Community, business ethics, and global capitalism

The absorption of the cultural sphere into the commercial sphere signals a fundamental change in human relationships with troubling consequences for the future of society. From the beginning of civilization to now, culture has always preceded markets. People create communities, construct elaborate codes of social conduct, reproduce shared meanings and values, and build social trust in the form of social capital. Only when social trust and social exchange are well developed do communities engage in commerce and trade…. When the commercial sphere begins to devour the cultural sphere … it threatens to destroy the very social foundations that give rise to commercial relations.(1)

I. INTRODUCTION: CORPORATIONS AND COMMUNITY

The field of business ethics is in a quandary. No unified theory has been accepted by its many scholars and practitioners, and, according to some, little practical guidance to business managers has been generated.(2) As a result, the field of business ethics–even after more than twenty years of vigorous growth–risks a decline in relevance, and many business ethicists are still searching for consensus around which the discipline can build.(3) After reviewing five years of articles from the Business Ethics Quarterly, LaRue Hosmer wrote in 1996 that “there seems to be a growing coalescence around the concept of the corporation as a community, with behavioral outcomes of loyalty, trust, and (perhaps) consensus or a sense of justice.”(4) Whether there is in fact such a coalescence, some of the most promising recent work in business ethics centers on “community” as the most important context for corporate social responsibility.(5)

This paper will comment on the work of Tom Dunfee, Tom Donaldson, and Tim Fort, scholars who have made significant contributions to the field of business ethics, and who share an interest in the concept of community as a key to understanding and fostering sound corporate ethics. All of them see businesses and corporations as communities capable of generating potent moral norms. To differing degrees, they urge business ethicists to pull back from large-scale theorizing and take a much closer look at the possibilities and practices within corporations to discover relevant values, organizational forms, and emerging norms.

In 1991, Tom Dunfee took the lead by stressing what he called “extant social contracts” among communities. Dunfee claimed (among other things) that an individual business, a working group within that business, or a wider consortium of businesses with shared interests could form a community with “authentic” moral norms.(6) In a subsequent article that provoked considerable comment, Dunfee and Tom Donaldson proposed an “Integrative Social Contracts Theory” (ISCT) to unify the disparate streams of normative and empirical research in business ethics.(7)

In ISCT, Dunfee’s earlier work on the extant social contracts in smaller communities merged into the concept of a “microsocial contract,” forged in communities where cultural and context-specific learning about ethics can take place. “Microsocial contracts,” note Donaldson and Dunfee, “represent agreements or shared understandings about the moral norms relevant to specific economic interactions. Moreover, we may call the freedom represented by the ability to endorse microsocial contracts moral free space.”(8) Local communities may specify ethical norms for their members through microsocial contracts. In ISCT, community means “a self-defined, self-circumscribed group of people who interact in the context of shared tasks, values, or goals and who are capable of establishing norms of ethical behavior for themselves.”(9)

While not specifically relying on the term “community,” Tim Fort has introduced the idea that businesses may be or become “mediating institutions” where morality is best learned.(10) Generally, mediating institutions would include relatively smaller groups where people work together, such as families, religious institutions, and voluntary organizations.(11) The small group setting gives people the ability to control the environment in which they work. As Tom Chappell has noted, business ethics is best learned by treating others as members of a family rather than as cogs in a wheel.(12) The “mediating” aspect of business is that it potentially mediates between autonomous individuals and larger society.

This insight has, according to Fort, implications for both stakeholder theory and ISCT.(13) In turn, of course, those theories would inform well-considered strategies in business ethics as well as indicating which legal reforms might be practical (since they would be based on underlying organizational realities). Professors Dalton and Metzger make a similar point about the need to look at organizational realities before prescribing new legal mechanisms for the purpose of making corporate behavior more ethical.(14) In using his “business as mediating institution” idea, for example, Fort finds that current corporate constituency statutes aim too broadly and should be confined primarily to suppliers, stockholders and employees.(15) More recently, Fort and Schipani find that differing corporate governance structures in European, Japanese, and U.S. laws can influence the degree to which large multinational corporations can allow for stakeholder influences and make room for smaller groups within those corporations to generate moral norms.(16)

Both ISCT and Fort’s approach to business as a “mediating institution” remind business ethicists how essential it is to have specific contexts for generating ethical norms. I endorse the significance of those reminders, and the notion that the context is often what we might call a “community.” But I would add a crucial caveat: The vast majority of international trade and business is carried on by large multinational corporations whose pursuit of ever-increasing global market share is breaking down traditional patterns of life and community, imposing a dynamic of rapid change on many segments of most societies, and severely degrading the natural environment on which business, communities, and human life ultimately depend.

The factual basis of this caveat will be explored below,(17) with appropriate attribution to such authors as David Korten, Tom Athanasiou, George Soros, John Cavanagh, Richard Barnet, Paul Hawken, William Greider, Tom Friedman and Ralph Estes. Space constraints here allow only brief exposition of these authors’ views. But collectively, the evidence they offer is abundant, and their conclusions are strikingly similar. If the reader accepts their critique of global corporate capitalism, she or he will be convinced–as I am–that the need to nurture social communities through education and public policy has never been greater. Reliance on “community” as the fount of ethical awareness and generation of moral norms would be misplaced if “future shock”(18) is already upon us, such that communities are coming and going too rapidly for people to form the necessary bonds for ethical development. Jeremy Rifkin (consistent with Korten, Hawken, Greider, and others) suggests that we are in the age of “hyper-capitalism,” in which culture and community are eroded by rapid economic change.(19) If this is so, then at least one clear goal for business ethics scholars is to conceive and advocate broad yet practical reforms that will enable corporations to transform into mediating institutions and also bring about greater accountability for the social and environmental consequences of their actions.

II. ORGANIZATIONS AS COMMUNITIES: INTEGRATIVE SOCIAL CONTACTS THEORY

A principal feature of Donaldson and Dunfee’s Integrative Social Contracts Theory (ISCT) is the recognition that morality is “strongly bounded.” Rationality in economic ethics is bounded by our limited capacity to assess facts and to articulate moral theories that adequately capture moral truth. Rationality is also bounded by “the plastic or artifactual nature of economic systems and practices.”(20) Knowing “all the moral theory in the world,” they note, “does not equip a person to specify in advance the moral norms of business ethics, much less the norms for the specific contexts of gift giving, negotiation, and employee compensation. In each, the ethical norms must be contoured to the rules of the specific economic practices and the notions of fairness of the participants.”(21) As an example, they note that “usury” has been defined with significant differences from time to time and culture to culture. In the Middle Ages, all lending at interest was prohibited

The commonality of a phenomenon may, in short, provide some ethical justification for it. As Donaldson and Dunfee note, “The claim that `everyone is doing it’ is nowhere more common than in business ethics.”(23) This is not necessarily because people in business have a lower ethical standard than those in other walks of life, but because businesspeople exist in an artifactual context where institutions are sometimes created by common practice. The rules concerning proper disclosures and behaviors in negotiations (e.g., revelations about the condition of real estate in a commercial transaction), for example, often arise out of a history of common practice. Although never a sufficient condition for ethical justification, the claim that “everybody’s doing something” can have some moral force in business contexts.(24)

This moral force exists at least in part because “economic systems are products of artifice, not nature, and their structures can and do vary immensely.”(25) Donaldson and Dunfee note that economic systems include the laws, practices, and value systems that inform economic practices

To push the analogy between economic systems and games a bit further, they observe that if we want to know the rules about games, we must ask, “Which games?” While we can know the rules of basketball, the concept of “games” is so broad that a general theory of games will itself be overbroad and cannot usefully be applied to the nuanced reality of basketball, squash, Monopoly, or any other game. “The ethics of basketball, or of soccer or squash, must be contoured somewhat to the rules of these particular games. Similarly, the ethics of client entertainment, negotiation, and employee compensation must be contoured somewhat to the rules of the particular economic systems in which they occur.”(27)

These insights are used to recommend an empirical agenda for business ethics. Rather than trying to apply the most abstract moral theories (Utilitarianism, Kantian Deontology, or Aristotelian Eudiamonism) to ongoing ethical quandaries, business ethicists as well as managers of multinational enterprises can usefully examine the customs and mores of a particular community to discover viable ethical norms (or microsocial contracts). Such attention to the particular extant norms, however, must be leavened by the prerequisite conditions of voice, consent, and right of exit, as well as due corporate regard for broader, more universally applicable standards. These more universal standards are called hypernorms, and would limit the moral free space of microsocial contracts by forbidding acts which violate the most fundamental principles of human existence. Yet Donaldson and Dunfee have not fully developed their theories on the origins and content of hypernorms, and have acknowledged the methodological difficulties of “discovering” hypernorms that would limit the moral free space of micro-contractors.(28)

Much more can (and has) been said about ISCT, micro-social contracts, and hypernorms.(29) But in essence, ISCT is a call to look more closely at the rules and standards operative within existing communities. This is similar in spirit to the work of Metzger and Dalton, who conclude that consultation, instruction, or writing about the ethics of business is “doomed to failure without an adequate understanding of the organizational context in which business behavior takes place.”(30) As Metzger and Dalton make clear, the corporation is a “real entity,” but it is difficult to locate its moral center, for the analogy to human moral agency is flawed, at best. Precisely because this moral center is difficult to locate, and precisely because the corporation as a “real entity” is so different from an individual, talking about the corporation’s “personality” is easily seen as a stretch. And perhaps because it is such a stretch, we inevitably resort to different metaphors: the business as community, or business as mediating institution.

III. BUSINESS AS MEDIATING INSTITUTION

Tim Fort has suggested that a free society needs mediating institutions to facilitate social justice and a flourishing free market. Mediating institutions–such as families, guilds, volunteer organizations or religious groups–serve as mediating structures between individuals and the greater society. As sociologist Robert Nisbet has said, “Within such groups have been engendered the primary types of identification: affection, friendship, prestige, recognition. And within them also have been engendered or intensified the principal incentives of work, love, prayer, and devotion to freedom and order.(31) In sum, mediating institutions enable people to understand community, reciprocity, solidarity, and the realization of self-interest through concern for others.

Fort links this insight with thoughts from an impressive array of authorities–from Adam Smith to Tom Chappell, Peter Drucker and Charles Hampden-Turner–to answer the long-standing question of what a corporation ought to look like. Not surprisingly, his answer is that a corporation ought to look more like a mediating institution. “… [T]here is a need to remake corporations into mediating structures themselves … [because] work has become an increasingly encompassing aspect of human life.”(32) Harvard economist Juliet Schor has noted the increasing time demands of work in U.S. society, as have other social observers.(33) “[U]nder such pressures of time,” notes Fort, “reinforced by an almost religious awe of and need for expensive consumer luxuries and technologies that cost the wages of long hours, the time available for family, guilds, and associations is simply less than it once was.”(34) Fort does not belabor this point, but I will expand on it briefly.

