Business Ethics

Business ethics is a part of general ethics, we can start with that wider topic. What ethics studies is a morality. Morality is a term used to cover those practises and activities that are considered importantly right and wrong; the rules that govern those activities; and the values that are embedded, fostered, or pursued by those activietes and practises . The morality of a society is related to its mores, or the customs accepted by a society or a group as being right and wrong, as well as to those laws of a society that add legal prohibitions and sanctions to many activities considered to be immoral. Ethics in general can be defined as a systematic attempt to make a sence of our individual and social moral experience, in such a way as to determine the rules that ought to govern human conduct, the values worth pursuing, and the character traits deserving development in life. The attempt is systematic and therefore goes beyond what reflective peple tend to do in daily life in making sence of their moral experience, organizing it, and attempting to make coherent and unified. If one approaches ethics through revelationfor instance, through the Bible or through religious teachingswe can speak of theological or religios ethics. Ifas we shall do one approaches ethics prescinding from revelation and religious belief, and using only arguments based on reasons applied to nonreligious human experience, we can speak of philosophical ethics. Insofar as it attempts ascertain what rules and values ought to be followed and pursued, philosophical ethics can be distinguished from antropology, psychology, and sociology. Those disciplines describe how people behave, but usually do not prescribe how they ought to behave. Ethics concerns itself with human conduct, taken here to mean human activity that is done knowingly and, to a large extent, willingly. It does not concern itself with automatic responces, or with for example, actions done in ones sleep or under hypnoses.. Despite the accuracy and usefulness of this definition of ethics as the study of morality, the term ethics is used in a variety of ways by different people. Sometimes ethics is synonymous with a morality; for example, an action that is morally right is called an ethical one. Frequently si used phrase work ethics, because that is a common phrase, right shuld be called it the work morality. Codes of moral conduct adopted by professions are frequently called ethical codes. Although, philosophically speaking, business ethics is a branch of general ethics, some people interpret the phrase business ethics to mean business morality. They interpret this either descriptively- that is, as the morality followed in business- or normatively, as the morality that ougt to be followed. We cannot legislate the use of terms, so it is wise to be conscious of divergent uses. Those engaged in ethics as a branch of philosophy do analysis and synthethis. There are three related phases of ethical study, which are commonly known as descriptive ethics, normative ethics, and metaethics. The three constitute what is sometimes called general, as opposed to special, ethics. Descriptive ethics is closely related to antropology, sociology, and psychology, and leans heavily on them. It consists in studying and describing the morality of a people, culture or society.It also compares and constrasts different moral systems, codes, practises, beliefs, principles, an d values. Descriptive ethics provides basic material that normative ethics must account for, and it provides a touchstone of the considered morality of a people or society with which the normative theory must more or less coalesce. Normative ethics systematically attempts to supply and to justify a coherent moral system. Typically it seeks to uncover, develop and justify the basic moral principle or priciples, or the basic moral values, of a moral system. The system itself consists of both the basic moral principle(s) and values and the particular moral rules that govern peoples behavior in a sence of prescribing those actions that are right or moral proscribing those that are wrong or immoral. These rules and values constitute the moral norms of the society. The task of normative ethics

