Business Responsibility: A Perplexing Question
An Address by Joseph C. Wilson
President Xerox Corporation
Before The New York Bond Club
New York City
April 27, 1966
What responsibility does business bear to society? It is a perplexing question - deeply perplexing.
I want to talk to you today about this issue, even though it is not an uncommon subject certainly, and is one which many have discussed before. The further I went back into the folklore of private enterprise to search for an answer, the more confusing became the images.
Let us re-summon some of them, or at least try, because they help to establish a framework of History in which I think business responsibility can, effectively and candidly, be assessed.
One was that of a wealthy entrepreneur who advised American businessmen on how far they could flout and abuse the laws of trade that governed them. His personal life was much gossiped about, and almost scandalous after he became an ambassador.
Another was our first great industrialist in metal. He considered his greatest feat to be the ability to furnish sheet metal in quantity. In fact, he wrote a poem of celebration about his hammers and his "role-ing mill". Not many people have read it.
I also remember thinking about a man who said he never gambled. He disliked those who played loosely with other people's money, and based his decisions on what he called "character." Once in our history, he personally saved the United States from financial ruin.
And finally there was the son of a doctor with very questionable skills. The son became enormously rich, yet lived simply, gave generously and regularly read the Bible. Shunning ostentation, he never owned a race horse or a yacht.
These businessmen were, in order, a founder of the country, a famous patriot, a Wall Street banker, and the creator of an empire in oil: Benjamin Franklin, Paul Revere, J. P. Morgan, and John D. Rockefeller.
A little girl, who was recently exposed to a history book for the first time, said: "Nobody lives more than two pages." Remember the point.
Of course, responsibility is not a totally relative thing. Franklin need not lose, nor Rockefeller gain because of their personal practices. But responsibility does nonetheless need definition; and when nobody lives more than two pages, it is difficult to decide whether the generalizations we draw from history are adequately balanced.
My own doubt about how to approach the issue of business responsibility came in part from the need to put the whole question into some sort of historical perspective. So much has already been said on this subject, so many accusations, so many defenses, that almost all of us respond to it automatically with a degree of bias or of suspicion.
It is immensely difficult, in other words, to discuss business-and-society objectively, and to separate it from already established attitudes. Many people who yesterday charged that business was a soulless, brutal institution seem now terrified of the effects of business conscience. They believe, apparently, that business should tend strictly to its economic knitting. Others will take care of the schoolroom, poverty, civil rights, foreign affairs.
Yet I think anyone would agree that it falls largely to business as the fundamental American economic institution to sustain a rate of growth sufficient to take care of the wants of our population, to innovate rapidly enough to support government programs for defense, education, essential foreign aid, internal development and welfare, and, through investment overseas, to contribute to their industrial development.
The implications of a serious dilemma can easily be found here. It is, I think, a fact that to this day the businessman's motives are met with deep misgivings in many quarters of our society. How then can he prove he is acting responsibly ? And what does he, and society, mean by responsibility ? And under normal circumstances, to whom is he most responsible ?
Those are the questions. The answers, I assure you. do not come easily.
One fascinating and extraordinary fact stands out in any historical survey of business. It is that business activity has always been considered amoral or immoral, regardless of the desirability or value of its ends. And monetary gain, as such, has never been considered the noblest of man's motives.
Plato believed the nature of business itself to be deadening to the spirit, and assigned productive activity to that part of the soul concerned with thirst, hunger and other physical needs.
Scorn and suspicion of money-making activities was the attitude of the medieval church. The clergy demanded repression of economic appetites. In such a society, it is not difficult to understand Heilbroner's description of the merchant as a "disturbing outsider . . . much despised. "Yet when a guild member's hands could be lopped off for cutting costs, one cannot help but wonder about the motives of the medieval power structure.
Other occupations have had their share of abuse also: but seldom with the frequency, consistency and continuity with which insults have been applied to businessmen.
Even capitalism's first great defender, Adam Smith, oddly enough, supported the archetype. He held that the nature of the capitalistic system rendered conflict and human abuse inevitable, and even desirable, in order to bring society through adversity to Utopia. Hidden away in capitalism's injustice and brutality, there was a design impenetrable to the eyes of men (except, apparently, to his own), leading to world betterment.
