocating resources among the various interest groups? . . . If managers really begin to function in this way, all the various parties at interest, and the general public, may

24

well begin to ask for a voice in selecting them. It is contrary to all democratic tradition for constituents to have no say in the selection of their representatives and no way of calling them to account (Dale, 1960: 54-55).

THE FINANCIAL REVOLUTION MEETS CSR

The academic pioneers of business and society were respected public intellectuals, were well

published, and had successful academic careers. However, their work was neither widely

embraced as a new gospel nor broadly condemned as heresy by business leaders or fellow

academics. Bowen’s Social Responsibilities of the Businessman earned a number of reviews

from library journals and serious magazines, and far from being seen as an attack on business, an

executive from General Mills actually gave the book a far more positive endorsement in

Management Review (Bullis, 1953) than it earned from an anonymous reviewer in the left-

leaning Nation Magazine (1953). However, for Bowen and most of his cohort, with Selekman

and Chamberlain providing the major exceptions, the study of the social responsibilities of

business did not become a central component of their careers, and they did not strive to turn their

interest into generating a new and separate field of study.

A new generation of academics through the 1960s and 1970s, associated with American

business schools, continued to write and teach on Business and Society topics, continuing the

tradition of largely focusing on defining or surveying the responsibilities of corporations, with a

smattering of writing on business-government relations providing the major exception. This

cohort made a conscious effort to build the institutions of an academic field, but they were, at

most, only partly successful (Frederick, 2006). This proto-field did generate new courses, a

25

journal, and even a couple of departments and graduate programs, but, despite a variety of

surveys and studies that identified a need in business programs for such work, it never firmly

established itself as a separate discipline. There are a number of possible explanations for this

lack of institutionalization. In an age of increasingly specialized academic work (Khurana,

2007), the field may have struck many as overly broad and too judgmental to be regarded as a

legitimate topic for scientific study, and while the scholars of the 1950s might have possessed the

stature to pursue business and society as a sideline, the generation of scholars that emerged in the

1960s were rarely accorded the status of public intellectual. Others have suggested that the

business students at that time were rarely interested in studying business from a broader social

perspective, and the subject matter itself was never entirely free of suspicion that these scholars

were irritants at best, or anti-business at worst (Cheit, 1991), a suspicion that would could not be

countenanced as the United States entered its hegemonic decline.

Falling Out of Favor

If many executives and business school administrators had not entirely relinquished their

doubts and suspicions of CSR advocacy during the post-war generation, a time when American

capitalism achieved its hegemonic peak, such suspicions were only amplified during the late

1970s when American executives became more politically and ideologically active in response to

increased regulatory demands, heightened international competition, and inflationary pressures

often blamed on unions and government fiscal policies (Burris, 1992; Clawson, Neusadtl, and

Weller, 1998). Furthermore, a slowdown in productivity growth made it increasingly difficult to

compromise or paper-over inherent conflicts over the economic fruits of the American economy 26

(Arrighi, 1994; Brenner, 2002). As American industrial hegemony buckled under the combined

pressure of foreign competition and demands from organized domestic groups, the very policies

that the original cohort of business ethicists had advocated for with regard to government,

unions, and the egalitarian distribution of wealth were precisely the kinds of arrangements that

American executives were increasingly organizing to counter and eventually rollback (Clawson

et al, 1998; Ferguson, 1995; Mills, 1979). Their efforts did not stop with pressuring the political

system. Executives also turned their attention to the American intellectual community (Burris,

1992; Callahan, 1999; Malott, 1978).

A famous essay by Lewis Powell, before he became a Supreme Court Justice, helped spark

this reaction. The “Powell Memorandum,” which was widely distributed by the U.S. Chamber

of Commerce in 1971, warned of a mounting and coalescing anti-business campaign, promoted

by large segments of the political, media, and educational establishments, launched not by “out-

front” radicals but by “the ambivalent liberal critic” (Powell, 1971). Lewis feared that while

“[a]lthough New Leftist spokesmen are succeeding in radicalizing thousands of the young, the

greater cause for concern is the hostility of respectable liberals and social reformers. It is the

sum total of their views and influence which could indeed fatally weaken or destroy the system.”

