Monthly Archives: December 2007

Business Ethics: Why They Are Important For a Company and Its Success

Martha Vasquez asked:

Business ethics is an interesting branch of business theory, primarily because of the fact that they are inherently interesting in a market economy. People tend to be extremely distrustful of corporations in market economies and the bigger they are, the worse that problem of trust usually gets. Business ethics therefore are politically charged in many different circumstances and that in turn serves to make them interesting. Aside from this academic interest however, business ethics are also important for a company and its success. Here are some ways in which this is true.

Public Image

It is impossible to discuss business ethics as a branch of academia without taking a look at the relationship between business ethics and public image. Each corporation has a particular public image, which represents the way in which the public views the corporation. Wal-Mart, for example, has a terrible public image. Toyota, on the other hand, has a very positive one. These public images are the result of a number of different things, but they are primarily the result of the way in which a corporation acts with respect to the different things around it.

A corporation’s environmental policy, the way they treat their employees and the way they treat the communities they exist in are all part of their overall behavior and this in turn is the principle factor in determining their public image. As proof of this, you will notice that even though Wal-Mart makes products that have a decent quality and an extremely low price, they still have a negative public image.

Since public image is largely a result of company behavior, business ethics play a large role in determining public image since they determine behavior. And public image is important to success in most cases, which is one of the reasons as to why business ethics are important to a company’s overall success.

Investment

Another reason that business ethics are important is the relationship they have to investment. When a person or an entity is considering investment in a particular stock, there are a number of things they take into account. Aside from the quantitative factors surrounding a company’s profit margin a future prospects, consideration is also given to a particular company from the point of view of the qualitative aspects such as their public image and the products that they happen to sell. All of these things are taken into account before the final investment is made.

Therefore, a company that would like to encourage extra investment is a company that has a strong sense of business ethics. Part of business ethics is responsibility to the investor and for that reason companies with strong reputations in the field of ethical business behavior are also companies that tend to attract more investment from people that are new into the market. Investment is most definitely important to success.

Partnerships

In the business world, joint ventures happen all the time. They happen all the time because they are ultimately of great importance to the bottom lines of businesses. A business can be made or broken on just one joint venture and part of the reason that joint ventures are successful is that they combine the forces of two extremely powerful companies on occasion.

If you want your company to do well in joint ventures, then you need to have good partners. The only way to get good partners is to have a good reputation both in terms of a track record and in terms of your business overall. And of course, the best way to get a good reputation is to ensure that your company has a strong tradition of ethical business behavior.

Justice Delayed is Justice Denied

Siddharth Chitturi asked:

Jawaharlal Nehru, on the afternoon of March 19, 1955, while addressing the members of the Punjab High Court at the inauguration of its new building in Chandigarh, said, “Justice in India should be simple, speedy and cheap.” He remarked that litigation was a disease and it could not be a good thing to allow any disease to spread and then go out in search of doctors. Referring to an adage that “Justice Delayed is Justice Denied”, Pt. Nehru stressed that disposal of cases must not be delayed.

Securing Justice – Social, Economic and Political to all citizens is one of the key mandates of the Indian Constitution. This has been explicitly made so in Article 39 – A of the Constitution that directs the state “to secure equal justice and free legal aid for all its citizens.” But the experience of last 57 years shows that the state has failed to dispense quick, inexpensive justice to protect the rights of the poor and the vulnerable. Hon’ble Justice B.P. Singh, a serving Judge of the Hon’ble Supreme Court, spoke on the topic “Justice Delayed is Justice Denied: the Plight of Indian Poor” at Observer Research Foundation and said that “the situation today is so grim that if a poor is able to reach to the stage of Hon’ble High Court, it should be considered as an achievement. It has merely become a court of the rich.”

The justice delivery system is on the verge of collapse with more than 30 million cases clogging the system. There are cases that take so much time that even a generation is too short to get any type of redressal. A brief look at some of the judicial statistics would tell the true story of the state of justice in India today: –

On an average, 50 lakh crimes are registered everyday, which are sought to be investigated by the police.

