Skinflint's book notes
There is a rather sick joke about a man with a twisted and gnarled right hand going to church to pray. "Please Lord," he says, "make my hand like the other one." There is a flash, a rumble and his left hand twists up as well.
A similar bitter irony surrounds the rash of books, pamphlets, articles and conference oratory which has built up recently, intimating that profits should no longer be the prime or sole concern of companies. Well, now the profits are certainly draining away to the point of bankruptcy, but all we have to show for it is growing unemployment.
It is not actually that they wanted to abolish profit though — as James Robertson makes clear right at the start of his admirably concise volume (Profit or People? Calder and Boyars £2.95), he just wants a new name for it in the hope that this will change the psychology. Profit, says Robertson, is the residue to be maximised for the shareholders (owners) while he would prefer thinking in terms of cash flows tagged for a purpose "to meet all the obligations of the business in ways that are accepted as fair." Which neatly dodges the issue since if agreement were reachable on what is fair there would be no debate. In fact Robertson, for all his socialising concepts, seems to like the market economy and would finance corporations by offering a new sort of share which did not imply ownership but offered a variable return based on a percentage of cash flows.
Curiously there is similarity here with a totally different new book The Intelligent Radical's Guide to Economic Policy (Professor J. E. Meade, Allen and Unwin £4.25) in the tacit attempt to prevent corporate self-financing to make companies more responsible to the twitches of the purse strings. Both men want to abolish current corporate taxation, but while Robertson would load the tax onto wealth, turnover or consumption (like VAT), and fun, Professor Meade wants a tax on retained funds to encourage responsiveness to outside pressures, and on employment to encourage smaller firms.
For strangely both men seem curiously enamoured of E. F. Schumacher's dictum that small is beautiful, believing that there lies the source of innovation. But recent evidence from Project Sappho and Manchester University's study is that successful innovation actually comes from large companies. Incidentally don't be fooled by Meade's title — a radical for him is not the dictionary man who gets down to roots and origins, nor the current loose definition of a sort of sub-revolutionary, he is merely a "citizen who places a rather high relative value upon Liberty and Equality in the catalogue of social goods."
Meade starts with 0-level economics and works his way through the conventional wisdom to what seem slightly impractical solutions. But Roberston's ideas range from the relabelled present practice to the utopian: "We should revive the worker-oriented philosophy of Owenite socialism, the customeroriented philosophy of the co-operative movement, and the traditional business philosophy of the small entrepreneur; and we should weave these strands into the fabric of a post-capitalist, post-socialist, free enterprise economy which is directly responsible to society." Nice work if you can get it.
These are the broad-brush social prophets; the vast volume of exhortation, explanation and warning about social responsibilities has been more specific. The ancestry of the movement is probably the industrial sociologists like Herbert Simon who back in the 1950s expounded the theory that executives do not continue searching for optimum solutions to problems but accept the first answer that meets minimum requirements — ie they do not optimise but `satisfice'. At about the same time J. K. Galbraith popularised the theory that division between ownership and management meant that "modern business enterprise can be understood only as a comprehensive effort to reduce risk." And so began the decline of profit in literature. Does nature follow art?
Other sociologists like Maslow pointed out that once workers satisfied needs for food and shelter they had higher aspirations like prestige and autonomy, and sure enough an increasing shopfloor militancy for participation built up. This was lent strength by the labour shortage. Finally came the noisy pressure groups for consumers and the environment.
And this three-way squeeze has built up to the point where if a company tried to maximise short term profits it would invite such a stream of self-righteous abuse that life would become intolerable. Yet some people are still outraged at companies abandoning concentration on profit and Milton Friedmann in 1962 scorched the whole tribe of mealy-mouthed reformers: social responsibility is "a funda
In an article published on this page in August 1972 it was suggested that Lord Goodman, Sir Max Rayne, Mr John Boulting, Mr ROY Boulting, Mr Frank Launder and Mr Sidney Gilliat, who were directors of British Lion Holdings Limited had arranged to acquire certain subsidiaries of British Lion Films Limited at "almost peppercorn prices" in consideration of their assisting Barclay Securities to get permission to sell Shepperton Studios and in complete disregard of the welfare of the workers at the studio. Lord Goodman and his fellow directors immediatelY brought proceedings for damages for libel against The Spectator. These proceedings have now been compromised by the parties.
Damages have been paid to each of the plaintiffs which they are donating to charity. In an agreed statement made on behalf of the parties in the High Court last week the plaintiffs drew attention to the efforts which they had made to protect the interests of the workers at Shepperton and to further the interests of the publishing coinpany which they had acquired and The Spectator publicly recognised that the allegations complained of were wholly without foundation and should never have been made. We apologised to the plaintiffs and undertook not to repeat the libel.
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mentally subversive doctrine" he said, "few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much for their. stockholders as possible." Rela% Professor Friedmann, capitalism means maximising long run returns so if the price of survival is yielding to immediate embarrassing pressures, you can rationalise a social conscience as enlightened self-interest.
But it seems the profit motive survives, for no sooner had notions of social responsibility gained currency than every literate consultant (or would-be consultant) PM' duced three books on the subject, and the illiterate ones organised conferences.
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