This seems perfectly adequate as a response to the objection. It does suggest,however, that much of the psychological appeal of the social contract theory isbased on a confusio
By calling the appeal of social contract theory a “confusion,” they dismiss its broader moral or philosophical value without really proving that misunderstanding is the only reason people find it convincing. This makes the critique sound somewhat dismissive rather than analytical.
. It is woefully incomplete, however, because it 1) does notadequately address the limits managers' ordinary ethical obligations as humanbeings place on the actions they may take in the business environment, and 2)entirely fails to address the managerial obligations that arise out of the actualagreements made with the non-stockholder participants in the businessenterprise.
rightly note that the theory ignores both the personal moral limits of managers and their responsibilities toward non-stockholder groups, like employees or customers. However, the author doesn’t fully explore the consequences of these oversights — for example, how this narrow focus on stockholders can lead to unethical corporate cultures or harm stakeholder trus
The fact that all three normative theories of business ethics rely on the moralforce of individual consent should come as no surprise given a proper understandingof what a business is, i.e., S'a voluntary association of individuals, united by anetwork of contracts"66 organized to achieve a specified end.67 Because businessesconsist in nothing more than a multitude of voluntary agreements amongindividuals, it is entirely natural that the ethical obligations of the parties tothese agreements, including those of the managers of the business, should derivefrom the individual consent of each
The author makes a clear connection between business ethics and the idea of individual consent, but their argument feels a bit too idealistic. They assume that all business relationships are truly “voluntary,” ignoring how power dynamics, economic pressure, or lack of options can limit real consent. By treating businesses as simple networks of equal agreements, the author overlooks the complex realities of modern corporations where not everyone has the same influence or freedom to choose
The social contract theory is often cnticized on the ground that the "socialcontract" is not a contract at all. To appreciate the nature of this criticism, let usborrow some terminology from the legal realm. The law recognizes three typesof contracts: express contracts, implied contracts, and quasi-contracts. An expresscontract consists in an explicit agreement made in speech or writing. In thiscase, there is a true meeting of the minds of the parties that is expresslymemorialized through languag
r makes a fair point about the social contract not being a real, written agreement, but they kind of take the idea too literally. it focus so much on the legal side that they miss the bigger picture — the “contract” in social contract theory isn’t supposed to be a real document, it’s more of a way to explain how people agree to live by certain rules
The normative social contract theory of business ethics takes much the sameapproach toward deriving the social responsibilities of businesses. It begins byimagining a society in which there are no complex business organizations, i.e., astate of "individual production," and proceed$ by asking what conditions wouldhave to be met for the members of such a society to agree to allow businesses tobe formed
This paragraph clearly explains the main idea of the normative social contract theory by describing how it imagines a society without businesses and asks under what conditions people would allow them to form. However, the paragraph mostly summarizes rather than critiques the theory
is important to note that even in this imprecise form, the stockholder theorydoes not instruct managers to do anything at all to increase the profitability ofthe business. It does not assert that managers have a moral blank check thatallows them to ignore all ethical constraints in the pursuit of profits. Rather, itstates that managers are obligated to pursue profit by all legal, nondeceptivemeans.
While it claims that managers must pursue profit only through legal and nondeceptive means, this restriction overlooks the complexity of real-world business ethics, where actions can be legally permissible yet morally questionable. The theory’s emphasis on legality as the main boundary of moral behavior allows corporations to prioritize self-interest while appearing ethically compliant. In this sense, the stockholder theory may fail to provide sufficient moral guidance for navigating the gray areas between profit and ethical responsibility.
he search for such principles has led to the development of several normativetheories that have been speciElcally tailored to Elt the business environment;theories that, for purposes of this article, I shall refer to as the normative theoriesof business ethics.4
These theories bridge the gap between philosophical ethics and real-world business situations. Their main goal is to guide ethical decision-making in a way that is practical for the business environment.