How should we address harm resulting from business
According to Christopher Stone’s (1975) argument that neither
market nor legal control is adequate.
In Where the
Law Ends, Stone favoured a third possibility: corporate
responsibility. Studies in the Journal of Business
Ethics or Business and Society Review now usually
begin fromthe premise that analysis of responsibilities
– managerial or corporate or both1 – is the right
way to do business ethics.
there has not yet been a discussion on the extent to
which doing business responsibly is sufficient.
This paper considers situations where business
activities perpetuate foreseeable, preventable harm
while being conducted as responsibly as possible.
theparadox can be resolved if we concede that evaluation
of responsibilities is not always an adequate
means for ethical evaluation of business activities.
We must also evaluate the nature of the produced
What is the ‘‘it’’ … ?
The issue is complicated further by the fact that
many aspects of corporate behaviour are only prima
facie harmful and are linked with benefits.
pollution is harmful; yet attempting to regulate it
down to zero might make it impossible to manufacture
One alternative to fining the corporation is to
hold individuals criminally liable for harmful effects
of corporate activities. The problem here is that
criminal law can only punish those who commit
crimes with knowledge and intent (mens rea). Creatingindividual criminal liability for corporate acts
gives executives an incentive not to know anything
about possible causes of harm, so they can honestly
plead ‘‘not guilty.’’
market pressure has generally
not been sufficiently forceful to control corporate
activities. Compared with regulators, consumers
generally have less knowledge about producers’
activities; and less ability to punishthem.
In short, according to
Stone, the market can’t do ‘‘it’’ because the conditions
of a free market are not satisfied in practice.
How might responsibility do ‘‘it’’ ?
Evading the question of whether collections of
persons can be responsible in a metaphysical sense,
he proposes that we create the analogues of conscience,
guilt, shame and responsibility within the
corporate ‘‘mind’’ ordecision making structures
As any business corporation must
answer to its shareholders for the financial results of
its actions, corporations could be made to answer for
all benefits and harms they produce
Many of Stone’s successors, conversely, treat
responsibility as an alternative to regulatory control.
Corporations are addressed as entities
that can act on moral reasons3 – as do humanpersons – and should be encouraged to do so rather
than being constrained by externally enforced rules
Responsible insurance can’t do it
The product sold by insurance companies is a
promise to compensate clients for specified possible
future losses (e.g. Baker, 1994; Driskill, 1991). For
clients, on the other hand, an insurance policy is not
understood only as a promise to pay; but as apathway
to many incidental social benefits.
people who do not have automobile insurance are
not legally allowed to drive in most jurisdictions
Since the insurance
product is in effect a financial promise, the highest
quality insurance plan is one that offers a client the
most effective guarantee that its promises will be
kept. This means that a high quality insurancecompany must have plenty of funds on hand to be
able to keep all of its promises
In short, being uninsured
results in probable and actual harm to persons.
combination of these two effects, known as adverse
selection, produces a situation where community
rated plans are more likely than others to attract
worse-than-average risks, but at a price suitable for