What ethical obligations of social justice does business owe society? Though obligations of social justice apply well beyond business, a special focus on business is important as business is one of the dominant institutions in our society and has a huge impact on all our lives. Our first question is “What is justice?”
At the most basic level justice is about what is deserved. Justice in punishment focuses on what a criminal deserves. Similarly social and economic justice depends upon what people deserve in terms of economic and social systems. The concept of desert is a central theme to moral philosophy, but is often foreign to economists. For economists (and business schools) products and services prices, employee wages, corporate profits, and executive salaries can be high or low, but not just or unjust. Economists speak of trade being free or unfree but rarely as just or unjust. Economics tends to view any result of the free market to be just or fair. Moral philosophy applies the question of justice/fairness to the market itself asking: is the free market just? This question is often overlooked in business schools where the results of the free market are accepted as fair and just without question. Now, it may be that free markets are just or fair (either in all things or in some things). But, if it is just and fair what makes it so? The importance of this question can be seen by considering the vast inequality in the worldwide results of free market distribution of goods like health care, education, and food.
Two examples highlight the difference between what one “deserves” in an economic sense and what one “deserves” from a justice perspective. First, imagine that my salary for teaching philosophy is X. An economist might describe X as what I deserve given the demand for philosophers and my level of experience and education. Now, suppose there is an international conference of philosophers in which 80% of all philosophers attend, but I do not attend. During the conference there is a terrorist attack in which all of the attending philosophers are killed. Given that the demand for philosophers is the same as it was before the conference, but the supply of philosophers has drastically decreased what will an economist say I deserve for my new salary? The economic analysis might conclude that I now “deserve” a salary of 3X given the new market conditions. Now look at this from a justice perspective. I am working just as hard, doing the same job, with the same skills and experience after the terrorist attack as I was before the attack. Given this, why would justice conclude that I deserve three times the salary for the same job? I’ve done nothing to deserve an increase based on justice even if the market now rewards me for events outside of my control.
Second, imagine two students studying language. Pat studies French and Chris studies Arabic. Each of them works just as hard and is just as skilled in what they do. Both begin their studies in the late 1990’s and both graduate shortly after September 11, 2001. A comparison of what each deserves based upon justice finds no difference between Pat and Chris. Yet, post 9/11 graduates who can translate Arabic now earn salaries over $100,000 whereas graduates of French are lucky to earn half that salary. Thus, what the free market economist concludes and means by “deserves” is not the same as what the moral philosopher concerned with justice concludes and means by deserves.
Our focus in this module is the question of distributive justice. That is, what is the just distribution of social and economic benefits and burdens in society? As such, the theory of distributive justice we accept will have immediate consequences for our economic systems, tax policy, property laws, rules and regulations of business.
There are three primary theories of distributive justice.
Egalitarian – Distributive justice involves equal access to primary goods favoring those at the economic bottom.
Libertarian – Distributive justice is achieved by protecting individual rights to liberty against collective control.
Utilitarian – Distributive justice is achieved by maximizing the good of public and individual interests.
So, which theory sounds best to you? We might employ a test case to see where your initial thoughts are. Suppose we have a good to distribute such as a $10,000 university scholarship or a pizza. There are several people asking for the good each with a different claim as to why they should get it. Though each claim will have some appeal we must choose a method to distribute the good. Which claim for just distribution should we accept?
Distribute to each person an equal share.
Distribute to the person most in need.
Distribute to the person who put forth the most effort.
Distribute to the person who made the biggest contribution.
Distribute to person who showed the most merit.
Every one of these standards has been proposed, but conflicts between them arise. When they do, which standard is the most important?
After thinking about the first sort of case lets invert the problem. This time rather than determining the just distribution of a particular good, we have to determine the just distribution of a cost. There is a tax that must be imposed in order to provide an important service. You must determine who should pay the tax. For simplicity, you have three options to choose from.
Impose the tax on the people using the service. A consequence of this is that only those who can afford the service will get it. The poor won’t have access.
Impose the tax on the people most able to pay. Everyone would get the service but the wealthy are paying more to subsidize access for the poor.
