SIGNIFICANCE OF NITI-NYAYA DISTINCTION IN

GLOBAL BUSINESS ETHICS

HEMENDRA KUMAR

LLM/980/2021

INTRODUCTION

"The theory of justice must be more concerned with the elimination of removable injustices
rather than defining a perfectly just society,"1

Amartya Sen in his book “The idea of justice” posits that in probing social justice, it is
paramount to distinguish between “NITI” and “NYAYA” both these words stands for justice
in the Sanskrit language but Sen gave a different meaning to these two words which help us
to understand the two different dimensions of justice. The term “NITI” (law in books) is deals
with rules, institutional behavior, and organizational correctness whereas the term “NYAYA”
(law in action) deals with actual social realization, going beyond rules and policies, and focus
on their implication of these rules in the real world. Therefore “Niti” is an arrangement-
focused view of justice on the other hand “Nyaya” is a realization-focused understanding of
justice. So according to Sen, the role of institution, rule, and organization is important but
their role has to be assisted in the broader perspective of Nyaya which is closely linked with
the world that emerges.

Business ethics refer to the standard of morally right and wrong in the code of conduct of the
business. These are the principles that a business must adapt and adhere to in its day-to-day
operation to achieve the welfare of all stakeholders and as well as of society. There are many
ethical issues in international business, some common ethical issues are discrimination,
harassment, working standards and condition, child labor, human rights, political arena, trust
and integrity, consumer exploitation, data privacy, and environment, etc. To eliminate these
injustices there is a need for Niti-Nyaya distinction and focus on the realization-focused
understanding of justice (Nyaya) along with an arrangement-focused view of justice (Niti).
The realization-focused understanding of justice helps to identify and eliminate this manifest
injustice in the global business rather than seeking the perfectly just. Thus, there is a need for
the Niti-Nyaya distinction in global business ethics.
My role in this project is to determine the significance of Niti-Nyaya distinction in global
business ethics. This project is divided into four parts. The first part deals with globalization
and its adverse impact. The next part deals with business ethics and its significance. After
that, this project gives insight into CSR and UNHR on business. The last part deals with the
significance of Niti-Nyaya distinction in global business ethics

Impact of global capitalism

Since the movement of global capitalism. Multinational companies are the pioneer in the
current global corporate world. MNCs have business all over the world. MNCs have done a
great contribution to outsourcing technology, market expansion, financial growth of the
world, and international trade. MNCs also helps in the economic growth and in providing
employment opportunity to underdeveloped countries. MNCs also have an impact on the
society in which they are operating. MNCs' cultures promote healthy competition,
infrastructure improvement, pluralism, etc. Thus, the MNCs have a great impact on host
counties in three ways i.e., economically, politically, and socially.
Despite these benefits received by the host county, these MNCs are also alleged for unethical
activities which they perform behind the curtains. These unethical activities are a serious
human rights violation. The policy of globalization creates a favourable atmosphere in that
corporations can abuse the human rights of the stakeholders. Some common ethical activities
that these MNCs perform are discrimination, harassment, working standards and condition,
child labor, human rights, political arena, trust and integrity, consumer exploitation, data
privacy, and environment, etc. There are many instances in international business which
reflect that these MNCs violated serious human rights. Some examples are:
1 Wal-Mart is the largest corporation in the world. In 2005, the International Labor Rights
Fund filed a lawsuit on behalf of Wal-Mart workers in China, Indonesia, Bangladesh. These
workers were forced to work overtime without minimum compensation and were denied
legally mandated health care. And there are many other similar complaints against Wal-Mart
around the world.
2 Coco-Cola

In India, Coca-Cola destroys agriculture in Kerala by extracting the public's water resources
which are bottled and sold under the name of Bon aqua. As a result, the water is depleted and
affects agriculture.

Coco cola also alleged the discrimination behaviour toward African-Americans based on race
in the matter of promotion and pay.
There are many other examples of the human right violation by these international
corporations such as the Bhopal gas tragedy and petrochemical company Chevron is guilty of
environmental and human rights violations etc. Thus, human right violation by these huge
MNCs has a horrifying effect on the public as well as on states.

What is business ethics and why it is important for a business?