There is now a growing number of writers, both scholarly and popular, who find the American pursuit of material happiness to be a moving cause of social and moral decline. “We the people” have been consumed by the pursuit of material goods, while families, churches, volunteer organizations, and other “mediating institutions” have become increasingly hollowed out. The much-touted crisis in “family values” has many alleged culprits, including television, liberals, the media, and both governmental largesse and governmental interference.(35) But seldom do the media acknowledge the influence of a corporate-social culture dedicated to ever-increasing consumption and growth, largely created by corporate views of reality and led by corporate advertising.(36) Paul Wachtel,(37) Juliet Schor,(38) and others have noted that we seem to be working more but finding life less fulfilling. Where families and communities are fragmented by plant-closings, downsizing, and the replacement of local goods and services by national and international ones, old market realities are swept away by new ones, and we become “connected” in virtual communities that bear little resemblance to traditional ones.(39)

As Fort correctly claims, if business should be a mediating institution, there would be implications for well-conceived formulations of ISCT, stakeholder theory, and laws on fiduciary duties of managers. Perhaps more importantly, his ideas raise important questions about what kinds of organizational and management structures could transform corporations into mediating institutions, and what kinds of external incentives could “reinforce the necessary associational structures.” For the sake of motivating and furthering this discussion, I wish to claim that the current legal/economic structures are working against the transformation of corporate business into mediating institutions, and that the primary task of business ethics and law scholars is to take up the discussion on transforming corporate dynamics and governance, both nationally and internationally.

IV. CORPORATE CAPITALISM’S REVISION OF THE SOCIAL CONTRACT

There is considerable evidence that capitalism today–what I am here calling “global corporate capitalism”–is a mighty historical force that is radically transforming the earth’s social and natural environment. The world’s largest corporations–the so-called multinationals, which include most of the Fortune 500–dominate international trade and business and, increasingly, make major impacts on the cultural-social and natural environments.(40) We are evolving–or have arguably already evolved–into an economy where the largest corporations comfortably control the direction of global business. In 1995, nearly 70 percent of world trade was controlled by just 500 corporations(41) and one percent of all multinationals own half the total stock of foreign direct investment.(42) Consolidations crossing national boundaries have accelerated in the late 1990s, especially in telecommunications and energy. Moreover, about “a third of the $3.3 trillion in goods and services traded internationally in 1990 consisted of transactions within a single firm.”(43) In short, a few multinationals are consolidating their hold on the global economy. Given their impact on our lives, it is predictable that individuals will in various ways accommodate their lives to the dynamics and beliefs of corporate values.

In the past six years, an impressive array of writers have commented on this phenomenon, including Paul Hawken in The Ecology of Commerce, Tom Athanasiou in Divided Planet: The Ecology of Rich and Poor, David Korten in When Corporations Rule the World, William Greider in One World, Ready or Not, and Richard Barnet and John Cavanagh in Global Dreams. Much of this article is an effort to distill their insights and apply them to ISCT and the idea of business as mediating institution.

Big business now shapes and re-shapes culture, as Cavanagh and Barnet make abundantly clear in Global Dreams. They claim that “[a]s traditional communities disappear and ancient cultures are overwhelmed, billions of human beings are losing the sense of place and sense of self that give life meaning.”(44) Now and into the future, they see a battle “between the forces of globalization and the territorially based forces of local survival seeking to preserve and to redefine community.”(45) France tries to protect its culture and heritage, but Euro-Disney outdraws the Louvre. Traditional values are at risk in developing countries as well, where one of the first articles that an upwardly mobile family obtains is a television

Banking, transportation, telecommunications, mining and manufacturing have all gone global. The pace of change is so rapid that people are “burning out” as never before. Natural resource depletion accelerates, along with species extinction, loss of genetic diversity, fisheries exhaustion, soil erosion, and the ultimate drawdown of irreplaceable aquifers. This listing does not even include the thinning ozone layer or the growing accumulation of carbon dioxide and other greenhouse gases that may disrupt global climate. Nor does it include the increasing use of child labor, forced labor, or sweatshops in nations ruled by elites with military backing.(47) In all of these, it is not the small entrepreneur that is profiting. It is big business, usually in the corporate form.(48) The large global corporation, much vilified in recent protests against the International Monetary Fund and the World Trade Organization, is clearly a force that the field of business ethics must take into account.

A. Global Corporate Capitalism: Changing Demand and Supply

In the standard economic view of the world, buyers and sellers form “markets” that extend through geographic space and over time, markets which generally function “efficiently” without government interference. In this view, business simply gives consumers what they want, increasing freedom of choice and general prosperity. Some writers in this tradition will even speak of consumer sovereignty,(49) noting the diminished power of nation-states to effectively govern multinational enterprises, and implicitly claiming that consumers (not corporations) are in the driver’s seat of the global economy.

But in the United States of the 20th century, large corporations were gradually able to shape or manipulate consumer desire and enlist government support to the point where actual “power” resided more on Wall Street than on Main Street or in Washington, D.C. This is ably documented in William Leach’s monumental study, Land of Desire: Merchants, Power, and the Rise of a New American Culture. Leach (and others) make a persuasive case that “the state and business are profoundly intermingled with one another.”(50) It is impossible to read Leach thoroughly yet maintain that consumers create demand, or that corporations are merely serving to give consumers what they want. Consumers have, it is true, willingly bought the dream, but at this point it is the corporate giants that seek to both perpetuate and globalize that dream. To borrow Leach’s words,

Today the world without boundaries … is with us, in part reality but, more important, in ideology, as corporate businesses and business-minded governments remind us daily that national boundaries are disappearing … and that Americans–if they wish to survive–must turn away from the narrow particularism of a special culture, of a special belief, or of a special tradition.(51)

Cavanagh and Barnet speak of “worldwide webs of economic activity” that have “already achieved a degree of global integration never before achieved by any world empire or nation-state.”(52) They continue by noting that the same few hundred corporate giants in G-7 nations comprise the driving force behind this activity. The cultural impacts on traditional communities and values are enormous.

Even in culturally conservative societies in what we still call the Third World the dinner hour is falling victim to television. In bars, teahouses, cafes and in living quarters around the world the same absence of conversation and human interaction is noticeable as family members, singly or together, sit riveted in front of a cathode tube…. Scenes depicting independent women, amorous couples, and kids talking back to parents upset all sorts of people across the globe as assaults on family, religion, and order.(53)

As global multinational corporations (MNCs) penetrate new regions and cultures, their primary aim is to find new and loyal customers for their products. While some corporate managers may demonstrate “sensitivity” to local cultures and mores, their ultimate aim is to sell more. Businesspeople, mass media, and advertisers are proud of their ability to project images and enticements around the globe, to homogenize tastes throughout the world and “to encourage everybody to desire the same goods and services.”(54) Within the United States, advertising gives business unopposed cultural influence.(55) The enduring ethical legacy of this century–one which is now being “exported” by MNCs to people everywhere–may well be the belief that in consuming new things, we enter the domains of freedom, self-expression, and fulfillment.

This concept of humanity is essentially egoistic and distinctly material rather than spiritual or moral. If there is “value” in such a view of life, it is economic value. To paraphrase Leach, the economic view of life values people as consumers rather than as neighbors or citizens, and celebrates people’s willingness to quest after whatever is “new,” to violate boundaries, to abandon habits and traditions, and to bring to themselves as individuals ever more goods, money, and experiences.(56) Corporate business that promotes never-ending human desires and overconsumption is largely behind this impoverished vision of human life and human community. To find a sound basis for social and moral values, we must look elsewhere.

In The Poverty of Affluence, Paul Wachtel has argued that the siren song of “newer, better, and more” is illusion that is making us psychologically and morally ill-at-ease, if not ill.(57) Wachtel claims that “our excessive concern with economic goals has disrupted the psychological foundations of well-being….”(58) But as Leach recognizes, the illusion that well-being is equated with material and economic gain is so powerful that no government or religion can resist it. In effect, the culture of desire is the new religion. The culture of desire, writes Leach, is a skewed notion of what it means to be human, rejecting what is most human about human beings: their ability to commit themselves, to establish binding relationships, to sink permanent roots, to maintain continuity with previous generations, to remember, to make ethical judgments, to seek pleasure in work, to remain steadfast on behalf of principle … to seek spiritual transcendence beyond the self, and to fight a cause through to the end.(59)

But is it fair just to blame corporations and their managers for promoting a culture of desire? After all, it will be said, they are only pursuing a profit, and usually doing so in response to consumer demand. And government seems to encourage consumer spending as a stimulus to economic growth. Yet corporate marketing stimulates demand as well as providing the supply, and corporate lobbying seeks (and finds) government policies that stimulate economic growth. Still, corporate managers are not exactly “villains” in all of this, for they are in the grip of something larger than themselves, and we can hardly expect them not to respond to their environments. “Studies of corporate management,” writes Ralph Estes, “invariably conclude that managers are driven toward growth–a larger market share, more assets, bigger corporation. Growth means even more power for the executive, more prestige … [and] higher and higher levels of compensation….”(60) With occasional exceptions, managers serve the “bottom line.”

By contrast, individuals have the option of non-material striving, and an increasing number of “downshifters” have generated a kind of counter-culture of self-sufficiency and simplicity. Even avid consumers can also pursue meditation, artistic or athletic excellence, friendship, and love as forms of non-material striving. But all of these are absent as possible gains in the corporate portfolio. The corporation’s dominant raison d’etre, profit-making, is the singular striving point. This dominant purpose tends to undermine efforts to establish “community” or enduring ethical values in corporations, and thus undermines efforts to reconfigure corporations as mediating institutions.

B. The “Special Ethics” of Business

To be sure, there are companies with a conscience,(61) and those who study and teach business ethics will hasten to add case examples of corporate social responsibility to the fired litany of corporate wrongdoing. But the number of these ethical strivers has been comparatively low, and their size seldom ranks them as a major player in the economy. Ben and Jerry’s or Patagonia provide excellent examples of smaller companies with a strong sense of ethics

Accordingly, it seems odd to posit (as ISCT does) that an individual business, or a group of similarly engaged companies may constitute a “community” whose “authentic” norms or standards merit serious consideration. Odd, because the norms or standards will necessarily reflect a different emphasis than that of individual moral agents. As George Brenkert has noted,

The business life is the active, not the contemplative, life. More than this it is the active life as directed towards the production and sale of goods and services for a profit. As such, it is only part of life. For an individual to maintain this activity, and to succeed against significant odds with hard competition, various virtues, values, and attitudes come to the fore [such as] … an energetic spirit, a “bold front,” a “can-do” mentality, loyalty, commitment, optimism, positive thinking, self-control, self-discipline, competitiveness, team playing, growth, material success, concealment of one’s strengths and intentions with regard to one’s competitors, distrust of competitors, self-protection, survival, willingness to exploit the psychological and financial weakness of one’s competitors, and the importance of winning.(63)

Brenkert posits a business community with its own “special ethics” relating to both the internal nature of the corporation and the current structure of the market system. In terms of its impact on the environment, Brenkert argues that this “special ethics” represents values which are intrinsically antithetical to embracing an environmental ethic and which are, in both the long run and the short run, “environmentally dangerous.” In my view, such values are also likely to undermine corporate commitments to stakeholders such as employees, customers, suppliers, or the community generally.