The pendency of criminal cases in subordinate courts is in the region of 1.32 crores and the effective strength of judges is 12,177.

· The number of under – trials in criminal cases pending in the courts is 1.44 crores and of these over 2 lakh persons are in prison.

· On an average, Courts are able to dispose off 19% of pending cases every year.

The reasons for delay could be attributed to the fact that every case moves from the lowest to the highest level. Too many revisions, bails, applications make five cases of one. The Centre and the State Governments also contribute to the backlog. Not only is the Govt. the biggest litigant but also it creates fresh litigation because it doesn’t honour judicial decisions. Another obstacle to speedy justice is adjournments. As far as the situation in Subordinate Courts is concerned, the infrastructure is non existent and at times the judges have to write judgments with their own hands as they don’t have stenos. Every subordinate judge is caught between oppressive workload and hardly any time or facilities.

Constitution which mandates that the state shall secure that the operation of the legal system shall promote justice, on a basis of equal opportunity and shall ensure that opportunities for securing justice are not denied to any citizen. The Judiciary is bound to shape the processes of the law to actualize the constitutional resolve to secure equal justice to all. A people who are illiterate by and large, indigent in no small measure, feudal in their way of life, and tribal and backward in large numbers, need an unconventional cadre of jurists and judges, if equal justice under the law is to be a reality. If there is breach, judicial power must offer effective shelter. Even if a legislation hurting or hampering the backward sector is passed, the higher courts have to declare the statute void, if it be contra-constitutional. In sum, the judicial process, in its functional fulfillment, must be at once a shield and sword in defending the have-nots when injustice afflicts them. And this must be possible even if the humbler folk, directly aggrieved, are too weak to move the court on their own and a socially sensitive agency advocates the cause. Securing justice – social, economic and political to all citizens is one of the key mandates of the Indian Constitution. This has been explicitly made so in the Article 39-A of the Constitution that directs the State – to secure equal justice and free legal aid for the citizens. But the experiences of last 57 years show that the State has failed squarely on addressing some very basic issues–quick and inexpensive justice and protecting the rights of poor and the vulnerable. The justice delivery system is on the verge of collapse with more than 30 million cases clogging the system. There are cases that take so much of time that even a generation is too short to get any type of redressal.

 

That it will take more than 300 years to clear the backlog of cases in Indian courts is proof enough that our criminal justice system is sick, stagnant and in urgent need of a complete overhaul. A committee was set up, a couple of years ago, under Justice V S Malimath to examine changes and its report came, coincidentally, at the time that justice was finally done in the Uphaar Cinema case and just before the fourth anniversary, Jessica Lal’s horrific murder. Both cases draw attention, in different ways, to the glaring flaws in our justice system.

In the Uphaar case it is shocking that it took ten years to establish that the 59 people died because of criminal negligence on the part of the cinema management and the Delhi government. It was clear from day one that nobody would have died had the cinema followed safety rules but because the wheels of Indian justice move at the pace of our national vehicle – the bullock cart – it took ten years for justice to be done.

Causes of Delay:-

Delay in disposition of cases– Due to huge pendency, the cases take years for its final disposal, which would normally take few months time. The arrears cause delay and delay means negating the accessibility of justice in true terms to the common man. The very core of a civil society and rule of law is the provision of justice, but the decision must be delivered within a reasonable time. It is totally unfair if a suspected criminal waits for trial for years and is ultimately found innocent. Similarly, the victim of the crime will be also not satisfied if there is no punishment to the criminal for so long. Only speedy justice could ensure effective maintenance of Law and order. Quality of justice not only promotes peace in the society but also strengthens internal security of the country. There are number of litigations which could be avoided if Govt. officials had taken interest, for e.g. section 80 of CPC require a prior notice of two months to Govt. by a party who wish to sue the Govt. The purpose of this section is to give time to Govt. to settle the matter with such party by taking proper and suitable action, and thereby could avoid unwanted and unnecessary litigation. But the utter failure of Govt. official in taking a quick, bold and suitable action inspite of giving time forces a person to file case.

