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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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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


Moral Agency

  • What does this mean?

  • What is the problem?


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 Agency

  • Can corporations make decisions?

    • Are moral decisions different than others?


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 Agency

  • vanishing individual responsibility

    • individuals

      • refuse

    • groups

      • diffuse

    • structure gives distance

      • investorboard

      • managerstaff


Corporate Responsibility

  • arguments

    • utilitarian

    • rights


Corporate Responsibility

  • only profit maximization

    • or

  • social responsibility

“the social contract”

“externalities”


Corporate Responsibility

  • “the promissory relationship”

    • what does it

      • require

      • forbid

      • permit


Broadening Responsibility

  • the arguments against

    • invisible-hand

    • role-of-government

    • inept-custodian

    • materialization-of-society


Institutionalizing Ethics

  • Should they exist?

  • What should be in them?

  • How should they be developed?

  • How should they be enforced?

“settled economic life”


Capitalism

  • today’s challenges

    • productivity

    • short term focus

    • manufacturing decline

    • attitudes towards work

    • instability

    • unsustainability


Capitalism

  • criticisms

    • persistence of

      • inequality

      • poverty

    • rise of oligopolies

    • implicit view of human nature

    • shortcomings of competition

    • employee’s

      • alienation

      • exploitation


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


GDP

  • source: World Bank


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


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


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


$20,000

$16,000

$12,000

South Korea

$8,000

$4,000

North Korea

$0

1950

1960

1970

1980

1990

2000


$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

% 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

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


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


Multinationals


Multinationals


Multinationals & Sweatshops


Multinationals & Sweatshops


Multinationals & Sweatshops


Multinationals & Sweatshops

The Economist Jul 29, 2010 “The Next China”


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 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 Labour

industry 15m

not defined 16m

services 55m

agriculture 129m

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


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


Capitalism

  • criticisms

    • persistence of

      • inequality

      • poverty

    • rise of oligopolies

    • implicit view of human nature

      • no ideals to aspire to

      • reinforces “natural” tendencies

      • caricatures society


Capitalism

  • criticisms

    • persistence of

      • inequality

      • poverty

    • rise of oligopolies

    • implicit view of human nature

    • shortcomings of competition

      • prevents cooperation


Capitalism

  • criticisms

    • persistence of

      • inequality

      • poverty

    • rise of oligopolies

    • implicit view of human nature

    • shortcomings of competition

    • employee’s

      • alienation

      • exploitation


Capitalism

  • criticisms

    • persistence of

      • inequality

      • poverty

    • rise of oligopolies

    • implicit view of human nature

    • shortcomings of competition

    • employee’s

      • alienation

      • exploitation


“Wealth” and “Happiness”


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 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/


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

  • Roman Empire

    • all of society

      • authority

      • relationships

      • work

      • commerce

      • belief

        understood within the idea of “the empire”


All-Encompassing

  • Medieval Europe

    • all of society

      • authority

      • relationships

      • work

      • commerce

      • belief

        understood within the idea of “the church”


All-Encompassing

  • Fascism

    • all of society

      • authority

      • relationships

      • work

      • commerce

      • belief

        understood within the idea of

        “the state” or “the nation”


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-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.”


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


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


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

  • Hindu gods

Lakshmi

Shiva

Kali


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

  • 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

  • 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 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 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 Cycle

  • the focus on shareholder value

    • no discussion of what “value” is

      • becomes = to current stock price


The Greed Cycle

  • “impersonal” forces

    • supposedly driven to actions

      • focus on motives = exoneration


Corporate Downsizing

  • ? moral primacy of shareholder

    • risk

    • $ vs. time


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 Downsizing

  • ownership ?=? investment

    • investors expect ethical behaviour?


Corporate Downsizing

  • utilitarian

    • does it really benefit company?

    • should this be the only consideration?


Corporate Downsizing

  • legitimate?

    • survival of firm

    • if uncontrollable, result can’t be fair

    • actual situations

    • owner’s risk


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


Heart of the Matter

  • not specific to business

    • constraints

    • “charitable” responsibilities


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 Matter

  • business as custodian

    • natural resources


Heart of the Matter

  • business as dominator

    • culture

    • freedom

    • creativity

    • individuality


Heart of the Matter

  • Camenisch

    • limits business only to

      • provision of goods & services

      • creation of profits


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 Matter

  • Camenisch

    • ignores

      • debt


Multinationals

  • both hope & scourge


Multinationals

text

  • can’t simply equate

    • US norms = ethical standards

  • but

    • don’t have to abandon idea of norms


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


Multinationals

text

  • valid critiques

    • specific

    • fact-based

  • lack of adequate “background institutions”

    • make ethical norms more relevant

  • host governments not absolved


Multinationals

text

  • how to implement?


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