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1/39 en.wikipedia.org/wiki/Business_ethics
Bine ehic
From Wikipedia, the Iree encyclopedia
Bine ehic (also copoae ehic) is a Iorm oI applied ethics or proIessional ethics
that examines ethical principles and moral or ethical problems that arise in a business
environment. It applies to all aspects oI business conduct and is relevant to the conduct oI
individuals and entire organizations.
Business ethics has both normative and descriptive dimensions. As a corporate practice and
a career specialization, the Iield is primarily normative. Academics attempting to understand
business behavior employ descriptive methods. The range and quantity oI business ethical
issues reIlects the interaction oI proIit-maximizing behavior with non-economic concerns.
Interest in business ethics accelerated dramatically during the 1980s and 1990s, both within
major corporations and within academia. For example, today most major corporations
promote their commitment to non-economic values under headings such as ethics codes and
social responsibility charters. Adam Smith said, "People oI the same trade seldom meet
together, even Ior merriment and diversion, but the conversation ends in a conspiracy against
the public, or in some contrivance to raise prices."
|1|
Governments use laws and regulations
to point business behavior in what they perceive to be beneIicial directions. Ethics implicitly
regulates areas and details oI behavior that lie beyond governmental control.
|2|
The
emergence oI large corporations with limited relationships and sensitivity to the communities
in which they operate accelerated the development oI Iormal ethics regimes.
|3|
Conen
1 History
2 Overview
3 Functional business areas
3.1 Finance
3.2 Other issues
3.3 Human resource management
3.4 Sales and marketing
3.5 Production
3.6 Property
3.7 Intellectual property
4 International issues
5 Economic systems
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6 La and eglaion
7 Implemenaion
7.1 Copoae policie
7.2 Ehic office
8 Academic dicipline
9 Religio ie
10 Relaed dicipline
11 See alo
12 Refeence
13 Fhe eading
14 Eenal link
Histor
Bine ehical nom eflec he nom of each hioical peiod. A ime pae nom
eole, caing acceped behaio o become objecionable. Bine ehic and he
eling behaio eoled a ell. Bine a inoled in lae,
[4][5][6]
colonialim,
[7][8]
and he cold a.
[9][10]
The em 'bine ehic' came ino common e in he Unied Sae in he eal 1970. B
he mid-1980 a lea 500 coe in bine ehic eached 40,000 den, ing ome
en ebook and a lea en caebook along ppoed b pofeional ocieie,
cene and jonal of bine ehic. The Socie fo Bine Ehic a aed in 1980.
Eopean bine chool adoped bine ehic afe 1987 commencing ih he
Eopean Bine Ehic Neok (EBEN).
[11][12][13][14]
In 1982 he fi ingle-ahoed
book in he field appeaed.
[15][16]
Fim aed highlighing hei ehical ae in he lae 1980 and eal 1990, poibl
ing o diance hemele fom he bine candal of he da, ch a he aing and
loan cii. The idea of bine ehic cagh he aenion of academic, media and
bine fim b he end of he Cold Wa.
[12][17][18]
Hoee, legiimae ciicim of
bine pacice a aacked fo infinging he "feedom" of enepene and ciic
ee acced of ppoing commni.
[19][20]
Thi cled he dicoe of bine
ehic boh in media and academia.
[21]
Overview
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Business ethics reflects the philosophy of business, one of whose aims is to determine the
fundamental purposes of a company. If a company's purpose is to maximize shareholder
returns, then sacrificing profits to other concerns is a violation of its fiduciary responsibility.
Corporate entities are legally considered as persons in USA and in most nations. The
'corporate persons' are legally entitled to the rights and liabilities due to citizens as persons.
Economist Milton Friedman writes that corporate executives' "responsibility... generally will
be to make as much money as possible while conforming to their basic rules of the society,
both those embodied in law and those embodied in ethical custom".
[22]
Friedman also said,
"the only entities who can have responsibilities are individuals ... A business cannot have
responsibilities. So the question is, do corporate executives, provided they stay within the
law, have responsibilities in their business activities other than to make as much money for
their stockholders as possible? And my answer to that is, no, they do not."
[22][23][24]
A
multi-country 2011 survey found support for this view among the "informed public" ranging
from 30-80%.
[25]
Duska views Friedman's argument as consequentialist rather than
pragmatic, implying that unrestrained corporate freedom would benefit the most in long
term.
[26][27]
Similarly author business consultant Peter Drucker observed, "There is neither a
separate ethics of business nor is one needed", implying that standards of personal ethics
cover all business situations.
[28]
However, Peter Drucker in another instance observed that
the ultimate responsibility of company directors is not to harmprimm non nocere.
[29]
Another view of business is that it must exhibit corporate social responsibility (CSR): an
umbrella term indicating that an ethical business must act as a responsible citizen of the
communities in which it operates even at the cost of profits or other goals.
[30][31][32][33][34]
In the US and most other nations corporate entities are legally treated as persons in some
respects. For example, they can hold title to property, sue and be sued and are subject to
taxation, although their free speech rights are limited. This can be interpreted to imply that
they have independent ethical responsibilities.
[ciaion needed]
Duska argues that stakeholders
have the right to expect a business to be ethical; if business has no ethical obligations, other
institutions could make the same claim which would be counterproductive to the
corporation.
[26]
Ethical issues include the rights and duties between a company and its employees, suppliers,
customers and neighbors, its fiduciary responsibility to its shareholders. Issues concerning
relations between different companies include hostile take-overs and industrial espionage.
Related issues include corporate governance;corporate social entrepreneurship; political
contributions; legal issues such as the ethical debate over introducing a crime of corporate
manslaughter; and the marketing of corporations' ethics policies.
[ciaion needed]
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Fncional bine aea
Finance
Fundamentally, finance is a social science discipline.
[35]
The discipline borders behavioral
economics, sociology,
[36]
economics, accounting and management. It concerns technical
issues such as the mix of debt and equity, dividend policy, the evaluation of alternative
investment projects, options, futures, swaps, and other derivatives, portfolio diversification
and many others. It is often mistaken to be a discipline free from ethical burdens.
[35]
The
2008 financial crisis caused critics to challenge the ethics of the executives in charge of U.S.
and European financial institutions and financial regulatory bodies.
[37]
Finance ethics is
overlooked for another reasonissues in finance are often addressed as matters of law
rather than ethics.
