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What impact do business and economic decisions have on society?

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2008-09-07 15:52:58

The impact of management's decisions on society is not just

public responsibility but is inextricably interwoven with

management's responsibility to the enterprise. Still it is a

responsibility of management to the public interest as such. This

is based on the fact that the enterprise is an organ of society and

that its actions have a decisive impact on the social scene. The

first responsibility to society is to operate at a profit and only

slightly less important is the necessity for growth. The business

is the wealth creating and wealth producing organ of our society.

Management must maintain its wealth producing resources intact by

making adequate profits to offset the risks of economic activity.

And it must besides increase the wealth creating and wealth

producing capacity of these resources with them the wealth of

society. It may seem paradoxical that the responsibility of

management is most clearly recognized in the Soviet Union.

Profitability is the first and absolute law for Soviet management

and the essence of what the Russians proudly proclaim to be their

great economic discovery management by the Ruble. But a source

which the Kremlin would hardly admit as authority has said as much.

This responsibility is absolute and cannot be abdicated. No

management can be relieved of it. Managements are in the habit of

saying that they have a responsibility to the shareholder for

profits. But the shareholders, at last in a publicity owned

company, can always sell his stock. Society however, is stick with

the enterprise. It has to take the loss if the enterprise does not

produce adequate profits, has to take the impoverishment if the

enterprise does not succeed in innovation and growth. For the same

reason management has a public responsibility to make sure of

tomorrow's management without which the resources would be

mismanaged would lose their wealth-producing capacity and would

finally be destroyed. Management is responsible for conducting the

enterprise so as to undermine our social beliefs and cohesion. This

implies a negative responsibility: not to usurp illegitimate

authority over citizens by demanding their absolute and total

allegiance. In a free society the citizen is a loyal member of many

institutions; and none can claim him entirely or alone. In this

pluralism lies its strength and freedom. If the enterprise ever

forgets this, society will retaliate by making its own supreme

institutions the state and omnipotent. The tendency today of so

many, especially of larger enterprises to same paternal authority

over their management people and to demand of them a special

allegiance, is socially irresponsible usurpation, indefensible on

the grounds alike of public policy and the enterprises self

interests. The company is not and must never claim to be home

family, religion life or fate for the individual. It must never

interfere in his private life or his citizenship. He is tied to the

company though a voluntary and cancelled employment contract, not

through some mystical and indissoluble bond. But responsibility for

our social beliefs and cohesion also has a cohesive component. At

east in this country it imposes on management the duty to keep open

the opportunity to rise from the bottom according to ability and

performance. If this responsibility is not discharged the

production of wealth will, in the long run, weaken rather than

strengthen our society by creating social classes, class hatred and

class warfare. There are other areas in which responsibilities can

be asserted. It is a responsibility of the management of the large

company to develop a capital-expenditure policy which tends to

counteract the extremes of the business cycle (with Automation such

a policy becomes a business necessity. Management has a

responsibility to develop policies that will overcome the

deep-seated hostility to profits, for the simple reason that this

is threat to our economic and social system. Any business, in the

present world situation, has the responsibility to make its best

contribution to the defensive strength of its country. But what is

most important is that management must realize that it must

consider the impact of every business policy and business action

upon society. It has to consider whether the action is likely to

promote the public good, to advance the basic beliefs of our

society, or contribute to its stability, strength and harmony.

-

The impact of management's decisions on society is not just

public responsibility but is inextricably interwoven with

management's responsibility to the enterprise. Still it is a

responsibility of management to the public interest as such. This

is based on the fact that the enterprise is an organ of society and

that its actions have a decisive impact on the social scene. The

first responsibility to society is to operate at a profit and only

slightly less important is the necessity for growth. The business

is the wealth creating and wealth producing organ of our society.

Management must maintain its wealth producing resources intact by

making adequate profits to offset the risks of economic activity.

And it must besides increase the wealth creating and wealth

producing capacity of these resources with them the wealth of

society. It may seem paradoxical that the responsibility of

management is most clearly recognized in the Soviet Union.

Profitability is the first and absolute law for Soviet management

and the essence of what the Russians proudly proclaim to be their

great economic discovery management by the Ruble. But a source

which the Kremlin would hardly admit as authority has said as much.

This responsibility is absolute and cannot be abdicated. No

management can be relieved of it. Managements are in the habit of

saying that they have a responsibility to the shareholder for

profits. But the shareholders, at last in a publicity owned

company, can always sell his stock. Society however, is stick with

the enterprise. It has to take the loss if the enterprise does not

produce adequate profits, has to take the impoverishment if the

enterprise does not succeed in innovation and growth. For the same

reason management has a public responsibility to make sure of

tomorrow's management without which the resources would be

mismanaged would lose their wealth-producing capacity and would

finally be destroyed. Management is responsible for conducting the

enterprise so as to undermine our social beliefs and cohesion. This

implies a negative responsibility: not to usurp illegitimate

authority over citizens by demanding their absolute and total

allegiance. In a free society the citizen is a loyal member of many

institutions; and none can claim him entirely or alone. In this

pluralism lies its strength and freedom. If the enterprise ever

forgets this, society will retaliate by making its own supreme

institutions the state and omnipotent. The tendency today of so

many, especially of larger enterprises to same paternal authority

over their management people and to demand of them a special

allegiance, is socially irresponsible usurpation, indefensible on

the grounds alike of public policy and the enterprises self

interests. The company is not and must never claim to be home

family, religion life or fate for the individual. It must never

interfere in his private life or his citizenship. He is tied to the

company though a voluntary and cancelled employment contract, not

through some mystical and indissoluble bond. But responsibility for

our social beliefs and cohesion also has a cohesive component. At

east in this country it imposes on management the duty to keep open

the opportunity to rise from the bottom according to ability and

performance. If this responsibility is not discharged the

production of wealth will, in the long run, weaken rather than

strengthen our society by creating social classes, class hatred and

class warfare. There are other areas in which responsibilities can

be asserted. It is a responsibility of the management of the large

company to develop a capital-expenditure policy which tends to

counteract the extremes of the business cycle (with Automation such

a policy becomes a business necessity. Management has a

responsibility to develop policies that will overcome the

deep-seated hostility to profits, for the simple reason that this

is threat to our economic and social system. Any business, in the

present world situation, has the responsibility to make its best

contribution to the defensive strength of its country. But what is

most important is that management must realize that it must

consider the impact of every business policy and business action

upon society. It has to consider whether the action is likely to

promote the public good, to advance the basic beliefs of our

society, or contribute to its stability, strength and harmony.

-


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