The Dynamics of Social Responsibility

The Dynamics of Social Responsibility

The Dynamics of Social Responsibility

There is no such thing as "the blind play of economic forces." Economic activity is the result of decisions made by individuals, and individual Behaviour is controlled by cultural norms. Economizing is too important to the preservation of society and conflict over scarce economic values occurs too frequently to allow economic activity to go its own way without social regulation. The economic system is a web of expectations about how people behave or ought to behave. As Durkheim showed, there is a non-contractual element in contract.

Fulfilment of contractual obligations must be explained in terms of the dependability of economic promises as well as the immediate interests of the contracting parties. Not even economic rationality can be taken for granted as a fixed characteristic because of its dependence upon complex conditions underlying the total social and cultural structure.

The goals the businessman strives for and the means he uses to attain them are culturally determined. The profit ethic can exist only because it is compatible with the underlying value orientation of society. But to say that society allows a self-seeking orientation to individual economic Behaviour is not to suggest that there is a complete absence of regulatory controls.

In any period the norms governing economic activity are well established and relatively static, but over time changes occur in them. An analogy can be drawn between the economic short and long run and the cultural short and long run. In the economic short run, the businessman's plant is fixed; but in the economic long run, it can be varied. In the cultural short run, the norms governing economic activity are fixed; but in the cultural long run, they vary. Thus a decision which once was made on the basis of the profit ethic and was perfectly acceptable in time may be considered socially irresponsible because of changes in cultural norms.

The dynamic relationship between profit maximizing and socially responsible decisions is shown in the accompanying diagram. The circle in time period I represents the cultural constraints on profit-maximizing Behaviour. Profit-maximizing decisions may be made within the boundary or outside of it. Any decision made within the boundary is socially responsible in terms of the norms for Behaviour prevailing at the time. A decision made on the basis of the profit ethic which falls outside the profit-maximizing boundary is considered improper or socially irresponsible.

Decision X falls within the boundary and therefore is socially responsible. At a later date, in time period II, the profit-maximizing boundary has shrunk and the range of socially irresponsible Behaviour has expanded. The same decision X now falls outside of the profit-maximizing boundary and is socially irresponsible.

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