Chat with us, powered by LiveChat Read the articles and write a summary These summaries should be no more than half a page The format of the summary is flexible, so feel free to use bullet points ? after writi - EssayAbode

Read the articles and write a summary These summaries should be no more than half a page The format of the summary is flexible, so feel free to use bullet points ? after writi

 

read the articles and write a summary. These summaries should be no more than half a page.
The format of the summary is flexible, so feel free to use bullet points.
 

after writing each summary also answer these questions down below it “What did you find most interesting, unexpected, and disappointing."

The Business Community and Poverty Paul Steidlmeier, School of Management, State University of New York, Binghamton, NY 13901

ABSTRACT

The nature and causes of poverty are analyzed in terms of the social responsibility of business. The responsibility of a business enterprise to help overcome poverty is assessed in terms of its own proper action as a business as well as in terms of participation in social policy. Systemic, corporate and individual courses of action are discussed.

INTRODUCTION

sectors of business suffer from overcapacity, it is important that the poor be brought into market processes. To that end poverty must be eliminated. A further reason for eliminating poverty is that, more and more, modern economies require a highly skilled labor force. The prospects for the poor developing their capacities are not bright. Often their education is inferior and they are not able to function within the system.

In what follows I first clarify the nature and extent of poverty. Following this I discuss its causes. I then suggest a general social framework for eliminating it and discuss specific potential contributions of the business community.

As a social and economic system capitalism has produced some dazzling successes. Historically, even relentless critics such as Karl Marx conceded the point that capitalism produced unprecedented wealth. Despite its record of success, however, capitalism has not been able to exorcise the specter of poverty. More than any other issue, poverty provides the prism through which the general public perceives the fairness of the free market system and of corporate behavior.

Poverty is not something that most business people think about. In strategic terms, it is part of their remote environment. It is very important, however, poverty on their agenda. There are, in fact, signs that they are doing just that (Conference Board, 1987). There are a number of reasons why. First, there are moral concerns for the well being of others. It is important to mention moral concern at the outset. Not to do so amounts to accepting the caricature of business people as amoral and unconcerned for others, as if those who run a profitable business necessarily have no social conscience. Many business people abhor exploitation and have both a sense of compassion as well as a sense of fairness (which market theory itself presupposes).

There are also a number of motives which can be cast in terms of mutual self interest between business and the poor. First, the long term survival of the free enterprise market system depends upon its integrity. It is of the utmost importance that capitalism be perceived as fair in order that people believe that the system is good for them. For the integrity of the system to be maintained it must be viewed as governed by fair rules, where all participants in the marketplace mutually benefit. If, instead, it is viewed as a struggle between the poor and dispossessed with the rich and powerful, the market becomes a zero-sum game. In such a scenario, poverty itself becomes a source of social instability both domestically and internat ionally.

Another reason why ending poverty is in the interests of business is market expansion. As it is, the poor do not constitute an effective market for business. Their needs do not translate into demand. At a time when most

CLARIFYING THE NATURE OF POVERTY

All of the above has forced a reexamination of the basic nature and extent of poverty (Steidlmeier, 1987: 4-8). Experts themselves are polarized around two notions: absolute and relative poverty. Following Amartya Sen (1983), absolute poverty is predicated of the failure to develop innate capacities of an individual such as physical, intellectual, artistic and occupational abilities and performance. Relative poverty is diverse and is generally defined in three ways (Townsend, 1979). Most fundamentally, it views both what are described as basic needs as well as the means necessary to meet them as culturally relative. In this sense there can be no absolute notion of poverty. The very notion itself is defined in terms of changing cultural and historical parameters. In a second usage of the term, the notion of relative poverty deals with income. It does so in two ways. The first is to compare the top xZ of income with the bottom x%. The result is poverty defined in terms of proportional income shares. Another approach rests on the establishment of poverty lines in the context of public policy. These income lines, such as $10,900 for a family of four, serve to establish welfare entitlements. The latter two relative definitions of poverty dominate discussions in the United States.

