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Consumers or citizens?

Finance | Sukhvinder Kaur-Stubbs | 28 Sep 2012

The ‘shareholder spring’ shows how active citizens can make markets less exploitative, says Sukhvinder Kaur-Stubbs.

Consumer protection and consumer rights are enshrined in law. They protect us from fraudulent activity and market failures.

Up to now, government has relied on price controls and redress mechanisms to protect consumers. Regulators are charged with overseeing each industry sector, to set and enforce standards on fair practices, good customer service and value for money.

Influencing markets

Increasingly though, government and consumer bodies are beginning to understand the power of consumers in influencing and shaping markets.

Last year’s white paper Better Choices: Better Deals, proposed that “confident, empowered consumers be able to choose the best deals, demand better products or services and resolve problems”. Technological progress is, of course, the main driver; in particular, internet and mobile phone applications enable large-scale and real-time responses to issues.

Paul Polman, CEO of Unilever, has stated that “if consumers can bring down a regime in egypt in 17 days, they can probably bring down a company in nanoseconds”. The growth of price-comparison websites, the popularity of rating schemes like tripadvisor, and feedback from interest groups like mumsnet.com, have all helped to liberate consumers.

Clearly, the interaction between consumers and providers is changing. Savvy customers can get better deals online, exploit price differentials and demand better service. but this still only applies to about 10 per cent of the public, and disadvantaged people are most at risk of being penalised by this development. There is, however, substantial scope for consumers to engage in collective action and insist on more ethical and sociallyresponsible standards.

There are notable examples. Earlier this year, the FT announced the ‘shareholder spring’. it reflected the power that shareholders wielded in curtailing the spiralling salaries of corporate CEOs who earn almost 200-times the average annual wage. The paper highlighted the ‘court of public opinion’ as vital to boardroom decision-making.

In addition, campaigns such as ‘Your Say on Pay’ encouraged the general public to think about where their pensions and savings were being held and to email their providers to take a stance. The general public, once placid and supplicant, had stirred and declared itself ‘enraged citizen’.

Despite the voluntary sector’s penchant for advocacy and rights, few major charities are overtly conspicuous in this arena. Perhaps the language of consumerism is off-putting and doesn’t sit well alongside our ethos of civil action.

Consumerism is based on transactions, while citizenship is about developing relationships with institutions. Indeed, the very term ‘consumer’ was invented by PR giant Edward Bernays, nephew of Sigmund Freud, as a way of expanding sales. It led to the development of marketing techniques to manipulate desires and encourage people to spend more.

Imperative

There is an imperative for charities to get involved and help transform the public from being passive consumers to more engaged citizens. Setting of corporate standards and maintaining ethical behaviour should not be left just to government and regulators.

Corporations need to become more porous and permeable to all their stakeholders, including the wider community. In turn, it behoves civil society to play a more dynamic role and demand accountability.

Here is an opportunity to shape markets so that they are less exploitative and fairer to the most vulnerable and disadvantaged.

Instead of patching up the failures of the market, voluntary action and citizenship could shore up the independence and self-determination of the most disadvantaged communities – reducing the potency of market forces to exploit and increase inequality.

Is it possible that the ‘shareholder spring’ could yet turn into a productive winter of discontent?

Sukhvinder Kaur-Stubbs is the chair of Volunteering England 

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