Scholars such as Bowen, soon to publicly condemn the “undue power and influence” of business

leaders (1978), would have fit readily into Powell’s definition of a subversive liberal. A few

years later, CEOs Justin Dart and Donald Kendall brought Powell’s fears explicitly into the

political arena with their own letters of alarm over an increasingly interventionist government,

and so helped instigate a campaign led by the Business Roundtable to block the passage of

27

proposed legal changes in labor law and consumer protection (Clawson et al, 1998; Mills, 1979).

Beyond politics, executives began to take a closer look at the ideas whose promulgation they

were subsidizing. In perhaps the most publicized example of revisionism, the staff of the

Committee for Economic Development (CED), a mildly Keynesian think-tank established in

1942, which had taken positions that were largely in accordance with the pluralistic principles of

the early business and society scholars (Schriftgeisser, 1960) was literally “purged” during the

middle 1970s (Frederick, 2006). The CED was founded by business leaders who had experience

with public service, a group Bowen identified as understanding the obligation for “public

policies which will make the economic system work better from the point of view of all classes

—not merely from the point of view of business” (Bowen, 1953: 64). However, only a

generation later, it was hard to find executives willing to support this class-collaborationist

perspective with cash, and so the personnel and output of the CED shifted accordingly. In its

1979 publication “Redefining Government’s Role in the Market System,” the organization

advocated lower taxes and reduced regulation. As one of the Committee’s administrators

explained it, “In the early [post-World War II] days the trustees were men who saw a need for

some more government intervention. Now some of the trustees believe the intervention has gone

far enough” (Clark, 1976: 38).

Business executives—patrons of American business schools and employers of their

graduates—were also taking a closer look at what universities were teaching, especially in

business schools. In an article candidly titled “Corporate Support of Education: Some Strings

Attached,” a CEO of a major defense contractor, Robert H. Malott, argued, without any apparent

28

irony, that “corporate support should be channeled to those [academics] who speak out for

limited government and those who stress the importance of individual liberties” (Malott,

1978:134). Malott also called for restoring a “balance” away from what he implied was an anti-

business academic bias, which he exemplified by arguing that professors needed to teach Milton

Friedman along with John Kenneth Galbraith. What Malott regarded as bias, however, reveals

the shift in what executives found intellectually tolerable since the day when Bowen’s book

could win a favorable review from a business executive. Friedman was already included in

standard economics texts, and Galbraith, while a skeptic, was never viewed, even by himself, as

an ideological opponent of the capitalist system (Sweezy, 1973), and his formulation of

countervailing power was actually a fundamental element of the pluralism inherent in post-war

CSR. For Malott, however, the pluralism and mild government interventions advocated by

Bowen’s generation were excessively radical: “We are too often witness to corporations

providing support to groups that are hostile to the competitive enterprise system” (1978: 133).

The result of this mobilization of business executives was their successful imposition of

constraints on what business related policies politicians of either major party were typically

willing to promote (Burris, 1992; Clawson et al, 1998). Republican President Reagan

declaration in his 1981 Inaugural Address, that “[i]n this present crisis, government is not the

solution to our problem; government is the problem,” was followed fifteen years later by

Democratic Clinton’s observation that “[t]he era of big government is over” (Clinton, 1996).

Many observers, particularly libertarians, have pointed out the logical inconsistency of corporate

executives arguing for limited government while simultaneously lobbying for expensive new

29

weapon systems or bargaining with state and local governments for a variety of “industrial

development” subsidies (Chesser, 2004; Leroy, 2005; Melman, 1987). Perhaps, though, what

generated such a defensively doctrinaire reaction on the part of many business leaders was the

cognitive dissonance of talking up the virtues of free market competition while simultaneously

seeking government assistance. Individuals whose principles are flexible in accordance with

their own or their organization’s self-interest are unlikely to welcome careful scrutiny of their

intellectual consistency.

