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EM. 213.32 6 Winter 2013. ch 5 text. your thoughts. The Corporation limited-liability moral agency corporate responsibility broadening responsibility institutionalizing ethics. Limited Liability. What is it? Why does this exist? What effect does it have?. enthusiasm. reluctance.

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213 32 6 winter 2013

EM

213.32

6

Winter 2013


Ch 5 text

ch 5 text

your thoughts

  • The Corporation

    • limited-liability

    • moral agency

    • corporate responsibility

    • broadening responsibility

    • institutionalizing ethics


Limited liability

Limited Liability

  • What is it?

  • Why does this exist?

  • What effect does it have?

enthusiasm

reluctance


Moral agency

Moral Agency

  • What does this mean?

  • What is the problem?


Moral agency1

Moral Agency

  • What is “moral responsibility?”

    • being able to make moral decisions

    • being held accountable

      • for past actions

      • for care & treatment of others

        • the obligations of a role in a society


Moral agency2

Moral Agency

  • Can corporations make decisions?

    • Are moral decisions different than others?


Moral agency3

Moral Agency

YOU.

BOUGHT 228 MILLION POUNDS OF RESPONSIBLY

GROWN, ETHICALLY TRADE COFFEE LAST YEAR

Everything we do, you do. You stop by for a coffee.

And just by doing that, you let Starbucks buy more

coffee from farmers who are good to their workers

community and planet. It’s using our size for good.

And you make it all possible Well done, you.


Moral agency4

Moral Agency

  • vanishing individual responsibility

    • individuals

      • refuse

    • groups

      • diffuse

    • structure gives distance

      • investorboard

      • managerstaff


Corporate responsibility

Corporate Responsibility

  • arguments

    • utilitarian

    • rights


Corporate responsibility1

Corporate Responsibility

  • only profit maximization

    • or

  • social responsibility

“the social contract”

“externalities”


Corporate responsibility2

Corporate Responsibility

  • “the promissory relationship”

    • what does it

      • require

      • forbid

      • permit


Broadening responsibility

Broadening Responsibility

  • the arguments against

    • invisible-hand

    • role-of-government

    • inept-custodian

    • materialization-of-society


Institutionalizing ethics

Institutionalizing Ethics

  • Should they exist?

  • What should be in them?

  • How should they be developed?

  • How should they be enforced?

“settled economic life”


Capitalism

Capitalism

  • today’s challenges

    • productivity

    • short term focus

    • manufacturing decline

    • attitudes towards work

    • instability

    • unsustainability


Capitalism1

Capitalism

  • criticisms

    • persistence of

      • inequality

      • poverty

    • rise of oligopolies

    • implicit view of human nature

    • shortcomings of competition

    • employee’s

      • alienation

      • exploitation


Capitalism2

Capitalism

  • criticisms

    • persistence of

      • inequality

        • inequality of opportunity

      • poverty

  • responses

    • government causes poverty

    • capitalism can be softened

    • benefits outweigh harms

      • better than the alternatives

Dickens


213 32 6 winter 2013

GDP

  • source: World Bank


213 32 6 winter 2013

inflation-adjusted per capita GDP

$25,000

$20,000

$15,000

$10,000

$5,000

$0

0

500 AD

2000 AD

1000 AD

1500 AD

Angus Madison, Historical Statistics of the World Economy: 1-2008 AD http://www.ggdc.net/maddison/Historical_Statistics/horizontal-file_02-2010.xls


213 32 6 winter 2013

world

Canada

Japan

inflation-adjusted per capita GDP

$30,000

$20,000

$10,000

$0

1820

1840

1860

1880

1900

1920

1940

1960

1980

2000

Angus Madison, Historical Statistics of the World Economy: 1-2008 AD http://www.ggdc.net/maddison/Historical_Statistics/horizontal-file_02-2010.xls


213 32 6 winter 2013

world

Canada

India

China

Japan

Nigeria

$8,000

$6,000

$4,000

$2,000

$0

1820

1840

1860

1880

1900

1920

1940

1960

1980

2000


213 32 6 winter 2013

$20,000

$16,000

$12,000

South Korea

$8,000

$4,000

North Korea

$0

1950

1960

1970

1980

1990

2000


213 32 6 winter 2013

$14,000

$12,000

$10,000

$8,000

$6,000

world

$4,000

Hungary

$2,000

Portugal

1900

1920

1940

1960

1980

2000


Effects of globalization

Effects (?) of Globalization

% of GDP derived from trade

world trade in goods

world per capita GDP

60%

$8,000

$6,000

40%

$4,000

20%

$2,000

$0

1820

1840

1860

1880

1900

1920

1940

1960

1980

2000

The World Bank World Development Indicators & Global Development Finance http://data.worldbank.org/data-catalog/world-development-indicators


Living on less than 2 day

% living on less than $2/day

100%

Nigeria

India

75%

% living on less than $2/day

50%

China

25%

Brazil

Mexico

0%

1980

1990

2000

World Bank World Development Indicatorshttp://data.worldbank.org/data-catalog/world-development-indicators


