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GRk SHAMCOLLEGE

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ETHICAL BUSINESS ~ EUROPE

Thee lec~res given by

THE ~W.PROFESSOR JACK MAHO~Y SJ MA DD FRSAMercers’ School Memorial Professor of Commerce

LecWre 1-17 October 1991MOW ~SOL~S W CW~ ~LATIWSM

Lec~re 2-24 October 1991m SOCIAL C~TER

Lechre 3-31 October 1991FOR~SS E~OPE?

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GRESHAM COLLEGE

Policy & Objectives

A independently finded educational institution,Gresham College exists

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to continue the free public lectures which havebeen given for 400 years, and to reinterpret the‘new learning’ of Sir Thomas Gresham’s day incontemporary terms;

to engage in study, teaching and research,particularly in those disciplines represented bythe Gresham Professors;

to foster academic consideration of contemporaryproblems;

to challenge those who live or work in the City ofLondon to engage in intellectual debate on thosesubjects in which the City has a proper concern;and to provide a window on the City for learnedsocieties, both national and international.

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Gresham College, Barnard’s ti Hall, Holbom, London ECIN 2HHTel: 02078310575 F=: 02078315208

e-mail enquWles@gesham. ac.ti

GRESW COLLEGE

~REE PUBLIC LEWRES

on

E~CAL BUSINESS IN EUROPE

by me Revd Professor Jack Mahoney w w DDH

Mercers’ School Memorial Professor of Commerce at Gresham College

delivered at Gresham College, Barnar&s Iq hndon, October 1991

I. Moral Absolutes and Cultural Relativism

~. me Social Charter

~. Fortress Europe?

I

Moral Absolutes and Cultural Relativism

Welcome to this new series of Gresham lectures onbusiness etilm, and let me introduce myse~ and,for some of you perhaps, Gresharn CoUege. ~mJack Mahoney and my regdar occupation is atfigs CoUege in the Strand as F D Maurice Pro-fessor of Moral and Social Theology, or more pop-ularly, of Christian Ethics. I’m *O Director of theBusiness EthiG Research Centre at figs CoUegewhich I founded as a pioneering centre of businessethics ~mBritain five years ago. And it is in that ca-pacity as a business ethicist that I was appointedfour years ago to the Mercers’ School MemorialChair of Commerce at Gresham College with theremit to develop the subject of business etiles inthe Chy and ekewhere. As a Gresharn Professor Ihave now given seven series of lunchtime lectureson various aspects and topics in business ethim, skof which are still avafiableas transcripts.

This autumn sees a major development in the workand activities of Gresham CoUege with our settle-ment here - at last - in our new premises inBarnards Inn; and the future of our efitence as aCity postgraduate institution was wefl eWressedlast Tuesday evening by our Provost, Prof PeterNailer, in his Inaugurating Lecture, ‘New Chal-lenges for the New Century’. Apart from the sat-isfaction involved in giving Gresham College now a

Iod habitation as weU as a name which we hopewill raise its profile in the Ci~s awareness and in-terest, the move from the Church Hd of St Ed-mud the fig where I have lectured for the pastfour years has for me two particular consequences.The fnst is that when people ask me what I do inthe City I shd no longer be able to say that I lec-ture to the passing trade in hmbard Street; d-althoughI am detightet and gratified, to see thatsome of the friends I made during those years havemade the move to Bamards Inn with me.

The other consequence for me is that, in a sense, Ihave come home, be=use the premises which wenow occupy housed unti the 1950s the Mercers’‘School, of which at least some Old Mercers visitingthe premises this week s~ retain rather vividmemories - partictiarly, it seems, of the schooldinners and the Heatiaste#s study! In this settingI now feel with more immediacy the importantwork which I am invited to undertake, consequenton the decklon of the Old Mercers to perpetuatethe academic tradition and contribution of theirSchool in the City by founding a Memorial Chair inCommerce. And I am even further encouraged toe~lore, I hope with your help, the various ways,new as weU as traditional, in which interest in, andconcern for, the ethical quality of the conduct of

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Ethjcal Busjness in Europe, page 2

business, particularly in the City, maybe stimulatedand pr~mnted.

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Let me now turn to address the subject of this newseries of Gresham Lectures, ‘Ethid Business inEurope’, and in particular of this frost lecture in theseries, ‘Moral Absolutes and Cdturd Relativism’.The tide is a somewhat forbidding one, and per-haps the packaging of my product might have beenimproved. For what I redy want to explore is howdiffering ctitures may tiuence moral and ethidperceptions, attitudes and behaviour; and whethermy conclusions on that question may throw somefight on particdar ethid chdenges, and perhapsdiffictities, which may be involved in conductingbusiness on a European scale.

The issue of culture and ethim is seen at its mostobvious on the international scene, and particularlyby mdtinationd and international companies,where the mores and culture of different parts ofthe ~obe appear to give rise to markedly differentways of doing things, or a marked difference in thethings which are done, or not done. The problem isone which has occupied United States companies inparticular, giving rise to questions of whether in re-quiring that business in some overseas markets beconducted according to the standards prevtig inthe home market, or at head office or its equiva-lent, they are in fact guilty of some form of ‘ethidimperi~m’, or of imposing their standards of con-duct on other ctitures without warrant. The prob-lem is compounded if companies or individu~which adopt or conform more to the perceivedstandards prevtiig in overseas m=kets are thenspotlighted or accused or pressurised at home forbehatiour which is considered at home downrightimmoral and unethical.

