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Christoph Lütge
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Matthias Uhl
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Foreword
This textbook would not have been possible without the cooperation of
many people. First and foremost, we would like to mention Johanna Jauernig,
Jan Gogoll, and Julian Müller. Special thanks also go to Manuela Schönmann
for her great help. We are indebted to Martin Berger, Benjamin Großmann-
Hensel, Immanuel Klein, Sebastian Seisenberger, and Johannes Waldorf for
research assistance. We would also like to thank Adam Swallow, commis-
sioning editor at Oxford University Press, for the critical review of the manu-
script, and OUP for the accepting this work. Last but not least, we also thank
our families for their unwavering support during the time-consuming work
on this book.
Christoph Lütge
Matthias Uhl
Munich
August 2020
List of figures
6.2 The four information layers and the four characteristics of an ethics code 212
6.3 Basic elements of a compliance management system according to
IDW PS 980 218
6.4 The structure of the internal investigation process 220
6.5 Autonomous organization of compliance 221
6.6 Matrix organization of compliance 221
6.7 The CSR pyramid 251
6.8 Growth in global CSR reporting rates since 1993 252
6.9 CSR reporting rates by region 253
6.10 Definition of sustainability 259
6.11 Tangible vs. intangible assets for S&P 500 companies, 1975–2018 260
6.12 Preconditions for the success of CRM cooperation 263
6.13 Stakeholder groups 265
6.14 Influences on productivity 267
6.15 Corporate citizenship in the narrower, broader, and broadest sense 273
List of tables
1.1 The TTIP dispute—The fear of being flooded with “inedible food” 8
3.1 Burning ivory in Kenya 56
4.1 Sweatshops and Kantian ethics 84
4.2 The classical paradox of value: Why is a diamond more expensive
than water? 105
5.1 More industrial jobs for Africa? An experimental study in Ethiopia 168
5.2 The Universal Declaration of Human Rights 171
5.3 Gao Feng and Chrysler 176
5.4 Self-binding of bank customers in the Philippines 188
6.1 Regulatory landscape in the United Kingdom 198
6.2 Corruption scandal at Siemens AG 203
6.3 Lorry cartel 206
6.4 Spying scandal at Lidl 209
6.5 The McDonald’s code of conduct 213
6.6 IHC Caland in Burma 224
6.7 The US and EU position on genetically modified organisms
(GMOs)—explicit versus implicit CSR 254
6.8 Krombacher’s rainforest campaign 262
6.9 WaterHealth International 269
6.10 Deepwater Horizon 279
6.11 Beyond Petroleum 285
6.12 Label fraud 289
An Economically Informed Approach
to Business Ethics
Business Ethics: An Economically Informed Perspective. Christoph Lütge and Matthias Uhl, Oxford University Press (2021).
© Christoph Lütge and Matthias Uhl. DOI: 10.1093/oso/9780198864776.003.0001
2 An Economically Informed Approach to Business Ethics
We hope that this textbook will help people in their work on business ethical
issues, whether it is academic or practical in nature.
1
Business ethics in the age of
globalization
Chapter overview
Business Ethics: An Economically Informed Perspective. Christoph Lütge and Matthias Uhl, Oxford University Press (2021).
© Christoph Lütge and Matthias Uhl. DOI: 10.1093/oso/9780198864776.003.0002
4 Business ethics in the age of globalization
4500
3,924 4,131
4000
3,701
Number of users in millions
3,345
3500
2,669 2,853 3,060
3000
2,478
2500
2,242
2000 1,772 2,035
1,382 1,570
1500
1,100 1,216
1000
500
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*
resources and cheap labor. This led to the further contraction of commodity
prices and thus to growing poverty.
In addition to the IMF and the World Bank, Chossudovsky is also very
skeptical of the WTO: On the one hand, the policies of the WTO violate
international law and legitimize almost criminal trade practices, such as the
robbery of intellectual property by multinational companies. For example,
the patentability of organisms would weaken the rights of plant breeders in
favor of Western biotechnology companies. In addition, Chossudovsky sees
the WTO agreements as being contrary to the 1948 Universal Declaration of
Human Rights.
