16 January 2011

Creating Shared Value: The annunciation of socially responsible accumulation

Shared value in action

"The capitalist system is under siege," announces the opening lines of the cover story of the Harvard Business Review's latest issue. This initiates the article's rhetoric that evokes the kinds of inspiring and visionary calls for renewed accumulation that have been conspicuously missing throughout this crisis (Porter & Kramer, 4). The authors Michael Porter and Mark Kramer, both based at Harvard, claim that more and more companies are beginning to develop a new form of corporate practice that will "drive the next wave of innovation and productivity growth in the global economy. It will also reshape capitalism and its relationship to society." They call this form "creating shared value" and with major corporations and academics placing this kind of hype around it we on the Left should take it seriously both as an object for critical examination and a potential vector in the changing space of political action.

Creating Shared Value or CSV, from the perspective of Porter and Kramer, who coined the term in a 2006 HBR article, amounts to a radicalization of "Corporate Social Responsibility" or CSR. Essentially they claim that corporations such IBM, Walmart and Nestlé are no longer viewing social concerns as something to be considered outside of profit, as a form of charity, but rather as vital parts of the production of profit itself. Under traditional CSR models a corporation establishes a meager budget to promote recycling or build schools in Africa after a company makes billions by "externalizing" carbon emissions and reaping the benefits of wages lowered by the existence of excluded populations, in the hopes that the good press will boost profits and prevent any more social pressure to ameliorate social ills. CSV, however, means conceptualizing the inclusion of populations and the preservation of ecology as themselves a basis for profit. This is not unrelated to the "cultural capitalism", whose semantic implications Zizek so nicely analyzed in his lecture to the Royal Society for the encouragement of Arts (This link goes to the animated one because it's so charming! Here's the full live version), but instead of being a matter of the "sense" of contemporary capitalism, CSV is framed as a reconfiguration of the political economic structures of accumulation.

Three aspects of CSV seem particularly significant:

Exploding the Value Chain
The value chain is the sequence of practices and institutions that produce value along the path of production. Porter and Kramer argue that rather than conceiving of this as a process of internalizing benefits and externalizing costs, many companies are beginning look at the value chain as a set of mutual relationships between firms, government and social actors inside and outside of the firm.

They write that, "The concept of shared value resets the boundaries of capitalism. By better connecting companies' success with societal improvement, it opens up many ways to serve new needs, gain efficiency, create differentiation, and expand markets" (Porter & Kramer, 7). Essentially the argument goes that if companies prioritize social benefit, it will drive innovations in efficiency, productivity and product development because social ills are often caused by inefficiencies, and social needs can lead to new products to fill those needs. Beyond this, helping communities related to a company thrive will provide stable labor and consumer markets. Thus "value," in this view, must be thought of as proper to the entire ecology of actors involved. One firm or social group must make value through helping others do the same, hence shared value.

This amounts to a totalization of an economistic conception of value, as a margin of utility, in both economic and social calculations. In both corporate and social contexts, problems must be tackled according to cost benefit analyses. This seems only natural after forty years of neoliberal prioritization of circulation and exchange value, where the concept "value" is reduced even to the point of merely being a matter of distribution of information and the eradication of "value" from certain "Marxist" discourses. To this extent CSV's emphasis on value smells of a dangerous extension of this tendency to further render inaccessible a conception of value as related to time and labor that, as Postone argues, point to some of capitalism's most emancipating potential. 

Relocalizing capitalism: Attention to "the cluster"
Continuing with this idea that firms must attend to the needs of those around them, Porter and Kramer emphasize the need for healthy "clusters" around corporate activity. Clusters are "geographic concentrations of firms, related businesses, suppliers, service providers, and logistical infrastructure" (Porter & Kramer, 12), Silicon Valley being a prime example. Under a shared value framework companies promote the sustainable growth and efficiency of these clusters. For example, Yara, a major fertilizer company, realized that a lack of infrastructure prevented farmers in Africa from buying their fertilizer. To fix this they invested $60 million to improve roads and ports that hopefully will create "agricultural growth corridors." The intention is to create the specific and localized dynamics that support capital accumulation.