is threefold. First, it attempts to form into a related whole the various norms, rules, and values of a societys morality. It tries to render these as consistent and coherent as possible, with perhaps some hierarchial arrangement of norms. Second, it attempts to find the basic principle from which the particular norms can be derived. Third, it attempts in a variety of ways, to justify the principle of morality. A society can hold various moral norms that may or may not be constintent. In forming a system that moral philosopher attempts to make the various norms consistent with one another. This system constituses a theory of morality. If the basic principle is powerful enough, it should provide the means for deriving the set of constistent norms accepted by a society, as well as for making explicit norms that were previously held only imlicitly. The basic principle shuld also provide a procedure by which conflicting norms can be adjudicated and particular cases decided. A moral theory interacts dynamically with the norms of a society in that both remain open to correction. A moral theory that resulted in injuctions to murder, steal, lie, or commit other actions a society consideredimmoral would be properly suspect. It is difficult to im agine would accept or adopt such a theory. In general, a society is more certin of of the bulk of its traditional norms of morality than it is of any theory of morality. Exceptions are possible, however. For instance , a society can undergo a conversion and adopt a religion along with that religions moral code. But this is not a general rule. Metaethics, the third portion of general ethics, is closely related to normative ethics. Metaethics is the study of normative ethics, and, to some extent, both normative and descriptive ethics involve some metaethical activity. It is sometimes called analytical ethics because it is concerned with analysis. Metaethics deals with the meaning of moral terms and with logthe logic of moral reasoning. It aks, for instance what terms good and bad mean in the moral sence, and what moral responsibility, moral obligantion, and other similar phrases mean. Meaning, of course, is closely related to linguistic usage. Some people think meaning is identical with such usage. To say what good means may be distinct from saying what things or actions are good. The former is generally considered a metaethical concern, the latter a normative ethical concern. The analysis of moral reasoning involves clarifying and evaulating presuppositions and investigating the validity of moral arguments. A famous, and still not completely resolved , metaethical dispute concerns the questions of whether a moral ought or duty can be derived logically from a statement of what is, exclusive of normative premises. General ethical theory provides a careful and systematic approach to morality, one that finds pararells in ordinary life and discourse.It develops and analyzes the kinds of moral arguments that are uused in ordinary language and in everyday life, in newspapers and magazines, and in books and articles on moral problems. Hence, it is practical discipline with practical import. Like science, ethics contitudes a continuing social endeavor. It is not a completed discipline, but a developing one in which there are a number disputed issues.: The presence of these disputes, however, does not indicate thatthere is not agreement, nor does it indicate that ethics has produced no usable results. Some results are negative: Certain theories that were initially plausible have been shown to be mistaken, and some popular approaches to morality have proved untenable. The last word has yet to be written, but this is to be expected of an ongoing enterprise. Mastery of ethical theory, however, provides the nesessary tools to engage intelligently in personal and social analysis of moral issues. Special ethics first applies general ethics (which, as we have said , includes descriptive, normative, and metaethics) to solving particular problems, and second investigating the morality of specislized areas of human endeavor. The first of these is sometimes called casuistry. Casuistry is the art of solving difficult moral problems, cases, or dilemmas throuh the careful application of moral principles. Casuistry uses the principles and norms that have been developed and justified in general ethics. It is an important art or skill, but one that has sometimes been held in law repute. It can easily degenerate inti the technique of seeing how

close one can come to the line that separates a moral from an immoral action. Moral people, its critics maintain, are more intersted in pursuing a moral course of action than in seeing how they can minimally fulfill what is morally demanded. The attempt to determine the latter has frequently let to all- too subtle rationalizations of questionable actions. The second area of special ethics involves the application of general ethics to specialized fields. These fields business ethics, medical ethics, engineering ethics, professional ethics, social ethics, and so on. Business ethics obviously deals with business. We shall take business to include any and all economic trasactions between individuals, and profit making organizations and othher such organizations. It will include the various activities carried oln inproducing, selling, and buying goods and services for profit. This definition is broad enough to include the business activities of people in the professions and therefore includes part of what is considered professional ethics. The delimitation of these domains, however, is not at all sharp and gread precision. In delimiting them is not necessary. Business ethics as a field is defined by the interaction of ethics and business. At its broadest, its studies the possible moral justification of economic systems. Business ethics is a national, international, or global as business itself, and no arbitrary geographical boundaries limit it. If we consider business ethics in the american context, its mayor focus on the macro- level is the moral evaluation of the economic system of American free enterprise, and of possible alternatives to and modifications of it. The second level of moral analysisand to date, the level of greatest attentionis the study of business within the American free enterprise system. Since corporations are the dominant feature of this system, they have attracted the most concernbut unions, small businesses, consumerism, and vast variety of business practises within the system are all appropriate objects of moral evaluation within the system and corporations and businesses are individuals who invest in, run, work for, buy from, and are in many ways affected by them. The moral evaluation of individuals and of their actions in economic and business transactions forms a third level of investigation. The field of business ethics embraces these three levels in their interconections, as well as treating themas descrete areas of investigation. A corporation can be only as ethical as the people own, manage, and work for it; but its organization and practises can be more or less conducive to ethical activity, which can in turn be reinforced or impeded by the larger system of which it is a part. Business ethics typically invilves four kinds of activities. The first is the applying of general ethics principles to particular cases of practices in business. Deciding whether the actions involved are immoral or morally justifyable is important. But the analysis of cases does not end there. Solving cases frequently involves the development, as well as the application of special rather than general moral principles, which can nonetheless be made universal. Cases sometimes suggest moral issues that need attention, clarification, and discusion. Cases also challenge us to consider imaginatively how we can prevent similar cases from arising in the future, and to develop suggestions that business, if it wishes to be moral, might implement, or that government, if necessary, might adopt. Some questions are what changes in organiozation, managerial techniques, social structures, programms, or approaches are required? And would moral imagination, care in assessing future development, or changes in attitude help preclude moral dilemmas? Business ethics, however, involves more than just applying moral principles to business. The second kind of activity is metaethical. We shall investigate, for instance, whether moral terms that generally used to decribe individuals and the actions they perform can also be applied to organizations, corporations, business, and collective entities with rights or do they have some other status? Do they have consciences in the same way individuals do? Does moral language appropriatelly applay to them , and if so , does it applay in the same way as it does to individuals? The asswers to these questions are not supplied by general ethical theory , which traditionally has been concerned with the actions of human individuals. The meaning of