Chossudovsky argues that the credit policy of international institutions
effectively makes developing countries insolvent. The loans are always linked
to political provisos such as liberalization, exacerbating the balance of pay
ments crisis. Project-related loans are rarely granted, thus preventing capital
formation wherever the interests of the export industry are not directly
impacted. Loans, conversely, are granted on a large scale for world-market
imports benefiting industrialized nations. This has the effect of crowding out
a wide range of domestic goods. According to Chossudovsky, developing
countries are left only with exports to the industrial nations, which leads to
fierce competition and, as a consequence, low prices and wage dumping.
Chossudovsky finds examples in the food crisis in Somalia in the 1980s,
which had been made worse by the policies of the IMF and the World Bank.
The economic reforms that the nomadic peasants were unable to cope with
destroyed agricultural production, which led to a dependency on grain
imports, which, in turn, prevented self-sufficiency. Chossudovsky contends
that the “subsidized beef and dairy products imported (duty free) from the
European Union have led to the demise of Africa’s pastoral economy”
(Chossudovsky, 2003, p. 99).
The Frenchman Thomas Piketty is another prominent economist who
takes a critical view of globalization. While Piketty regards globalization as a
benefit, he finds that the profit of global trade is not fairly distributed among
the various actors. His book Capital in the Twenty-First Century published in
2014 addresses the critique of inequality. Piketty sees regulatory shortcom
ings as the main problem behind the unequal distribution of globalization’s
gains. Yet, institutions such as the IMF or the World Bank are not in a posi
tion to solve these problems. He also argues that the European Union has
failed in its task of mitigating inequality (Piketty, 2014). Overall, Piketty
advocates closer political and economic cooperation to effectively combat
problems such as tax evasion.
8 Business ethics in the age of globalization
In this context, Piketty also recognizes free trade agreements such as the
Transatlantic Trade and Investment Partnership (TTIP, see also practice
box 1.1: The TTIP Dispute) and Comprehensive Economic and Trade
Agreement (CETA) as an opportunity: If free trade were complemented by
fiscal-political cooperation between countries, which, for instance, could
lead to a joint corporate tax, it would be an effective way of combating
abuses. At present, Piketty points out, multinational companies in both the
United States and Europe pay less tax than medium-sized companies. Piketty
sees tax competition between countries that want to attract multinational
companies into the country with the lowest possible corporate taxes as a cen
tral problem that can only be solved through political cooperation.
Overall, Piketty argues for a fundamental reorientation of globalization
(Piketty, 2016). Only in this way can the greatest challenges of our time—
inequality and global warming—be effectively combated. The instruments
for this are international agreements, but they should no longer be geared
exclusively toward trade liberalization. Rather, these agreements must ensure
that global development is oriented in terms of the goals of fairness and sus
tainability. Specifically, this means that the reduction of trade tariffs must be
combined with conditions to effectively tackle tax dumping and the exploita
tion of natural resources (Piketty, 2016).
In the wrangling over the Transatlantic Trade and Investment Partnership (TTIP),
the issue of food safety has dominated the reporting in the European and espe-
cially German press. As EU consumer protection, environmental and health stan-
dards are in most cases stricter than the corresponding US rules, many Europeans
feared that harmonizing the regulations in the wake of TTIP implementation
would drastically weaken current EU standards. This fear of a “race to the bot-
tom” (Neslen, 2016) became particularly apparent through warnings of being
forced to eat allegedly “inedible food,” once TTIP opened the EU “floodgates” to
American food products (Chan and Crawford, 2017). Europeans’ fears of free
trade with the United States crystallized in response to debates on “turbo pigs”
(pigs treated with growth hormones), “chlorinated chicken” (poultry cleaned
with chlorinated water to kill bacteria), and “gene food” (genetically modified
food) (Hagelüken, 2014).
