Abstract
This paper offers the concept of “justice failure,” as a counterpart to the familiar idea of market failure, in order to better understand managers’ ethical obligations. This paper takes the “market failures approach” (MFA) to business ethics as its point of departure. The success of the MFA, I argue, lies in its close proximity with economic theory, particularly in the idea that, within a larger scheme of social cooperation, markets ought to pursue efficiency and leave the pursuit of equality to the welfare state. As a result, the core ethical responsibility of business actors is to avoid profiting off of market failure. After reviewing this approach I challenge its emphasis on efficiency. I argue that just as we note the suboptimal efficiency of actual markets (market failure), we should also take seriously the suboptimal equality of actual welfare states (what I call “justice failure”). Taking this idea seriously results in a whole other set of ethical responsibilities for businesses to take into account; in addition to market imperfections and regulatory lacunae, managers should also avoid profiting from, and exacerbating, structural inequalities and injustices. I offer an outline of the kinds of injustices and inequalities that would have bearing on business ethics, and the kinds of ethical responsibilities that this approach suggests that business actors should take into account.
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Notes
The articles I cite for Heath’s articulation of the “Market Failures Approach” have now been collected and updated in a book (Heath 2014).
I use the term advisedly. The libertarian argument is Lockean only in the sense that Nozick and others have interpreted Locke as a libertarian. There is much in Locke’s Second Treatise that does not square with a libertarian approach to political economy.
This is, of course, assuming that the law is legitimate and does not require extraordinary behavior like civil disobedience.
This does not include failures to “level down” toward equality, which is why I add the qualification “equality consistent with efficiency.”
It is an open and interesting question whether other institutional market actors—like labor unions—might have such duties as well. My intuition is to think that they do, though I do not explore that here.
This is not to deny that our current social practices might be based on norms that are insufficiently egalitarian or just. It is indeed a worthy philosophical project to explore such a possibility and it would have ramifications for how we understand business ethics. Yet, for our purposes, starting with the normative commitments that are already immanent to our own societies is a more productive enterprise, since it enables us to offer a program of business ethics that is not alien to our socio-economic institutions.
Despite the variety in ethical descriptions of affirmative action, all seem to agree that fundamentally it is about the failure of society to integrate a particular “protected class,” either affirmatively working toward their equal treatment, or demanding special treatment in order to achieve equal results. (See Adams 1997, p. 245).
I thank Michael Kates for helping me understand the distinction between a “living wage” and a “fair wage.”
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Acknowledgements
This paper grew out of a conversation with Sareh Pouryousefi; without her insight and encouragement this paper would likely not have been written. This paper benefited from the input and feedback of Kiran Banerjee, Joseph Carens, Julian Culp, Lisa Herzog, Waheed Hussain, Michael Kates, Beth Kahn, Peggy Kohn, Chris MacDonald, Dominic Martin, and Lincoln Rathnam.
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Singer, A. Justice Failure: Efficiency and Equality in Business Ethics. J Bus Ethics 149, 97–115 (2018). https://doi.org/10.1007/s10551-016-3086-x
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DOI: https://doi.org/10.1007/s10551-016-3086-x