responsibility must be changed , if it is to be approriatelly applied to corporations as well as to human persons. The analysis of this type of problem in business ethics cannot take place in abstraction from general ethical theory. There is a reciprocal relation between business ethics and general ethics. But those involved in business ethics often engage in metaethical inquiries that their work demands end that general theory does not provide. A third activity of business ethics is the analysis of the presuppositions of businessboth moral presuppositions and presuppositions from a moral point of view. Because business operates within an economic system, part of the proper task of business ethics is to rise questions about the morality of economic systems in general and about the morality of the Americans economic system in particular. In evalueting structures of business we must also analyze the meaning and justification of such non moral therms as property , exploiation competition, and the presuppositions and uses of cost-benefit analyses, accounting procedures, and so on. Fourth, those in business ethics are sometimes led by embedded problems to go beyond the field of ethics into other areas of phylosophy and into other domeins of knowledge, such as economics organizations theory. But when they go beyond their own areas the usually do so to resolve some problem in business ethics, or to investigate in some other area what appeared, initially, to be a problem in business ethics. This activity becomes especially important in dealing with macro-moral issues, such as whether rich countries have any moral obligations to poor countries, or multinational corporations to host countries. Here our ordinary moral intuitions are less clear than they are in our personal dealings with individuals. Hence, there is a special need to carefully sort out the issues, to see which are moral and which are not, and to clarify the language and the level of moral discourse. Sometimes the task concernes reducing moral problems to managerial, organizational, or economic problems, or vice versa. Business ethics can help people approache moral problems in business more systematically, and with better tools than they might otherwise use. It can help them to see issues they might normally ignore. It can also impel them to make changes they might otherwise not be moved to make. But business ethics will not, in and of itselfs, make anyone moral. Business ethics, as is true of ethics in general, presupposes that those who study it already are moral beings that they know right from wrong, and that they wish to be even better, more thoughtful, more informed moral beings.Business ethics will not change buiness practices that need moral change wish to change them. Business ethics can produce arguments showing that a practice is immoral, but obviously, only those in a position to implement the changes will be able to bring them about. Business ethics is a field with practical import, but it is up to those who study it to put what they learn into practice.

Multinational Corporations and the International System of Free Enterprise

The international system of capitalism or of free enterprise is not simply an extension of the American system. Involved in the system are a great many other countries, each with its own system of capitalism, together with its own political system and its own social and historical background and institutions. The total international capitalism system is a result of the extension and interaction of all of these. It operates in a world where socialist countries extert various influences, and compete with capitalist countries for markets, resources, and capital. Multinational corporations have their parent headquarters not only in United States, but increasingly in Japan, Germany, and other industrialized countries as well. Even some of less developed countries, such as Brasil , have developed multinational corporations that operate in many countries. For purposes of simplicity, however, we shall focus on the american extension

