Dr. Rado Bohinc: What is NEW SOCIAL RESPONSIBILITY? (upcoming)

Social responsibility is the way of governance (societal and corporate) that takes into consideration social consequences of governance decision as equally important as environmental and economic ones. Social responsibility is the responsibility for the social consequences of governance. The world permanent cyclical economic crisis calls for a thorough conceptual rethinking of how to reshape the existing global and societal and corporate governance foundations, systems and tools based, on legislative frameworks, which have dominated over the last decades .

The definition of social responsibility

Social responsibility is the way of governing a society or a corporation following social objectives in addition to the economic development on societal level or maximization of profit on corporate level.

Social responsibility is the way of governance (societal and corporate) that takes into consideration social consequences of governance decision as equally important as economic ones (capital gain). We understand that social implications of governance are as relevant as economic. Social responsibility in this respect is the responsibility for the social consequences of governance.

We understand social consequences broader as observance of human rights, ethical labour and employment practices, including corporate social responsibility (CSR) economic democracy (SE) and social economy (SE) issues. Besides, environmental consequences are to be taken into consideration, and the combating of bribery and corruption, however this aspects are not within the scope of our research in this paper.

The social dimensions of governance, as CSR, ED and SE, derive its philosophical roots in human ethic, equity and social welfare and its legal basis in general principles and constitutional provisions on human rights and freedoms, rule of law and. In addition, other stakeholders’ integration in the governance process contributes to more equitable relationships between capital and labour and better human resource added value. In addition, high level of human rights influences successful human resource management, especially in the area of motivation of employees.

New information & communications channels and therefore increasingly required higher skills and qualifications, shall more and more affect the balance between capital and labour as the two opponent governance foundations.  In a modern society, significant for huge developments of knowledge and technologies, both capital gain and human/social objectives should form the framework for democratic life and social welfare. 

Following this, not just capital, also labour should serve as legal foundation for governance and appropriation rights in a corporation. Such an approach requires fundamental changes in property rights theory and legal framework. In addition to private property additional types of property should be designed in legislative framework related to corporate and labour law, as for example: corporate ownership (employee owned corporations), cooperative ownership (cooperatives), social ownership (social undertakings)

The world permanent cyclical economic crisis calls for a thorough conceptual rethinking of how to reshape the existing global and especially EU societal and corporate governance foundations, systems and tools based, on legislative frameworks, which have dominated over the last decades. Thus, research should be focused to identify and try to propose measures overcome the growing disequilibrium of capital and labour in the context of the global cyclical crisis from the viewpoint of its roots.

Social responsibility is the way how members (individual or corporate) of the society or stakeholders of a corporation, should behave and perform their activities, as to maintain coexistence with other members of society and with society at large Social responsibility refers to all members of the society, be it individual or corporate. There is no difference in the duty of socially responsible behaviour. The difference appears, when we talk about social responsibility as an ethical commitment.

When talking about social responsibility on global level, every entity, doing activities in an intercourse with nature shall maintain balance between the economy and the ecosystems. In addition, a balance should be searched between the profit and social well fare or, to say broader, between economic and social development. A trade off shall be achieved between two desirable but incompatible features; or to be less ambitious, at least a compromise (in search of equilibrium).

Modern societies are in search of equilibrium between economic development and the welfare of the society and environment, however it all depends, how we define economic development; it cannot be a goal per se, rather than satisfying overall human objectives, including social and environmental in the sense of sustainable development and quality of life for all people.

The concept of the New social responsibility

New social responsibility is an innovative theoretical approach to societal and corporate governance. It aims to explain the concept of economic growth for all, to gradually overcome income and social inequalities in contemporary societies, through consistent legal frameworks covering concepts such as corporate social responsibility (CSR), economic democracy (ED – financial and structural participation) and social economy and social business initiative (SE, SBI). The new social responsibility concept in this book is limited to the mentioned three pillars (CSR, ED and SE). Accordingly, the scope of the research is limited to the same three issues; environmental CSR issues, bribery and corruption CSR aspects are not a part of the analysis in this book.

