Should business have a purpose?

Business is not separate from society.

In February the Public Services (Social Value) Act came into force. The Act very simply requires public authorities to procure services in a way that generates social value. This was a piece of Tory legislation (gasp), so well done to Chris White on seeing his private members bill through to the end.

Social Value seems a long way away from the capitalism of the 1970s and 80s when Milton Friedman famously wrote in his book Capitalism and Freedom: "there is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

This is often condensed into the “business of business is business” quote. This finds clear resonance in the UK Companies Act where the goal of business is to maximise profit for shareholders.

Apologists for Abstract Expressionism in New York in the early 20th Century, Alfred Barr and Clement Greenberg, made strenuous claims that painting was about surface and colour and nothing else, getting rid of the difficulties of subject matter. Like those art critics, doesn’t Friedman’s abstract view strip business activity of all sense of production, all politics and all purpose, leaving it to do its own thing and have no particular social relevance? Such commentary allows for a discussion of business in the absence of any knowledge of what they actually do and what impacts they may have.

Isn’t it just very convenient to isolate business from society when society isn’t very happy with it and is losing a strongly-held faith in the world of business? 

The Edelman Trust Barometer for 2013, which surveyed over “31,000 respondents in 26 markets around the world and measured their trust in institutions, industries and leaders”, opens with the words:

“The 2013 Edelman Trust Barometer demonstrates a serious crisis of confidence in leaders of both business and government.”

The Barometer shows that whilst trust in institutions including businesses rising modestly, the quality of that trust is feeble: the respondent’s category for “Trust a great deal” is at 16 per cent in government and 17 per cent in business and media.

This is pretty lamentable. Business is not separate from society; it is a social activity, literally being busy. To make this clear, the now well-worn quote of Bjorn Stigson, when president of the World Business Council for Sustainable Development, that “businesses do not succeed in societies that fail”, needs to be read alongside the Kofi Anan comment that it is the absence not the presence of business that has condemned the much of the world to poverty. 

We have started to see the emergence of a new sense of entrepreneurship which is increasingly called responsible capitalism in the shape of businesses and social enterprises that combine a sense of social or environmental purpose with profit. We can see this in the Social Value Act. How long, we might wonder, before it is common practice for all organisations to think about the social value they create. Would then the Companies Act, instead of enshrining the purpose of business to be profit maximisation whilst nominally nodding at the needs of society and the environment, in fact require businesses to have a purpose in society and, in fulfilling that purpose, they should of course make a profit. 

That might make people trust businesses more; it might make people feel that instead of being self-serving, businesses are in fact part of society.

Richard Spencer is Head of Sustainability at ICAEW.

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Grant Shapps on the campaign trail. Photo: Getty
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Grant Shapps resigns over Tory youth wing bullying scandal

The minister, formerly party chairman, has resigned over allegations of bullying and blackmail made against a Tory activist. 

Grant Shapps, who was a key figure in the Tory general election campaign, has resigned following allegations about a bullying scandal among Conservative activists.

Shapps was formerly party chairman, but was demoted to international development minister after May. His formal statement is expected shortly.

The resignation follows lurid claims about bullying and blackmail among Tory activists. One, Mark Clarke, has been accused of putting pressure on a fellow activist who complained about his behaviour to withdraw the allegation. The complainant, Elliot Johnson, later killed himself.

The junior Treasury minister Robert Halfon also revealed that he had an affair with a young activist after being warned that Clarke planned to blackmail him over the relationship. Former Tory chair Sayeedi Warsi says that she was targeted by Clarke on Twitter, where he tried to portray her as an anti-semite. 

Shapps appointed Mark Clarke to run RoadTrip 2015, where young Tory activists toured key marginals on a bus before the general election. 

Today, the Guardian published an emotional interview with the parents of 21-year-old Elliot Johnson, the activist who killed himself, in which they called for Shapps to consider his position. Ray Johnson also spoke to BBC's Newsnight:


The Johnson family claimed that Shapps and co-chair Andrew Feldman had failed to act on complaints made against Clarke. Feldman says he did not hear of the bullying claims until August. 

Asked about the case at a conference in Malta, David Cameron pointedly refused to offer Shapps his full backing, saying a statement would be released. “I think it is important that on the tragic case that took place that the coroner’s inquiry is allowed to proceed properly," he added. “I feel deeply for his parents, It is an appalling loss to suffer and that is why it is so important there is a proper coroner’s inquiry. In terms of what the Conservative party should do, there should be and there is a proper inquiry that asks all the questions as people come forward. That will take place. It is a tragic loss of a talented young life and it is not something any parent should go through and I feel for them deeply.” 

Mark Clarke denies any wrongdoing.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.