Sep 6, 2011

The Grey Side of Business

Evidence suggests that technology companies enabled brutal repression in Libya and Bahrain, two of the countries currently undergoing impressive change as part of the Arab Spring. This is not a surprise.

Technology is morally neutral - you can use it for good and for evil. This is been discussed enough and often enough. The real question of the hour is are businesses morally responsible, should they be held to the same standard as we hold individuals and governments? When is it OK for a business stop following a profit motive and hold to a sociopolitical position? Should every business deal be scrutinized to ensure it is not aiding and abetting something "immoral"?

In the aftermath of the Great Recession, given the "evil bankers and financiers" it is easy to pass judgment and say "Of course businesses need to be moral!" Nokia and Siemens have no business enabling dictators to better spy on their people! Lenders had no business lending to people they knew wouldn't repay!

I submit that this represents a less nuanced opinion than the real world would support.


There are limits to how "moral" we would want a business to be - after all, morality and the common understanding of what is OK changes with time. Businesses and corporations can be powerful instruments of social change, yes - as perhaps was shown during the desegregation era in the US, or the more recent repeal of Don't Ask, Don't Tell in the US Military. Enforcing such change is is not always a good idea (or popular) however, for example here in India where debates have been ongoing for some time now regarding implementing affirmative action in private enterprise.

The thing to remember is that businesses or "legal persons" aren't people, and in the end it is the people that make them up or lead them - whether a tyrant dictator, a democratically elected politician, a meritorious CEO, or a bureaucratic functionary - that will define, refine, and implement policies. I don't think we want them to push an agenda, especially secretly or outside of public scrutiny, do we?

Would it be OK for a conservative Christian CEO in the pharma space to aggressively take over rival companies and shut down production/ sale of the morning after pill? Would it be OK for a chemical plant to renege on a contract to sell a chemical to a government when it dawns on them that this is one component of a nerve gas? Especially if there is evidence the government is sourcing the other components from the market? The answer to the first is probably a No, and to the second a Yes - but that's just what I think.

What we must be mindful of is that corporations and even government (bureaucratic) machinery aren't governed democratically; neither are the judiciary or the executive in any advanced system of governance. Only the legislature - which should drive public policy and make laws - is democratic (although even here it is only representative and not participatory, but that's a separate rant). What I'm getting at is that there is great scope for abuse once we decide to ask these impersonal agents to hold to what must in the end be personal views.

Coming to the article that triggered these thoughts for me, of course Nokia and Siemens did business with (insert repressive regime here). Well, yeah! This regime ruled a large and exciting market for decades, and unless we expect the corporations in question to depose it, they are doing their shareholders a disservice if they ignore the market there. If not these companies, surely the technology would be sold to the regime by someone else?

Business is done in the real world and absent formal sanctions and prohibitions companies really cannot be expected to be moral. Obviously if companies are sneaking around sanctions, that's illegal and punishable, but unless that was the case, they've done nothing wrong.

This is a grey area, clearly and requires more debate and discussion... which is why I thought I'd post this reaction I had to the article and ask: What do you think?

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