While managers may, individually, dislike downsizing, polluting, pulling up stakes in a community, or cutting back on worker or product quality or safety, the ones who survive and prosper are willing to serve the primary corporate purpose. Ralph Estes, a professor of business administration at American University and former senior accountant with Arthur Anderson & Co., has written tellingly about the Tyranny of the Bottom Line: Why Corporations Make Good People Do Bad Things.

Even the most upright people are apt to become dishonest and unmindful of their civic responsibilities when placed in a typical corporate environment…. The culprit is not personal value but corporate culture…. People’s personal values are getting blocked by the needs of the corporation.(64)

This view is consistent with what we know about moral decisionmaking in groups where dominant values and the perceived demands of a situation drive individuals to do things they would otherwise avoid doing. The experiments of Stanley Milgram at Yale,(65) the work of Darley and Batson among seminarians,(66) and various other accounts of organizational dynamics and authority in decisionmaking come to mind. Nor are such influences confined to the United States. Experiments by J. Scott Armstrong in the 1970s point to a fairly homogenous response worldwide to corporate pressure to make decisions with the bottom line uppermost in mind.(67)

Thus, where the focus is on communities (ISCT) or mediating institutions (Fort), emphasis may be laid on functional group norms as “moral norms,” but overlook the more systemic influence of laissez-faire capitalism gone global. If we wish to collectively reclaim the kind of norm-generating communities that Fort and ISCT commend, we must first realize that business corporations are structurally aligned to create values and ethics that often oppose those of the communities that originally created them.

C. Breaches in the Larger Social Contract

Recently, a number of authors have reminded us that historically, corporations were chartered only for public purposes, not just for profit.(68) Justice Brandeis warned of dangers in allowing the corporate form for enterprises concerned solely with making a profit.(69) There were no giant corporations 150 years ago

The traditional arrangement Justice Brandeis speaks of was thus: in exchange for various special rights granted to private corporations, states expected certain public benefits. This was typical in the early years of the Republic, when corporate charters were granted for the building of canals, roads, bridges, or for other public benefits. But in the late 1800s, when the states (particularly New Jersey and Delaware) began to offer corporate franchises for any lawful purpose, the public no longer demanded specific benefits in return for granting the corporate privileges (such as perpetual existence or limited liability of shareholders). And in the 20th century, as United States businesses entered global markets, the corporate form proved especially worthwhile: corporations could sell off divisions and subsidiaries, be taken over and absorbed by another company, reorganize and rename themselves and emerge as different companies, operate in different nations and use transfer pricing and tax havens to minimize tax payments.

Former Secretary of Labor Robert Reich argued in 1991 that by the mid-20th century there was an implicit social contract in the U.S. that replaced the public’s original expectation of specific benefits from private corporations. In exchange for limited liability and other corporate privileges, United States corporations would provide jobs, “progress,” and income, providing individual livelihoods to private citizens and tax benefits to the public.(71) By 1953, Charles Wilson, CEO of General Motors, could say (to considerable agreement) that what was good for GM was good for America.(72) Yet now, multinational corporations often explicitly disavow any particular nationality or loyalty to the nations where they were incorporated, and U.S. corporations deliberately bear an increasingly smaller share of the federal tax burden.(73) Certain critics also claim that while economic progress is apparent, social well-being in the United States has declined, despite economic growth from 1993 to 2000. What follows will focus briefly on several areas that show how corporations are no longer fulfilling the implicit social contract that Reich claims prevailed some fifty years ago.

1. Corporate crime

Investigators from Fortune magazine found that at least 11 percent of the 1,043 corporations studied had been involved in one or more major crimes over a ten-year period.(74) This counted only major crimes, and did not include foreign bribery, kickbacks, and other improper payments. The corporations Oust looking at the As and Bs) included Allied Chemical, American Airlines, American Brands, American Can, American Cyanamid, Anheuser-Busch, Ashland Oil, Beatrice Foods, Bethlehem Steel, Boise Cascade, Borden, Borg-Warner, and Braniff. Available evidence suggests that corporate criminality imposes a substantial drain on public resources and imposes high social costs.(75) A review of corporate crime and punishment in the 1990s concludes that enforcement of corporate crime was relatively weak. According to the Multinational Monitor, corporate crime involves some of the largest and longest-lived corporations operating in the United States and includes many cases of premeditated criminal acts

2. Political Influence

When corporations call, legislators listen. Corporations have influence because they control political action committees, because CEOs know and talk with each other, and because large companies have many employees who vote, write letters, and contribute to political campaigns.(78) How is this influence used? Henry Mintzberg said in 1987 that “a friend of business [points out] that it has fought every progressive piece of American legislation in this century, from child labor laws on up.”(79) Much has been made recently of PAC money in politics, and much of it comes from labor unions and trial lawyers as well as corporate interests. But the bulk of political influence money is coming from corporate coffers, and to both major parties. According to Common Cause, the vast majority of “soft money” contributions to Republican and Democratic national parties in 1999 were from corporate business interests rather than unions or trial lawyers.(80)

3. Cultural influence

The effect of modern-day media and corporate advertising on U.S. and global culture has already been discussed.(81) In the U.S., television has largely replaced community and family life, cultural pursuits, and reading. The average American adult sees about 21,000 commercial messages a year

And even if consumers do not buy the particular product from a specific ad, the message is generically the same: buy something now, feel better now. The repetition of that message, and the hearing of that message from infancy, surely shapes (or mis-shapes) the values of those who incessantly hear it. A mood is created, a mood of longing, for an end to emptiness and the beginning of excitement. The social and psychological consequences of that most effective mood-creation is addictive overconsumption, well-described in Paul Wachtel’s The Poverty of Affluence.(83)

In giving commercial speech significant constitutional protection, we are going well beyond giving consumers information about price, quality, and warranties. We are also, through marketing, deliberately stimulating the addictive, irrational impulse to feed a spiritual emptiness with more and more goods and services. To say that commercial speech merely allows buyers and sellers to exchange information in a free market transaction seems naive, if not downright disingenuous. As Paul Hawken points out, “[b]y invoking the First Amendment privilege to protect their “speech,” corporations achieve precisely what the Bill of Rights was intended to prevent: domination of public thought and discourse.”(84)

4. Plant Closings and Corporate “Downsizings”

Job creation and job retention are singular sources of stability in our communities. Communities literally rise and fall with the presence or absence of economic activity, and, increasingly, economic activity has meant corporate investment. Money has no particular conscience

In the U.S., plant closings, downsizings (or “rightsizings”) and outsourcings have begun to seriously erode job security. The rhetoric around such events is illuminating. Labor and communities feel as though something is “owed” to them for providing loyal and skilled help

5. Abusing the Civil Justice System

In apparent obedience to the logic of increased short-term profits and market share, no corporate manager wants to lose a big lawsuit, even if the corporation has engaged in ethically questionable acts. Increasingly, corporations and their legal counsel have abused the civil justice system. Without question, there are abuses where companies are jolted by runaway juries awarding huge punitive damage awards. But the less obvious abuses of the system by corporations and their attorneys may be more pernicious, yet are far less publicized. Most of these abuses are in the nature of obfuscation, secrecy and delay.

The adversarial system of civil justice requires access of parties to all evidence beating on the controversy. Destruction or concealment by a party–called spoliation–subverts the purposes of discovery, but is increasingly common. As Professor Charles Nesson of Harvard Law School writes, “I believe spoliation is an effective and growing litigation practice that threatens to undermine the integrity of civil trial process. It is a form of cheating which blatantly compromises the ideal of the trial as a search for truth.”(88) But, as Nader and Smith note, “the truth is the last thing on the minds of some power lawyers seeking victory for their corporate clients.”(89) If in fact many of our most profitable corporations avoid telling the truth to courts, can we look to them as communities that generate meaningful ethical norms or as “mediating institutions”?

Many corporate lawyers routinely make specious objections to discovery requests, withhold documents, reinterpret questions asked, ignore others, and twist the common meaning of terms to avoid disclosure of documents or information.(90) The result is that plaintiffs must go to court repeatedly to get information that by law they are entitled to receive.(91) Document retention programs are common, where one set of sanitized documents are kept for litigation purposes, and more truthful documents are kept separately. The corporate use of discovery to exhaust plaintiffs along with vacatur, protective orders and barring of witnesses are all increasingly common techniques to block the truth from emerging at trial and ripening into public judgments.

Ted Schneyer, law professor and ethicist at the University of Arizona Law School, focuses on abuse by lawyers representing major corporations. “There are strong forces at work that induce corporate and defense lawyers to satisfy the managers in the company who hire them and can fire them.”(92) There is nothing mystical about these “strong forces”–they are the same as the forces at work in the “special ethics” of business. In effect, lawyers play these games for the same reason that corporate managers tend to favor the bottom line over social responsibility: it pays.

6. What’s Good for GM is Good for America?

Thus far we have seen that new technologies, the globalization of business, the power of major corporations, and their socially defined role as engines of economic growth have had a number of social costs: the subversion of the civil justice system, plant closings, downsizings, a culture of addictive overconsumption, expanded political influence, and high levels of corporate crime. What’s good for business appears to be good for America if the GDP and corporate earnings statements are to be trusted, but these generally accepted measurements fall short of measuring the true social benefits and costs of corporate activity.(93)

Robert Reich, former Secretary of Labor in the Clinton Administration, wrote that fifty years ago, “America’s core corporations came to identify themselves, and be identified by Americans and others around the world, with the American economy as a whole. They were the champions of the national economy

In short, corporations are no longer chartered to meet public needs, and a case can be made that global competition among large multinationals is generating considerable wealth globally but is not effectively meeting social needs, even in developed nations.(96) Curbing the social costs of a corporation was far simpler when sovereigns effectively controlled the geographic market in which corporations were chartered to operate. Given the lack of central authority in international politics and law, there is little effective control over the social costs of corporate activity. Governmental power to demand specific societal benefits (or impose stringent regulations) has been waning during the new age of globalization. But we should not conclude that the new dominance of the private, commercial sector means that there is neither need for control nor the possibility of securing social benefits. Global values can still emerge from ethical reflection and rational debate, as the recent OECD agreement on bribery attests.(97) Tom Friedman’s comments about emerging appreciation for transparency and global standards are also apropos.(98) The OECD bribery agreement may even ripen into law with effective sanctions, and is part of a revised social contract between corporations and citizens that is sorely needed.(99)