One problem that has emerged with such definitions is the implied priority of economics in the definition of poverty. Income usually figures as the primary indicator. There is a hard logic to all of this, for in a market economy the goods and services people need are either self-produced or purchased. It is this primarily economic focus that seemingly provides the easy Jump to a responsibility of business for poverty. Such a move needs further examination.

Poverty includes economics but is much more. The opposite of poverty is not so much wealth as power. In the last decades emphasis in poverty analysis and policy has been shifting to empowerment (Butler and Kondratas, 1987: 56; Harrington, 1984: 207-229). Empowerment is clearly rooted in an absolute notion of

329

poverty and also definitely includes an economic component. The main issue in empowerment, however, is behavioral dependency and the inability of people to care for themselves. This category includes everyone from the economically handicapped, to less talented plodders, to those whose lives are emotionally unmanageable. The idea of empowerment includes 1) the nurturing of self-esteem and esteem by others in the context of family and community and 2) education together with the enabling development of capacities. Empowerment is concerned with total human development in the context of community. Viewing poverty in terms of empowerment has the advantage of preserving its economic component while directing policy toward a broader spectrum of issues. Neglect of empowerment and the concentration of policy on defining economic entitlements and transfers is at the root of the ineffectiveness of many programs.

Judging the extent of poverty has proven to be a statistical minefield. It is usually done in economic terms. The extent of underreporting is not known. Partial studies abound. Comparisons across different studies– which employ different base years, methodologies, definitions and assumptions– has proven to be especially difficult. All of this is further complicated by the volatile politicization of the issues, which affects the objectivity of analytical frameworks themselves. Most observers seem to rely on the Bureau of the Census for macro data. Micro data is most often generated by grass roots organizations, social workers and surveys. With all the caveats implied above, I summarize some of the general data.

In 1985 roughly 31% of blacks and 29% of Hispanics lived below the poverty line. The position of blacks improved slightly over 1970. Hispanics were some 7% worse off in 1985 than in 1970. Some 13% of all those

TABLE ONE

United States Family Income Distribution, 1970-1986 (%)

TABLE TWO

Percentage of Persons Below The Official Poverty Line, 1960-1985 (%)

Population Group and

1986 Income

Highest 20% > $50,370

Second Highest 20% $35,016- $50,370

Middle 25% $24,021- $35,015

Second Lowest 20% $13,887- $24,020

Lowest 20% < $13,887

1970 1975 1980 1986 Change In A n n u a l Income 1973-1985*

40.9 41.1 41.6 43.7 0.3

23.8 24.1 24.3 24.0 -4.4

17.6 17.6 17.5 16.8 -7.6

12.2 11.8 11.6 10.8 -18.4

5.4 5.4 5.1 4.5 -32.3

Sources: U. S. Census Bureau as cited by McLeod (1987) and by Danziger and Gottschalk (1987).

* The d e c l i n e in mean income i s for fami l i e s with children; income for 1973 and 1985 i s measured in 1985 constant dollars.

YEAR

1960

1965

1970

1975

1980

1985

ALL RACES

22.2

14.7

12.6

12.3

13.0

14.0

WHITE

17.8

22.2

9.9

9.7

10.2

11.4

BLACK

n.a.

41.8

33.5

31.3

32.5

31.3

SPANISH ORIGIN

n.a.

n.a.

n.a.

26.9

25.7

29.0

Source: U. S. Census Bureau, 1987, p. 412

in poverty were children. In terms of total numbers, 69% of all those classified as poor were white. The percentage of whites in poverty rose from 10% in 1970 to around 12% in 1985. With respect to income distribution, only the top 20% have experienced growth in real income from 1973 to 1985. The bottom 20% suffered a decline of 32% while the second lowest quintile declined by 18%.