Social responsibility at societal level, also referred as country social responsibility, is the ability of an individual country’s legislation to ensure a high level of social wellbeing, economic and environmental sustainability, without further deepening income inequalities and violating human (economic and social) rights. Out of the three pillars of sustainability – economic, environmental, and social, this paper refers only to social, considering it, as equally important as economic and environmental. Social responsibility on corporate level is the attitude that creates opportunities to empower people to become main actors and beneficiaries in the enterprises they work.

The research for this book is a survey of historical and contemporary insights related to all three pillars of the New social responsibility, aiming to summarize some of the proposals for future legislative and policy steps and for future research of this important field. The main objective of the research is to justify and deliver some of the proposals for the necessary steps forward[1] in all three pillars composing the New social responsibility. It is a multidisciplinary analysis on contribution of CSR, SE and ED to the New Social Responsibility of the level of contemporary societies and coporate levels, showing the gap between political resolutions and declarations, on global, EU and national level and related legal framework, referring to. 

Assessment of the grounds, scope and level of implementation of the New social responsibility in real life is far not complete. More comprehensive model and research methodology is needed to define consistent and socially innovative model of a more socially sustainable, inclusive and therefore more efficient governance approaches on corporate, as well as on societal level.

This book aims to contribute to better explanations and understanding of the comcept of the New social responsibility and related role of the modern corporate and labour law in relation to contemporary trends and developments both at the country and corporate level of governance. It also aims to to show the fields where and how to improve the research on social responsibility (understood as described above) is grounded on the assumptions, described in the next paragraphs.

More social responsibility on societal and corporate level

The aimed contribution of this book is to generate new knowledge and to strengthen scientific base for more social responsibility on societal and corporate level. I attempt to develop also employee, in addition to capital corporate legislation, improving corporate governance, adjusting relationships between labor and capital and strengthening societal and corporate social responsibility as a conditio sine qua non for improving competitiveness, ensuring sustainable development and promoting growth for the whole society

The book creates and follows scientific base for policies aimed at efficient and socially responsible governance at the national and EU and corporate level. The idea is to advance theoretical and practical knowledge about durable foundations for successful economic recovery and growth through more effective and socially responsible ways of societal and corporate governance. In particular, it is aimed to contribute to a better understanding of crucial weaknesses in social responsibility at societal and corporate level, functioning and social responsible corporate governance in the private and public sector, the role of ethics and justice (equity), the rule of law affecting economic and social development. Hopefull this book will also recall and even provide provide for some new (unimplemented) ideas for fostering social market economy.

Both free market industrial capitalism and 20th-century socialism have failed to solve urgent problems of humanity like poverty, hunger, exploitation, economic oppression, sexism, racism, the destruction of natural resources and the absence of a truly participative democracy.[2]

In this book it is attempted to overcome important knowledge gaps in legal and socio-economic foundations regarding the objectives and interests in companies with respect to the possible legal, regulatory and other measures and incentives to secure long-term successful and competitive development. This new knowledge is essential to overcome the exclusivity of the principle of “maximizing the shareholder value” and excessive “financialization” of companies in order to put focus on a long-term horizon in terms of productivity growth, innovations and sustainable development, which should become the central characteristic of the innovative companies, based on knowledge. Main findings will help to ensure long-term interests of a wide range of stakeholders by means of establishing socially responsible corporate governance, develop social responsibility within enterprises, strengthen the responsibility of corporate governing and control bodies for the promotion of interests of all stakeholders during decision-making processes and pursuance of corporate goals.

Strengthening the social power and value of human labor

The vision of growth for the whole society (as one of the most important highlights from the strategy “EUROPE 2020”) raises important questions regarding property, corporate and social relations, and numerous other questions linked to the basics of socio-economic foundations of the modern society. Moreover, implementation should strengthen the engagement of science in the topical socio-economic and scientific debate on societal and corporate responsibility and on building Europe’s social market economy for the 21st century. Some of these issues are addressed in this book.

The fundamental scientific background in the research for this book, is based on the recognition of urgency of a legal system’s responses to changes in social relationships in a modern world. The scientific background of the proposed research project is based in the belief that human labour, especially highly skilled and creative labour, as well as the kind bringing forth competitive advantages and added value, demands a rearrangement of its position within the system, so that its social power and value may be strengthened

Significant aspect of this book research is derived from the thesis that economic and related social organization of human society in the 21st century, still follows the paradigm of classical capitalism of 19th and 20th century, where capital was considered to be the only production factor justifying it as an exclusive tool for determination appropriation and governance rights. This anachronism has been resulting to tensions and even distortions in the structure of the modern society, significant for predominant contribution of innovations and qualified human skills to added value, known today as world economic and financial crisis. Adaptation of classical tools of capitalism is more than needed; one of the issues researched in this book is whether the transformation of property relations can be achieved in modern times by involving other factors of production (as for ex. work rather than capital) as a foundation for appropriation. Such a transformation would add new incentives to the contemporary economic paradigm and society as a whole.

