Academic journal article The American Journal of Economics and Sociology

The Business Community and the Poor: Rethinking Business Strategies and Social Policy

Academic journal article The American Journal of Economics and Sociology

The Business Community and the Poor: Rethinking Business Strategies and Social Policy

Article excerpt


Business and Poverty

FEW TOPICS have been so hotly debated as the relations between the business community and the poor. Analysis of the impact of private enterprise upon the poor is all too often confined to either 1) an exploitation model, where business greed causes poverty and 2) the flourishing economy model, where business prosperity is assumed to trickle down to the poor. While each model is accurate to some degree, neither effectively captures the range of business interactions with the poor which could serve as part of a broad base for a more comprehensive set of social policies to overcome poverty.

In what follows, the causes of poverty are briefly reviewed. Then, both the motives and forms of business interaction with the poor in the marketplace are analyzed. Finally, some suggestions for integrating business strategies with social policies to overcome poverty are presented.


The Causes of Poverty

DETERMINING THE EXTENT OF POVERTY has proven to be a statistical minefield. The extent of under reporting is not known. Partial studies abound. Comparisons across different studies, which employ different base years, methodologies, definitions and assumptions, has proven to be especially difficult. All of this is further complicated by the volatile politicization of the issues, which affects the objectivity of analytical frameworks used. Most observers seem to rely on the Bureau of the Census for macro-level domestic data (U.S. Bureau of the Census, 1991) and on organizations such as the World Bank (1991) for global data. Micro data is most often generated by grass roots organizations, social workers and surveys. At present, however, there is no broadly accepted portrait of poverty, either domestically or internationally.

The plight of the poor has long been associated with exploitive business practices as well as downturns in the business cycle. History attests that the direct link of poverty to business activities has a logical foundation. Indeed, in industries such as agriculture and textiles in the United States, for example, exploitation is still rampant (Belkin, 1990; Mayer and de Cordoba, 1991; Truchil, 1988; Wilkinson, 1990). Furthermore, in the current recession, the poor and unskilled have become more marginal than ever. As a theory of poverty, however, the economic thesis based on exploitation and business cycles has proven incomplete. A new emerging theory of poverty states that the opposite of poverty is not so much wealth, as power. Accordingly, much more attention is now being given to an array of individual and social factors: the cultural aspects of poverty, family structure, inner city isolation, welfare dependency, and race.

Economic aspects of poverty can be caused |wholly or partially~ by a number of business agents. First, individual business persons who abuse their roles can cause or exacerbate the plight of the poor (e.g., a particular business person who discriminates against minorities, swindles or bilks the elderly out of savings, etc.). Secondly, poverty may be linked to corporate policy which exploits poor and vulnerable people (e.g., wage policy which exploits cheap labor in sweatshops, price fixing, redlining, etc). Thirdly, poverty can also be caused by the impact business decisions have upon indirect stakeholders (e.g., relocating plants, depleting the ecological system, taking capital out of a poor area, etc.).

The broader social analysis of poverty highlights individual, political and cultural factors in addition to economic causes of poverty. In this broader definition, poverty may stem from a lack of education, a mentality of personal defeatism based on poor self-esteem, social discrimination and lack of opportunity, and cultural factors (to name just a few basic non-economic causes). There is, for example, a considerable body of well-researched opinion that links poverty directly to race (Schulman, 1990) as well as to gender (Northrup, 1990). …

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