Morality, Money, and Motor Cars

Contrary to the three views of corporate responsibility, the philosopher Norman Bowie believes that businesses have no special obligation to the environment except those defined by the law (the letter of the law, not the spirit). In his article, “Morality, Money, and Motor Cars”, he says that corporations have only the responsibility to respond to consumer demand.

Bowie makes this point by using the example of cars. He asks whether auto manufacturers are morally obligated to produce a maximally safe car. He thinks (as I suspect you might as well) that the answer is no. Consumers ought to be able to buy a less safe car if they are not willing to pay a higher price for the safest possible car. The market reflects, Bowie thinks, that there are a range of cars that provide various levels of safety to their drivers because this is what consumers want. If I want to pay a low price, and I am willing to drive a very unsafe car, like the Ford Pinto, for example, I should be able to trade away my own safety for a lower price. Our old friend Milton Friedman makes this exact case.

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Bowie wants to make the same argument for environmentally friendly products. He says that consumers might want to trade away environmental-friendliness for a lower price. Now whether consumers were aware of the danger of driving the pinto is a separate issue, and whether consumers understand the environmental impact of various products is a point that Denis Arnold and Keith Bustos will make soon enough. But let’s stay focused on Bowie’s argument for now. He claims that like safe cars, if consumers demand environmentally friendly products, the market will produce them, but this does not mean that corporations have any moral obligation to do so.

“Environmentalists, like government officials, employees, and stockholders, expect that business firms and officials have moral obligations to obey the law, avoid negligent behavior, and tell the truth. In sum, although many business decisions have harmed the environment, these decisions violated no environmental moral obligations. If a corporation is negligent in providing for worker safety, we do not say the corporation violated a special obligation to employees; we say that it violated its obligation to avoid negligent behavior.”1

Because consumers don’t demand environmentally friendly products, he says, corporations are under no obligation to produce them. And corporations have no responsibility to refrain from producing environmentally dangerous products if consumers continue to buy them. (He does not mention whether consumers should be aware of these dangers, nor whether corporations have any obligation to reveal this information.) Further, he claims that the fact that environmentally friendly products are often more expensive than competing products is a market failure that is the responsibility of the government to correct.

“More important, they might argue that environmentally friendly products are at a disadvantage in the marketplace because they have public good characteristics. After all, the best situation for the individual is one where most other people use environmentally friendly products but he or she does not, hence reaping the benefit of lower cost and convenience. Since everyone reasons this way, the real demand for environmentally friendly products cannot be registered in the market. Everyone is understating the value of his or her preference for environmentally friendly products. Hence, companies cannot conclude from market behavior that the environmentally unfriendly products are preferred.

Suppose the environmental critics are right that the public goods characteristic of environmentally friendly products creates a market failure. . . . Traditionally it is the function of the government to correct for market failure. If the market cannot register the true desires of consumers, let them register their preferences in the political arena. Even fairly conservative economic thinkers allow government a legitimate role in correcting market failure.”2

So it is up to consumers, by voting, to bring about laws that will protect the environment from harmful products by forcing corporations to comply with stricter environmental regulations. With this argument, Bowie places the responsibility of protecting the environment squarely on consumers.

This view seems to let corporations completely off the hook. They don’t have to worry about environmental concerns, they only have to respond to consumer demand and obey the law. But, as Bowie says, the problem with this in practice is that “far too many corporations try to have their cake and eat it too. They argue that it is the job of government to correct for market failure and then use their influence and money to defeat or water down regulations designed to conserve and protect the environment. They argue that consumers should decide how much conservation and protection the environment should have, and then they try to interfere with the exercise of that choice in the political arena. Such behavior is inconsistent and ethically inappropriate.”3

If corporations are going to leave it up to the government to protect the environment, and if they are going to take seriously the claim that environmental regulations are an expression of the desires of consumers, then they have an ethical obligation not to interfere with that expression. This means that lobbying against environmental regulations—a common practice among the most powerful corporations—is unethical. Bowie is confident that business will be resistant to this idea, so he proposes that in order to limit the necessity for government intervention, businesses have an additional special obligation to educate consumers about the environmental harms or benefits of their products, and thereby to promote environmentally responsible consumer behavior. This would work to correct the market failure of environmentally friendly products, thereby reducing the necessity for government to correct it.

This is an even more serious concern since Citizens United v. FEC, since now corporations are no longer limited in the amount of money they can spend to further their political goals. Though Bowie’s view at first seems to put all the moral responsibility on consumers and removes it from corporations, the moral constraint of restraining the corporate desire to meddle in politics, coupled with the responsibility to promote environmentally responsible consumer behavior may actually be more limiting to business than if we just presume instead that businesses have a moral responsibility to the environment themselves. Consider that Bowie’s position would result in a great deal more governmental regulation of businesses. Consider also that government is often inefficient at enacting the desires of consumers through the creation of environmental regulation. Even unfettered by corporate efforts to “defeat or water down” those regulations, it would still take a long time and a lot of resources to generate and enforce these regulations.

Business managers have two choices, if they do not want these formal limitations placed on them, and enforced under penalty of law, then they must limit themselves and act under the assumption that they have moral obligations to the environment. Or they must accept that they have ethical obligations to both stay out of the political arena and to educate consumers about environmentally responsible behavior.

In “Business, Ethics, and Global Climate Change”, Denis G. Arnold and Keith Bustos will further develop the position that corporations should regulate themselves by moral principles, rather than be regulated by the law.

1. Bowie, Norman, Morality, Money, and Motor Cars, From W. M. Hoffman, R. Frederick, and E. S. Petryjr., eds. Business, Ethics, and the Global Environment (New York: Quosum Books, 1990), 89-97.

2. Ibid.

3. Ibid.