Much of Smith's work in analyzing capitalism was brilliant and to this moment important. But with that kind of philosophical defense, one wonders whether there is much need for a prosecution.
In any event, considering the heavy inventory of sins attributed to business over the centuries, it is worthwhile to ask two questions:
How did business survive so much public contempt ?
And, historically, have there ever been any important exceptions to it?
It seems to me that there has been at least one notable exception, and that it is really worth looking at. But before examining it, of course, I will have to answer the first question.
How did business survive ?
My answer may be a surprising one.
Business did not survive. It died.
What Plato viewed as business is not what Thomas Aquinas saw as commerce a millennium and a half later. Nor did the industry of Goldsmith's England bear much resemblance to medieval guilds and tiny fiefs. Even Karl Marx would have difficulty recognizing the institution he attacked a century ago.
So business, in effect, has died in one form as it evolved to others. The only constant, it seems, has been a lingering distrust of the profit motive — regardless of the form it has taken.
The most significant exception to that feeling, in my opinion, is in the United States.
In most respects, American business began life without a heritage of hatred. It has become the central core of economic life in this country and, uniquely, has achieved a degree of social respectability unknown abroad until the present time.
Why ? I will try a hypothesis.
In the raw stock of a new continent, class divisions did not survive very well. Business became a process that crossed and recrossed them at will; and there was no stigma attached to being a merchant or a trader, nor was there anything debasing in making money.
Think of some of our earliest and greatest entrepreneurs: Franklin, the wealthy publisher; Paul Revere, who thought his famous ride was pointless, but who was enraptured with metalworking; John Hancock; Samuel Adams; and the wheat grower and real estate developer from Virginia, George Washington.
Some of the framers of our Constitution were business men. Yet I doubt if anyone has ever viewed the Bill of Rights as reflecting the interests of narrow capitalists.
There were men interested in financial gain as part of the process of fulfilling the needs of a growing country. Without the distractions of public contempt, they could feel great self-respect because the building of economic strength was an awesome, challenging, and essential responsibility.
In other words, the economic growth of the United States depended on the responsibility of these early entrepreneurs and in the context of that necessity, it seems unlikely they found their roles stultifying. Today we regard these commercial pioneers in a kindly light because their task was essential.
But what of the later robber barons -- so called ? What of the Vanderbilts, the Jay Goulds and Jim Fisks, J. P. Morgan, Carnegie and Rockefeller?
Cornelius Vanderbilt was regarded as a man of few scruples who bribed legislators, manipulated stock, and tricked his way to control of a railroad empire. At one time, according to John Chamberlain in "The Enterprising Americans," he proposed that monuments be erected in Central Park to commemorate the two greatest Americans: Washington and himself.
But this was also the same man who worked tirelessly to improve railroads, and to make them more efficient. He tightened the nation's communications and transportation network by cutting in half the time it took to get from New York to Chicago. J. P. Morgan later used the strong foundation of the Vanderbilt road to save the nation's railroads from chaos.
Our total resources were, in fact, opened to us by men like Vanderbilt.
Whatever may be said about John D. Rockefeller's business policies he brought order to an undisciplined industry. At one point, he controlled ninety percent of the total oil refining capacity in the United States. Although always generous in buying out his competitors, he firmly held that competition was immensely wasteful.
The Standard Oil "trust" probably was not in the public interest. Yet, in a sense, it served the public by proving that enterprise on a massive scale was possible, but still could not subdue competition.
But in the nineteenth and early twentieth century, the history of business, and the way business met its economic responsibilities, must be balanced by other considerations.
Let me read you some testimony from a mine investigation in England in the middle of the nineteenth century. It probably was equally applicable to America.
"I am Sarah Gooder. I am eight years old. I'm a coal carrier in the Gawber mine. It does not tire me, but I have to trap without a light and I’m scared. I go at four and sometimes half past three in the morning and come out at five and half past in the evening. I never go to sleep. Sometimes I sing when I've light, but not in the dark; I dare not sing then. I don't like being in the pit. I am very sleepy when I go in in the morning. I go to Sunday school and learn to read. They teach me to pray. I have heard tell of Jesus many a time. I don't know why he came on earth. I don't know why he died, but he had stones for his head to rest on. "
How, then, are we to view the responsibility that business in the past has borne to society ? A Morgan creates order out of chaos in railroads, yet is unconcerned by human suffering. A Rockefeller organizes the resources of a nation while children toil fifteen hours a day.