1.1 The phenomenon of globalization 9
Continued
10 Business ethics in the age of globalization
Concerning food safety, the regulations for milk products for human consump-
tion have been much stricter in the United States than in the EU since the 1980s and
were last tightened in 2014. In particular, products made from unpasteurized milk
are considered to be hazardous to health and therefore may not be sold. For this
reason, most French raw milk cheeses, such as Camembert, Roquefort, or Brie, are
banned from import to the United States (Bonem, 2017; Bushak, 2014; US Food &
Drug Administration (FDA), 1987).
Sources:
Behsudi, Adam (2015). U.S. to Europe: Don’t Move My Cheese. Politico, updated July 21, 2015. Last
accessed July 4, 2020 at: https://www.politico.com/story/2015/07/us-to-europe-dont-move-my-
cheese-120387
Bluth, Christian (2016). Attitudes to Global Trade and TTIP in Germany and the United States. GED
Study. Edited by Bertelsmann Stiftung, Gütersloh. Last accessed July 4, 2020 at: https://www.
bertelsmann-stiftung.de/fileadmin/files/BSt/Publikationen/GrauePublikationen/NW_Attitudes_
global_trade_and_TTIP.pdf
Bonem, Max (2017). Why Americans Don’t Get to Eat Delicious Raw Milk Cheese, updated May 24,
2017. Last accessed July 4, 2020 at: https://www.foodandwine.com/lifestyle/why-americans-
dont-get-eat-delicious-raw-milk-cheese
Bushak, Lecia (2014). FDA Bans Roquefort, Other French Cheeses Due To Bacteria Levels; Though
They’re Virtually Harmless. Consumer News, updated September 6, 2014. Last accessed July 4,
2020 at: https://www.medicaldaily.com/fda-bans-roquefort-other-french-cheeses-due-bacteria-
levels-though-theyre-virtually-301638
Chan, Alexsia T. and Crawford, Beverly K. (2017). The Puzzle of Public Opposition to TTIP in
Germany. Business and Politics, 19(4), 683–708.
Diamand, Emily and Schimpf, Mute (2016). Schlechter Deal für EU—Bäuerinnen und Bauern.
Gefahren für die Europäische Landwirtschafts durch TTIP. Edited by Bund für Umwelt und
Naturschutz Deutschland e.V.—Friends of the Earth Germany (BUND), Friends of the Earth Europe,
Berlin. Last accessed July 4, 2020 at: https://web.archive.org/web/20160713105629/http:/www.
bund.net/fileadmin/bundnet/pdfs/umweltschutz_international/160711_bund_ttip_studie_
agrar.pdf
European Food Safety Authority (EFSA) (2008). EFSA Opinion on Four Substances Used to
Decontaminate Poultry Carcasses: Assessment of Effects on Bacterial Tolerance and Antimicrobial
Resistance. Last accessed July 4, 2020 at: https://www.efsa.europa.eu/en/press/news/080402
European Food Safety Authority (EFSA) (2009). Scientific Opinion: Safety Evaluation of
Ractopamine. Scientific Opinion of the Panel on Additives and Products or Substances used in
Animal Feed 1049, pp. 1–52. Last accessed July 4, 2020 at: https://ec.europa.eu/food/sites/food/
files/safety/docs/codex_ccrdvf_18_agenda_item2-efsa_en.pdf
Hagelüken, Alexander (2014). Geplantes EU-Freihandelsabkommen mit den USA. Tempolimit für
Turboschweine. Süddeutsche Zeitung, 29 April, 2014. Last accessed July 4, 2020 at: https://www.