of the capitalist model as it projects into the rest of the world. Critics fault the United states government with supporting American-based MNCs and exerting political influence for the benefit of theAmerican companies at the expense of the LDCs. Multinationals are corporations that operate extensively in more than one country, usually through branches subsidisries engaged in production, marketing, or both. They pose special moral problems. Because their their activities are not confined to single nation , no one nation can effectively control them. National law can circumscribe the activities of national firms, and government action can offset the ill effects of certain activietes of a firm. But there exists no supranational state that can confine or control many varied activities of multinationals. Among some nations there agreementa that restrict, to a limited extent, the activities of such firms. But that control is far short of what can be imposed on firms operating in only one country. Critics of multinationals loudly proclaim that multinational corporations operate to benefit themselves and their interests, with no moral or legal constraints on their activities. Multinational corporations are not immoral in themselves. The fact that Japanese firms operate in United States , either independly, as Sony does, or in cooperation with an American corporation, as Toyota does (with General Motors), is no reason to call them immoral. Nor is the fact that Ford has factories in Germany a reason to feel that it operates immorally. But when large multinationals operate in less developed countries, critics claim that although they do not necessarily operate immoraly, often they do in fact operate immoraly. Developed countries are able to control foreign firms. Less developed or developing countries are not able, or less able, to do so, especially when the firm has greater total sales than that countrys gross national product. The government in United states fulfills many necessary functions, such as keeping competition fair and protecting the interests of workers and consumers. On the international level, however, there is no effective way to prevent firms from forming cartels on controlling prices and production. We see this clearly in the case of OPEC (Organization of Petroleum Exporting Countries). Critics charge that the large international oil corporations (the seven largest have been called The Seven Sisters) have conspired to limit the production of oil of oil, creating false shortages, and driving up the price without any regard to whom they hurt by such action. Because these companies operate internationally, it is not possible for any government to check their books, worldwide, or to prevent such collusion. Other multinationationals are charged with supporting repressive governments that serve the intrests of the MNCs, exploiting workers in underdeveloped countries, marketing dangerous drugs and unsafe equipment, and discrupting the culture and traditions of other nations. We shall start by looking at some of the general attacs on American multinational corporation.we shall than examine some particular charges and cases. The following are three general, major charges: (1)MNCs operate immoraly in the less developed countries by exploiting workers, by exploiting natural resources, and by reaping exhorbitant profits; (2) MNCs compete unfairly in the LDCs, to detriment of the host countries; and (3)MNCs are the major cause the impoverishment of the LDCs, and of the unrest found there. Each of the charges has some basis in the fact of history. Multinationals and Exploitation Multinational corporations operate in less developed countries for a variety of reasons. They seek cheap labor, they seek availabla resources, they seek tax shelters and relief, and they seek markets. If they did not think they could make a profit in a less developed country, they would not establish subsidiaries thre. In seaking cheap labor, they operate just as they do in the United Stated. Many textile factories, for instance, moved from New England to the South, to take advantage of cheaper labor there. Were the Southern workers exploited because they were paid