Diversification of uniform private property to several types of property plurality of ownership structures, various (mutual, close end and open end, etc.) funds, ESOPs, employees, small shareholders…) and the establishment of development alliances of various stakeholders, are analyzed. Analysis is also devoted to the possibilities of alternative ownership structures: to cooperatives, social enterprises, labor owned enterprises and others. Special focus is put on institutions of industrial democracy: employees’ participation in profit sharing, participation of employees in co-decision making processes.

Overcoming the anachronism that the capital is the exclusive legal basis for appropriation

The present economic organization of the society is based upon the principle of capital rather than labor as the legal basis for appropriation of value added and governance; distribution of profit is governed under the principle of proportionality (there are some exceptions in the profit sharing schemes that some regulations permit, but rarely stimulate). Capital is also the basis for the governance rights in the corporation: decision making is organized based upon invested capital, according to principle: one share, one vote rather than one man one vote. Labor-based management is an exception, restricted to minority representation in rare legislations.

In contemporary societies, capital hires and fires labor, when/if needed and never vice versa. The understanding of property rights as the owners’ absolute right, disregarding social, economical and ecological responsibility is at least old fashioned, if not out of date, in the times of information, communication and innovation society in which high-qualified labor is the key value added factor. The economic and related social organization of human society in the 21.st century, still follows the paradigm of classical capitalism of 19 and 20th century, where capital was considered to be the only production factor justifying it as an exclusive tool for determination appropriation and voting rights.

This anachronism has been resulting to tensions and even distortions in the structure of the modern society, significant for predominant contribution of innovations and qualified human skills to added value, known today as world economic and financial crisis.

Socially responsible, successful and efficient public and corporate governance is a prerequisite for more competitive, transparent and democratic societies[3]. In this book some of the literature and the current jurisprudence and present some ideas on dilemmas and challenges of the modern corporate law in relation with developments and trends in property rights theory is analysed. Particular attention is paid to good practice examples of some leading and most successful European and world corporations, related to corporate governance and corporate social responsibility.

What is intended to provoke whith this book, is to encourage the reflection on the contemporary apporoaches in societal and corporate governance, considering, that the cyclical word financial and economic crisis is a proof of inefficiency and ineffectiveness of the existing prevailing property rights governance principles.

We need alternative models for more inclusive and efficient governance approaches

In this book there are some proposals for so called alternative models for more inclusive and, for this reason, more efficient governance approaches on societal, as well as on corporate level are researched and proposed, like: transformation of property rights, mandatory corporate social responsibility and profit sharing with employees, employee stock ownership and related directors duties, cooperative, employee and social enterprises, structural, financial employee participation and some more.

In modern society and corporation, significant for huge developments of information & comunicartions and other techologies, both capital gain and human/social aspects should form the framework for democratic life and social welfare. Technological aspects of the societal and corporate developments should be reflected as an integral part of the analysys; new information & communications channels affect the balance between the two opponent principles of the modern societies: capital and labour.

The future research of the New social responsibility

The future research should cover corporate law topics like corporate social responsibility, related to director’s duties and responsibilities (liabilities), conflicts of directors’ interests with corporate and social interests, diversity in composition of corporate boards including gender underrepresentation, social economy business organization like cooperatives, mutuals, employee and social enterprises, employee share ownership, structural and financial employee participation. The research should be supported by case and comparative studies of selected counties respective legislation and by case studies of governance practices of a number of selected corporations.

Development of an original and innovative methodology and set of indicators to define, asses and evaluate countries’ the New Social Responsibility related legal framework, focusing on the selected specific legislative fields of country’s SRG and development of the new, innovative SRG Index[4], as the proposal for the EC initiative on this field, would more than welcome for the future.