sueddeutsche.de/wirtschaft/geplantes-eu-freihandelsabkommen-mit-den-usa-tempolimit-
fuer-turboschweine-1.1945592-0
National Pork Producers Council (2016). Comments on the “Transatlantic Trade and Investment
Partnership.” Last accessed July 4, 2020 at: https://nppc.org/wp-content/uploads/2016/03/
Trans-Atlantic-Trade-Negotiations-Comments-to-USTR-on-TTIP-Negotiations.pdf
Continued
12 Business ethics in the age of globalization
Neslen, Arthur (2016). Leaked TTIP Documents Cast Doubt on EU–US Trade Deal, updated May 1,
2016. Last accessed July 4, 2020 at: https://www.theguardian.com/business/2016/may/01/
leaked-ttip-documents-cast-doubt-on-eu-us-trade-deal
Peter, Laurence (2015). TTIP Talks: Food Fights Block EU–US Trade Deal. BBC News, updated June
10, 2015. Last accessed July 4, 2020 at: https://www.bbc.com/news/world-europe-33055665
Serfati, Claude (2015). The Transatlantic Trade and Investment Partnership (TTIP): A Controversial
Agreement and Dangerous for Workers. European Trade Union Institute (ETUI), Brussels (ETUI
Working Paper 2015.07).
US Food & Drug Administration (FDA) (1987). 21CFR1240.61 “Mandatory Pasteurization for all Milk
and Milk Products in Final Package Form Intended for Direct Human Consumption,” revised April
1, 2019. Last accessed July 4, 2020 at: https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfcfr/
CFRSearch.cfm?fr= 1240.61&SearchTerm=pasteurization
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Figure 1.2 Ethical preferences for autonomous cars across three clusters of countries
Source: Awad et al. (2018, p. 62)
14 Business ethics in the age of globalization
The International Labor Organization (ILO) defines child labor as the eco
nomic activity of children under 15 years of age. Child labor can be further
divided into three categories, children in employment (1), child labor (2),
and hazardous work and other worst forms of children labor (3). The first
and broadest category is work in informal and formal markets within or out
side the family, with or without pay. Child labor in the strict sense (2)
excludes forms of light child labor. Finally, hazardous child labor (3) refers to
work that endangers the welfare of the child physically or mentally, including
serious forms such as physical or sexual exploitation, the use of child sol
diers, or abuse for criminal activities.
According to the ILO, around 152 million children worked in 2016, almost
half of them (73 million) in hazardous areas of activity. Africa has both the
highest number and the highest proportion of working children (72 million,
or 19.6 percent of all children). Together, the Africa region and the Asia
and the Pacific regions account for almost 9 out of every 10 children in
child labor. Worldwide, most children work in agriculture (108 million),
26 million in services, and 18 million in industry (International Labour
Organization, 2017).
Not only is the ILO combating all exploitative forms of child labor under
the umbrella of the UN, but there are also many non-governmental
1.3 Case studies 17
organizations such as Save the Children or Terre des hommes. The UN itself
also takes the view that child labor should generally be banned, with the jus
tification that child labor is dangerous and unnecessary. A total of 193 coun
tries have committed themselves to the UN development goals, including
the abolition of child labor worldwide by 2025 (United Nations, 2020).
In the meantime, the view that a complete abolition of child labor is desir
able has changed in many scientific circles. In 2016, a group of international
scientists criticized the UN’s general ban on child labor in a letter to the
British newspaper The Observer (McVeigh, 2016). They argue that the UN
relies on outdated facts and ignores the positive effects of some forms of
child labor. Child labor, for example, does not generally prevent children
from attending school. Light forms of labor can even support it, for example,
if it helps the child to afford his or her schoolbooks.
In their article “The Economics of Child Labor,” the economists Kaushik
Basu and Van Pham (1998) put forward two arguments against a general ban
on child labor: Child labor is a phenomenon of the poorest of the poor, and
even in the most deprived areas, parents send their children to work only if it
is essential for the family’s survival. There is therefore no better alternative
here (for example: the child goes to school), which could be enforced by a
ban on child labor. Even import bans on goods whose production involved
child labor does not lead to the desired improvements for the affected chil
dren. On the contrary, a ban could drive children out of industrial work into
even worse fields of activity such as prostitution. As an example, Basu and
Van refer to the so-called “Harkin’s Bill,” named after US Senator Tom
Harkin, who introduced the Child Labor Deterrence Act to the US Congress
in 1992. The purpose of this law was to prohibit the import of products cre
ated by child labor into the United States. Even before the law came into
effect, numerous clothing manufacturers in Bangladesh fired children in
order not to jeopardize their trade agreements with the United States.