A second trend made the established approach to CSR even less tenable. Not long after

business executives began to unite to resist perceived attacks from what they regarded as the

“left,” they faced assault from another direction that only reinforced this hostility. A new line of

criticism began emanating from economics and finance departments that argued that corporate

managers were paying too much attention to the interest of non-shareholder groups, or, worse,

were pretending to do so as an excuse for self-dealing and thus avoiding their supposedly

fundamental duty to promote profitability and shareholder value (Friedman, 1970; Jensen, 1989).

Furthermore, corporate executives working in formerly oligopolistic industries, now facing

heightened competition and shareholder pressure, were understandably less interested in keeping

“the big picture” of society’s interests in mind then in fighting for their professional survival.

Under siege by the financial community and its academic allies for allegedly being too

deferential to stakeholder groups, executives were not likely to be sympathetic to the view that

they themselves were potentially dangerous individuals requiring institutional constraints on

their autonomy (Clawson et al, 1998: 26-27).

30

Historically and legally, agency theorists were wrong in their claim that investors ought to

be the exclusive concern of corporate executives. In actuality, the evolution of corporate law

during the nineteenth century was a contentious political process in which advocates for

accessible incorporation and limited liability repeatedly promised that these legal changes would

produce social benefits that went beyond the investors in corporations (Dodd, 1954; Roy, 1997).

Likewise, during the twentieth century, courts did not impose on managers any exclusive duty to

shareholders, particularly the managers of publicly-traded firms (Marens and Wicks, 1999). And

while Berle and Means’ (1933) might have been accurate regarding the separation of ownership

and control, whatever neglect or self-dealing that arose under this arrangement was rarely viewed

by investors as a profound threat to their fundamental interests (Sweezy, 1953).

What agency theorists claimed, then, was not some eternal truth but a newly relevant one.

With signs of American industrial decline evident, society could no longer rely on a growing

economic pie to ameliorate class conflict and satisfy various interests (Arrighi 1994). In

response to this increasing unlikelihood of pleasing all groups, agency theorists called for a near

revolutionary resistance on the part of investors to management diversions of cash into “empire-

building projects . . . bloated staffs, indulgent perquisites, and organizational inefficiencies” even

if it was necessary to generate a “crisis atmosphere [where] managers [were] require[d] to slash

unsound investment programs, shrink overhead, and dispose of assets” (Jensen, 1989: 67).

Advocates of this position did not bother to pretend that the entire society would benefit, except

perhaps in some hypothetical long run, expecting that “real wages are likely to continue their

sluggish growth and some will fall dramatically over the coming two or three decades, perhaps

31

as much as 50% in some sectors” (Jensen and Fagan, 1996: A10). What Jensen and his

colleagues grasped, then, was not a timeless principle but just the opposite, since “the time” had

only recently arrived for investors to look out for their immediate interests and stop putting faith

in an increasingly creaky American economic regime to generate broad-based prosperity

indefinitely.

As a result, scholars working within the field of business and society not only faced

potential career risks by advocating unionization, countervailing power, and additional

regulation, they also faced the question of whether advocating these arrangements in an era

characterized by weak unions, mobilized shareholders, and cautious politicians of both parties

was anything more than naïve utopianism (Clawson et al, 1998). Certainly, there was no

shortage of ideologues willing to provide a view of the corporation more palatable to business

executives. In 1956, not long after the Red Scare, Selekman could work at America’s leading

business school and title a book, Power and Morality in a Business Society, without generating

serious controversy. Sixteen years later, two highly respected economists could publish an

enormously influential article that argued, with total seriousness, that power was not even an

issue within the modern corporations, since the business firm “has no power of fiat, no authority,

no disciplinary action any different in the slightest degree from ordinary market contracting

between any two people” (Alchian and Demsetz, 1972: 777).

In response to these pressures Business and Society scholars embraced business ethics.

