노사관계론 Business Ethics adopt a laissez-faire approach to business. Business ought to be free from government regulation and control, allowing the market to function most efficiently.

노사관계론 Business Ethics Seen in this way, we can raise two general types of challenges: those that focus on the adequacy of free markets as means to the ends of maximally satisfying consumer demand, and those that focus on the appropriateness of these ends as legitimate ethical goals. More simple, is the free market an adequate means 2. Critical Assessment of the Economic Model: The Utilitarian Defense

노사관계론 Business Ethics to our ends, and are the ends ethical appropriate? Economists are familiar with a variety of situations in which the pursuit of profit will not result in a net increase in consumer satisfaction. In fact, such situations are called market failure precisely because in these cases markets fail to do what they were designed to do. Externalities such as pollution and resource depletion are perhaps the best known examples of market

노사관계론 Business Ethics failure. Externalities provide examples of efficiently functioning markets failing to achieve optimal results. A second example of market failure occurs in the case of public goods. There are many social goods – clean air, scenic views, friendly and supportive neighborhoods and communities, or safe streets for example – for which no pricing mechanisms exist. A third type of market failure occurs in situations in which individual pursuit of rational self-interest –

노사관계론 Business Ethics the sort of behavior required by competitive markets – results in a worse outcome than what would have occurred had the parties’ behavior been coordinated, either through cooperation or regulation. What is good and rational for a collection of individuals is not necessarily what is good and rational for a society. Once again, if society wishes to address these concerns it will need to reply on public and not private

노사관계론 Business Ethics (i.e., the market) decision making mechanisms. The law is also the appropriate mechanism for addressing social goods that are unattainable through individual choice. In short, the law is the obvious remedy for social harms resulting from market failures. But there are good reasons for thinking that such ad hoc attempts to repair market failures are socially inadequate.

노사관계론 Business Ethics First is what I call the first-generation problem. Market can work to prevent harm only through information supplied by the experience of market failures. That is, we learn about market failure and thereby prevent harms in the future only by sacrificing the first generation as a means for gaining this information. Second, but even if we allow government regulation to establish social standards for business, we are still faced the ability of business to influence both

노사관계론 Business Ethics government and regulation and consumer demand. Lastly, but just as we must recognize the ability of business to influence government policy, we must also recognize its ability to influence consumers. The second challenge to this utilitarian defense of the economic model claims that the ends attained even by an efficiently functioning market are unsatisfactory

노사관계론 Business Ethics on ethical grounds. Friendship, psychological health, and love are important elements of happy lives, but you can find none of these sold on the open market. Market economies, and many of the political institutions that surround them, assume (often uncritically) the value of economic productivity and economic growth. The language of economic growth is simply a shorthand way of saying that more people are getting

노사관계론 Business Ethics more of what they want. Economic growth means only that consumers are getting more of what they want, as determined by what they spend in the marketplace. There is a market for child pornography and child prostitution, but these are grievous moral wrongs. There are also markets for drugs, nuclear weapons, chemical weapons, and military secrets.

노사관계론 Business Ethics Management should pursue profits only “so long as it stays within in the rules of the game, which is to say, engage in open and free competition, without deception or fraud”, and only “while conforming to the basic rules of society, both those embodied in law and those embodied in ethical custom”. There are reasons to doubt the utilitarian rationale for the economic model.

노사관계론 Business Ethics The second ethical defense of the economic model appeals to the rights of private owners rather than to alleged beneficial consequences of markets. On this view, managers have an overriding obligation to maximize profits because that is what their employers, the owners of the corporation, want done with corporate resources. 3. Critical Assessment of The Economic Model: The Private Property Defense

노사관계론 Business Ethics We can indicate two significant challenges to this defense of the economic model. First, we need to recognize that property rights are not absolute. Minimally, one’s right to use property is constrained by the rights of others. The second challenge questions the understanding of stockholders implied by this defense. We need to recognize that, historically, corporate property rights differ from personal property.

노사관계론 Business Ethics If investors disagree with managerial decisions, they are free to move their capital elsewhere. If employees disagree with managerial decisions, they also are free to take their labor elsewhere. If enough do either, managers will be directed by market forces to adjust their policies accordingly. This philosophical conclusion is reflected in the practice of many corporations that have established ethics programs and ethics officers.

노사관계론 Business Ethics Much good work gets done by ethics officers, but it is fair to say that much of their work focuses on issues of legal compliance. But, as was described in chapter 1, compliance with the law is not enough to ensure ethical behavior. Because the law is ambiguous, because in many cases it simply is not clear what the law requires, business managers will often face decisions that will rely on their ethical judgments.

노사관계론 Business Ethics Philanthropic CSR holds that, like individuals, business is always free to contribute to social causes as a matter of philanthropy. From this perspective, business has no strict obligation to contribute to social causes, but it can be a good thing when they do so. Just as individuals have no ethical obligation to contribute to charity or to do volunteer work in their 4. The Philanthropic Model of CSR

노사관계론 Business Ethics community, and society has no right to demand this from individuals, business has no ethical obligations to serve wider social goods. But just as charity is a good thing and something that we all want to encourage, business should be encouraged to contribute to society in ways that go beyond the narrow obligations of law and economics. This approach is especially common in small, locally owned businesses where the owners also often play

노사관계론 Business Ethics a prominent leadership role within their local community. Within the philanthropy version are occasions in which charity work is done because it brings the firm good public relations, provides a helpful tax deduction, and builds goodwill and a good reputation within a community. The social contribution is as much an investment as it is a contribution. Even defenders of the economic

노사관계론 Business Ethics model of CSR can support social responsibility in this sense. From the perspective of the economic view of CSR, only philanthropy done for reputational reasons and financial ends is ethically responsible.