Black Managers Forum: “The Impact of Political Leadership Transition on the Economic Landscape”
Expected Agenda of Black Executives in the CORPORATE SECTOR.
SA Business and Human Rights: Is Corporate South Africa Complying with Human Rights? Economic Growth with a Human Face- A Macro Perspective[(]
Contextual Background
The struggle for democracy waged by our people against colonialism and apartheid was not a struggle for a few to enjoy a good life and lead lavish lifestyles when millions of our people live under appalling conditions of poor housing, unemployment, poverty and many other challenges. Our struggle was for the transformation of a political, social and economic order that will ensure a better life for all our people, address poverty and provide equal opportunities for all.[1]
Our Constitution[2] does indeed reflect the aspirations and demands of our people that informed their struggles then and continued to do so today. In this regard, the Preamble of the Constitution provides for an improvement in the quality of life for all our citizens and section 198(a) of the Constitution provides for a South Africa where its people, “as individuals and as a nation shall live as equals, in peace and harmony, free from fear and want and being able to seek a better life.” And the Preamble of the Promotion of Equality and Prevention of Unfair Discrimination Act[3] provides for:
“[T]he transition to a democratic society, united in its diversity, marked by human relations that are caring, united in diversity, marked by human relations that are caring and compassionate, and guided by the principles of equality, fairness, equity, social progress, justice, human dignity and freedom.”
Nevertheless, 14 years into democracy, our country faces many of challenges, especially for millions of our people. Despite many achievements over the years, such as the much talked about economic growth, millions of our people, especially African people continue to live under abject poverty. The State’s own report, Towards A Fifteen Year Review, while pointing to a “six to seven” percentage reduction in income poverty amongst African people, acknowledges that African people continue to account for a “disproportionate share of poverty.” According to the report, while African people made 77% of the population in 1995 and 79% in 2005,” they accounted for in both years for “93% of those living on less than R322 a month.”[4] This is a time-bomb waiting to explode.
A more worrying development is the increasing gap between the rich and the poor over the last 14 years. According to the state’s Towards A Fifteen Year Review report, “[n]ational income inequality as measured by the Gini coefficient increased from 0.64 to 0.69 between 1995 and 2005 and continued to do so from 2006 to 2007.”[5] With the exception of about seven countries, that have higher Gini coefficient rates, South Africa is one of the most unequal countries in the world.[6]
On the impact of income inequalities at a global level, David Rothkopf, in his book, the Superclass: The Global Power Elite and the World they are Making, said:
“The reality is that the combined net worth of the worlds richest thousand or so people – the planet’s billionaires – is almost twice that of the poorest 2.5 billion. The human race may have made great progress over the centuries, but such disparities are an indictment of our civilization. And, I believe, they are a threat to its stability.”[7]
The income inequality and other forms of inequalities in South Africa manifest themselves along racial and gender lines. In the context of our history and the current global food and financial crises, these challenges constitute a serious threat to social cohesion and stability of the country[8] and inform, to some extent, many of our current political, economic and social challenges.
Fantu Cheru and Colin Bradford in lamenting similar human rights challenges and their impact, though at a global level, wrote in their book, the Millennium Development Goals: Raising the Resources to Tackle World Poverty:
“We live in a divided, polarized world. Half of the five billion people living in the developing world live on less than US$2 a day. Massive global poverty signifies too many deep failures in the prevailing market-oriented system of global governance, the global economy and policy reform efforts. Economic growth is too slow, income distribution too unequal, and poverty reduction too constrained to generate a sense of progress and hope. The rules of the game and the protection afforded to human rights seem skewed to favour the have over the have-nots. There is increasing frustration, disillusionment and distrust.
As a result, the planet is at risk. Even those who are well-off feel insecure in a polarized world. Human security has become a widespread global concern of all rather than a condition affecting only the poor and disadvantaged. Crime, violence, conflict, terrorism and instability spread unexpectedly into cities and neighbourhoods around the world. No one is exempt. Everyone has a stake in changing the dynamics of globalization, which appear to be disadvantaging the global majority.”[9]
While the State bears the primary responsibility in ensuring a South African free from fear and want and a better life for its people, the current human rights challenges in our country bring into question the role of Corporate South Africa as a very powerful and influential component of our society in addressing these challenges and thus strengthening our constitutional democracy.
Our constitution makes it patently clear that South African corporations, like other citizens, are “equally entitled to the rights, privileges and benefits of citizenship; and equally subject to the duties and responsibility of citizenship.”[10]Section 8(2) of the Constitution also provides that South African corporations, as juristic persons, are bound by the provisions of the Bill of Rights of the Constitution and therefore have a duty, to the extent applicable, to promote and protect the human rights of everyone in South Africa.[11]
Several questions could then be asked of Corporate South Africa in this regard. Does Corporate South Africa sufficiently appreciates its role and is adequately contributing to the advancement of human rights in our country? Is Corporate South Africa playing the necessary role in the political, social and economic transformation of our country and in this regard, what is the role of Black Executives and are they adequately playing that role?
