Jul 25, 2014

The Ethical Duties of "Corporations" by Kirk Jackson

A corporation, dealing with it as an abstract entity, has two main duties: the first, to seek a profit; the second, to obey the law. The second duty is problematic with large corporations due to various phenomena. Firstly, corporations have the ability to bypass the law when paying the fines associated with their infractions is lesser than the benefit of breaking the law. Secondly, a large corporations have an influence on the law, either through the importance to the economy by its size, or its political ties concerning key employees and shareholders directly holding important government positions or possessing the ability to affect those who do. Because corporations can break the law (or alter it, which is, in effect, the same thing) moral philosophers deem it important to draw up an ethical system to govern corporations.

Deontology is a normative ethical principle that sets out to judge one’s actions based on its adherence to a set of guidelines or rules. It is a duty based ethical system. This is strongly contrasted to consequentialist ethical principle such as utilitarianism where the outcome is the basis for judgment. Kant utilizes deontology to create his ethical system; he states that a man must act in a morally right way and from duty, and that the consequences of the actions do not make the actions right or wrong but rather the intent and motives of the man who does the action. In opposition to utilitarianism because Kant does not believe that morality should be given a purpose outside of itself. A moral act is moral regardless of the consequences.

Kant does not encourage acting in order to obtain happiness, as is one of the founding guidelines of utilitarianism. Acting upon a categorical imperative is more fundamental than acting in order to achieve happiness. However, Kant also said, “A man even has an indirect duty to seek happiness. The more he is troubled by the burdens of anxiety and need, the more he may be tempted to fail in his duty. Even apart from duty, everyone has the most fundamental urge to be happy, since the idea of happiness more or less sums up in our minds the satisfaction of all our desires, cares, and needs.”

Kantian Deontology which is often summarized with the following statement by Kant: “Act in such a way that you treat humanity, whether in your own person or in the person of any other, never merely as a means to an end, but always at the same time as an end”. Kant did not intend to say that one should never be used as a means to end but that one should never be exclusively a means to an end.

Kant went further to claim that a party is not necessarily being ethical if they are only doing the right thing out of prudence. The essence of morality according to Kant is derived not from what the duty may have prescribed but from the concept of law (not to be confused with a nation’s law). In today’s highly regulated business environment this has a large impact. Many corporations, it may be assumed in example, only act in an outcome that is considered ethical because they are forced to by forces such as the law. If it does not act this way it may be fined, leading to less profit than acting in accordance to the law (atleast this is one of the purposes of fines, it may appear to some that the fines are insufficient to produce the best possible outcome for society). In Kantian ethics this behavior is deemed reprehensible. A corporation should act ethical out of duty and obligation not simply because it is prudent to do so. Kant worries more about the motives than the consequences. In the increasing globalization of large corporation this idea takes on an even greater weight. Many developing countries still do not have the legal infrastructure necessary to prevent unethical corporations from taking advantage and its citizens are left to the moral whims of corporations.

This subject takes us to Kant’s categorical imperative. He states it as follows, “I ought never to act except in such a way that I can also will that my maxim should become a universal law.” A corporation should not take advantage of consumers of developing nations because that would make for a lousy imperative. Kant believed that the man should act as if the principle were to be set as a law in the “kingdom of ends”.

The categorical imperative gives us a necessary but not sufficient criterion of virtue. For example one of Kant’s categorical imperatives is to not commit suicide. He offers no reasons as to why one should not commit suicide. In order to practically use the categorical imperative one must look at the consequences of the actions undertaken. Kantian ethics has been criticized for not providing a concrete application in various ethical dilemmas. For example, I jump into my car in the morning to go to work, but if everyone in the world were to do the same thing the Earth would choke to death; so should I not drive my car to work? Most people may be able to accept the former imperative; that of treating man as the ends and not merely the means; this could be taken as a form of human rights put into ethical law, but many circumstances require a more rigorous ethical platform.

I stated earlier that Kantian ethics has its foundation in the idea that ethics is based on adhering to a set of obligations and duties. But where do these duties come from? Do they come from the state? That’s hardly a satisfactory answer as ethics would be highly subjective to time and culture. Do they come from a greater power? In this modern business environment of numerous different religious beliefs it is hardly prudent for society to base its ethics on the guidelines associated with a divine creator. Some philosophers defend the view that a common morality exists and is the foundation of all theories of morality. This could explain why people accept Kant’s statement of treating people not exclusively as means to an end. Modern biochemical science has attempted to isolate a brain chemical that scientifically explains this phenomenon of human compassion. These finding may have a drastic impact on theories of common morality. Many ethical dilemmas are simply caused by differing interpretations of the event and not so of the principles governing the conclusion.

Kantian ethics also raises numerous questions about the ethical treatment of things outside of human kind. What kind of treatment to lesser creatures such as dogs, cattle, chickens etc. deserve? How should humans treat Earth and nature? Using Kant’s categorical imperative could possibly provide numerous divergent and impractical answers.