SORTING OUT THE CAUSES OF POVERTY

For a country that is an acknowledged leader in information age technology, our knowledge of the extent of poverty is fragmentary indeed. It is not surprising that there is little agreement regarding causes. Like it or not, business has always been suspected by critics of causing poverty. The debate linking business to poverty is complex and wide-ranging (Hunt, 1972: 40- 88). The anti-business feeling, however, is nurtured by more than "leftist" thinking. At present the private enterprise system and its principal institution, the corporation, are viewed with considerable mistrust by •the public. In her study of The Businessman In American Literature, Emily Stipes Watts (1982) chronicles the predominance of negative literary portrayals of big business. In recent years a number of religious organizations as well as private interest groups have grown increasingly critical of "capitalism."

Members of the business community have found the above sniping at capitalism difficult to put up with. They counter that the number one antidote to poverty is the private enterprise system itself (American Enterprise Institute, 1984). No other system has produced greater aggregate wealth. Furthermore, no other system can boast that so many of its citizens are so well off. Capitalism has championed the emergence, well being and dominance of the middle class.

Why continue to bedevil capitalism with the specter of poverty? The first reason stems from obvious cases of exploitation of labor or of consumer fraud. These cases reinforce the notion that the market represents a zero- sum game rather than an environment of mutual benefit.

Secondly, the very success of capitalism has given birth to rising expectations regarding progress and the quality of life. The economic progress that capitalism brought about made it more evident than ever that poverty is not necessary; it can be overcome. This

330

observation leads to the conclusion on the part of some that business should eliminate poverty. It also reinforces the notion that the poor are somehow victims of an anonymous system where they have no voice and do not seem to matter.

Thirdly, the dynamics of markets themselves must be considered. Both the instability of business cycles, the continual presence of market imperfections and the factor of market externalities suggest that short run social disequilibria would be a rather constant feature of capitalism.

The history of poverty in the United States is by no means uniform. Two traditions have existed side by side. The first is the American system as the land of opportunity for the poor and downtrodden. This is the immigrants' story which has been repeated thousands of times by peoples from every continent. This tradition has profound roots in literature (Watts, 1982) as well as in religion (Bellah, 1984). It directly answers the quest for legitimacy in terms of the success individuals have experienced in their lives as well as in terms of God's providence, which is played out in terms of individual callings and the stewardship of God's gifts.

At the same time there is a tradition of the poor as the underclass. Celebrated by Henry George in his The Poverty of Progress, in the struggles of the depression as captured in John Steinbeck's The Grapes of Wrath, and in Micahel Harrington's The Other America, the poor are seen as struggling uphill in a game where the rules are stacked against them.

The first tradition has also focused a social optic on the poor as somehow being the main cause of their own problems, whether because of laziness, the lack of thrift or defects of character. The second tradition sees the poor as somehow deserving. Their plight should evoke feelings of human solidarity if not a preferential option for the poor. This latter feeling has spawned the welfare tradition, which grew out of the Englisg poor laws. (Interestingly enough, some who think the poor undeserving will nonetheless support welfare in order to defuse a potentially volatile and unstable social situation). American welfare capitalism has been most recently attacked by Gharles Murray in Losing Ground and by Stuart Butler and Anna Kondratas in Out Of The Poverty Trap. In each case the argumentation is not so much about the poor themselves, but about the inefficacy of government programs.

CRAFTING A SOLUTION: THE GENERAL SOCIAL FRAMEWORK

Although Marxist socialism has provided both the most strident critique of the business/poverty interrelation as well as the most radical solution, it is the so- called "mixed economy" that has dominated strategy in the West. The response to poverty has taken the form of both charitable works by voluntary organizations as well as legislation. I concentrate on the latter. Legislation has first of all set out to curb the exploitation of the ugly capitalists (if,indeed, such people can be called capitalists). The focus has been labor, consumer protection, the environment, anti- trust, and bribery and corruption. Secondly, legislation has focused upon economic welfare. In the United States the primary policy has been based upon the consumption function, primarily choosing income supplements rather than price controls or rations as socialists tend to do. This is significant, for such policy conceives of poverty in terms of entitlements.

The entitlements/income transfers approach has some validity; its weak point is that is does not tackle the poverty mind-set which undergirds the lack of empowerment either in society or in one's own affairs.