Corporate case studies of the CSR and other SRG (ED, SE) related strategies, bylaws, operations and outcomes of a number of multinational corporations, selected by different industrial branches and sectors (public and private), aiming to asses and evaluate the progress and the achieved results and scope of the voluntary CSR concept are necessary to prove and gradually overcome the gap between the declarations, wishful recommendations and reality.

In addition, country case studies, assessment of SRG (CSR, ED, SE) related legal framework focusing on corporate and labour (social) law of selected EU and non EU countries, as a research basis to develop the methodology for the definition and the evaluation of the the New Social Responsibility legal system in an individual country and comparatively would be indispensable for thorough and clear picture of the grounds for where we are and how to get out of this.


The roots of the crisis of global capitalism

The global and EU policies do not show interest in the conceptual changes in social and economic order, and the necessary systemic correction of modern capitalism. Temporary exits, accumulate imbalances are only cause delays. We need proposals that are more radical to transform the market economy mechanisms.

The biggest challenge for human society is how to redefine economic, financial, social and other legal rules in order to work more inclusive and fairer. The current period should be the period of search for new answers to questions of economic and public order and governance in the modern world.

Only the corrections to the existing regime, through enhanced international financial regulation and supervision, cannot provide an exit from the financial and economic crisis, but they can only patch and postpone the accumulated problems. For a long-term exit from the crisis, the basic conceptual and institutional frameworks of a modern capitalist society must be tackled, preventing the long-term elimination of economic and social imbalances.

Fundamental changes are needed in the regulation of social and corporate governance relationships by integrating work as capital of an equivalent foundation of corporate governance and by involving civil society in contemporary parliamentarism.

Operation instead of cosmetics

Cyclical repetition of the crisis is proof of the abundance of existing approaches for long-term maintenance of the economic balance in the unchanged frameworks of corporate and social (governing) governance.

The current period of the current temporarily managed financial crisis must therefore be the period of search for new answers to questions of economic and public order and governance in the modern world. Only the cosmetic renovation of the existing arrangement can not provide an exit from a continuous crisis, but it can only patch some of the accumulated problems and, in the best case, reset the real crisis to the future. For the long-term exit from the crisis, it is necessary to tackle those fundamental conceptual and institutional obstacles of a modern capitalist society that prevent the long-term elimination of the economic and structural imbalances of the world economy.

The future of the world is to establish competitive, knowledge-based societies that maintain and strengthen a high degree of cohesiveness and inclusiveness; the precondition for the development in this direction is the fundamental changes in the regulation of corporate and social governance relationships by integrating labor as the capital equivalent foundation of corporate appropriation and governance.

Wealth and income inequality in the global society increases in the last decades

It is especially visible at the last centile of income distribution.  The world’s seemingly permanent cyclical economic crises, political instability, social inequalities, existential distress and uncontrolled migrations, massive violation of human rights, call for a thorough conceptual rethinking of how to reshape the existing global, capital-based societal and corporate governance foundations which have remained unchanged over the last centuries.

The promise of digital technology, responsible for huge developments of knowledge and skill, is undermined by those foundations. Instead of offering a breakthrough the uncritical adoption of existing ownership arrangements surrounding these technologies compounds the problem of economic inequality.[5]

Conceptualizing workers, as opposed to owners, as hired (rented) workforce instead of the enterprise members

Conceptualizing workers in the enterprises, as opposed to owners, as hired (rented) workforce, to be paid at current market price, instead of the enterprise members, sharing the joint risks and successes of the enterprise, creates division between greatest part of the people who are rented, hired, or employed, and those who directly or indirectly are their ’employers[6]. This leads to understanding, that the employees are rented people and their wage incomes are the rental payments. From that starting point follows the fundamental division of people to those who are owners (employers) and those who are rented workers (employees). To be more specific, existing corporate governance arrangements create a division between a large percentage of people who are “rented” and a small percentage of people who serve as employers and owners.

In the industrialized democracies, self-governance is touted as a fundamental human right in the overall political sphere while ‘work’ (i.e., what most people do all day long) is not even in theory organized on the basis of democratic self-governance. People at work are, in general, rented people, so only the employer/owners have decision-making power—as if human rights to self-governance somehow stopped at the factory gates or office door[7].

