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TRANSCULTURAL FRIENDSHIP: OUR POLITICAL FUTURE

Chapter Eleven: The Educating Society

Section 3: Corporate Responsibility

 

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This raises the more general problem of corporate responsibility. Corporations are not going to contribute to the overall level of development of their employees so long as corporate objectives are narrowly defined.

 

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Capitalist countries like the U.S. have an interesting double standard. As a whole, we are a moral and charitable people. We are often wary of individuals whose motives are basically avaricious. Yet, we tolerate the same narrowness in our corporations. "Tolerate" is too weak a term --irresponsibility is the law of the land. One State Supreme Court has held that a corporation's sole responsibility is to maximize profits for the shareholders, and that it could not weigh altruistic concerns against dollars (Dodge V. Ford Motor Company, Supreme Court of Michigan, 1919, 204 Mich 459, 170 N.W. 668). The relatively high moral level of individuals is thus offset by the fact that amoral corporations control a large portion of the nation's wealth, resources and production.

 

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A democratic society copes with this problem by legislatively imposing a system of regulations and taxation to make sure the price of each product accurately reflects its true cost to society.

 

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By and large people know what is best for themselves. If people want television sets, society should produce television sets; if they want licorice drops, then licorice drops should be made. And, the theory continues, in order for people to know what they really want they must know the relative costs of producing different goods. The function of prices is to reflect the actual costs of competing goods, and thus to enable the buyer to cast an informed vote in making his purchases (Guido Calabresi, "Some Thoughts on Risk Distribution and the Law of Torts", 70 Yale L.J. 499, at 502 [1961]).

 

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Calabresi argues that industries with high risks associated with dangerous machinery and chemicals, etc. should have to pay for insurance or for the harm directly, rather than having the state pay, since the costs would then be reflected in the products so that the consumer would make a better informed choice as to the worthwhileness of the product. The principle is quite general, however. A regulation requiring anti-pollution devices or taxing pollution forces the consumer to bear the cost to society of such intangibles as the loss of valuable resources such as clean air and water. Thus, democratic action, through the legislature, in the market place, can compensate for corporate irresponsibility.

 

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This democratic approach effectively represents the will of the majority. On the other hand, the majoritarian approach lacks the sensitivity to express the diverse values of minorities. Eventually, it will be up to consumers to be aware of the costs of a product -- including costs to the environment, human life and dignity, and international cooperation. What should be developed is a willingness on the part of consumers to pay more for: "Dolphin-safe" tuna; products manufactured in environmentally sound manners; and products which do not depend on unfair exploitation of human labor or raw materials, domestically or abroad.

 

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This consumer awareness and responsibility approach does not depend on gross majoritarian valuations. Each person "votes" one's dollars in accordance with one's own values. The market place becomes a much more finely tuned instrument of moral feedback to the corporations. This level of responsibility corresponds more to a political friendship than a majoritarian democracy. Thus, as society develops, we can expect to see this approach increase in importance.

 

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Stockholder responsibility can reinforce consumerism. Some stockholders in recent years have voted according to moral principles -- and where this has proved ineffective, which is the usual case, have sold their stock. Society would benefit if the reputation of its members were tied to the activities supported by their investments, and not merely to their own actions. Stockholder lists, piercing holding company veils, should be public and up-to-date. Only then will stockholder voting and selling be persuasive enough to change the corporate sense of responsibility.

 

 

 

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