The most obvious group of such ethical dilemmmappears to be connected with bribery, commissions,specird fees, or whatever other euphemisms onemay come up with. And yet there are other topimwhich can give rise to serious concern. SouthAfrica and apartheid has been untd recently one ofthe most contentious. But one can think also ofother Iod forms of cultural discrimination,whether of sex or caste or age, as well as of culturallack of concern for environmental and ecological is-sues, working conditions, and consumers’ and thepublic’s health and safety. One can dso think oftraditions of governmental neglect or collusion inthese and other areas.

The often bewildering disparity of concerns andinterests which can he en~~l~~ered he~e~~ ~~ff~~.

ent cultures gives rise in the minds of many peopleto the conclusion that cultural relativism necessaryentails ethical relativism, and that anfihing like ab-solute standards of behaviour or conduct is a mfihor a chimera. mat is right or wrong in aparticdar society is what that society decides, eitherexplicitly or irnpficitly, is right and wrong for it.Consequently, other ethical standards mot beimported, far less imposed, from outside. After ~isn’t the maxim generdy accepted, ‘men inRome, do as the Remans do’? (I shfl return toItaly later).

Attractive and plausible as tils view of outrightethical relativism may be as a matter of experienceand resulting from reflection on that experience, it&o suffers from various difficulties. For one thing,it makes a nonsense of any serious discussion ofethics or mortity. It makes dl ethicrd argumentat-ion simply a matter of swapping reminiscences orexperiences, with no possibfi~ of arriving at com-mon ground or trying to fmd a bedrock of sharedethicrd values, such as is irnpfied, for instance, inthe doctrine of human rights, which the PrimeMinister was commending last week to such a dis-parate collection of cultures as the Commonwealth.

For another, it is important not to confuse ethidrelativism with ethid tolerance. Many peoplerightly react to an attitude of moral dogmatism orethicrd intransigence bordering on claims to infti-btiity, particularly today as even national societiesbecome more plurtist, and as ‘live and let five’ isseen as the desirable order of the day. But notethat such tolerance is itself an ethical value, whichis prtied at least by those who belong to fiberddemocracies, and note *O that it is one which theywould We to see other societies adopt. And thisraises perhaps the most compelling argumentagainst complete ethid relativism, that it impfiesthat absolutely any form of human behaviour orany way of treating humans is conceivable asacceptable, including physical mutilatio~

infanticide, torture, and fiterdy anything eke youcare to think of. Is there no place for moralrevuhion other than as a manifestation of adifferent culture? Is it not possible to considerdiffering cultures as strong on some ethical valuesbut weak on others? And finally, the theory thatethics is purely a manifestation of a particularsociety w find no place for moral rebeh within asociety, people ~ie Wlberforce, Martin LutherKng, Ghandi, and others who set about changingthe prevailing culture and remedying certainfeatures of it by appealing to the criteria of certainsuper-cultural values.

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So much for the large-screen approach to thequestion of cdtural relativism and moral absolutes.I do not suppose any of us would expect to fmdwithin the Continent of Europe or in the EuropeanCommunity such sharp disparities as I have identi-fied. Yet perhaps it is worth drawing attention tothe fact that Europe itse~ is becoming increasin~yplurtist in the cultures which are developing therefrom other pints of the #obe, partiy byimmigration and perhaps partly dso by businesstransplants; and that this must have an increasingimpact on any claims to cdturd homogeneitywithin Europe as it has developed historica~y.However, not to make my task too difficult, is itpossible to discern within the EC various culturaldifferences which would give rise to dtiferingethid perceptions and ways of doing business?And if so, how might one react to them?

A major survey of European value systems was un-dertaken in the 1980s, and has recently been re-peated. And one study which resulted was that ofHarding and PWps, Contrasting Values in WesternEurope (Macmillan 1986). The survey was of indl-viduals and their attitudes to such areas of life asreli@on, pofitics, the family and work, and it did notaddress itse~ particdarly to business practices orbehaviour. Nevertheless, perhaps the general con-clusions of Harding and P~ps are useful as beingindicative of similarities and differences of generalethid attitudes between the different Europeancountries. Their conclusion is that there is a no-table level of agreement across Europe in percep-tions of mordty, and a high common level of ac-ceptance of the broadly tradition moral values,

#but that there are also some comparatively slightnational differences in the degree of strictness ortoler~ce with which those values are applied.

I Thus, the authors conclude that in Europe thegreatest tolerance in the area of personal and sex-urd morrdi~ is shown by the Danes, followed by theDutch and the French. They also conclude that theFrench and the Dutch show a greater tolerancethan other European countries in matters to dowith se~-interest (including lying, cheating and dis-honesty) and legal compliance. By contrast, North-ern Ireland and Italy appear to take a stricter lineon matters of self-interest and legality, Belgium andSpain show less strictness in the area of self-inter-est, and West Germany and Britain reflect the Eu-ropean average in their attitudes to behaviour insuch areas.