[38]
Finance paadigm
Aristotle said, "the end and purpose of the polis is the good life".
[39]
Adam Smith
characterized the good life in terms of material goods and intellectual and moral excellences
of character.
[40]
Smith in his The Wealh of Naion commented, "All for ourselves, and
nothing for other people, seems, in every age of the world, to have been the vile maxim of the
masters of mankind."
[41]
However, a section of economists influenced by the ideology of neoliberalism, interpreted
the objective of economics to be maximization of economic growth through accelerated
consumption and production of goods and services.
[42]
Neoliberal ideology promoted
finance from its position as a component of economics to its core.
[ciaion needed]
Proponents of the ideology hold that unrestricted financial flows, if redeemed from the
shackles of "financial repressions",
[43]
best help impoverished nations to
grow.
[ciaion needed]
The theory holds that open financial systems accelerate economic
growth by encouraging foreign capital inows, thereby enabling higher levels of savings,
investment, employment, productivity and "welfare",
[44][45][46][47]
along with containing
corruption.
[48]
Neoliberals recommended that governments open their financial systems to
the global market with minimal regulation over capital flows.
[49][50][51][52][53]
The
recommendations however, met with criticisms from various schools of ethical philosophy.
Some pragmatic ethicists, found these claims to unfalsifiable and a priori, although neither of
these makes the recommendations false or unethical per se.
[54][55][56]
Raising economic
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growth to the highest value necessarily means that welIare is subordinate, although advocates
dispute this saying that economic growth provides more welIare than known alternatives.
|57|
Since history shows that neither regulated nor unregulated Iirms always behave ethically,
neither regime oIIers an ethical panacea.
|58||59||60|
Neoliberal recommendations to developing countries to unconditionally open up their
economies to transnational Iinance corporations was Iiercely contested by some
ethicists.
|61||62||63||64||65|
The claim that deregulation and the opening up oI economies
would reduce corruption was also contested.
|66||67||68|
Dobson observes, "a rational agent is simply one who pursues personal material advantage
ad inIinitum. In essence, to be rational in Iinance is to be individualistic, materialistic, and
competitive. Business is a game played by individuals, as with all games the object is to win,
and winning is measured in terms solely oI material wealth. Within the discipline this
rationality concept is never questioned, and has indeed become the theory-oI-the-Iirm's sine
qua non".
|69||70|
Financial ethics is in this view a mathematical Iunction oI shareholder
wealth. Such simpliIying assumptions were once necessary Ior the construction oI
mathematically robust models.
|71|
However signalling theory and agency theory extended the
paradigm to greater realism.
|72|
Ohe ie
Fairness in trading practices, trading conditions, Iinancial contracting, sales practices,
consultancy services, tax payments, internal audit, external audit and executive compensation
also Iall under the umbrella oI Iinance and accounting.
|38||73|
Particular corporate
ethical/legal abuses include: creative accounting, earnings management, misleading Iinancial
analysis insider trading, securities Iraud, bribery/kickbacks and Iacilitation payments. Outside
oI corporations, bucket shops and Iorex scams are criminal manipulations oI Iinancial
markets. Cases include accounting scandals, Enron, WorldCom and Satyam.
|ciaion needed|
Hman eoce managemen
Human resource management occupies the sphere oI activity oI recruitment selection,
orientation, perIormance appraisal, training and development, industrial relations and health
and saIety issues.
|74|
Business Ethicists diIIer in their orientation towards labour ethics.
Some assess human resource policies according to whether they support an egalitarian
workplace and the dignity oI labor.
|75||76||77|
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Issues including employment itselI, privacy, compensation in accord with comparable worth,
collective bargaining (and/or its opposite) can be seen either as inalienable rights
|78||79|
or as
negotiable.
|80||81||82||83||84|
Discrimination by age (preIerring the young or the old),
gender/sexual harassment, race, religion, disability, weight and attractiveness. A common
approach to remedying discrimination is aIIirmative action.
Potential employees have ethical obligations to employers, involving intellectual property
protection and whistle-blowing.
Employers must consider workplace saIety, which may involve modiIying the workplace, or
providing appropriate training or hazard disclosure.
Larger economic issues such as immigration, trade policy, globalization and trade unionism
aIIect workplaces and have an ethical dimension, but are oIten beyond the purview oI
individual companies.
|78||85||86|
Trade unions
Unions Ior example, may push employers to establish due process Ior workers, but may also
cost jobs by demanding unsustainable compensation and work
rules.
|87||88||89||90||91||92||93||94||95||96|
Unionized workplaces may conIront union busting and strike breaking and Iace the ethical
implications oI work rules that advantage some workers over others.
|ciaion needed|
Management strateg
Among the many people management strategies that companies employ are a "soIt"
approach that regards employees as a source oI creative energy and participants in
workplace decision making, a "hard" version explicitly Iocused on control
|97|
and Theory Z
that emphasizes philosophy, culture and consensus.
|98|
None ensure ethical behavior.
|99|
Some studies claim that sustainable success requires a humanely treated and satisIied
workIorce.
|100||101||102|
Sales and marketing
Main aicle: Makeing ehic
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Marketing Ethics came oI age only as late as 1990s.
|103|
Marketing ethics was approached
Irom ethical perspectives oI virtue or virtue ethics, deontology, consequentialism,
pragmatism and relativism.
|104||105|
Ethics in marketing deals with the principles, values and/or ideals by which marketers (and
marketing institutions) ought to act.
|106|
Marketing ethics is also contested terrain, beyond
the previously described issue oI potential conIlicts between proIitability and other concerns.
Ethical marketing issues include marketing redundant or dangerous
products/services
|107||108||109|
transparency about environmental risks, transparency about
product ingredients such as genetically modiIied organisms
|110||111||112||113|
possible health
risks, Iinancial risks, security risks, etc.,
|114|
respect Ior consumer privacy and
autonomy,
|115|
advertising truthIulness and Iairness in pricing & distribution.
|116|
According to Borgerson, and Schroeder (2008), marketing can inIluence individuals'
perceptions oI and interactions with other people, implying an ethical responsibility to avoid
distorting those perceptions and interactions.
|117|
Marketing ethics involves pricing practices, including illegal actions such as price Iixing and
legal actions including price discrimination and price skimming. Certain promotional activities
have drawn Iire, including greenwashing, bait and switch, shilling, viral marketing, spam
(electronic), pyramid schemes and multi-level marketing. Advertising has raised objections
about attack ads, subliminal messages, sex in advertising and marketing in schools.