The legislative approach to poverty stands in distinction to market solutions, on the one hand, and the role of private voluntary organizations and primary communities, on the other. Clearly, if poverty is concerned with personal development and social empowerment. more than market activity is involved .

The market can only really handle the economic component. It cannot directly handle problems of self esteem or skill development. Nor can it handle those who are only marginally present in the market. For example, it will not immediately handle the problem of 10 million homeless children or of the elderly, for they are not part of the work force. Nonetheless, the market can handle certain components of the poverty syndrome.

THE POTENTIAL CONTRIBimON OF THE BUSINESS COMMUNITY

There is no clear one-to-one relationship between the business community and poverty. The causes of poverty are diverse. It is worth examining two scenarios: 1) when the existence or continuance of poverty is related to a business' activities, and 2) when poverty is primarily socially or individually caused.

Certain types of poverty can be caused [wholly or partially] by a number of business agents. First, individual business persons who abuse their roles (e.g., a particular business person who discriminates against minorities, swindles or bilks the elderly out of savings, etc.). Secondly, poverty may be linked to corporate policy which exploits direct stakeholders (e.g., wage policy which exploits cheap labor in sweatshops, price fixing, redlining, etc.). Thirdly, poverty can also be caused by the impact business decisions have upon indirect stakeholders (e.g., relocating plants, depleting the ecological system, taking capital out of a poor country, etc.).

In the second scenario, poverty is primarily socially or individually caused. It may stem from a lack of education, a mentality of personal defeatism based on poor self-esteem, from social discrimination and lack of opportunity, and from cultural factors (to name just a few basic non-economic causes). The behavioral dependency of the poor deserves special attention. The primary focus has fallen upon primary communities, such as family and community, on the one hand, and upon education, on the other. The main issue is not economics but empowerment.

Before suggesting what the responsibilities of business are, it is necessary to relate the general causes of poverty to some ethical principles. Poverty represents a partial negation of the common good. It derives from multiple causes (individual, group, systemic) and its solution would seem to call for the co-action of many diverse moral agents. Poverty represents, first of all, a general problem of social ethics. In this sense it raises the question of the justice of the system itself. Secondly, within this social context it is a problem of business ethics. On this score it evokes an examination of actual business policies. Finally, poverty raises questions of morally responsible individual behavior. In this case the responsibility of the poor themselves as well as other people is the subject of moral scrutiny.

331

Regarding poverty, there is no "special ethics" for business people as opposed to other members of society. All members of society face the same moral imperatives: 1) to act responsibly and do no harm to others in one's actions and 2) to be responsive and to do good. If there is anything special, it is the experiential context in which business men and women make their moral choices and topuch the lives of the poor.

The central issue of whether poverty serves the interests of business must be squarely faced. On a macroeconomic level I contend that it does not. First, it augurs political instability. Second, the main problem which contemporary capitalism faces is overproduction and the lack of markets. Thirdly, business needs a skilled and productive labor force. A fourth reason business might be willing to combat poverty is that it might generate the goods and services necessary to do so. The poverty programs become their customers, much as food stamps provide income for the food industry. On all four points it is in the general interests of business that poverty be eradicated and the poor become empowered.

Insofar as business contributions to solving poverty go, solutions are to be found at three levels: the system, corporate policy and individual action. The social responsibility of business differs according to which poverty scenario one is dealing with.

Business people contend that the capitalist system itself is an antidote to economic poverty. The logic, on the one hand, is based upon entrepreneurs who can identify market opportunities to create wealth. On the other, it is based on accumulating an investible surplus which would lead to growth and jobs. For this scenario to work, however, society must prepare the poor to participate either as entrepreneurs or as workers. Capitalism presupposes 1) empowered individuals 2) access to markets and information and 3) the dispersion rather than concentration of power. The principle responsibility of business at the systems level is to ensure fairness in the marketplace, on the one hand, and to strengthen to proper functioning of other social institutions, such as education, on the other. In this sense the corporation is involved in a broad social ethic (as a co-active subject of the common good). In a 1987 survey of 130 executives by The Conference Board (1987: 3), education was ranked as the main concern by 64% of respondents.

