Friedman and Pogge’ Accounts of Ethical Obligations of a Company
Milton Friedman argued that since business executives are agents of the business owners, their key ethical responsibility is to boost the business profits. According to Thomas Pogge, such a view involves a kind of ethical incoherence and that people should not agree to the effectiveness of social arrangement such as the owner-agent relation in altering the moral obligations. Both views do no give a clear account of the distribution of the ethical obligations in a business context. It is important to understand the difference between minimal ethical obligation,; including fairness and human rights and maximal ethical obligations; all other forms of ethical consideration including support for the needy, beneficence, and virtues. Minimal obligations apply to every individual, while maximal obligations are normally effected by the social setup such as the business executive-business owner relationship. This describes Friedman and Pogge’s accounts of ethical obligation in a business and the gives a comparison of the two.
Friedman’s Accounts of Ethical Obligations of a Company
Friedman believes that business executives have social responsibilities. According to Friedman, in any kind of a business set up the business executive is an employee of the business owner, and he has direct obligations to his/her boss. His/her obligation is to manage the business, based on the desires of the business owner, which in most cases is to generate as much profits as possible while meeting the requirements of the basic rules of the society; the rules included in the laws by the state and in ethical customs (Friedman 173). Sometimes, the employers may have dissimilar aims, for example, a group of people may decide to set up a corporation for a charitable reason such as a hospital. The director of this kind of corporation will not have an objective of boosting the profits, but instead he/she will focus on offering particular services. This then implies that the director is the agent of the proprietors of the corporation and his/her main obligations is to the proprietors. The business owners are the legislators, the executives and the jurists. They have capability of deciding whom to impose tax on by what amount and for what reasons, they can spend the profits as they desire; they can choose to engage in programs that aim at improving the environment and fight poverty among others (Friedman 174). For instance, the main obligation of the Tobacco industry was to boost its profits and to advise the society about the health risks that cigarettes may cause them. The industry is not answerable for any individual who suffers from cancer after excessive use of cigarettes. Rose Cipollone knew about the health dangers of cigarettes. She had read the warning labels on the cigarettes and a number of articles cut out yet she could not harness her habit (Mukherjee 286-288).
Friedman believes that this understanding maximizes the economic liberty and that economic freedom is a required condition for political liberty. According to Friedman, it is the duty of the business owners whether to take part in a charitable contribution to eradicate poverty and not the obligations of the business executives. The business executives are mainly concerned with productions of products, selling the products or financing the products. They cannot make decisions concerning the public well being. The aspect of “social liability” policy is preferred when the policy is implied in justifying wage control by trade corporations. The conflict of interest is normally very clear in cases when the union representatives are required to subordinate the concern of their associates to some more general purpose. The union leaders, especially in America have objected to the regime’s interference with the market than the business owners. The complexity of exercising social responsibility clearly outlines the great virtue of private competitive projects. It makes individuals to be accountable for their own deeds and prevents them from exploiting others for their own good (Friedman 177).
One could argue that the government’s obligation of imposing taxes and determining the spendings of social purposes is good. However, for the issues that require immediate response, the exercise of the social responsibility by the businessmen is faster in a certain way of solving the current critical issues. If an individual proprietor decides to minimize the returns of his business for the purpose of exercising his social responsibility, he/she is using his own money, in the process he/she may inflict costs on his/her employees and customers. Since he is likely not capable of having the monopolistic control, he/she may not be affected much. The use of the facts about social responsibility can interfere with the establishment of a free society. Many impressive business owners are careful with matters they consider internal to their businesses (Friedman 174).
Pogge’ Accounts of Ethical Obligations of a Company
Freedom from severe poverty is among the significant human concerns. Human beings have the right to clean drinking water, adequate food, clothing, protection and above all, basic health care to be able to enjoy life. Individuals who live a very poor life, are denied the right to sufficient quality of the basic needs. According to Thomas Pogge about one third of the premature deaths are from poverty related causes. Most of these deaths could be avoided through global institutional reforms that would assist eradicate severe poverty. Many could also be avoided through global health program reforms that could make medical information freely accessible as a global public good (183). For instance the global agreement proposed by the tobacco company (the master settlement agreement) which includes restrictions on cigarette advertisements and allows for free access to internal research documents. It also recommends national forums for the purpose of educating the public about the health dangers of Tobacco (Mukherjee 290). Regardless of the undoubted great significance of the essential human needs, there is no accord of whether individuals have a right to the requirements of life. To tackle this disagreement, it is important to distinguish between the legal and moral issue. According to Pogge, there are ethical individual rights, and their soundness is dependent of the three main governmental bodies. These governmental bodies have authority only if they value the ethical human rights; the ability to establish ethical obligations to abide by, and the ethical power to impose their laws. The suprastate, state and the substate systems of law establish numerous human rights. The contents of such rights as well as the any equivalent legal obligations depend on the three main governmental bodies that maintain and interpret the laws in question. Businesses are normally regulated by an extensive body of laws that establish obligations, which may or may not have the ethical basis. These laws are created and imposed by the Governments (Pogge 184).