The digitalized labor market: appropriate skills, social protection and diversity

Appropriate skills, social protection and diversity in the workplace will all be crucial for the future, as will social dialogue about the introduction of new technologies. The digital transition should be supported by more robust social policies. Workers, companies and the public alike should benefit from the huge potential offered by new technologies. Digitalisation should not result in winners and losers. It should be possible for everybody to benefit[8].

One of the top priorities is upskilling workers, i.e. ensuring that they have the appropriate skills for the future, as the vast majority of jobs will be affected by digitalisation. All sectors will need workers not only with high levels of cognitive and creative skills but also with managerial and communication skills and the ability to learn. Currently, some 22% of workers in the EU may not have the right digital skills to keep up with developments in their jobs. Particular attention should be paid to workers in low-skilled occupations at high risk of automation, transformation, replacement or even disappearance[9].

Another priority is to bolster social security systems, which should be of high quality and financially viable to guarantee protection for all workers, including those in the flexible and atypical forms of employment that are now on the rise. Investment in social policies currently accounts for only 0.3% of total public expenditure in the EU, which should be beefed up[10].

Diversity in the workplace is also a top EU objective. For example, most jobs in the IT sector and other well-paid and highly recognised fields are currently predominantly occupied by men. This needs to change if we want to avoid inequalities in the future world of work[11].

The huge societal impacts of technological development

The impact of new technologically advanced products and services, particularly the information – communication technology and transport on the revaluation of values, human behaviour, cultural development, on the developmental policies and on the raising the people’s awareness on social inequalities is huge. It generates evaluation of social criticism, conflicts and engagement aiming to overcoming the traditional exploitative society.

Capital based determination of democracy, as the mode of governing at the global level and at society level and at the level of corporations is relevant as well; explaining of modern capitalist democracy on private property rights protection not recognizing the elementary human right to enjoy the fruits of ones’ labour.

New ICT possibilities of direct democracy in terms of new opportunities of broader public influence on the ruling political class creates ground for the new “tools of postmodern democracy”. This is a hope, to gradually prevent continuous global capitalism self-destruction, based on increased profound differences between the wealthiest minority and growing poverty.

In the industrialized democracies, democratic self-governance is touted as a fundamental human right in the overall political sphere while ‘work’ (i.e., what most people do all day long) is not even in theory organized on the basis of democratic self-governance. People at work are, in general, rented people, so only the employer/owners have decision-making power—as if human rights to self-governance somehow stopped at the factory gates or office door[12].

A huge gap between political and legal acts and the actual situation in real life

The world faces a huge gap between normative and real, between political and legal acts stipulating to individuals guarantees, freedoms and rights on one hand and the actual situation in real life on the other, especially between the normative scope of human rights law and the effective power of property rights. In a globalized (cross-border, multi-national) economy standards of human (mainly economic and social) rights protection are even lower in countries with low GDP/c.

The non-binding recommendations of international organizations (UN, ILO, OECD, EU…) referring to human rights, appear as too weak legal tool, to sufficiently confront the comprehensive and very powerful property rights legal protection.

The response: to empower employees in relation to the owners

The scientific response to the above challenges is increasing and deepening scientific research to find ways to empower employees in relation to the owners, on the enterprise level, by developing new appropriation and governance concepts, by increasing employee ownership and other ED and SE  approaches—which in turn will impact in a natural way to more social responsibility[13] on societal and corporate level. Combining the roles of owners and employees, emphasizes increasing people’s responsible agency, rather than to displace the people’s agency and capacity with governmental programs for the people.[14]

In this book we demonstrate the fields and approaches of necessary future research that could lead to the consistent use of proper legal tools, which impose new, advanced theoretical concepts in the relationships between owners and workers, which can:

– contribute substantially to overcoming income inequalities and to the greater efficiency in the use of human resources both on the basis of a fairer distribution of the created added value[15], and labour participation in governance;

-effectively protect the property and human rights simultaneously; therefore, preventing distressful social environment and poverty, violation of human rights, and human dignity unworthy position of workers.


