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Thomas Wallgren

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The Need for Corporate Social Responsibility (CSR) — The Impossibility of CSR

Seminar on Corporate Social  Responsibility (CSR)

4th December 2013, Hanken School of Economics Helsinki, Finland

 

Tax Planning: Friend or Foe

A seminar about tax planning in the context of Corporate social responsibility

 

Key note presentation

Draft: The lecture was based on this draft

 

Friends and fellow-travellers,

It is an honour for me to speak here. I will speak from two positions.

 

First, from the position of the philosopher who is a specialist in the philosophical discourse of modernity. Second, from the perspective of the local politicians who wants to protect the Nordic welfare state. Each voice will get some five minutes and then I will wind it all up.

 

1.

 

This is the philosopher speaking

 

Discussions of tax  and CSR have at least one thing in common. They seem to be about money. About whose it is? About who should own it, about where it goes and how.

 

But what is money? This is a most difficult question. I would go as far as to say that

 

– money remains the most enigmatic and least understood of the civilisational innovations that have shaped the cultural formation we may call the modern west modernity since their first appearance in the great ancient civilisations some 25 centuries ago.

 

The best hunch we have about what money is can be summarised in two sentences:

 

– Money is about efficiency in communication.

– Money is about indifference. Most importantly: money is about moral indifference

 

We can call these the ontological features of money. That may not be a very clear thing to say – but it sounds a bit grand so maybe you will remember this and then it may give you some food for thought.

 

Let us now combine the two ontological features of money. We then see that money is efficient, morally indifferent communication.

 

Somethings remarkable and important follows from this:

 

It follows that the greater the role is that money plays in social organisation and in our lives the more efficient our communication becomes and the more morally indifferent our culture becomes.

 

It is a deep-seated feature of modern civilisation that it relies in its social development and cultural practices on money more than any other civilisation. It is an important feature of the present ”globalised” modernity that the role of money in society and culture is now even greater than it was just some decades ago.

 

The discussion about corporate social responsibility and about taxation and fair tax must be seen in this context.

 

What is really at stake in these debate is not tax or corporations as such. The underlying issue is moral indifference and the growing sense that most of us have that indifference has grown too large in our lives.

 

In indifferent communication – that is, in all communications where ”money talks” – fairness is not an issue. Responsibility is also not an issue. The question whether the Nordic welfare state survives is not an issue. Even climate change and the survival of higher life-forms on the planet are not  issues.

 

So: on the monteary market none of these things are issues.

 

But we are not made of money. We have moral concerns. For us things such as fairness and climate change are issues.

 

That is why we have a growing tension between two things:

 

The new thing that money – this mechanism of moral indifference and efficiency –  has grown to such new, extreme importance in our lives

 

and

 

– The old thing that we have moral concerns.

 

The natural reaction to this tension is that we want to ease it. We want to have money with a moral quality.

 

That is why we are interested in corporate social responsibility and in many other similar things that have to do with pumping more morality, more ethical concern, into markets and money.

 

The natural reaction is the false reaction.

 

Elephants won’t fly even if we give them wings.  Wolves eat lambs. Money is indifferent.

 

The responsibility of corporations is to make money — especially that form of money that is called profit.

 

This is a juridical fact. It captures unromantically, but rather correctly, the role corporations have in our so called ”free” market societies.

 

To the extent that this — the description of what corporations are in our society today — is true, they, the corporations themselves, will not become socially responsible. They are like elephants. CSR will not happen even if we give corporations wings. This is the first and most fundamental thing we need to understand when we discuss CSR and taxation.

 

Many things follow from this fundamental observation. One such thing is that we must not invest any moral hope or political energy in such things as voluntary commitments by corporations in promoting social responsibility, fair tax, climate justice or other goals we find morally laudable.

 

That may sound a bit depressing. So let me move from the bad news to the good news.

 

So far I have talked about money. About what it is and why there is no such things as Corporate Social Responsibility.

 

But now let me talk about tax.

 

Tax is also enigmatic. But one essential aspect of, let us say, the ontology of tax, is that it is politically controlled redistribution. It redistributes money.

 

Politically controlled means, among other things, morally concerned distribution. In democracies the moral concern of politics is of the highest possible quality.

 

This means that in democracies taxation ca be a benign counter-weight to the indifference of money. It is a tool by which we can — at least to some extent — close the gap between two things. Our moral needs and the indifference to these needs that money always brings.

 

For taxation to serve our moral needs it must be democratic. It is only democratic if men and women, old and young, highly educated and lesser educated, speakers of small and big languages, rich and poor, have the same say when decisions about tax are taken.