V. THE NATURAL ENVIRONMENT AND THE GLOBAL “MARKETPLACE”

Much of the urgency for getting clear on global corporate responsibilities comes from our current economic approach to measuring development and its adverse impact on the natural environment. The following critique comes primarily from the work of Paul Hawken and Herman Daly. Daly was the chief economist for the World Bank, but left that position and wrote several books that consider economics, the environment, and communities.(100) In essence, Daly claims that our accounting systems do not consider the natural environment as capital, so that rapid depletion or contamination of our natural capital does not reduce anyone’s “bottom line” or the nation’s Gross National Product.(101) I have yet to read an economist who disputes that simple yet telling claim. While I find reason for some guarded optimism in certain respects, there is still an astonishing array of environmental ills, caused by poor government management, selfish or uninformed decisions by consumers, and by corporations and their suppliers.(102) Recent appraisals suggest that increasing consumption and population rates, coupled with prevailing mind-sets and aging technologies, are stressing our natural environment as never before. Space limitations here allow only a limited litany of ecological ills, but in 1993, Paul Hawken claimed that

Given current corporate practices, not one wildlife reserve, wilderness, or indigenous culture will survive the global market economy. We know that every natural system on the planet is disintegrating. The land, water, air, and sea have been functionally transformed from life-supporting systems into repositories for waste. There is no polite way to say that business is destroying the world…. [A]s I prepared to write this book, I reviewed much of the new literature in the field and discovered that the more I researched the issues, the more disquieting I found the information. The rate and extent of environmental degradation is far in excess of anything I had previously imagined.(103)

Such statements may be dismissed as alarmist

Hawken does not claim that corporations act alone, but recognizes that much of the ongoing destruction is more systemic, and involves governmental and individual participation as well. Deeply disturbed by what he saw, Hawken spent the next several years wondering how market-oriented reforms might bring about sustainable economics. In collaborating with Amory and Hunter Lovins, Hawken chose to advocate “natural capitalism” and claimed that “green business” was the only way to create (or recreate) meaningful human communities.(104) “Natural capitalism” sees sustainability as answering not only environmental concerns but also social ones, and will be introduced by way of George Soros’ recent critique of capitalism. Soros, well known and at one time preeminent as a global trader in financial assets, claims that “the untrammeled intensification of laissez-faire capitalism and the spread of market values into all areas of life is endangering our open and democratic society.”(105)

Insofar as there is a dominant belief in our society today, it is a belief in the magic of the marketplace. The doctrine of laissez-faire capitalism holds that the common good is best served by the uninhibited pursuit of self interest. Unless it is tempered by the recognition of a common interest that ought to take precedence over particular interests, our present system … is liable to break down.(106)

Soros explains that economics as social science is quite different from natural science, and is inevitably self-referential (economic theories, policies, and human expectations influence events in a way that the theories of natural science cannot). As such, it cannot provide justification and confirmation by observation of “natural” phenomena, undermining its claims of optimum allocation of resources.(107)

Having derived substantial monetary value from the market, Soros nonetheless warns that “market values served to undermine traditional values,” and that, “unsure of what they stand for, people increasingly rely on money as the criterion of value.”(108) What is needed for the emerging global community, he notes, are “common interests” or “shared values” beyond “preservation of the environment and the prevention of war.”(109) Soros recognizes the difficulty: societies “derive their cohesion from shared values,” values that are “rooted in culture, religion, history, and tradition,” but the promise of abundance through capitalism tears up those roots in promising to make all things new and more abundant.(110)

Hawken’s ideas in “natural capitalism” agree with Soros that our present system of production, distribution, and consumption does not represent optimal distribution and adds that the system is actually quite inefficient and wasteful. Because this inefficiency and waste has undesirable social consequences it cannot be ethically justified

The purpose in sketching some of his criticisms and proposals is to remind the reader that in looking to ethics without law, or in looking to law without ethics, we fail in our task of constructing institutions and policies that can best guide participants toward ethical behaviors. Social and legal institutions develop to reinforce “correct” behavior. Yet those institutions can rigidify, failing to adapt to changing times or imminent disaster. Such is the case, Soros and Hawken agree, with the current reign of global corporate capitalism.

Hawken’s critique of the status quo is fairly compelling, and dovetails in most essentials with Herman Daly’s critique of current corporate and national accounting systems. The reader will not, unfortunately, get a thorough sense of that critique here, but a mere whiff may suffice. First, natural capital comprises renewable (forests, fisheries, grasslands) and non-renewable (oil, coal, metal ores) resources. Renewable resources provide not only goods (pulpwood, food) but services. These services are the “income” derived from a healthy environment: clean air and water, a stable climate, ocean productivity, fertile soil, watersheds, and the processing of natural and industrial wastes. There are, he asserts, “trillions of dollars of critical ecosystem services received annually by commerce.”(111) The second point is directly related to the first: these services are being depleted at an ever-increasing rate, but human technology cannot replace these services. As Hawken notes,

We have not come up with an economical way to manufacture watersheds, gene pools, topsoil, wetlands, river systems, pollinators, or fishers. Technological fixes can’t solve problems with soil fertility or guarantee clean air, biological diversity, pure water, and climatic stability can they increase the capacity of the environment to absorb 25 billion tons of waste created annually in America alone.(112)

The third point is that modern industrial and agricultural systems developed at a time when the ratio of resources to people was far greater. With more people chasing fewer and fewer resources, physical limits are being reached rather rapidly. The new limits to prosperity are natural systems–not boats, but fisheries

A fourth point follows ineluctably from the third. Accounting systems devised during an era of plentiful resources and fewer people did not need to put natural capital on the balance sheet. But, increasingly, the availability of natural capital will prove to be a critical factor, just as the availability of labor, energy, machinery and financial capital have traditionally been viewed as essential factors of production. Nor has the current value of natural capital been taken into account, because prices do not give us very good information about “how much our suburbs, freeways, and spandex cost.”(114) Gross Domestic Product (GDP)(115) is not a very rich source of information, since it measures financial exchanges but does not distinguish between transactions that add value to our lives and those that do not. Halstead, Cobb, and Daly have provided similar critiques,(116) but Hawken provides the most vivid examples:

Compare an addition to your home to a two-month stay in the hospital for injuries you suffered during a mugging. Say both cost the same. Which is growth? The GDP makes no distinction…. Or what if a train overturns next to the Sacramento River and spills 10,000 gallons of atrazine, poisoning all the fish for 30 miles downstream? Money pours into cleanups, hatchery releases, announcements warning people about tainted fish, and lawsuits
against the railroad and the chemical company. Growth? Or loss?(117)

Where economic growth is concerned, “the government uses a calculator with no minus sign.”(118) Corporations calculate in much the same way, with no regard in “the bottom line” for social costs or externalities they generate.(119) Hawken even suggests that the U.S. economy may have stopped growing 25 years ago, if growth were measured in improved lives, better infrastructure, higher real wages, more leisure and family time, and greater economic security.

The fifth point is that much of the waste is social, not just economic or environmental. The International Labor Organization in Geneva finds that thirty percent of the world’s labor force either cannot work or have such marginal and menial jobs that they cannot support themselves or their families.(120) The U.S. unemployment rate of 4 percent is commendable, but masks a more complex reality: full time work often does not pay enough to support a family, over 38 million workers are doing so on a part-time basis, and many workers have taken early, semi-forced retirement. Among the employed, many work without any health or retirement benefits. And the currently employed (and presumably more productive) survivors of downsizing or “rightsizing” are working 100 to 200 more hours per year than 20 years ago.(121) Hawken claims (as do others) that “[f]or a majority of workers, wages are no higher today than they were in 1973.”(122) Meanwhile, the U.S. “underclass” seems to be growing, and with it, the need for yet more prisons–a waste of human and taxpayer resources if there ever was one.(123)

The sixth point is pivotal: reducing resource use can create jobs and lessen adverse impacts on the environment.If we ask, “How much work (or value) do we get from our materials and energy?” the market would ordinarily answer that we are already maximizing efficiency. But are we? Robert Ayres, who studies “industrial metabolism,” estimates that about 94 percent of the materials extracted for use in manufacturing durable goods become waste before the product is even manufactured.(124) Likewise, only 8 to 10 percent of the energy used in heating the filament of an incandescent light bulb actually becomes visible light. According to Hawken, “modern carpeting remains on the floor up to 12 years, and then remains in landfills for as long as 20,000 years–less than .06 percent efficiency.”(125)

Immense savings are possible but face immense political/legal hurdles. The seventh point provides the exclamation: the tax system must be revised to end subsidies for behaviors we do not want (resource pollution and depletion) and to stop taxing behaviors that we do want (income and work).(126) In the U.S., we have subsidized environmental exploitation, motor vehicle use, big corporations (corporate welfare), various technological boondoggles, and the disposal of waste. In the process, 80 percent of what we consume in our economy gets thrown away after one use. We donate money to dying industries, subsidize energy costs, and encourage cattle grazing on public lands (even while paying for soil conservation).(127) At the same time we tax labor and income, discouraging both. As of 1997, out of $1.27 trillion the federal government raised in taxes, 71 percent came from taxes on labor, and another 10 percent came from corporate income tax. By taxing labor (including social security taxes) we encourage business not to employ people as full-time employees. Can we really create a sense of community within corporations motivated systemically to hire independent contractors?

More essentially: does any of this represent a truly mature capitalist market? Is this the best that markets can do to optimally allocate resources and meet human needs? We may be inclined to think that “our” version of capitalism is somehow “natural” or “inevitable,” but Hawken proves otherwise. To believe that markets “should” look like they now look is surely nearsighted, and probably partakes of the naturalistic fallacy as well.(128)

As Hawken notes in Ecology of Commerce, it is difficult to argue with markets, since Marxism tried and failed. But when we attach the word “market” to the word “global,” we construct a new artifice, a new “game” (to borrow Donaldson and Dunfee’s analogy). The old meaning of”market” conjures up images of the local farmers’ market, Haymarket in Boston, or Les Halles in Paris. In law school, contracts professors still discuss the principles of offer and acceptance with homely examples of horse-trading. The marketplace of Adam Smith’s day was “conducted on certain days … within the context of daily life, to be observed, experienced, and modified. A high degree of interaction prevented the market from becoming a monopoly, from becoming unfair, from becoming anti-social.”(129) In terms of ISCT or mediating institutions, we could well say that community, common culture, and micro-social contracts all seem possible in such a marketplace.

But the “global marketplace” that has evolved is distinctly different. It is a new artifice, the new game, and social experimentation on a grand scale. As Soros has noted, our faith in the “magic of the marketplace” is misplaced. The global market cannot easily distinguish between tuna that is “harvested” without injury to dolphins by purse-seine netting, or between “a piece of wood harvested sustainably from a forest and one harvested from a clear-cut that has destroyed habitat and future productivity.”(130) It does not tell consumers whether the toys or finely woven carpets they buy are the product of barbaric working conditions or not. The global operations of multinationals in fact assure that adverse social and environmental consequences–what the economists would call negative externalities–are not felt or understood either by corporate decision-makers or consumers.

