We're not convinced by this from James Kirkup

James Kirkup at the Social Market Foundation tells us that businesses which gain support from government in these troubled times should have to sign up to a charter of niceness. Promise not to be nasty in the future given whatever today’s fashionable definition of being nice is.

We spot, just on casual reading, two errors. This:

And in 2006, Parliament legislated to embed in law a significant challenge to the Friedman

view that business has no social responsibility beyond profit. Section 172 of the

Companies Act 2006 remains, to my mind, one of the most important yet under-discussed

laws passed in recent years. It places the directors of limited companies under a new duty

to “promote the success of the company for the benefit of its members as a whole.” In a

sense, the narrow shareholder value doctrine has been disputed in UK law for more than

a decade, though this law has not been given sufficient force to date. (I will return to S172

later in this paper.)

A member of a company is not one of that wider group of stakeholders. A member is not an employees, customer, lender or anything other than a shareholder - members are, in company law, shareholders. Thus the Section 172 claim is that shareholders might have other interests than mere cash. We’re entirely sure they do, something that would not have surprised Friedman either.

There is a much deeper and more important error here though.

Few arrangements or practices can survive the public perception of unfairness, that some

people are undeservingly favoured while more worthy people miss out. Nor are bankers

the only business actors bedevilled by the perception of unfairness. Big tech firms and

(especially) famous coffee chains that are seen not to pay their fair share in tax to the

country where they operate are other examples of how no company is bigger or more

important than the idea of fairness.

The argument is that business will benefit from this new contract that must be signed. For those that don’t - or those that appear not to hew to the principles of it - will suffer as the customer base considers them to be unfair in their actions and thus avoids them.

Which is the very proof that a contract, the legal force, is not required. For if customers do avoid companies they regard as having acted unfairly this will damage those interests of shareholders - members being such recall - and so they will benefit from hewing to those notions of fairness. Greed - or, to borrow a phrase, enlightened self-interest - will ensure that companies act as the public wishes them to. The very diagnosis shows us that the law is not needed.

This all comes from the Social Market Foundation. Perhaps showing us that the qualifier “Social” when added to market is as with “social” when added to justice, or climate to science. The first word rather negating the meaning of the second.