6 September 2018

10 years after the crisis: companies, behave!

Bank pinautomaat in het donker

“Has the trust bond between banks and civilians fully recovered? Interesting moment to ask such a question, right in the middle of ING’s laundering scandal,’ says Rutger Claassen, political philosopher and coordinator of Utrecht University’s newest Bachelor programme Philosophy, Politics and Economics. Ten years after the financial crisis, the integrity of systemics bank is seriously contested once again.

“I always tell students that aspire to change banks or other big businesses morally to open the black box. With this, I am trying to say that such businesses, not unlike society, contain conservative as well as progressive forces. Enormous dichotomies exist within such companies. You will have to create a coalition of well-doers and even then, there will always have to be a balance between good and evil. You need people that take steps in the right direction.” Starting this month, students are able to study Philosophy, Politics and Economics at Utrecht University, an English-taught Bachelor programme in which political and economic questions are perceived from four perspectives: philosophy, politics, economy and history. The programme is interdisciplinary, hosting lecturers from the faculty of Humanities and the faculty of Law, Economics and Governance.

The conviction that businesses merely exist for profit and that there’s nothing wrong with that, is being less and less defended in public.
Dr. Rutger Claassen. Foto: Ed van Rijswijk

Painfully Clear

Many companies nowadays won’t stop talking about Social Corporate Responsibility (SCR). “The conviction that businesses merely exist for profit and that there’s nothing wrong with that, is being less and less defended in public,” Claassen says. Yet, a situation such as that of ING makes it painfully clear how difficult it is to turn that social responsibility into reality.

Ten years after the financial crisis, bonuses decreased while savings grew, financial risks would be reduced while supervision increased, and we still go wrong. Is all that SRC no more than a sales pitch, some window dressing? “That social responsibility is at least something with which you can make a company keep word,” Claassen says. “If, as a business, you claim to be involved with society, you should start acting like it.”


Corporate Citizenship

People expect businesses to behave as good citizens, taking their responsibilities through a concept called corporate citizenship. But that is exactly where the tension lies: a business is not a regular citizen. In his ethical annotation “The public part of businesses” (Dutch), Claassen writes that a business is a private, profit-driven actor on one hand, containing public aspects on the other. Like citizens, business pay taxes and adapt to government rules. Like citizens, they gain power, influencing society. Businesses, however, don’t suffer a lot of resistance against this power, from market nor government, Claassen argues. “Power exertion by business is not more or less problematic than political power exertion, thus deserving the same treatment.” Resistance, a better balance of power, as a trias politica for example, might be desirable.

Power exertion by businesses is not more or less problematic than political power exertion, thus deserving the same treatment.
Dr. Rutger Claassen. Foto: Ed van Rijswijk

After the financial crisis, customers did not massively walk out of systemic banks, so “voting by feet” does not always occur. Then, what did the financial crisis bring us? “A clear understanding of the vulnerability of our economic system, the amount of risks that were being taken and how different western economies and their problems are interconnected,” Claassen says. “Public debate, however, quickly shifted to budget cuts induced by the crisis. Although, initiatives for sustainable finance, alternative finance and crowdfunding have been growing.”

The crisis was a catalyst for sharing economy platforms such as AirBnB and Snappcar, but by no means a cause.
Koen Frenken

Sharing Economy

Koen Frenken, professor Innovation Studies at Utrecht University, specializes in the sharing economy. Is this a result of the financial crisis? Frenken does not think so: “Platforms such as Snappcar and AirBnB have indeed gained popularity during the crisis, but the principles of such platform existed before that. Think of eBay, for example, as platform for second hand goods, or websites for home swapping. From my perspective, the crisis was a catalyst for sharing economy platforms, but by no means a cause. Gig platforms such as Uber and Deliveroo are not crisis phenomena to me either. Those are here to stay. The popularity of such online platforms for freelancers is rooted in the job market’s increased flexibility and financial advantage for independent entrepreneurs. Plus, customers are obviously interested.”

Alternative economic structures

On top of the worldwide crisis, Europe followed with the Euro crisis, in which several Euro countries were to save Greece from bankruptcy. “That crisis has shown the mistakes in the Euro’s design and made it politically clear that solidarity between North and South is mandatory,” Frenken says. “I also hope that the crises raised awareness for the limitations of the way the economic system exists today. In the long run, I expect people to invest and consume more consciously. After all, it is not unimaginable for alternative economic structures to rise based on corporations that utilize online platforms for lease-loans, trade and insurances.”