Not long ago, business ethicists spoke of cultural relativism and cultural imperialism, often noting that Western values should not be superimposed on distant cultures. Global corporate capitalism has ignored such directives Business, in its pursuit of profit, does have an ethic. It is the ethic of money, or the bottom line

VI. CONCLUSION: CREATING MEDIATING INSTITUTIONS AND PRESERVING HUMAN COMMUNITIES–THE NEED FOR SYSTEMIC CHANGES

If there is an Achilles heel to the new age, it probably lies in the misguided belief that commercially directed relationships and electronically mediated networks can substitute for traditional relationships and communities. The premise itself is deeply flawed. The two ways of organizing human activity flow from very different sets of assumptions and values, making them irreconcilable rather than analogous. Traditional relationships are born of such things as kinship, ethnicity, geography, and shared spiritual visions. They are glued together by notions of reciprocal obligations and visions of common destinies…. Commodified relationships, on the other hand, are instrumental in nature…. The relationships are contractual rather than reciprocal in nature…. The distinction between social contracts and commercial ones is important…. Social contracts are steeped in the notion of indebtedness to ancestors, unborn generations, the earth and its creatures, and a benevolent God.(132)

Amitai Etzioni and the communitarian movement have given us an increased awareness of the importance of community, and of the responsibilities that are necessarily a part of “rights.” “Community” has thus become part of the conceptual landscape in business ethics.(133) “Community” has become a metaphor for corporations and business in much the same way that the metaphor of “personhood” (with all its implications of moral autonomy) has been. Metzger and Dalton have revealed the numerous conceptual muddles that attend the metaphor of corporate personhood.(134) Clearly, corporations do not have the same kind of moral autonomy that humans do, and it would be a mistake to “anthropomorphize” corporations for purposes of ethical analysis.

Curiously enough, we now have a different kind of attribution going on, one which invests corporations not with human personality but with the more amorphous concepts of community and mediating institutions. In Donaldson and Dunfee, there is a desire to see communities with moral free space living out moral values that have some claim to authentic moral force. In Fort’s writings, there is a desire to see business as creating the context for learning and/or developing moral sensibilities and values. In business ethics articles generally, there is (as Hosmer noted)(135) a renewed focus on corporations and businesses as “communities” which can generate trust, loyalty, and consensus on other moral values.

But the possibility of discovering and nurturing ethical values in communities and mediating institutions presumes that these communities and institutions will be relatively stable over time. The current incarnation of corporate capitalism, however, only assures us of further and more rapid changes in the corporate environment, in our social arrangements, and on the earth itself. Modern technology and the global corporation are erasing old boundaries at near warp-speed

My hope is that readers who share a commitment to both law and ethics will thus understand the moral challenge here. Many readers of this journal were (or still are) attorneys who have worked in the United States’ legal system.(138) As lawyers, many of us found that representing the propertied and well-to-do was more financially rewarding than working for a pro bono firm serving the needs of social justice, civil rights, or the environment. A similar challenge confronts those who work in U.S. business schools that articulate assumptions and goals of “free markets.” It may be more comfortable to affirm the positive possibilities of the status quo than to advocate its restructuring. Yet if the political/legal system is not delivering socially responsible results, and if the system’s participants (including business entities) feel relatively powerless to deviate from the “tyranny of the bottom line,” then it is the architecture of the system itself that ethicists, sociologists, and legal scholars need to reckon with.

Moreover, this may indeed be the kind of long-term help that managers most need. For the present, practitioners of business ethics can still dispense practical advice, but they need not speak with one voice or dominant paradigm to be effective in a world where poor ethics is so often bad business practice as well. Yet unless systemic changes are wrought, the ethical component of corporate social responsibility becomes a mere holding action against a relentless tide of economic competition that has been freed from serving the public interest. If Estes is correct, managers are caught in a “tyranny of the bottom line” which is not of their own making. Anyone who wants to consult with or influence managers as a “business ethicist” by providing practical advice to corporations will often face a dilemma: to tell a manager pressed by economic exigency that s/he can take the expedient path, or to let them know that s/he really “ought” to do something that will not translate well to the bottom line. The first advice only tells managers what they want to hear anyway, and the second will likely be rejected rather summarily as inane and/or self-destructive. Neither approach advances excellence, virtue, or enhanced corporate social responsibility.

Because it becomes so difficult to give sound yet convincing moral guidance in a system already so badly skewed, the long-term business ethics agenda must begin with the recognition that corporations are now operating in a relatively deregulated and highly competitive global environment where the primary operative values are material and economic ones. Since non-material values are critical to the flourishing of the human spirit, ethics must partner with law (and other disciplines such as sociology, psychology, and political economy) toward the goal of removing rules and systems that perpetuate the reckoning of social and economic well-being in material terms alone. In seeking to create or re-create communities where people discover enduring human values, we must recognize that much of the problem lies not in “big government” as such, but in the permanent partnering of corporate and governmental interests with ever-increasing material and monetary growth as the bedrock, bottom-line value.

Both ISCT and Fort’s mediating institutions have provided useful constructs and ideas for business ethics and the law

With Fort’s mediating institutions approach, there is a recognition that ethics comes from social and religious experiences, rather than just economic relationships. But he offers the hope that economic institutions (e.g., corporations) can provide fertile ground for generating ethical virtues among participants, provided that the communities within corporations are small enough to socialize their members and develop their ethical identities in relationship with others.(141) This insight is not as conceptually complex as ISCT (with its blend of varied and conflicting community norms overlaid with possible hypernorms) but it is problematic nonetheless

Yet both Fort’s mediating institutions and ISCT point to a meaningful melding of law and ethics as critical to the future of business ethics. Given the unique historical relations among business, governments, people, and the natural environment, Donaldson and Dunfee’s invitation to discover “hypernorms” to forge a global ethical consensus must surely be taken seriously. And discovering the means (whether by education, moral suasion, or legislation) to reinvent or reshape corporations into mediating institutions that serve human needs and human communities cannot wait much longer. But it must be done with an appreciation for the role that government and law must surely play.

Tom Friedman’s understanding of globalization is relevant here, for he sees the need for the United States and other nations to be “moral beacons” in a sea of global change.(143) While his focus is generally on U.S. foreign relations, he emphasizes the need for governments to set clear standards for the process of globalization.(144) This focus reminds us that corporations are not disembodied entities, but are part of the legal, social and cultural fabric of our time

The unfinished work of ISCT is the discovery of those transcendent standards for the process of globalization

There are numerous and very sound suggestions about how current capitalist forces might be redirected into more sustainable, equitable, and community-oriented business.(145) I will suggest just a few, knowing that there are many more, and that none of them will be taken quite seriously in the U.S. without a sharp decline in the economy or a substantial resurgence of civic-minded and politically active citizens.(146)

To help create corporations that are “mediating institutions,” government-required accountings of social costs (and/or taxes based thereon) would make corporations and their activities more transparent to the public. To reestablish trust that government is accomplishing real gains for its citizens, a social well-being index should get the same kind of attention and publicity as the GDP. There are many thoughtful proposals that would reduce the frenetic pace of consumption in the U.S. and other industrialized nations, establish fairly reliable measures of social well-being, measure the social costs of corporate activities, and reform international trade and economic institutions to more equitably share and preserve the world’s resources. What is lacking, as a first step, is the recognition that we are faced with a unique historical situation. We must protect and nurture community even as we find ourselves in a world where multinational enterprises are only weakly controlled by democratic political institutions, where human rights, the environment, and jobs are greatly at risk, and where communities are becoming defined by socio-economic status rather than place, history, or tradition.

(1) JEREMY RIFKIN, THE AGE OF ACCESS: THE NEW CULTURE OF HYPERCAPITALISM, WHERE ALL OF LIFE IS A PAID-FOR EXPERIENCE 11-12 (2000).

(2) See Andrew Stark, What’s Wrong With Business Ethics, HARV. BUS. REV., May/June 1993, at 38. “I suspect that the field of business ethics is largely irrelevant for most managers…. The discipline of business ethics has yet to provide much concrete help to managers … and even business ethicists sense it.” Id.

(3) LaRue Tone Hosmer, 5 Years, 20 Issues, 141 Articles, and What?, 6 BUS. ETHICS Q. 325, 341 (1996). “There is a sense of urgency within the recent literature.” Id.

(4) Id.

(5) “Business ethics” and “corporate social responsibility” are not entirely interchangeable terms. Corporate social responsibility is generally understood to encompass not only ethical responsibilities, but legal and ethical responsibilities as well. Thus, the aspect of corporate social responsibility that is distinctively ethical also tends to describe the field of business ethics. See Archie B. Carroll, Social Responsibility, in THE BLACKWELL ENCYCLOPEDIC DICTIONARY OF BUSINESS ETHICS 594 (Patricia H. Werhane & R. Edward Freeman eds., 1997).

(6) “Most individuals are concurrently members of multiple communities and, as a consequence, they regularly confront conflicting or competing ethical norms. Coherent communities having social contracts could include one’s profession, family, religion, community, employer, nation, business generally, industry, colleagues, peers, and so on.” Thomas W. Dunfee, Business Ethics and Extant Social Contracts, I BUS. ETHICS. Q. 23, 30 (1991).

(7) See Thomas Donaldson & Thomas W. Dunfee, Toward a Unified Conception of Business Ethics: Integrative Social Contracts Theory, 19 ACAD. MGMT. REV. 252 (1994) [hereinafter Donaldson & Dunfee, Unified Conception]. See also THOMAS DONALDSON & THOMAS W. DUNFEE, TIES THAT BIND: A SOCIAL CONTRACTS APPROACH TO BUSINESS ETHICS (1999) [hereinafter TIES THAT BIND].

(8) Donaldson & Dunfee, Unified Conception, supra note 7, at 262. See also TIES THAT BIND, supra note 7, at 38.

(9) Donaldson & Dunfee, Unified Conception, supra note 7, at 262. See also TIES THAT BIND, supra note 7, at 39.

(10) See generally Timothy L. Fort, Business as Mediating Institution, 6 BUS. ETHICS Q. 149 (1996)

(11) Fort, Corporation as Mediating Institution, supra note 10, at 156.

(12) TOM CHAPPELL, THE SOUL OF A BUSINESS: MANAGING FOR PROFIT AND THE COMMON GOOD 62 (1993).

(13) See Timothy L. Fort, Integrative Social Contract Theory: Integrating ISCT and Mediating Institutions, working paper, presented to the Society for Business Ethics, Aug. 1996 (on file with author).

(14) Michael B. Metzger & Dan R. Dalton, Seeing the Elephant: An Organizational Perspective on Corporate Moral Agency , 33 AM. BUS. L.J. 489 (1996).

(15) Fort, Corporation as Mediating Institution, supra note 10, at 201.

(16) Timothy L. Fort & Cindy A. Schipani, Corporate Governance in a Global Environment: A Search for the Best of All Worlds, 33 VAND. J. TRANSNAT’L L. 829 (2000).

(17) See infra notes 40-131 and accompanying text.