Here we begin to see some rather novel aspects of economic life that creates shared value. Multi-nationals no longer act as homogenizing forces, destroying indigenous life and cultural diversity, but actively promoting and guiding its development in way that makes life better for those communities and serves capital. This amounts to radically flexible accumulation that can have a higher return on investment by paying close attention to local diversity. This rests on the belief that local knowledge is best suited to tackle local problems, and in the vision of micro markets served by production that can make profit off of extremely short runs of products. Creating shared value is then a possible recuperation of the multicultural revolt witnessed under neoliberalism. The Zapatismo call for "a world where many worlds are possible" may indeed be on the horizon, though with the slight modification of "a system of production and markets where many systems of production and markets are possible." (And I do very much intend to parallel "systems of production and markets" with "worlds") 

Efficiently promoting efficiency
What is most at stake for Porter and Kramer is achieving new heights of efficiency and productivity. Walmart offers a good example. Walmart is "increasingly sourcing produce for its food sections from local farms near its warehouses. It has discovered that the savings on transportation costs and the ability to restock in smaller quantities more than offset the lower prices of industrial farms farther away" (Porter & Kramer 11). The minimizing of environmental and social impact can thus be solved through gains in efficiency.

What kind of efficiency are they promoting? It appears not to be a trivial example a raising the organic composition of capital (the reduction of socially necessary labor time at the point of production through the increase in "dead labor" in the form of machines). Here Walmart might end up employing more people to do more labor-intensive work (small-scale farming is incredibly more time consuming than industrial farm production), while still increasing the cost-to-value-added ratio in their balance sheets. How can we integrate this impulse into a larger political economic theory?

One important thing to note about this emphasis is that it does seem to be a re-emphasis on production. Whereas above I discussed the deepening priority of circulation in consciousness, there may be a real, material re-emphasis on production under shared value. We can't forget that transportation for Marx is still within the sphere of production. With more people working harder, and having a closer relationship to social production we may see a renewed relevance for certain neglected aspects of Marx and social movements with new perspectives on what another world might look like.
The global capitalist elite making important decisions about CSV

General Reflections, or, wild unfounded speculation
Porter and Kramer merely intend to name this new framework and give a call for more rigorous theorizing of it. It is unclear what CSV's potential is for gaining market share, or for capturing the imagination of political elites. In fact it is not even clear what metrics would be appropriate to determine if CSV is becoming the hegemonic regime of accumulation. In an era of crisis and presumably transition however, it is important to keep eyes on the horizon as new possible terrains come into view.

A word jumps to mind while considering all this, ecology. Conceptualizing the economy as a complex network of mutual relations sharing resources and promoting common flourishing sounds strikingly like discussions of the impacts of ocean acidification on intertidal kelp populations. If Chicago School economists all have penis envy for physics, perhaps the next generation of economic thinkers will do the same for ecology and dynamical systems theory. If I might coin a term extremely prematurely, we may be in for an era of "ecological accumulation."

The task however is not merely to coin terms or speculate on possible forms of economic life, but to outline what a Left position might be in relation to this possible future. Personally, if this becomes the dominant economic model for how we get out of the crisis, I'd be pretty darn pleased. It certainly would lead to a lot of social good being done. It is not an overcoming of capitalism and would certainly produce its share of limits and ills, but as with any regime it opens and closes certain doors to that overcoming. My provisional call for a program might then be to interrogate, both practically and theoretically, just what those doors are. I think we should also very seriously consider, in the absence of a vital revolutionary Left and an increasingly terrifying alternative, whether the Left response to this crisis should be to align with these folks. This does not have to be a defeatist position. Our goal then would be to do this in such a way as to lay the foundations for a movement that is adequate to the next phase, and has real historical potential. 

Kramer, Mark R. and Michael E. Porter. "Creating Share Value: How to reinvent capitalism -- and unleash a wave of innovation and growth," Harvard Business Review Jan-Feb 2011.


  1. Great analysis. What strikes me is that the "shared value" framework parallels key aspects of the Fordist-Keynesian synthesis that finally ended the Depression. Rather than a predatory model of business behavior based on increasing exploitation and foisting costs onto anyone who can't defend themselves, this is a vision of an organic connection between capital and society. If it wins out, we'll face the same basic problem: the fundamental hostility of interests between capital and human beings will be effectively hidden behind the seeming congruence of interests.

    If it wins out. It took a powerful workers movement and ultimately massive state coercion during WWII to bring the capitalists over to the Fordist solution. Now the state cowers at the thought of infringing corporate privileges, and popular pressure is nearly inconceivable, at least in the US.

