Seminar by Professor Elaine Sternberg

Free Market Business Ethics and Human Rights (2 February 2011)

Professor Elaine SternbergProfessor Sternberg questioned the now fashionable view of business ethics, the notion that businesses should serve ‘stakeholders’. She pointed out that there are many possible stakeholders, who can have divergent interests, and so make many different demands on a business.  Stakeholder theory in practice promotes ethical confusion about the fundamental aims of any business.

Professor Sternberg took the Friedmanite position; businesses are forms of corporation or association whose aim should be to serve their owners (i.e. their shareholders).  Businesses should therefore act to maximise profits, that and nothing else.  Of course individuals working in businesses should act decently and ethically, but their major purpose, while working in the business, should be to pursue the aims of the owners of the business. Of course other types of corporation could pursue different social aims, when they are set up for non-business purposes.  

Her libertarian views were displayed by her opposition to health and safety legislation.  She would even allow businesses to employ child labour.  In the less developed world children and their families may improve their lives as a result of it.  She suggested that those who oppose such practices are free not to deal with companies that employ children.  These things should be a matter of individual decision, and the state should not get involved.

Report by Malcolm Rees