Cosmopolitanism, Neo-liberalism, and Global Corporate Social Responsibility

Introduction With the rise of globalization come several opportunities as well as threats. On one hand there is the opportunity to overcome problems such as world hunger, poverty, and abuse of human rights. However, on the other hand, globalization could pose as a threat against cultural diversity, as well as allow large corporations and rich governments to exploit human and natural resources in less developed countries. There has been much discussion and debate over how to approach globalization in a way that maximizes opportunities and minimizes threats, but of course it is not always clear which approach will do this. Two approaches in particular, which have been come to known as cosmopolitanism and neoliberalism, have developed and made lasting impacts on ideologies as well as policies. There are avid supporters as well as opponents of both, but in this paper, rather than compare the pros and cons of the two and argue for which one is superior, I would like to discuss if these approaches oppose each other or if in fact they compliment each other as an approach to globalization. As well, I will discuss the issue of social responsibility of multinational corporations in a globalized environment.
Cosmopolitanism
In order to evaluate the relationship of cosmopolitanism and neoliberalism as approaches to globalization, it is important to first have a clear understanding of the basic tenants and goals of both of these ideologies. At the heart of cosmopolitanism is the idea that, “Many matters that require governance have moved from a national to an international form, requiring governance and democracy to be organized at this level. In particular, such governance should be…democratically and through the input of interests and actors worldwide”, or put even simpler, “The aim is to globalize democracy and democratize globalization” (Compendium, 85). In other words, cosmopolitanism argues that because problems we face global problems that stretch beyond borders and continents (e.g. climate change, terrorism), these problems cannot be tackled by nation states, but must be overcome through establishing international political institutions in a democratic form. Cosmopolitans believe that our current democratic system is inefficient because it revolves around electing officials for nation states. However, power is not only held by nations, but by other international forces that can operate outside of democratic control. Because of this, we must bring democracy to these forces and processes that are currently not held accountable in order to ensure stability (Compendium, 89). In doing so, cosmopolitans propose we will be much better equipped to tackle the global problems that plague our world today such as drug and sex trafficking, as well as economic and environmental concerns.
Neoliberalism
Neoliberalism, on the other hand, “comes in various forms, but all are undergirded by a belief in the importance of the free market and the need to allow it to operate free of any impediments, especially those imposed by the nation-state” (Compendium, 48). It is the idea that interventions on capitalism prevent the system from working the way it is supposed to and if we allow capitalism to operate freely, everyone will benefit in the long run through economic expansion and increased productivity that capitalism brings.
Friends or Enemies
At first glance, it would appear that these two schools of thought are in clear opposition of each other. One argues to create an international democratic governing body while the other believes that unconstrained capitalism is the key to bringing equality and development. However, I believe that cosmopolitanism and neo-liberalism are actually complimentary ideologies whose proposed methods can be conjoined to reach a common goal.
First, both ideologies are able to exist together based on the key tenant of the decline of the nation state. On one hand, cosmopolitans believe that greater global governance is needed to provide stability and accountability to citizens instead of letting powerful corporations that are not held accountable run the economy (Compendium, 87). While neoliberals on the other hand believe that the nation state intervenes with capitalism and thus reduces efficiency (Compendium, 48). Although there are different motives, both believe that the nation state is not operating in a way that maximizes development and effectively handles the social issues we face. The fact that both systems give up the nation state as the most important form of government is key in their coexistence.
Further more, the ideologies are able to compliment each other because the international government that cosmopolitans propose would provide the economic and political infrastructure for the markets to actually be allowed to operate freely as suggested by neoliberalism. Although it seems like cosmopolitanism calls for a bigger government and neoliberalism a smaller government, they both in fact actually call for a more efficient government. Even though neoliberalism may mean less government, it does not mean that there is less governance (Larner, 12). Neoliberals do not argue that the government should retreat from the economy, but instead ensure that it operates efficiently (Moore, 515). This is completely in line with the ideas supported by cosmopolitans who propose “a more holistic agency that coordinates investment, production and trade on a global level rather than the national one of state intervention” (Compendium, 218). The international government that the cosmopolitan view seeks to set up would actually have the capability to let the market operate freely in a way that would not be possible if neoliberalism was implemented by a nation state. It is easy to assume that neoliberalism and cosmopolitanism are opposing views because one calls for an international democratic government while the other calls for unconstrained capitalism. However, both views seek to replace the current system dominated by the nation state and provide solutions to the current economic, political, and social issues. Because of this, I believe it is more accurate to view the ideologies as complimentary methods to achieve this common goal.
