Excerpt from Dan Craciun, Business Ethics. Basic Concepts and Principles, pp.

114-125
Relativism
The easiest anser to this !uestion seems to "e the solution stated "# the relati$istic theories,
hich "ase their claims on to undenia"le facts. %irst, each social and cultural communit#
esta"lishes a spectrum of $alue patterns, hierarchicall# ordered and imposed on each mem"er
of the communit# "# means of education and, if necessar#, "# the pressure of the &roup upon
the re"els ' indi$iduals ho de$iate from the collecti$e patterns. (econdl#, each culture and
ci$ili)ation has its on specific $alues, hich define its indi$idualit# and uni!ueness.
Conse!uentl#, relati$ism claims that $alues are super indi$idual, "ut ne$er uni$ersal. *alues
are o"+ecti$el# $alid inside of a certain culture, "ut each culture defines its on spectrum of
$alue patterns. These patterns rest, more or less, hidden to the indi$iduals ho "elon& to
another culture or ci$ili)ation.
Contrar# to su"+ecti$ism, the relati$istic approach holds that $alues are not matters of indi$idual
taste, the# "elon& to a lar&e cultural communit# and, therefore, are super indi$idual. This $ie ma-es
relati$ism more comprehensi$e than su"+ecti$ism. .n the other hand, more and more people ha$e
noada#s the possi"ilit# to tra$el all o$er the orld, ha$in& the direct experience of the differences
"eteen cultures and ci$ili)ations in their a#s to concei$e of decenc#, inte&rit#, happiness, etc. People
from different cultures do "usiness differentl# ' and ha$e $ar#in& sets of $alues, moral &uidelines and
ethical principles to &uide them throu&h the ma)e of life. /hat mi&ht "e the 0ri&ht1 a# to act in one
culture ma# "e considered the 0ron&1 a# in another.
Charles 2itchell helps us to &rasp ho important cultural $ariet# ma# "e in international "usiness.
03ot e$er#one,1 sa#s 2itchell, 0$ies the meanin& of a ritten contract in the same a#. /hile
4mericans and 5ermans &enerall# insist on intricate multi-pa&e contracts, that are meticulousl#
folloed to the letter of the la, other cultures ' especiall# those here personal relationships are
hi&hl# $alued and contract la is rare, such as 6ussia, 3i&eria or China ' $ie contracts more of a
statement of intention rather than a formal "indin& o"li&ation ith real penalties ' at least as it applies
to locals.1 2itchell presents us an interestin& list of examples.
GERMANY. Contracts are even more detailed than in the United States. Once signed, they
are strictly adhered to by Germans and they e!"ect the same #rom yo$.
EGY%&. Contracts are regarded as g$idelines #or b$siness relationshi"s rather than s"eci#ic
"er#ormance re'$irements. &he content may be renegotiated, revised and a""ended many
times to re#lect changing circ$mstances $s$ally on the Egy"tian side. &o ignore "rovisions o#
a signed contract does not carry any great moral stigma (ithin society or la(.
UN)&E* S&A&ES. Signing on the dotted line, as the Americans (ill +o,e, is the #irst ste" to a
co$rt a""earance. Americans (o$ld s$e their mother -in #act some act$ally have. i# they
tho$ght she had reneged on a signed deal. &o renege on a (ritten contract reveals com"lete
ethical and moral ban,r$"tcy. Only croo,s and cheats #ail to live $" to contracts. Needless to
say, la(yers "lay an im"ortant role in the dra(ing $" o# contracts a characteristic that is
o##ensive to many c$lt$res that inter"ret the "resence o# attorneys as a sign o# moral and
ethical mistr$st. O# co$rse, it de"ends (ho is b$ying and (ho is selling.
/A%AN. Contracts are g$idelines and any "roblems are arbitrated rather than litigated. Every
contract (ill incl$de a jiji henko cla$se that "ermits com"lete renegotiation i# circ$mstances
change. &his is tied to the im"ortance o# giving and saving #ace in /a"anese c$lt$re, that is,
allo(ing "lenty o# (iggle room #or both sides to "revent embarrassment. )n #act a 0gentleman1s
agreement2 an in#ormal verbal commitment #rom a /a"anese e!ec$tive o#ten means more
than a #ormal (ritten contract. &o violate s$ch an agreement (o$ld re"resent a greater ethical
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breech #or the /a"anese b$sinessman -a grave loss o# #ace. than (al,ing a(ay #rom a #ormal
contract.
SOU&3 A4R)CA. &his is not a litigio$s society. 5$siness contracts are not overly com"licated6
b$t sometimes they are le#t intentionally vag$e to give the local "arty some (iggle room sho$ld
things not (or, o$t. &he So$th A#rican legal system, (hich is #air and mostly $ncorr$"ted -at
least #or no(., $s$ally #avo$rs the local side over the #oreign side in cases o# cor"orate and
b$siness la(. So$th A#ricans (ill ma,e a good #aith e##ort to meet contract deadlines b$t don1t
#eel they sho$ld be "$nished i# their non7"er#ormance is $nintentional.