The corporation is a social organ that is derived from society and operates in society. The
nature of the corporation is embedded within the society, Mark Granovetter brought
sociological and institutional perspectives to bear on fundamental observation that market is
embedded within the social and political system in which they arise 2. According to him
corporation and market are social phenomena and corporations must not understand in
insolation from the social, cultural, and political value in which they are operating. Thus,
business is derived from society therefore they should not engage in activities that will cause
harm to society and other stakeholders.
Why ethics is important for a business organization? Business ethics works like a reward-
punishment system, a business may be rewarded or punished depending on the operation,
policies, and conduct of the business. Good business ethics enable the business to develop a
good relationship with the customer, employee, and society. Business ethics play an
important role in the growth, maximization of profit, and help in building goodwill in the
market. Business ethics enable to conduct its operation within the law. Thus, the business is
under an obligation economically as well as legally to conduct ethically.

United Nations Guiding Principles on Business and Human Rights

To regulate the global standard of practice of state and business. In June 2011, the United
Nations Human Rights Council endorsed the Guiding Principles on Business and Human
Rights presented to it by the Special Representative of the United Nations Secretary-General,
Professor John Ruggie.3 They consist of 31 guiding principles.
These guiding principles are expected to follow by all the states and businesses around the
globe although these guiding principles are themselves are not binding. They were built on
the three-pillar structure that is “protect, respect and remedy”
• The State duty to protect human rights
• The corporate responsibility to respect human rights
 • The need for greater access to remedy for victims of business-related abuse.4
These guiding principles aim to provide the first global standard to protect and prevent the
adverse impact on human rights in business activities. These principle-imposed
responsibilities on business to respect the human right in the business place and also have a
principle of remediation. Thus, this guiding principle is the first attempt that aims to protect
human rights in business activities and impose responsibilities on the state and as well as on
the state to adhere to these principles.

CORPORATE SOCIAL RESPONSIBILITY

Corporate social responsibility is a broader concept that can vary from corporation to
corporation depending on the nature, size, place, and business of the corporation. CSR is the
self-regulating policies adopted by companies to contribute to social welfare. CSR is valuable
for society and business as well. CSR helps companies to build goodwill, promote good
relationships between the corporation and consumer and also help in the stability and
sustainability of the business in the long run. A company can practice CSR in four ways
environment protection, philanthropy, volunteering, and ethical practices towards labor.
Some Example of CSR, Starbucks, accordi ng to its 2020 Global social impact report, 100
percent of ethically sourced coffee, creating a global network of farmers and providing them
100 million trees by 20255, Infosys spends nearly 370cr on CSR on various public welfare
schemes, and “Gulshan kumar charitable trust” does philanthropy by providing free meals to
devotees in various Hindu temples.
Even after adopting this guiding principle on human rights, code of conduct, sustainable
development policy, labor unions, and CSR, and other policies adopted by these
multinational companies they are failed to provide a solution to issues such as discrimination,
harassment, working standards, and condition, child labour, human rights, political arena,
trust and integrity, consumer exploitation, data privacy, and environment, etc. These issues
are still prevailing in global business and affecting adversely economies, society, and
consumers. I believed that this is happening because we are focusing on the arrangement-
focused view of justice (Niti) that is institutional behavior, correctness and rule, and
regulation rather than actual realization of these injustices.
I believed that there is a need for the Niti-Nyaya distinction to remove the injustices in the
global business world. By adopting this Nyaya approach, we can specifically focus on the
manifest injustice rather than dreaming about a perfectly just society. According to Amartya
Sen's idea of justice if you want to make a perfectly just society that is free from any kind of
injustice then it impossible b0ecause it is difficult to answer that “What is just society”. There
is pluralism in the answer to this question. But there is consensus in answers to the question
"What is injustice". We should remove injustice one by one by adopting the Nyaya approach
that is the actual realization-focused understanding of justice.
“In that line of vision, the roles of institutions, rules, and organization, important as they are,
have to be assessed in the broader and more inclusive perspective of Nyaya, which is
inescapably linked with the world that emerges, not just the institutions or rules we happen to
have”6 According to Sen’s idea of justice, adopting the Nyaya approach doesn't mean that
there is no need for Niti, the role of the institution, an organization is important but at the
same time, we should focus on the actual realization of the world that emerged.
Thus, to remove the injustices which are still prevailing in the global business world, there is
a need to determine injustice like discrimination, harassment, working standards and
condition, child labor, political arena, trust and integrity, consumer exploitation, data privacy,
and environment, human rights make efforts to remove them urgently rather than dreaming
about the perfectly just society. Therefore, there is an urgent need for the Niti-Nyaya
distinction in global business ethics.

