Hostname: page-component-cd9895bd7-hc48f Total loading time: 0 Render date: 2024-12-26T05:11:19.921Z Has data issue: false hasContentIssue false
  • English
  • Français

International Business Ethics: The Aluminum Companies in Jamaica

Published online by Cambridge University Press:  23 January 2015

Manuel Velasquez
Manuel Velasquez*
Affiliation:
Santa Clara University
Get access Rights & Permissions [Opens in a new window]

Abstract:

I evaluate the adequacy of the three models of international business ethics that have been recently proposed by Thomas Donaldson, Gerard Elfstrom and Richard De George. Using the example of the conduct of the aluminum companies in Jamaica, I argue that these three models fail to address the most important of the ethical issues encountered by multinationals because they focus too narrowly on human rights issues and on utilitarian considerations. In addition I argue that these models also evidence an inadequate understanding of microeconomic theory. I end by proposing that these defects can be remedied by a model of ethics that incorporates a theory of moral rights, a utilitarian-based theory of the market, and a theory of justice.

Type
Replies
Information
Business Ethics Quarterly , Volume 5 , Issue 4 , October 1995 , pp. 865 - 882
Copyright
Copyright © Society for Business Ethics 1995

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 T. Donaldson, The Ethics of International Business (New York: Oxford University Press, 1989); G. Elfstrom, Moral Issues and Multinational Corporations (New York: St. Martin’s Press, 1991); R. T. De George, Competing with Integrity in International Business (New York: Oxford University Press, 1993).

2 Michael Manley, Jamaica: Struggle in the Periphery (London, 1982); Michael Manley, Up the Down Escalator: Development and the International Economy (Washington, D.C.: Howard University Press, 1987); Michael Manley, The Poverty of Nations: Reflections on Underdevelopment and the World Economy (Concord, MA: Pluto Press, 1991).

3 See, Ronald Graham, The Aluminum Industry and the Third World (London: Zed Press, 1982); Merton J. Peck, ed., The World Aluminum Industry in a Changing Energy Era (Washington, D.C.: Resources for the Future, 1988); H. D. Huggins, Aluminum in Changing Communities (London: Andre Deutsche Limited, 1965).

4 Richard Barnet and Ronald Muller, Global Reach: The Power of the Multinational Corporations (New York: Simon & Schuster, 1974).

5 Ray Vernon, Storm Over the Multinationals: The Real Issues (London: Macmillan Press, 1977); H. May, Multinational Corporations in Latin America (New York: Council of the Americas, 1975).

6 Alex Rubner, The Might of the Multinationals: The Rise and Fall of the Corporate Legend (New York: Praeger Publishers, 1990).

7 Rachael Kamel, The Global Factory (Philadelphia: American Friends Service Committee, 1990); Janet Lowe, The Secret Empire, How 25 Multinationals Rule the World (Homewood, IL: Business One Irwin, 1992).

8 See, for example, William C. Frederick, “The Moral Authority of Transnational Corporate Codes,” Journal of Business Ethics, 10: 165–177; Kathleen A. Getz, “International Codes of Conduct: An Analysis of Ethical Reasoning,” Journal of Business Ethics, 9: 567–577; Claes Hagg, “The OECD Guidelines for Multinational Enterprises, A Critical Analysis,” Journal of Business Ethics, 3: 71–76. A number of international bodies have in fact developed codes of ethics for multinationals including: the United Nations (The Proposed Text of the Draft UN Code of Conduct on Transnational Corporations, not yet formally adopted), the International Chamber of Commerce (The ICC Guidelines for International Investment, 1972), the Organization for Economic Cooperation and Development (the OECD Guidelines for Multinational Enterprises, 1976), and the International Labor Organization of the UN (the UN International Labor Office Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, 1977).

9 For an analysis of these codes see John M. Kline, International Codes and Multinational Business (Westport, CO: Quorum Books, 1985).

10 The big six are Alean (Canada), Alcoa (U.S.), Kaiser (U.S.), Pechiney (France), Reynolds (U.S.), and Alusuisse (Switzerland).

11 Peck, ibid., pp. 4–8.

12 Peck, ibid., p. 33, 78.

13 Manley, 1987, p. 54: “…none of the American-based companies ever declared a net, taxable profit on their Jamaica operations. Even when the bauxite production was running at record levels in 1973, no company, save ALCAN, confessed a profit.”

14 Manley, 1987, p. 54: “…to say nothing of the notional and highly fictional prices which were set by the companies for moving bauxite and alumina between their various affiliated bodies.”