Modern thought places much more emphasis on empirical facts and purports that very little can be proved a priori. This poses a problem when a society attempts to convince a corporation to act ethically and not simply by the law. Ultimately, however, it is up to society to define what it believes is ethical and have these beliefs reflected in law. These ethical laws provide the concrete framework for corporations to follow that is lacking in Kantian ethics. Perhaps, all we can expect of corporations is for them to be prudent. A corporation has a duty to its shareholders to deliver a profit, and to society to operate within the boundaries of law. For example, a corporation treats it employees ethically because (a) its the law and (b) it has a positive effect on the bottom line.

I was surprised when I first heard the idea that corporations are not affected by Kantian ethics because they are not technically humans, although legally defined as a separate legal entity. I put corporation in quotations in the title of this post to highlight that a corporation is not a thing in the world but a construct of human relations.

Humans within a corporation may be completely indifferent to the actions of the corporation. For example, I worked at a casino a few years ago. I felt that the casino was taking advantage of many gambling addicts. But, I wasn't the casino. I wasn't in charge. So I just let it go. However, a corporation is people and people need to be aware of their actions, regardless of their orders. A member of a corporation is not absolved from the ethical implications of his actions simply because he was following orders. The "blame", if you wish to call it that, falls upon all members involved. A corporation involved in ethical decision making needs to remove its veil and the people involved need to truly feel involved in the actions undertaken. When a corporation does something unethical, there needs to be real responsibility by all the people involved from the board of directors and CEO who set the broader strategy, to the people involved in the implementation of the actions, and even to the members of government who need to set appropriate laws.

At the end of the business day we all go home to our families and friends and we would do well to not lose touch with our individual humanity and empathy while at work. Profits and money are meaningless without the people that we love (especially considering our fiduciary monetary system relies on others). If we wish to enjoy the care and love of our family, we must also enable others to do the same; meaning we should not abuse our corporate power. Obeying the Kantian maxim of treating people not merely as means to an end will have a positive societal, economic and, individual impact. Kantian ethics does not provide a fully applicable ethical principle to be used in all business situations but it is useful in helping us focus on the most important thing: people.

Kirk Jackson
Admitting that this blog is created by people in Kelowna, BC
October 8, 2013

Jul 11, 2014

Property Rights versus Economic Equality by Isaac Snow

Distributive justice concerns the nature of a socially just allocation of the goods in a society. Like all discussions on a topic concerning justice, there are numerous basic stances on what qualifies as a just distribution. John Rawls approaches the concept of distributive justice from an egalitarian point of view. A strict egalitarian notion of distributive justice would have everyone in society have the same level of material goods and services. Rawls distinguishes himself from this stance by introducing his 'difference principle', He contends that any just conception of freedom is one that would be agreed upon and accepted by everyone from a fair position. This conception of freedom would theoretically be developed in the concept Rawl’s introduces as the 'original position'. The concept states that the initial negotiations of society's distributions would happen behind a veil of ignorance. Meaning the negotiators, including all in the society, would not be aware of their own individual position. In the end the principle of justice settled upon would be fair. This theory requires that individuals that are in a well-off position agree to a distributive rule that may not be in their individual favor. Rawls believes that a society is well ordered when members of the society agree on and know the principles of social justice and the institutions in the society satisfy these principles.

Rawls’ distribution theory helps to maximize the position if the most disadvantaged. A redistribution is considered just when it would help to improve the situation of the most disadvantaged. Rawls allows inequalities to the extent that the inequalities make the least advantaged better off then they would be under a strict egalitarian system. This makes the assumption that the possibility of earning greater income gives the incentive to the individual to put forth greater productive effort that he wouldn't under a strict egalitarian system.

Another American philosopher Robert Nozick, in contrast to Rawls, begins his theory of distributive justice from a libertarian stance and proposes what he calls the 'entitlement theory'. The entitlement theory states that a just situation would allow a person to hold property that he has lawful entitlement to and transfer it at his discretion with no outside interference. This stance necessarily conflicts with Rawls as it would be unjust under the Nozick system to take from the rich and give to the poor. Nozick holds that property rights are non-negotiable and an individual’s personal liberty makes state policies of redistribution illegitimate.

Rawls introduces two principles of justice. The first is liberty wherein each person has a right to the extensive schemes of standard civil liberties such as freedom of speech and voting rights. The second principle is the difference principle. This second principle has less priority than the first. The difference principle states that social and economic inequalities need to meet two conditions. They must be to the greatest benefit of the least advantages and be attached to offices and positions open to all under conditions of fair opportunity. The difference principle is a maxi-min principle and a legitimate constraint on the liberty principle.

