GLOBALISATION

Globalisation means 'the reduction of the difference between one economy and another, so trade all over the world, both within and between different countries, becomes increasingly similar. This has been going on for a long time, and used to be quite a slow process, but in recent times it has speeded up. The reasons for the increase in the pace of globalisation are: 1 Technological change - especially in communications technology. 2 Transport is both faster and cheaper. 3 Deregulation - increase in privatisation and countries can now own businesses in other countries e.g. some UK utilities which were once government owned are now owned by French businesses. 4 Removal of capital exchange controls - money can now be moved easily from one country to another. 5 Free trade - many barriers to trade have been removed, sometimes by grouping countries together such as the EU. 6 Consumer tastes have changed and consumers are now more willing to try foreign products. 7 Emerging markets in developing countries. All of this means that businesses are now freer to choose where they operate from, and can move to countries where labour is cheaper. This has meant, for example, that much manufacturing has moved to countries such as Indonesia, and many telephone call centres have moved to India. National borders are becoming less important, as markets stretch across them and multinationals have taken advantage of this. Consumers are alike, but not the same, in different countries, and businesses have needed to consider local variations. However, globalisation also brings problems - especially those of justice towards poorer countries. Trade between countries Is not totally fair, and some of the richest countries such as the US have very strong trade barriers to protect their national interests. It could be said that globalisation means that the interests of the shareholders are more important than the interests of the employees or the consumers, and it means that the poorest people have just 1.4% of the global income. The disaster at Bhopal in India is a prime example, as the chemical companies concerned continued to deny responsibility for a long time, and some survivors still await compensation. Toxic waste still pollutes the environment. Anti-globalisation movements campaign against the bad effects of globalisation: • Amnesty International campaigns for a global human rights framework for business based on the UN Norms for Business. • The WCC campaigns for responsible lending and unconditional debt cancellation. • There are also campaigns for ecological farming practices, the imposed privatisation of public services, especially water. In his book One World: The Ethics of Globalisation Peter Singer lists the various global problems that we face and challenges us to develop a system of ethics and justice that can be accepted by all people, regardless of their race, culture or religion. BENEFITS OF ETHICS FOR BUSINESS One of the main benefits for a business of behaving ethically is that a better image is given to the world at large, and especially to consumers, resulting in greater profit. It also means that expensive and potentially embarrassing public relation disasters are avoided. As far as employees are concerned, if the business is seen to behave ethically, for example with regard to the environment, it will recruit more highly qualified employees, and this leads to better employee motivation as the employees are proud of their jobs. PROBLEMS OF ETHICS FOR BUSINESS Being ethical can increase costs for the business, e.g. they have to pay reasonable wages to all employees. If a business is truly putting its ethics into practice it will have to pass on the same standards down the supply chain and this will mean no longer doing business with suppliers who are not prepared to meet the same standards. However, businesses are products of the society in which they operate, and if society does not always have clear standards, it is not always easy for a business to decide what to do, e.g. some people in our society are completely opposed to experimenting on animals, but others would argue that it is alright for a business to do so if it benefits human health. Sometimes a business needs to consider that its role is to make a profit, provide jobs and create wealth for society as a whole, and it may consider that ethics are good if they help achieve these aims, and to be ignored if they do not. Ultimately to really be ethical a business may have to change its whole business practice and organisational culture. THE RELIGIOUS APPROACH TO BUSINESS ETHICS For the purpose of this book a Christian approach will be followed. The Bible give guidelines that can easily be applied to the ethical issues surrounding business. The Old Testament contains laws and injunctions about the fair treatment of employees e.g. Leviticus 19:13, about justice, honesty and fairness in business: 'Do not steal' and laws about just weight e.g. Deut.25:13-15 - giving the full amount for fair payment. The prophets, especially Amos, spoke out about the unfair treatment of the poor by the rich. People are told to treat others as they would be treated - and in the New Testament Jesus was concerned with not amassing wealth for the sake of it, and sharing with those in need. In the Middle Ages just price, usury, property and work were the only ethical approaches to business, and it was some time before Christian ethics looked at the real ethical problems facing modern businesses. Protestant social teaching pulled in two different directions: firstly the individualistic approach was concerned with the individual's calling and personal integrity, so a business man could be praised for his charity; and secondly was the concern about the competitive individualism of capitalism and the great social inequalities caused by capitalism, so social solutions were offered. Catholic thought was never very individualistic and very early on addressed the problems of modern industrial life. The encyclicals Revum Novarum in 1891, through to Populorum Progressio in 1967 and Centimus Annus in 1991 all recognised the needs of workers, argued for trade unions and for the protection of the needs of poor countries to correct the defects of the world market. The idea of the common good, of solidarity, is a basic value in Catholic social teaching and has led the Catholic church to criticise both communism and free market capitalism which acts against the poor and leads to the selfish pursuit of wealth. Christian churches have increasingly, as organisations and as individual Christians within those churches, monitored and corrected the harm done by the businesses in which they are shareholders. This has led to changes in behaviour in areas such as environmental impact and marketing practice in the developing world. This role of the ethical investor is not new - in the 18th century the Quakers refused to invest in companies that were involved in slave trade. APPLYING ETHICAL THEORIES TO BUSINESS ETHICS Utilitarianism Utilitarianism considers the majority affected by a certain action - general welfare is important, and this is often seen as good business policy: the general good of the organisation is more important than that of individuals. So, for example, an employee, though qualified for a certain position, will have to give way to another so that the interest of the business as a whole can be preserved. A farmer may have to give up some of his land for a dam project, because it will provide irrigation for lots of farmers and generate electricity for the whole community. However, the best business transactions are the ones in which the best result is achieved, when both business and consumer, employer and employee, shareholders and stakeholders are considered and benefited. This means that when making business decisions all alternatives need considering - no one can just act on intuition if they wish to maximise utility. Economically Utilitarianism would seem to be a good ethical approach to business, however, in many cases it is not simple and clear cut. For example, closing a polluting factory may be good for the environment, but not for the local community who may need the jobs. Whatever the business does it is going to upset one group of people or another. Utilitarianism does not always help here