Production
This area oI business ethics usually deals with the duties oI a company to ensure that
products and production processes do not needlessly cause harm. Since Iew goods and
services can be produced and consumed with zero risk, determining the ethical course can
be problematic. In some case consumers demand products that harm them, such as tobacco
products. Production may have environmental impacts, including pollution, habitat
destruction and urban sprawl. The downstream eIIects oI technologies nuclear power,
genetically modiIied Iood and mobile phones may not be well understood. While the
precautionary principle may prohibit introducing new technology whose consequences are
not Iully understood, that principle would have prohibited most new technology introduced
since the industrial revolution. Product testing protocols have been attacked Ior violating the
rights oI both humans and animals
|ciaion needed|
Propert
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Main article: Private propert, and Propert rights
The etymological root oI property is the Latin 'proprius'
|118|
which reIers to 'nature',
'quality', 'one's own', 'special characteristic', 'proper', 'intrinsic', 'inherent', 'regular', 'normal',
'genuine', 'thorough, complete, perIect' etc. The word property is value loaded and
associated with the personal qualities oI propriety and respectability, also implies questions
relating to ownership. A 'proper' person owns and is true to herselI or himselI, and is thus
genuine, perIect and pure.
|119|
Modern histor of propert rights
Modern discourse on property emerged by the turn oI 17th century within theological
discussions oI that time. For instance, John Locke justiIied property rights saying that God
had made "the earth, and all inIerior creatures, |in| common to all men".
|120||121||122||123|
In 1802 Utilitarian Jeremy Bentham stated, "property and law are born together and die
together".
|124||125|
One argument Ior property ownership is that it enhances individual liberty by extending the
line oI non-interIerence by the state or others around the person.
|126|
Seen Irom this
perspective, property right is absolute and property has a special and distinctive character
that precedes its legal protection. Blackstone conceptualized property as the "sole and
despotic dominion which one man claims and exercises over the external things oI the world,
in total exclusion oI the right oI any other individual in the universe".
|127|
Slaves as propert
During the seventeenth and eighteenth centuries, slavery spread to European colonies
including America, where colonial legislatures deIined the legal status oI slaves as a Iorm oI
property.
|128|
During this time settlers began the centuries-long process oI dispossessing the
natives oI America oI millions oI acres oI land.
|129|
Ironically, the natives lost about 200,000
square miles (520,000 km
2
) oI land in the Louisiana Territory under the leadership oI
Thomas JeIIerson, who championed property rights.
|130||131||132|
Combined with theological justiIication, property was taken to be essentially natural ordained
by God.
|133|
Property, which later gained meaning as ownership and appeared natural to
Locke, JeIIerson and to many oI the 18th and 19th century intellectuals
|134|
as land, labour
or idea
|135|
and property right over slaves had the same theological and essentialized
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justification
[136][137][138][139][140][141]
It was even held that the property in slaves was a
sacred right.
[142][143]
Wiecek noted, "slavery was more clearly and explicitly established
under the Constitution as it had been under the Articles".
[144]
Accordingly, US Supreme
Court Chief Justice Roger B. Taney in his 1857 judgment stated, "The right of property in a
slave is distinctly and expressly affirmed in the Constitution".
Naal igh ocial conc
Neoliberals hold that private property rights are a non-negotiable natural right.
[145][146]
Davies counters with "property is no different from other legal categories in that it is simply a
consequence of the significance attached by law to the relationships between legal
persons."
[147][148]
Singer claims, "Property is a form of power, and the distribution of
power is a political problem of the highest order".
[149][150]
Rose finds, "'Property' is only an
effect, a construction, of relationships between people, meaning that its objective character is
contestable. Persons and things, are 'constituted' or 'fabricated' by legal and other normative
techniques.".
[151][152]
Singer observes, "A private property regime is not, after all, a
Hobbesian state of nature; it requires a working legal system that can define, allocate, and
enforce property rights."
[153]
Davis claims that common law theory generally favors the view
that "property is not essentially a 'right to a thing', but rather a separable bundle of rights
subsisting between persons which may vary according to the context and the object which is
at stake".
[147]
In common parlance property rights involve a 'bundle of rights'
[154]
including occupancy,
use and enjoyment, and the right to sell, devise, give, or lease all or part of these
rights.
[155][156][157][158]
Custodians of property have obligations as well as rights.
[159][160]
Michelman writes, "A property regime thus depends on a great deal of cooperation,
trustworthiness, and self-restraint among the people who enjoy it."
[161][162]
Menon claims that the autonomous individual, responsible for his/her own existence is a
cultural construct moulded by Western culture rather than the truth about the human
condition.
[163]
Penner views property as an "illusion"a "normative phantasm" without
substance.
[164][165]
In the neoliberal literature, property is part of the private side of a public/private dichotomy
and acts a counterweight to state power. Davies counters that "any space may be subject to
plural meanings or appropriations which do not necessarily come into conflict".
[166]
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Private property has never been a universal doctrine, although since the end oI the Cold War
is it has become nearly so. Some societies, e.g., Native American bands, held land, iI not all
property, in common. When groups came into conIlict, the victor oIten appropriated the
loser's property.
|167||168|
The rights paradigm tended to stabilize the distribution oI property
holdings on the presumption that title had been lawIully acquired.
|169|
Property does not exist in isolation, and so property rights too.
|170|
Bryan claimed that
property rights describe relations among people and not just relations between people and
things
|171||172||173||174||175||176|
Singer holds that the idea that owners have no legal
obligations to others wrongly supposes that property rights hardly ever conIlict with other
legally protected interests.
|177|
Singer continues implying that legal realists "did not take the
character and structure oI social relations as an important independent Iactor in choosing the
rules that govern market liIe". Ethics oI property rights begins with recognizing the vacuous
nature oI the notion oI property.
|178|
Intellectual propert
Main aicle: Inellecal pope and Inellecal pope igh
Intellectual property (IP) encompasses expressions oI ideas, thoughts, codes and
inIormation. "Intellectual property rights" (IPR) treat IP as a kind oI real property, subject to
analogous protections, rather than as a reproducible good or service. Boldrin and Levine
argue that "government does not ordinarily enIorce monopolies Ior producers oI other
goods. This is because it is widely recognized that monopoly creates many social costs.