less than Northern workers? One cannot conclude that they were, simply because the workers were paid less; the charge of exploitation requires more than the existence of a comparatively low wage scale. This requiries background institutions that are just, which include minimumwage laws and welfare programs as alternatives to workers having to accept any wage offered in order to live. In many Third world countries, fair background institutions of this sort are woefully lacking. Under such conditions, it is difficult to speak meaningfully of a fair wage set by the market. Without the restrains imposed by background institutions, the market does not guarantee fair wages ; the market inclines firms to go in the direction of paying the lowes wages possible. Sometimes this is lower than what is required for subsistence. To the extend that that this is a case, the wage is not a livin wage ; it does not allow the worker to livbe in dignity as a human being, and it can be morally faulted. Some MNCs are guilty of paing such wages, and that practise can be morally condemned. But the situation is more complicated than a blanket condemnation would warrant. In many situations, multinationals pay the same rate as the local employers. If the other employers fail to pay a living wage, they are as guilty as MNCs. But in other cases, local businesses criticize the MNCs for paying more than the going wage. The businesses complain that the multinationals thus attract the best workers, leaving the less skilled or less productive workers to work in the locally owned firms. Furthermore, they say that multinationals force up the wages that workers in general expect, in some instances to more than local firms can afford. The MNCs are thus caught between contradictory demands. Some critics demand that they pay more , other demand that they pay less than they do. The solution is to pay living wage, even when this is not paid by local firms; and otherwise to pay only as much as necessary to get competent workers, given the competetive situation of a particular region or country. Although most people would not expect the MNCs to help in the development of labor unions or to lobby for the passage of minimal wage or other laws, the MNCs should not work against any such developments. And to the extent possible, they should foster an atmosphere in which the ddevelopment of fair background institutions is facilitated. The exploitation of resources is a different problem. Mineral resources represent one of the assets of a country. The resources, however, do little good unless they are removed from the earthand solod or used. There is moral demand that resources extracted from one country be used only in that country. If that were the case, oil poor countries would be precluded from buying the oil they need. The complaint against MNCs, therefore, cannot be simply that they extract minerals and they ship them out of the country. The complaint is that the MNCs buy the mineral rights for a very low price, and sell the minerals abroad for much higher price. The natural-resource wealth of the LCDs in thus being extracted and diminished. Those who are profiting by the extraction are not LCDs but the MNCs. The complaint is well taken. It was just such a situation that led to the OPEC nations raising the price of oil, ensuring a large return on their diminishing assets. Oil depletion taxes in the United States are a means by which states seak to be repaid by those who extracts oil, thereby making the state that much poorer in resources. Once as states nonrevenable resources are used up, it has lost that portion of its wealth. Taxes reaped from the depletion, however, help offset the loss. LCDs can take measures to offset exploitation of their resources by MNCs, and more and more are beginning to do so. Multinational corporations are morally bound not to take advantage LDCs, and governments are morally permitted to impose regulations or taxes on extraction of minerals. The United Nations has drafted a Charter of Economic Rights and Duties of States, which includes a chapter on multinationals and rights of states with respect to them. The UN has also established a Commission on Transnational Corporations and an Information Research Center to monitor multinationals and to draw up a code of conduct for MNCs. These are all steps in the direction of helping the less developed countries to control the blatant abuses of multinationals. The LDCs can tame the MNCs and ensure that their presence

help the host country, by providing employment, transferring organizational knowledge and productive techniques, and paying their fair share of taxes. If American MNCs pay workers very low wages , pay little for natural resources, and sell wages pay little for natural resources, and sell in the United States at the regular prices the products somewhat lower than the going price for similar products produced in the United States. They thereby gain a greater share of the market, without reducing their proifit margin by more than is necessary to undersell the competition. Those Americans who felt the LDCs were being treated unfairly complained; those in the United States who felt they were losing jobs to cheap labor abroad complained; and those who felt they were faced with unfair competition complained. The complaints were often justified, and various remedies have been suggested or tried. Import taxes on some of these goods have forced up the price and reducted the profit; export taxes imposed by the LDCs have helped the LDCs share in some of the profits of the multinationals. Competition has developed among than the MNCs themselves, so that the profit margin has been driven down to the benefit of the consumer. But international background institutions are still not adequately developed, and codes cannot be effectively enforced. MNCs try to play one less developed country against another in an attempt to get the most favorable conditions possible. Only slowly are LDCs learning that they can play one company against another, as well. They can establish laws governing the allowable growth of MNCs ; they can require companies to hire a certain proportion of a firms managerial staff. From the local population they can demand that profits be reinvested in the host country instead of being sent to the parent country; and they can renegotiate inital conditions of operation to their own benefit, after a firm has developed an expensive plant in the host country and is unable to move elsewhere. The Unfair Competition of Multinationals The charge that MNCs compete unfairly in the LDCs has two major components. One is that the MNCs are able to operate on especially favorable and uncompetitive terms. The MNCs can borrow money from local lenders at favorable rates, because they are sound and competitive. The result is that little local capital is left for local firms, and the rates for the capital that is left are often higher than for the MNCs. The second charge is that MNCs do not carry their fair share of the cost of social development, which imposes greater burdens on local industries. MNCs frequently utilize advanced technologies, which local companies do not have or cannot afford. The MNCs are thus able to be more productive. The result is that they not only pay higher wages but they also hire fewer people than the local firms who produce the same produc. They are thus able to underprice the competition, and often force local firms out of business. The MNCs also negotiate low taxes rates, and by manipulating transfer payments among their affiliates worldwide , they pay little tax anywhere. The overall result is unfair competition. The MNCs hence does the host country little good. These charges are often well founded. But at least some of LDCs have found ways of countering the dominant position of the MNCs, as many policies adopted by Latin American countries show. Capital formation is a cruical issue for developing countries. Capital is often in short supply. Under such conditions LDC national policy can restrict the amount that a multinational corporation can borrow; and it can require that MNC profits be reinvested or loaned within the host country. The difficult situation many Latin American countries find themselves in, however, results more from external borrowing by the country or local firms than from MNCs tying up all the local capitaleven though that is osmetimes a contributing factor. The national debt of some Latin American countries is so large that the country must use a major portion of

