In April of 2013, the Savar garment factory in Bangladesh collapsed, killing over a thousand workers and leaving many others injured (Manik and Yardley, 2013). The effects and aftermath of this disaster were widespread, from people arguing over safety regulations to the merits of conspicuous consumerism. The garment workers were making clothing for stores such as Sears and Walmart, and government investigations revealed violations of fire safety that could have contributed to the collapse (Manik and Yardley, 2013). In today’s capitalist economy, many large companies have to cut down on overhead by outsourcing labor and paying less to produce these products. To that end, the question remains: what kind of ethical responsibility does a company have to its workers versus its stockholders and customers? Comparing Scalet’s sense of fealty to stakeholders to Friedman’s more libertarian ideas of corporate social responsibility, there is a way to reconcile the two ideas and engage in greater corporate social responsibility in order to appease both stakeholders and stockholders.
The responsibility for the collapse is said to fall on the owners of the garment factory, who ordered the employees to go to work that day in spite of the risks to their safety (found with cracks in the structure of the building) (Manik and Yardley, 2013). It is clear that the owners are responsible for what happened, but to what extent they broke business ethics is still worth investigation. Consumers worldwide have been protesting and speaking out about the company running the garment factory, as well as the retailers who purchase clothes made in those factories (Fox, 2013). There are consumers even seeking to boycott these businesses and change their own consumer habits to avoid companies that treat their workers and source products this way. This kind of criticism leads to a culture that is definitely hostile towards these businesses, violating a company’s ethical obligation to protect and care for its stakeholders (while also creating a culture that actively detests these businesses and deprives them of a greater consumer base).
Because of this debate about what responsibility corporations have towards all the parties involved in its sales cycle and beyond, there are conflicting ethical views on what these companies should do. First, there is Milton Friedman’s concept of the free market; Friedman argues that political freedom cannot come about without economic freedom, and argues for the perpetuation of the free market as a philosophical and practical solution to many of society's problems. In essence, if we are to posit that a free society is the best society, and is the one we want to participate in, it is vital that the government take a limited role in controlling the economy. According to Friedman, “Only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but “business” as a whole cannot be said to have responsibilities, even in this vague sense” (Friedman 173). To that end, whole industries are not to be held responsible for events, no matter how tragic or dangerous to the worker, as they are just a grouping of individuals and companies.
Government regulation of companies and factories to deliver better working conditions would also be met by resistance from Friedman. Granting the individual the economic freedom to make his or her own choices with their money is the only way individual dignity can be maintained; the interference of government in the economic process forces a mixed, confused system that does not know how many freedoms it wants to give its people. To that end, Friedman would not want the companies involved in the Savar factory collapse to do anything that a government mandated it to; they are just meant to increase and sustain their profits. To do otherwise, and kowtow to consumer and government interests, is to “impos[e] taxes, on the one hand, and deciding how the tax proceeds shall be spent, on the other” (Friedman 175).
Friedman’s views are a stockholder-based view on corporate social responsibility, whereas a stakeholder-based view (such as that provided by Scalet) provides a slightly more magnanimous perspective on the issue. According to Scalet, companies are beholden to the law above all else, and so they cannot do something that breaks the law, even if stockholders tell them to; this is preferable to shutting out one group of people (the stakeholders) in favor of solely focusing on profit maximization. Given the powerful political and economic capital that many of these retailers bring to the table (like the companies buying the clothes from the Bangladesh factory that collapsed), however, it is often difficult to impose laws that will have any effect: “Management must place ethical constraints on their activitiesor they could easily cease market activity altogether and be doing no better than acquisition by violence that has marred much of human history” (Scalet 10).
Corporations, nonetheless, still have an obligation to respect human rights under the law – meaning that the Savar factory collapse is still on their shoulders. It was previously mentioned that many people are asking questions and there is a greatly negative portrayal in the media of these businesses due to the collapse – this has surely been hurting the stockholders, whose potential to maximize profits is hurt by people refusing to patronize their business. To that end, it is possible for a stakeholder-friendly approach to social responsibility to help both save lives and money.
In conclusion, the issue of the Savar factory collapse is a difficult and complex case of ethical responsibility. On one hand, Friedman argues that the only fealty corporations have are to their direct stockholders – the people who own the company – and their goal is to maximize profits as much as possible. To that end, the Savar factory’s working conditions were negligible, as they had no obligation to honor their human rights and safety. However, the stakeholder approach offered by Scalet shows that corporations have the need to obey human rights under the law, so they should have taken care of their workers for the sake of basic ethics. It is a case of selfishness vs. selfishness, and there is no real clear-cut answer. However, given the outrage that this has sparked in the world community, perhaps it would be best for the stakeholders and the stockholders (who wish to maintain maximum profits from people patronizing their business) to make policy changes, in the face of conspicuous consumerism.
Fox, Emily Jane. “Shoppers lash out at stores over Bangladesh.” CNN Money, May 01, 2013.
Friedman, Milton. Capitalism and Freedom. Chicago: University of Chicago Press, 1962. Print.
Friedman, Milton. “The Social Responsibility of Business is to Increase Its Profits.” 174-178.
Scalet, Steven. “Corporate Responsibility.” 1-19.
Manik, Julfikar Ali and Yardley, Jim. “Building Collapse in Bangladesh Leaves Scores Dead.”
The New York Times, April 24, 2013.