TuttleJPDebate1

John Peter Tuttle Debate Paper #1 Sustainability Problems

Word Count: 1869

//Is increasing profits the only social responsibility of business?//

Social responsibility -- the issue of what corporations are responsible for with regards to others, and how it affects the public and the environment -- is an issue that originated around the industrial age, when the first chartered corporations were created. They originally had clearly-defined limits and rules; however, corporations eventually felt they needed more power, and managed to use the 14th Amendment -- intended to give slaves rights -- to gain the legal rights of a person. Once a business is incorporated, they are legally considered a person, have many of the rights of a regular person, and in some cases are required to put the bottom line above all else, just benefiting the stockholders – as opposed to taking into account all of the stakeholders in a business and making sure none of them are adversely affected by the corporation’s operation. However, some people argue that for many types of businesses, they should put other issues above profits, for the sake of the public, the earth, or the environment. The stakeholders for an issue such as this depend on the company in question -- many companies outsource to countries where there are sweatshops, so the workers there would be considered stakeholders. Pollution or toxicity can be an issue in multiple situations -- people living near factories that pollute nearby air or water are affected, as well as workers in factories with poor conditions. Sometimes, the issue may be more complex -- use of bovine growth hormone, for example, can cause problems both for the cows and for humans that eat the resulting meat or drink the milk. To deal with this issue, corporations need to identify potential social issues -- environmental problems, unfair treatment of employees, etc -- and be willing to deal with them. However, citizens also need to keep corporations accountable; while some corporations will have the sense to deal with these issues (both for the sake of their own ethics, and for the sake of their view in the public’s eye), if no one holds them accountable, many corporations will simply not do anything about it. Milton Friedman's 1970 article in the New York Times Magazine, entitled "The Social Responsibility of Business is to Increase its Profits," argues that corporations have no reason to strive towards anything besides making profits. The author argues that "...a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible." (Friedman p1) -- implying that the //only// thing an employee needs to do is what their employer (the business owners) want them to do, which may be //technically// be true, but may or may not be the right thing to do //morally// or //ethically// (and in some cases, legally). Executives that put social responsibility over doing their jobs and helping the company make profit may put both their job and the company’s profits at risk. It may also be an issue if an employee’s idea of social responsibility does not quite agree with what would benefit the company; depending on what happens, it may reflect badly on the compny. He explains that if corporate executives //do// have social responsibility, they would end up "act[ing] in some way that is not in the interest of his employers." (Friedman p2) He does argue that in some cases, it may make sense for a company to engage in social responsibility, but only due to the fact that society tends to expect //people// to care about those sorts of things. It //is// a bit odd that corporations are treated as people //legally//, but not //ethically// or //morally//; it seems like a bit of a double standard, especially given how corporation originally attained legal status as people. Friedman argues that if stockholders are electing the executives in a business, the executives are expected to represent the needs of the stockholders – mostly profits – and if the executives do not represent those values, they are not doing their jobs, the system is broken, or at least there was no point in electing them in the first place. There are several issues and holes in Friedman's arguments. One issue is that it does not take into account if the owners of the business //do// want to deal with social issues; he assumes that all //they// care about is profits, and discusses what employees do in response to the owners’ desires. In some cases, business owners may care about social issues, and are actually doing something to ensure they are dealt with; there are plenty of businesses that pride themselves on being social responsible, and even use it as a selling point. It may be that the owners //do// care about social issues that the business is involved in, but it is not practical for one reason or another for the business to deal with it. In other cases, the owners of a business may not even //know// what is going on, due to a lack of communication. If they do not know the details of what are going on in their business (working conditions in factories, etc.), they would not even be able to //start// dealing with potential social responsibilities, even if they //wanted// to. Joe DesJardins argues the opposite point in his paper “Business and Environmental Sustainability”, published in volume 24 of the Business & Professional Ethics Journal. DesJardins argues that there are several factors businesses need to deal with in the 21st century, and that “[t]hese factors will require that business in the twenty-first century be practiced in a way that is //economically// vibrant enough to address the real needs of billions