the money it recieves from exports merely to pay interests on its loans. The moral blame, if blame is to assessed, falls on MNCs, on the lending banks, on the borrowing countries, on oilexporting countries, and on the policies of the developed countries. Expect for purposes of determining instances of compensatory justice, however, determining blame is less important than finding solutions to the debt and to the capital-developmentproblems of LDCs. Latin America faces a worse debt problem than many African countries, which were too poor even to qualify for loans, or attract MNCs. The charges that MNCs use advanced technology, are more productive, and undercut local firms are in part true. Some people urge MNCs to utilize more labor-intensive productive processes and thus equalize competition with local firms to increase employment opportunities for the local population. However, competition in itself is not unjust. Some less developed countries have taken a more positive approach to the problem. They have allowed foreign companies to establish only firms that do not compete with local firms. A country gains little or nothing by allowing a foreign company to operate to the detriment of a local producer of the same product. But a country can gain if a foreign enterprise establishes a plant that produces and sells locally a desired product not produced locally. The less developed countries give multinationals tax advantages in order to attract them. But this makes sense only if the multintionals in other ways contributes to the wealth, development, and good of the country. Transfer payments are related to taxes. Transfer payments are payments made by multinational to its various divisions or affiliates. Where profits are highly taxed, it is to the benefit of the MNCs to put low prices on the products sold to other parts of the firm, thus claiming low profits. Where profit taxes are low, they put high prices and claim higher profits on products sold abroad to other affialtes. This in turn lowers the profit and taxes paid by the affialte in the receiving country. A multinational is able to change prices from country to country to suit its needs, transfering prices at intervening countries where necessary, prior to selling a product in the United States. The UN code proposes that MNCs engage in arms length pricingthat is, it proposes that prices among an MNCs affiliates be figured as if each affiliate or division were truly independent. Less developed countries can demand this. The attacts on MNCs have not been misplaced. But the age of the multinational robber baron is slowly drawing to a close. The finantial crisis in many countries makes them unattractive places in which to invest, and in other countries governments are learning from one how to use MNCs to their own advantage. Abuses still take place, but as government controls increase, firms have more reason to adopt policies that do not grossly exploit a host country. The more responsibility MNCs behave, the less likely that a host country will impose restrictive legislation upon them. Multinationals and Third World Impoverishment The charge that MNCs are cause of the impoverishment of the Third World and of the unrest found there partly correct. Colonialization was a mixed blessing for most nations. The some extent substructure of the countries was developed. Roads were built where none existed before, water was made safe to drink, schools and hospitals were built, as were airports and railroads. Industry was imported and work and capital provided. But in the colonies and in general, they were impoverished culturally. Their cultures were disrupte; Western ways were imposed on the people, and if not imposed then imported and made attractive, so as to seduce many of the local population. Division, unrest, and raised expectations that could not be fulfilled were results. Some responsibility falls on the more developed countries for enticing people with goods and products they could not afford and did not previously want or need. Second, people of the less developed countries were impoverished in a comparative sense. Poverty is not only an absolute condition; it is also relative. When all are poor, people do not feel as wealth, the rich make poor

