Balancing Priorities

These two cases depict the actions of two well-known multinational corporations who were faced with a difficult decision: "Should they continue to operate in nations which do not respect human rights?"

Neither multinational actually pulled out of the country in either case. Pepsi "ended operations" in Burma, but they merely sold their plant to their Burmese partner and continued supplying the necessary syrups and such to that partner so that they could continue to make and sell Pepsi products in Burma. They might have reduced their financial interests in Burma, but it certainly seems as if they did not eliminate them. Levi Strauss never really left China, either. Their plan was to slowly reduce their investment in Chinese facilities, and perhaps even eventually eliminate them, but they never really left. They reduced the value of their contracts from $3 billion to around $800 thousand (a substantial reduction), but by 1998 they returned their manufacturing operations to Chinese facilities. 

We can make guesses about why these companies decided to take the actions that they did, but we'll never know their full motivations. Pepsi claimed to be in favor of  a policy of "constructive engagement." This was the idea that the best way to precipitate change in Burma was by participating in the system and changing it from the inside. This might be a viable strategy, but it is difficult to take this claim at face value. Regardless of whether Pepsi could have made changes to the way that Burma treated it's subjects, there are two things which are clear:

  1. Pepsi Co. was increasing their profits by doing business in Burma, and profit is a strong motive for corporate actions.
  2. Pepsi Co's involvement in Burma was at least partly a validation of Burma's labor and trade policies. By doing business there they were, in effect, giving Burma the capital that they needed to keep oppressing their subjects. 

Levi Strauss was in a similar (though perhaps less dramatic) position. China is not known for their recognition of human rights, and it is well-known that conditions in Chinese sweatshops are not good. They did not feel that they could make any progress through "constructive engagement," so the best move was to leave the country. Their gradual withdrawal could be interpreted in many ways, but it appears as though their return was motivated by a loss in profits and the appointment of a new CEO who had different ideas about the balance of human rights and corporate profits.

It seems, if we're being charitable, that both of these companies were trying to balance the necessity of survival through profit and the need to protect human rights. At least it appears that they each thought it was distasteful to profit on the backs of mistreated foreign workers. 

We're not going to solve this balancing problem today, but in thinking about this issue you should consider the following questions:

  • Can a company operate ethically in a country that condones human rights abuses like these?
  • Should multinationals try to balance human rights abuses against potential profits, or should they just refuse to operate in nations that abuse human rights?
  • Is there some amount of profit that would excuse participation in human rights abuses?
  • Is there some amount of profit that would necessitate human rights abuses?