 

A very important lesson for the relation between CSR and taxation follows: We can use tax to impose social responsibility on corporations. Tax may be a very useful tool to do so. That is one lesson.

 

The second lesson is that when we decide about tax, and when we take any other decision with a moral purpose, we must eliminate the influence of coroporations as far as possible. It is absurd to ask corporations for their views about CSR, fair tax or any other such things. It is also absurd for corporations to take interest in such matters.

 

 

Let me summarise what I have said in the first part of my talk in three sentences.

 

First: the business of business is business.

 

Second: the only way for a corporation to be socially responsible is to do its business.

 

Third: therefore there should no political or other non-business activity by corporations. It follows, for instance, that all forms of lobbying by companies is bad and should be banned.

 

*

 

 

Friends: I will now stop talking like a philosopher.

 

I will now use a few minutes to talk as a politician.

 

When societies have become more and more organised around monetary markets globalisation of communication has become possible.

 

One empirical consequence has been that the distribution of money has become more and more polarised. Relatively speaking the winners have been large corporations and a small minority of very rich individuals. The losers have been local micro and small enterprise and the one billion very poors hit by worsening malnutrition especially since he finance crisis and the consequence rise and volatility in food prices.  The debate about the consuming middle-class — whether it has grown and whether globalisation has been good for it and whether the globalisation of consumerism is sustainable — I will leave to another occasion.

 

When we speak about drastic new unfairness of distribution he tip of the ice-berg is tax-havens. You must have heard the basic facts many times. Let me recall only two of them to your memory. During the past 20 years some 20 billions euros have been transferred to tax havens. According to recent estimates some 1 billion euros of tax money goes missing in the EU area alone because of transfers to tax havens.

 

One billion euros is more than the total amount that goes into health care annually in the EU.

 

Just societies such as we dream of in the Nordic countries are now under very severe pressure. It is obvious that they can not be maintained unless the power of global monetary markets is curbed. Tax havens and fair socities are incompatible.

 

The lessening of the hold of markets can happen in two ways.

 

One way forward is political control of markets:

This can mean for instance that we monitor, regulate and tax finance transactions to such an extent that there will no longer be such a thing as tax havens.

 

The other way forward is withdrawal from markets.

This can mean for instance

 

– local non-marketised self-reliance, promoted for instance through time-banking and local production and exchange of basic necessities such as energy, food, shelter and healthcare.

– socialisation of production: for instance when muncipalities withdraw from marketised production of elderly care, construction work or education.

 

 

Local authorities can and should use both way forewards. A useful first step is symbolic. Municipalities and other local authorities can simply declare that they will begin a policy of non-cooperation with corporations that run away with their profit to ax havens.

 

I am proud to say that I have been instrumental in helping Helsinki to take this step. The document that you see here .– called the Strategy for Global Responsibility — was adopted by the Helsinki City council on Sept 26 last year (2012). With it Helsinki became one of the fist local authorities world-wide to take the symboplic step and declare that it withdraws from all cooperation with tax-have companies.

 

Now we are in Helsinki taken our first steps to move from symbolic intention to real practice. To this end we are developing tools both to curb and control markets and to withdraw from markets.

 

There is a lot that we can do. We have for instance socialised debt collection. We have also decided to support time-banking and to try to tailor, within the confines of existing laws, our procurement for instance in elderly care so as to avoid tax haven companies.

 

The last method is difficult at present – even if not as difficult as people think. But for us to become truly successful in this respect we need citizen’s mobilisation for fair tax and legal reform to implement fair tax norms at many levels, including Finland, EU and the World Trade Organisation

 

I would have loved to explain in great detail what all local authorities can do to avoid companies that use ta havens to avoid tax.

 

But I will stop here.

 

 

3.

 

Let me conclude in my own voice.

 

The pressures are enormous. Over-reliance on markets is killing the planet. Tax havens is one big part of the prolem. CSR will not help us solve the problem. But discussion of CSR can be of help.

 

The struggle ahead – to save ecological justice and human dignity is a long struggle but also a fine strugge. It is good to be part of it.

 

So thank you all.

 

 

 

Helsingfors 4th December 2013

Thomas Wallgren

 

Note about the author:

Thomas Wallgren is a social activist.

He works as docent and university lecturer of philosophy at the University of Helsinki and is also an elected member of city council in Helsinki.

 

 

It is a remarkable feature of our times that we — the citizens and children of modern western civilisation, a civilisation that today domimates the whole planet —