Free Market Theory Of Corporate Social Responsibility

CORPORATE SOCIAL RESPONSIBILITY

Introduction

Free market theory was a dominant theme of the 1780s propagated by economists such as Adam Smith. Amongst other things was its exclusive resolve that there should be minimal government involvement in the business of the economy if any at all. It was the era of the industrialization concerned with maintaining of internal advantages for the succession of competition within local markets therein maximizing profits for its shareholders (as its sole and ultimate objective) (Bakan, 2004). Proponents of this model argued that the market, in the absence of government control, would naturally adjust itself into a state of equilibrium by matching the aggregate demand to the aggregate supply for demanded commodities;

This has by far been the most visible tool through which multinationals have been able to blind the sight of society from its foul plays. In their bid to prove to the communities where they operate that they hold the interests of such communities at heart, most firms conduct community services and partner with local institutions such as schools to clean up their public image. In so doing the multinationals are displaying and building a form of reputation as champions for good governance in society. If clearly they are going outside their mandated roles and in limited resources to provide certain vital and essential goods and services yet the government which has access to large volumes of wealth largely through taxation fail to offer them this essential services. Once the public’s perception has been won, it becomes fairly easier to penetrate such groups

It also includes aspects such as the rising tendency of states to sub-contract the provision of their own obligations and responsibilities to private firms; and the reluctance of neo-liberalism to perish with the collapse of its theoretical foundations through the world financial crisis.

Finally, neo-liberalism has led to a change in the nature of politics both domestically and globally. Countries are now more than ever keen to protect their natural resources and ideologies even at the expense of developmental concerns that will actually develop more welfare to the citizens of the country. It is therefore possible to envision the eruptions of both civil and external conflicts and wars in response to this concerns.

Reference

Boyes, W., 2011. Managerial Economics: Markets and the Firm. Arizona: Cengage Learning.

Wapshott, N., 2011. Keynes Hayek: The Clash that Defined Modern Economics. W. W. Norton &