The Historical Development of Business Philanthropy: Social Responsibility in the New Corporate Economy

Abstract

According to neo-liberal economists such as Friedman and Hayek, the prime function of any business enterprise is to generate profits; its central responsibility is to shareholders. The idea that business owners should also seek to perform social tasks is regarded as completely erroneous. Historical evidence suggests that not all business leaders have been content simply to perform a commercial role in society. Numerous industrialists and entrepreneurs throughout the nineteenth century made significant contributions to their local communities. The early efforts of socially responsible business leaders are well documented. This paper aims to build on existing historical analysis of business philanthropy and social involvement by analysing developments in post-war Britain. Three main historical developments are outlined. Firstly, the early post-war years, despite the formation of the welfare state, witnessed some notable efforts to engage business in society. These were mainly inspired by church-led organisations and Christian entrepreneurs. Second, the expansion of the corporate economy throughout the 1940s and 1950s placed increasing constraints on the social aspirations of businesses. Finally, from the mid-1970s onwards there grew a more general interest in corporate responsibility. This was consolidated in the 1980s. As part of the general redefinition of state functions in this period, the role of business in addressing social problems became more prominent. Such political and policy developments, it is argued, have made a significant contribution towards enhancing the social role of business.