If they are condemned, should we not also apply the same yardstick of indifference to humanity to Washington, the owner of slaves ? How do we judge an Andrew Carnegie who himself "slaved" as a boy, yet managed to scramble, with limited conscience, to the head of a great steel complex; finally he created libraries in which millions of children first had access to books ?
And, how do we relate our judgments about medieval merchants, colonial enterprisers, robber barons and great monopolists to businessmen here and now ?
We see, I think, that the institution of business has mellowed and matured, although not without strife and rarely in symmetrical fashion. The businessman in Colonial America is not comparable to his late nineteenth century counterpart who, in turn, is almost totally dissimilar to present day industrialists.
A Time reporter recently heard a union leader lament that it had been years since he had heard "Joe Hill" sung at a union meeting. Today labor is recognized and many corporate managers recognize that unions can play a valid and valuable role in that splendid instrument, the American economy.
The fact is that in a society as complex as ours, no institution —business, labor or government — lends itself to easy generalizations; and anyone who thinks that the sins or the assets of the fathers extend to the behavior and motives of the sons is reasoning very loosely indeed. Business responsibility cannot be judged by looking at the past, however spectral, because it distorts our view of the present and of the future.
The point, in my view, is that the nature of business power has changed.
Once a business enterprise could close its doors and move away without thought to the disruption this caused in a community. But this is an age of great companies charged with supplying a giant economy. Today a sub- division of a large company may employ as many people as the population of a small city. Change can mean the death of an entire town. Or, to take the positive side, a new industry can revitalize the people and institutions of an entire region.
Without a doubt, the businessmen who direct the nation's corporations large, medium and small -- are invested with enormous economic power.
Businessmen make the decisions which, to an important degree, affect one-half of the national income. They control the jobs of more than thirty million people These men account for 96 percent of sales in manufacturing industries; 92 percent of transportation, communication and public utilities; 80 percent of mining sales.
Of course, these are aggregate figures, and in a competitive economy they can be somewhat misleading. They do, however, provide us with some concept of the scope of real and potential corporate influence on our society.
How can that influence best be used?
You must be astonished by the polar positions taken by reasonable men.
Monroe Spaght, the first American managing director of Royal Dutch Shell, has said that "however deeply a corporation is committed to finance, technology or science, it cannot be purely financial or technological or scientific. For a corporation involves people, and it is therefore a social entity with definite and inherent social responsibilities."
On the other hand, Theodore Levitt, a respected consultant to major corporations, has written that "in the end business has only two responsibilities — to obey the elementary canons of everyday face-to-face civility . . . and to seek material gain. "
Consider the fact that today large corporations are not owned by individuals, but by large groups of people. The Chairman of AT & T, Frederick R. Kappel, has talked of this problem. While the entity he represents is known to almost everyone, few realize that the ownership of his company is distributed among 2,500, 000 people of every type, profession and inclination; and his decisions influence not only them, but additionally some 800, 000 AT& T employees.
In the end, Mr. Kappel, and all corporate officers govern and exercise power through the consent of others.
Consider also that the basic function of a modern corporation is to return profits from products and services to those whose savings have been invested in it. Immutably, the purpose is gain; but the uses to which that gain is put are numberless. One man may finance a house, another supplement retirement income, a third enhance his son’s education.
The corporation is responsible to each, despite the fact that none hold the same opinions or views toward the world in which they live.
With these facts in mind, we can at last start to describe examples of business responsibility and their consequent problems that perplex.
One of the great issues facing us today is the impact of automation on our economic system. It is an issue the implications of which many businessmen seek to define; and also one that demonstrates the dilemma in which a corporate leader can find himself.
Let me present you with a situation:
If a man automates some processes in an aging factory, he may throw a number of people out of work, including some who have worked for the company for years. He feels loyalty toward them, as many do toward him. So let us assume that he resolves to do everything he can to place them with other companies in the area.