RUSS)A. )t is im"ortant to remember that even i# yo$ have a signed contract (ith a R$ssian
#irm, it may not be (orth m$ch. R$ssians have a di##erent vie( o# contracts than 8esterners
and see contracts more as a statement o# intention than a #ormal, morally binding obligation
(ith "enalties. R$ssian b$siness la(, (hile im"roving, is still not so"histicated eno$gh to deal
(ith s$its stemming #rom bro,en contracts. R$ssian b$siness ethics are still very m$ch in a
develo"mental stage. )n R$ssia, 0e!tra7legal2 "rocesses are more the norm than legal
reg$lations.
ME9)CO. Contracts are more a matter o# "ersonal hono$r than a com"any commitment.
:a(yers are $seless in trying to gain com"liance, (hich rests more on a signer1s "ersonal
ethics rather than some over7arching "rinci"le o# b$siness ethics. &h$s, i# the "erson (ho has
signed a contract sho$ld change +obs, dro" dead or emigrate, yo$ may be le#t holding a
relatively (orthless "iece o# "a"er. )n s$ch a case, re7negotiation (o$ld be e!"ected.
Especiall# in international "usiness, these differences are extremel# important. 4 compan# that
i&nores or underestimates the $ariet# of ethical standards in different parts of the orld mi&ht confront
extremel# difficult challen&es, hich sometimes lead to failure, as the next to cases sho.
ITALIAN TAX MORES
&he )talian #ederal cor"orate ta! system has an o##icial, legal ta! str$ct$re and ta! rates +$st as
the U.S. system does. 3o(ever, all similarity bet(een the t(o systems ends here.
&he )talian ta! a$thorities ass$me that no )talian cor"oration (o$ld ever s$bmit a ta! ret$rn
(hich sho(s its tr$e "ro#its b$t rather (o$ld s$bmit a ret$rn (hich $nderstates act$al "ro#its
by any(here bet(een ;< "ercent and =< "ercent6 their ass$m"tion is essentially correct.
&here#ore, abo$t si! months a#ter the ann$al deadline #or #illing cor"orate ta! ret$rns, the ta!
a$thorities iss$e to each cor"oration an 0invitation to disc$ss2 its ta! ret$rn. &he "$r"ose o#
this notice is to arrange a "ersonal meeting bet(een them and re"resentatives o# the
cor"oration. At this meeting, the )talian reven$e service states the amo$nt o# cor"orate income
ta! (hich it believes is d$e. )ts "osition is develo"ed #rom both "rior years1 ta!es act$ally "aid
and the c$rrent year1s ret$rn6 the amo$nt (hich the ta! a$thorities claims is d$e is generally
several times that sho(n on the cor"oration1s ret$rn #or the c$rrent year. )n short, the
cor"oration1s ta! ret$rn and the reven$e service1s stated "osition are the o"ening o##ers #or the
several ro$nds o# bargaining, (hich (ill #ollo(.
&he )talian cor"oration is ty"ically re"resented in s$ch negotiation by its commercialista a
#$nction that e!ists in )talian society #or the "rimary "$r"ose o# negotiating cor"orate -or
individ$al. ta! "ayments (ith the )talian ta! a$thorities. &h$s, the management o# an )talian
cor"oration seldom, i# ever, has to meet directly (ith the )talian reven$e service and "robably
has a minim$m a(areness o# the details o# the negotiation other than the #inal settlement.
5oth the #inal settlement and the negotiations are e!tremely im"ortant to the cor"oration,
the ta! a$thorities, and the commercialista. Since the ta!7a$thorities ass$me that a cor"oration
al(ays earned more money this year than last year and never has a loss, the amo$nt o# the
#inal settlement, i.e., cor"orate ta!es that a com"any (ill act$ally "ay, becomes, #or all
"ractical "$r"oses, the #loor #or the start o# ne!t year1s negotiations. &he #inal settlement also
re"resents the amo$nt o# reven$e the )talian government (ill collect in ta!es to hel" #inance
the cost o# r$nning the co$ntry. 3o(ever, since large amo$nts o# money are involved and t(o
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individ$als having vested "ersonal interests are cond$cting the negotiations, the amo$nt o#
bustarella ty"ically a s$bstantial cash "ayment 0re'$ested2 by the )talian reven$e agent #rom
the commercialista $s$ally determines (hether the #inal settlement is closer to the
cor"oration1s original ta! ret$rn or to the #iscal a$thority1s original negotiating "osition.
8hatever b$starella is "aid d$ring the negotiation is $s$ally incl$ded by the commercialista
in his l$m"7s$m #ee 0#or services rendered2 to his cor"orate client. )# the #inal settlement is
#avo$rable to the cor"oration -and it is the commercialista1s +ob to see that it is., then the
cor"oration is not li,ely to com"lain abo$t the amo$nt o# its commercialista1s #ee, nor (ill it
ever ,no( ho( m$ch o# that #ee (as re"resented by b$starella and ho( m$ch remained #or
the commercialista as "ayment #or his negotiating services. )n any case, the ta! a$thorities (ill
recogni>e the #$ll amo$nt o# the #ee as a ta!7ded$ctible e!"ense on the cor"oration1s ta! ret$rn
#or the #ollo(ing year.