Global Corporate Social Responsibility Corporate Social Responsibility, or CSR for short, has become a hot topic in business today and it is especially poignant in the topic of globalization and multinational corporations. Corporations have taken advantage of international opportunities on both the production side of their business, such as outsourcing jobs to overseas countries with lower wages, as well as the distribution side through entering new international markets and selling their products to larger populations. However, in doing so, these corporations have created negative externalities that affect the communities and regions in which they operate. As these issues have been brought to the public eye and scrutinized, a heated debate has emerged regarding the level of social responsibility that these multinational corporations have. While some believe the only obligation of a business is to generate profit, others argue that corporations have a responsibility to improve society. I will argue that corporations not only have the responsibility to be reactive in fixing problems which they have caused, but should become proactive in improving society though their business functions because of the mutual benefit that this provides to society and to the company’s bottom line.
Problems with Reactive CSR
Increased government regulation, as well media coverage, and social activism have all lead to a greater focus on CSR, but unfortunately as a result, an “us vs. them” mentality has developed across companies in regards to social issues (Porter, 11). Many multinational corporations have taken measures to mitigate the consequences that their activities have on its stakeholders, but these are largely ineffective because of the way it causes companies to think that being socially responsible negatively contributes to business and profit (Porter, 1). In the US, CSR focuses on compliance by issuing sanctions and penalties for companies who break rules, rather than offering subsidies and partnerships, and as a result public support of CSR is low (Compendium, 268). This further drives the business vs. society mentality that causes multinationals to have a low commitment to CSR. Businesses tend to only care about the public relations aspect of CSR, and as such, much of their CSR activity is not actually improving anything, but instead it is window dressing through CSR company reports that earn them high rankings in popular publications regarding socially responsible companies (Porter, 2). While this reactive approach to CSR is necessary and a better option to no accountability at all, it does not sufficiently take care of the negative social and environmental issues that multinationals are creating, and it neglects the opportunity that companies have to generate value for both their business and society.
Opportunity for Shared Value
Multinational corporations should not only limit the negative effects they have on society, but also be proactive in creating social change and improvement, because both business and society are interdependent on each other (Porter, 4). As Porter states, “A healthy society creates expanding demand for business, as more human needs are met and aspirations grow. Any business that pursues its ends at the expense of the society in which it operates will find its success to be illusory and ultimately temporary” (Porter, 5). Every company operates in a competitive environement that affects the success of their business strategy, so by improving and protecting the health of the context that they operatte, multinationals will not only benefit the community, but also their chance for success and growth within that market (Porter, 6). Ultimately, corporations that have the capabilities to ennact social change but neglect it in pursuit of maximizing profit are not only doing society a dis-service, but also neglecting oppurtunities for their own growth.
It is important, however, to understand that not every multinational corporation has the ability, or should try to fix every social problem; instead corporations should focus on issues that can be tackled through the business in which they already operate (Porter, 6). Instead of approaching CSR as an expense of running the business, companies should integrate CSR into their business functions in a way that maximizes profit and social benefit. For example, Microsoft engaged in CSR activity that created shared value for both society and the company when it initiated a program to improve IT education in community colleges by donating money and sending employee volunteers to the colleges, and in doing so it addressed the problem of a shortage in IT workers that it was facing (Porter, 9). It is this sort of CSR activity that more companies can engage in that will both advance the company’s strategic position in the market, and create positive externalities for society and the environment.
All together, the disagreement regarding CSR is largely due to a misunderstanding of the oppurtunities that CSR provides to businesses. It is obvious that corporations have an obligation to fix any negative impacts they generate on society, but it should not stop there. Corporations and politicians must move pass the ideas that it is business vs. society or that CSR is an expense account to maintain good publicity. Instead, managers should recognize the interdependence that businesses and society have on eachother, and pursue oppurtunities to generate shared value through their business functions. Even if the role of a business is to maximize profits, this does not mean to abandon CSR, but instead pursue it even more, becuase it is through improving society that the demand for business and oppurtunity for profit will grow.

Bibliography

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Porter, Michael E., and Mark R. Kramer. "Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility." Harvard Business Review 84.12 (2006): n. pag. Harvard Business Review. 01 Dec. 2006. Web. 8 Dec. 2015.