But he knows that labor there is plentiful, and that few jobs are available. Simultaneously, a competitor automates successfully in another part of the country where the situation is different.
Many businessmen, I believe, would decide that the long-term interests of the company — which includes those of shareholders, the employees who remain, the other communities which collect taxes from the company's operations, the customers who rely on it require that he automate; but that he also must try his best to reduce the impact on people and on the community.
But is it enough to try his best? What about the merchants whose business is reduced? What about those whose skills, though great, cannot be transferred ? What about the payments on their houses and cars ? What about those who feel betrayed and lost, however few they may be ? How, in such an instance, do we determine the point where responsibility begins and where it ends ?
Another perplexing issue concerns civil rights. Reviewing the progress that has been made in the South, a corporation might decide to integrate a plant lunchroom as the first in a series of steps toward integration.
But in announcing its intention, the company finds itself faced with the prospect of a bitter, violent wildcat strike. The cost of the strike to the company and to the community can total millions of dollars. There can be no estimate of the potential of violence — the human cost.
If the company takes the strike, its whole complex structure of financing and recruitment, of sales commitments, of balanced planning for profits and their uses will be altered. Men may be scarred and maimed; and hatreds which the company had hoped were dying may be re-kindled to smolder for years to come.
If it does not take the strike, the company will open itself to the ugly charges of bigotry and injustice Yet perhaps next year, a smaller step will be accepted and the huge cost of strife avoided. And then again, perhaps not. What would you do ? — Because act you must.
According to folklore, the responsibility of the corporate leader is to preserve and enhance the profitability of his organization; and at the same time to preserve its integrity strictly and without exception. But as these examples illustrate, the profitability itself involves moral choices that are often unlike those faced by businessmen in the past.
When confronted with such choices, however, the businessman cannot hold a referendum of shareholders or employees to resolve them. Despite the fact that responsibility does not easily separate from compassion, he has been given the duty to make their choices for them, in the hope that his judgment will encompass the interests of all.
In the attempt to fulfill that trust — the results of which are public — I think we must admit that the leaders of the modern corporation, no matter how large, can be as fallible or as wise, as flawed or faultless, as any other human beings. The issue is always a question of motives, The issue is always a question of character. What kind of men are involved? How much do they know?
In my view, it all boils down to education.
Browning once wrote:
"That low man seeks a little thing to do,
Sees it and does it:
This high man, with a great thing to pursue,
Dies ere lie knows it.
That low man goes on adding one to one,
His hundred's soon hit:
This high man, aiming at a million,
Misses an unit."
There's a lesson in these lines.
The unknowing to the contrary, the life of the businessman in this century is rich in intellectual challenge imposed by dazzling technological and social change. It is ruthlessly demanding of the courage and integrity needed to face with equanimity sudden crises deeply involving the treasured interests of others and, equally, the slow remorseless stubborn trends, like socialism, which threaten the bases of the society in which he believes. The best of them must have, on the one hand, the resources of the artist whose penetrating perception allows him to master and interpret phenomena he does not fully comprehend; and yet, on the other, he must strive constantly for the facts the scientist wants and use his method with precision. In America he has been entrusted with a great share of responsibility for the State's good and the people's happiness, and, therefore, he must under stand that a sense of duty arises, not only through the sanction of higher power, but, as important, through the will of individuals.
Businessmen must work with human beings and, the most rigorous obligation of all, create in them a common will to do worthwhile work, to achieve together aims which add dignity to their lives and pride in the company of their associates.
Every businessman, who must make the final decision, who sits, as Harry Truman put it, where "The buck stops, " lives at times in a kind of impenetrable loneliness where judgment and its consequences loom large and awful because they focus so tightly on one being. Then the price of power seems high. But more often comes the ecstacy of common aspiration and effort, of the well joined movement of the group toward valuable objectives through an imaginative, creative process which is delicately balanced in a vast variety of characters and forces over which no man has control but which must be studied with insight and acted upon with vigor; else others suffer or gain.