Studying and teaching ethics in business schools began as a legitimate effort to fill a neglected

need. While earlier Business and Society scholars occasionally raised ethical issues, they lacked

32

the training, and perhaps the interest, to do so systematically (Frederick, 2006). What started,

however, as a defensible, even laudable, effort to expand the boundaries of the field resulted in

the eventual dominance of these newcomers, who would not only abandon most of the

preoccupations of their predecessors, they would display little interest in testing the efficacy of

their own approach to CSR.

Redefining CSR

The unexpected result of the introduction of formal ethics into the discipline of Business

and Society was that even those without training in philosophy widely adopted micro-level

constructs based on the nonconsequentialist ethics put forward by philosophers, notably social

contracting (Donaldson, 1982), stakeholder management (Freeman, 1985), and, to a lesser

extent, virtue ethics (Solomon, 1992). This tendency ultimately drove out almost all of what

remained of the more macro outcome-driven approach to discussions of CSR (Carroll, 1999).

This loss did not go entirely unnoticed. In a “thoughts on the field” special issue of the journal,

Business and Society, Blockson (1998) complained of the lack of interest in distributional justice,

perhaps the single most important concern of previous generations of scholars, and in this same

issue a major figure of the previous generation of scholars offered this critique:

. . . business ethics theory is hobbled by a failure to acknowledge and integrate contemporary social science and natural science perspectives into the analysis of business operations. A decade of rubbing shoulders with management scholars, through collaborative annual meetings of SIM and the Society for business ethics, has not moved business ethics philosophers far beyond their continued devotion to the noncontextualist abstractions found in the lore of conventional philosophy. Theories of rights, theories of justice, theories of social contract remain firmly anchored in 18th-, 19th-, and early 20th-century perspectives on human nature and human society (Frederick, 1998: 44).

33

If, as another of contributor claimed, the “vitality of the field” truly rested “on scholarship

that challenges the status quo”, and the field’s very legitimacy depended “on pressing the

intellectual issues that have traditionally characterized the field; as well as providing guidance,

perspective, and insight, to those in the management profession” [italics mine] (Post, 1991: 84),

then scholars proved quite willing by the 1990s to sap the field’s “vitality” and forgo any

“pressing” in favor of at least the appearance of providing “guidance.” In the words of another

long-standing member of the field, Business and Society had proven “too often wishy-washy, not

as forceful as we should be,” largely because of the “[t]ensions between raising money and

critically analyzing social problems” (Logdson, 1998: 82-83).

If the work of Bowen, Selekman, and the rest of their cohort reflected the dominant

pluralistic political philosophy of their day, focusing in recent decades on ethical decision-

making might potentially appeal to the one group that still might possess both the power and

motivation to resist the ideological onslaught of finance: corporate executives themselves. The

closing of one Business and Society program at the University of Washington and the conversion

of another to microeconomics at Berkeley, suggested that the withdrawal of support for a

discipline without adequate business patronage had become a very real possibility. William

Frederick, a holdout from the previous generation, complained about how strongly corporate-

centered the field had become, making the corporation “the sun around which society revolves,”

and leading to a trend in which “our analyses may be yielding tangible answers to smaller and

smaller questions” (1998: 42). Yet if anyone hoped to gain the support of corporate executives

and business school administrators, viewing the relationship between business and the larger

34

society from the admittedly narrow and subjective perspective of business leaders still may have

offered a more promising strategy than asking the traditional big questions about the social and

economic obligations of business in an era of weak unions and political mobilization against

virtually any regulation.

Embracing the same perspective as corporate managers did not preclude disagreeing with

one or another management assumption or practice, but it did implicitly legitimize the right of

executives to serve as the ultimate arbitrators of how corporations should act. Bowen may have

been accurate in stating that “[t]he businessman’s viewpoint is that management should function

as a trustee mediating among the several interest groups, but that the power of decision-making

should rest exclusively with management. . . . is . . . just another application of the familiar but

discredited doctrine of benevolent use of power” (1953: 42). Nonetheless, this viewpoint had

become the only one that could be safely taken within an American business school

environment.