Abo$t ?@ years ago, a leading American ban, o"ened a ban, s$bsidiary in a ma+or )talian
city. At the end o# its #irst year o# o"eration, the ban, (as advised by its local la(yers and ta!
acco$ntants to #ile its ta! ret$rn 0)talian7style2, i.e., to $nderstate its act$al "ro#its by a
signi#icant amo$nt. 5eing on his #irst overseas assignment, the American general manager o#
the ban,, re#$sed to do it. 3e considered it dishonest and inconsistent (ith the "ractices o# his
"arent com"any in the United States.
Abo$t si! months a#ter #illing its 0American7style2 ta! ret$rn, the ban, received an 0invitation
to disc$ss2 notice #rom the )talian ta! a$thorities. &he ban,1s general manager cons$lted (ith
his la(yers and ta! acco$ntants (ho s$ggested him to hire a commercialista. 3e re+ected this
advice and instead (rote a letter to the )talian reven$e service not only stating that his #irm1s
cor"orate ret$rn (as correct as #iled, b$t also re'$esting that they in#orm him o# any s"eci#ic
items abo$t (hich they had '$estions. 3is letter got no re"ly.
Abo$t si!ty days a#ter receiving the initial 0invitation to disc$ss2 notice, the ban, received a
#ormal ta! assessment notice calling #or a ta! o# a""ro!imately three times that sho(n on the
ban,1s cor"orate ta! ret$rn6 the ta! a$thorities sim"ly ass$med the ban,1s original ret$rn had
been based on generally acce"ted )talian "ractices, and they reacted accordingly. &he ban,1s
general manager again cons$lted (ith his la(yers and ta! acco$ntants (ho again s$ggested
he hire a commercialista (ho ,ne( ho( to handle these matters. U"on learning that the
commercialista (o$ld "robably have to "ay b$starella to his reven$e service co$nter"art in
order to reach a settlement, the general manager again chose to ignore his advisors. )nstead,
he res"onded by sending the )talian reven$e service a chec, #or the #$ll amo$nt o# ta!es d$e
according to the ban,1s American7style ta! ret$rn, even tho$gh the d$e date #or the "ayment
(as almost si! months hence6 he made no re#erence to the amo$nt o# cor"orate ta!es sho(n
on the #ormal ta! assessment notice.
Ninety days a#ter "aying its ta!es, the ban, received a third notice #rom the #iscal
a$thorities. &his one contained the statement, 08e have received yo$r cor"orate ta! ret$rn #or
?A77 and have determined that the lira e'$ivalent o# BC million o# interest "aid on de"osits is
not an allo(able e!"ense #or #ederal ta! "$r"oses. Accordingly, the total ta! d$e #or ?A77 is lira
9.2 Since interest "aid on de"osits is any ban,1s largest single e!"ense item, the ne( ta!
assessment (as #or an amo$nt many times larger than that sho(n in the initial ta! assessment
notice and almost #i#teen times larger than the ta!es (hich the ban, had act$ally "aid.
&he ban,1s general manager (as $nderstandably very $"set. 3e immediately arranged an
a""ointment to meet "ersonally (ith the manager o# the )talian reven$e service1s local o##ice.
Shortly a#ter the start o# their meeting, the conversation (ent something li,e thisD
GENERA: MANAGERD 0Yo$ can1t really be serio$s abo$t disallo(ing interest "aid on
de"osits as a ta! ded$ctible e!"ense.2
)&A:)AN REEENUE SERE)CED 0%erha"s. 3o(ever, (e tho$ght it (o$ld get yo$r attention.
No( that yo$1re here, shall (e begin o$r negotiationsF2
)n the end, the ban, (as #orced to "ay ta!es sho(n on the original ta! assessment, and
the American manager (as recalled to the United States and re"laced.
."$iousl#, the contempt of the 4merican mana&er for the 7talian tax mores pro$ed to "e a $er#
"ad idea for the "usiness. 3e$ertheless, if e compare the ethics of the 4mericans and 7talians
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in their tax pa#ments, fe people ill hold the# are e!uall# +ustified, +ust as sha-in& hands or
ta-in& a "o are e!uall# $alid forms of meetin& someone. Perhaps such a radical difference
"eteen 4mericans and 7talians is not a "i& surprise. There are so man# important differences
"eteen the to cultures. Comparin& the 4merican and the British cultures, one mi&ht expect
to see less radical differences. 4fter all, the 4mericans are the descendants of the British
colonists. 3e$ertheless, the next case ill surprise us, ma-in& e$en stron&er the case for
cultural and ethical relati$ism.