Capitalism3

Capitalism

  • criticisms

    • persistence of

      • inequality

      • poverty

    • rise of oligopolies

    • implicit view of human nature

    • shortcomings of competition

    • employee’s

      • alienation

      • exploitation

natural direction

corporate welfare

modern economy

multinationals


Multinationals

Multinationals


Multinationals1

Multinationals


Multinationals2

Multinationals


Multinationals3

Multinationals


Multinationals sweatshops

Multinationals & Sweatshops


Multinationals sweatshops1

Multinationals & Sweatshops


Multinationals sweatshops2

Multinationals & Sweatshops


Multinationals sweatshops3

Multinationals & Sweatshops

The Economist Jul 29, 2010 “The Next China”


Multinationals child labour

Multinationals & Child Labour

  • International Labor Organization

    • International Programme on the Elimination of Child Labour

      • 2010 report:

        • “Accelerating action against Child Labour”

http://www.ilo.org/ipec/lang--en/index.htm


Multinationals child labour1

Multinationals & Child Labour

250m

200m

150m

100m

50m

0

2000

2004

2008

under 15

53m under 15

215m child labourers

1.6b children

http://www.ilo.org/ipec/lang--en/index.htm


Multinationals child labour2

Multinationals & Child Labour

industry 15m

not defined 16m

services 55m

agriculture 129m

http://www.ilo.org/ipec/lang--en/index.htm


Capitalism4

Capitalism

  • criticisms

    • persistence of

      • inequality

      • poverty

    • rise of oligopolies

    • implicit view of human nature

    • shortcomings of competition

    • employee’s

      • alienation

      • exploitation

natural direction

corporate welfare

modern economy

multinationals


Capitalism5

Capitalism

  • criticisms

    • persistence of

      • inequality

      • poverty

    • rise of oligopolies

    • implicit view of human nature

      • no ideals to aspire to

      • reinforces “natural” tendencies

      • caricatures society


Capitalism6

Capitalism

  • criticisms

    • persistence of

      • inequality

      • poverty

    • rise of oligopolies

    • implicit view of human nature

    • shortcomings of competition

      • prevents cooperation


Capitalism7

Capitalism

  • criticisms

    • persistence of

      • inequality

      • poverty

    • rise of oligopolies

    • implicit view of human nature

    • shortcomings of competition

    • employee’s

      • alienation

      • exploitation


Capitalism8

Capitalism

  • criticisms

    • persistence of

      • inequality

      • poverty

    • rise of oligopolies

    • implicit view of human nature

    • shortcomings of competition

    • employee’s

      • alienation

      • exploitation


Wealth and happiness

“Wealth” and “Happiness”


The pew global attitudes project

The Pew Global Attitudes Project

good

bad

Canada

very good

somewhat good

somewhat bad

very bad

Japan

India

China

Nigeria

Q.20 What do you think about the growing trade and business ties between [survey country] and other countries. Do you think it is a very good thing, somewhat good, somewhat bad or a very bad thing for

our country?

Pew Research Center 2007 World Publics Welcome Global Trade - But Not Immigration http://www.pewglobal.org/files/pdf/258.pdf/


The pew global attitudes project1

The Pew Global Attitudes Project

agree

disagree

completely agree

mostly agree

mostly disagree

completely disagree

Canada

Japan

India

China

Nigeria

Q.18a Please tell me whether you completely agree, mostly agree, mostly disagree or completely disagree with the following statements:

a. Most people are better off in a free market economy, even though some people are rich and some are poor.

Pew Research Center 2007 World Publics Welcome Global Trade - But Not Immigration http://www.pewglobal.org/files/pdf/258.pdf/


Capitalism9

my cricitisms

utilitarian?

really?

instability

disposability

consumer-only

debt

all-encompassing

works against

work as sacred

generosity

Year of Jubilee

my view

Hindu gods

Maddison

constructed

freedom and norms

changeable

responsible

Capitalism


All encompassing

All-Encompassing

  • Roman Empire

    • all of society

      • authority

      • relationships

      • work

      • commerce

      • belief

        understood within the idea of “the empire”


All encompassing1

All-Encompassing

  • Medieval Europe

    • all of society

      • authority

      • relationships

      • work

      • commerce

      • belief

        understood within the idea of “the church”


All encompassing2

All-Encompassing

  • Fascism

    • all of society

      • authority

      • relationships

      • work

      • commerce

      • belief

        understood within the idea of

        “the state” or “the nation”


All encompassing3

All-Encompassing

  • modern capitalism

    • all of society

      • authority

      • relationships

      • work

      • commerce

      • belief

        understood within the idea of “the market”

the church as consumer item


All encompassing4

All-Encompassing

  • empire

  • medieval Europe

  • fascism

  • modern capitalism

all of life captive to an overarching idea of what a society is

so, saying “Render unto Caesar what is Caesar's and unto God what is God’s” remains an outsider’s position

“My kingdom is not of this world.”


