Ethical Issues in Business, A Philosophical Approach, Seventh Edition by Thomas Donaldson, Patricia H. Werhane, and Margaret Cording. Article by John Rawls, Distributive Justice (p 193-203)
Upon first reading John Rawls’s article on the concept of Distributive Justice, I felt that the principles seemed reasonable and I agreed with his basic ideals. However, I recognized that the many assumptions about how people must act for the system to work could be a problem. The basic principle contains two simplistic rules. The first rule demands equality for all people. Each person has “an equal right to the widest liberty compatible with an equal liberty for all.” The second rule is a warning for when the first rule cannot be applied. It revolves around the concept that inequalities are only allowed if, in the end, inequality benefits everyone. Although the article discusses the application of these rules to government, they are easily applied to businesses as well. It is this aspect of Distributive Justice that I am focusing on. As I delved into these principles and the effects they could have on business, I began to see some problems.
The first problem involves rule makers and rule breakers. Distributive Justice defines a set of rules that everyone must follow. These rules should give all people the same opportunities. If there are inequalities, these same rule makers are responsible for deciding whether the inequalities are okay based on whether they enhance the greater good for all in the long run. Whether you think about this from a government or corporate perspective, the problem remains the same. Who can make the rules? Who decides if an inequality is justified? When legislators decide what is right, will they take all stakeholders into account? Do some stakeholders have priority over others? For example, would problems involving people neglect effects on the environment? We live in a world made up of many different cultures. Even within a specific culture a wide range of human behavior is found. Each person has their own value system, and these differences can affect the importance of stakeholders. Some stakeholders may not even be considered by certain people or cultures. Given this diversity, how do you really define what is Fair?
Andrew Carnegie is an example of how these principles can go astray. Carnegie believed that private wealth should be held in trust for the public3. Carnegie also believed in acquiring this wealth by minimizing his bottom line at his steel mills. One of the ways he accomplished this was by paying his work as little as possible. The justification for workers’ inequalities was offset by the greater good that would be achieved when their wealth was redistributed to the public. This fits nicely into the second rule of distributive justice. Inequalities are compensated since they are considered to be advantageous for all in the long run. The problem, of course, is that workers wanted a better life now, not in a future they may not live to see. The workers felt that their quality of life was below that of the slaves. Their salary was so low that they could barely get by, the company controlled the housing and stores in an effort to help the employee, but it was more like a debtors’ prison than an employee benefit. In essence, the workers did not believe that the second principle of justice was upheld. In their view, the inequalities were not offset by these benefits. So we see that although Carnegie thought what he was doing was correct and just, other viewpoints may have drastically different views of the situation. Since rule makers are human, their ideals will influence their perceptions of what is fair and just. As rule makers, managers should survey as many different groups as possible before setting a policy to minimize the chances of misrepresenting a stakeholder.
Now let’s take a look at discrimination. Businesses today deal with a wide diversity of employees. The ability to travel anywhere in the world in one or two days eliminates the isolation of cultural groups or races and opens the doors for cultural mixing. With increasing diversity in the workplace, it is even more important to minimize the effects of discrimination. Since concepts of equality for all people are central to the principles of distributive justice, it should follow that their application would eliminate discrimination. In an ideal world, this would work, but discrimination can rear its ugly head in the most subtle ways. Take an interview for example. It would be obvious to anyone who has even the slightest idea of what discrimination is to know that using a person’s age, race, culture, or gender as a reason not to hire a person would be discrimination. Rion describes a typical manager’s decision-making environment as something that is usually made in a short period of time and only a few of the facts are known. The typical interview exemplifies this situation. You are given a fact sheet about a person who may or may not be correct. You are given a very short period of time to interact with the person and then you must make a decision about hiring them. He will probably never have all the facts and probably won’t be able to verify most of the ones he does.
Given this situation, suppose that two potential employees have just been interviewed. The two people are on an equal footing in terms of experience, skills, and education. They were both personable and made a positive impression during the interview. In essence, both are equally qualified for the position. One of these people is from a culture he is not familiar with. The other is from the same culture you come from. The unknown work ethic of another culture generates some doubts in the decision-making process. What is the work ethic of this person’s culture? Will they follow your cultural work ethic? Will other ethnic or cultural issues create problems/tensions in the workplace? Given the uncertainty of another culture’s work ethic and personality, it may make sense, from a limiting unknowns perspective, to hire what you know, rather than take a chance on an uncertainty. It would seem logical to choose the person most similar to you to be able to play in your favor. By choosing the person most like you, you feel more comfortable with your choice as you have removed some of the unknowns from the situation. He is a rare person who can put aside all his prejudices. People are made up of likes and dislikes, prejudices and preconceived ideas. Even if they tried to minimize these effects on decisions, you will eventually have to make a decision. Even if a person could be 100% objective when it comes to discrimination issues, a manager’s decision methodology could still result in a discriminatory decision.
Distributive justice also looks at social minimums, but as good as it is, it also has a dark side. For the most part, social minimums are a great thing. They help raise the standard of living for all people, regardless of their income or financial situation. It has a system to deal with unemployment and to help those who are temporarily financially disadvantaged. But what happens when the system provides a social minimum that exceeds the lifestyle that could be allowed through work. There is a study by Martin Feldstien that has a section that talks about a group of people who, due to dysfunctional lifestyles or personal choice, choose to live in poverty. They use the system established by the social minimum to get ahead. He goes on to describe a problem we have in this country where an increase in welfare benefits, combined with inflation, has outpaced the value of some people’s wages. In effect, the message that the government is sending is that you can live a better life if you don’t work and live outside the system. If low-wage jobs do not allow a life better than the social minimum, what is the incentive to work? How do you motivate people in a low-wage situation to work hard when the alternative would be a government-provided social floor that exceeds what you can earn on the job? There is a part of the population that chooses not to work, since they are happy with the lifestyle that provides them with the minimum social. Is it right to promote a system that allows and even encourages this antisocial behavior to some extent? A behavior counterproductive to the necessary assumption that all people want to improve themselves and the communities in which they live.
This set-up becomes a problem for any manager working with people in this low-wage range. Your workforce will likely be made up of people who are at a stage in their life where they can afford the salary, but who will be out of it soon, such as high school or college students. One part will work hard because they are conscientious. And some are unmotivated and just want a paycheck. A high turnover rate and constant training will be required as new employees come in, making it difficult to create a well-trained staff. If the job does not have a clear path to better positions, what is the motivation for a person to work hard? Through social minima, we can actually harm management’s ability to hire, motivate and retain a workforce, thus creating an undesirable situation in the long run.
Distributive Justice is a strong ideal that can provide a solid backbone for creating a system of ethical behavior that takes into account the diversity of human morality and ethical behavior. If followed, his utilitarian approach should raise the standard of living for all social levels. By its very nature, it can be adapted to account for changing times and new information. Applying the principles of Distributive Justice to a business would be a good step for a company to move towards more responsible behavior. By thinking about the implications of its actions and the effects, and adhering to the principles of justice, a company can move forward in a responsible and socially conscious manner. The first step in solving any problem is to identify it. Distributive Justice is a way to discover those problems.