15 Manley, 1987, p. 38.

16 Manley, 1987, p. 197.

17 Manley, 1987, pp. 33–34; Manley notes, that such low wages were prevalent in Jamaica at the time. Although the companies could easily have afforded much more, they decided to pay only the local prevailing wage. Huggins, 1965, p. 121 writes: “the workers through their unions pressed for rates of pay on a par with those paid to bauxite and alumina employees in Canada and the United States. The companies resisted this claim, but the compromise reached has given the bauxite workers a lead over other industrial workers in the island.”

18 Anthony Payne, “Jamaica: The ‘Democratic Socialist’ Experiment of Michael Manley,” in Anthony Payne and Paul Sutton, Dependency Under Challenge: The Political Economy of the Contemporary Commonwealth Caribbean (Manchester, U.K.: Manchester University Press, 1984), pp. 18–42.

19 Manley, 1987, pp. 38, 61.

20 Payne, ibid., p. 28.

21 Derick A. C. Boyd, Economic Management, Income Distribution, and Poverty in Jamaica (New York: Praeger Publishers, 1988).

22 Donaldson’s theory is elaborated in his 1989 book, The Ethics of International Business, cited above; many of the main ideas in this book were first outlined in his “Multinational Decision-Making: Reconciling International Norms,” Journal of Business Ethics, 4 (1985), 357–366; a short popularized version of his main claims can be found in his “Can Multinationals Stage a Universal Morality Play,” Business and Society Review (1992), 51–55. Donaldson claims in his book that a social contract theory of ethics will imply “that a productive organization should refrain from violating minimum standards of justice and of human rights in any society in which it operates” (p. 54). The ten “fundamental rights” are supposed to specify what these rights must be, although, surprisingly, Donaldson never gives an argument to show that these particular ten rights would be chosen from a social contract perspective.

23 See Norman Bowie, “Moral Decision Making and Multinationals,” Business Ethics Quarterly, v. 1, no. 1, 1991, pp. 223–32.

24 For evidence of the importance of rights in international contexts one need look no farther than the United Nations Declaration of Human Rights. Nevertheless, other international codes, particularly those which deal with multinationals, are not focused on human rights issues. In fact, the fundamental value that has pride of place in almost every international code of ethics is economic or social development, which is a utilitarian value, not one of human rights.

25 These nations include: Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom, the United States, Japan, Finland, Australia, New Zealand, and Yugoslavia.

26 Organization for Economic Co-operation and Development, the OECD Guidelines for Multinational Enterprises (Paris: OECD, 1986).

27 Interestingly, Michael Manley attested to the relevance of these international codes. Referring to the Proposed Text of the Draft United Nations Code of Conduct on Transnational corporations, he wrote: “If such a code had been in operation, it would clearly have had implications for Jamaica in the period between 1974 and 1980. For example, a code might have prevented retaliation by the bauxite companies over the imposition of the levy…. Looking at some specific issues, it can be argued that the code would have made it difficult, if not impossible, for Kaiser to manipulate Jamaica and Guinea to Jamaica’s disadvantage…. Finally…the TNCs traditionally exploit different standards in pay and customary working conditions where other things are equal. With a proper code this kind of manipulation would be far more difficult.” Manley, 1987, pp. 206–07.

28 Elfstrom’s theory is elaborated in his 1991 book, Moral Issues and Multinational Corporations, cited above.

29 There is a question here as to whether Elfstrom is reading Hare correctly; Hare’s view—like that of Bentham—is that satisfaction of the actual preferences of every individual must be maximized, while Elfstrom’s view—much closer to Mill’s—is that those goods in which the majority of people have strong interests must be maximized.

30 This is, of course, a strange conclusion for a utilitarian, since exactly the same argument could be made about any private individual, thereby absolving every individual of any positive utilitarian duties.

31 Utilitarianism would imply that the aluminum companies were obligated to give away their revenues to Jamaica right up to that point where the utility of the other constituencies who depend on company revenues would have equaled the utility of the citizens of Jamaica.

32 Which individuals would have had less, which would have had more if things had been different? And what would those individuals have done with what they got?

33 De George’s theory is elaborated in his 1993 book, Competing with Integrity in International Business, cited above; De George’s approach was first described in “Ethical Dilemmas for Multinational Enterprises: A Philosophical Overview,” in Ethics and the Multinational Enterprise, ed. by W. Michael Hoffman, Anne E. Lange, and David A. Fedo (Washington, D.C.: University Press of America, 1986), 39–46

34 Ibid., p. 48.

35 Ibid., p. 61,62.

36 Ibid., p. 48.

37 See Manuel Velasquez, Business Ethics: Concepts and Cases (Englewood Cliffs, NJ: Prentice-Hall, 1992).