Perhaps at this stage I should recall the observationof Sir Robin Day after taking a poll of his audienceonce at ‘Question Time’ on the BBC, ‘It doesn’t

prove anything, but it’s very interesting’! However,are national characteristics of the kind I have men-tioned at play, or identifiable, in the attitudes ofthese various countries to developments in the Eu-ropean Community as a common market? I do notneed to chronicle here the history and difficultiesinvolved in developing and implementing the ideaof a European market without intemd frontiers inwhich there shodd be free passage for goods, ser-vices, capital and people. Nor the controversiesover harmonizing or recognisiig national standardson a Continental sale. What may be relevant toour consideration is the finding of ~e Economistof 22 June 1991 that of the 126 sin@e-market lawsto date, ody 37 have been passed for implementa-tion by d its members, with Denmark at the topwith 107, France 103, Britain 99, Spain 83 and Italy52.

But, of course, that is not the whole picture, be-cause it is one thiig to pass a European law at thenational level and quite another to implement orenforce it, as the stream of complaints to the ECclearly indicates, and as another Economist study ofthe previous year had shown (23 June 1990) in pre-senting a European beauty-contest marked out often. For according to that, enthusiasm for devel-oping the European. community was not invariablyaccompanied by conscientiousness in arrying outEC decisions. Britain, for instance, was consideredlow on enthusiasm but higher in implementationthan others professedly more enthusiastic. By con-trast, Italy among the highest in favour ofEuropean development was lowest in actudyputting it into practice. And other countriesoccupied varying positions beween these No.

One commentator on the relative performance ofthe European partners (Alan Butt Philips, fimes 5Dec 1989) suggests various factors which should betaken into account, including a propensity of somestates to rush their fences eagerly in Brussels, ornot possessing the administrative and pofitid re-sources at home to detiver on their undertakings, orperhaps most worryin~y, not possessing the potiti-eal will to carry through what they cheerfully un-dertake.

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Does this necessarily mean that delinquent statesare immorrd, or just different in their ethical per-ceptions of right md wrong? What it might indi-cate is that they do subscribe to various individudmoral values, as do dl the others, but perhapswithin a cluster of values or a ~it of priorities whichdiffers from one country and culture to another.There is, for instance, a mostly anecdotal view - so

Ethical Business in Europe, page 4

far as I am aware - that the attitude to law, and re-~nect fnr !~wj & Nn~thern. E!lrnnean lands is mnre~-.---.serious and more fiterally m~~ded than it is incountries closer to the Mediterranean. If that is so,it can e~lain some disparities, not necessarily interms of ctiate, but perhaps more in historidterms of Latin rather than Germanic influence.Perhaps dso it might be seen as a manifestation ofCathohc as contrasted with Protestant work ethictraditions, or at least of temperamental Northernearnestness compared with Southern nonchalance.And this may meq if there is any truth in suchtiturd contrasts, not that Southern Europeancountries are less moral in their attitude to law, butthat they have a different understanding of thefunction and role of law in society. If so, then nowonder that Brussels has problems!

Msuch comparative differences or nuances do etiston the part of various nations in their attitude tothe Aes and regulations of a common market, theanswer perhaps fies in a minim~ing approach tosuch roles and regulations, not out of despair, butout of respect for dtifering cdtures, histories andtemperaments. In pluralist Britain we have cometo this conclusion as a mark of social tolerance, andin a bid to identify what is, not the lowest commondenominator, but the. highest common factoramong differing individual and group clusters ofvalues, whether indigenous or immigrant, whichean be found and given communal weight. And thesame may well apply in the wider Europe.

In so doing we may perhaps take a lead from themarketing strategy which has developed, I under-stand, in successful European companies. At first,the idea of the ‘Euro-consumer’ or the

‘PanEuropean customer’ seemed to promise mar-velous economies of mass production comparableto that of the United States for its internrd market.But further thought and research have shown acertain sales resistance to ‘consumer convergence’and a persistence of national diversities of wishesand e~ectations, with a resulting change instrategy to more precise targeting of differentconsumer groups and the closer ttioring ofproducts to meet Iod preferences.

So perhaps ethid business in Europe shodd *Orecognise that ethidy Europe is not entirely homogeneous, although sufficiently united in its ad-herence to etild values - at least when it is on itsbest behaviour. And perhaps dso it shotid notyearn for some unattainable ethical as we~ as cul-tural homogenisation. So far as ethi= is con-cerned, perhaps we ean learn from others that ourcluster of values and our priorities are not the odyones which should be remgnised, far less imposed.And that there is a certain amount to be sai~ evenin the perception of morals, for the mti Wve ladifference.

In giving these Gresham t~ on business ethim Ihave made it a practice not to defiver a fuU-blownlecture, but to aim only at introducing my subject asa pump-primer and a prelude for discussion on thepart of, not my audience, but my e~erienced fel-low-participants. So I have aimed only to open upthis particular question of moral absolutes andcdturd relativism, rather than presume to defiverthe last word on the subject. And now I shodd bedetighted to have your reactions to what I havesaid, or even to what I might not have, but shoddhave, said.

