Titan, a Tata company, posted an advertisement for their popular jewelry brand, Tanishq, on social media to promote communal harmony. The anti-harmony brigades noticed it and threatened a manager within a Tanishq store. Fearing harm to its employees, Titan withdrew the advertisement.
Liberals have expressed their indignation with Tatas. They say Tatas should not have been cowed down by threats of violence. But what about Tata’s courage in putting out the ad in the first place? It was an unusual ad, promoting communal harmony, not just Tanishq jewelry. Wasn’t the company courageous to do this? How many other companies who spend millions on advertising use their budgets to promote social harmony in these troubled times? Experts in advertising are debating whether the ad and its withdrawal helped the company’s sales. Social activists, on the other hand, say the company did not do its duty as a good citizen of society.
This incident has again raised the question: what is the purpose of a business corporation? This came up in 2011 in a debate in Delhi organized by NGOs protesting against companies acquiring land for projects. The moderator asked how many present owned shares through mutual funds. Almost all hands went up. How many would like their investments to produce greater returns for them? Again, all hands up. Therefore, what are you charging the users of your funds—corporate managers—to do for you, was the last question. This was not easy for the NGOs to answer.
These questions about business responsibility had also come up after the riots in Gujarat in 2002. Some business leaders had spoken up then. Reacting to them, a political leader wondered why industry was making a noise then when it had remained silent when Hindus were driven out of Kashmir earlier.
Similarly, Royal Dutch Shell was accused of complicity by remaining silent when the Nigerian government executed the activist and author Ken Saro-Wiwa in 1995. Shell was in a quandary at the time, report the authors of the book, When Good Companies Do Bad Things.Shell’s business philosophy was to be a good corporate citizen by working in partnership with national governments everywhere. But what if the government is not effective in protecting human rights? According to Shell’s critics, the company should have stood up for what was right in Nigeria even if its business suffered.
Jamsetji Tata, the founder of the Tata group 150 years ago, envisioned a business enterprise that cared for the community and the environment. One hundred years after it was founded, Tata Steel advertised, ‘We also make steel’. When Indian businesses joined global markets in this century, a business analyst in New York asked the CEO of Tata Steel when Tatas would stop being a ‘socialist’ enterprise!
India began to adopt the principles of liberal economics, with the ‘liberalization’ of the Indian economy in 1991. India was influenced by the ‘Washington Consensus’, which was founded on the principles of the Chicago School. In ‘liberal’ economics, business managers must act purely rationally, and in the interests of their shareholders only. This is an extension of a foundational premise driving 20th century economics that human beings are purely rational and self-interested. Another foundational premise of economic policy, expressed as ‘The Tragedy of the Commons’, says that humans will care for only what they own: they will not take responsibility for the public interest.
The values of liberal economics can clash with the creation of an inclusive society. In spite of large amounts of evidence to the contrary, liberal economics suggests that people cannot care for others. Liberal economists recommend that economic institutions should be designed accordingly; the business of business must be only business; economic policies must be designed to enable businesses to pursue their self-interest by making it easier for them to ‘do business’. Therefore, labor unions must be silenced because they speak on behalf of workers. And environmentalists must be subdued too because they make it harder for businesses to profit from natural resources.
The controversy about the Tanishq advertisement has highlighted again the difficulties responsible business leaders, like the Tatas, have in meeting their wide range of responsibilities, of managing their bottom lines while also fulfilling their loftier responsibilities as citizens of societies.
21st century challenges, described in the UN’s Sustainable Development Goals, require 21st century institutions fit for purpose. The discipline of economics must be recoupled with human society from which it has strayed too far. Countries need new scorecards of citizen well-being—GDP is an incomplete measure. The contract between limited liability corporations and society must be redefined too. The old corporate scorecard, of bottom lines and shareholder wealth, has passed its ‘sell by’ date. The creation of new score cards for corporations, as well as countries, require fresh, cooperative conversations amongst all stakeholders.
(This was published by The Economic Times on 21st October 2020)