UNICEF investigations, however, show that the children who were dismissed
ended up in much more harmful activities, such as working in quarries or
even in prostitution.
Other experts argue against a general ban on child labor, arguing that such
bans ignore the reality of many countries and make working children even
more vulnerable to exploitation (Liebel et al., 2012). An example of not gen
erally prohibiting child labor, but regulating it in the interests of children,
can be found in Bolivia (Liebel, 2014): In contrast to the usual prohibition on
child labor as a whole, the law that came into force in 2014 (whose drafting
incidentally involved children themselves) emphasizes the right of children
to be protected at work. The law also takes into account the fact that among
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Language: Finnish
Kirj.
Lauri Soini
SISÄLLYS.
Suomen laulu.
Suomen kielellä.
Suomen lippu.
Suomettaren laulu.
Elä sure, Suomeni!
Karjala apua huutaa!
Siirtolaisille.
Suomen pojat.
Tuuloselle.
Iloisin mielin.
Rauhan sankari.
Kumpumäen vanhukset.
Herra sensori.
Ihanteen etsijä.
Torpan poika.
Pohjolan neidet lännessä.
Kotkankallio.
Keväinen kotiutuminen.
Iltakello.
Ilta.
Neitosen sulhaset.
Neitokolmikko.
Neitonen, tietäjä kuitenkin.
Annikki.
Kumma tyttö.
Koulu jo alkaa!
Valkamalle.
Elämä ja ihanteet.
Täyteläs rinta.
Nuoret, nuoret.
Konsahan!
Keväiset yöt.
Tuoksuva tuomen oksa.
Kultani kartano.
Pihlajan juurella.
Hänen luonansa.
Kuusi on tumma ja koivu on seljäs.
Lemmenpaula.
Ei toki semmoista tehdä saa!
Tule kultani keinuhun!
Sydämillä leikkimistä.
Minä ja hän.
Juhannus ja joulu.
Taivaan pilvet.
Sinä olet päivyt.
Sinä olet päivä ja minä olen kuu.
Ruusun kukka ja vaahteran oksa.
Kukkaset ja kukkasvarkaat.
Jänis ja — kultani.
Niin täytyy.
Kullan haudalla.
Surujeni lampi.
Suuren surun keskelläkin.
Luottava vuottaja.
Minä olen sellainen.
Raitis Rautiainen.
Päiväläisen mietteitä.
Kulkijapoika.
Hulivilipoika.
Vaikeassa asemassa.
Mitäpä noista —!
Kuohuvan kosken kunnaalla.
Lintu lenti oksalle huojuvalle.
Laulaja- ja tanssijatyttö.
Pikkunen tyttö.
Kultaansa ihaileva.
Järvellä.
Meripojan morsian.
Kullastansa jäänyt.
Salainen lempi.
Illalla ja aamulla.
Lempi.
Suomen laulu.
Talvella 1899.
Suomen kielellä.
1899.
Suomen lippu.
Liehu, liehu korkealla lippu sinivalkonen! Laula, kansa, lipun
alla laulu toivon, vapauden!
1896—99.
Suomettaren laulu.
Riemukasta, onnekasta
oli meillä silloin,
Väinämöisen laulujansa
laulaessa illoin.
1896—1899.
1899.
Jalovaaralla 1897.
Siirtolaisille.
1899.
Suomen pojat.
1899.
Tuuloselle.
1899.
Iloisin mielin.
1899.
Rauhansankari.
I.
II.
III.
Heinäkuulla 1899.
Kumpumäen vanhukset.