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International Ethics
and
Globalization
Zsolt Boda,Ph.D.
Associate Professor
Business Ethics Center
Corvinus University of Budapest
What is globalization?
The economy has become increasingly
internationalized in the past 3-4 decades.
• International trade (5x)
• FDI (15-20x)
• International finances (25x)
FDI inflows: 15-20x
Globalization
The free movement of capital
• Financial superstructure
• Multinational companies
▫ 70% of all trade
▫ 80% of patents
▫ Symbolic and political power as well
Globalization: benefits and
problems
Benefits
• Opportunity for (some) poor countries and their
people
• Efficiency gains
• Peace among nations
Problems
• Inequalities are growing
• Human suffering (exploitation, child labour,
dislocated people etc.). Case: Shell in Nigeria.
• Severe environmental problems
Change in financial globalization and
economic growth in selected countries,
1977-2004 (IMF)
The share of the highest income decile
from total income, U.S., 1917-2006
Top 1% income and median income
in the U.S.
The problem of international ethics
The potential conflict between the universalism
of modern ethics and the empirical facts of
relevant communities.
The limits of moral communities.
• How to deal with norm conflicts? Do we have
universal norms?
• Is it possible to enforce them?
Universalism versus relativism
Universalism: there exists a set of universally
binding moral precepts
Cultural relativism: no ethical view held by one
culture is better than any other view held by
another culture
Universalism
Where do universal norms come from?
• Universal patterns in societies’s norms.
• Common foundation in religious and ethical
teaching. Hans Küng
• Dialogue, negotiation and agreement. Jürgen
Habermas: discourse ethics. International law.
Moral relativism
Communitarian thinking (M. Walzer, Ch. Taylor):
• Man is a communal being.
• Communities carry cultures.
• Morality is embedded into culture.
• The limits of intercultural dialogue.
Pluralism (Donaldson and Dunfee)
There exists a broad range of ethical viewpoints
that can be chosen by communities and cultures.
The possibility exists that conflicting views are
equally valid.
There are, however, circumstances in which the
viewpoint of a particular culture will be invalid
due either to a universal norm or to the priority
of the view of another culture or community.
Norm conflict no. 1
A new American firm in Russia was advised by its Russian
attorneys to file a tax return that misstated income and
expenses and consequently grossly underestimated
actual taxes due. The firm learned, however, that most
other Russian companies regarded the practice as
standard operating procedure and merely a first move in
a complex negotiating process with the Russian tax
authority. The firm initially refused to file a fallacious
return on moral grounds and submitted an "Americanstyle" return instead. But because the resulting tax bill
was many times higher than what comparable Russians
were asked to pay, the firm changed policy in later years
to agree with the „Russian-style".
Norm conflict no. 2
• In the late 1980s a number of U.S. companies left
South Africa in response to its severe racist and
segregationist laws under the Apartheid regime. The
withdrawal was said to finally contributing to the
democratization of the country.
• Similar events happened recently with Burma.
Several businesses left the country. Levi-Strauss
withdrew its textile business, noting that "it is not
possible to do business in [Burma] without directly
supporting the military government and its
pervasive violations of human rights.“
Norm conflicts
In case of norm conflict a useful distinction is
between
- welfare norms depending on the level of
development (labor standards, env. law):
adjustment is possible
- cultural/social/political norms: respect or reject
Donaldson’s Ethical Algorithm
• If the moral reasons underlying the host
country's view that the practice is permissible
refer to the host country's relative level of
economic development, the practice is
permissible if and only if the members of the
home country would, under conditions of
economic development similar to those of the
host country, regard the practice as
permissible.
Donaldson’s Ethical Algorithm
• If the moral reasons underlying the host
country's view that the practice is permissible
are are rooted in culture, the practice is
permissible
▫ if it is not possible to conduct business
successfully in the host country without
undertaking the practice,
and
▫ it is not a clear violation of a fundamental
international right.
A summary
• We need universal norms to regulate intercommunity interactions. Global challenges,
global responsibility.
• But local cultures and identities should also be
respected.
• An equilibrium is needed between universalism
and relativism.
The problem of regulation
The international system is inherently
anarchic, lacking any central, orderenforcing authority. Moral principles loose
their validity and agents tend to follow
their own self-interest. (Machiavelli,
Hobbes, Morgenthau, Castells)
But: Immanuel Kant: cooperation is a duty.
The problem of regulation
• How to regulate the MNCs as powerful actors in
the global economy? How to ensure that they
take into account social and environmental
concerns as well, beyond their self-interest?
▫ Cooperation of states
▫ Self-regulation
Self-regulation at different levels
• company codes (e.g., Mattel)
• sectoral codes (e.g., Code for marketing of breast
milk substitutes)
• global standards (SA 8000, ISO 14001, GRI)
• governance and stewardship schemes (MSC,
FSC)
• international codes of world organizations (ILO,
OECD, UN Global Compact)
UN Global Compact: Ten Principles
World business should:
• (i) support and respect the protection of international
human rights within their sphere of influence;
• (ii) make sure their own corporations are not complicit
in human rights abuses;
• (iii) uphold freedom of association and the effective
recognition of the right to collective bargaining;
• (iv) eliminate all forms of forced and compulsory
labour;
• (v) uphold the effective abolition of child labour;
• (vi) eliminate any discrimination in respect of
employment and occupation;
• (vii) support a precautionary approach to
environmental challenges;
• (viii) undertake initiatives to promote greater
environmental responsibility;
• (ix) encourage the development and diffusion of
environmental friendly technologies.
• (x) fighting corruption
Self-regulation: limits and weaknesses
- Soft provisions.
- However: multi-stakeholder codes!
- Non-compliance is, by definition, not (really)
sanctioned.
- They come after a tragedy or scandal occured.
Pressure of the civil society (NGOs, media,
consumers) is essential.
The ethics of the multinational
• Openness to dialogue and cooperation in order
to strengthen global governance.
• Respecting some basic universal values and
norms
• Respecting the norms of local communities and
stakeholders.
• An enhanced responsibility of the firm abroad.
▫ Complexity (social, cultural, ecological)
▫ Power