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Big Oil's Generosity and the Cloak of Social Responsibility

By Daniel J. Graeber | Wed, 22 February 2012 23:46 | 2

U.S. supermajor Exxon Mobil said it invited 50 school girls to its headquarters in Texas for its 9th annual program meant to encourage more women to pursue engineering. The company said that while women make up about half of the U.S. workforce, only around 14 percent of those jobs were in the field of engineering. The program, Exxon explained, was part of a multi-million dollar effort launched through its philanthropic arm, the Exxon Mobil Foundation.

The initiative, Exxon officials explain, is meant to show school girls that engineering was a rewarding field and not just a boys-only club. Last week, the foundation announced it awarded Teach for America a $500,000 grant to improve math and education programs for tens of thousands of students in low-income communities. Officials involved in Exxon's philanthropic arm said the educational initiatives are meant to prepare students to compete in the global economy.

But Exxon isn't the only major energy company concerned with the greater good to some degree. BP claims it's spent some $14 billion on restoration operations along the southern U.S. coast following the 2010 oil spill in the Gulf of Mexico. Another $1.2 billion was spent funding a scientific study of the gulf ecosystem and BP workers invested some 66.5 million man hours cleaning up southern beaches.

Why would oil companies worth billions of dollars tout their extension of valuable financial resources on things not directly related to energy? The BP case, in part, reveals that what's really at stake is an overriding concern for corporate survival. Economist Milton Friedman, in an essay published in 1970, described this as the "cloak of social responsibility." Friedman explains that a business which claims to have a social conscience is preaching socialism. Businesses, Friedman said, should be concerned with one thing and one thing only and that's making a profit. Social responsibilities are the responsibilities of individuals not of business, he said. Financing measures not directly related to revenue accumulation suggests corporations are actually spending money on improving the corporate image. It's advertising, Friedman would say, meant to make consumers feel good about the company.

The counter argument, however, is that oil companies like Exxon and BP are spending lots of money on good things no matter what evil claims Friedman may have. Schools are getting funded and the beaches are getting restored. Philosophers would argue, however, that the need to survive is the motivating force behind any and all action. Yes, companies like Exxon and BP are doing good things for apparently good reasons. But the sociologists will tell you most people, subconsciously or not, assume their morals and virtues are just, when in most cases it's not so clear cut as that. To assume otherwise, the argument goes, is to undermine the need to survive, or in this case, to make a profit. Friedman would argue that this cloak of social responsibility is in fact a ruse meant to attract capital. That's what businesses are supposed to do in a capital system, he said.

Exxon reported a net income of $9.4 billion during the fourth quarter of 2011. BP returned to profit last year as well. Friedman's assessment isn't so much a direct jab at economic giants like big oil as it's an argument meant to cut through certain value systems that cause consumers to perceive benevolence when that's not necessarily the case. If you're not convinced, next time you go to the store, check out which brands sell better. Is it the ones that back a cause or the ones that don't? Re-read this beginning of this article and ask yourself, what would Friedman say?

By. Daniel J. Graeber of Oilprice.com

About the author

Contributor
Daniel J. Graeber
Company: Oilprice.com
Position: Senior Analyst

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Leave a comment

  • J. e. Taratuta on February 23 2012 said:
    Dan:

    I believe Friedman's point was not that business run from so-called social responsibility, but rather it has the right to choose whatever responsibilities, if any, it decides to pursue. There is, after all , the unseen governing force what Soren Kierkegaard called "the Public," which would translate today into the "norm," if one needed a "social scorecard."

    Business is the only institution, as the late Peter Drucker liked to point out, with a shelf life. It is also an institution working with, for the most part, limited or scarce resources, something we are reminded of every day when oil is over $100/barrel.
  • Fred Banks on February 24 2012 said:
    Exxon (and a few others) get the message. According to my last calculation I took 40-45 courses in engineering school (Illinois Institute of Technology and UCLA). I don't remember a single woman in any of them. NOT ONE. In fact I don't remember any in the engineering mathematics course I began at the Royal Institute of Technology (Stockholm, Sweden).

    In 50 years the only boys in courses of that nature in many countries - like the US - will be nerds like myself who lucked out in the genetic draw. Where will the rest of them be? Well, porn and dope will have taken its toll, although I hope that there will be enough of them willing to play at a top level the greatest game ever invented, which is AMERICAN FOOTBALL.

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