Strength of Judges are inadequate according to population and bunch of cases. As of January 2005, pending cases in the Supreme Court number 30,000, in high courts over 33.79 lakh and in subordinate courts over 2.35 crore – a totally unacceptable situation. Much of this is due to shortage of judges. The ratio of judges to population is 10.5 to one million, the lowest in the world. Even this low level is not reached because of the accumulation of vacancies in the Benches -140 against the approved strength of 668 judges in high courts and 2000 against 15000 in subordinate courts.4

The infrastructure of the lower courts is very disappointing. Though, the Sup
reme Court and High Courts are having good infrastructure but this in not the same position with lower courts. The Courts have no convenient building or physical facilities. The executive has failed to provide necessary infrastructure to enable judiciary and function normally. Good library, requisite furniture, sufficient staff and reasonable space are the need of the qualitative justice. In some courts security systems is also not good. The legal profession is one of the most struggling profession but no social security scheme is available for lawyers, some financial aid should be provided to Bar associations or the new beginners by the government. The good working condition of the lawyers would help in the excellence of service and qualitative justice to the litigating public.

Competency of the Other Staff in Court : It should also be kept in mind that not only Judges and Advocates be competent but also the administrative and clerical staff. The clerical staff must be free from all type of corruption. This is the era of computerization. The highly technical and competitive clerical staff will also help in speedy course. We all know how much time is taken in getting merely a copy of the judgment? It is hard that money is used to speed up the process. The bribe giver does not wish, to get anything done unlawfully, but merely wants to speed up the process of movement of files and communication relating to decision. Certain sections of staff concerned do work only after taking money.

Investigative agencies generally delay : The investigation of crime It is generally heard that the accused gets bail as the investigating agency failed to submit charge sheet within statutory period. The combination of several functions, such as crime investigation, riot control, intelligence gathering, and security of VIPs by a single police force has a devastating effect on the criminal justice system. Nowadays, the crime investigation is not immune from the partisan politics. The power of the government to drop criminal charges against the accused has further abused it. The lethargic police investigation is also a ground of slow process of law.

Consider the condition of the poor victims of Bhopal gas Leak disaster, which took a toll of 15000 people. Twenty years had passed to that ghastly incident; still now victims were fighting for its compensation, which fails to measure up the damage caused to them. Consider the terrible situation occurred in August 1991 as massacre of Dalits at Tsundur in Andhra Pradesh. 13 years had passed to that incident, the families of the victims of Tsundur, still await justice for those who died. They say, they will not find any peace until the guilty are punished for their crime. Consider the condition of those girls who were brutally gang raped during the Godhra riots in front of their helpless family members. Consider the victims of Best Bakery case who still awaits justice to be dispensed in their favour but the climax starts with the key witness in the case turned hostile and the entire fate of the Bakery case is in turmoil. Today the victims of the all the above-enumerated cases know full well that the price of truth is extremely high.

 

“Still they are waiting… But for what? Whether all these amounts to justice?”

 

Remedies to Overcome Delay (Suggestions)

I. Talking about the strategies to deal with justice delay, an improved justice delivery system means cutting down the number of adjournments, reducing the time for arguments, keeping a check on review petitions/ frivolous petitions, stopping lawyers extending cases and so on.

II. Punishments should be very stringent and the implementing authorities should be tough so that crime comes down automatically.

III. Lawyers should encourage out of Court settlements.

IV. In case a lawyer looses a certain number of cases, his license should be suspended for sometime so that lawyers refrain from taking up frivolous cases.

V. Govt. Officials should be made personally liable for lapses so that cases against the Govt. are reduced.

VI. The number of appeals to be filed for each category of case should be fixed. Every litigant should not be allowed to go to the Hon’ble Supreme Court. If need be, the law can be changed accordingly.

VII. It is needed to establish a body at national level composed of Judges, Lawyers and Legal academics, which should be charged with a duty to conduct examinations for recruitment to Indian Judicial Service (IJS). Article 233 will have to be amended to confer power on the president to appoint members of Indian Judicial Services on the recommendation of National Judicial Service Commission. The creation of Indian Judicial Service is appeared necessary to get best available talent in the country.

VIII. There is urgently need to improve the basic infrastructure and management of resources. Modern technology and use of computers could also increase the efficiency of the court system. The judiciary has also to learn management techniques through training at all levels. Though, the Supreme Court and High Courts are having good infrastructure but this in not the same position with lower courts. The lower courts are the basic institution of justice and to improve the quality of the justice dispensed with, it is necessary to improve their infrastructure by modern technology. Lack of funds should not be allowed to enter in the way of development of infrastructure, as external security is necessary, internal maintenance of law and order is also necessary for the internal security, national interest, peace and progress. In general budget certain handsome amount could also be allocated to judiciary like defence and education or a separate judicial budget should be placed, like railway budget. The panel of government lawyer should also be on merits not on the basis of nearness to ministers. As the government is the largest litigant, more transparency is required on their part. Govt. counsel should be selected on the basis of merit, efficiency, integrity, by some transparent manner. There should also be some permanent vigilance provision to observe the working of the public prosecutors. Security system in courts also needs improvement for proper confidence of people and fearless functioning of system. Information-counter should be set up in every court for the convenience of litigating public.

IX. Our criminal justice system has the urgent requirement of Independent Investigative Agency. Delay in police investigation is also one reason due to which cases linger on for years. It is, therefore, good to create an independent wing of police force, fully in charge of crime investigation, and functioning under the direct control of independent prosecutors. That wing should be accountable to judiciary and not to particular government of a time. The practice of torture and third degree methods, extra judicial execution in fake encounters may be stopped also when crime investigation machinery became accountable to judiciary. Such type of police wing also became knowledgeable about the type and method of the evidence needed. Hence, baseless cases, which lead acquittal, also could come down. So, there should be co-ordination between police and prosecuting agencies. The early disposal of case also boosts the morals of police force and will save time, which would have been taken in producing arrestee to the court Horn time to time.

X. We have inherited British legal system, British prescribed it at that time, without considering the need of Indian society nor did they consider the practical of the procedure. So, this system is drawn from different sources without seeing the ground realities. Some people today prefer to keep quiet, rather than go to the court of law. So, now this system is more Indianised for making it fit to society. It is heard that in ancient time justice system was very good. The disputes were settled on the spot by delivering justice. B
ut ancient justice proceedings were oral in general and therefore no much record is available. Now we can take modem know-how from the countries, which have best justice delivery system by getting acquainted with the procedure followed there, if fit to Indian society. The civil and criminal procedure codes and the laws of evidence have to be substantially revised to meet the requirements of modem judicial administration. Though most of procedural laws are effective even today but some provision needs revision, especially the civil laws. To lessen the burden of cases, we may introduce the concept of’ Plea-bargaining’ by decriminalization of those wrongs, which can justly be dealt with by compensatory remedies (Compensation to victim like in tort). The institutions involved in justice delivery system such as the police, the prosecution, and the court, prison etc.-requires to be reformed in terms of organization, procedures, resources and accountability. So that, nowhere citizen feels uneasiness. There should be time limits prescribed for adjudication. There should be uniform formats for the appeals and petitions to make the procedure easy. The judgment should be in brevity and clarity. The concept like of public interest litigation is always welcoming, which is affordable to common men. Hence, there is a lot of scope to improve the situation. For e.g. Section 301 Cr. P.c. should be amended to allow the victim to appoint a lawyer of his choice in addition to public prosecutor to defend his case. Similarly, Section 3 13 (3) of Cr. P.C. also be amended so that the accused would be held liable for refusal to give answer or telling lie. The victim will be allowed to cross-examine the accused to elucidate the truth. There must be some fixed time for presentation of written statement, counter claim and reply like the plaint, under the I imitation Act. After all procedural law is meant to further ends of justice.

Conclusion

While the problem of delay looks daunting, it can be dealt with, by having more fast track Courts, making judicial services more attractive thereby attracting good lawyers and filling up all vacancies at various Courts. We can conclude from the above discussion that we should not resort in extra-ordinary hurry-up of cases by whatever means. As justice delayed is justice denied, similarly, the saying, justice hurried is justice buried is equally true. Therefore, sufficient, reasonable and due hearing of every cases with consideration of its circumstances is the necessary requirement of natural justice and balance of convenience. In fact, the untiring efforts put by fear and flavorless Indian Judiciary is doing commendable job of imparting justice in spite of so many difficulties, which created faith of public in the rule. Of law is a great achievement, which really requires deep appreciation. Social justice will be possible only if the entire concept of egalitarian politico-social order is followed, where no one is exploited, where every one is liberated and where every one is equal and free from Hunger and poverty. The proverb ‘Justice Delayed is Justice Denied’ is proved as it is denied to the poorest of the poor. Providing basic necessities to them will amount to Justice because the definition of justice varies from individuals to individuals on the basis of its economic conditions. According to B.P.Singh J the situation today is so grim that if a poor is able to reach to the stage of a high court, it should be considered as an achievement.  Cases should be decided for imparting justice not for the sake of its disposal. Secondly, Arbitration procedure must be utilized as a better option for quick disposal of cases. Finally, to conclude with the words of Lord Hewet as it is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done.

“Without Justice, life would not be possible and even if it were it would not be worth living” ……Giorgio Del Vecchio

Business, Ethics, And The Law

Joseph Brochin asked:

The primary objective of a business is to make money. Why would an individual or group of people start a business if he did not want to make money? An argument that is generated by some is: “Should profits be the only function of a business?”

The desire for businesses to make money can sometimes lead to what is considered unethical business practices. Keep in mind the words unethical and unlawful are two separate terms with two separate meanings. One side of the argument states that ethics should not play a part in business as long as the business abides by the law of the land then they should not concern themselves with ethical behavior, but they should act in the best interest of the organization. The other side of the argument states that for an economy to function in a capitalist fashion that businesses must act in an ethical fashion regardless if their actions are legal under law.

Milton Friedman contends that the sole responsibility of business is to increase its profits. Robert Almeder maintains that if capitalism is to survive, it must act in a socially responsible ways that go beyond profit making. The views of these two individuals go to the heart of the argument. This author believes that after reading their material that the views of both are exaggerated. I do believe that a business’s responsibilities do go beyond what is legal. A business has a responsibility not only to the owners or stockholders, but also to the consumer who trust the business is acting not only in a legal manner but a safe and ethical manner as well. If a business goes out of its way to act in an unethical fashion then the business has broken their trust with the consumer. Once a business loses the trust of their consumers then profits will plummet. Seeing that profits are the primary function of a business then it is in the businesses best interest to maintain a trusting relationship with the consumers and continue to act in safe and ethical manner.

Keeping in mind that it is not the purpose of a business to propose or to dictate legislature nor ethical behavior to the individual, a business should not be held accountable for what a small population of consumers consider unethical. If the practice of the business is out in the open and hazards of their products are readily published and do not present the possibility of death involuntarily to the consumer then legislature should not dictate ethical behavior to business nor individuals for that matter.

The Political Economy of Social Justice

Murali asked:

ng>The Political Economy of Social Justice

Dr.R.Murali

Head, Department of Philosophy & Centre for Philosophical Research

The Madura College (Autonomous), Madurai -625011.