FCUK GOES INTERNATIONAL
&he UG #ashion retail chain 4rench Connection e!"erienced considerable commercial s$ccess
in the highly com"etitive UG high street d$ring the late ?AA<s and early H<<<s. As #o$nder and
CEO Steven Matts has claimed, one o# the ,eys to its s$ccess in the UG has laid in the #irm1s
aggressive advertising cam"aign, establishing the acronym #c$, and its connotative meaning
at the core o# their slogans.
&he fcuk slogan a""ears to a""eal to 4rench Connection1s target a$dience o# yo$ng
cons$mers and the re"eated criticism o# their advertising cam"aigns by the Advertising
Standards A$thority -ASA. in the UG has only boosted the 0na$ghty2 image o# the brand. )n the
co$rse o# H<<?, 4rench Connection not only e!"anded its "rod$ct range into cosmetics and
drin,s, b$t also made a #$rther move to(ards e!"anding its international b$siness.
One o# the main target mar,ets #or 4rench Connection has been the USA. )n their e##ort to
establish a global brand, the com"any has $sed the same mar,eting cam"aigns $sed in the
UG and #aced considerable "roblems. Even in more liberal "laces, s$ch as Ne( Yor,, San
4rancisco or :os Angeles, "$blic o$trage (as stirred $" by the fcuk cam"aigns. &h$s, #or
instance, some o# Ne( Yor,1s ta!i drivers re#$sed to have the advertisement on their cabs.
Earlier on, the com"any had similar reactions in Singa"ore.
Steve Rabos,y, the chie# creative o##icer o# the advertising #irm Saatchi I Saatchi in :os
Angeles, said o# the iss$eD 0&he "roblem over here Jin the USAK is it is going to get a lot o#
censorshi". &his society is not as o"en as the UG. )# fcuk goes o$tside Ne( Yor, and San
4rancisco, it co$ld r$n into "roblems. &hings are very "olitically correct over here right no(.
&he entertainment ind$stry is being "ress$red to c$t bac, on violence and n$dity, and
advertising is "art o# that.2
&he ris,s o# this "rovocative cam"aign are also boosted by the di##erent legal #rame(or,s
in the UG and the USA. 8hereas 4rench Connection only #aces one central a$thority, the
ASA, in the UG, censorshi" o# advertising in the USA is the res"onsibility o# local a$thorities.
Altho$gh in the initial stages o# the cam"aign they had no con#licts (ith s$ch bodies in Ne(
Yor, or San 4rancisco, e!"anding their b$siness to Salt :a,e City or Atlanta co$ld "rovo,e
di##erent reactions.
&he fcuk case sho(s that moral val$es and c$lt$ral norms di##er signi#icantly across the
globe and that cor"orations have to be very care#$l in toning their comm$nications to the local
s"eci#ics. )n the event, 4rench Connection decided to r$n their "rovocative &E cam"aigns only
on selected US stations s$ch as M&E, (hich directly #oc$ses on their target a$dience o# yo$ng
cons$mers.
Universalism
Cultural and ethical relati$ism has also its ea- points, su"+ect to criticism. 4nthropolo&ists
and sociolo&ists ha$e documented the fact that people in different cultures, as ell as people
ithin a &i$en culture, hold di$er&ent moral $ies on particular issues. The ancient 5ree-s did
not "elie$e that infanticide as immoral, althou&h e "elie$e that it is. (ome mem"ers of our
societ# "elie$e that a"ortion is immoral, and others "elie$e that it is morall# permissi"le. These
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differences are examples of trans-cultural and intra-cultural relati$ism. 9oe$er, sa#s De
5eor&e, 0/e should distin&uish hat is often called cultural relati$ism, hich is descripti$e,
from ethical relati$ism, hich is a normati$e position.1 7ndeed, this is a $er# important
distinction. %acts pro$e that different cultural communities and different historical a&es ta-e
$arious $ies upon ethical standards. This is the "asic idea of cultural relati$ism, &rounded on
descriptive sociolo&ical and anthropolo&ical research. But ethics is primaril# a normative
approach of hat people should do ri&ht or ron&. That $arious cultures define moral decenc#
in different a#s is a fact, that all the definitions of moral decenc# are e!uall# $alid is !uite
another matter. 4ccordin& to Des:ardins and 2cCall, 0cultural relativism ac-noled&es the
fact that cultures disa&ree a"out man# "eliefs and $alues. 7f this is all that ethical relati$ism
in$ol$es, there ould "e little cause for orr#. But ethical relati$ism is not +ust this descripti$e
claim, it is a normati$e $iepoint that claims there can "e no o"+ecti$e or rational standards "#
hich e can resol$e disputes and disa&reements.1
7ndeed, cultures differ in their moral practices. 4s anthropolo&ist 6uth Benedict illustrates in
Patterns of Culture, di$ersit# is e$ident e$en on those matters of moralit# here e ould expect to
a&ree;
8e might s$""ose that in the matter o# ta,ing li#e all "eo"les (o$ld agree on condemnation.
