The Hindu Business Line : <I>Roots of CSR </I>

In a free society, there is `one and only one social responsibility of business,' wrote Milton Friedman in The New York Times Magazine, on September 13, 1970, citing from his book `Capitalism and Freedom.' What's that responsibility? "To use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

Friedman's position is often seen as `a position arguing against CSR (corporate social responsibility),' writes Meera Mitra in It's Only Business! from Oxford (www.oup.com). She draws our attention to another snatch from the same article of the Nobel Laureate, where he says, "Make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom."

But 1970 was long ago in the business-society dialogue. "There have been momentous changes in the institutional and social aspects of economic life." The business model of CSR is certainly in vogue, declares Mitra. But social responsiveness isn't new to India, explains the author, tracing ancient roots.

Historical roots

"Both in the early Vedic and later Vedic periods, the work of guilds in wider social development initiatives is evidenced... In the Gupta period, especially detailed rules were set for business partnership and there is reference to chiefs of artisans and trader guilds acting as members of the advisory board of the district administration."

One learns that Brihaspatismriti (300-500 AD) speaks of how guilds had a duty to use their profits for `works of piety and charity' such as `donation for construction and maintenance of assembly hall, shed for water, shrine, tank, garden, ... assistance in times of famine and other calamities.'

No wonder, Gandhiji had described the concept of `trusteeship' to be India's gift to the world. "However untenable his solutions may appear, his thinking was instructive in highlighting the great need for thinking economics anew and for bringing the human face centre stage when discussing economic advancement," comments Mitra.

A chapter on `social sensitivities ahead of the law' catalogues the many firsts in Tata Steel, as labour welfare measures. For instance, the company had the eight-hour working day in 1912, whereas the statutory enforcement happened only in 1948 through the Factories Act. Other `firsts,' as sourced from Tata Steel's Corporate Sustainability Reports, include free medical aid (1915), schooling facilities for children (1917), leave with pay (1920), maternity benefit (1928), profit-sharing bonus (1934), retiring gratuity (1927), and social audit (1980).

"Not only were the Tatas, through their social practices, ahead of legislation in the area of labour and other practices in India, they were, on some issues, ahead of such legislation in Western countries as well," notes the book. "The expenditure on CSR was sustained and growing even in a period (1996-2001) when the steel market had taken a downward turn and Tata's margins had been squeezed."

Topical read.

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