No ground for social responsibility in the existing socioeconmic concepts

The concepts elaborated in this book are ground breaking compared to the Smith’s idea on invisible hand and the doctrine of laissez-faire where no social responsibility aspect could be found whatsoever. The same stays for the concept of economic liberalism (Freedman’s Capitalism and freedom) swearing that maximization of profits is the most fundamental and ultimate corporate responsibility and that social issues are not the concern of business people (the business of business is business).[17]  

Obviously there is no social responsibility neither in societal nor in corporate level in such an approach also in classical liberalism („night-watchman state‟), which hasmuch common ground with economic liberalism and neoliberalism[18]. In modern liberalism, the state plays a significant role in the economy, but there is still no room for social responsibility on neither on state nor on corporate level.

Neoliberalism eliminates the concept of “the public good”, replacing it with “individual responsibility.” Obviously, there is no room for social responsibility; it is invented moe or less as an excuse for the social averse economic policy, as neoliberalism.

Social responsibility as an ethical approach

People are bound to behave ethically; corporations behave ethically due to marketing reasons (consumers’ reputation). Hence, we can talk about individual social responsibility as an ethical issue, however we can talk about corporate social responsibility as an ethical issue only in the context of their consumer orientation, respecting ethical codes, that they may have approved by themselves or by associations they are a part of.

Originally social responsibility, both individual and corporate, is voluntary; it is a matter of social justice as an ethical value, therefore above and beyond legal responsibility. It involves an idea that corporate and individual persons will voluntary follow the recommendations referring to social responsibility eliminating corrupt, unsocial, sweatshop, irresponsible or unethical behaviour that might bring harm to the community, its people, to employees, or the environment. Nevertheless, to behave and perform in accordance with standards and principles (codes) of social responsibility, is not their legal duty; likewise, social responsibility is also not the legal duty of corporate directors, as it is to act in the best corporate interests and follow the benefits of owners, and maximizing return on investments.

Social responsibility is therefore an ethical approach, applicable originally to human beings and societies, also applied to corporate entities through the motive of corporate reputation. Socially responsible member of a society (group) has an ethical obligation to act for the benefit of society at large, or at least not to harm other participants.

Social responsibility should also be ethical framework (limitation) for the implementation of individual or corporate property rights. Since ethical standards are not legal provisions (compulsory and enforceable) and therefore not legally bound and enforced, the consequences of violation and disrespect are ethical sanctions only; legal sanctions for violation of ethical standards are with some exceptions, generally not applied (imposed).

Corporate entities can ethically be sanctioned, when violating ethical principles and codes of ethics only by their consumers and costumers. Hence, corporate social responsibility as an ethical (voluntary) approach is legally not enforceable.

A code of ethics serves as a set of principles of conduct on a corporate level; however social responsibility codes of ethic are unfortunately rare in practice. A code is an ethical guideline for corporate decision making and behaviour. The purpose of the code is to provide with and publicly declare guidelines for making ethical choices in the conduct of their work. To respect the code is a matter of professional integrity is the cornerstone of corporate credibility and reputation among consumers. It is highly recommended, that members of corporate boards adopt a social responsibility code of ethics to share a dedication of a corporation to respective ethical behaviour principles and standards of practice in day to day and strategic business decisions.

The question arises here is, whether so called self-regulation, as corporate by-laws, strategies and codes of ethic, rather than market or government mechanisms for implementation of social responsibility, are appropriate mechanism to resolve problems related to social responsibility? The answer, shown by the results of implementation of this ideas, is obviously not.

Why then social responsibility in general and corporate are still under voluntary approach? The answer lies in prevailing neo liberal economic system and policies (see above on neo – liberalism), in most of the developed countries and as the consequence of that, public outcry, that introduction of social responsibility as a legal concept threatens profit maximization and therefore the well-being of the shareholders and preservation of their fundamental property rights. According to this position, corporate social responsibility (CSR) distracts from the fundamental economic role of businesses.  This shows that recommendations for voluntary implementation of social responsibility are peculiar hypocrisy.

Social responsibility as legally binding approach

Depending on the countries’ legal system, social responsibility in some respects may become a legal obligation. To what extent, social responsibility is ethical framework and at what point it becomes legally binding provision depends on, to what level legal system is sensitive on social and generally human values; in real life it has predominantly to do with the ideology of political parties on power.

The more in a certain country, human values as solidarity, equity, human dignity and other human (mostly economic and social) rights, are respected the higher this country is in a human value scale and the more sensitive legal system shall be and therefore codify social responsibility as legally binding behaviour.

