Corporate “Social Responsibility” – An Alibi For Perilous Deregulation

“These business leaders from the companies Salco-Brand, Ahumada and Cruz Verde were in fact convicted” – (Juan Pablo Ortiz)

SANTIAGO – After four long years in court, the 10 Chilean pharmaceutical executives prosecuted for colluding to raise the prices of 222 medicines can breathe easy.

These business leaders from the companies Salco-Brand, Ahumada and Cruz Verde were in fact convicted, but the sentence amounted to a meager fine — the equivalent of $445,000 to be paid as a group — and an order to attend 30 hours of business ethics classes.

It’s an insulting punishment for executives who padded the profits of their respective companies by millions at the expense of sick people. But unfortunately in Chile, sanctions are light for businesses and executives who commit financial crimes.

Sentencing the 10 guilty executives to attend business ethics classes is absurd. How can they redeem themselves in a country that pushes them to cheat, and where personal success and profit, at any cost, are the driving forces of the economy?

As an alternative to government regulation, the concept of Corporate Social Responsibility (CSR) has evolved here as a form of self-regulation. Companies are supposed to monitor and guarantee their compliance with legal and ethical requirements. But CSR is in clear opposition to the pressures and demands of the economy. As long as no rules, regulations or sanctions exist for those who abuse their economic power, CSR will remain mere window-dressing, duping society and benefiting only the richest 1% and their profit margins.

The Chilean economic model has renounced all regulation. Indeed, all obstacles to the flow of productive and speculative capital have been eliminated. Unionization and the right to strike have been restricted, and collective bargaining is almost non-existent; natural resources can be freely exploited; regressive taxes hurt taxpayers while large businesses are granted exemptions; education, health and social systems have been converted to business models; and the state’s responsibilities have been reduced to a bare minimum. In summary, Chile has created a society designed around a tiny fraction of its wealthiest citizens.

CSR simply cannot counteract the overwhelming neoliberal ideology. In fact, it is making matters worse. It is used to justify less regulation, which means fewer checks and fewer preventative measures. Businesses fiercely defend their right to self-regulation, including their right to self-regulate their CSR, because they think that rigid national regulations would dampen competitiveness and, in the long term, lead to financial losses.

In the name of my free market

And businesses insist on self-regulating not just their relationships with other companies and consumers, but also their interaction with local communities, the environment and the global market. CSR is therefore directly responsible for the relocation of industry to countries with globalization, competition and lower overhead. CSR will never modify the rules of the game to attribute greater importance to decency and respect for citizens.

Businesses are using it in the name of the free market to justify reducing the role of the welfare state and eliminating anything that hinders generating maximum profit in the most minimum timeframe possible.

But ethics must never be forsaken. They should be present throughout society, and especially within the economy and politics. But if we want to see socially guided behavior from businessmen, we need to start by giving the state back to its citizens and creating a regulatory system that favors ethical competency and harshly condemns crimes against consumers, workers and the environment. In particular, if the education system forgets its love affair with profit and starts to teach civil decency, our culture may finally begin to value social solidarity.

Aristotle believed that political and economic decisions have an unavoidable moral connotation. But Machiavelli thought that economics and politics are far from moral, that ethical values have no place in the pursuit of power achieve power. Though it repulses us to acknowledge it, economic and political power, independent of the common good, have become dominant in today’s world. We are unfortunately much closer to Machiavelli than Aristotle.

The way in which economics governs everyday life is not helping us to achieve a more ethical outlook. In Chile, like much of the world, the size of the economy and the power of those who control it have grown. Instead of compensating for the inequalities inherent in modern financial markets, politics and the state have grown weaker, becoming instruments used to increase financial power. Economics 1 – politics 0. Though they have been elected by the people, politicians regard their ability to channel the public’s desires as limited. The nation’s sense of community is weakened by the overbearing power of the economy and the fragility of the state.

The case of pharmaceutical collusion, just like the La Polar accounting fraud case, is emblematic of the assault being committed in Chile against consumers. And this is allowed to happen because the state is so weak. By focusing on growth and employment, it has placed the need for a healthy balance between business and society into a distant second place. Until that changes, justice in Chile will continue to be biased, and ethics classes certainly won’t make a difference.

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