Intellectual monopoly is no diIIerent in this respect. The question we address is whether it
also creates social beneIits commensurate with these social costs."
|179|
International standards relating to Intellectual Property Rights are enIorced through
Agreement on Trade Related Aspects oI Intellectual Property Rights (TRIPS).
|180|
In the
US, IP other than copyrights is regulated by the United States Patent and Trademark OIIice.
The US Constitution included the power to protect intellectual property, empowering the
Federal government "o pomoe he poge of cience and efl a, b ecing fo
limied ime o aho and ineno he eclie igh o hei epecie iing and
dicoeie".
|181|
Boldrin and Levine see no value in such state-enIorced monopolies stating,
"we ordinarily think oI innovative monopoly as an oxymoron.
|182||183|
Further they
comment, 'intellectual property' "is not like ordinary property at all, but constitutes a
government grant oI a costly and dangerous private monopoly over ideas. We show through
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theory and example that intellectual monopoly is not necessary for innovation and as a
practical matter is damaging to growth, prosperity, and liberty" .
[181]
Steelman defends
patent monopolies, writing, "Consider prescription drugs, for instance. Such drugs have
benefited millions of people, improving or extending their lives. Patent protection enables
drug companies to recoup their development costs because for a specific period of time they
have the sole right to manufacture and distribute the products they have invented."
[184]
The
court cases by 39 pharmaceutical companies against South Africa's 1997 Medicines and
Related Substances Control Amendment Act, which intended to provide affordable HIV
medicines has been cited as a harmful effect of patents.
[185][186][187]
One attack on IPR is moral rather than utilitarian, claiming that inventions are mostly a
collective, cumulative, path dependent, social creation and therefore, no one person or rm
should be able to monopolize them even for a limited period.
[188]
The opposing argument is
that the benefits of innovation arrive sooner when patents encourage innovators and their
investors to increase their commitments. Roderick Long, a libertarian philosopher, observes,
"Ethically, property rights of any kind have to be justified as extensions of the right of
individuals to control their own lives. Thus any alleged property rights that conflict with this
moral basislike the "right" to own slavesare invalidated. In my judgment, intellectual
property rights also fail to pass this test. To enforce copyright laws and the like is to prevent
people from making peaceful use of the information they possess. If you have acquired the
information legitimately (say, by buying a book), then on what grounds can you be prevented
from using it, reproducing it, trading it? Is this not a violation of the freedom of speech and
press? It may be objected that the person who originated the information deserves ownership
rights over it. But information is not a concrete thing an individual can control; it is a
universal, existing in other people's minds and other people's property, and over these the
originator has no legitimate sovereignty. You cannot own information without owning other
people".
[189]
Machlup concluded that patents do not have the intended effect of enhancing
innovation.
[190]
Self-declared anarchist Proudhon, in his 1847 seminal work noted,
"Monopoly is the natural opposite of competition," and continued, "Competition is the vital
force which animates the collective being: to destroy it, if such a supposition were possible,
would be to kill society"
[191][192]
Mindeli and Pipiya hold that the knowledge economy is an economy of abundance
[193]
because it relies on the "infinite potential" of knowledge and ideas rather than on the limited
resources of natural resources, labor and capital. Allison envisioned an egalitarian distribution
of knowledge.
[194]
Kinsella claims that IPR create artificial scarcity and reduce
equality.
[195][196][197]
Bouckaert wrote, "Natural scarcity is that which follows from the
relationship between man and nature. Scarcity is natural when it is possible to conceive of it
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before any human, institutional, contractual arrangement. Artificial scarcity, on the other
hand, is the outcome of such arrangements. Artificial scarcity can hardly serve as a
justification for the legal framework that causes that scarcity. Such an argument would be
completely circular. On the contrary, artificial scarcity itself needs a justification"
[198][199]
Corporations fund much IP creation and can acquire IP they do not create,
[200]
to which
Menon and others object.
[201][202]
Andersen claims that IPR has increasingly become an
instrument in eroding public domain.
[203]
Ethical and legal issues include: Patent infringement, copyright infringement, trademark
infringement, patent and copyright misuse, submarine patents, gene patents, patent, copyright
and trademark trolling, Employee raiding and monopolizing talent, Bioprospecting, biopiracy
and industrial espionage, digital rights management.
Notable IP copyright cases include Napster, Eldred v. Ashcroft and Air Pirates.
Inenaional ie
While business ethics emerged as a field in the 1970s, international business ethics did not
emerge until the late 1990s, looking back on the international developments of that
decade.
[204]
Many new practical issues arose out of the international context of business.
Theoretical issues such as cultural relativity of ethical values receive more emphasis in this
field. Other, older issues can be grouped here as well. Issues and subfields include:
The search for universal values as a basis for international commercial behaviour.
Comparison of business ethical traditions in different countries. Also on the basis
of their respective GDP and [Corruption rankings].
Comparison of business ethical traditions from various religious perspectives.
Ethical issues arising out of international business transactions; e.g.,
bioprospecting and biopiracy in the pharmaceutical industry; the fair trade
movement; transfer pricing.
Issues such as globalization and cultural imperialism.
Varying global standardse.g., the use of child labor.
The way in which multinationals take advantage of international differences, such
as outsourcing production (e.g. clothes) and services (e.g. call centres) to low-
wage countries.
The permissibility of international commerce with pariah states.
The success of any business depends on its financial performance. Financial accounting
helps the management to report and also control the business performance.
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The inIormation regarding the Iinancial perIormance oI the company plays an important role
in enabling people to take right decision about the company. ThereIore, it becomes
necessary to understand how to record based on accounting conventions and concepts
ensure unambling and accurate records.
Foreign countries oIten use dumping as a competitive threat, selling products at prices lower
than their normal value. This can lead to problems in domestic markets. It becomes diIIicult
Ior these markets to compete with the pricing set by Ioreign markets. In 2009, the
International Trade Commission has been researching anti-dumping laws. Dumping is oIten
seen as an ethical issue, as larger companies are taking advantage oI other less economically
advanced companies.
Economic sstems
Political economy and political philosophy have ethical implications, particularly regarding
the distribution oI economic beneIits.
|205|
John Rawls and Robert Nozick are both notable
contributors. For example, Rawls has been interpreted as oIIering a critique oI oIIshore
outsourcing (http://works.bepress.com/julianIriedland/3/) on social contract grounds,
whereas Nozick's libertarian philosophy rejects the notion oI any positive corporate social
obligation.