On the contrary, in the matter o# homicide, it may be held that one ,ills by c$stom his t(o
children, or that a h$sband has a right o# li#e and death over his (i#e or that it is the d$ty o# the
child to ,ill his "arents be#ore they are old. )t may be the case that those are ,illed (ho steal
#o(l, or (ho c$t their $""er teeth #irst, or (ho are born on 8ednesday. Among some "eo"les,
a "erson s$##ers torment at having ca$sed an accidental death, among others, it is a matter o#
no conse'$ence. S$icide may also be a light matter, the reco$rse o# anyone (ho has s$##ered
some slight reb$##, an act that constantly occ$rs in a tribe. )t may be the highest and noblest
act a (ise man can "er#orm. &he very tale o# it, on the other hand, may be a matter #or
incred$lo$s mirth, and the act itsel#, im"ossible to conceive as h$man "ossibility. Or it may be
a crime "$nishable by la(, or regarded as a sin against the gods.
.ther anthropolo&ists point to a ran&e of practices considered morall# accepta"le in some societies
"ut condemned in others, includin& infanticide, &enocide, pol#&am#, racism, sexism, and torture. (uch
differences ma# lead us to !uestion hether there are an# uni$ersal moral norms or hether moralit# is
merel# a matter of 0cultural taste.1
E$en thou&h the $ariet# of moral practices in time and space is an undisputa"le fact, most ethicists
re+ect the theor# of ethical relati$ism as normative approach. (ome claim that hile the moral practices
of societies ma# differ, the fundamental moral principles underl#in& these practices do not. %or
example, in some primiti$e societies, -illin& one<s parents after the# reached a certain a&e as common
practice, stemmin& from the "elief that people ere "etter off in the afterlife if the# entered it hile still
ph#sicall# acti$e and $i&orous. /hile such a practice is unaccepta"le in our societ#, e ould a&ree
ith these societies on the underl#in& moral principle ' the dut# to care for parents. (ocieties, then,
ma# differ in their application of fundamental moral principles "ut a&ree on the principles.
2oreo$er, some ar&ue, it ma# "e the case that some moral "eliefs are culturall# relati$e hereas
others are not. Certain practices, such as customs re&ardin& dress and decenc#, ma# depend on local
custom, hereas other practices, such as sla$er#, torture, or political repression ma# "e e$aluated
accordin& to uni$ersal moral standards and pro$ed ron&, despite man# other differences amon&
cultures. (impl# "ecause some practices are relati$e does not mean that all practices are relati$e. The
prohi"ition of incest, for example, is a &ood proof of that.
.ther philosophers critici)e ethical relati$ism "ecause of its implications for indi$idual moral
"eliefs. These philosophers assert that if the ri&htness or ron&ness of an action depends on a societ#<s
norms, then it follos that one must o"e# the norms of one<s societ# and to di$er&e from those norms is
to act immorall#. This means that if 7 am a mem"er of a societ# that "elie$es that racial or sexist prac-
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tices are morall# permissi"le, then 7 must accept those practices as morall# ri&ht. But such a $ie
promotes social conformit# and lea$es no room for moral reform or impro$ement in a societ#.
%urthermore, mem"ers of the same societ# ma# hold different $ies on practices. 7n all the de$eloped
countries, as ell as in 6omania, a $ariet# of moral opinions exists on matters ran&in& from animal
experimentation to a"ortion, euthanasia, clonin&, and so on. /hat constitutes ri&ht action hen social
consensus is lac-in&=
Perhaps the stron&est ar&ument a&ainst ethical relati$ism comes from those ho assert that
uni$ersal moral standards can exist e$en if some moral practices and "eliefs $ar# amon& cultures. 7n
other ords, e can ac-noled&e cultural differences in moral practices and "eliefs and still hold that
some of these practices and "eliefs are morall# ron&. The practice of sla$er# in pre-Ci$il ar >. (.
(ociet# or the practice of apartheid in (outh 4frica or the total su"ordination of omen to men in the
fundamentalist 7slamic countries is ron& despite the "eliefs of those societies. The treatment of the
:es in 3a)i societ# or the repression of the political dissidents in the communist re&imes is morall#
reprehensi"le re&ardless of the moral norms of 3a)i or Communist societies. %or these philosophers,
ethics is an in!uir# into ri&ht and ron& throu&h a critical examination of the reasons underl#in&
practices and "eliefs. 4s a theor# for +ustif#in& moral practices and "eliefs, ethical relati$ism fails to
reco&ni)e that some societies ha$e "etter reasons for holdin& their $ies than others.
This perspecti$e encoura&es multinational companies to adhere to dou"le standards in their
international operations, hich actuall# led to fre!uent press scandals, lasuits and pu"lic outra&e.