In discussing corporate policy regarding poverty, two scenarios must be distinguished: 1) when business is a contributing cause of poverty, and 2) when business is not a cause but is called upon to help resolve the problem. On the corporate level, the principle social responsibility of business is not to either itself cause or further contribute to the existence of poverty as it goes about its business. It is important to also state business responsibility in a positive way. An efficient well-run business is itself a social contribution to a healthy economy. In a general macro sense, when business flourishes, poverty should decline. Yet, as Michael Harrington pointed out in The New American Poverty (1984), this economic logic has changed. For much new investment is placed outside U. S. borders and new technologies displace rather than engage labor. The "flourishing economy" prescription is, therefore, endangered by three factors: 1) the poor are not educated to be capable of participating in the modern marketplace, 2) new forces of international economic production are at work and 3) with modern technology new investment does not necessarily mean more jobs. Nonetheless, a well run business itself represents socially responsible behavior. Ethics on the corporate level entails a particular responsibility for a company's policy and its consequences, for what the

corporation itself does or fails to do. The second poverty scenario is more difficult for it is not directly related to a firm's principle business policies and actions precisely as a business. The problem business faces here is whether it can be content to be a bystander. For poverty can be caused by omission. In this case the poverty in question does not so much result from an individual's or a corporation's direct decision [as in the first scenario], but from apathy or the lack of the willingness to use available resources to make a positive contribution (e.g., investing in depressed areas, providing job training, corporate philanthropy, etc.). This type of scenario is clearly different from the first. Business is not seen as cause but as part of the solution. The implication is that it should make a contribution.

The point needs clarification, for working to overcome poverty is not the unique responsibility of business. For example, while a corporation may be socially responsive by providing job training or strengthening education, the social responsibility of all the people simultaneously entails that educators themselves do a better job, that governments set in place appropriate legislative and fiscal policies, that churches aid in overcoming the psycho-social syndrome of poverty, that unions afford equal opportunity, that the quality of family life be improved, and so forth. Social ethics is itself social both in theory and action. When it comes to doing a social good (as opposed to simply not doing harm), all members of society share alike in that responsibility. There must be a fair sharing of the costs. If, indeed, business is asked to do more in a certain area because it is well placed to do so, it must be supported in that effort by the public (concretely, for example, with tax breaks).

Finally these prescriptions also apply to all individual members of society, no matter what their sphere of activity, not just to business. Many actions that individuals may take are focused on improving the way their principle institutions (such as a corporation, a university or a church) behave in society as well as improving the system itself. Further, there is the individual commitment to treat others fairly in interpersonal contacts and transactions. This commitment goes beyond simply not doing harm to setting aside some of one's resources and time to help those who are less fortunate. If empowerment is a central problem of poverty, then it is clear that personal care for one person by another is an indispensible part of a solution. On this level of personal regard for one's neighbor, business people are like any other member of society. A sense of caring and concern for others is a sign of moral maturity.

CONCLUSION

Social ethics and business ethics are inherently a social process as well as one of individual commitment. Issues such as poverty are public and entail a social process of public debate, choice and action. Within that process the social responsibility of individuals as well as of groups is defined.

If a society is to resolve poverty problems, it must be recognized that the corporation is but one of many social moral agents, although it is a very important one. It has moral responsibility for its own proper actions and omissions. It also has indirect responsibility to foster the overall common good and the justice of the social system and its institutions.

332

REFERENCES

American Enterprise Institute, 1984. The lav letter on the economy. Washington, D. C.

Bauer, Peter, 1984. Reality and rhetoric. Cambridge: Harvard University Press.

Bellah, Robert et al., 1984. Habits of the heart. Berkeley: University of California Press.

Conference Board, 1987. Community affairs: 1987-90. New York.

Danziger, Sheldon and Peter Gottschalk, 1987. Target support at children and families. New York Times March 22: Dl.