II

me Social Chafier

One of the most contentious areas of the whole who have stocks or shares in a company but *Oproject of the Single Market or the European those who have a stake in the activities of a corn-Community, so far as the British government and pany are entitled to have their interests taken intoBritish industrialists are concerned, is the social consideration in dl the compan~s potiey and deei-area, and in particulm the idea of the Social Char- sion-making. Mat the project of the Soeid Char-ter. And yet perhaps no other area in the changes ter does is to focus that general stakeholder theo~projected for European business is more obviously specifically on the interests of European employeesconcerned with ethical issues and values. in a market and in companies which are blddlng to

become panEuropean. For what the SoUd CharterThe idea of stakeholder theory has become stan- aims to do is identi~ basic social rights and eWressdard in considering business and management those rights in European industrial relations.ethi=, and according to that theory not only those

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Ethics/ Busjness jn Europe, page 5

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The project of the Social Charter was eloquentlyoutlined by M Jacques Delors at the British TradesUnion Congress in 1988, to the strains of Fr@reJacqtes from delegates, when he spoke of the‘social &ension’ of the Common Market adcded for a ‘platform of guaranteed social rights’.And it was, of course, in a return match on theContinent in Bruges that Mrs Thatcher shortly af-terwards roundy declared in favour of dere@ationand observed that ‘We have not successful rolledback the frontiers of the State in Britain ody to seethem reimposed at a European level’. It was notsurprising, then, that the following year, December1989, when heads of government at the StrasbourgSummit formally agreed to a non-binding set ofEuropean social principles the British governmentwas the sole dissentient. Nor is it surprising thatBritish opposition has since been the most markedamong the European partners to the Social Actionprogramme of 47 items which foflowed, as we~ asto various projected d~ectives which have sincebeen emanating from the office of the Social X-fairs Commissioner, Mrs Vasso Papandreou. Andthis opposition will no doubt continue to be in evi-dence on 3rd December of this year when in theweek precedhg the Maastricht Summit ministers oflabour W be invited to sign health and safety di-rectives relating to the leave of pregnant employ-ees, and to working time.

If the Dutch have their way, they wi~ ako be askedto agree to the setting up of workers’ councils bypanEuropean companies. Untike health and safetydirectives, of course, this latter directive wi~ re-quire unanimous agreement, and it maybe that ifBritain predictably enters its veto against it, othersmay conclude that European laws in this and otherareas are more ~iely to pass if a new treaty whichis being considered extends majority voting to morethan health and safety considerations. For theconference on pofitical union is to consider threesets of treaty amendments encouraging socialpartners to produce their own agreements on in-dustrid relations, extending the ECS power to leg-islate by unanimity on minimum wages and socialsecurity, and dso extending majority voting tocover equal opportunities, information andconsultation of workers, and ‘working conditions’.

Those who are promoting the Social Charter envis-age it as harmonizing industrial relations upwards,and as timed at expressing common agreement onworking hours, including young people and nightwork; a maximum working week and mandatoryrest, equal working, employment and retirementconditions and protection for men and women, in-

cluding pregnant women, with a change in the bur-den of proof relating to discrimination; vomtiondand professional initial and ongoing training, mini-mum pay and security for all workers includingsubcontracting foreign workers; provision of socialsecurity pro rata for part-time and temporary em-ployees the freedom (though not the requirement)to join unions, to engage in collective bargainingand to strike; and the setting up of workers’ coun-cik in panEuropean companies.

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Various arguments are advanced in favour of suchsocial legislation to protect the European work-force, including the need to reduce regional dispar-ities and avoid the danger of the ‘social dumpin~ ofjobs in low-cost areas with poor pay and provisions,or the importing of cheaper labour. Such practices,if Mowed to exist or continue, wotid result in theloss of plants and jobs in more prosperous areasand reinforce the poor conditions in less prosper-ous, but more attractive, regions. Competition, it isargued, requires a level playing field so that no oneshall be at a competitive disadvantage through in-creased Iabour costs, or so that no country with ex-isting high standards will be forced on economicgrounds to lower them. It is scarcely surptilngthat the European Trade Union Confederation isfirmly in favour of a Community Charter of SocialRights, including industrial democracy, cross-frontier union links, social protection, andemployment conditions, guaranteed by legislationor co~ective agreements.

Not that the aims of all those advocating such soeidchange are necessarily altruistic. For example, theprojected stipulation that the minimum weekly restperiod of 35 hours should in principle include Sun-day, which has proved embarrassing to a disap-proving M Delors, and has been greeted with deri-sion in many quarters in a Britain wresthng withthe complexities of Sunday trading, seems to be aproduct and a particular preoccupation of theChurches and Trade Unions in Germany (meEco~jomist 19.10.91). Moreover, as we~ as endan-gering French minimum-wage laws, any move t-wards social dumping would undermine the highGerman standards in wages, working hours andworker-participation, if some German companiesdecided to re-locate or Europeanise in order toavoid them. And worker self-protection is an un-derstandable reaction to the recognised fact thatthe implementation of the Single European Act tillead in the short term to reduction of employmentby 1/2 milfion, and in the longer term to a consid-

Ethical Business in Europe, page 6

erable collapse of vulnerable companies with theirworkforces.