Pogge believes that, the main crucial barrier to a dramatic reduction in the global disease saddle can be eliminated by giving the medical investors steady and dependable financial incentives to address the medical issues of the poor. This can only be achieved through the reformation of the existing state and international laws for incentivizing the search for effective drugs. However, the decision about the reformation of such laws rests with the government and the international organizations, including the World Trade Organization (WTO) and the World Health Organization (WHO), and not an obligation of the pharmaceutical business executives (Pogge 184). The present day laws for funding pharmaceutical research are ethically very problematic. This fact is widely identified in the wake of the AIDS disaster, especially in African countries where the important needs of the poor patients are pitted against the requirements of the pharmaceutical companies to regain their research and development investments (Pogge 184).
From an economic point of view, health care is considered a commodity just like any other commodity in the service sector. This implies that the establishment of a new effective medical treatment is an intellectual achievement just like nay other. From an ethical point of view, there is a big difference between the needy lacking access to some services and avoidably lacking access to essential medical issues. It is the government’s obligation to establish and defend an ethical standard that can ground the evaluation of the existing government grant against the numerous ideas of reforming it, and can govern the formulation of a particular reform plan. The government is responsible for imposing laws that treat drug as a public good. This way, new drugs could be accessed freely by various drug firms. This would help reduce the drug prices, and at the same time bring back the no-incentive issue. The reformation plan as suggested by Poggie would allow the drug Companies to take out new kinds of government grant. To be helpful as a policy option for the decision makers, the community, and as a comprehensible focal point for advocacy, the reform should be detailed with the appropriate facts and insights from science, statistics, medicine, law, economics and both moral and political philosophy (Pogge 191).
It is normally very expensive for the drug companies to bring new, safe and effective life saving drugs to the market since the investor firms must offer payments for the research and the development process, for conducting tests for the invented drug and for successive approval processes. In some cases, the newly invented medical treatments may turn out to be dangerous or ineffective. The drugs may also have negative side effects, or may fail to be approved by the government for specific reasons which may result in the loss of the complete investment. Due to these reasons, there are very few inventive pharmaceutical research carried out in a free market scheme. The investors always have to bear the full cost of the failures, and at the same time the investor would not be able to enjoy the success because the competitors would always copy the new invention. It is therefore the duty of the government to impose patent rule that grants the investors a temporary monopoly for the invention a specific time period prohibiting the competitors from copying and selling any newly invested drug during the specified time (Pogge 193).
According to Pogge, when social laws violate human rights without clearly mandating the ways that violate human rights, those responsible for upholding these laws may not be violators of human rights. Contribution to the imposition of the social laws constitutes a human rights violation, when such laws avoidably deny individuals of safe access to the items of their human rights. All through the world, about 18 million people die each year from poverty related causes, and mainly from communicable illnesses that could be easily prevented. These people die, because they are underprivileged of some objects of their human rights. For instance the right to a condition of livelihood that is adequate for the physical condition and the wellbeing of a family. There are a number of factors, both national and global that contribute greatly to the deprivation of human rights. These factors include the way in which pharmaceutical research into new effective drugs is incentivized under the present day laws of the TRIPS agreement as complemented by a number of bilateral agreements that are pursued by the U.S.A. With these reasons, Pogge believes that it is essential for the citizens of countries with high wages to support a reform of the global health system that can benefit everyone at their expense (Pogge 197).
From Friedman and Pogge’s accounts of ethical obligations of a company, one may ask, is it the responsibility of the pharmaceutical industries to supply the life saving drugs to the needy in the society? Arguments about the obligations of the pharmaceutical firms may not be too extreme as compared to the topics of offering life saving drugs to the needy. Friedman recognizes no such obligations. According to him, the social responsibility of any business is to boost its profits and no special efforts should be demanded from the pharmaceutical businesses. Pogge, on the other hand, emphasizes on the respect for moral human rights. These moral human rights include access to basic medical care (Friedman 173). He believes that, the main crucial barrier to a dramatic reduction in the global disease saddle can be eliminated by giving the pharmaceutical industries steady and dependable financial incentives to address the medical issues of the poor, which he believes can only be achieved through the reformation of the current national and global laws for incentivizing the search for effective drugs. Pogge believes it is important for the pharmaceutical firms to put access to drugs of of the key factors in the process of decision making and that these firms should develop and offer the essential drugs at affordable prices. According to Pogge, the pharmaceutical companies should fulfill these requirements consistently and through this, take part in the wider responsibility of improving the health status among the poor. The pharmaceutical firms have an ethical obligation to offer considerable resources to save human lives. These obligations mainly apply to the global pharmaceutical firms in the context of the deadly diseases such as cancer and AIDS (Pogge 196).
Friedman emphasizes on maximization of profits as the obligations of the business executives. He considers the business executives as the employees of the business owners. He believes that the obligations of the business executives are to carry out the business based on the wishes of the business owners and not according to their social liability. Conversely, the business owners, are regarded as the legislators, the executives and the jurists. They have the ability to decide whom to impose tax on and the amount of tax to be imposed. Pogge on the other hand, emphasizes of the respect for human rights, and that is important for firms to act in a way that supports and respects human rights. These human rights include access to essential requirements. According to Pogge the validity of moral human rights is greatly dependent on the three main government bodies who have authority only if they value the ethical human rights.
Friedman, Milton. The social responsibility of business is to increase its profits. Springer, Berlin Heidelberg, 2007.
Mukherjee, Siddhartha. The emperor of all maladies: a biography of cancer. Simon and Schuster, 2011.
Pogge, Thomas W. “Human rights and global health: a research Program.”Metaphilosophy 36.1‐2 (2005): 182-209.