Business ethics grew to dominate Business and Society, then, not despite the inherent

limitations of ethical analysis but because of them. The influence of ethics within Business and

Society scholarship grew rapidly, both directly in the growth of ethics papers presented at

conferences and published in journals, and indirectly by providing more research-oriented

academics “the vocabulary that is needed to articulate the concerns, the values, the pressures, and

the conflicts relative to various aspects of SIM and CSR” (Gerde and Wokutch, 1998: 433). As a

basis for social scientific scholarship, the field converted Kantian-based stakeholder management

principles (Evan and Freeman, 1993) into something labeled “stakeholder theory,” a mixture of

35

enlightened self-interest banalities, which were hardly original in days of Mill, Baggage, and

Ketteler (e.g. Jones, 1995), with assumptions about the generally honorable intentions of

corporate executives to promote and sustain the success of their organizations that, unlike typical

social science theory, could not claim any preliminary support from the empirical record

(Marens, 2004). The influence of these ethical constructs ultimately proved so great that not only

are the terms “Business and Society” and “Business Ethics” often used interchangeably, the latter

increasingly pushed the former out of general use (Collins and Wartick, 1995).

In short, this movement to formal ethics that began in the 1980s succeeded in remaking the

field because it responded to recent changes in the American business, political, and academic

environments. By implicitly conceding the right of corporate executives to exercise a high level

of autonomy and power, it at least won a hearing to try to explicitly influence corporate decision-

makers toward a broader perspective regarding their responsibilities. Such an effort was

defensible in an era of few practical alternatives. However, toleration and influence are not

synonyms, and scholars in the field have launched few efforts to investigate whether the

recipients of all this advice were actually heeding it.

36

Structural changes in American economic life may have prompted the shift toward ethics

and ethically derived constructs, but it did not preclude applying ethics to macro level issues, and

it certainly did not prevent a closer examination on the part of tenured faculty as to whether

ethics-based scholarship and research were achieving any measurable influence. Two decades

ago, one business ethicist warned that the field risked forgetting that questioning the nature of the

corporation and weighing the welfare of the entire society are as legitimate topics for scholarship

as analyzing the decisions and actions of individuals (DeGeorge, 1991). Moreover, trained

philosophers working in business schools could certainly have found models for following

DeGeorge’s advice from their own traditions. Mill, at one time favorably quoted by Tead, was

an unusually worldly ethicist, albeit with his own blind spots with regard to such issues as

imperialism. Still, as the Corporate Secretary of the East India Company while also supportive

of labor organizing, he possessed a background and broad sense of fairness that ought to have

attracted the attention of Business Ethicists, and his version of utilitarianism is indeed covered by

every business ethics textbook. Yet, it is rare that either Mill or utilitarianism is utilized by the

field’s own scholarship. Similarly, Rawls (1999), the most widely cited modern academic

philosopher within the business ethics literature, was greatly concerned with the economic

outcomes generated by social contracting, yet his difference principle is almost never invoked by

business ethicists, nor are his arguments for state enforcement of social contracts and the

provisioning of a social safety net. Moreover, scholars of corporate law from Dodd (1954) to

Roy (1997) might have provided backing to challenges to the fundamental legitimacy of claims

for shareholder primacy. In short, none of these academically defensible alternatives were ever

37

utilized because they were paths to an potentially dangerous criticality.

Kahn (1990) reports that business ethicists was aware of some of these shortcomings at one

time and hoped to overcome them. His interviews found both a general desire to integrate more

social science into business ethics and a declared intention to dialogue with a variety of groups

other than corporate managers. However, with the passage of two decades since Kahn’s

interviews, scholars in the field have done little of either. Stakeholders, so honored in the

abstract, are rarely interviewed or surveyed, nor are there many references to the latest relevant

research in law, sociology, and political science, or even journalism.