Impose the tax on everyone equally. Everyone pays the same whether they use the service or not. The financial burden affects the poor the most, but everyone has access to the service.
How you answer these sorts of questions says something about which theory of distribute justice you favor. Now that you’ve given a couple of basic cases some thought we can look at a formal presentation of some of the major theories of distributive justice.
John Rawls’ A Theory of Justice is an attempt to provide a theory of justice on a societal level. Rawls’ argument will focus on the institutions of government (as opposed to the actions of individuals). With this in mind, let’s examine his theory.
A society is a “self sufficient association of persons who in their relations to one another recognize certain rules of conduct as binding and who for the most part act in accordance with them.”
Why join a society? Rawls claims that the rules of society “specify a system of cooperation designed to advance the good of those taking part in it.” Of course these rules will not always advance our own good, but on the whole they will. These rules governing society are the principles of justice. For society to work, everyone must know and accept the principles of justice and the institutions of society must generally live up to these principles.
How do we determine the rules? First of all let’s spell out the assumptions made about humanity. Rawls wants to find out what principles of justice people would agree on. But for Rawls people are:
Free (uncoerced)
Rational (able to determine the most effective means to an end)
Concerned with furthering their own interests (self interested)
Risk adverse (we don’t like taking to many chances with our lives)
Now that we have an idea of what Rawls assumes about people, he asks us to perform a thought experiment involving such people. Rawls sees a problem in asking these people what principles of justice they would agree to. The problem is that each will be biased towards their own self interest. For instance, wealthy people would not agree that the rich should be heavily taxed to care for the poor and conversely the poor would not agree to let the rich keep all their money. Consider the following cartoon demonstrating the type of disagreements we might have when we are self interested and biased.
Rawls has a solution to this problem. The solution is to add the veil of ignorance. The veil of ignorance requires that each of the hypothetical people in our thought experiment know everything about the world (or at least as much as the average educated person) but is completely ignorant of who they are in the world. For instance, you know physics, philosophy, and mathematics but you do not know if you are black, white, rich, poor, male, female, smart, dumb, attractive, ugly or any other factors that make up who you are.
Now, given our self interested, rational people are now behind the veil of ignorance what first principles of justice would they agree to? (Note, Rawls does not think they can agree to the utilitarian principle of utility because it is to risky as we could be sacrificed for a greater good.)
Rawls “Two Principles of Justice”
Rawls claims that our hypothetical people would agree to two principles of justice.
Each person has equality in the assignment of rights and duties.
Inequalities in wealth and authority are just only if they result in benefiting either everyone, or the least advantaged.
These two principles form the “first principles” for a just society. The first principle will entail that we are treated equally, and that we will have rights to protect us from society. Our hypothetical people would agree with this first principle since it best provides a level playing field from which each of us (whoever we turn out to be) has a chance to live a fairly good life. The second principle would entail that society only tolerate inequalities of wealth and power if those inequalities benefit the least well off. For example, we ought to pay medical researchers more because this will lead to benefits for everyone. This second principle would be agreed to since it ensures that even if we are the poor or less powerful in society we will benefit by that inequality rather than be hindered by it.
So what does all this mean for distributive justice? Recall the veil of ignorance in which rational, self-interested, and risk adverse people (who know everything about the world but who they are) are asked to decide how society ought to be set up. Rawls claims that two principles of justice emerge: 1) The equality principle, 2) The difference principle. Specifically relevant to our discussions will be the difference principle in which inequalities are only tolerated if they benefit the least well off (generally calculated by income).
Rawls then can view the business as a just institution so long as that business is designed to advance everyone’s interest or the least well off. This would allow for businesses and investors to profit, but only as much as is needed to encourage businesses to do what is best for everyone and the poorest. This creates a dominant obligation for business to help those at the economic bottom rather than the top. This inverts the paradigm of Milton Friedman who placed investor profit before workers. With Rawls, investors only deserve the amount needed to encourage continued investment and the rest should be used to raise salaries for the lowest paid workers and to promote the social good for society.