Role of Business in General
In any society, ours included, citizens either play a positive or negative role. While some citizens uphold the law, promote positive values of the society and advance its interests; some citizens break the law, ravage other citizens and plunder their resources. Corporate citizens behave no differently from other citizens, the difference being that due to their power and influence, the impact of their conduct, either positive or negative, is quite tremendous - “of the one hundred largest economies in the world, fifty-one are corporations –of these, forty-seven are U.S –based.”[12]
On the power of corporate entities and their influence in society, Joel Bakan, in his book, ‘The Corporation: The Pathological Pursuit of Profit and Power’, observed:
“Over the last 150 years the corporation has risen from relative obscurity to become the world’s dominant economic institution. Today, corporations govern our lives. They determine what we eat, what we watch, what we wear, where we work, and what we do. We are inescapably surrounded by their culture, iconography, and ideology. And, like the church and the monarchy in other times, they posture as infallible and omnipotent, glorifying themselves in imposing buildings and elaborate displays. Increasingly, corporations dictate the decisions of their supposed overseers in government and control domains of society once firmly embedded within the public sphere.”[13]
Joel Bakan further said:
“The corporation’s legally defined mandate is to pursue, relentlessly and without exception, its own self-interest, regardless of the often harmful consequences it might cause to others. As a result, I argue, the corporation is a pathological institution, a dangerous possessor of the great power it wields over people and societies.”[14]
On the negative role played by corporate entities, John Perkins in his book, the Secret History of the American Empire: Economic Hit Men, Jackals, and the Truth about Global Corruption, concluded:
“In actual practice, corporations are the opposite of good citizens. They bribe politicians to write laws that cheat society on a mammoth scale, most significantly by allowing them to avoid paying many of the real costs incurred in conducting their business. What economists refer to as “externalities” are left out of pricing calculations. These include the social and environmental costs of destruction of valuable resources, pollution, the burdens on society of workers who become injured or ill and receive little or no health care, the indirect funding received when companies are permitted to market hazardous products, dump wastes into oceans and rivers, pay employees less than a living wage, provide substandard working conditions, and extract natural resources from public lands at less- than- market prices. Furthermore, most corporations are dependent on public subsidies, exemptions, massive advertising and lobbying campaigns, and complex transportation and communications systems that are underwritten by taxpayers; their executives receive inflated salaries, perks, and “golden retirement parachutes, “ which are written off as tax deductions.”[15]
On the other hand, many corporate entities have and continue to make important contributions in society and indeed no society can do without its good corporate citizens. The survival of any society is to a large extent dependent on its corporate entities without which sustainable economic growth so vital for human rights and democracy would not materialize. Numerous social responsibility programmes of corporate entities make material contribution in the development of their respective societies. According to Joel L Fleishman, in his book, ‘The Foundation: A Great American Secret- How Private Wealth is Changing the World’, the estimated 68 000 foundations in United States that control assets estimated at half a trillion dollars made annual grants of $33.6 billion in 2005. Fleishman also argues that without these foundations and their contributions, the American civic sector would not be ‘the powerful engine of American dynamism that it has been for many years.’[16]
It is therefore quite clear that corporate entities play a dual role in the development and advancement of societies and the promotion and protection of human rights-a negative and positive role, though some will argue that the role is more negative than positive.
Role of South African Business (Over last 14 years)
South African corporate entities are no different from other corporate entities elsewhere in the world and thus like their counterparts elsewhere, they play a positive and negative role in society.
In view of the generally impressive economic growth over the past years, the relatively stable political environment in our country, it cannot be disputed that corporate South Africa has played some positive role. However, there are worrying concerns which show a negative side to the role of some components of Corporate South Africa which need to be attended to. These concerns include the on-going inequalities in our country characterized by the increasing gini-coefficient, labour challenges , especially working conditions many workers are subjected to, that is, safety and health at the work place, environmental degradation, corruption, high levels of crime, racism and gender discrimination and slow pace of social and economic transformation of many of our key institutions.
These challenges suggest an inadequate attention paid by Corporate South Africa in general to human rights and an insufficient appreciation of the link between human rights and trade. This is not difficult to understand in view of the role played by Corporate South Africa in supporting the oppressive and exploitative apartheid system and the inability of Corporate South Africa to quickly transform in order to fit into the democratic, non-racial and non-sexist post-apartheid order. The unrepresentative nature of Corporate South Africa in the context of race and gender and the increasing gap between the rich and the poor are clear indicators of its challenges.
The slow pace of transformation in Corporate South Africa and inadequate role in championing the promotion and protection of human rights constitute a threat to the stability of the country and to Corporate South Africa itself. In this regard, Benjamin M Friedman in his book, The Moral Consequences of Economic Growth, said that “[e]xperience clearly suggests that the absence of democratic freedoms impedes economic growth, and that the resulting stagnation in turn makes a society even more intolerant and undemocratic.”[17] The health of our democracy and the advancement of human rights which are crucial for sustainable economic growth should thus be one of the main priorities of Corporate South Africa. A human right environment is good for business.
Way forward
There is thus a pressing need for corporate entities to play a far more active role in promoting good governance, democracy and the advancement of human rights. In this regard, Lee Iacocca [former president of the Ford Motor Corporation and Chrysler Corporation], in his book with Catherine Whitney), Where Have All The Leader$ Gone, wrote:
“Instead of living by the deadly sins, corporate America should try living by some of the virtues.
Instead of greed, how about generosity
Instead of envy, try a little charity
Instead of pride, show some humility
Instead of wrath, let’s see composure
Our capitalist system holds the promise that every American can succeed, but if we don’t infuse it with some humane values, it deteriorates into a winner-take all setup, which doesn’t really serve our free enterprise or our common good.”[18]
While there are adequate and effective regulatory measures in place to ensure that organs of state do meet their obligations towards the advancement of human rights, this is not the necessarily the case with non-state entities, especially big and powerful corporate entities. This lack of adequate human rights regulatory measures for non-state entities and in particular, corporate entities, in not peculiar to South Africa, it is an international concern and the current global credit crisis is a good example. There is a pressing need to find more effective ways of regulating the activities of these entities to ensure that their power and influence is not used to undermine the advancement of human rights in our country but rather play a more positive role in the promotion and protection of human rights. In this regard, John Perkins, contends that: