Tuesday, September 23, 2014

The Ethics of an Industry is Driven by the Most Ruthless Competitor

This insight is the fruit of a visit to the Eastern Kentucky coal fields, but could come from many other industries.

I am drawn to this idea because students tend to see ethics as simply the morals of individuals, multiplied by the number of individuals.  It is very hard for them to see social structures at first.  Thus, when we study how some particular firm is exploitative, they attribute this to the bad morals of the owners of that firm.  Students imagine that if they were in charge, they would never act so badly because they are good people.

Yet in any competitive industry - which is to say, any industry in capitalism - if exploitation will increase profits, then some firm will become more exploitative.  And if that gives them a competitive advantage over other firms, the other firms will incline to become that exploitative, too, or lose business.  Normally, I think, it is not the biggest or highest status firms that begin a round of exploitation, and the managers in that firm think themselves more honorable than their more ruthless competitors.  Until, that is, the higher-status firm starts losing profits.  Then, no matter how high-minded they started out, they are likely to follow the more ruthless firms downward.  And thus, the ethics of the industry as a whole are driven by the most ruthless competitor.

Which is why regulation is good for industries, and is most beneficial to those owners and managers who do want to be moral, who do not want to exploit their workers.

We were told a chilling story by a retired coal miner, who had worked in both unionized (that is, more regulated) and non-unionized mines.  He said that when women won the right to work in the mines in the 1970s, the owners were required to put portable toilets in the mines.  In the unionized mines, these were a practical improvement for all workers.  In the non-unionized mines, our guide told us, the workers were told that the toilets were there for the inspectors to see - any miner who actually used one would get fired.  To eke out the tiniest bit of extra profit by not letting miners take a toilet break, and not paying the cost of cleaning portable toilets, the more ruthless firms would add that much exploitation - until and unless the inspectors caught on. 

Ethics comes from the structure of social relations as much as it does from the morals of individuals.


Anon Ymous said...

Is it necessarily true that "immoral" behavior on the part of employers lead to lower profits?

One could argue that a well paid and safe workforce would actually be more profitable than one that is poorly paid and unsafe. This may indicate that profit maximization may in fact encourage morality.

gruntled said...

I think that is an empirical question, and may differ from industry to industry. It is probably impossible to get better professional work done by enslavement, and a losing proposition in many service jobs. The fact that extractive industries tend toward maximal exploitation makes me think that those industries, at least, will always have some employers who calculate that they could squeeze out more profit that way.