06.30.2009 0

The Abrogation of the Social Contract

  • On: 07/31/2009 11:03:07
  • In: Uncategorized
  • By Victor Morawski

    An argument used in many current business ethics textbooks today to morally justify the intrusion of Big Government into corporate and small business decisions turns on the notion that we now are in the process of re-writing the understood social contract between business and society.

    So, let’s take a quick look at this convenient fallacy and see if we can figure out why the left contrived it in the first place.

    In the nineteenth and early twentieth centuries what Americans most wanted from business was rapid economic growth and job creation. Back then, we were willing to overlook many negative consequences of business activity on the environment to see business achieve this end.

    Now, the argument goes, society has concerns other than simple economic growth — specifically, quality of life and environmental concerns — that mean that it can no longer absorb costs associated with these side effects.

    The argument claims that society, largely through government regulations, is now justified in forcing business (especially large corporations) to internalize these costs, even if doing so will have a negative impact on their bottom line. Not satisfied with imposing such Big Government dictates merely on U.S. corporations, the Obama Administration wants all governments worldwide to impose such job-destroying directives.

    You’ll notice, of course, that this argument gets no traction whatsoever when used against a developing nation, which is clearly why Hillary Clinton did not bother to bring it up herself during her recent trip abroad. Unfortunately for Ms. Clinton, her Chinese and Indian counterparts did bring it up as a reason why they should not sign on to the US-backed, UN emissions guidelines.

    They, in effect, pointed out that we did not levy similar constraints on ourselves during our own nation’s early development, so why should they stifle their own rapid economic growth by putting such strict constraints on their industries? All Hillary had left was to fall back on was voodoo science and the Global Warming Doomsday Scenario as tools to use to persuade them to come on board. And they wisely weren’t biting, just as they did not bite when her boss pitched the same argument to them and other members of the G8 earlier.

    Now, if the bill really is based on voodoo science, then there is no good scientific reason for its enactment. But what of the moral argument that our own society’s understood social contract with business is changing?

    First of all, who is saying that our society is modifying its understood social contract with business if not the same liberal academics and politicians who have, for the past 30 years or so, been calling for ever-increasing, anti-productive and burdensome environmental regulations by Big Government on business? Writing on this issue, Jesuit scholar Edward W. Younkins insightfully observes, “It is interesting to note that when corporate critics refer to the public interest or the common good, they are frequently referring to the good of some individual or group of individuals intent on imposing their own views or goals upon others.”

    Have ordinary Americans —who after all are society, with no particular environmental axe to grind and who are most affected by their loss — really been in favor of seeing hundreds of US factories close and millions of American jobs shipped overseas during the last few decades because ever increasing environmental regulations? Did they really want the contract modified in spite of these consequences?

    Those who ardently advocate Big Government corporate regulation view businesses essentially as creations of government—on society’s behalf—which exist solely to serve public needs. Whatever assets they have they possess as a matter of privilege granted by government concession, not as a right.

    Defenders of liberty, on the other hand, view corporations as created not by government, but by the voluntary actions of private individuals. As such they are private property, not public property. And they exist primarily for the financial benefit of their owners.

    So, if and when government abrogates its social contract with business – for whatever reason – it not only destroys jobs and stifles initiative, it violates the most basic precepts of freedom in the process. For, as Thomas Jefferson wrote, “The true foundation of republican government is the equal right of every citizen in his person and property and in their management.”

    Victor Morawski is a contributing writer for ALG News and a professor of philosophy.


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