I have a presentation for the Corporate Accountability Network at Essex Univesity yesterday. I did not use slides, although I had prepared some. These were my notes, in that case:

Bad business and corporate responsibility

• Professor Richard Murphy
• Professor of Practice in International Political Economy, City University, London
• Director, Corporate Accountability Network
• University of Essex, 30 October 2019

Bad business and corporate responsibility

• The issues for this talk
• What is:
• Business?
• Good and bad?
• The corporation?
• Responsibility?
• And how can we manage in accordance with the resulting insights

Business

• At its most basic:
• The exchange of goods and services between willing parties for mutual advantage
• We all do it
• Inherently there is nothing wrong with it
  • No one but a hermit can avoid it
  • And even they might abuse the planet
• I’d suggest business is not our problem

Good or bad?

• Let’s stick to the business context
• And I’m going to be horribly ‘positive’ about this and to an extent exclude normative considerations
• I draw out two issues:
  • Willing parties
  • Mutual advantage
• Economists assume perfect information to overcome these issues - suggesting everyone knows what they’re taking part in
• The reality is that this is not true
• God or bad depends, I suggest, upon the asymmetry of information in the deal

The corporation - 1

• Many right-wing thinkers would suggest there is no such thing as a corporation
• It’s an agent
• A mere bundle of contracts
• The representative of its owners
• Without objectives or existence of its own
• Very politely, these people need to get a life in the real world

The corporation - 2

• The corporation has become an exercise in excepting some from what they think might otherwise be their responsibility
• Shareholders say the managers of a company are responsible for it - so don’t blame then
• Managers claim shareholders demand that they pursue profit, come what may
• Society affords limited liability - allowing shareholders and those who represent them with at least partial immunity for their actions
• And no one demands the quid pro quo for this very obvious abuse of our human rights - to have our property appropriated by others against our will contrary to UN Declaration of Human Rights 17 - which is accountability for the privilege granted by society

Responsibility - 1

• Corporate responsibility is about managing a company taking into consideration the asymmetries of power between the parties who contract with it
• What are those asymmetries?
  • Of command of resources
  • Of the cost of capital
  • Of status, and so of
  • Political power
  • Influence
• Of information over an enormous range of issues
  • What the organisations does
  • About its products
  • Who it engages
  • What it pays
  • Its lobbying
  • Its taxes
  • Its own ability to survive

Responsibility - 2

• The current system exaggerates these asymmetries
• Limited liability is the best example of this
• Limited accounting disclosure helps
• So do trade union laws
• And limited requirements on product disclosure
• The absence of compulsory environmental disclosure
• No country-by-country reporting for tax
• And tax havens help

So what is responsibility?

• It is managing the enormous, unanticipated and unearned benefit limited liability has provided in a way that benefits all in society, who are the people who have granted that privilege

Can there be a good business that exercises corporate responsibility?

• Yes
• But, only if it has all its cards face-up on the table all the time
• Accounting is nowhere near this standard at present
• This is why I have established the Corporate Accountability Network
• Working to integrate corporate responsibility into the mainstream of accounting by bringing it back from being the externality it’s become