Justice Failures: Efficiency and Equality in Business Ethics

Journal of Business Ethics

The Market Failures Approach (MFA) is one of the leading theories in contemporary business ethics. It generates a list of ethical obligations for the managers of private firms that states that they should not create or exploit market failures because doing so reduces the efficiency of the economy. Recently the MFA has been criticised by Abraham Singer on the basis that it unjustifiably does not assign private managers obligations based on egalitarian values. Singer proposes an extension to the MFA, the Justice Failures Approach (JFA), in which managers have duties to alleviate political, social, and distributive inequalities in addition to having obligations to not exploit market failures. In this paper I describe the MFA and JFA and situate them relative to each other. I then highlight a threefold distinction between different types of obligations that can be given to private managers in order to argue that a hybrid theory of business ethics, which I call the MFA + , can be generat...

SPICE: Student Perspectives on Institutions, Choices and Ethics, 2020

This paper surveys and critiques the current market failures approach (MFA) to business ethics, beginning with the concept of market inefficiencies as introduced by Coasian transaction costs and progressing to the concept of market failures as discussed in Arrowvian information costs. The second section outlines contemporary constructions of MFA. At the macroscopic level, MFA is justified with Pareto efficiency, generating its characteristic efficiency imperatives and their derivative implications of metavoluntarism. The third section outlines the use of agency theory and professionalism norms within microeconomics to evidence MFA's attractiveness. The final section advances a critique of MFA based on the general theory of second best, finding MFA irrelevant, because its fundamental premises do not obtain in a dynamic capitalist economy, and unreasonable in its expectations of individual human behavior.

Postmodern Openings

Economic crises - such as the Great Recession of 2008 or the 2020 crisis triggered by the Covid-19 pandemic - have always represented an opportunity to address the relationship between macroeconomic variables and business and society’s reactions to them. Indeed, negative economic conjuncture, slump and stagnation, represent a challenge and may elicit the opportunity to rethink the role of business in tackling systemic global problems of the current system - such as persisting and raising inequalities and environmental unsustainability – by focusing on Business Ethics both as a theory and a practice. Accordingly, the present work aims at shedding light on the link between the systematic production of inequality within the current economic system and the opportunities for entrepreneurs and managers to significantly reduce it by engaging in business ethics practices. For this purpose, the theoretical framework proposed rests on a step “back” to the discussion of the relation between ec...

Journal of Business Ethics, 2004

This paper gives prescriptions for introducing ethical concerns into the economic theory of the firm. Topics include social responsibility, corporate governance, profit maximization, competition barriers, collusion, the market system, and welfare econo mics. The need for such prescriptions is based on a content analysis of 21 managerial economics texts for their coverage of ethics. My analysis finds that substantive discussions of ethics are conspicuous by their absence. This finding is also consistent with the (lack of) coverage of business ethics in economics journals. As ethical breaches can involve significant monetary damages to a firm -particularly through adverse market reactions -moral-reasoning abilities can complement analytical skills. Consequently, my analysis demonstrates how ethics figure into the opportunity costs of managerial decision-making, which is central to the economic definition of profit.

2013

In this section we analyze the role, if any, of principles in distributive justice in business ethics. The business world is often criticized in morally condemning terms, many of them somehow related to the issue of distributive justice. Traders are accused of receiving indecently high bonuses; CEOs benefit from shockingly high packages upon dismissal-the "golden parachutes"; the announcement of a massive layoff boosts share value on the stock markets; and multinationals are said to exploit supplier companies and, indirectly, their workers in emerging countries. The list of complaints is endless. However, justice, more particularly distributive justice, is a complex issue. Moreover, the scope and the relevance of the different principles of distributive justice in the business world is not obvious.

Journal of Business Ethics, 2000

How can a business institution function as an ethical institution within a wider system if the context of the wider system is inherently unethical? If the primary goal of an institution, no matter how ethical it sets out to be, is to function successfully within a market system, how can it reconcile making a profit and keeping its ethical goals intact? While it has been argued that some ethical businesses do exist, e.g., Johnson and Johnson, the argument I would like to put forth is that no matter how ethical a business institution is, or how ethical its goals are, its capacity to act in an ethical manner is restricted by the wider system in which it must operate, the market system. Unless there is a fundamental change in the notion of the market system itself, the capacity for individual businesses to act in an ethical manner will always be restricted. My argument is divided into two parts. The first part is to show the inherent bias towards unethical outcomes that is inherent in the market system. The second part is to suggest how to reorient the general economic framework in order to make ethical institutions more possible. The question then becomes, how to define economic behavior in terms other than competition for profit.

2015

This paper takes a brief look into a number of important issues that each requires a much deeper level of inquiry and analysis. The core issue is based on a fundamental assertion that ethics is an inherent component of a well-run economy and successful businesses. In recent years, business has been viewed increasingly as a major cause of social, environmental, and economic problems. This paper questions the sustainability of recent economic and business practices. It argues that the cost of economic crisis, the fallouts from unfair business practices and the emergence of an uncertain future for humans and other living beings on Earth are some of the more obvious costs of the inefficiencies caused by unethical behavior. The issue of profit maximization as a concept that works against its stated objective by bringing a fall in profit in the long term is looked into closely. It also questions the validity of a number of long-held economic principles of neoclassical economics. Finally, ...

Business Ethics: A European Review, 2005

Many traditional conceptions of ethics use categories and arguments that have been developed under conditions of pre-modern societies and are not useful in the age of globalisation anymore. I argue that we need an economic ethics which employs economics as a key theoretical resource and which focuses on institutions for implementing moral norms. This conception is then elaborated further in the area of business ethics. It is illustrated in the case for banning child labour.

2004

Business Ethics Journal Review

Joseph Heath (2014) argues that the contribution of competitive markets to Pareto-efficiency generates moral constraints that apply to business managers. Heath argues that ethical behavior on the part of management consists in avoiding profit-seeking strategies which, under conditions of perfect competition, would decrease Pareto-efficiency. I argue that because (1) such conditions do not obtain; and (2) the most efficient result-under imperfect conditions-is not achieved by satisfying the largest possible set of the remaining conditions; it is (3) impossible to draw any substantive ethical guidelines from Heath's approach.