Freitag, Michael, 1987. New York is fighting spread of sweatshops. New York Times. November 16: Al, B4.

Harrington, Michael, 1984. The new American poverty. New York: Penguin Books.

Harrington, Michael, 1962. The other America. New York- MacMillan.

Hvnt, E. K., 1972. Property and prophets: the evolution of economic institutions and ideologies. New York; Harper And Row.

McLeod, Ramon G. , 1987. U. S. rich got richer, poor got poorer. San Francisco Chronicle. August 4: 7

Murray, Charles, 1984. Losing ground: American social policy. 1950-1980. New York: Basic Books.

Seligson, Mitchell A., ed., 1984. The gap between rich and poor. Boulder, CO: Westview Press

Sen, Amartya, 1983. Poor, relatively speaking. Oxford Economic Papers. 35, 2: 153-169

Steidlmeier, Paul, 1987. The paradox of poverty: a reappraisal of economic development policy. Cambridge- Ballinger Publishing Co.

Townsend, Peter, 1979. Poverty in the United Kingdom. London: Penguin.

United States Bureau of The Census, 1987. Statistical abstract of the United States. Washington, D. C.

Watts, Emily Stipes, 1982. The businessman in American literature. Urbana: University of Illinois Press

333

,

Social Crisis and Corporate Response

BY DONALD P. KIRCHER

CORPORATE PARTICIPATION in solving

the problems of race, the central city, education, and minority employ- ment IS a currently popular topic which has attracted the attention of some stu- dents of the subject and many orators. The more extreme examples of grandiose rhetoric would have one believe that, all else having failed, business was the last best hope for solving every problem that besets our society. Much of the hyperbole which has attended discussions of the subject is due to the striking contrast between private affluence and public squalor. Corporate business, as the prin- cipal mechanism which has produced private aflSuence, is seen as successful, capable, vigorous, confident, optimistic.

The public sector simultaneously pre- sents many unedifying vistas. The streets of our cities are jammed and filthy; chil- dren in the ghettos are badly educated; the nationalized and semi-nationalized

transport systems in and around tbe cities are barely operative; welfare systems, while relieving distress, have institution- alized poverty and dependence; and even the relatively simple matter of delivering the mail seems to strain both the capaci- ties and the budget of the Federal Gov- ernment. And hanging over everything is the ominous cloud of the race problem.

The 1969 McKinsey Foundation Lectures, entitled "Of Men and Markets—Diversi- fication in a Worldwide Setting," were delivered recently at Columbia University by DONALD P. KIRCHER, President of The Singer Company. They will be pub- lished next fall by the McGraw-Hill Book Company. This article, drawn from the last of the three lectures, appears here by courtesy of the publisher and of the Graduate School of Business, Columbia University, co-sponsor of the lectures.

Is battling poverty, racism, and urban blight really the business of

husiness, as tbe rhetoric of tbe day suggests? This chief executive thinks

so—but he nams that corporate action programs must be kept consistent

with basic business disciplines, purposes, and performance criteria.

streaked occasionally with lightning flashes of violence and riot. The public sector thus presents many aspects of mal- aise and decay, of uncertainty and pes- simism, and areas of disruptive changes and demoralization.

The contrast leads to the assumption that corporate business can and should bring its disciplines and capabilities more precisely to bear upon tiie solution of these social ills. I agree emphatically that it can and should, but the manner of its doing so requires more exact definition than it has commonly received.

Tha Need to Keep in Character

In attacking social ills, business should act within the framework of its proven special abilities, skills, and dis- ciplines. Only by acting in the manner which has made it

Related Tags

Academic APA Assignment Business Capstone College Conclusion Course Day Discussion Double Spaced Essay English Finance General Graduate History Information Justify Literature Management Market Masters Math Minimum MLA Nursing Organizational Outline Pages Paper Presentation Questions Questionnaire Reference Response Response School Subject Slides Sources Student Support Times New Roman Title Topics Word Write Writing