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Moral Minimums for Multinationals1

Published online by Cambridge University Press:  28 September 2012

Thomas Donaldson
Thomas Donaldson
Affiliation:
THOMAS DONALDSON is the Henry J. Wirtenberger Professor of Ethics at Loyola University in Chicago.
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Abstract

Adam's Smith's invisible hand guiding market mechanisms toward moral conduct seems recklessly idealistic today, in light of forces that have dramatically skewed international free-market operations. Donaldson argues that major changes are necessary in the decision-making process as well as in the conduct of multinational corporations in order to exercise moral obligations and meet culture-specific needs of host countries. Donaldson proposes standards for international institutions by which to protect fairness and freedom, ownership of property, free speech, and minimum education and subsistence levels. “Are such changes in the decision-making process of multinational corporations likely or even possible?” he asks. With some reservations, the author is optimistic that a more ethical approach to market issues is workable.

Type
Articles
Information
Ethics & International Affairs , Volume 3 , March 1989 , pp. 163 - 182
Copyright
© Carnegie Council for Ethics in International Affairs 1989

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References

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4 An example of disparity in wages between Mexican and U.S. workers is documented in the case study by Haddox, John H., “Twin-Plants and Corporate Responsibilities,” in Profits and Responsibility, eds. Werhane, Patricia and ĎAndrade, Kendall (New York: Random House, 1985)Google Scholar.

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7 I have borrowed this eight-fold scheme of categories from researchers Farr and Stening in Lisa Farr and Bruce W. Stening, “Ethics and the Multinational Corporation” (an unpublished paper) p. 4Google Scholar.

8 An analysis of such reasons, one which also contains many observations on the evolution of international public policy, is Lee E. Preston's “The Evolution of Multinational Public Policy Toward Business: Codes of Conduct,” a paper read at the annual meeting of the American Academy of Management, New Orleans, August 1987Google Scholar.

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27 The fairness-affordability test implies that in order for a proposed right to qualify as a genuine right, all moral agents (including nation-states, individuals, and corporations) must be able under ordinary circumstances, both economically and otherwise, to assume the various burdens and duties that fall fairly upon them in honoring the right. “Affordable” here means literally capable of paying for; it does not mean “affordable” in the vernacular sense that something is not affordable because it would constitute an inefficient luxury, or would necessitate trading off other more valuable economic goods. This definition implies that—at least under unusual circumstances—honoring a right may be mandatory for a given multinational corporation, even when the result is bankrupting the firm. For example, it would be “affordable” under ordinary circumstances for multinational corporations to employ older workers and refuse to hire eight-year-old children for full-time, ongoing labor, and hence doing so would be mandatory even in the unusual situation where a particular firm's paying the higher salaries necessary to hire older laborers would probably bankrupt the firm. By the same logic, it would probably not be “affordable” for either multinational corporations or nation-states around the world to guarantee kidney dialysis for all citizens who need it. The definition also implies that any act of forbearance (of a kind involved in not violating a right directly) is “affordable” for all moral agentsGoogle Scholar.

28 Shue, , Basic Rights, p. 57Google Scholar.

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31 Companies are also charged with undermining local governments, and hence infringing on basic rights, by sophisticated tax evasion schemes. Especially when companies buy from their own subsidiaries, they can establish prices that have little connection to existing market values. This, in turn, means that profits can be shifted from high-tax to low-tax countries, with the result that poor nations can be deprived of their rightful shareGoogle Scholar.

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35 Some have argued that insulating the economies of the less developed countries would be advantageous to the less developed countries in the long run. But whether correct or not, such an argument is independent of the present issue, for it is independent of the claim that if a practice violates the norms of the home country, then it is impermissibleGoogle Scholar.