If they had paid attention to the information reported in these sources, the scholars in the

field would have realized that they had failed to influence management policies and behavior.

Whether one looks at the sharing of gains with employees (Economic Report of the President,

2009; Mishel et al, 2007; Picketty and Saez, 2003)., the disclosure and management of financial

risk (Partnoy, 2003), lobbying for subsidies and procurement and against regulation (Chesser,

2004; Clawson et al, 1998; Melman, 1987), the keeping commitments to communities or long-

time employees (Hira and Hira, 2008; Leroy, 2005), the stratification of customer service

(Brady, 2000), or respecting the rights of organized labor (Logan, 2002), the evidence suggests

that the majority of corporate and financial managers have never systematically applied the

ethical principles of stakeholder management, social contracting, virtue ethics, or any other

approach to formulating the content of corporate social responsibilities.

Nor have ethicists acknowledged having lost the intellectual tug of war with agency theorists.

It is hardly a secret that corporate managers made their separate peace with the financial

38

community by publicly acquiescing to the primacy of “shareholder value,” first treating their

own companies as a raider would (Useem, 1996), then finding increasingly sophisticated ways to

fudge or even falsify company accounting (Partnoy, 2003). Companies such as IBM, once

admired for their enlightened HR policies, ultimately yielded to pressures from both competitors

and investors to hire abroad while laying off Americans (Lohr, 2005), while Microsoft and

Toyota, among the world’s most successful firms over the last generation, have recently

attempted to reduce employee compensation (Peterson, 2004; Roberson, 2008). Bank of

America, famous for its egalitarian lending and employment policies during much of the

twentieth century, reportedly now holds severance pay hostage to a willingness of the laid off to

train replacements, and, of course, played a major role in securitization of subprime mortgages

(Gardner, 2002). Even the occasional firm that still practices a degree of enlightened self-

interest vis-à-vis employees has failed to convince investors that high-road human resource

policies are viable (Holmes and Zellner, 2004).

From the perspective of Arrighi’s model (1994), there is nothing surprising either about

these real world outcomes or that business school academics ignore them in their work on CSR.

While trust, cooperation, and commitment may indeed improve productivity, these may still not

be enough to overcome the cost advantage of companies that either reduce compensation or

employ foreign labor for manufacturing or back-office work, and even the high-road may

eventually pay in some cases, high-road HR policies require levels of upfront costs and faith in

the future that is difficult to justify in an era where the fruits of a century of economic hegemony,

accumulated in public and private institutional funds, have become almost impossible to ignore.

39

Nonetheless, the degree that structural forces have made it difficult to follow moral

prescriptions does not itself explain why the discipline has demonstrated little concern to correct

this failure, nor made a serious move to go beyond the parsing of abstractions that Frederick

complained of a decade ago. In his highly critical follow-up piece three decades ago, Bowen

(1978) could still concede that many businesses still shared their economic gains with their

employees. A decade later even the consolation of “business as good provider” was becoming

hard to sustain. What does explain this apparent indifference are a) the institutional danger of

being seen as excessively critical and b) the dwindling number of acceptable models among

American businesses of allegedly responsible companies to suggest as positive alternatives, with

some such as Saturn or Motorola ending in failure, and others, such as IBM and Microsoft,

“controlling” their labor costs to an unprecedented degree. Persisting with arguments for

noblesse oblige, with the hope that it only needs more time to work, is not, on its face, a realistic

strategy for maintaining the focus of the field, but it is not clear what a practical alternative might

be for business school academics. Given the nearly ubiquitous abrogation of some basic social

responsibilities, decrying this trend would finally have placed the field in the position it has long

sought to avoid, being labeled “anti (actual existing American) business.”