of people, yet //ecologically// informed so that the earth's capacity to support life is not diminished by that activity and //ethically// sensitive enough that the human dignity is not lost or violated in the process.” He discusses how reducing energy use and other activities that make a business more sustainable can also improve the efficiency of a business, making it //more// profitable (in contrast to Friedman’s argument that any attempt at social responsibility will result in a loss of profit, or at least would not contribute to it). He explains how companies that make sustainable products need to take the entire product life cycle into account – it is all fine and good to make products that are sustainable to //build//, but if the product breaks easily or does not decompose or recycle sustainably, there is not that much progress (DesJardins, p52). DesJardins explains how designing buildings to be sustainable from the start can end up saving large amounts of money in the future, even if designing and building such a facility would require a larger investment at the outset. He explains some background about the economy and supply and demand, explaining how there will not be large enough supply of sustainable products for it to be profitable for corporations to sell until customers demand them – “[c]onsumers are able to demand only what they know about and, to a large extent, only what is available in the marketplace” (DesJardins, p16). In some cases, it is a bit of a chicken-and-egg situation; companies are not making products because there is no demand, but consumers are not demanding products because, in many cases, they do not even know they are available, or, in other cases, because they have heard there are issues with the more sustainable alternatives. DesJardins’ analysis does have some flaws, however; it does not completely take into account the fact that it may not be financially possible to create sustainable products in some cases, at least not without large changes in how society works. In some cases, this would involve educating the public; one example of this would be the fishing industry. While there are some issues in that industry with quotas for particular species being ignored (overfishing), for the problem to be truly solved, people need to be aware of endangered species and avoid eating them, or at least eating them as much as they do less endangered animals. In other cases – manufacturing consumer electronics products – it would not be practical to try to convince consumers to potentially do without particular aspects of a product due to issues of social responsibility, since most people are used to modern conveniences, and likely could not be convinced otherwise. An interview with Milton Friedman, entitled “Social Responsibility: ‘Fundamentally Subversive’?” was published as online bonus material to go along with the August 2005 issue of Bloomberg Businessweek. It puts an interesting twist on the issue; Friedman points out that many businesses are benefitting from helping the community, and that in many cases, they are just doing so for their own profits, rather than any sort of “social responsibility.” The interview seems to //generally// agree with his earlier work, but does seem to admit that there is some use for working with the community, even if it is not done for the sake of social responsibility, which is more than his earlier article admits. Personally, I think that corporations //do// have a social responsibility to their stakeholders beyond simply making profits. First of all, in many business situations that involve social responsibility, there are laws that regulate social issues, and corporations that do not deal with social issues may be breaking those laws (fishing quotas, energy requirements, etc.) In many cases, it may not be completely practical to //deal// with the social issues their business deals with, given the state of society. However, corporations should at least have //some// idea of what is going on – knowing if there are issues with pollution, mistreatment of workers in factories, potential environmental problems, etc. It is rather inexcusable – and unethical -- for business executives or owners to simply have absolutely //no// idea about the working conditions in factories, or that their product manufacturing methods are causing major pollution in nearby cities; I would say that part of their responsibility in running their business is to make sure they are doing so ethically and morally, which, given what some businesses are doing, can certainly be an issue. In order to deal with the issue of social responsibility, businesses need to be held accountable for how their operations affect the rest of the world. In some cases, this may involve improving the lines of communication between different parts of a business, to make sure that executives and other higher-ups know the details of what is going on. In other cases, it may involve revamping products designs or product lines to make sure they are easier to recycle or less harmful to the environment. Overall, dealing with this issue is certainly feasible, though it may require a decent amount of effort from both the corporations involved and society.

Bibliography: DesJardins, Joe. “Business and Environmental Sustainability.” Business & Professional Ethics Journal, Vol. 24, No 1 & 2. Friedman, Milton. “Social Responsibility: ‘Fundamentally Subversive’?” Businessweek. 15 Aug 2005. http://www.businessweek.com/magazine/content/05_33/b3947115_mz017.htm Friedman, Milton. "The Social Responsibility of Business is to Increase its Profits." New York Times Magazine. 13 Sep 1970.