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Otteson (p. 45), citing Gregory Clark (2007), A Farewell to Alms: A Brief Economic History of the World. Princeton, NJ: Princeton University Press (p. 1). The welfare gains from ordinary profitable exchanges are so large (for all parties, absent negative externalities) that some theorists have even argued that firms are morally required to maximize their profits. See Michael Jensen (2001) “Value Maximization, Stakeholder Theory, and the Corporate Objective Function,” Journal of Applied Corporate Finance 14: 8–21. For a counterargument to Jensen’s view, see Gregory Robson (2019), “To Profit Maximize, or Not to Profit Maximize?: For Firms, This Is A Valid Question,” Economics & Philosophy vol. 35, 307–320.
In addition, around 1980 the U.S. began shifting from managerial capitalism to finance capitalism. Changes in financial institutions and the prospect of hostile leveraged buyouts gave many top managers less discretion to implement their preferred ethical principles. One might accordingly wonder whether the Otteson Code is easier or harder to apply (if perhaps no less morally justified) in finance capitalism than in managerial capitalism. See, e.g., Gerald F. Davis, Managed by the Markets: How Finance Re-Shaped America, Oxford: Oxford University Press.
Andreas Georg Scherer and Guido Palazzo (2007), “Toward a Political Conception of Corporate Responsibility: Business and Society Seen from a Habermasian Perspective,” Academy of Management Review, 32(4): 1096–1120; and (2011) “The New Political Role of Business in a Globalized World: A Review of a New Perspective on CSR and its Implications for the Firm, Governance, and Democracy,” Journal of Management Studies, 48(4): 899–931. For an excellent overview of this and other literature, see Jeffrey Moriarty (2016), “Business Ethics,” Stanford Encyclopedia of Philosophy online, Sect. 7.2 et passim.
Richard T. De George (1993), “Competing with Integrity in International Business,” New York: Oxford University Press. Thomas Donaldson (1989), The Ethics of International Business, New York: Oxford University Press.
Benjamin Powell and Matt Zwolinski (2012), “The Ethical and Economic Case Against Sweatshop Labor: A Critical Assessment,” Journal of Business Ethics, 107(4): 449–472. Cited in Otteson, p. 75. See also Matt Zwolinski (2007), “Sweatshops, Choice, and Exploitation,” Business Ethics Quarterly, 17(4): 689–727; Jeremy Snyder (2010), “Exploitation and Sweatshop Labor: Perspectives and Issues,” Business Ethics Quarterly, 20(2): 187–213; Zwolinski (2008), “The Ethics of Price Gouging,” Business Ethics Quarterly, 18(3): 347–378; and Snyder (2009), “What’s the Matter with Price Gouging?”, Business Ethics Quarterly, 19(2): 275–293.
See Otteson (2002), Adam Smith’s Marketplace of Life, Cambridge: Cambridge University Press; and Otteson (2018), The Essential Adam Smith, Fraser Institute.
See James R. Otteson and Steven McMullen, The Ethics of Wealth Redistribution (Routledge, forthcoming).
Otteson observes, “[t]he poorest 10 percent of those countries that most closely approximate Smithian recommendations [e.g., Chile, Hong Kong, South Korea] are, in real terms, an order of magnitude more prosperous than the poorest 10 percent of those countries furthest away from Smith [e.g., Venezuela, China, North Korea]” (p. 117; also see p. 49). While it is also important to compare the countries in between, this is a striking observation.
For example, suppose that 70 percent of people in a society are extremely affluent and 30 percent are abjectly poor. If the former are unwilling to privately assist the latter, can the state force assistance by taxing them? Similar questions arise about, say, environmental policies of taxing current generations to benefit future ones.
One way the argument could fail would be if incentive or inefficiency problems beset government efforts to develop poverty relief programs. See also Otteson (p. 49), citing empirical evidence for the claim that “[r]edistributive programs lead to localized and short-term benefits but tend to do so at the expense of general and long-term benefit.”
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Drs. Dan Cummings, Dan Hammond, Karina Robson, and two anonymous reviewers.
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Robson, G.J. Review of Honorable Business: A Framework for Business in a Just and Humane Society by James R. Otteson. J Bus Ethics 172, 191–193 (2021). https://doi.org/10.1007/s10551-021-04844-x
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DOI: https://doi.org/10.1007/s10551-021-04844-x