Nozick: Anarchy, State, and Utopia
Nozick builds upon the Lockean idea that as long as things are acquired justly then they have a property right to them that cannot be infringed upon. Specifically, Nozick says:
A person who acquires a holding in accordance with the principles of justice in acquisition is entitled to that holding.
A person who acquires a holding in accordance with the principle of justice in transfer, from someone else entitled to the holding, is entitled to the holding.
Nozick: “The Importance of Liberty and Self-Ownership”
Nozick argues that socialism (wealth transfers) are unjust because they violate our liberty rights. Even if we everyone started with equal shares (or under a strict egalitarian distribution), our liberty and property rights would be continually violated. For example, if Wilt Chamberlain negotiates a contract that he gets 25 cents from every ticket sold to any basketball game he plays in, the egalitarian will want to take this additional income from him to obtain an equal redistribution. Why should Chamberlain’s income be taken from this voluntary transaction in which everyone agrees to pay him a quarter for the privilege of watching him play? Suppose, instead of the quarter contract Wilt decides to do overtime performances and earns extra money that way, why should this income be taken from him?
Taxation and redistribution, Nozick claims, is equivalent to forced labor. Would you suggest that we ought to be forced to work for the benefit of others? But how is this different than taking 1/3 of your labor in the form of taxes? The only difference seems to be that in forced labor we choose the labor you perform whereas in taxation we let you choose what you do. Yet, this distinction is irrelevant since the outcome is the same: much of the work you perform is taken from you by force for the benefit of others against your will. If society is justified in taking 1/3 of your products (thereby 1/3 of your time working was really for them not you) why can’t society simply demand that you work 1/3 of your regular time for them (i.e. forced labor)?
In the end analysis, Nozick thinks there is only one explanation for taxation and positive duties. That is, the shift from the classical liberal notion of self-ownership to a notion of partial-ownership. Where self-ownership seems to stop paternalism, income taxes, and other positive duties to others, partial-ownership presumes that society (the state) is a partner in your life, hence it has an equal say in what you do and what property you can keep. This notion however, is a clear violation of liberty and property rights and Nozick thinks we should reject it in favor of the classical liberal view.
What Nozick says concerning individuals could also be applied to businesses. What business earns fairly is theirs and no one else has a claim upon it. Business would have no obligation to assist even the most desperate of persons by sharing its profits. Neither governments through taxation nor moral philosophers through claims of charity generate any obligation to share the wealth. Certainly business may choose to assist and this would be nice, but it is in no way an obligation to do so.
Peter Singer “Rich and Poor”
Singer approaches the question of distributive justice from a utilitarian perspective. As a utilitarian Singer is not persuaded by the absolute rights’ claims offered by Nozick when such claims stand in the way of the greater good. Similarly, Singer doesn’t accept Rawls’ claim that justice is about equality or helping the least well off. For Singer the just distribution is the one that leads to the greatest good even if it means violating property rights (what Nozick’s opposes) or sacrificing some at the bottom for the greater good of others (what Rawls opposes). On Singer’s account wealthy countries, businesses, and individuals do have moral obligations to at least some of the least fortunate because just as doing something has moral consequences doing nothing also has moral consequences. Everyone who has more than they need has a moral obligation to assist those people who do not have enough to meet their basic needs of food, water, and shelter.
Consider those who lead lives of poverty unable to meet their basic needs. We often make the argument in defense of not helping them that we didn’t do anything to cause their problem. However, Singer points out that since we could do something to save lives but aren’t doing anything, we are guilty of letting people die. Is letting people die morally as bad as killing? If not, then is letting people die morally acceptable? Unless we claim that letting people die (without their consent in this case) is morally acceptable then it seems we are doing something immoral by not acting to prevent extreme poverty.