(18) ALVIN TOFFLER, FUTURE SHOCK (1970). In his remarkably prescient book, Toffler both describes and predicts a rising flood of technological, social, and economic change, and notes the limited capacity for humans to adjust to these changes. In an ever-changing world of rapidly shifting institutions, Toffler predicts that many people will find it difficult to cope. Such a world destabilizes extant communities and replaces them with shorter-lived groupings.

(19) RIFKIN, supra note 1. “The selling of the culture in the form of more and more paid-for human activity is quickly leading to a world where pecuniary kinds of human relationships are substituting for traditional social relationships. Imagine a world where virtually every activity outside the confines of family relations is a paid-for experience, a world in which traditional reciprocal obligations and expectations–mediated by feelings of faith, empathy, and solidarity– are replaced by contractual relationships in the form of paid memberships, subscriptions, admissions charges, retainers, and fees.” Id. at 9. In a hypercapitalist economy, Rifkin explains, “virtually all of our time is commodified” and “cultural time wanes, leaving humanity with only commercial bonds to hold civilization together.” Id. at 10.

(20) Donaldson & Dunfee, Unified Conception, supra note 7, at 258. See also TIES THAT BIND, supra note 7, at 28, 31.

(21) Donaldson & Dunfee, Unified Conception, supra note 7, at 258.

(22) Id. at 259.

(23) Id. (citing Ronald M. Green, When Is “Everyone’s Doing It” a Moral Justification?, 1 BUS. ETHICS Q. 75 (1991)). See also TIES THAT BIND, supra note 7, at 13.

(24) Donaldson & Dunfee, Unified Conception, supra note 7, at 259.

(25) Id. at 257. See also TIES THAT BIND, supra note 7, at 33.

Any moral calculus used in business must be applicable to an incredibly wide variety of contexts that arise from radically different economic systems. Just as it is impossible to create a general theory of economics without knowing the institutions, history, and culture of a people to whom it will apply, so too one cannot devise a general theory of economic ethics without understanding the types of organizations, people, and transactions to which it will apply.

TIES THAT BIND, supra note 7, at 33.

(26) Donaldson & Dunfee, Unified Conception, supra note 7, at 257-58 (citing A.D. CHANDLER, THE VISIBLE HAND: THE MANAGERIAL REVOLUTION IN AMERICAN BUSINESS (1977)).

(27) Id. at 258. The discussion about games is strongly reminiscent of Wittgenstein’s discussion in Philosophical Investigations. In the Investigations, Wittgenstein makes clear the pointlessness of generating realities from words and language alone. Humans often use words that cover a variety of realities, not all of which share in some essence or invariable set of characteristics. “Games” is used as an example, just as “blue” or “love” or “justice” could be. But “corporations” may be artificial in a different way from games. Games come about organically, without creation from an already artificial construct: the government. In effect, games would exist without government, but corporations could not. Corporations represent artifice upon artifice. As such, their dimensions or boundaries are not plastic in the same way as games. The definition of corporation can be located far more precisely within the artifice of the law. But the very useful point that we can draw from Donaldson and Dunfee’s discussion about games is that we have it within our power, publicly and politically, to change the way the game is played. LUDWIG WITTGENSTEIN, PHILOSOPHICAL INVESTIGATIONS 31-34 (G.E.M. Anscombe trans., 1953) (numbered discussion points 66-70).

(28) Donaldson & Dunfee, Unified Conception, supra note 7, at 267. In Ties that Bind, Donaldson and Dunfee have developed the epistemology of hypernorms considerably. See TIES THAT BIND, supra note 7, at 54-81.

(29) Note especially the articles in Vol. 5 of the BUSINESS ETHICS QUARTERLY, including Edward J. Conry, A Critique of Social Contracts for Business, 5 BUS. ETHICS Q. 187 (1995)

(30) Metzger & Dalton, supra note 14, at 574-75. I disagree with this assessment. See infra note 141.

(31) ROBERT NISBET, THE QUEST FOR COMMUNITY: A STUDY IN THE ETHICS OF ORDER AND FREEDOM 50 (2d ed. 1990), cited in Fort, Integrative Social Contract Theory: Integrating ISCT and Mediating Institutions, supra note 13.

(32) Fort, Corporation as Mediating Institution, supra note 10, at 151.

(33) Note especially JEREMY RIFKIN, TIME WARS (1988) in which Rifkin coins the rather grim phrase “tempo gridlock” to describe the life of the average working American. We are locked, he claims, into an accelerating lifestyle that is always “on the go,” with less and less experience of a more leisurely sense of time or the rich possibilities of family time or community involvement. See also infra note 38 and notes 121-22 and accompanying text.

(34) Fort, Business as Mediating Institution, supra note 10, at 151.

(35) Cultural conservatives are aghast, for example, that in school districts the local government (rather than the family) would tender advice to teens on birth control or distribute condoms, or that the federal government (through the Supreme Court) would condone abortion in any trimester.

(36) WILLIAM LEACH, LAND OF DESIRE: MERCHANTS, POWER, AND THE RISE OF A NEW AMERICAN CULTURE (Vintage Edition 1994) (1993).

(37) PAUL WACHTEL, THE POVERTY OF AFFLUENCE: A PSYCHOLOGICAL PORTRAIT OF AMERICAN LIFE (1989). See also infra notes 58-59 and accompanying text.

(38) JULIET SCHOR, THE OVERWORKED AMERICAN: THE UNEXPECTED DECLINE OF LEISURE (1992) (analyzing why productivity of the U.S. worker doubled from 1948 to 1991 while work-hours have been rising steadily. Her thesis is that workers are being pulled by a number of centrifugal forces: employers encountering market forces that all but mandate longer hours, high consumption standards in the U.S. that entice people to take on high consumer debt, and a labor-union movement that abandoned the struggle for shorter hours 50 years ago.).

(39) See generally JAMES HOWARD KUNSTLER, THE GEOGRAPHY OF NOWHERE (1994) (discussing the role of urban sprawl, the federal highway system, VA and FHA loans, the home mortgage subsidy, and other structural economic adjustments that have spawned “Edge Cities,” hollowed out urban cores, and a nation of people who spend more time in their cars than with each other).

(40) See William Greider, Planet of Pirates: The Manic Logic of Global Capitalism, UTNE READER, May/June 1997, at 70. “The deepest social meaning of the global economic revolution is that we no longer have free choice in this critical matter of identity. Ready or not, we are already of the world. As producers or consumers, as workers or merchants or investors, we are now bound to distant others through the complex strands of commerce and finance that are reorganizing the globe as a unified marketplace.” Id. “Social cohesion and consent, even the minimal standards of human decency, are irrelevant to free markets…. Yet neither can people resign from the new circumstances of `one world.'” Id. at 72.

Greider’s view stands in some contrast to Donaldson and Dunfee, who assert that microsocial contracts may be “authentic” and presumptively valid in cases where “consent” and the “right of exit” obtain

(41) See DAVID KORTEN, WHEN CORPORATIONS RULE THE WORLD 124 (1995).

(42) Id.

(43) Id. at 79.

(44) RICHARD BARNET &JOHN CAVANAGH, GLOBAL DREAMS: IMPERIAL CORPORATIONS AND THE NEW WORLD ORDER 22 (1994).

(45) Id. See also BENJAMIN R. BARBER, JIHAD VS. MCWORLD (1995) (Barber’s thesis is that a one-world commercial culture is seen as a threat by many local, traditional communities, who seek to preserve their identity in the midst of the commercialization of culture.). For a similar view of history and globalization, see THOMAS L. FRIEDMAN, THE LEXUS AND THE OLIVE TREE (1999) in which Friedman describes the “disconnect” between the commercial culture of globalization (symbolized by the Lexus) and humanity’s historical orientation toward kinship, tribe, and local community (symbolized by the olive tree). As Friedman puts it, half of the world in the post-Cold War era seemed intent on “building a better Lexus” by “modernizing, streamlining, and privatizing their economies in order to thrive in the system of globalization,” while the other half of the world was “still caught up in the fight over who owns which olive tree.” Id. at 27. Olive trees, Friedman explains, “represent everything that roots us, anchors us, identifies us and locates us in this world–whether it be belonging to a family, a community, a tribe, a nation, a religion, or, most of all, a place called home…. We fight so intensely at times over our olive trees because, at their best, they provide the feelings of self-esteem and belonging that are as essential for human survival as food in the belly. At worst, though, when taken to excess, an obsession with olive trees leads us to forge identities, bonds and communities based on our exclusion of others….” Id. at 27.

(46) The Baywatch estimate was printed in the TORONTO GLOBE AND MAIL, July 9, 1996, at B14. See also FRIEDMAN, supra note 45, at 56. “In South Teheran, the poorest neighborhood of the Iranian capital, some families can afford a television and some can’t. When I visited Teheran in 1997, I found that some of those in South Teheran who had televisions were setting up a few chairs and selling tickets when the most popular American television show came on each week (courtesy of a satellite). The most popular show was Baywatch, a Southern California fantasy, in which all the women wear only bikinis and are 36-24-36.” FRIEDMAN, supra note 45, at 55-56.

(47) See WILLIAM GREIDER, ONE WORLD, READY OR NOT: THE MANIC LOGIC OF GLOBAL CAPITALISM 351 (1997) (discussing the role of the Thai military in that country’s industrial development).

(48) Id. at 342-43 (discussing the “worst industrial fire in the history of capitalism” on the outskirts of Bangkok, Thailand in 1993 (188 dead, 469 injured

(49) See, e.g., KENICHI OHMAE, THE BORDERLESS WORLD (1988).

(50) Cass R. Sunstein, The Mystery of Progress, NEW REPUBLIC, Sept. 30, 1996, at 39 (reviewing JEAN DREZE & AMARTYA SEN, INDIA: ECONOMIC DEVELOPMENT AND OPPORTUNITY (1996)). “Dreze and Sen argue that market and government are not separate, that they are analytically and actually interdependent. Without government protection of contract and property rights, markets cannot exist.” The Mystery of Progress, Sept. 30, 1996, at 39.

(51) LEACH, supra note 36, at 387.

(52) BARNET & CAVANAGH, supra note 44, at 15.

(53) Id. at 15-16.

(54) LEACH, supra note 36, at 384 (citing Ken Wells, Selling to the World: Global Ad Campaigns, After Many Missteps, Finally Pay Dividends, WALL ST. J., Aug. 27, 1992, at A1).

(55) Id. at 384.

(56) Id. at 385.

(57) See also ECOPSYCHOLOGY: RESTORING THE EARTH, HEALING THE MIND (Theodore Roszak et al. eds., 1995) (This volume is a breakthrough book in the field of ethics, psychology, and ecology, with significant implications for public policy. It is a collection of essays describing what might be called our societal state of mind, or collective ethic about the Earth and our place in it.).

(58) WACHTEL, supra note 37, at 71.

(59) LEACH, supra note 36, at 385-86.