This is a role that calls for a scholar's willingness to study, analyze and synthesize, to project bravely, to hypothesize with boldness and wisdom, and then to act from intellectual premises. Those who scoff at the businessman do not understand the good ones and the satisfying richness of their jobs' demands upon them. Just as many business men, who shrug off the academician, do not appreciate the seminal contribution the true lover of knowledge makes to a free society.
The head of a business works with people and all other phases of his task pale in significance compared to his need to know human beings. He must understand the complexity of their characters and motives, to persuade them of sound judgments, and above all to inspire in them the desire to lift their joint efforts to planes above those which their individual capacities could achieve through that almost miraculous force of leadership which takes some churches, or universities, or states, or enterprises to heights which seem beyond the reach of the men who make them up.
Charles Nelson said, "To manage well, you must be able to teach subordinates; to teach well you must understand the nature and aims of man; and to understand well, you must study subjects that have no practical applications in business."
Think of that line of Browning's, "This high man, aiming at a million, misses an unit." In ten words, it distills an essence of business leadership and it comes from 19th century English poetry, not the curriculum of the Harvard Graduate School of Business Administration. Toynbee's figure of the toilers, leaping from ledge to ledge, slowly, steadily climbing from the abyss up the precipice toward civilization, contains all the wisdom the manager needs to know about the process of creativity in his research department. Plato's chained men, searching for truth by observing the flickering shadows of reality on the cave's back wall, illuminate for all time the industrial relations director's problem of communication. He who denies that the humanities are an indispensable, perhaps the indispensable part, of a business manager's training, attests his ignorance of true leadership.
Once, when I was making such as assertion in public, a tough-minded personnel man stumped me with this question, "why do you management people talk like that, but when you send us out to hire a young fellow for a specific job, you stipulate that he should have a business administration degree, or one in accounting, in physics, or chemistry, or electrical engineering, and never that he be an English or Philosophy major?" The answer I could not find that day came after much brooding, and I regret to say it reflects on our foresight to the degree the question is precise. The answer, of course, is that not many of us have the wit to start out to hire the man who will be president two decades hence. It is the general manager who most evidently needs to know what Browning meant. He is the one who must take responsibility for articulating human activity into an order as elegant as an algebraic "Group". The builders of the Catholic Church were artists as great as Leonardo. The harmony of an organization, smoothly working toward goals of value, is as beautiful as a late Beethoven quartet or Van Gogh's "Starry Night", and unless its leaders understand beauty and the relationship of these three beautiful things, they cannot inspire. This is the heart of the matter. The fact that few businessmen attain such richness and joy of understanding does not detract from the validity of the hypothesis that the best ones do; few artists are Michelangelos.
So much talk of beauty and joy should not obscure the fact that the end of enterprise is profit. It is no good for harmonious, humanitarian, just, creative managements to close their books on a loss. The Sistine Chapel had to be finished; "War and Peace" was finally written. Greatness is not the stuff of dreams; human effort must be successful to be great in business, as in art. It is more likely to succeed in any field if the common denominator, man, is comprehended. The successful manager must truly understand words like these:
"No Man has fully lived who has not experienced the fear, the exultation, of meeting great odds and struggling to prevail. But no man has fully lived who has not also experienced the joy of close association with worthy fellows or who has not known the thrill of individual creation. He who can say honestly to himself that he has discovered a set of facts or a relation between phenomena not known to any man before him in all history, and that by his insight and skill has made them comprehensible to the human intellect - such a man experiences the same uplift of spirit as the one who first climbs a high mountain or first runs a mile in four minutes. And when the accomplishment results not from the lonely acts of individual genius but from the efforts of a team or group having mutual trust and confidence, supplementing one another's weaknesses, carrying the unfortunate over the rough places, heartening the leader by steadfast support - then all members of the group enjoy a satisfaction transcending that of accomplished creation, a satisfaction of success in their margin of effort to attain something that was beyond the capacity of any individual." Vannevar Bush said it.
Organized human endeavor can be lifted an order of magnitude through leadership if it is inspiring. The springs of inspiration lie deep in the knowledge of all that is worst and best in men and in the wholehearted acceptance of that worst and best. To lead well is to know people and to know, above all, that they are always people. The roots of that knowledge are in the sturdy minds and noble souls of the centuries. These are the only sources for the answers to the perplexing questions about responsibility.