And vice versa, countries, whose societies are based on individualism, unlimited and uncontrolled competition and egoism, will not codify social responsibility as an ingredient of its economic and legal system. Those societies will declare social responsibility as something entities are recommended to follow, but nothing (legally) harmful really happens to them if they refuse to act so.

Depending on legal framework can social responsibility be passive (duty of avoiding engaging in socially or environmentally harmful acts), or active (duty to perform prescribed activities that directly advance social and environmental goals). It is up to legislation, how to define socially harmful acts. For environmentally harmful acts, it is internationally agreed, however not always respected.

Accountability vs. Responsibility

It is plenty of possible misunderstanding when we use the word responsibility as non-legal term. It is possible to have responsibility without accountability, or accountability without responsibility.

Accountability can be described as answerability. Having accountability means a necessity and expectation to explain one’s actions for whatever being accountable for.

Responsibility, on the other hand, is the position of being completely in charge of something. Upon the person who is responsible for something depends, whether that thing succeeds or fails. Responsibility refer to “being in charge”, however responsibility does not necessarily mean accountability. Responsible person in this meaning is not necessary accountable. It depends on legal rules. One of the he main differences between responsibility and accountability is therefore that accountability is something you hold a person to only after a task is done or not done. Responsibility can be before and/or after a task.

Responsibility has alternate meanings which are themselves distinct, leading to impresion in its use. The definition of responsibility specifically excludes uses that refer to the reliability of a person, the moral/ethical quality of behaviours, or accountability. Responsibility locates causality for choices. Accountability is the ability to report accurately and neutrally on a sequence of choices.[19]

Talking about social responsibility it is thus one’s responsibility for social consequences of its action, but the same person need not to be accountable, meaning bearing the burden of social irresponsibility. A socially irresponsible corporation is thus not necessarily accountable.

Modern transformation of property relations 

The question is, whether efficient and democratic corporate governance requires a unique, absolute, capital based property right, as claimed by the neoclassical theory, or a division of this right into a bunch of rights allotted to different stakeholders within the corporation is better solution?

One of the crucial issues researched in this book is, whether the transformation of property relations, the process which has been taking place in the history even before the emergence of Roman law, can be achieved in modern times, by involving other factors of production (as for example labor, rather than just capital) as a foundation for appropriation and corporate governance.

Such a transformation would change the contemporary economic paradigm, based on capital as an exclusive foundation for appropriation and corporate governance substantially and also would change the society as a whole.

The continuation of the historical process of transformation of property rights is therefore condicio sine qua non for the reforms needed to overcome the existing blocades, known as world economic and financial crisiss. What I want to prove is that transformation of property rights is needed for the implementation of democratic, human rights based and in addition innovative, knowledge based and efficient social (public) and corporate governance as a prerequisite of a modern society.

There have been a number of adaptation of basic property right’s principles so far in the history, but none of them succeeded to change dramatically the basic appropriation and corporate governance principle, based upon property (in modern times: capital) so far. Labor and innovations were never recognized as an independent factor of production but treated rather as an expense, needed to be paid in the course of production.

What I want to do in this research,  is to review the attempts in the history to transform the basic property (appropriation) principle from Roman law on property right as an absolute right, to modern concepts of property as a social function (property with economic, societal and ecological restrictions and limitations) rather than substitution of the basic appropriation principle, and predict if this process is going to continue in the future and if, generated by what driving forces and what legal tools.

The Implementation of the social responsibility concept

The implementation of the Social responsibility concept, measured by its contribution to achieving the economic, social and environmental goals of the EU, as framed for example for the EU in the Lisbon and Gothenburg Agendas, is poor. The main reason for the poor implementation is that SRCG approach is not legally binding and that it has not entered yet to EU and national company and labour legislations.

The implementation of CSR, ED and SE varies enormously among countries al over the world, including EU.

Due to its voluntary concept, social responsibility has always been politically “wishful” orientation, never seriously tried to be enforced (with rare exceptions) by compulsory legal rules[20]. The EC in 2012 indeed revised the definition of corporate social responsibility, thereby transforming it into a responsibility of enterprises with regard to their impact on society. However, the new definition was neither implemented in corporate or social legislation nor in the EU binding rules.

As for ED and SE the achievement diverse from country to country, depending on more or less supportive legislation and national development policies. Like CSR, ED and SE are voluntary concepts as well with very rare exceptions in a few countries.

