The Chair of Business Theory Research Seminar "Business, Responsibility and Civilization

Excerpts from the February 10, 2021 seminar

"Powerful and fragile, the company in democracy"

Alain Schnapper, an engineer from the Ecole des Mines de Paris, has worked for 30 years in consulting, industry and distribution. Since 2018, he mixes consulting activities by being associated with the chair "Theory of the Firm - Governance Models & Collective Creation" of MINES ParisTech PSL. He is a member of the board of the Community of Companies with a Mission. In 2020, he published, with Dominique Schnapper, Puissante et fragile, l'entreprise en démocratie , l’entreprise en démocratie, (Odile Jacob).

Alain Schnapper considers that the reflection on the company cannot be decoupled from the analysis of the society in which it is immersed. However, the technical and scientific innovations brought about by companies since the end of the 19th century have gone hand in hand with a profound evolution of democratic societies. By pushing individualism or the spirit of equality to the extreme, don't the transformations of today's democracies risk calling into question the very functioning of companies? Conversely, how can companies respond to the expectations that citizens have of them with regard to social and environmental issues? How can companies and states combine their actions to rebuild the nature of the social contract that has bound them together within the welfare state in order to face the challenges of the 21st century?

We note that companies have adapted to the "demands" of society, including in their managerial approaches. Thus, the integration of concerns about safety in the workplace, sustainable development and then CSR can be seen as ways in which companies have chosen to respond to the more or less formally expressed expectations of society towards them. Companies develop in a very specific social environment linked to democratic functioning. What is special about the fact that we are in democratic societies compared to others in the world?

• Companies are not democratic institutions in the sense of organizing power and decision-making. Today, even if there is a "democratic style" in companies because the form of relations is much more egalitarian than before and the prerogatives of the small boss are much less accepted, the company is an organization which implies forms of authorities resulting from the rational obligation of its tasks. In its principle, this idea clashes with that of the autonomy of the citizen in democracy and the fundamental equality that is at the very heart of democracy. There is a form of tension between the fact that we are all citizens and therefore free and equal in law, whereas in the company we are employees and this organization is not in conformity with this principle at the base of democracy.
• The citizen legitimately aspires to freedom and equality, the two founding principles of the democratic system. These aspirations have no limit in themselves. Alexis Tocqueville reminded us that the more egalitarian societies are, the less tolerable the slightest inequality is. Freedom gives the individual a form of liberty in relation to the social determinisms that guided his way of being a few decades ago. Fifty years ago, the individual was more determined by family situation, church and school attended, place of birth or union membership. This aspiration to freedom allows the individual to free himself from his social determinisms. On the other hand, he is put in front of the responsibility to define himself his own social identity. Thus the social identity of each individual is more uncertain, but each individual is more responsible for his or her own failures and successes. This search for identity also translates into a form of expectation in relation to one's professional activity, mainly in one's situation as an employee, to seek a form of meaning in one's relationship with the company. The employees' search for meaning refers to this form of indecision or uncertainty which is linked to the very functioning of democracy. This freedom also leads to the use of criticism, which is encouraged by this form of freedom. Each person is encouraged to manifest his or her own freedom, in particular to judge for him or herself the norms that are applied. This is what is at the origin of a generalized criticism of institutions. It is a generalized criticism of institutions and the company does not escape it.  The exercise of authority is experienced as more and more complicated both by the people who are subject to it and by the people who are in a position to exercise it. This internal pressure is caused by the fact that citizens in a democracy are encouraged to exercise their free will and to criticize the institutions with which they interact.

Until the 1980s, the company had found its place in the political project of Western democratic societies, which could be summarized as a social and democratic political project.  After the Second World War, the political project of Western societies was to oppose the Soviet communist project and to propose a competing alternative project by combining, on the one hand, a level of prosperity for the populations equal to or higher than the level of prosperity that the socialist model in the Bolshevik sense claimed to lead, while preserving, on the other hand, public freedoms. This project was based on a form of social contract for companies, whereby the state created the conditions for companies to develop and create wealth. In return, they assumed the protection of the population, the redistribution of wealth and the reduction of inequalities. Obviously, all this worked with social conflicts in companies and the role of trade unions, which varied from one country to another, but nevertheless this project found different forms in different countries. Nevertheless, this contract was common to all Western democracies and was symbolically materialized in France by the declarations of the National Council of the Resistance and the organization of social security. In a more global way, the declaration of Philadelphia launched the International Labour Office whose explicit project was to bypass economic and social performance. This project was to operate in varying forms in Northern Europe, the Scandinavian countries and France, and was to take on a form of social democracy in different countries. Analyses of the different forms of social democracy. This political project, which makes it possible to combine public freedoms and prosperity, has been well established in all Western countries. At the end of the 1980s, this political project was weakened by the collapse of the communist bloc and the phenomena of financialization and globalization. This was concretely translated by the weakening of the wage-earner, which was at the heart of the social-democratic model. Thus, social status was given by work and the distribution medium was indeed the wage-earner. However, since the end of the 1980s, the phenomena of financialization have led to corporate strategies formulated under the term of refocusing on the core business. Companies have specialized in the most lucrative fields and in the highest value-added businesses. Companies have relied on specialized service providers who themselves work with flexible service providers. This system generates self-employment mechanisms that manage more flexibility. In general, this weakening of the social-democratic project has been both political on the one hand and reinforced by forms of partial destructuring of the workforce on the other. The democratic functioning of society itself is potentially under pressure in the sense that a society that destructures to the point that companies constituting islands of successful prosperity with hyper-protected and ultra-qualified employees prosper in the midst of an ocean of poverty and a disappearance of the middle classes. This type of society that exists in Latin America is incompatible with a democratic functioning. This is why defending and reforming the company is a fight for democracy for Western social democrats. It must be defended because it is obviously necessary to give the States the means to play their roles in terms of social justice, of protection of a general interest, even if we can put quotation marks around this notion, but we need the company to bring the indispensable innovations to take up the social and environmental challenges of the 19th century.

Photo caption: Roosevelt and Phelan signing the Declaration of Philadelphia in 1944