  2. I agree, but I think we need to be careful about two things. First that, while it shares a basic outlook and "deal" quality with Fordism, there are fundamental differences. David Harvey argues that the nature of the "deal" of Fordism left definite groups excluded, ultimately laying some of the foundation for the civil rights movements. CSV wouldn't exclude around such biopolitical categories. I suspect any systematic exclusions it produced would be explained as inefficiencies that could be remedied by more careful cluster formation or a close attention to the value chain. The solution would then be deferred to the future, much the way neoliberal development discourse does. On top of this the patterns of exclusion would likely be economically motivated and in the ideal there would be exclusions where either shared value hadn't reached or for some reason could not reach. In the later case I can see there being a deepening consciousness that we as a society must choose between universal inclusion and a healthy economy. People might become very open about the fact that, "there are hard choices to make." That would be something new to both neoliberalism and Fordism.

    It's not completely new however, and I think that's something that will come out of this crisis no matter what the regime of accumulation is. There is a growing consensus, for example among state level politicians, that in the name of fiscal solvency some exclusion will have to happen. This is the axis that I think will divide society going forward. The options won't be "exclude" and "don't exclude" but "exclude ruthlessly" or "exclude sympathetically." The authoritarian capitalism that some talk about would be the former where militarized cities maintain order in hopelessly and eternally under served. CSV would be the later where we try to include more people into the economy but not as an end in itself, only as a means to a healthy economy. In this case a healthy economy will always, and most likely casually, be chosen over further inclusion when necessary.

    As for the note about social movements needing to make this happenm, I agree in principle, but we can't get too lost in romantic visions of sit down strikes and barricades. I called this "ecological" accumulation as a double entendre. It's both based on a ecological framework, and an attempt to overcome the ecological limits currently facing capitalism. In the next 20 years we will face real choices about whether we as a society want to try and overcome those limits (possibly with CSV), or deal with the consequences (through intense militarization). CSV seems so strongly in line with a lot of dominant liberal thinking that it's entirely possible it could become popular, in the right circles that is. It doesn't necessarily matter that there's little chance of it being adopted by our government or becoming the new political center any time soon. In its design it's about business practice. Convince enough oil companies that CSV is the only way to exist 20 years from now and you might be in for a very different future. The US political climate might not palate this, but it's corporate climate might.

    I think the better question is not how do we get this, but how can we put more potential into it if we do get it. What I mean by this is that a strong left presence in the next 10 years, while the next regime of accumulation takes hold, would change that regime in subtle if not essential ways. If we play our cards right, maybe this change could be such that a seed is planted for successful movements of overcoming 40 years from now. Of course this puts a lot of stake in our predictive power, but 40 years also isn't that long. Most of us will be around for it and can help dynamically shape how our predictions play out. ... wait now I'm excited.

  3. Unfortunately I don't see the "shared value" framework becoming general without robust state intervention to at least establish the conditions required for its widespread adoption. These experiments that Porter and Kramer have described actually do seem like a viable new approach to accumulation if pursued on a wide scale, but they won't remain viable unless a new overall framework comes into being - just as the experiments of Ford and "welfare capitalists" in the 1920s weren't really workable before WWII established a new socioeconomic foundation upon which their hegemony could be built. Private businesses as currently constituted within a competitive market framework simply don't have the coordinative capacity that would be required to change the terrain on which they operate. It's these kind of changes to the underlying conditions of accumulation that would be necessary before currently unproductive populations could be profitably drawn into the economy or large-scale investment in environmental innovation would make sense.

    We can see some of this kind of state intervention happening in China, but obviously not in the US. So maybe we should be thinking about a politics that would support a move toward "shared value" as a corporate strategy. If, that is, "shared value" really is the best option on offer.

  4. Just to revisit this discussion, as it has been brought up more recently, I am inclined to think that Earl may be right here, that CSV is ultimately about corporate practice, and that the momentum for it would come from the new opportunities for profit it makes available. If CSV can generate profits, it would be attractive to capital without the need for state intervention or mobilization. In light of the growing strength of anti-government sentiment in the U.S., the success of CSV might only be possible in the absence of state action. To speak directly to Walker's last comment, it may be precisely because of competition that something like CSV takes hold. But this would require the rate of profit from CSV activities to be higher than other potential uses for capital. In so far as one of the major features of the present crisis is that corporations are sitting on their cash, putting it in financial instruments, rather than investing in production, this would not seem to be the case. I am not clear if an adjustment in the rate of profit in the direction of CSV is something the markets will correct, the Left (as perverse as it sounds) could promote, or requires government intervention to create the incentives. So in other words, under current conditions, I don't know that we should be concerned with coordinative capacity of private businesses so much as the structural conditions that would create the rates of profit necessary to make CSV attractive.