A new article in The Washington Post traces the radical shift in America's business economics, from the formerly widespread belief that corporations had a strong duty to the community who buys their products to having no duty above maximizing profits. While many other companies have participated in this culture, IBM is used as a perfect example of how to ruin the culture at a corporation and the fallout that happens after for the broader community and economy.

Author Jia Lynn Yang traces the decline of corporate responsibility, as with most of the negative trends in economics in the United States, to the "Chicago School" of economics, led by economist Milton Friedman, who was the first in the mainstream press to argue that the only “social responsibility of business is to increase its profits.” The writings of the Chicago School and allies quickly became influential. Before the 1970s, it was widely agreed upon that the interests of corporations were closely tied to the interests of the communities they operated in. After Friedman and his allies came along, there was a sharp shift to the belief that a corporation's primary purpose is to maximize shareholder value, heavily influenced by the mainstream media's acceptance of the theories. This led to companies—with IBM leading the way—laying off workers, cutting benefits, keeping wages low, offshoring or threatening to offshore operations and increasingly eliminating the once-strong connection between companies and community responsibility.

“The shift in what employers think of as their role not just in the community, but [relative] to their workforce, is quite radical, and I think it has led to the last two jobless recoveries,” says Ron Hira, an associate professor of public policy at the Rochester Institute of Technology.

Yang says that despite the widespread belief to the contrary, there is no statute, state or national, that requires companies to place shareholder profits above corporate responsibility. And while the new philosophy has raised profits for a number of companies, Yang raises the question of whether or not those profits are sustainable long-term if companies keep shedding employees and lowering employee satisfaction. These trends almost guarantee weaker customer service and are likely to drive down profits in the long-term. IBM's recent struggles seem to be a shining example of these potential problems.

“This is a horrible business model,” says Lee Conrad, a coordinator for Alliance@IBM, a group that advocates for company employees. “It’s all about the EPS [earnings per share] and not about growing the business. The customers are being impacted by this when good employees are being cut. It’s just a mess.”

The article doesn't offer much in the way of solutions, but it does point out how this shift has been an important factor in the low job growth recovery the country is currently mired in.