(60) RALPH ESTES, THE TYRANNY OF THE BOTTOM LINE 69-70 (1996).

(61) See, e.g., MARY SCOTT & HOWARD ROTHMAN, COMPANIES WITH A CONSCIENCE (1994).

(62) It is often noted that Aaron Feuerstein’s much-celebrated decision to rebuild Malden Mills in the same community after a devastating fire was possible in large part because his company was closely held. Another well-known example is Pacific Lumber Company, which was not privately held, but which had engaged in sustainable timbering for many years before being taken over by Charles Hewitt’s MAXXAM Corporation. Subsequent to the takeover, Pacific Lumber changed its ways, and began greatly increased cutting operations to pay down its debt and maximize “efficiency.” See Lisa Newton, The Chainsaws of Greed: The Case of Pacific Lumber, in CASE STUDIES IN BUSINESS ETHICS 86-106 (Thomas Donaldson & A1 Gini eds., 4th ed. 1996).

That said, however, it is true that many public companies have managed to be competitive and to generate a culture of ethical awareness. Part of the unmistakable appeal of the Donaldson-Dunfee empirical agenda for business ethics is to study such companies to discover not only their underlying values, but also the ways in which those values are created and maintained.

(63) George Brenkert, The Corporation and Its Culture, 5 BUS. ETHICS Q. 681-82 (1995).

(64) Rick Wartzman, Nature or Nurture? Study Blames Ethical Lapses on Corporate Goals, WALL ST. J., Oct. 9, 1987.

(65) Stanley Milgram, A Behavioral Study of Obedience, 67 J. ABNORMAL & SOC. PSYCHOL. 371-78 (1973). In Milgram’s experiments at Yale, a large number of volunteer “trainers” in a carefully constructed experiment were found to administer dangerous levels of shock to a learning “partner” on the other side of a partition. While many participants protested having to administer shocks for wrong or silent responses, a large percentage of “trainers” were willing to continue shocking their partner as long as the researcher in charge was taking responsibility for the experiment.

(66) J. Darley & C. Batson, From Jerusalem to Jericho: A Study of Situational and Dispositional Variable Helping Behavior, 27 J. PERSONALITY & SOC. PSYCHOL. 100-08 (1973). As described by Neil Brady, 40 seminary students were told to prepare and deliver a lecture on either the parable of the Good Samaritan or job opportunities for graduates. Half of the students in each group were told that they had plenty of time to prepare, but the other half were told that they must hurry. On the way to the lecture location, each student had to pass by a prostrate man (an actor) who was in obvious distress. “Of the 40 subjects, only 16 stopped to help him, and most of those were from the group that thought they had plenty of time to get to the lecture. Surprisingly, the title of their assigned lecture had no bearing on their willingness to stop….” F. NEIL BRADY, ETHICAL MANAGING: RULES AND RESULTS 14-15 (1990).

(67) Armstrong asked almost two thousand management students from ten countries to play the roles of board members of a multinational pharmaceutical company. The decision was whether to remove from the market a drug that had been found to endanger human life. As board members, 79 percent refused to withdraw the drug and undertook legal and political maneuvering to delay or end government efforts to ban the drug. Armstrong asked a sample of his students about an actual and identical case involving Upjohn and found that 97 percent deemed Upjohn’s actions in refusing to withdraw the drug as “socially irresponsible.” See J. Scott Armstrong, Social Irresponsibility in Management, 5 J. Bus. RES. 185-213 (1977).

(68) See, e.g., Jonathan Rowe, Reinventing the Corporation, WASH. MONTHLY, May/June 1996, at 16. See also ESTES, supra note 60, at 22-25. “In the beginning corporations were chartered by monarchs to serve the interests of the state…. Democracies later adopted this tradition of chartering corporations to serve a public interest.” ESTES, supra note 60, at 22-23.

(69) Liggett Co. v. Lee, Comm’r, 288 U.S. 517, 518-19 (Brandeis, J., dissenting). Brandeis wrote: The prevalence of the corporation in America has led men of this generation to act, at times, as if the privilege of doing business in the corporate form were inherent in the citizen (but) throughout the greater part of our history a different view prevailed. Although the value of this instrumentality in commerce and industry was fully recognized, incorporation for business was commonly denied because of fear. Fear of the encroachment upon the liberties and opportunities of the individual. Fear of the subjection of labor to capital. Fear of monopoly. Fear that the absorption of capital by corporations, and their perpetual life, might bring evils similar to those which attended mortmain.

Id.

(70) Donaldson and Dunfee are clearly correct when they note that corporations and other business forms are artifices, created by humans and alterable by humans. What seems missing is a commitment to mold corporate activities to human ends and humane purposes. Recall their claim that the evolution of the corporation and market economics from 1800 to present are “striking examples” of the “plasticity” of the corporate form and of capitalism. Plasticity implies a molding process where a manufacturer sets the design

(71) ROBERT REICH, THE WORK OF NATIONS: PREPARING OURSELVES FOR 21ST CENTURY CAPITALISM 42 (Vintage Edition 1992) (1991). “Gradually, the top executives of America’s largest corporations would come to view themselves as `corporate statesmen,’ responsible for balancing the claims of stockholders, employees, and the American public. Surprisingly, the public would come to share this view.” Id. “By the 1950s, the well-being of individual citizens, the prosperity of the nation, and the success of the nation’s core corporations seemed inextricably connected. Most of the larger questions about the role of the giant corporation in American society had been resolved.” Id. at 43.

(72) Id. at 48. When Wilson was tapped by President Eisenhower to serve as Secretary of Defense, he was asked at a Senate confirmation hearing whether he would be able to make a decision for the public interest of the United States that would be adverse to GM’s interests. He is reported to have said, “I cannot conceive of one because for years I thought what was good for our country was good for General Motors, and vice versa. The difference did not exist. Our company is too big. It goes with the welfare of the country.” Id. at 47-48 (citing Confirmation Hearings on Charles E. Wilson as Secretary of Defense Before the Senate Comm. On Armed Services (Feb. 18, 1953)).

(73) See, e.g., Glenn Kessler, Treasury Aims to Shut Tax Shelters

(74) See KORTEN, supra note 41, at 103.

(75) Readers may wish to consider Russell Mokhiber’s “Top 100 Criminals of the Decade” list, meant to mirror the Fortune 500 or the Forbes Platinum 100 lists. Mokhiber claims that during the 1990s there was a “wave of corporate criminality that has swamped prosecutors around the country.” On the basis of his compilation, his claims appear justified. See Russell Mokhiber, Top 100 Corporate Criminals of the Decade, available at http://www.corporate predators/org/top 100.html (last visited Nov. 30, 2000).

(76) MULTINATIONAL MONITOR, Corporate Crime and Punishment, July/August 1999, http://www.essential.org/monitor/mm1999/99july-aug/editorial.html.

(77) Id.

(78) See ESTES, supra note 60, at 105

(79) ESTES, supra note 60, at 105.

(80) According to Common Cause, lawyers and lobbyists contributed over $4,760,000 in “soft money” to Republican and Democratic national parties in 1999

(81) See supra notes 44-46 and accompanying text.

(82) For the final episode of the CBS series Survivor in August of 2000, prime-time advertising was selling for $600,000 for a 30 second spot. National Public Radio, Morning Edition, (Radio broadcast, Aug. 24, 2000).

(83) See WACHTEL, supra note 37. See also ECOPSYCHOLOGY: RESTORING THE EARTH, HEALING THE MIND, supra note 57.

(84) HAWKEN, supra note 78, at 108.

(85) The flight of firms and investors out of countries that impose relatively high costs for whatever reason–labor laws, environmental protections, high inflation, welfare and social safety nets that require high taxation–is “the preeminent political issue for the nations of advanced capitalism,” according to Greider.

In military terms, the free-running market has mounted a pincer movement against the modern welfare state and is advancing to disable it. One flank of the attack is formed by debt, the accumulating indebtedness of the wealthiest governments as they are unable to keep up with the costs of long-established social commitments. The other flank is capital exit–the flight of firms and investors to other locations when nations fail to shrink their overhead costs that the welfare state imposes on enterprise and labor markets.

GREIDER, supra note 47, at 360.

(86) See ROBERT KUTTNER, EVERYTHING FOR SALE: THE VIRTUES AND LIMITS OF MARKETS (1996).

Today, employers are breaching virtually all of the conventions so carefully analyzed by the last generation of labor economists–and evidently getting away with it. With heightened competition and successive waves of leveraged buyouts, brutal downsizings have become normal. Relentless layoffs are not merely a temporary response to business cycles, but a way of life. Labor has come to be viewed not as a long-term resource but as an expendable cost center.

Id. at 74.

(87) CHARLES HANDY, THE HUNGRY SPIRIT 64 (1998).

(88) RALPH NADER & WESLEY J. SMITH, NO CONTEST: CORPORATE LAWYERS AND THE PERVERSION OF JUSTICE IN AMERICA 136 (1996).

(89) Id. at 137. See also JONATHAN HARR, A CIVIL ACTION (1995) (quoting Jerome Facher, attorney for Beatrice Corporation, as smiling and saying “The truth? The truth is at the bottom of a bottomless pit.”) Id. at 340.

(90) NADER & SMITH, supra note 88, at 102.

(91) Id. at 104.

(92) Id. at 104.

(93) See infra notes 115-23 and accompanying text. See also ESTES, supra note 60, at 117-200.

(94) REICH, supra note 71, at 47.

(95) See GREIDER, supra note 47, at 192-223 (discussing the global movement of manufacturing capital and finance capital and ineffective U.S. government attempts to manage the process).

(96) See generally TOM ATHANASIOU, DIVIDED PLANET: THE ECOLOGY OF RICH AND POOR (1996) (discussing the impacts of free trade and global capitalism on developing nations since World War II). “From the perspective of the new world disorder, with economic, political, and ecological chaos all competing for our scant time and attention, with `globalization’ become a euphemism for a commercial imperative unbuffered by ethical skepticism, care for the weak and vulnerable, environmental protection, or even democracy, the schemes of the post-World War II geopoliticians do not seem to have worn well at all.” Id. at 44. Those readers who work in business schools are likely inclined to disbelieve such sweeping conclusions, but owe it to themselves (and their students) to read the evidence that Athanasiou has assembled.

(97) Nicholas Bray, OECD Ministers Agree to Ban Bribery As Means for Companies to Win Business, WALL ST. J., May 27, 1997, at A2. For the past twenty years, many business ethics writers have assumed that U.S. concern over bribery was parochial and reflected “U.S. values” rather than global ones. See also Barbara Crutchfield George et al., The 1998 OECD Convention: An Impetus for Worldwide Changes in Attitudes toward Corruption in Business Transactions, 37 AM. BUS. LJ. 485 (2000).

(98) Friedman, supra note 45, at 144-47. (With regard to transparency, Friedman notes that “the herd” of global capital investment will stampede out of nations that fail to make financial records open or “transparent,” and will make more of a commitment to economies where generally accepted accounting standards prevail. Harmonization of other standards is also part of this process, led by capital, which is able to penetrate and investigate the underpinnings of an economy far better than governments can.).

