Veil of Ignorance

Let us compare two societies – in one the firms are allowed to break contracts, in the

other they are not. Where the poorest people will feel better?

 

Breaking contracts without compensation undermine the trust and create unfavorable environment for the business. Even if some cases will be advantageous for the society. So, this behavior is UNETHICAL.

 

Breaking contracts with compensation protects economy from contracts which become non-optimal. So, this behavior is ETHICAL

 

Storchevoy M. A. Corporate Social Responsibility. 2013

Topic 2 (2). Normative Analysis: Deontology

 

2.11

Application: Norms

 

Storchevoy M. A. Corporate Social Responsibility. 2013

Topic 2 (2). Normative Analysis: Deontology

 

 

2.11. Application: Norms

Actions vs. Norms

 

 

Normative Business Ethics may be aimed at evaluation of

actions, norms or whole systems of norms.

 

In Utilitarianism you evaluate an action as such.

 

In Deontology you cannot do this. All actions are analyzed as universal norms.

 

Let us now look at the

basic norms of economy and business…

 

 

Storchevoy M. A. Corporate Social Responsibility. 2013

Topic 2 (2). Normative Analysis: Deontology

 

 

2.11. Application: Norms

Areas of Justice

 

There are three traditional problems of justice in economy

which were formulated by Aristotle.

 

 

Justice of Distribution (or Distributive justice)

How to distribute the stock of a good between people?

 

 

Justice of Exchange (or Commutative justice)

What are just rules of exchange?

 

 

Justice of Retribution (or Retributive justice)

How the damage should be punished?

Property Law

 

 

Contract Law

 

 

Tort Law

 

 

E t h i c s L a w

 

Storchevoy M. A. Corporate Social Responsibility. 2013

Topic 2 (2). Normative Analysis: Deontology

 

 

2.12

Distributive Justice

 

Storchevoy M. A. Corporate Social Responsibility. 2013

Topic 2 (2). Normative Analysis: Deontology

 

 

Distributive Justice

Pie Problem

 

 

Suppose that the stock of a good (“pie”) should be divided between members of society. What are just rules of these distribution? Consider next cases:

 

 

The pie falls from the sky.

a) Everybody knows where it is.

b) It should be found.

 

 

The pie is produced by people.

a) Everybody has equal capabilities.

b) Everybody has unequal capabilities.

c) There is stochastic variance in productivity.

 

 

Storchevoy M. A. Corporate Social Responsibility. 2013

Topic 2 (2). Normative Analysis: Deontology

 

 

Distributive Justice

Pie Problem: Solutions (1)

 

The pie fell from the sky

 

a. There is no problem of finding.

Equal distribution: every person gets an equal share of the pie.

This is the rational strategy to maximize the expected payoff

for a risk-adverse person.

 

b. The pie has to be found.

Equal distribution + A finder’s fee. This is a rational compromise

between maximizing the expected payoff and creating an incentive

for finders.

 

 

Implication. Why the oil producing countries have exclusive right for oil and gas

at their territories? This “pie” fell from the sky and should belong to all people on

the Earth.

 

 

Storchevoy M. A. Corporate Social Responsibility. 2013

Topic 2 (2). Normative Analysis: Deontology