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Bearding the Lion in his den | Blog Wars

by Vinayak Jhamb

Editorial Note This blog has been written by a finalist of the Blog Wars event organised the PeaceX. The writing prompt, "As Ayn Rand, write an essay on the topic 'Artificial Intelligence: A dependent crutch or an unreigned unicorn'", was created from a writing prompt generator to allow participants to step into the minds of the most famous and influential of international personalities, and recreate their vision on contemporary issues. We encourage you to read, like and share your favourite posts, which can be found here! Happy reading, Blog Wars Organising Team

The post-modern society has witnessed a humongous transformation in technology and modernism which, has taken a toll on all of us. We are incessantly looking for avenues to make our life easier by lowering our efforts. This has led to a drastic change in the market structure as well. As a result, Consumerism has pervaded in every part of the society. All this has further, resulted in coming up of large companies which are catering to the needs of present-day consumers who want everything just at the click of a button. Emergence of Transnational Corporations and Multinational corporations in our contemporary human society is vividly indicative of the man’s urge to achieve everything with minimal efforts. These organizations are gigantic in terms of capital size and operations, thus have been able to become an intrinsic part and parcel of the human society. By virtue of the gigantic scale of their operations, they greatly impact human lives.

With the advent of liberalization, privatization and globalization in India since 1992, these corporate entities were given ample freedom to carry out their business operations with minimalistic rules and regulations. Therefore, many developing countries resorted to lowering of their norms in order to accommodate business entities, which we now call as “ease of doing business”. Thus, these corporate houses became astray over a period of time. Particularly, in developing countries like India, government adopted policies known as the “race to the bottom”, which implies that the government was incessantly lowering down their set of rules and regulations to welcome more and more foreign entrepreneurs. All this was essentially done to bring the foreign investment into the country, which of course, came with a price. These enterprises became habitual in exploiting the natural resources continuously thus, disparaging the environment day in and day out.

The business operations of a corporate entity should be governed by the amalgamation of “Shobiado” and “Shonindo”. Shobaido means good way of doing the business and Shonindo means merchants way of doing business. So, there should be striking balance between both the contours of the business. Over the period of time, these big corporate houses have themselves realized the significance of a sustainable business. Corporate houses across the globe are coming up with their own set of standards or guidelines to conduct their businesses prudently. They have voluntarily started following some norms to conduct their business sustainably. Big corporate houses across all the spectrums have become pragmatic enough to carry out their business operations after adequately giving back to the society at large. This happy realization has dawned upon majority of these corporate houses that they need to reciprocate towards the society in which they are operating.

Unfortunately, this goes against the cannons of one of the plausible theories given by the father of Economics, Adam Smith. The Classical theorist, believed in a governmental free economy and laid down three natural rules for the same. The first was the law of interest which implied that the companies or entrepreneurs shall be solely working for their own interests. No wonder, even in the contemporary times, the companies only work on one fundamental tenet: Profit-maximization. They have the tendency to convert each and every opportunity in their favour regardless of the society in which they are operating. Adam Smith’s theory completely excludes the government control in the market which can be a little daunting. The complete absence of the government regulation can make the companies astray and they might end up resorting to exploitative practices. We have heard various news emanating from each and every corner of the globe that large scale companies end up violating labour rights, cause human right violations and environmental violations etc.

Going by the logic of Sir Adam Smith, companies should be left to their own volition. However, this shall result in companies going completely astray, a possibility which cannot be denied. On the contrary, the government should come up with certain standards or guidelines which shall govern the operations of business entities. The international community, long back in 1983, devised a mechanism to ensure that companies do not become unruly horse amuck with power. This year marked the coming up of United Nations Draft Code on the obligations of Transnational as well as Multinational Corporations. Not only this, the world community also came up with numerous regulations to curb the exploitative behaviour of the corporate biggies.

One of the prominent examples is the violation of environmental norms by the companies in the process of carrying out their operations. There have been multiple incidents wherein companies thoroughly damaged the environment because of their callousness and were able to escape liability with a minimal compensation. The illicit activities by Union Carbide Corporation in Bhopal, popularly known as the Bhopal Gas Tragedy case, is still etched in our memories as an epitome of pain and anguish. There have been thousands of instances like this which have marred the environment clearly. Therefore, it won’t be wrong to say that if companies are left to their own volition, they are bound to go astray. Knowing the exploitative nature of these companies, the environmentalist across the globe have tried to come up with a much stricter phenomenon to put a complete halt on the activities of these corporate houses. The concept, popularly known as Green Criminology, started gaining importance in the 1990s when many developing countries opened up their economy by integrating with the World Economy (Globalization). However, as unfortunate as it sounds, Green Criminology is still considered as a pristine arena where the scholars haven’t ventured completely and as a result of which, this area hasn’t progressed completely.

However, one question immediately pops up in my mind regarding the above-stated situation. Even if the international norms are implemented to the fullest, how can you ensure the compliance of such norms at the domestic level? As Austin categorically stated, “International law is a piece of ornamentation”. The countries need to actively adopt those rules in their domestic territories so as to make them implementable in that region. If I talk about my own country, the situation is not very appeasing. In India, The Companies Act, 2013 under section 135 provides for “Corporate Social Responsibility” (CSR) which a company should adhere to in accordance the Schedule VII of the Act. The said Schedule talks about 10 major areas wherein the companies are obligated to invest and these include: Heath, Education, Environment, Agriculture etc. However, the problem with these norms are their voluntary nature and non-bindingness. As a result of which, the government cannot force the companies to adhere to these obligations which have been enshrined under the legislation. In the year, 2019, the government of India came up with a specific penalty for the non-compliance of CSR norms. Later, those were rolled back as the corporate community started rebelling against the government for imposition of such strict penalties. The point that I need to bring home is the flexibility of the governmental regime towards the corporate houses that even laws have become negotiable in the post-modern world.

I would like to conclude this piece by emphasizing the need of establishing stricter control on the companies so that they contribute adequately towards the society. Unfortunately, post Globalization, even the state has joined hands with the corporate houses in their illicit endeavours. That has been termed as the Corporate State by many scholars across the globe. When the Corporate State also starts serving the big money, it becomes the Fascist State thereby, disenfranchising the individuals of their rights. Even though, this Corporate Conscience should develop on its own, but if that’s not the case, then the State should step in right away in order to do the needful. I shall not be deliberating upon a long list of suggestion regarding the issue, instead I would leave the piece open-ended for the readers to contemplate and think beyond the narrative. I am a firm believer in the policy of Corporate Social responsibility towards the society and this is something that the Corporate Houses should inculcate as a set of good practices.

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