“Shared Value” and State Capitalism

Last Tuesday, NPR’s On Point assembled former Labor Secretary Robert Reich and Michael Porter of Harvard Business School’s Institute for Strategy and Competitiveness to discuss Porter’s new article, “Creating Shared Value.” The article (Harvard Business Review’s January-February feature), recommends that we “reinvent capitalism,” elegiacally explaining that “[t]he capitalist system is under siege,” and that “diminished trust in business” is a thing to be feared.

Porter and his co-author Mark R. Kramer’s central thesis is that business and society ought to be brought together, toppling the outmoded dichotomy between the bottom line and social responsibility. That project, with its gloss of “shared value,” seems a lot like something market anarchists could get on board with. Underneath its appeals to “meeting human needs,” however, Porter and Kramer are concerned much more with recapturing the values of some apparently not-so-distant past where Big Business was looked on as a neighborly paragon of virtue.

That such a past never existed anywhere but in the Madison Ave. reveries of Big Business is of no real concern. Anyway, all of the talk about the “intersection between” society and business is promptly drowned out by the authors’ concessions to violent statism and their conflation (perhaps the most common of all) of the state and civil society. Focusing on “the right kind” of government interference with the market, the article supposes that such interference should address itself to apparently “precompetitive issues,” convinced that a lack of an appropriate regulatory substructure leads to crisis.

Though the substance of the article acknowledges that the state’s regulations impose arbitrary costs, invariably fail to achieve their putative goals, and actually obstruct “measurable social improvement,” the authors nevertheless fall into the doctrinaire reassurance: “Oh, don’t get us wrong! We still recognize the need for state involvement!”

The notion that some areas of business practice supposedly fall outside of the realm of competition — and that the state is capable of neutrally defining those areas — is fanciful enough, but Porter and Kramer don’t stop there. No, on On Point, Porter supplicated government, seen of course as benign but bumbling, to “learn” how to tailor its regulations; he maintained that Big Business, which he sees as rallying for competition, just wants to be left alone to create shared value.

In response to the latter claim, Robert Reich stepped in to bring Porter back to earth, noting that “we have a regulatory state that is largely the product of Big Business lobbying.” In spite of that observation, the implications of which are obviously lost on him, Reich blamed too much competition for capital — a condition apparently brought about by globalization — for the present standard of corporate malfeasance.

When Porter agreed with that tenuous inference, he and Reich patted each other on the back for “getting it,” and seeing that naturally there must be a — you guessed it — new law to keep shareholders from jumping around from company to company (i.e., to keep them invested in the established economy).

For all of its predictable paeans to the state’s prying into our lives and our exchanges, Porter and Kramer offer something of a spotty account of how “re-localization” and internalization of corporate costs could transform our ideas about business. Without genuflecting to the myth that the state and Big Business are mortal enemies, they might have been onto something.

The nugget of truth is that “[b]usiness and society have been pitted against each other for too long,” but business wants it that way; entrenched corporations undeniably won’t be willing “to take the lead” to bring the two together. The state-corporate system is designed to make sure that true freedom and voluntary association are never the governing norm for society, but that is exactly the goal of the free market left.

“[T]he idea of anarchy,” taught Proudhon, “is quite as rational and concrete as any other. What it means is that political functions have been reduced to industrial functions, and that the social order arises from nothing but transactions and exchanges.” If we’re worried, as Porter says he is, about “capitalism in a bubble,” then we might tear away at the insulation the state has put up around capitalism. That way we might begin to see what kind of social order true free exchange is capable of creating.

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