“Never doubt that a small group of thoughtful, committed citizens can

change the world. Indeed, it is the only thing that ever has.”- Margaret Mead

I

Social justice refers to conceptions of justice applied to an entire society. It is based on the idea of a just society, which gives individuals and groups fair treatment and a just share of the benefits of society. Hence, Ethics has many spheres to operate. Economics is one of the major spheres of ethics. According to Aristotle, Economics is a practical expression of ethics- a basic virtue rooted in justice. This concept of justice has been variously described as distributive justice or a fair share for all. In other words, the concept of social justice was accepted as being rooted in an ethical base or simply common sense and economics cannot be divorced from this. Similarly economics and politics are inseparable. Social justice is both a philosophical problem and an important issue in political economy.

It can be argued that everyone wishes to live in a just society, but different political ideologies have different conceptions of what a ‘just society’ actually is. The term “social justice” itself tends to be used by those ideologies who believe that present day society is highly unjust – and these are usually left wing ideologies, advocating a more extensive use of democracy and income redistribution, a more egalitarian society and either a mixed economy or a non-market-based economic model. The right wing has its own conception of social justice, but generally believes that it is best achieved through embracing meritocracy, the operation of a free market , and the promotion of philoanthropy and charity. Both right and left tend to agree on the importance of rule of law human rights, and some form of a welfare safety net (though the left supports this to a greater extent than the right).

Social justice is also a concept that some use to describe the movement towards a socially just world. In this context, social justice is based on the concepts of human rights and equality. So a very broad definition of social justice is that “social justice reflects the way in which human rights are manifested in the everyday lives of people at every level of society”. It can be further defined as working towards the realization of a world where all members of a society, regardless of background, have basic human rights and an equal oppurtunity  to access the benefits of their society.

Many philosophers like Aquinas, Locke, Bentham , Mill, Kant and others have discussed the problem of social justice in their works. In the latter part of the twentieth century, the concept of Social Justice has largely been associated with the political philosopher John Rawls (1921-2002) who draws on the utilitarian insights of Bentham and Mill, the social contract ideas of Locke, and the categorical imperative ideas of Kant. His first statement of principle was made in A Theory of Justice (1971) where he proposed that, “Each person possesses an inviolability founded on justice that even the welfare of society as a whole cannot override. For this reason justice denies that the loss of freedom for some is made right by a greater good shared by others”, a deontological proposition that echoes Kant in framing the moral good of justice in absolutist terms. His views are definitively restated in Political Liberalism (1993), where society is seen, “as a fair system of co-operation over time, from one generation to the next.” (at p.14).

Along with these philosophers some others hold that social justice is nothing but the redistribution of wealth, power and status for the individual, community and societal good. Some others hold that it is government’s (or those who hold significant power) responsibility to ensure a basic quality of life for all its citizens.

Hence, it’s very clear that economic policies of the society are very much connected with social justice. It is also true that all around in the world today many advocates of social justice are in some state of despair. Some of them fear that social justice is a lost cause in a global economy.

II

Liberalism: Social Justice as Economic Freedom

Liberal capitalism, the super economic, all pervasive model which is promoted and practiced all over the globe today has been subject to severe critical examination by economists, not only due to economic recession but also mainly for destabilizing value systems in countries and becomes responsible for social injustice across the globe.

Friedrich Hayek, Nobel laureate in Economics and a principal twentieth century defender of liberal capitalism, once stated that “…nothing has done so much to destroy the juridical safeguards of individual freedom as the striving after this mirage of social justice.” We do not have to spend a great deal of time on his jaundiced reading of the history of struggles for social justice. What is, however, worth noting is his unequivocal presumption that social justice and the freedoms we have under modern capitalism are not only distinct from each other, but mutually antagonistic.

Sam Gindin in his article on ‘Anti-Capitalism and the Terrain of Social Justice’ severely criticizes Hayek’s position. He says that what so many others have obscured and what Hayek to his credit confronts directly, is that inequality is not an unfortunate aberration under capitalism, but an inescapable outcome and an essential condition of its successful economic functioning. Capitalism is—and this is surely as clear today as it ever was—a social system based on class and competition. Such a society guarantees not just inequality of result, but insofar as the results of inequality are passed on through the institution of the family and the spatial divisions of uneven capitalist development, the inequality is reproduced inter-generationally and inter-regionally. This leads to a decisive inequality of opportunity.

