Corporate Responsibility
Rivka at Respectful of Otters was writing about Abbott Pharmaceuticals increasing the price of one of its HIV drugs when he noted:
My posts about Wal-Mart met with the same criticism from some quarters: it's unreasonable for me to expect private corporations to behave in ways that don't maximize their own profits. Okay. But that implies that the way to change corporate behavior is by affecting its profitability. If I think Abbott's price structure and Wal-Mart's treatment of its employees are reprehensible, then my response should be to try to make those behaviors more costly.
Sometimes sentiments such as this are phrased in a purely descriptive manner, i.e. they are simply a description of how the world happens to work, not an opinion about how the world should work. Quite often though such sentiments are indeed normative: they constitute a moral claim corporations have no ethical responsibilities outside of generating a profit and, at least in some cases, that it would be unethical to try and require anything else from them.
I would like to raise a couple of objections to such a position.
First, there is no right for corporations to exist. Corporations exist and are allowed to do business based upon the existence of a corporate charter. Corporations are chartered in particular states, but no state is obliged to issue a charter simply because an application has been filed and states do have the power to revoke charters. At one time, corporate charters had a limited duration (like a decade or two) and corporations were limited in how much they could own.
There already exist financial and legal conditions for allowing corporate charters. Why not insist on other conditions involving, say, pollution? Thus if the corporation pollutes illegally, one possible penalty might be for the charter to be revoked. If companies don’t want to take that risk, they can forego being incorporated and continue to do business, but the advantages that incorporation brings would be lost.
Second, the idea that a corporation has no ethical responsibilities beyond making a profit seems to commit the fallacy of reification by treating the corporation as if it were a person. It is true that for a variety of legal purposes a corporation is treated as if it were a person, but I don’t think that we should always do so in an ethical discussion.
There is no independent entity called “the corporation” that, say, poisons the local water sources. Those actions were taken by the people who make up the corporation. Thus, if we say that if no laws were broken then nothing unethical was done when the water was poisoned, we are saying that the people who made the decisions to poison the water were not acting unethically. Is this, however, a coherent position to adopt? I don’t think so.
A person’s ethical obligations as a neighbor and as a CEO may not be precisely the same in every possible situation, but there must be sufficient overlap to argue that if it would be unethical for him to poison his local water source when acting as a person living in the community, then it is unethical for him as a CEO to order the dumping of poisons into the local water source.
Saying that a corporation has no ethical responsibilities aside from making a profit (and following the law, of course) implies that, when acting in their corporate roles, employees and decision-makers have no ethical responsibilities aside from helping the corporation make a profit. This would require that corporations be made up of certifiable sociopaths or that the decision-makers adopt a sort of moral schizophrenia that is unacceptable. Human beings have ethical obligations to one another which don’t disappear when one dons a suit and sits at the head of a board of directors. We might disagree on just which ethical obligations corporations have to the community and its employees, but I don’t think it possible to successfully argue that they have none beyond following the law and making a profit.
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Of course, corporations have ethical responsibilities, as the writer of the article aptly argues. Salaries and benefits have to be decided upon by the people who run the corporations. Working conditions are set by the designers of the corporation. The people who make up the corporation have a say from the get-go. People will not work under sub-standard conditions. Highly skilled employees are offered competitive salaries. The corporation is only as good as the people who work in it. I think the problem has become that people feel more like monads nowadays. In the abstract, employees desire a safe and comfortable workplace, but since their anxieties and fears have caused them to feel colder and more isolated, they are reluctant to open up and communicate with one another: that corpse they’ve planted has not begun to sprout, a la T.S. Eliot. So, they have to rely wholly on Human Resources to set general standards and guidelines, like what we find in employee handbooks, which no one really reads anyway. There is always a potential for more friendly settings, but no one is courageous enough to take steps in that direction. There is a real need to work together and cooperate for the good of the corporation, at any rate. That is a must. Corporations can and do reach out to their communities. Ethical standards have been recognized through the years. There are other societal checks on this. Once again, also with respect to the neighborhood and the community, I think the problem lies in the anxieties and fears of the employees, all the way up to CEO. What keeps the people in a company cold and aloof has an effect on what type of concern is displayed outward towards the community. Profit must be important for them. However, if we could conquer the monumental task of allaying the fears in the employees’ minds, then we will open up space in their minds to concentrate on community projects and altruistic endeavors.