Law and regulation
Very oIten it is held that business is not bound by any ethics other than abiding by the law.
Milton Friedman is the pioneer oI the view. He held that corporations have the obligation to
make a proIit within the Iramework oI the legal system, nothing more.
|206|
Friedman made it
explicit that the duty oI the business leaders is, "to make as much money as possible while
conIorming to the basic rules oI the society, both those embodied in the law and those
embodied in ethical custom".
|207|
Ethics Ior Friedman is nothing more than abiding by
'customs' and 'laws'. The reduction oI ethics to abidance to laws and customs however have
drawn serious criticisms.
Counter to Friedman's logic it is observed that legal procedures are technocratic,
bureaucratic, rigid and obligatory where as ethical act is conscientious, voluntary choice
beyond normativity.
|208|
Law is retroactive. Crime precedes law. Law against a crime, to be
passed, the crime must have happened. Laws are blind to the crimes undeIined in it.
|209|
Further, as per law, "conduct is not criminal unless Iorbidden by law which gives advance
warning that such conduct is criminal.
|210|
Also, la presumes the accused is innocent until
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proven guilt and that the state must establish the guilt of the accused beond reasonable
doubt. As per liberal laws followed in most of the democracies, until the government
prosecutor proves the firm guilt with the limited resources available to her, the accused is
considered to be innocent. Though the liberal premises of law is necessar to protect
individuals from being persecuted b Government, it is not a sufficient mechanism to make
firms morall accountable.
|211||212||213||214|
Implemenaion
Copoae policie
As part oI more comprehensive compliance and ethics programs, many companies have
Iormulated internal policies pertaining to the ethical conduct oI employees. These policies
can be simple exhortations in broad, highly generalized language (typically called a corporate
ethics statement), or they can be more detailed policies, containing speciIic behavioural
requirements (typically called corporate ethics codes). They are generally meant to identiIy
the company's expectations oI workers and to oIIer guidance on handling some oI the more
common ethical problems that might arise in the course oI doing business. It is hoped that
having such a policy will lead to greater ethical awareness, consistency in application, and the
avoidance oI ethical disasters.
An increasing number oI companies also require employees to attend seminars regarding
business conduct, which oIten include discussion oI the company's policies, speciIic case
studies, and legal requirements. Some companies even require their employees to sign
agreements stating that they will abide by the company's rules oI conduct.
Many companies are assessing the environmental Iactors that can lead employees to engage
in unethical conduct. A competitive business environment may call Ior unethical behaviour.
Lying has become expected in Iields such as trading. An example oI this are the issues
surrounding the unethical actions oI the Saloman Brothers.
Not everyone supports corporate policies that govern ethical conduct. Some claim that
ethical problems are better dealt with by depending upon employees to use their own
judgment.
Others believe that corporate ethics policies are primarily rooted in utilitarian concerns, and
that they are mainly to limit the company's legal liability, or to curry public Iavour by giving
the appearance oI being a good corporate citizen. Ideally, the company will avoid a lawsuit
because its employees will Iollow the rules. Should a lawsuit occur, the company can claim
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that the problem would not have arisen if the employee had only followed the code properly.
Sometimes there is disconnection between the company's code of ethics and the company's
actual practices. Thus, whether or not such conduct is explicitly sanctioned by management,
at worst, this makes the policy duplicitous, and, at best, it is merely a marketing tool.
Jones and Parker write, "Most of what we read under the name business ethics is either
sentimental common sense, or a set of excuses for being unpleasant."
[215]
Many manuals are
procedural form filling exercises unconcerned about the real ethical dilemmas. For instance,
US Department of Commerce ethics program treats business ethics as a set of instructions
and procedures to be followed by 'ethics officers'.,
[31]
some others claim being ethical is just
for the sake of being ethical.
[216]
Business ethicists may trivialize the subject, offering
standard answers that do not reflect the situation's complexity.
[208]
Ehic office
Ethics officers (sometimes called "compliance" or "business conduct officers") have been
appointed formally by organizations since the mid-1980s. One of the catalysts for the
creation of this new role was a series of fraud, corruption, and abuse scandals that afflicted
the U.S. defense industry at that time. This led to the creation of the Defense Industry
Initiative (DII), a pan-industry initiative to promote and ensure ethical business practices. The
DII set an early benchmark for ethics management in corporations. In 1991, the Ethics &
Compliance Officer Association (http://www.theecoa.org) (ECOA)originally the Ethics
Officer Association (EOA)was founded at the Center for Business Ethics
(http://www.bentley.edu/cbe) (at Bentley College, Waltham, MA) as a professional
association for those responsible for managing organizations' efforts to achieve ethical best
practices. The membership grew rapidly (the ECOA now has over 1,200 members) and was
soon established as an independent organization.
Another critical factor in the decisions of companies to appoint ethics/compliance officers
was the passing of the Federal Sentencing Guidelines for Organizations in 1991, which set
standards that organizations (large or small, commercial and non-commercial) had to follow
to obtain a reduction in sentence if they should be convicted of a federal offense. Although
intended to assist judges with sentencing, the influence in helping to establish best practices
has been far-reaching.
In the wake of numerous corporate scandals between 200104 (affecting large corporations
like Enron, WorldCom and Tyco), even small and medium-sized companies have begun to
appoint ethics officers. They often report to the Chief Executive Officer and are responsible
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for assessing the ethical implications of the company's activities, making recommendations
regarding the company's ethical policies, and disseminating information to employees. They
are particularly interested in uncovering or preventing unethical and illegal actions. This trend
is partly due to the SarbanesOxley Act in the United States, which was enacted in reaction
to the above scandals. A related trend is the introduction of risk assessment officers that
monitor how shareholders' investments might be affected by the company's decisions.
The effectiveness of ethics officers is not clear. If the appointment is made primarily as a
reaction to legislative requirements, one might expect little impact, at least over the short
term. In part, this is because ethical business practices result from a corporate culture that
consistently places value on ethical behaviour, a culture and climate that usually emanates
from the top of the organization. The mere establishment of a position to oversee ethics will
most likely be insufficient to inculcate ethical behaviour: a more systemic programme with
consistent support from general management will be necessary.