Capitalism10

Capitalism

  • works against

    • work as sacred

The LORD God took the man and put him in the Garden of Eden to work it and take care of it.

Genesis 2

All hard work brings a profit…

Proverbs 14

So I saw that there is nothing better for a man than to enjoy his work...

Ecclesiastes 3


Capitalism11

Capitalism

  • works against

    • generosity

Give, and it will be given to you. They will pour into your lap a good measure--pressed down, shaken together, and running over. For by your standard of measure it will be measured to you in return.

Luke 6

a generous God  a generous response


Capitalism12

Capitalism

  • works against

    • Year of Jubilee

This fiftieth year is sacred—it is a time of freedom and of celebration when everyone will receive back their original property, and slaves will return home to their families.

Leviticus 25


My view

My View

  • Hindu gods

Lakshmi

Shiva

Kali


Agency

Agency

principle

agent

If an ox gores a man or a woman to death, the ox shall surely be stoned and its flesh shall not be eaten; but the owner of the ox shall go unpunished.

If…an ox was previously in the habit of goring and its owner has been warned, yet he does not confine it and it kills a man or a woman, the ox shall be stoned and its owner also shall be put to death.

Exodus 21

servants in parables

I think we’re responsible for the actions of our money.


Ch 5 articles

ch 5 articles

  • Cassidy

    • The Greed Cycle

  • Orlando

    • Ethics of Corporate Downsizing

  • De George

    • Ethical Dilemmas for Multinational Enterprise

  • Camenish

    • Business Ethics: On Getting to the Heart of the Matter


The greed cycle

The Greed Cycle

  • interesting Adam Smith quote

    • “Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company [in which the owners aren’t also the managers].”


The greed cycle1

The Greed Cycle

  • a pretty good blow-by-blow

    • repeat of the 1920’s cycle

    • “corporate raiders” became +

      • as if pirates became the navy

    • rewards & punishment

      • truth, lies & spin


The greed cycle2

The Greed Cycle

  • role of politics & accounting

    • options

    • accounting dodges

      • recording dubious revenue

      • not recording liabilities

      • shifting revenues or expenses

        • through time

        • between capital and operating


The greed cycle3

The Greed Cycle

  • the focus on shareholder value

    • no discussion of what “value” is

      • becomes = to current stock price


The greed cycle4

The Greed Cycle

  • “impersonal” forces

    • supposedly driven to actions

      • focus on motives = exoneration


Corporate downsizing

Corporate Downsizing

  • ? moral primacy of shareholder

    • risk

    • $ vs. time


Corporate downsizing1

Corporate Downsizing

  • fiduciary duties

    • not same in all situations

    • not absolute

    • “unstated contracts”

      • who decides what they are?

      • which has primacy?

      • how are they changed?

      • what if parties unequal?


Corporate downsizing2

Corporate Downsizing

  • ownership ?=? investment

    • investors expect ethical behaviour?


Corporate downsizing3

Corporate Downsizing

  • utilitarian

    • does it really benefit company?

    • should this be the only consideration?


Corporate downsizing4

Corporate Downsizing

  • legitimate?

    • survival of firm

    • if uncontrollable, result can’t be fair

    • actual situations

    • owner’s risk


Corporate downsizing5

Corporate Downsizing

  • investors expect ethical behaviour

    • is this expectation voluntary?

    • obligations of agents

      • responsibilities of principles

principle

agent


Business ethics on getting to the heart of the matter

Business Ethics: On Getting to the Heart of the Matter


Heart of the matter

Heart of the Matter

  • not specific to business

    • constraints

    • “charitable” responsibilities


Heart of the matter1

Heart of the Matter

  • what does business actually do?

    • provision goods & services

    • profit

  • Camenisch asserts:

    • moral of provision > moral profits

      • Are they really goods?

      • Are they really services?


Heart of the matter2

Heart of the Matter

  • business as custodian

    • natural resources


Heart of the matter3

Heart of the Matter

  • business as dominator

    • culture

    • freedom

    • creativity

    • individuality


Heart of the matter4

Heart of the Matter

  • Camenisch

    • limits business only to

      • provision of goods & services

      • creation of profits


Heart of the matter5

Camenisch

ignores

work

communal activity

creativity

passing on to children

saving/borrowing

generator of social wealth

potential of support for the poor

brake against war

Heart of the Matter


Heart of the matter6

Heart of the Matter

  • Camenisch

    • ignores

      • debt


Multinationals4

Multinationals

  • both hope & scourge


Multinationals5

Multinationals

text

  • can’t simply equate

    • US norms = ethical standards

  • but

    • don’t have to abandon idea of norms


Multinationals6

Multinationals

text

  • proposed

    • no intentional direct harm

    • more good than harm

    • contribute to host’s development

    • respect employee’s human rights

    • pay fair share of taxes

    • respect cultural norms if…

    • just background institutions


Multinationals7

Multinationals

text

  • valid critiques

    • specific

    • fact-based

  • lack of adequate “background institutions”

    • make ethical norms more relevant

  • host governments not absolved


Multinationals8

Multinationals

text

  • how to implement?


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