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Tuesday, October 11, 2011

Wall Street and the Populists: A Disconnect

In October 2011, Gerald Seib observed that political and economic pressures were “pushing business leaders into the public cross hairs.” From the corporate standpoint, the time was ripe for the field of business and society, whose topics of corporate social responsibility, corporate citizenship, and stakeholder management had emerged as means by which managers could interface with the broader society. The fundamental matter to be “managed” or assuaged could be said to be divergent norms or values, which in turn can eventuate in antithetical perspectives. Seib was essentially noting that the societal populists and corporate executives were not on the same page. In being geared to creating the impression that the values espoused in a given corporation are in line with societal norms, the field of business and society may not have been equipped to deal with divergent talking points that are grounded in antipodal social realities. Indeed, being invested in one social reality can prevent someone from even being aware of threats from another social reality. Under that scenario, the cues for value-congruence are missed by boundary-spanning managers on the corporate side, which in turn solidifies the discordance between the two social realities. In other words, the pressures mount from the outside, and the validity of the corporate social reality is itself in the cross hairs. To effectively “unwind” this dynamic, the field of business and society must deepen to include the basics of how to see things from a very different perspective without discrediting it from the outset. Value-congruence, and thus the continued legitimacy of the corporate form in modern society depend on this rather-basic yet arduous ability as a precursor.

In the context of the “Occupy Wall Street” protests spreading across the U.S. in the fall of 2011, Seib pointed to the existence of “a radical disconnect between the picture populist critics paint from the outside, and the one business leaders describe from inside.” This disconnect went back to September 2008, when bankers viewed the collapse of the CDO market as a result of over-reaching, dishonest and languid mortgage borrowers and the wider society saw greedy and fraudulent mortgage originators and investment bankers behind the liars loans. This disconnect infuriated the general public, as the business perspective meant that expected contrition would never come from the bankers. In fact, the latter would engage in mass foreclosures without a hint of guilt even as the general public was dumbstruck that people could be so clueless as to inflict injury on insult without realizing it. In short, pressure actually builds from such a disconnect.

In the populist protests, the crowd saw American companies with enough profit and cash to create jobs on-shore yet inexplicable without the will to do so. In the first decade of the new century, American corporations had cut their work forces in the U.S. by nearly 3 million, while increasing employment abroad by almost 2.5 million. In the fall of 2011, Standard & Poor predicted corporate earnings growth of 13.5% for the third quarter, which suggested “to Wall Street protesters that companies were hoarding profits without creating work.” Seib goes on to observe that business leaders saw the inverse. From the business perspective, third-quarter expectations were less than expected. The managers pointed to the benefits of an artificially weak dollar that had already strengthened at the expense of exports. More broadly, businesses were looking at weak consumer demand and increasing costs with government regulations, which make augmenting the domestic work force more costly. Seib juxtaposes this view of a hostile business environment with that of unpatriotic and greedy corporate chieftains.

Debating the respective variables misses the point (or does not go far enough). The underlying disconnect may itself be a threat to American corporations. Indeed, the perspectival disconnect could mean that corporate capitalism could itself be the target of popular angst and dissatisfaction. While the field of business and society has been geared to the corporate “unit of analysis,” it is not clear that the managerial tools used to assuage perceived differences concerning norms (and thus values) will suffice when the corporate form itself has a target painted on its ass. In other words, the bastards may not see the arrows coming until it is too late, due to the rather basic disconnect in perception. Of course, it could be argued that the mega corporations have so much potential power that even a few arrows wouldn’t do much damage that could not be repaired. In other words, corporate capitalism may be so entrenched that it could easily survive being made a target without having to change the way managers view their refined domain of excellence and the broader society of sore-losers.  Even so, it couldn’t hurt to deepen the field of business and society to address the disconnect and how to manage it. Foremost, I would advocate the development of a skill-set that is devoted to being able to see things from a very different perspective without immediately falling over in supercilious laughter that only makes matters worse.


Gerald F. Seib, “Populist Anger Over Economy Carries Risks for Big Business,” The Wall Street Journal, October 11, 2011.