Development of the Social Charter is objected toon other grounds, however, than simply national ortrade union vested interests. British objections thatmaking provision for rest and materni~ under theheading of health is a subterfuge to avoid unani-mous voting raises a procedurd objection. Butmore typid of the British establishment attitude ingovernment and industry are the remarks of theDirector-Generrd of the CBI a few days ago (~mes18.10.91) that the CBI wifl pressure the British gov-ernment to veto any new treaty of Rome which en-visages accepting qufified majority voting for ECsoeid laws, on the grounds that the provisions ofthe Social Charter are a recipe for a mass increasein unemployment. Other objections spell this outin terms of the inevitable increased cost resultingfor business and govermnent, the resulting loss inproductivity and competitiveness, increasing Wa-tion, the tilcdty of creating jobs in poorer coun-tries, and the resurgence (for Britain) of tradeunion power, including a virtua~y unqualified rightto strike.

In addition there is the whole body of complaintsabout Brussels. bossiness in meddling in nationaland Iocrd matters, and in quite d~regarding inpractice the principle of subsidiarily which it hasbeen trumpetig so widely. In fact, as variously d-alleged,what we are experiencing is typical Frenchdirigisme, which even M Delors appears to suspect,as well as the entry of Sociafism by the back door,with the European Commission being influenced bya left-wing majority of the European Parliament.And perhaps, more darHy, as Timothy Raison sug-gested (~ma 8.D.89), ‘In the background lurks abefief that the charter embodies the kind of corpo-ratism found in tradhional Catholic social doctrine,rather than that of the fiberal Protestant tradhion’.In any ease, the whole idea of human rights, at leastat a national level, is not one with which British po-titicd philosophy or governments are particularlycomfortable, since Jeremy Bentham, the founder ofUnitarianism, termed them ‘nonsense on stilts’, orthe height of nonsense. Better surely to rely on thesimpler dtematives of market forces, or at least, ifthere must be regulation, to stress the need forflexibility at national Ievek, dependent on the expe-rience and insight of national governments.

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But perhaps to that alternative one might respond,if ordy it were so simple. Resistance to protection

ism can be very selective, and one is more readilyinclined to accept it when it is exercised in one’sown interests. European business, if d goes oth-erwise according to plan in the European Commu-nity, is going to possess immensely increasedpower, both economic and social, at national levelsas well as at the panEuropean level. And wtiemuch may be hoped for from the ‘social dirdogue’recommended at European level betweeb the Eu-ropean employers’ organtition (UMCE) and theEuropean trade unions Confederation (ETUC), itdoes appear that the balance of power, at presentat least, ties with the former. The argument of thelevel playing field in European industrid relations,which is persuasive in such other European areasas the environment, may be considered as pointingto a necessary regulation of the exercise of suchpower on the part of business, to do something forworkers as a counter to balance the benefitsenvisaged and anticipated for business people.

Moreover, the principle of subsidiarily is not just aprinciple of leaving application and action to themost appropriate lower level of decision-making. Itcan dso be a principle of intervention when thoselower levek are not measuring up to expectations,or to the undertakings which they may have given.And for all its appeals in favour of a national levelof decision-making over against intrusion fromBrussels, it does not appear that Britain is a shiningexample of the principle of subsidiarily, either in itsown constitutional form of government, or morepartictiarly in keeping its own house in order, orrather its own room in Europe in order.

The recent letter from the Environmental Commis-sioner requesting Britain to hdt work on sevenconstruction projects as allegedly in breach of thedirective on Environmental Impacts Assessment,on which Britain agreed, has been greeted in somequarters with imprecations against Brussels med-dling. But it may be worth considering that thiswas not a Brussels inhiative; it was in response toappe~ from various British groups and interests.And there is a parallel to be drawn from the in-creasing way in which British cittiens fmd them-selves forced to appeal to the European Court ofJustice for redress which our own Government andlegislation are not perceived as providing. More-over, if todays ~mes report is correct (24.10.91),Britain is now facing prosecution for allowing someof its water companies to adopt standards ofdrinking water which are lower than those requiredby the EC directive - which somewhat ~tsBritain’s claims to be more law-abiding in enwron-mental, or even health, matters than some of itsEuropean partners.

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Ethical Business in Europe, page 7

To take another si@lcant and topical area, thereare continual reports of discriminatory practices atwork in Britain in regard to sex. Only yesterdayone of my former students told me of a horrendousone-to-one job interview to which she was sub-jected - anecdotal, to be sure, but not withoutconflation from other quarters. According tothe Low Pay Unit (~mes 17.10.91) pay inequtityin Britain is costing women al bn a year, in thatthe average gross wee~y earnings of femalemanual workers are 62.9% of those of a simdarmde worker, as a restit of men working longerhours and of discrimination in shift payments andjob gradings. It looks as if what some wotid preferas a Iod national approach to introducing socialjustice at work is not proving ~ that successfd. AS~te Economist observed earlier this summer(29.6.91), in relation to pay for pregnant women,the benefits provided in Britain are ‘among theECS stingiest’.