0The relati$ist must claim,1 sa# Des:ardins and 2cCall, 0there is no reasona"le and o"+ecti$e "asis for
esta"lishin& that freedom is "etter than sla$er#, democrac# is "etter than totalitarianism, heroism is
"etter than murder, and friendship is "etter than hatred. The relati$ist must claim there is no rational
ethical difference "eteen a parent ho lo$es and nurtures her child and the one ho a"uses and
murders her child. ?. . .@ These examples su&&est ho dan&erous such relati$ist conclusions can "e.1
4ll these ea- points of ethical relati$ism lead some moral philosophers to hold a uni$ersalistic
perspecti$e. 4ccordin& to uni$ersalism in axiolo&#, there must "e certain "asic $alues ' such as
honest#, &enerosit#, fairness, coura&e, etc. ' that all cultures and all historical a&es reco&ni)e. E$en
thou&h different cultures cherish and promote these $alues in $arious a#s, the# are identical in their
su"stance, "ecause the# condense a uni$ersal historical experience of man-ind. 3o societ# could "ase
on, and sur$i$e throu&h, &lorif#in& theft, murder, l#in&, cheatin&, ne&lectin& #our children, "rea-in&
promises, and so on. That is h# e should postulate the necessar# existence of uni$ersal $alues, hich
+ustif# uni$ersal moral +ud&ment. 3e$ertheless, e should a$oid the terri"le mista-e of adoptin& an
a"solutist perspecti$e, loo-in& for some &host $alues, existin& in themsel$es, "e#ond the empirical
orld, in a realm of perfect forms of "eaut#, truth, &ood, remindin& of Plato<s 7deas or 9e&el<s
4"solute (pirit. >ni$ersal $alues do not exist "# themsel$es, separate from human societ# and histor#,
hich is ala#s concrete and particular. /e must accept onl# the possi"ilit# of human race to pro&ress
indefinitel# toards more and more &eneral ethical standards, capa"le to unif# pro&ressi$el# different
cultures and ci$ili)ations around certain "asic, elementar# principles. This does not mean that cultures
and ci$ili)ations ill e$er lose their specific nature or that differences in appl#in& uni$ersal principles
under $arious circumstances ill e$er cease to exist. That is h#, in m# opinion, uni$ersalism in
axiolo&# should not "e $ieed as a positi$e metaph#sical doctrine, "ut rather as an alternati$e to the
unaccepta"le, excessi$e conse!uences of radical relati$ism.
9oe$er, e$en if e re+ect the theor# of ethical relati$ism, it must "e ac-noled&ed that the
concept raises important issues. Ethical relati$ism reminds us that different societies ha$e different
moral "eliefs and that our "eliefs are deepl# influenced "# culture. 7t also encoura&es us to explore the
reasons underl#in& "eliefs that differ from our on, hile challen&in& us to examine our reasons for the
"eliefs and $alues e hold. This is an important issue in the present &lo"al econom#, hich ma-es
ine$ita"le more and more intensi$e contacts "eteen different cultures and societies.
A
Free-market view
The free-mar-et $ie is not an ethical theor# as such, "ut man# free-mar-et ideas can
"e used in "usiness ethics.
1. It is my property and my risk, so I have the moral right to decide on it.
%or the free-mar-et supporters, propert# ri&ht is one of the most important ri&hts and, if
other ri&hts are not $iolated, it is permissi"le to use #our ri&ht B#our thin&, a"ilit#, etc.C
hate$er #ou ant. Thus, the oner of a firm has the moral ri&ht to decide upon his firm,
"ecause he is the main part# affected "# his decision. 5enerall#, if a ron& decision is ta-en,
the person ill suffer the loss. %ree mar-et punishes "ad decisions.
Example 1. 7t is permissi"le for the oner of a small firm to hire a less !ualified
relati$e in his compan# "ecause he has the ri&ht to hire hate$er he ants. 7f the decision is
ron&, he ill suffer the loss, so he is the first one interested in ta-in& a &ood decision.
Example 2. Discrimination
he Free !arket "#tomatically $#nishes %&ad% 'iscrimination B6o"ert 2urph#,
/almart and Discrimination ' excerptC
3o that eD$e come this far, itDs a simple step to pro$e that the free mar-et
automaticall# punishes E"adE discrimination. >nli-e under &o$ernment las, here there is no
chance of a &uilt# part# escapin& his or her punishment F and the punishment itself is exactl#
proportional to the se$erit# of the Eoffense.E
GetDs ta-e a concrete example. (uppose that there is an openin& for a mana&erial
position at /almart ith a salar# of HI5,JJJ. The inter$ie process has settled on to
candidates; a oman ho ould contri"ute HK5,JJJ per #ear in extra profit Bnot countin& her
salar#C to /almart, $ersus a man ho ould contri"ute onl# HKJ,JJJ per #ear.
%urther suppose that "ecause of their corporate culture, the executi$es at /almart +ust
canDt see this realit#. 7nstead, the# falsel# "elie$e that the oman ill end up !uittin& her +o"
after a fe #ears to raise a famil# F e$en thou&h she ouldnDt. /almart thus promotes the
man and lea$es the oman at her current position stoc-in& the shel$es ith cereal.