Rawls does take into account the economists notion of incentive. The overall economic wealth of a society would be reduced – and therefore the worst off left even worse off – if incentives are taken away. Inequalities can constitute incentives that increase the overall economic pie can make everyone better off. Rawls states that society must redistribute income up to the point where the wealth of the representative poorest individual is maximized. Rawls makes a few statements concerning redistribution. He believes that society should equalize the prospects of those whom were not born in to wealthy families by redistributing the undeserved gain of children of rich families. Rawls wants to try to equalize the inequalities created by society and historical circumstances. Rawls also does not see the reason to allow distribution of wealth to be allowed by natural endowments. A man’s natural endowments are not considered his own property, but that of society’s. Rawls subscribes to the Kantian theory of equality in moral dignity. Nozick as well agrees with these Kantian ideas. Rawls’ Kantian theories help to prevent the individual ignorance of utilitarian principles but also prevents libertarianism’s inability to account for arbitrary inequalities of fortune. Rawls’ goal is to put individuals in the position they would have been in if not for undeserved circumstances. Rawls contends that his theories are political and not metaphysical in that the theories do not require agreements in morality. His theories demand democracy and prior agreement – so that disagreements are resolved not by force.

Nozick approaches property rights from a different point of view than Rawls. This difference is the main elements of the two philosophers’ disagreement. Rawls’ theories include a personal property right that is defended in terms of moral capacities and self-respect. Nozick approaches property rights from a libertarian point of view that is similar to the classical liberalism of John Locke but diverts on a few conclusions. Nozick believes that the distribution of goods is just if brought about by a free exchange among consenting adults and from a just starting position. He argues that the term distributive justice is inappropriate as there is no central distribution and all distribution was made by individual decisions. This remains just even in the face of large inequalities that may arise from the process. Nozick argues that property rights are non-negotiable and that personal liberty makes state policies of redistribution illegitimate; whereas Rawls sees no reason why the greater gains of some shouldn’t compensate for the lesser losses of others. Differences in wealth are mostly due to arbitrary matters and are not justified. Nozick fears a reduction of wealth creation that could result from a coercive redistribution. Nozick seems to have a greater fear of this than Rawls. Rawls sees his redistribution as resulting from prior agreements and in a non-violent and non-coercive manner.

Nozick believes that justice in holdings is historical and depends on what has actually happened. Injustice in past holdings is an issue that he approaches as well. Redistribution of holdings could be considered just if it is a rectification of a past injustice. This introduces another of the core differences in the two men’s philosophies. Nozick approaches the idea of distributive justice from a historical point of view. The current position of individuals is justified by the legitimate acquisitions and transactions of the past. Rawls looks at distributive justice from a “current-time slice” point of view. The current position of individuals is all that matters. Any redistribution that can help make the worst off better is considered and could be considered justified.

Nozick’s entitlement theory may not be fully adequate when explaining why a person is more deserving than another for getting more goods or social status but it is a better explanation than Rawls gives. What claim can an individual make under Rawls philosophy to be more “deserving” than another? That he has more urgent need or a more significant need? Individuals made the original acquisitions and voluntary transfers and these individuals have a legitimate entitlement to the goods that I do not think should be overridden. Rawls theory faces the problem that it would be difficult to get a well-off person to accept that he should have less in order to help the worst-off segment. On what basis is worthiness decided? Rawls might say, urgency of need and significance of need.

Nozick comments on the concept of patterning. Where the distribution is a society is hypothetically composed by patterned distributions (such as by IQ). Nozick’s entitlement theory is not a patterned system due to liberty – which allows freedom in transaction. Rawls end-state ideas may require constant governmental intervention to maintain the specific pattern that is (perhaps arbitrarily) considered to be preferable. Nozick diminishes the importance that Rawls puts on the worst-off segment of society. Nozick also criticizes Rawls tendency to group individuals into social classes when an individual in the “original position” would not be concerned about groups but about himself.

Comparing the two philosophers to the current Canadian stance we can see that with progressive tax rates Canadian law has adopted a philosophy that may be agreeable with Rawls. Wealthy citizens have a smaller need with each marginal increase in wealth; thus, a dollar to a poor person means more than another dollar to a wealthy person. With this in mind, Canadian law attempts to redistribute wealth with significance in mind.
From an economic point of view, Nozick holds a more persuasive position. His theories are in line with modern economic thinking, namely that the free operation of the market will lead to the greatest amount of wealth in society and that transactions arising from liberty are justified. However, Rawls current-time slice view is ideal in helping all members of a society enjoy life. It is fully in line with Kantian deontological ethics.

However, I argue, with economic theory in mind, that a redistribution of wealth under Rawls principles will do more harm than good for society because it violates an individual’s right to property and reduces private incentive to create more utility. Nozick holds the position that has the least issues even if it may not be compatible with many notions of justice as it may not adequately treat everyone as moral equals. I believe that the entitlement theory is a better alternative than the insecure contract Rawls proposes.

Isaac Snow
Distributing this paper justly from Kelowna, BC
September 2013

Further Reading: 

Stanford Encyclopedia of Philosophy http://plato.stanford.edu/entries/justice-distributive/