It will be worthwhile to examine this view in This short passage only hints at the variety of social ,political ,ethical .and economics issues that are embedded in the market approach to business ethics. Indeed, it would be fair to describe “the market” as one of the most influential public policy philosophies in modern history. For issues ranging from environmental protection to the allocation of health of health care , and certainly for virtually every controversy in business ethics, we can commonly find a recommendation to “let the market decide.” In this text alone, we shall examine market-based recommendations for such diverse issues as employee rights and responsibilities, and environmental protection. depth.
Let us examine the Wal-Mart case from the perspective of this classical model of corporate social responsibility. Wal-Mart’s tremendous financial accomplishment is good evidence that management’s strategy of offering “everyday low prices” has been successful in the marketplace. Wal-Mart has been able to attain such low prices by following a variety of managerial strategies. They have pursues several aggressive policies to keep labor costs down. They have used their purchasing power to bargain forcefully with suppliers to keep price down and, as a result have encourage suppliers to outsource their production to China and other country with lower labor and supply cost. They have outsourced their janitorial services to independent firms and negotiated with these suppliers for the lowest possible price. Wal-Mart has entered new markets where their efficiencies have been able to defeat competitors, and has bargained with local municipalities to attain favorable tax and financial incentives. Despite lawsuits and regulatory infractions, we can assume that as a matter of corporate policy, Wal-Mart has always been committed to obeying the law. In short , Wal-Mart’s managers have sought to maximize stockholders profit within the law.
How would “the market” evaluate this corporate strategy? Wal –Mart seems to be exactly the type of socially responsible corporation envisioned by Friedman’s model. Wal–Mart ‘s return on investment over the last 35 years has been extraordinary. Assuming that the retail industry has been free and open, and assuming that Wal-Mart ‘s has not engage in fraud, deception, or illegal activities, Wal-Mart’s corporate strategy has, on the market view, attained several significant ethical objectives. Perhaps most importantly, Wal-Mart’s low prices have meant that more consumers have been able to purchase more of what they want. Society benefits when efficient companies sell more product for the same cost. This strategy provides an incentive to move the production of everything from janitorial services to soap and electronics to their most efficient suppliers. Greater efficiency means that more beneficial consequences result from each spending decision. In turn, this efficiency attracts more investors whose resource can then be used to increase business. Overall, society benefits from Wal-Mart’s pursuit of profit.
This justification of the Free market clearly is based on the utilitarian ethical principles that one should act so as to maximize the overall good. But besides utilitarianism, there is another ethical defense of the free market. Rather than appealing to the good consequences of the market, this approach appeals instead to the right of private property.
Again, Milton Friedman offers us a succinct statement of these principles:
In a free-enterprise, private property system a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of society, both those embodied in law and those embodied in ethical custom… The key point is that, in his capacity as a corporate executive, the manager is the agent of the individuals who own the corporation … and his primary responsibility is to them.4
From this perspective, a business is understood as private properly, and like any private property, the owners get to decide what to do with it. If Aaron Feuerstein, as the owner of Malden Mills, chose to use his property to benefit the workers and community, fine. That is his free choice. But if the managers of Wal-Mart chose to use their stockholders’ property to serve the interests of employee and the local community, they are acting irresponsibly. Pursuing any social objective other than the maximization of profit is spending someone else’s money for your own purposes. According to defenders of the classical model, this is ethically equivalent to theft.