3o hat ould happen to /almart in this scenario in a trul# free mar-et= 7tDs true, no
&o$ernment +ud&e ould aard dama&es to the oman if she filed a lasuit. 9oe$er, in a
$er# real sense, /almart has "een EfinedE H5,JJJ in potential profits. 7f it had promoted the
B"etterC female applicant, its net income ould ha$e increased "# H1J,JJJ. 7nstead, its "iased
decision onl# #ields an increase in net income of H5,JJJ.
7nter$entionist critics mi&ht retort that this is hardl# an incenti$e for /almartDs oners
to put in place policies to eed out such "ias. But these same critics, in other contexts, accuse
"i& "usiness of perpetratin& all sorts of e$ils in the "lind pursuit of profit. 4re companies
illin& to outsource +o"s and sell unsafe products for mone#, "ut unwilling to stamp out
discrimination "# their mana&ers for mone#=
The stor# doesnDt end there. 7f the discrimination is se$ere enou&h, then not onl# does
/almart BstillC automaticall# EloseE the potential profits, "ut there is a lar&e opportunit# for
competitors to hire aa# its underpaid or-ers F here EunderpaidE is defined in reference to
the or-ersD actual producti$it#. %or example, if it reall# ere true that hundreds of thousands
I
of omen ere "ein& s#stematicall# underpaid "# /almart, then Tar&et and other stores could
reap an enormous ad$anta&e "# offerin& sli&ht pa# raises and inducin& them all to !uit.
7tDs true that in the real orld, thin&s are more complicated than the simple stories
a"o$e. %or example, a oman ho has or-ed 2J #ears at $arious departments in /almart
ould "e more producti$e as a mana&er at Walmart than she ould "e at Bsa#C Tar&et.
Therefore, the alle&ed &ap in her salar# ould need to "e !uite lar&e "efore it made sense for
her to sitch stores.
3onetheless, the point remains; if emplo#ees are "ein& s#stematicall# underpaid in a
firm, there is an automatic incenti$e for other companies to "id them aa#. 2oreo$er, in the
lon& run new or-ers ill floc- to the firms that ha$e a reputation for fair promotion and
salar# practices. 7f it reall# ere the case that omen at /almart e$entuall# hit a &lass ceilin&,
then #oun& omen considerin& a career in retail ould need a hi&her startin& salar# from
/almart to con$ince them to or- there rather than for a competitor.
Bsee http;LLmises.or&Ldail#L58MAL/almart-and-Discrimination for the hole article, a
t#pical free-mar-et approach of discriminationC.
'e(ata(le cases
a. " con)lict o) rights
Example; 7f the potential emplo#ees has a ri&ht to non-discrimination, onerDs ri&ht not
to hire someone could enter into conflict ith the applicantDs ri&ht to non-discrimination.
2. Freely agreed, so morally correct *right-(ased perspective+.
7f to parties free and completel# informed a&ree to a certain transaction, the result is
fair and do not $iolate the ri&hts of the parties. (o, 7t is morall# permissi"le for "oth parties to
tr# to maximi)e their ad$anta&es.
Example; 4n# mar-et price is fair if the "u#er and the seller are ade!uatel# informed
a"out the characteristics of the products Bor could ac!uire this informationC. The to parties
ri&htl# ant to maximi)e their ad$anta&es. %or instance, the landlord ant to char&e the
hi&hest rent possi"le, exactl# in the same a# as the renters ant to pa# as little as possi"le.
Exceptions
a. ,ot in)ormed consent. 7n case in hich one of the parties conceals an important
information to the other Binformation as#mmetr#C, the result ill not "e fair.
Example; 7f the seller conceals a hidden defect to the "u#er, the resulted price ill not
"e fair.
(. ,on-competitive market. Competition pro"lems Bmonopol#, collusionC can lead to
unfair prices.
Example; The prices on pharmaceutical mar-et are unfair Btoo hi&hC "ecause of the
pattern ri&hts aarded "# &o$ernment.
c. $ersons who are not )#lly responsi(le. 4 person ho is not full# responsi"le
cannot full# consent to do somethin&.
Example; Children are not full# responsi"le for their actions, so the# cannot full#
consent to or- at a certain a&e.
'e(ata(le cases
a. -ery di))erent negotiation powers. There are man# case in hich one of the parties
in ne&otiation has much more poer than the other. 7n this case, man# people ould consider
that to use all this poer Bto ta-e ad$anta&e of, to exploit the ea- partC is unethical, "ut the
K
free-mar-et supporters ar&ue that this is permissi"le, "ecause in all ne&otiations one of the
parties is more poerful and it is natural to tr# to exploit his ad$anta&e.
Example; 7t is unethical, critics of a free-mar-et $ie ould sa#, to exploit the
emplo#eesD ur&ent need for a +o" in $er# poor countries. %or a free-mar-et supporter this is
permissi"le. 7t is natural to ta-e ad$anta&e from #our stron& position in ne&otiation, and
emplo#ees and emplo#ers ha$e a s#mmetrical position Bemplo#ers are illin& to &i$e lo
salaries +ust the same as emplo#ees are illin& to recei$e hi&h salariesC.