From the point of view of business itse~, for d itscomplaints about increased costs resdting from theSocial Charter, it may not be cynid to red simil-ar strong complaints on the part of various indus-tries when they were asked titerdy to clean uptheir act in terms of automobile pollution, wastedisposd and pubfic health considerations. And itmay turn out that similar complaints on the part ofBritish industry are simply a ‘knee-jerk reaction toanything which involves change and investment oftime and money. It is commonly said, after all, that

~ a compan~s best asset is its workforce, or its hu-man resources, and that ‘people-maintenance’shodd be at least as high a priority as plant andmachinery maintenance. mat the Social Charter

,. is aiming at, in its spirit, is the promotion of work,and the quafity of worhg conditions, as a humanoccupation in society.

This is what gives it the claim to be concerned withsocial rights m a counter-balance to market forces.Not just the creation of such rights in law, but theirrecognition by society and business as humanrights. For N the difficulties involved in estabkh-ing a viable philosophic argument for the efi-tence of human rights, it remains significant thatthe American thinker Richard Dworkin struck achord when he coined the phrase that ‘rights aretrumps’ over other, and particdarly over utitarianand pragrnatiq considerations.

It may be si@lcant, not only for British businessbut dso for the Government, that popdar senti-ment may not be running entirely their way in theirimplacable opposition to a European Charter ofSocial Rights. According to a Xnles/Mori pofltaken at the end of 1989 (4.12.89) a sizeable major-ity in Britain supported the ‘social dmension’ inEuropq with 51% agreeing that Europe-wide col-lective agreements wodd be advantageous toworking peoplq and 70% agreeing that thereshotid be European law for companies, with thesame rules everywhere for workers’ participation.Perhaps one does not need to Mate the ideasstru@g for expression in the Social Charter bygiving them the problematic title of social rights.Perhaps the idea of fair play-on the part of businesstowards dl its workers is just as effective in stress-ing this tepid and important aspect of Stakeholdertheory.

There remains, of course, the question of Conti-nental ideology, corporatism, din.gikme, and so on.Perhaps the simplest argument ad hominem rejoin-der to such easy charges is, happy is the countrywhich has no ideology.

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CFofiress Europe’?

In this third and last Gresham lecture in my serieson ‘Ethical Business in Europe’, I want to considerfrom the ethical point of view some of the externalimplications of the Single European Market, andthe charge, or the fear, that we are in process ofcreating Fortress Europe, a vast protected tradingzone which is interested in regional, but not global,free trade.

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In the summer of 1988, as preparations for the Sin-

gle European Market seemed to be getting intotheir stride, the notion spread abroad that it wasonly a matter of time before the portctis -edown, or the drawbridge was raised, cutting Europeoff from free access on the part of other worldtrading blocks, notably the USA and Japan. Afterall, one of the economic motives for constructing aEuropean Common Market appeared to be to off-set the immense trading advantages which the USAand Japan had developed over the separate Eur&pean countries, and it would not be surprising if aconcerted European economic force would aim not

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Ethical Business in Europe, page 8

simply at competition abroad but also at protec-tionism at home.

In June 1988 the European summit at Hanover de-clared that ‘the internal market should not close inon itse~; and later the same year the British PrimeMinister, in her famous Bruges speech, observedthat ‘Europe shodd not be protectionist’. In nei-ther ease was it stated that Europe would not beprotectionist or close in on itse~, however. Andalthough in October of that year the EuropeanCommission published a statement on the ECStrading intentions, including reciprocal access(whatever that might come to mean), fears contin-ued to exist, and to increase, that the spirit of pro-tectionism was already to be seen in various moveswithin Europe. There were increasing anti-dump-ing accusations of imports being sold at artificiallylow prices. There were various decisions andagreements about standards of products, ‘rules ofori~, and ‘led content’, to prevent the prolifera-tion of foreign ‘screwdriver plants’ which concen-trated simply on the assembly of imported compo-nents, thus avoiding tax on completed products.There was continual negotiation about quotas ofsome imports, notably automobdes. And therewere pleas and manoeuvrings on the part of someEuropean, countries for the protection of some keynational companies or industries.

Might it not be possible that Europe would, at leastat f~st, wish to cushion the pain of internal adjust-ment by protecting the new market from externalpressures, espeeidly since many of the factorswhich wodd now decrease costs for Europeanbusiness of production and distribution could alsobe taken advantage of by foreign invaders? (cf ~teEconontist 8.7.89). Hence the buying or setting upby US companies of subsidiaries in various ECcountries, and the setting up of ‘transplants’ to cre-ate what ~te Economist (ibid) nicely called ‘theJapanese investment diaspora’: W in order toqurdify as insiders before the doors clanged shut.And despite further protestations that the ECwould not be protectionist, fears have recently beenrevived by the intractable problem for Europe ofagreeing a Common Agricultural Policy, and by de-&ions, quotas and tariffs in the car and electronicindustries,

So much have been the fears occasioned abroad bythe prospect until recently of welve partners com-prising the Single European Market. Now with theannouncement that the EC and E~A have agreedto unite and create the European Economic Areafrom the end of 192, as a trial run for enlargingthe EC itself, it would scarcely be surprising ifother major world trading blocks feared not only

the competitive power but also the protectionistpotential of what will Cnrn.e to be what n~~ mm-e------ .. ---- ..-”(2.10.91) described as ‘the worlds richest openmarket’. Indeed, in welcoming this European de-velopment, ~te fimes also saw an urgent need forit ‘to show this agreement is compatible withglobrd, not just regional, free trade’ in the interestsof World prosperi~.