CONCLUSION

With the rise of global capitalism, corporations become more powerful and seek to
influence the social, political, and economic circumstances in which they are operating.
corporations possess controlling power; they pursue their motive of profit maximization. To
achieve their motive, they tend to exploit their labour, society in which they are operating,
and environment, this results in a sudden increase in the injustices within the business
activities which affects adversely.

To regulate the conduct of corporations they do not indulge in unlawful and unethical
practices there are servals laws and conventions and guiding principles but all these are failed
to remove these injustices. they are still prevailing and businesses are engaged with these
practices behind the curtains.
Thus, there is a need to adopt Sen's idea of justice that is the Niti-Nyaya distinction in the
global business world to remove these injustices. By adopting the Nyaya approach that is
social realization, going beyond rules and policies, and focusing on their implication of these
rules in the real world rather than dreaming about a perfectly just world.

BIBLIOGRAPHY
1 SAN FRANCISCO, February 24, 2010 "The theory of justice must be more concerned with
the elimination of removable injustices rather than defining a perfectly just society," 7 said
Nobel Prize-winning economist Dr. Amartya Sen at an event hosted by Asia Society Northern
California.

2 Mark Granovetter “economic action and social structure: The problem of embeddedness
‘(1985) 91 American journal of sociology 481-510.
In this book the idea of Granovetter is that the nature of corporation is embedded within the
social and political value in which they are operating and markets are cannot be considered in
isolation. They are embedded in the society and political condition.

3 Page NO.1, Introduction, THE CORPORATE RESPONSIBILITY TO RESPECT

HUMAN RIGHT. These are guiding principal setup the standard which the state and business
should follow, although these is not binding but it a responsibility on them. “United Nations
Human Rights Council endorsed the Guiding Principles on Business and Human Rights
presented to by the prof. John Ruggies , Nations Secretary-General, Professor”

4 Page NO.1, Introduction, T HE CORPORATE RESPONSIBILITY TO RESPECT

HUMAN RIGHT. These are guiding principal setup the standard which the state and business
should follow, although these is not binding but it a responsibility on them. “United Nations
Human Rights Council endorsed the Guiding Principles on Business and Human Rights
presented to by the prof. John Ruggies, Nations Secretary-General, Professor

5 Starbucks. "2020 Global Environmental & Social Impact Report ," Pages 10 and 20.
Accessed Sept. 4, 2021. This is the report of the Starbucks for the example of CSR..

6 Amartya Sen’s book “THE IDEA OF JUSTICE” , Amartya Sen in his book “The idea of
justice” posits that in probing social justice, it is paramount to distinguish between “NITI”
and “NYAYA” both these words stands for justice in the Sanskrit language but Sen gave a
different meaning to these two words which help us to understand the two different
dimensions of justice. The term “NITI” (law in books) is deals with rules, institutional
behavior, and organizational correctness whereas the term “NYAYA” (law in action) deals
with actual social realization, going beyond rules and policies, and focus on their implication
of these rules in the real world. Therefore “Niti” is an arrangement-focused view of justice on
the other hand “Nyaya” is a realization-focused understanding of justice. So according to
Sen, the role of institution, rule, and organization is important but their role has to be assisted
in the broader perspective of Nyaya which is closely linked with the world that emerges.

These are the article I have read for the better understand of the topic.

1 “Environmental Pollution and Human Rights Violations by Multinational Corporations” by

Prasadi Wijesinghe.

2 “GLOBAL BUSINESS ETHICS” Simon Zadek, Institute of Social and Ethical

Accountability, UK

.
1
Said Nobel Prize-winning economist Dr. Amartya Sen at an event hosted by Asia Society Northern California.
2
Mark Granovetter “economic action and social structure: The problem of embeddedness ‘(1985) 91 American journal of sociology 481-
510
3
Page NO.1, Introduction, THE CORPORATE RESPONSIBILITY TO RESPECT HUMAN RIGHT

4
Page NO.1, Introduction, THE CORPORATE RESPONSIBILITY TO RESPECT HUMAN RIGHT
5
Starbucks. "2020 Global Environmental & Social Impact Report ," Pages 10 and 20. Accessed Sept. 4, 2021
6
Amartya Sen’s book “THE IDEA OF JUSTICE”
7
.