(99) Note that the role of international non-governmental organizations (NGOs) is often crucial in mediating between citizens, governments, and corporations. See THOMAS PRINCEN & MATTHIAS FINGER, ENVIRONMENTAL NGOs IN WORLD POLITICS (1994). In the case of bribery as a transnational social/business problem, Transparency International has had a leading role, and has argued for years that bribery is not only dishonest but is also economically inefficient, results in higher prices to consumers, encourages corrupt elites in developing countries, and is essentially anti-democratic in effect. See TRANSPARENCY INTERNATIONAL, NATIONAL INTEGRITY SYSTEMS: THE TI SOURCE BOOK (Jeremy Pope ed., 1996) http://www.transparency.de/documents/source-book/index.html.

(100) See, e.g. HERMAN E. DALY & JOHN B. COBB, JR., FOR THE COMMON GOOD: REDIRECTING THE ECONOMY TOWARD COMMUNITY, THE ENVIRONMENT, AND A SUSTAINABLE FUTURE (1989) [hereinafter COMMON GOOD] and HERMAN E. DALY, BEYOND GROWTH: THE ECONOMICS OF SUSTAINABLE DEVELOPMENT (1996) [hereinafter BEYOND GROWTH].

(101) See e.g., BEYOND GROWTH, supra note 100, at 40-41.

It is by now a commonplace to point out that GNP does not reveal whether we are living off income or capital, off interest or principal. Depletion of fossil fuels, minerals, forests, and soils is capital consumption, yet such unsustainable consumption is treated no differently from sustainable yield production (true income) in GNP. But not only do we decumulate positive capital (wealth), we also accumulate negative capital (illth) in the form of toxic-waste deposits and nuclear dumps.

Id.

(102) Some of the worst environmental problems are attributable to the public sector. The U.S. government’s Hanford Nuclear facility, for example, still has 54 million gallons of radioactive waste that must be disposed of, with cleanup costs to exceed 15 billion dollars. See Craig Welch, DOE Sacks N-Cleanup Contractor, SEATTLE TIMES, May 9, 2000, at B1. But consumers must bear responsibility as well. See, e.g., 1 in 5 admit buying drugs made from endangered species, Kyodo News Service, Associated Press, April 5, 1999, http://cnnfn.newsreal.com /apnews/19990406/02/29/3293400_st.html. Also, while it is true that people do choose to buy products sold by corporations, and thus bear some responsibility, they are often unaware of the social costs engendered by the products they purchase (information about labor conditions or environmental impacts in the production of the product are seldom voluntarily provided by the company) and corporations in this century have worked to create consumer desires, transforming luxuries into perceived necessities. See generally LEACH, supra note 36. As to the relative roles of consumers, government, and corporations in creating excessive carbon dioxide emissions from the U.S., see Donald O. Mayer, Greenhouse Gas Emissions and the Social Responsibility of Automakers, 105 BUS. & SOC’Y REV. 347 (2000).

(103) HAWKEN, supra note 78, at 3, 4.

(104) Paul Hawken, Natural Capitalism, MOTHER JONES, Mar./Apr. 1996, at 40-62. For the complete elaboration of “natural capitalism,” see PAUL HAWKEN, AMORY B. LOVINS & L. HUNTER LOVINS, NATURAL CAPITALISM (1999).

(105) George Soros, The Capitalist Threat, ATLANTIC MONTHLY, Feb. 1997, at 45. Accord BARBER, supra note 45, at 15. “Certainly the hurried pursuit of free markets regardless of social consequences has put democratic development in jeopardy in many nations recently liberated from communism.” BARBER, supra note 45, at 15.

(106) Soros, supra note 105, at 48.

(107) Id. at 50.

(108) Id. at 52.

(109) Id. at 55.

(110) Rather than prescribing a set of potential shared values, Soros recommends a process for finding them. His answer is “the open society” and the recognition of our own fallibility in reasoning

(111) Hawken, Natural Capitalism, supra note 104, at 42.

(112) Id. at 44.

(113) Id. at 46.

(114) Id.

(115) GDP is now routinely substituted for a somewhat more familiar term, GNP (or Gross National Product). For the distinction between the two, see Clifford Cobb et al., If the GDP is Up, Why is America Down?, ATLANTIC MONTHLY, Oct. 1990, at 59.

(116) Id. See also COMMON GOOD, supra note 100, at 62-84.

(117) Hawken, Natural Capitalism, supra note 104, at 48.

(118) Id.

(119) ESTES, supra note 60, at 171.

(120) Hawken, Natural Capitalism, supra note 104, at 46.

(121) Id. at 49.

(122) Id. at 48-49. See also WILLIAM WOLMAN & ANNE COLAMOSCA, THE JUDAS ECONOMY: THE TRIUMPH OF CAPITAL AND THE BETRAYAL OF WORK (1997). Wolman (at the time, chief economist at Business Week magazine) and Colamosca contend that from 1977 to 1997, U.S. workers lived through twenty years of “wage stagnation” and an economic system that provided rewards primarily to the “very rich,” living through a period “when more and more members of each household had to go to work seeking to maintain their accustomed standard of living.” WOLMAN & COLAMOSCA, supra at 198.

(123) The U.S. prison population has long been the highest in the world. U.S. Prison Population May Pass 2 Million Next Year, REUTERS, Apr. 20, 2000, http://www.sightings.com/general/ priz.htm.

(124) Hawken, Natural Capitalism, supra note 104, at 50.

(125) Id. at 50.

(126) Accord WOLMAN & COLAMOSCA, supra note 122, who find that changes to the tax code in the 1980s had the net effect of greatly increasing “the burden for federal expenditures carried by those who earn their living from work.” Id. at 177.

(127) Hawken, Natural Capitalism, supra note 104, at 59.

(128) The naturalistic fallacy is the mistaken idea that whatever happens naturally is always for the best. As Manuel Velasquez notes, “It is a basic failure of logic … to infer that what is necessarily ought to be or that what nature creates is necessarily for the best.” MANUEL G. VELASQUEZ, BUSINESS ETHICS: CONCEPTS AND CASES 183 (4th ed. 1999).

(129) HAWKEN, ECOLOGY OF COMMERCE, supra note 78, at 78.

(130) Id. at 79.

(131) Id. at 95.

(132) RIFKIN, supra note 1, at 241.

(133) See AMITAI ETZIONI, THE MORAL DIMENSION: TOWARD A NEW ECONOMICS (1988). See also Bill Shaw & Frances E. Zollers, What Etzioni Might Mean to Moral Managers, 3 BUS. ETHICS Q. 153-69 (1993). As Shaw and Zollers note, Etzioni’s view takes the neoclassical view of a rational, self-interested economic actor and merges it with communitarian and moral values

Etzioni defines community as a “web of affect-laden relationships among a group of individuals, relations that often crisscross and reinforce one another … and second, a measure of commitment to a set of shared values, norms, and meanings, and a shared history and identity–in short, to a particular culture. AMITAI ETZIONI, THE NEW GOLDEN RULE: COMMUNITY AND MORALITY IN A DEMOCRATIC SOCIETY 127 (1997).

(134) See Metzger & Dalton, supra note 14, and accompanying text.

(135) Hosmer, supra note 3.

(136) BARNET & CAVANAGH, supra note 44, at 421.

(137) See KORTEN, supra note 41, at 103-04 (discussing the `Cloud Minders of Stratos’). In accord, see REICH, supra note 71, at 268-81 (In a chapter titled “The New Community,” Reich discusses how both government and the new economic elite are distancing themselves from social needs and less fortunate segments of society.). See also RIFKIN, supra note 1, at 229 (discussing the deepening divide between the connected and the non-connected). “While nation-states are beginning to buckle under the pressure of a new global economic and social order made up of vast networks of shared interests that bypass national boundaries, eclipse geography, and exist in cyberspace, we need to understand that most people on earth are not connected to these new worlds. They exist outside the electronic gates in another world of poverty and despair in which sheer physical survival dictates the terms of daily life…. In an era in which the affluent fifth of the population is leaving property behind in search of cultural experiences and personal transformation, the remaining four-fifths have meager belongings and still wish to be propertied.” RIFKIN, supra note 1, at 299. Ritkin notes that 65 percent of the human race has never made a single telephone call, and 40 percent have no access to electricity. RIFKIN, supra note 1, at 299.

(138) The term “legal community” may or may not be an oxymoron.

(139) Applying the prioritization rules and hypernorms may well be problematic. See Bill Shaw, Ties That Bind, 37 AM. BUS. L.J. 569 (2000) (review essay).

(140) TIES THAT BIND, supra note 7, at 186. (“The more extensive or more global the community that is the source of the norm, the greater the priority that should be given to the norm.”)

(141) Fort, Corporation as Mediating Institution, supra note 15, at 190-94. In most of his writings, Fort provides a compelling answer to Metzger and Dalton: we don’t need to look at organizational realities all that much–we already know that businesses, to serve as mediating institutions, need to take social psychology seriously enough to re-structure their operations and governance to provide a better sense of intra-firm community. Empirically, ethicists may study and deliberate upon those corporations that manage to do this, but must also consider the legal structures that encourage or inhibit such transformations.

(142) See Michael Bradley et al., Challenges to Corporate Governance: The Purposes and Accountability of the Corporation in Contemporary Society: Corporate Governance at a Crossroads, 62 LAW & CONTEMP. PROBS. 9 (1999).

(143) Friedman, supra note 45, at 378 (“America at its best takes the needs of markets, individuals and communities all utterly seriously. And that’s why America, at its best, is not just a country. It’s a spiritual value and role model.”).

(144) Id. at 144-47, 349-78.

(145) Many of the suggestions by Hawken, Daly, Greider, and Korten in works cited earlier would qualify. See Hawken, Natural Capitalism, supra note 104

(146) In an earlier work, William Greider focused on the declining sense of public involvement in all levels of government, especially the federal level. One of his principal themes is that “special interests” have so taken over the legislative and regulatory agenda in Washington, D.C. that voters no longer feel empowered to make any difference. See WILLIAM GREIDER, WHO WILL TELL THE PEOPLE? THE BETRAYAL OF AMERICAN DEMOCRACY (1991). More recently, the phrase “social capital” has gained currency, with its idea that civic involvement is essential to a thriving body politic. See, e.g., ROBERT PUTNAM, BOWLING ALONE: THE COLLAPSE AND REVIVAL OF AMERICAN COMMUNITY (2000). Francis Fukuyama, reviewing Putnam’s book, noted that Americans were in fewer bowling leagues and that Putnam took the “lonely bowlers” as “symbols of a distrustful society in which Americans replaced the town square with gated communities and disengaged from civic life.” Francis Fukuyama, Community Matters, WASH. POST, May 28, 2000, at X5.

Don Mayer, Professor of Management, Oakland University.