The foundation for ethical behaviour goes well beyond corporate culture and the policies of
any given company, for it also depends greatly upon an individual's early moral training, the
other institutions that affect an individual, the competitive business environment the company
is in and, indeed, society as a whole.
Academic dicipline
As an academic discipline, business ethics emerged in the 1970s. Since no academic
business ethics journals or conferences existed, researchers published in general management
journals, and attended general conferences. Over time, specialized peer-reviewed journals
appeared, and more researchers entered the field. Corporate scandals in the earlier 2000s
increased the field's popularity. As of 2009, sixteen academic journals devoted to various
business ethics issues existed, with Journal of Business Ethics and Business Ethics Quarterly
considered the leaders.
[217]
The International Business Development Institute
[218]
is a global non-profit organization that
represents 217 nations and all 50 United States. It offers a Charter in Business Development
(CBD) that focuses on ethical business practices and standards. The Charter is directed by
Harvard, MIT, and Fulbright Scholars, and it includes graduate-level coursework in
economics, politics, marketing, management, technology, and legal aspects of business
development as it pertains to business ethics. IBDI also oversees the International Business
Development Institute of Asia
[219]
which provides individuals living in 20 Asian nations the
opportunity to earn the Charter.
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Religious views
Main aicle: Religio ie on bine ehic
In Sharia law, followed by many Muslims, banking specifically prohibits charging interest on
loans.
[ciaion needed]
Traditional Confucian thought discourages profit-seeking.
[220]
Christianity offers the Golden Rule command, "Therefore all things whatsoever ye would that
men should do to you, do ye even so to them: for this is the law and the prophets."
[221]
according to the article "Theory of the real economy", there is a more narrow point of view
from the Christianity faith towards the relationship between ethics and religious traditions.
This article stresses about how capable is Christianity of establishing reliable boundaries for
financial institutions. one criticism comes from pope Benedict by describing the "damaging
effects of the real economy of badly managed and largely speculative financial dealing." it is
mentioned that Christianity has the potential to transform the nature of finance and investment
but only if theologians and ethicist provide more evidence of what is real in the economic
life.
[222]
Related disciplines
Business ethics is part of the philosophy of business, the branch of philosophy that deals
with the philosophical, political, and ethical underpinnings of business and economics.
Business ethics operates on the premise, for example, that the ethical operation of a private
business is possiblethose who dispute that premise, such as libertarian socialists, (who
contend that "business ethics" is an oxymoron) do so by definition outside of the domain of
business ethics proper.
[ciaion needed]
The philosophy of business also deals with questions such as what, if any, are the social
responsibilities of a business; business management theory; theories of individualism vs.
collectivism; free will among participants in the marketplace; the role of self interest; invisible
hand theories; the requirements of social justice; and natural rights, especially property rights,
in relation to the business enterprise.
[ciaion needed]
Business ethics is also related to political econom, which is economic analysis from
political and historical perspectives. Political economy deals with the distributive
consequences of economic actions. It asks who gains and who loses from economic
activity, and is the resultant distribution fair or just, which are central ethical
issues.
[ciaion needed]
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See alo
Bribery
Business culture
Business Ethics Quarterly
Business and Professional Ethics Journal
Business law
Corporate behaviour
Corporate crime
Corporate Social Entrepreneurship
Corporate social responsibility
Corruption
Ethicism
Ethics
Ethical implications in contracts
Ethical consumerism
Ethical code
Ethical job
Fiduciary
Journal of Business Ethics
Management
Organizational Ethics
Optimism bias
Strategic misrepresentation
Strategic planning
Refeence
1. ^ Smith, A (1776/ 1952) An Inquiry Into the Nature and Causes of the Wealth of Nations.
Chicago, IL: University of Chicago Press, p. 55
2. ^ Berle, A. A., & Means, G. C. (1932). The Modern Corporation and Private Property. New
Jersey: Transaction Publishers. In this book, Berle and Means observe, "Corporations have
ceased to be merely legal devices through which the private business transactions of
individuals may be carried on. Though still much used for this purpose, the corporate form has
acquired a much larger significance. The corporation has, in fact, become both a method of
property tenure and a means of organizing economic life. Grown to tremendous proportions,
there may be said to have evolved a 'corporate system'as there once was a feudal system
which has attracted to itself a combination of attributes and powers, and has attained a degree
of prominence entitling it to be dealt with as a major social institution. [] We are examining
this institution probably before it has attained its zenith. Spectacular as its rise has been, every
2/1/12 Business ethics - Wikipedia, the free encclopedia
19/39 en.wikipedia.org/wiki/Business_ethics
this institution probably before it has attained its zenith. Spectacular as its rise has been, every
indication seems to be that the system will move forward to proportions which stagger
imagination today [] They [management] have placed the community in a position to demand
that the modern corporation serve not only the owners [] but all society." p. 1.
3. Jones, Parker & et al. 2005, p. 17
4. Slavery and the Making of AmericaEpisode 1 (http://video.google.com/videoplay?
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5. Kingsolver, A. (2008). Capitalism. Encyclopedia of Race and Racism. J. H. Moore. Detroit,
Macmillan reference ISBN 0-02-866021-8 pp. 268271.
6. Williams, E. (1994 [1944]). Capitalism and Slavery (http://books.google.com/books?
id=Ns4ktOA-FxQC&pg=PA7) . Chapel Hill, The University of North Carolina Press. "Slavery
was not born of racism: rather, racism was the consequence of slavery. Unfree labor in the
New World was brown, white, black, and yellow; Catholic, Protestant and pagan"
7. King Leopold II King of BelgiumKing of the Congo (http://video.google.com/videoplay?
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8. Robotham, D. (2005). Political Economy. A Handbook of Economic Anthropology. J. G.
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9. Berger D., Easterly W, e al. (2010) Commercial Imperialism? Political Influence and Trade
During the Cold War (http://www.nber.org/papers/w15981) . NBER Working Paper No.
15981.