11

What, if any, ethid comments might be offered onsuch developments? Perhaps fittle directly on thecenturies-old debate between free trade and pro-tectionism, except perhaps to venture the truismthat long-term advantages ean frequently enttimore immed]ate sacrifices - which are, however,acceptable ody in relation to the degree to whichsuch saerfices are justified, shared, and alleviated.But perhaps *O to suggest that what we are nowbeing forced to consider is the ethies of competitionand of the market economy as played on a giantscreen, not just by individud businesses or evenmultination~, but now by regions of the ~obe,with correspondin~y higher stakes not ody for suc-cess but dso for failure.

In an earher Gresham lecture I considered theethim of competition and the market economy, toconclude that not ody were these ethically justil-able; they were also desirable as means of devel-oping the eartis resources to satisfy the needs andaspirations of the increasing milfions of its inhabi-tants. But that, at the same time, it was a duty laidon society as a whole that no members of it shouldsuffer unduly from economic failure or from thelack of material resources or wellbeing as a resdtof the workings of the free market. And if even innational economies or continental economies thereis a recognise~ if reluctant, need for some form ofregulation of business in the public interest, thenperhaps one should conclude to the need for someform of #obd authority or international gover-nment to ensure and protect the common good atglobal level.

However, I do not want to proceed down that per-haps utopian or primrose path. I want rather toexplore the thinking which underlies such a form ofargument in favour of the regulation of business atsuch an international level. For it seems to find itsroots, at least for some people, in the view of hu-man nature and human behaviour which goes backto one of the most influential of English philos~phers, Thomas Hobbes (1588-1679). Hobbes waswriting, of course, about the behaviour of individu-als in society, but some writers advance the view

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that his philosophy is alive and well today in inter-national relations and in international business.

Hobbes was of the belief that ‘it is natural, and soreasonable, for each individud to aim solely at hisown preservation or pleasure’, and that ‘the condi-tion of man...is a condition of war of everyoneagainst everyone’. If we had d remained in thiscondition of nature, then, he concludes, therewould be ‘no arts; no letters; no societies andwhich is worst of d, continual fear and danger ofviolent death, and [i the famous phrase] the fife ofman, sofitary, poor, nasty, brutish, and short’. Mencome together in society, and surrender some oftheir rights to an absolute governing and protectingpower, solely out of fear for their own safe~ adthis exclusive concern for self-interest is what moti-vates every single one of their actions.

How did Hobbes come to this melancholy conclu-sion on human nature? One answer is that he waswhat one historian described as ‘a frightened Puri-tan’, frightened, that is, by the events and conse-quences of the En#lsh Civil War and the Com-monwerdth - just as later Jeremy Bentham was tobe influenced in his rejection of any idea of humanrights by being frightened out of his wits by theFrench Revolution. Another ~uence on Hobbeswas the fascination which the new science of me-chanics had for him and many of his contempo-raries; so much so, that he saw human fife, too, interms of matter and motion, and of the play ofstronger and weaker forces, with the inevitablevictory of the stronger over the weaker. Thus, notonly one’s mental activities, but also one’s socialactivities, were a simple matter of competing andcountervailing forces, and the jun@e law of individ-ud ‘might is right’ needed constraint and restraintin case one ran up against someone bi&er thanonese~.

Whatever might be objected against Hobbes interms of his underlying refigious views on humannature, and in terms of his simplistic acceptance ofthe laws of physics to explain human behaviour, it isgenerdy agreed that he was not overly concernedwith emptilcrd proof of his doctrines on the natureof humanity and of human society doctrines whichled him to conclude, for instance, that laughter isno more that the sudden realisation of one’s supe-riority over others; and that compassion at the dis-tress of others is really fear that the same mighthappen to ourselves. And perhaps the most tellingattack on his views came in the next century fromJoseph Butler (1692- 1752), who declared thatHobbes’ explanation of human nature and humanfeelings simply did not square with the facts of ex-perience. As Butler expressed it, ‘there is such a

thing in some de~ee as reaf good-will in man to-wards man’. A::; many people would incline toagree with the then Bishop of Dur5am, at least inthis regard.

For however attractive and proven by (perhaps se-lective) experience some people might fmdHobbes’ pessimism and his view that, in the wordsof the Roman playwright Plautus, ‘man is a WOMtohis fe~ows’ (Aomo homini fupus), for others thisseems altogether too bad to be true as a completeaccount of human behaviour. There are those,however, as I have said, who see it as a more appropriate description, not of how individurds be-have towards each other, but of how various groupsin society can behave, in a form of ‘group egoism’and in the unrelenting pursuit of their own intereststo the exclusion of all others. And for those of arefigious turn of mind, as was Hobbes, this view hasbeen powerfu~y reinforced this century by thewritings of the influential American Protestant socid thinker Reinhold Niebuhr, whose best knownwork is probably his Moral Man atld Immoral Soci-ety, written (perhaps significantly) in 1932, of whichhe later said that if he had to entitle it again, hewould d it ‘Immoral Man and even more Im-moral Socie&. For one of Nlebuhr’s theses wasthat as individuals come together their ethical stan-dards diminish and their destructive power in-creases as the expression of collective egoism in so-ciety. Perhaps this can be seen today as not only apowerful force in the new rise of nationa~ims, butalso at the level of international relations and, inour present context, of international business?

