82. Cultural Contradictions of Business Legitimacy

The legitimacy of business has been influenced by two parallel developments in the second half of the twentieth century. The first is the economic development of increasing welfare during the first decades after WWII. This so-called Golden Age lasted until the early 1970s and was followed by the rise of a globalized economic system. The second is the cultural development of anti-capitalist ideals during the 1960s and 1970s student movement. The students of the New Left protested against consumer society and promoted anti-capitalist intellectual ideals. These ideals have penetrated society at a cultural level, but not at the level of citizens’ practical lives.

This chapter distinguishes formal from informal legitimacy as characterizing two realms of society: one of practical lives where citizens support the liberal economy and the other of culture characterized by critical attitudes toward business and consumerism. R.E. Freeman’s invention of the stakeholder concept in 1983 illustrates the attempts of business to communicate with an increasingly critical public. However, this attempt is met with resistance because the New Left has set a radical polarity between the business elites and the middle and working classes, thus undermining the possibility of dialogue across social and economic divisions. This social division has deepened owing to business taking advantage of (and occasionally abusing) the increasing freedom to operate internationally and the wages for western working and middle classes stagnating due to the increase in global labor supply. Recent political developments should serve as a warning of potential consequences of increasing social division and discourage businesspeople from misconduct in return for a wider cultural acceptance of the connection between consumer behavior and business opportunities.