10. The article A History of Business Ethics
(http://www.scu.edu/ethics/practicing/focusareas/business/conference/presentations/business-
ethics-history.html) by Richard T. De George of Santa Clara University (web page version of
DeGeorge, Richard. 2005, "History of Business Ethics", paper delivered at "The Accountable
Corporation", the third biennial global business conference sponsored by the Markkula Center
for Applied Ethics at Santa Clara University) as availed on March 30, 2010 observes, on the
origin of business ethics discourse, " The Second World War was over, the Cold War was ever
present, and the War in Viet Nam fostered a good deal of opposition to official public policy
and to the so-called military-industrial complex, which came in for increasing scrutiny and
criticism. The Civil Rights movement had caught the public imagination. The United States was
becoming more and more of a dominant economic force. American-based multinational
corporations were growing in size and importance. Big business was coming into its own,
replacing small and medium-sized businesses in the societal image of business. The chemical
industry was booming with innovation, and in its wake came environmental damage on a scale
that had not previously been possible. The spirit of protest led to the environmental movement,
to the rise of consumerism, and to criticism of multinational corporations....Corporations,
finding themselves under public attack and criticism, responded by developing the notion of
social responsibility. They started social responsibility programs and spent a good deal of
money advertising their programs and how they were promoting the social good. Exactly what
"social responsibility" meant varied according to the industry and company
11. Richard T. De George
12. ^
Davies 2007, p. 20
148. "Property is something we must collectively define and construct. It is not given to us whole;
it does not emerge fully formed like Athena from Zeus's head. It is closer to a piece of music
that unfolds over time. Like music, property gets its sense of stability from the ongoing
creation and resolution of various forms of tension. The tensions that inform property are the
tensions inherent in social relations. The solutions to the problems of property conflicts lie in
understanding the connection between property and human relationships. Relationships
sometimes form stable patterns, but they are also ongoing and constantly renegotiated. cultural
norms. It is argued that there is no simple definition of property that can be posited without
making controversial value judgments about how to choose between conflicting
interests"Singer 2000, p. 13
149. Singer 2000, p. 9
150. Cohen, M. R. (1927). Property and Sovereignty. Cornell Law Quarterly, 13, 830. Cohen
commenting on the power dimension of property noted, "we must not overlook the actual fact
that dominion over things is also imperium over our fellow human beings" p. 13
151. Rose 1994, p. 14
152. "'Property' has no essential character, but is rather a highly exible set of rights and
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31/39 en.wikipedia.org/wiki/Business_ethics
152. "'Property' has no essential character, but is rather a highly exible set of rights and
responsibilities which congeal in different ways in different contexts" Davies 2007, p. 20
153. Singer 2000, p. 8
154. Cooter, R. and T. Ulen (1988). La and Economics. New York, Harper Collins.
155. Honore, A. M. (1961). Ownership. In A. G. Guest (Ed.), Oxford Essays in Jurisprudence.
London: Oxford University Press.; Becker, L. (1980). The Moral Basis of Property Rights In J.
Pennock & J. Chapman (Eds.), Property. New York: New York University Press..
156. However, some scholars often use the terms ownership, property and property rights
interchangeably, while others define ownership (or property) as a set of specific rights each
attached to the vast array of uses accessible by the owner. Ownership has thus been interpreted
as a form of aggregation of such social relationsa bundle of rights over the use of scarce
resources . Alchian, A. A. (1965). Some Economics of Property Rights. Il Politico, 30, 816
829
157. Epstein, R. A. (1997). "A Clear View of the Cathedral: The Dominance of Property Rules"
(http://www.questia.com/googleScholar.qst;jsessionid=M1sW1nylSWKQJzZnVYGGY3ZCLG
0shFGz4Bjj8YTLjNjFKRGv92Ym!-1814198305!558324302?docId=5000440763) . Yale
La Journal 106 (7): 20912107. doi:10.2307/797162
(http://dx.doi.org/10.2307%2F797162) . JSTOR 797162
(http://www.jstor.org/stable/797162) .
http://www.questia.com/googleScholar.qst;jsessionid=M1sW1nylSWKQJzZnVYGGY3ZCLG
0shFGz4Bjj8YTLjNjFKRGv92Ym!-1814198305!558324302?docId=5000440763. "Bundle
of rights is often interpreted as 'full control' over the property by the owner"
158. Merrill, T. W., & Smith, H. E. (2001). "What Happened to Property in Law and Economics?"
(http://www.yalelawjournal.org/the-yale-law-journal/content-pages/what-happened-to-
property-in-law-and-economics?/) . Yale La Journal 111 (2): 357398.
doi:10.2307/797592 (http://dx.doi.org/10.2307%2F797592) . JSTOR 797592
(http://www.jstor.org/stable/797592) . http://www.yalelawjournal.org/the-yale-law-
journal/content-pages/what-happened-to-property-in-law-and-economics?/.
159. Property has been conceptualized as absolute ownership with full control over the owned
property without being accountable to anyone else Singer 2000, p. 29.
160. Demsetz, H. (1988). A Framework for the Study of Ownership. In H. Demsetz (Ed.),
Ownership, Control, and the Firm (Vol. I, pp. 1227). Oxford: Blackwell. Further, it is held,
the ownership goes beyond what is describable. Demsetz claims that the notion of "full private
ownership" over assets is "vague", and "[i]n one sense, it must always remain so, for there is an
infinity of potential rights of actions that can be owned []. It is impossible to describe the
complete set of rights that are potentially ownable.
161. Rose 1996, pp. 329365 Property as the Keystone Right? Notre Dame Law Review 71
162. "Property itself is fragilemuch more so than one would think from its sheer persistence. A
central feature of this fragility is this: property entails the cooperation of others. You cannot
have property all alone. Even the rule of First Possession, seemingly so quintessentially
individualistic, depends on the recognition and acquiescence of others; they must know what
you are claiming, and tacitly agree to let you hold iteven against their own interests. No
trust, no property" Michelman, F. I. (1982). Ethics, Economics, and the Law of Property. In J.
R. Pennock & J. W. Chapman (Eds.), Nomos: Ethics, Economics, and the Law (Vol. 24, pp. 3
40). New York: New York University Press.
163. Menon observes, "Atomy, in short, is selfishness and free fulfillment of sovereign self at the
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163. Menon observes, "Atomy, in short, is selfishness and free fulfillment of sovereign self at the
cost of the other. Atomy is reified as if it were autonomy within the social construction of the
mythology of individuality". p. 15 Menon, Madhu (2008). Suicide as unfreedom and vice versa
(http://books.google.com/books?id=Ho66yZj9LNYC&pg=PT18) . Norderstedt: GRIN Verlag
ISBN 3-640-18334-7
164. Gray, Kevin (2009). "Property in Thin Air". The Cambridge La Journal 50 (02): 252.
doi:10.1017/S0008197300080508 (http://dx.doi.org/10.1017%2FS0008197300080508) .