.ther cases; price &ou&in& ' ta-in& ad$anta&e of customers in need durin& disasters
Bsee http;LLmises.or&Ldail#L15M8 for a free-mar-et approach of price &ou&in&C, or ta-in&
ad$anta&e from $ital &oods Bsee "eloC.
:. 2eadocroft, The Ethics of the Market Bpp. MK-MMC
The fact that success in the mar-etplace is "ased upon people<s a"ilit# to satisf# the
needs of others is an important component of the ethical case for the mar-et. Profitin& from
other people<s needs is a feature of an# economic s#stem in hich people recei$e recompense
for pro$idin& the &oods and ser$ices that others ant. /hile some ha$e claimed that a
distinction should "e dran "eteen those needs that are properl# met in the mar-etplace and
those that are not, it is not clear h# it is morall# accepta"le for supermar-ets and farmers to
profit from people<s need for food, for example, "ut not for healthcare professionals to profit
from people<s health needs. .r is it to "e su&&ested that doctors and nurses ho do not or-
for free or for a su"sistence a&e, are exploiters of the sic- and need#= .f course, different
indi$iduals do ha$e different health needs throu&h no fault of their on, "ut in this sense
healthcare is simpl# an example of an insura"le ris- li-e man# others.
.. he )reely agreed transactions increase the total #tility *#tility-(ased
perspective+.
4 certain transaction that is freel# a&reed increases the utilit# of "oth parties Bis
mutuall# "eneficialC, "ecause otherise it ould ha$e not "een a&reed "# "oth parties. (o,
from an utilitarian perspecti$e, the transaction is morall# ri&ht.
M
'e(ate iss#es
Relativism
1. 7n the 1MIJs, a ne le&islation on pesticides issued in >nited (tates. 4 lot of pesticides ere
restricted "# these las. 4merican companies continued to export the pesticides that had "een
restricted, such as that called DDT. These ere shipped to less de$eloped countries, here the
re&ulations ere less se$ere, such as 7ra! and E&#pt, and used "# farmers ho did not understand the
dan&ers. The pesticide companies completel# respected the le&islation of countries hich recei$ed the
pesticides. 9oe$er, a lot of people ere seriousl# affected "# this. 4re the 4merican companies
responsi"le for this=
2. 7n (audi 4ra"ia fast-food restaurant chains are le&all# o"li&ed to introduce &ender-
se&re&ated seatin& and entrances. (hould the# accept and o"e# to this la= 4pproach the pro"lem from
a relati$ist and a uni$ersalist point of $ie.
8. 7n (outh 4frica, durin& the 4partheid re&ime, a se&re&ator# and discriminator# le&islation
a&ainst 4frican people as in force. 2an# people ar&ued that the man# 4merican companies operatin&
there should lea$e the countr#. /hat should a compan# that operates in (outh 4frica do from an ethical
relati$ismLuni$ersalism point of $ie=
4. 7n man# countries "ri"er# is an accepted practice, onl# $er# seldom penali)ed. 7t is $er#
difficult for "i& forei&n companies that do "usiness in these countries to ma-e profit ithout "ri"in& the
officials. 7n these conditions, should e accept practice of "ri"in&= 4pproach the pro"lem from a
relati$ist and a uni$ersalist point of $ie.
5. 7n some countries child la"or is a le&al practice and some people could ar&ue that this
practice could help $er# poor families to sur$i$e. (hould the companies accept child la"or in their
su"sidiaries in de$elopin& countries=
Free-market view
A. 4fter a disaster, man# $endors stron&l# increase the prices of some commodities, &oods and
ser$ices that "ecome necessar# for people, such as &as, fuel, food, hotel accommodation. This practice,
called 0price-&ou&in&1 is considered stron&l# immoral.
I. Can e consider that some products, for instance to"acco, are harmful for the societ# as a
hole and so unethical "# themsel$es.
K. The CE.Ds salaries are considered "# man# people unethicall# hu&e, "# comparison to the
or-ersD salaries.
M. 4 chemical compan# respects the en$ironment norms. 9oe$er, its CE. is orried a"out
the ne&ati$e impact of compan#<s operations on the en$ironment. Therefore, he decides to "u# a $er#
expensi$e pollution filter and to co$er the cost "# increasin& the price of compan#<s products. /hat do
#ou thin- a"out the CE.<s decision=
1J. 2ost of the companies re!uire emplo#ees to si&n a contract "# hich the# &i$e up patents
o"tained for in$entions made "# him hile emplo#ed. 7s this incorrect from a moral point of $ie=
11. 2ost of the multinational companies &i$e loer salaries in loer de$eloped countries than
in de$eloped countries. 7s this practice unethical=
12. Do #ou thin- that desi&nin& and sellin& lo-!ualit# products is an unethical practice=
1