As a result, the field of Business and Society bought itself some time. During the Clinton

years, a relatively peaceful world, coupled to the rise of new occupational paths and the

prosperity of at least some segments of the American workforce meant enough promising news

to allow the advocates of a voluntary managerialist approach to CSR to retain their hopes for

increasingly better outcomes. Furthermore, tenured faculty stay in their jobs for decades, and

40

even as they retire, courses enshrined in the curriculum need to be covered in subsequent years

and journals need to fill their pages. Yet, even the ivory tower eventually succumbs to the siege

of massive social structural change. CSR as an ideological adjunct to American hegemony

appears to have run its course, even if some of its adherents do manage to continue as before.

CONCLUSION: CSR IN A NEW WORLD ORDER

It would hardly have surprised earlier generations of Business and Society scholars,

witnesses and sometimes participants in the mass unemployment, violent labor strife, political

battles over regulation, world war, and the resultant mixed economy of their era, that ethical

exhortation might supplement, but could not successfully substitute for the independent

functioning of a regulatory state, nor eliminate the necessity for stakeholder groups to organize

themselves to protect, advance, and bargain over their interests. While this earlier generation

hoped, or at least conceded, that the broad assumption of social responsibilities by the corporate

organizations could preserve or even strengthen a fundamentally capitalist system, they

understood that delineating and enforcing these responsibilities was far too important to be left to

the judgment of hardly disinterested corporate executives. In an era of declining hegemony,

however, the structural props that had mainstreamed advocacy of regulation and countervailing

power were knocked aside, or, at least, could no longer be convincingly framed as “constructive

criticism” or “loyal opposition” within business schools. As a result Business and Society

scholars have ignored the substantial evidence, academic and otherwise, of the failure of this last

generation of American business leaders to responsibly use whatever autonomy and discretion

41

they possessed to produce fair and generous outcomes for their various stakeholder groups.

Now it is too late. The era of American corporate stability ended a generation ago

(Edwards, 1975), and with it, the beginning of the end of American economic hegemony. In an

increasingly competitive world in which organizational forms are fluid, the future bleakly

uncertain, and the mechanics of the control and ownership of the means of production obfuscated

by the financial revolution, it is not clear how even all the sincerity in the world can implement

either the pluralist or managerialist versions of CSR in any consistent and effective way.

A reason for optimism, however, is the real possibility that “this too will pass.” The decline

of American hegemony may have intellectually bankrupted a CSR-driven Business and Society

academic field, but this loss of economic hegemony does not necessarily imply a total economic

collapse for the United States, but a change in relationship, albeit a potentially painful one, with

the rest of the world. Perhaps it may prove a blessing for everyone if American society can no

longer perpetuate its leadership of an increasingly dysfunctional set of economic, financial, and

military relationships that extend far beyond the borders of the United States (Brenner, 2002;

Melman, 1987). And as American workers succumb to their weight of their global role of

consumers of last resort, the economic treatment of employees can no longer be ignored by either

businesses or academics. Furthermore, American dominance is becoming increasingly less

available as a excuse for the social failures of business practices originating elsewhere.

Still some successor form of the large corporation is likely to survive anything short of a

global conflagration, and the responsibilities that should be assumed or imposed upon this

organizational form will remain a serious concern. If a new, more relevant version has any hope

42

of emerging, however, the impetus is likely to come from outside North America, this “rest of

the world” that has never been the subject, and only infrequently the object, of a U.S.-centric

CSR. Other regions have both distinctive ethical traditions and experience grappling with the

tensions of industrial capitalism. The whole world could benefit from an academic field that

studies and evaluates the myriad large-scale experiments in balancing justice and growth,

successful or not, ranging from Chinese Keynesianism to German works councils.

We can not turn back the clock. The social arrangements in which Bowen, Selekman,

Chamberlain and the others were embedded in the post-war years are, to a great extent, no longer

with us. We can however, admire qualities they possessed, qualities that their successors

abandoned under pressure. The earlier cohort not only possessed the courage to criticize in the

shadow of McCarthyism, and the knowledge and experience to do so with plausibility, they were

motivated by a compassion since stamped out by fear and opportunism, and as Peter Frost (1999)

has taught us, compassion bring richness and life to the study of people and their organization.

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