True Economic Freedom

True Economic Freedom

True Economic Freedom

In America we favour informal and non-authoritarian mechanisms of social control. Freedom is equated with "control by diffuse cultural structure rather than by a definite social organization.' 25 It is natural, therefore, that we looked first to the market system as our basic form of social control of economic activity.

When the effectiveness of this control mechanism declined because of the concentration of economic power in big business, we moved half-heartedly to the more general control mechanism of economic planning and attempted to shore up competition through antitrust regulation.

But because of our belief in the advantages of big business and our reluctance to engage in overt economic planning, we have not been willing to use antitrust regulation to break up big business and restore the competitive economic structure of an earlier era.

Therefore, it has become necessary to take recourse to the control mechanisms of industrial pluralism and the cultural norms governing economic behaviour.

Industrial pluralism is a form of economic power relationship in which each of the major economic interest groups contends in an open bid for political power to protect and further its interests. It is based on the principle of checks and balances: "The power of the state is limited by the power of organized public opinion and large special interest groups; the pressure exercised by business interests is counterbalanced by the forces of organized labour; both management and labour must take into account the interests of an integrated consumers' movement and other public agencies.

The increasing reliance placed by individuals on economic interest groups in our organizational society is responsible for the "politicizing" of modern economic life. Whether this is unfortunate, as Drucker thinks, or not, the fact remains that when market controls declined there was something to fill the void.

A variety of specific cultural norms have a directing influence on economic activity. By means of laws, rules, and customs, society can shape and mould the actions of many separate individuals into a coordinated economic system that functions to a remarkable degree without overt administrative actions. "The whole economic order, looked at sociologically, is a network of norms and expectancies-a web of 'promises' as to the course that economic action will take, or is supposed to take.

Without this normative network, the other three control mechanisms would not be possible (e.g., market competition without rules is inconceivable; for organizational coordination to be effective the authority relations in organizations must conform to the accepted norms of interpersonal relationships; social economic planning is possible only if it is consistent with cultural norms of the proper functions of the state).

There is, however, a separate control system based on cultural norms-the system of social roles. One of the most powerful mechanisms of social control over corporate economic activity is society's capacity to delineate the social role of the manager. Once their role is clear to managers, they readily attempt to conform to it. The difficulty is that in a democratic society such as ours, with no definite and concrete goals except perhaps a generalized desire for more of the same good things of life that most of us already enjoy, expectations for such an important role are not very explicit.

But the lack of clarity of the managerial role should not be interpreted to mean that this control device is weak and inconsequential. The many articles and speeches of managers about social responsibility in management attest to the imperative need of modern professional managers to come to grips with this nebulous but powerful constraint on their behaviour.

When the doctrine of socially responsible management is widely under-stood and accepted, it will play an important role in the contemporary liberal approach to social control of big business. The UK economy is still capitalistic because it protects and furthers liberal goals and values. But because of the rise of big business and the decline of competition, a new solution must be found to the problem of a source of economic order compatible with individual dignity. Industrial pluralism is an acceptable control mechanism, but it cannot do the entire job because it operates on groups, not individuals.

The social responsibility ethic is effective at the level of the individual. It influences his behaviour in a way that conforms with liberal values. The individual's conscience is the source of order rather than an external coercive force. When society desires a change in managerial behaviour, the role of the manager is altered. The manager responds in a seemingly voluntary fashion. There is no need for overt coercion or force. Each manager does what is socially correct because he has learned that this is what he should do. The control mechanism has become internalized.

The conclusion, then, is that the doctrine of social responsibility is compatible with contemporary liberalism. When the latter is widely accepted as the economic ideology of today, it will provide solid support for the doctrine of social responsibility and the social responsibility ethic.

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