Economic Justice and the Obligations of Transnational Corporations

Abstract:     
The eighth UN Millennium Development Goal, Develop a Global Partnership for Development, includes two targets that rely on improved cooperation with private corporations: the first calls for cooperation with pharmaceutical companies so that developing countries may have access to essential drugs; the second encourages the private sector to make the benefits of new technologies more widely available. Aside from these concrete proposals, in the Post-Washington Consensus, economic growth is still regarded as the most important means for reducing poverty worldwide.

With these normative expectations in mind, the ethical question arises of to what extent, if at all, transnational companies (one of the main actors to carry out the above-mentioned aims) can be held responsible for reducing unemployment, poverty, disease, malnutrition, and illiteracy. Is a corporation a single collective actor that should be held responsible for certain activities? Why should it be obliged to respect human rights conventions and ILO standards? Or is it comprised of individual members of a collective that can and should each be held responsible?

In my paper I will first discuss objections to the idea of the social responsibility of corporations. One main argument from Milton Friedman, for example, is that corporations, and with this their managers and leading employees, do not have a moral duty, but only a legal duty to respect rights, and that this duty is restricted by the property rights of their shareholders. Against this assumption I will argue that transnational corporations are obliged to respect some basic principles of justice (including human rights) for three reasons: they can directly or indirectly (through outsourcing of production) violate human rights; they have knowledge about the consequences their activities have; and they have the power to act in ways that respect certain basic standards of justice and human rights.

I will then address the question of duty allocation. A sphere-specific notion of corporate duties seems to be adequate as one should be careful about expanding the rights of private actors. I will argue that if the normative ideal of political participation is realized at an international level, it may well destroy its original intention; if international regulations are decided by private (collective) actors who make decisions according to economic rationality, and not by representatives that voice the interests of their constituents, then a basic moral principle (that all those who are affected by norms and rules should participate in its establishment) will be turned upside down.

Number of Pages in PDF File: 26

Keywords: Corporate obligation, individual obligation, human rights, private self-regulation, global governance

JEL Classification: F20, L20

working papers series