Singer puts forth the following example concerning our duty to assist those in need. Suppose you are walking to class and on the way you encounter a small, one foot deep, plastic pool in a yard along the way. In the pool is a baby who is drowning. Do you have an obligation to save the drowning baby, even though you will get wet and be late for class? Singer says, and most people agree, that you do have an obligation to save the baby. Notice, that your obligation is strictly a matter of the baby’s needs and your ability to provide. Your obligation does not arise from: the fact that this is your baby (it isn’t), the fact that you’re babysitting the child (you aren’t), or the fact that the event occurs on your property (it doesn’t). Suppose further that someone saw the baby a moment before you did and did not help. Singer argues that just because someone else failed to uphold their obligation to assist, this does not excuse you from your moral obligation to assist. Even if there are others who can assist if you do not, this doesn’t excuse you from the moral obligation to assist either. The obligation to assist falls upon anyone and everyone who can assist until the assistance is provided.
How great is this obligation to assist? Singer, who takes a utilitarian view of obligation, does place a limit upon our moral obligation to assist. For instance, suppose instead of a drowning baby in a pool you come across a child in a third story window of a blazing inferno. In this case, your attempt to assist will likely fail costing your life in the process (as you are not a trained or equipped fire fighter and the fire department is still minutes away). Singer holds that in a case such as this, that it would be supererogatory for you to assist, but you are not morally obligated to assist because the costs of assistance are comparable to the benefits of assistance. In other words, risking one life to save another is not something we are morally obligated to do (though it is noble and brave to do so; you do no wrong by not assisting). These two cases will serve as the framework for Singer’s argument for a moral obligation to assist those in need.
Singer’s Argument for our Obligation to Assist:
If we can prevent something bad without sacrificing anything of comparable significance, we ought to do it.
Absolute poverty is bad.
There is some absolute poverty we can prevent without sacrificing anything of comparable moral significance.
Therefore, We ought to prevent some absolute poverty.
In evaluating this valid argument consider the following: Premise one is supported by the case of the drowning baby. Premise two is an unsupported assumption (but would you reject it?). Premise three is supported by the facts (we certainly could help alleviate at least some poverty by giving up some of our wealth). We can also support premise three by pointing out that for a dollar a day you can prevent one child from starving. Since this is what many of us spend on an unnecessary item like a soda, it is hard to reject premise three. In order to reject this argument’s conclusion we should first look at the premises. Can we mount an argument against any of Singer’s premises? If we cannot then we will have difficulty arguing against his conclusion.
There is one challenge to be made to Singer’s argument even if we accept his premises. Specifically, if we are morally obligated to prevent some absolute poverty, then how much are we to give up in order to meet this moral obligation? It seems that Singer requires an awful lot of us before we reach “comparable moral significance.” This means that until your giving costs you something of comparable moral significance to what your giving helps prevent, that you are obligated to continue giving. For instance, compared to someone who is starving, it seems we should give up drinking liquor, going to the movies, having cable TV, most anything we do for entertainment, and even the extra food we do not need to eat (you don’t need pizza you can do fine with Ramen noodles if it helps prevent starvation). This is asking an awful lot of us, but how can we morally argue that we should be entitled to things we don’t need while others starve in countries that could not provide their people the opportunities you have. Just because you were lucky to be born here and they were unlucky to be born there? It would appear that denying Singer’s conclusion makes us look selfish and immoral. Of course, Singer wouldn’t take everything. For instance, taking away your education or your car would preclude you from holding a job to support yourself (which would place you in a starving position of comparable moral significance). Singer wouldn’t let you drive that fancy new BMW (Big Money Wasted?) you want, but you can drive something that gets you from place to place.
The same arguments which Singer applies to individuals can be applied to corporations and businesses as well. Singer would not require that a business go bankrupt by helping others, but certainly a lot of business profit could be redirected to help prevent absolute poverty without destroying the economy. Singer would admit that we shouldn’t kill the “golden goose” that is business. But Singer would point out that an obligation to give up some amount of profit is compatible with business and investment continuing to exist, grow and be profitable. Exactly what that amount will be would the result of a utilitarian calculus.
Between Rawls, Nozick, and Singer we find three different approaches to the question of distributive justice. Which we accept will determine what obligations individuals and businesses have to others. In our own society we see elements of each theory at work often conflicting with each other. All too often the social justice question is forgotten in business as it focuses on profitability. Yet, given the huge impact business has for better and worse on all our lives the social justice question deserves more attention than it is given.