One modern commentator on the internationalbusiness scene (Thomas Donaldson, ~le Ethics ofIntentational Business, OUP, 1989) analyses sev-enteenth-century Hobbesianism and the modemcharges that it is all too present today in interna-tionrd business, as well as in the recent work Moralsby Agreement of David Gauthier, whom Donaldsondescribes as neo-Hobbesian. But Donaldson tooconsiders such a charge excessive, and like BishopButler he cites empirical evidence to the contrary,pointing to the considerable amount of cooperationwhich exists at international level, the UniversalDeclaration of Human Rights (194), the fact thatthere are some shared values in society in additionto sheer seti-preservation, that there can berational discussion on the quality of the meanswhich are considered as necessary to survival orsecurity, and that there etists abroad in sociev afair measure of what he calls ‘moral commonsense’. My own view inclines less to thereductionism of Hobbes and his modernsupporters, and more to that of Donaldson andButler, that individuals and groups are not

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Ethicai Business in Europe, page ;0

dominated purely by self-interest, but that we ared, both individually and collectively, a complexmixture of concern for ourselves and concern forothers.

Foreign aid may be instanced as one example ofthis mixture, in which long-term self-interest maywe~ be at work, but this does not necessarily con-fict with a genuine desire to help others. It maybeinteresting to see, however, how and why the ECpartners docate and direct their aid now to whatwas formerly Eastern Europe and COMECON,and in particular how these policies will affect theaid and investment programmed which they havehitherto been directing to Third World countriesand economies. For the ethical irnpfications of theidea of ‘Fortress Europe’ concern not just the ECSrelationships with other major trading blocks, but*O its relationships from a position of greatly in-creased wealth and strength with other regionsmuch less powerful and vastly less fortunate.

III

On a Hobbesian model there seems fittle future forsuch poor countries in the world economy, short ofagreement (out of fear) on a central absoluteworld-government which can enforce its decisions.But if there is more to be said for individuals, andfor groups, than Hobbes was prepared to concede,then perhaps the future may not be too over-whehnin~y pessimistic, or some improvement nottoo unattainable. Perhaps this is a major challengefor business ethi= in the international scene, espe-cia~y if business ethics is viewed in a more positivefight than it sometimes appears. On the whole, thesubject tends to occupy itse~ with identifyingharrn~ practices and exhorting business to avoiddoing, harm to its various stakeholders. But per-haps it could also usefully devote itself more toiden~g the positive challenges for good whichare within the reach and the grasp of the power ofbusiness. One way in which this could be exploredis by giving more consideration to the idea of soli-darity in human tiving, as a counter to the aggres-sive individu#lsm which is, of course, central to thethinkiig of Hobbes, and to some degree of othersin the British phdosophlcal tradition.

Perhaps one method of promoting the idea of soli-darity and this more positive agenda for business,and business ethics, can lie in what might be calledthe ‘democratizing’ of business. Reinhold Niehbur,

to whom I have already referred for his ~oomyview of the even ~reater harm which ~mnljps werehkely to get up to m society than individuals, viewedthe democratic form of government, in the words ofone commentator (Gary J Dorrien, Reconstictingtlte Common Good, Orbis 1990) not ‘as the form ofpolity that enlightened people deserve’ but ‘as thesystem which most fairly restrained human egoism’.In Nlebhur’s famous dictum, ‘Man’s capacity forjustice makes democracy possible; but man’s in&-nation to injustice makes democracy necess~. Itis in that Ught that I wonder whether more shouldbe done to ‘democratise’ business, not ody in thesense of worker-participation, but also in the senseof broadening the way in which many other individ-uals and groups of individuals share in shaping theaims and activities of business corporations, in-cluding individud, group, and institutional share-holders, directors, executive and non-executive, andconsumers and cfients.

For modern business has surely become one of themajor formative agents in society and public Me,alongside the state, the churches, edumtionrd in-stitutions, and the media. This is not a bid to divertbusiness from its primary purpose in society, whichis to provide a service of value to society and tomake its profit at the same time. Nor is it to turnbusinesses into good citizens in the sense of ex-horting them to give generously to various causes,far less to make them evangelistic. But it is per-haps to su~est that business may be ~pable ofproviding a vision for society, insofar as its inher-ently expansionist tendency can offset what is oftenthe stagnation or undue conservatism of other so-cial agencies.

The conclusion to this would be to see Business inEurope as something to be warmly encouraged onethical and social as weti as economic grounds, andto encourage European business not to turn in onitself, either u regards its major competitors or as -regards the Third World. It would also be torecognise that, while there is and must be a usefulplace for competition in business, there is also aplace for cooperation and the recognition of atleast some measure of solidarity, reflecting at thegroup, or even national and continental sale, thatstrange, but red, mixture of self-interest and other-interest which I have mentioned. At least it mightbe a challenge to discover to what extent evenEuropean business is capable of exemplifying thecontention of Butler, that ‘there is such a thing insome deflee as real good-will in man towards man.’