THE RATIONALE FOR CAUSE CAPITALISM

Cause Capitalism is a call to action for corporate organizations to exercise deliberate social compassion by proactively pledging humanitarian assistance to communities around them. Between seeking to maximize profits, fulfill shareholder expectations, and secure the cheapest production factors, corporate executives find little time for exercising deliberate programs to benefit the communities around which they operate. I am aware that multinational corporations no doubt bring massive investment to developing countries.

Foreign direct investment and new technologies introduced by multinationals spur GDP growth and the growth of different micro industries. Multinationals are also beneficial for developing countries in terms of bringing employment opportunities and new technologies that spill over to domestic firms. Furthermore, multinational companies often benefit from government subsidies, which could in the future be linked to investment in local firms. 

However, as it has been widely documented, some of these multinational corporations migrate their business to third-world countries for more nefarious purposes than what’s advertised.

In industrialized nations, labor laws and unionization have kept wages relatively high and protected employee rights. Companies are required to provide health benefits, paid vacation, and ensure anti-discriminatory practices. Companies are additionally mandated to observe strict environmental protection activities such as cleaning their effluent, proper disposal of waste, and cleaning up after industrial accidents. 

Uncomfortable with these stringent supervisions and faced with the prospect of reduced profits, most companies relocate to third-world countries where laws are lax or non-existent. With deep corporate pockets and sleek PR campaigns, these organizations receive licenses to operate in regions where access to cheap labor and raw materials is guaranteed. 

Companies in the least developed countries feel less obligated to observe social responsibility. Having paid their way to the highest government echelons, these corporations launch lucrative businesses that stash 99% of their profits abroad in tax havens, while delegating a minuscule amount of their earnings to local projects as initially envisaged.

Multinational companies look to reduce their liability in regions where they operate through the practice of outsourcing. Outsourcing takes place when a company hires or contracts another company, which is not related to the first, to do some type of work. Outsourcing work decreases the liability of the multinational through the contract of the work. The contract states that if there is to be any liability at all in the contract, the liability will be shared by both the principal and the contractor.

Another way in which these multinational corporations minimize liability is through renegade regime regulation. Multinationals can use the jurisdiction of one state to protect themselves from the jurisdiction of another. These companies use this to their advantage by seeking “refuge” in certain states, so-called secrecy havens. 

Liability reduction has given international companies the ability to be unaccountable and reckless in business practices. In the past, these megacorporations have been untouchable through the use of contracts, lack of policy enforcement, and basic corporate organization. The difficulty arises when placing responsibility on these companies as most are to be held accountable under national laws. With the wide scope of the actions of multinational corporations and their transnational nature, it is no wonder that national law cannot deal with these issues. 

One way to keep these conglomerates liable for all the actions that they undertake. That solution is international law. In four applicable ways, the international community can start holding the right people accountable for the activities that they undertake.

Communities must also be appraised of their environmental rights, labor rights, and social protection rights.

There have to be mechanisms by civil society and local non-profit organizations to recognize companies that show deliberate social responsibility and environmental protection. Conversely, lawbreakers and irresponsible exploitative practices must be called out and highlighted. Robust legal institutions must uphold existing laws so those rogue organizations can account for their practices.

Locally, independent multi-stakeholder committees must be encouraged to oversee the company’s activities and supervise adherence to laid down regulations. National governments should tax these multinational companies and use these funds for environmental protection purposes and as insurance against disasters such as oil spillage. Community advocacy and local participation in legislative frameworks are encouraged too because the voices of local communities are best placed to indicate the failure or success of investment strategies.

Given the rampant abuse of power, privilege, and position by some companies, it is not only fair but logical that we urge these corporations to contribute a percentage of their gross income to a charitable cause. multinational corporations can partner with a non-profit with the aim of supporting a worthy cause such as housing, water, sanitation, environmental clean-up, or food for impoverished communities. This will not only paint these companies in a positive light but will effect real change for communities in these countries.

In most third-world countries, their citizens no longer rely on governments for the provision of basic social infrastructure. Given the massive wealth and influence wielded by multinational companies, it can be competently argued that societies can depend on these corporations to bring about social and economic change, and by doing so escape the delineating label affixed on them such as “The Evil Corporations,” “Tax Evaders,” or “Exploitative Capitalists.”