The economic and moral defense of sweatshops given by Powell and Zwolinski has been criticized in two recent papers. Coakley and Kates focus on putative weaknesses in the logic of Powell’s and Zwolinski’s argument. Preiss :55–82, 2014) argues that, even granting the validity of their economic argument, Powell’s and Zwolinski’s defense is without force when viewed from a Kantian republican viewpoint. We are concerned that sweatshop critics have misinterpreted the economic literature and overstated the conclusions that follow from their ethical (...) premises. We show that the best understanding of the current economic literature supports Powell’s and Zwolinski’s conclusions about the negative effects of sweatshop wage regulation, and that it is unreasonable to reject economic analysis in moral argument against sweatshops even from a Kantian perspective. Additionally, we defend the theory of exploitation as unfairness given by Wertheimer, and show how economic analysis can be applied to that theory to identify cases of sweatshop exploitation. (shrink)

Business Ethics, the Environment & Responsibility, EarlyView.

Arnold and Bowie (2003) attempt to derive ethical constraints on the actions of the managers of multinational enterprises (MNEs), orthe MNEs themselves, from a Kantian perspective. We contest Arnold and Bowie’s claims regarding MNE duties, in particular that MNEs have a duty to pay a subsistence wage above market levels. We conclude that even within Arnold and Bowie’s Kantian framework such a duty does not properly emerge. In addition, we argue that the account of coercion used by Arnold and Bowie (...) does not serve their purposes. Arnold and Bowie address consequentialist issues by arguing that their conclusions are not undercut by economic considerations regarding unemployment. We argue that Arnold and Bowie have misread the economic literature in this regard. (shrink)

Abstract:In contrast to “social contract” theories of the corporation, a moral justification of the corporation as actual, not hypothetical, agreement is presented. Central to the justification is the idea of personal projects, as developed by Loren Lomasky. The key idea is the role that corporations can play in the construction and advancement of personal, value-creating projects. The concept of the corporation as actual agreement, as a type of “right of association” theory, is defended against influential criticism of such theories by (...) Thomas Donaldson. (shrink)

Shareholders of corporations have their liability for actions of the corporation limited by law. Unlike the equity holder in a partnership or proprietorship, the assets that a shareholder has distinct from her holdings in the enterprise can not be taken to satisfy liabilities arising from actions of the enterprise itself. This paper argues that a reasonable principle of fairness argues for an alternative to limited liability, proportional liability. Proportional liability makes a shareholder liable for the same proportion of a corporation''s (...) excess of liabilities over assets that her number of shares bears to the total number of shares outstanding. The key idea is that it is unfair in situations in which explicit agreements can not be reached for shareholders to bear only limited risk when they may receive gains from stock dividends and appreciation that are not limited to any pre-determined amount. Proportional liability has not been much examined in the financial literature. Good utilitarian arguments have been given for limited liability over unlimited liability for corporate shareholders, but these arguments do not clearly support the choice of limited liability over proportional liability. (shrink)

It has been suggested that a new form of moral responsibility, labeled “social products liability,” is relevant to business ethics.In particular, this kind of responsibility might justify recent legal claims against firearm manufacturers. This paper argues that, as ithas been presented, social products liability must rest upon utilitarian considerations or on a deeper, more complete theory of moralresponsibility. In the first case, a new form of responsibility seems unnecessary, since liability could be directly apportioned on utilitariangrounds. In the second case, (...) proponents of social products liability face the tasks of presenting the more complete theory and then anchoring social products liability to it. (shrink)

Jean Hampton has argued that an important case of the free-rider problem has the structure of a battle-of-the-sexes game, rather than the Prisoner's Dilemma, as is often assumed. This case occurs when the collective good to be produced is a ‘step’ or ‘lumpy’ good, one that is produced in a single production step. Battle of the Sexes is a coordination game, with stronger equilibria than games such as the Prisoner's Dilemma or Chicken. Hampton argues that, because of this difference, there (...) is good reason to think that players facing a battle-of-the-sexes game can more easily reach mutually desirable outcomes than players facing these other games. An examination of Hampton's argument, however, shows that she has failed to specify a condition that would clearly distinguish her examples of battle-of-the-sexes games from chicken games. Consequently, Hampton's claim that free riding in the provision of step goods is less tempting than other analyses have suggested because of the presence of coordination equilibria is incorrect as it stands. (shrink)

Kenneth Silver criticizes our use of the Capital Asset Pricing Model to determine the return on investment that is deserved by shareholders, and suggests shareholder primacy follows from the principal/agent model, rather than a concern for risk. We argue that Silver has misunderstood CAPM and our use of it, and that, under current law, more is required from articles of incorporation or corporate bylaws for the principal/agent model to apply to corporations.