In order to foster the implementation of social responsibility concept in the modern world, readaptation of classical corporate tools of capitalism is more than needed in the following directions’ that are researched over this book:

 – modernization of corporate law, related to employee membership corporate forms, liability of directors, towards other than capital stakeholders, the position of minority share holders, directos’ duties, related to conflict of interest, related party transactions, disinterested directors, gender composition, diversity in corporate boards and so on…

– more comprehensive implementation of the principles of corporate social responsibility through the adaptation of relevant parts of corporate legislation, stakeholders partnerships (greement) and corprations,

– mandatory profit sharing schemes in certain types of corporations (with high skilled labor structure) and/or for high skilled and innovative individuals; the labor principle of profit distribution should be followed,

– mandatory employee ownership plans in certain types of corporations following the labor principle of differed profit distribution and other forms of distribution of shares out a part of a profit,

– mandatory participation of employee representatives in corporate bodies in one and two tier system of corporate governance,

– improvements needed to stimulate the establishment of social enterprises as a type of organization, whose main objective is to have a social impact rather than make a profit for their owners or shareholders, which uses its profits primarily to achieve social objectives, being managed by involving employees, consumers and stakeholders affected by its commercial activities.

-legislative improvements needed to facilitate establishment of cooperatives and labour – managed companies in which the principle of one man one vote is introduced,

-improved policy and legislative framework for different other forms of social economy, like social undertakings, cooperatives, private institutions, professional corporations, etc

[1] COMMUNICATION on CSR 2011: Many companies in the EU have not yet fully integrated social and environmental concerns into their operations and core strategy. Accusations persist of the involvement of a small minority of European enterprises in human rights harm and failure to respect core labour standards. Only 15 out of 27 EU Member States have national policy frameworks to promote CSR

[2]Heinz Dieterich: „Der Sozialismus des 21. Jahrhunderts – Wirtschaft, Gesellschaft und Demokratie nach dem globalen Kapitalismus“, Einleitung, Socialism of the 21st Century – Economy, Society, and Democracy in the era of global Capitalism, Introduction

[3] See the results of the two Fundamental research projects of the ARRS (Slovenian Research Agency):

1. Legal and economic aspects of corporate governance in the public and private sector as a tool for overcoming economic and development crisis” (principal: dr. Rado Bohinc), 2011-2014;

2.Corporae social responsibility as a platform for the new  social development paradigm (principal: dr. Rado Bohinc (ongoing 2014-2017)

[4] To measure the level of sustainability, the Sustainable Society Index, SSI, has been developed by Sustainable Society Foundation in 2006. The framework of the SSI differs from this proposal substantially for it comprises all three wellbeing dimensions human, environmental and economic.


[5] Erik Brynjolfsson and Andrew McAfee The Second Machine Age, WW Norton & Co, 2016

[6] Ellerman, David in conversation with The Straddler, winter2017, David Ellerman, Column: The case for employee-owned companies. Economy Nov 20, 2015 2:20 PM EDT, Ellerman, David. 2015. “On the Renting of Persons: The Neo-Abolitionist Case Against Today’s Peculiar Institution.” Economic Thought 4 (1): 1–20, p. 9.

[7] Ellerman, David, above, ref. 2

[8] https://www.eesc.europa.eu/en/news-media/news/digital-transformation-should-be-socially-and-ethically-responsible

[9] Ibidem

[10] Ibidem

[11] Ibidem

[12] Ellerman, David, above, ref. 2

[13] There is a natural connection between the form of enterprise ownership and social responsibility. Absentee ownership fosters social irresponsibility since the decision-makers are far removed from the impact of their decisions. No one wants to ‘foul their own nest’ so local owners, e.g., employees and local stakeholders, will tend to automatically lead to more socially responsible decision-making.

[14] Ellerman, David, above ref. 2

[15] OECD definition of Value added by activity: Value added reflects the contribution of labour and capital to production.


[16] More comprehensive on theoretical background in the chapter on property rights

[17] Friedman, M. (1962). Capitalism and freedom. Chicago, IL: University of Chicago Press, held,

[18] Ibidem

[19] Accountability vs Responsibility, Success Culture Beliefs & Models, copyright 1999, 2002, Planned Success Institute