165. Penner, J. E. (1997). The Idea of Property in Law (http://books.google.com/books?
id=xihmDndRfmoC&printsec=frontcover) . Oxford: Clarendon Press ISBN 0-19-826029-6 In
explaining the identity crisis of 'property' Penner wrote, "'You see', property will say, 'now I am
not even my own idea. I'm just a bundle of other concepts, a mere chimera of an entity. I'm just
a quivering, wavering, normative phantasm, without any home, without anything to call my own
but an album full of fading and tattered images of vitality and consequence and meaning. I'm
depressed." p. 1
166. Any space may be subject to plural meanings or appropriations which do not necessarily
come into conflict: pastoralists and Indigenous people may have quite different understandings
of rural landscapes reflected in different types of property interests, which canideally
coexist legally. A nominally open public space may have 'private' or limited meanings imposed
upon itfor instance religious meanings (Urban spaces such as privately owned but publicly
accessible shopping malls are increasingly of a 'quasi'-public nature. At the same time,
intrusions of public norms into personal proprietary spaces through, for instance, zoning,
heritage, and environmental regulations, militate against seeing 'private' property as entirely
private. Social transitions which transgress neat liberal distinctions put the theory under strain
in key points: where the owners of a quasi-public space like a shopping mall try to enforce a
dress code or standards of behaviour, private proprietorial power intrudes into the public
sphere Davies 2007, p. 11
167. AJ van der Walt notes, "forced removals and the restrictions upon free movement and
economic activity that accompanied state-enforced racial segregation, helped to secure white
privilege while at the same time politically and economically marginalising millions of black
South Africans. Walt, AJ. (2009). Property in the Margins. Oxford: Hart Publishing, ISBN 1-
84113-963-7 p. 2
168. Fischbach, M. R. (2003). Records of Dispossession: Palestinian Refugee Property and the
Arab-Israeli Conict (http://books.google.com/books?
id=l8amWU3Z800C&printsec=frontcover) . New York: Columbia University Press ISBN 0-
231-12978-5. In this book Fischbach discusses on forceful dispossession of Palestinian
property by Israel
169. Robertson observes, "In this country and, to a great extent, in other former British colonies,
the legal rule justifying claims to indigenous lands discovered by Europeans traces to the 1823
decision of the Supreme Court of the United States in Johnson v. M'Intosh. Johnson contained
the "discovery doctrine, which answered the question: What rights did Europeans acquire, and
indigenous peoples lose, upon the discovery of the New World? The answer, according to the
Court, was ownership of all discovered lands. Discovery converted the indigenous owners of
discovered lands into tenants on those lands. The underlying title belonged to the discovering
sovereign. The indigenous occupants were free to sell their "lease," but only to the landlord,
and they were subject to eviction at any time. More than 180 years later, the discovery doctrine
is still the law". Robertson 2005, pp. ixx
170. Sax, J. L. (1971). "Takings, Private Property and Public Rights" (see pp. 149, 152). Yale La
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170. Sax, J. L. (1971). "Takings, Private Property and Public Rights" (see pp. 149, 152). Yale La
Journal 81 (2): 149186. doi:10.2307/795134 (http://dx.doi.org/10.2307%2F795134) .
JSTOR 795134 (http://www.jstor.org/stable/795134) .
171. Singer 2000, p. 6
172. Hohfeld, W. (1913). "Some Fundamental Legal Conceptions as Applied in Judicial
Reasoning I". Yale La Journal 23 (1): 1659. doi:10.2307/785533
(http://dx.doi.org/10.2307%2F785533) . JSTOR 785533
(http://www.jstor.org/stable/785533) .
173. Hohfeld, W. (1917). "Some Fundamental Legal Conceptions as Applied in Judicial
Reasoning II". Yale La Journal 26 (8): 710770. doi:10.2307/786270
(http://dx.doi.org/10.2307%2F786270) . JSTOR 786270
(http://www.jstor.org/stable/786270) .
174. Miunzer, S. R. (1990). A theory of property. Cambridge: Cambridge University Press, p. 17
175. Bryan, B. (2000). Property as Ontology: on Aboriginal and English Understandings of
Property. Canadian Journal of Law and Jurisprudence, 13, 331. In this article Bradley Bryan
claimed that property is about much more than a set of legal relations: it is 'an expression of
social relationships because it organizes people with respect to each other and their material
environment' p. 4
176. Arendt, H. (1958). The Human Condition. Chicago: University of Chicago Press, p. 7
177. Singer 2000, p. 16
178. "The legal realists understood property rights as relationships only in the formal sense. They
acknowledged that rights impose duties on others and that liberties impose vulnerabilities on
those affected by the exercise of those liberties. In deciding whether those duties and those
vulnerabilities were fair, they suggested that lawmakers balance the interests of those harmed
by entitlements against those who benefit from them. This balancing solution did not take
seriously the idea that legal rules both respond to and shape the contours of social relations.
They did not, in other words, take the character and structure of social relations as an important
independent factor in choosing the rules that govern market life. Economists may similarly fail
to give sufficient attention to the moral and customary underpinnings of market societies. The
idea of balancing interests is a useful one, but it does not quite get at what is at stake in
constructing property law. What is at stake is a vision of social life" Singer 2000, p. 11 Singer
further states, "Problems emerge when abstract property concepts meet the disputes over
property that arise between people in the real world. The ownership model fails to
acknowledge the substantial limitations on property rights that are necessary to protect the
interests of both owners and nonowners harmed by the exercise of those rights. Conflicts
among owners are quite prevalent. In some cases one owner's exercise of her lawful property
rights interferes with other owners' rights in their own property. We also need to restrict
property rights in situations where they impinge on nonproperty rights we hold as dearly". (p.
31)
179. Boldrin & Levine 2008, p. 10
180. Drahos and Braithwaite write, "When in 1994 we interviewed a former US trade negotiator,
he remarked that 'less than 50 individuals' were responsible for TRIPS. Less than 50 individuals
had managed to globalize a set of regulatory norms for the conduct of all those doing business
or aspiring to do business in the information age" Drahos & Braithwaite 2002, p. 73
181. ^