relative poorer. In these two sentences, the industrial countries are in part responsible for the poverty and unrest of the less developed countries. There is a third sense in which the developed countries are partly responsible for the impoverishment of the LDCs; paradoxically, this is related to the gains made by the LDCs. The more developed countries have helped eradicate some of the diseasessuch as smallpoxthat ravaged some countries; through medical technology they have decreased the infant mortality rate and increased the average life expectancy of the people of many countries. At the same time, this has contributed to the population growth in many LDCs, which poses enormous problems and leads to increasing poverty and starvation. Fourth, several MNCs have directely helped produce starvation in some countries. The typical scenario in this: An MNC goes into a country and buys a large portions of the productive land. In then grows cash crops for export, wheras before, local farmers grew food for local consumption. The best land is thus taken out of production for local consumption, people are no longer able to grow their own food, and the result is frequently increased malnutrition or starvation. Multinational corporations have played this role, and continue to play it. Multinational corporations , just as do other corporations, have an obligation not to harm, and must consider the consequences of their actions. They cannot act with moral impunity. Some LDCs governments, moreover, are learning to control the actions of multinationals in the agricultural sector. They are requiring cooperation with local farmers , limiting the amount of land that can go into cash crops, and taxing profits for the benefit of the people. All of this requires governments that are not corrupt, that do not benefit by colluding with MNCs at the expence of the people, and that are strong enough and stable enough to control and restrict MNCs. The number of countries in which these conditions prevail is growing. But unfair practises have by no means been eliminated. The abuses of multinationl corporations in Third World countries need not and should not, be denied, ignored, or excused. But even taken at their worst, and as whole , they do not establish the case that the American free-enterprise system rests on the exploitation of Third World countries. That the Third World offers potential markets cannot be denied. That continued expansion by American companies is made easier by such markets is obvious. But the claim that the developed countries depend on exploiting less developed countries does not follow from the claims we have examined. The arguments do show that there is a tendency on the part of MNcs toward injustice, which must be controlled. Some practises are immoral and shold be changed. The advantages, that the system brings to Third world countries at least offset the cost s imposed by it on them. As in our analysis of the free-enterprise system in the United States, the arguments that critics mount do not show that extension of the system through American controlled multinationals is inherently immoral. The role of multinationals is not, however, the same as the role of the United States in international economic affairs, even though they are related. The United States, because of its size, wealth, and global importance, intervenes in the economy of many nations even if it does nothing to them directly. Its internal monetary and fiscal polities, for instance, affect the interest rates other countries must pay for loans, and influence inflation rates. Its import and export policies also influence what happens in many MNCs. Does the United States have obligations toward other countries? It ha s at least obligation not directly to harm themthrough its practises. Where it has knowingly and willingly done harm, it owes reparations. Furthermore, the United States has sometimes acted benevolently, but despite its good intensions has caused harm. This happened, for instance, when it sent sugar to Bolivia for humanitarian reasons. The distribution of the sugar required all the distributive resources of the country. As a result, the local wheat growers were unable to transport their wheat to market, and were forced out of business. Although the united States intended no harm, it was casually responsible for it. In this case the United States is more guilty of paternalism than of exploitation. The United States can help

avoid unintended harm by working more closely with local governments, and by replacing paternalism with cooperation. If the United States wishes toi help a country, it can support programs developed by the country itself, especially when these the poor , provide the employment, and lead to self-improvement. Whether the United states has obligations to other countries, based not on charity, reparations, or self interest but on the rights of other countries. Its obligation not to harm other countries, however, is not necessarily violated by its adherence to a free-enterprise economy and extension of that system into the iternational domain Ethics in international business is complex. The problems are pressing and require careful analysis and discussion. Ethics for international business constitutes one more layer of analysis that business must consider in any business activity. Ethics by itself will not tell a business how to act, but it can tell business how not to act. In this sense it is a sieve through which business decisions must pass. Only those that pass through it are morally acceptable. But which that pass through it are the best from a business point of view must of course be decided by those in business. The moral level achieved in international business will be a reflection of the morality of those engaged in such business. Yet ultimately, fairness and global justice will require not only honest businesspersons, but also just background institutions that enable all to compete on the same terms and that provide for those whom the international business system fails to benefit. Business can cling tenaciously to the Myth of Amoral Business, and can refuse to respond to the new moral mandate. If it does, it will convince the public that business is business, that it condones and fosters immorality and injustice, and that it puts profit above people. Some businesses and some businesspeople act in this way; but not all businesses do. Business will enjoy the moral respect of society only when it earns it. It can show that business ethics is not contradiction in terms, not a myth, and not merely a body of theory. Ethics and morality can be a part of business. When they are built into its structure, when business lives up to its new moral mandate, it will deserve the public respect it will once again enjoy.

UNIVERSITY OF ECONOMICS BRATISLAVA

FACULTY OF INTERNATIONAL RELATIONS

BUSINESS ETHICS
(Acessed work)

Name: Lucia Vojtkov Year of studies: 1 Academic year: 2006/2007

Source:

DE GEORGE R. T.: Business Ethics New York. MACMILLAN PUBLISHING COMPANY 1990