It is not surprising therefore that the most clear-minded defenders of capitalism consequently seek to displace the terrain of debate over the legitimacy of capitalism from distributive or equal-opportunity notions of social justice, to notions of individual freedom and especially market freedoms. Gindin observes that the individual is placed at the center of a world in which the concept of the community or the collective is confined to the state—liberalism’s old nemesis. Liberalism then seeks to limit the power of the state not only by the rule of law, freedom of expression and association, and elected legislatures, but also and especially by the rights of property, the inviolability of contract in market exchanges, and the protection of private-family spaces to enjoy the fruits of property and labor.

There is no denying the powerful practical appeal of this structure. Both civil and political rights and the historically unprecedented economic dynamism and possibility of rising standards of living rested on it. Yet the reality of class inequality behind this structure could not so easily be set aside. The contradictions of liberal justice rest on the fact that a market economy creates a market society, and that private property is not and never was a relationship between people and things, but a relationship between people. Historically, the creation of markets and private property were
not, as liberal mythology tends to present it, a matter of getting the state to stand aside so natural human propensities could unfold. Private property in particular emerged with the support of an absolutist state controlled by landed interests who asserted unconditional rights over property which had previously been constrained by traditional obligations. Those interests, backed by the state, forcibly expropriated the commons—lands formerly accessible to the community—for their exclusively private use. The need to reproduce these kinds of private property rights and the privileges they imply necessitated a permanently strong, active, and class-biased state. Today, the drive to deepen and expand such rights takes the form of neo liberal globalization.

Capitalism’s inequalities, it is crucial to emphasize, are not simply about some getting more and others less, but rather that the economic freedom capitalism embodies involves guaranteeing different kinds of freedoms for different people. For a minority, economic freedom revolves around the power to organize production and accumulate; for the rest, freedom to sell one’s productive potential in a labor market and, on the basis of that, to exercise some personal choice in consumer markets. What the minority is accumulating as part of its freedom includes power over the labor of others and therefore over their “individuality.” The freedom/power to sell one’s productive potential and to exercise some choice in consumer markets, in contrast, is founded on a dependency on those who provide the jobs and the commodities available for consumption.

The neo liberal response set out to undo the historically-acquired social limits that had redefined liberalism in practice in the postwar era. Neo liberalism named a strategy that sought to place capitalism clearly back on the track of its still incomplete development by accelerating the drive to commodify, and therefore open every aspect of life to profits and the social discipline imposed by profits. This was not just a matter of the extension of markets spatially (“globalization”), but of deepening the domestic penetration of markets into any social, personal, or cultural space that had previously managed to escape subordination to a capitalistic calculus. Since democracy tends to recreate protections against the anti-social logic of markets, the implementation of neo liberalism also necessitated a decline, one way or the other, in effective democracy.

It is relevant to take note of certain important criticisms against neo liberalism by its own supporters. Joseph Stiglitz former economist in the World Bank and the Noble Prize winner in Economics in 2001, who is the staunch supporter of the Globalization himself, declares that “Globalization today is not working for many of the world’s poor. It is not working for much of the environment. It is not working for stability of the global economy”. He writes on the basis of this close observation: “what I saw radically changed my view of both globalization and development… I saw first hand the devastating effect that globalization can have on developing countries”. Stiglitz accuses that the West “acting through the IMF and the WTO – has seriously mismanaged the process of privatization, liberalization and stabilization, and that by following its advice Third World countries and former Communist states are actually worse off than before.

George Soros, another architect of Globalization observes that ‘we have global markets but we cannot build a global society without taking into account moral considerations’ He says that US is the major obstacle to international cooperation today. It is resolutely opposed to any international arrangement that would infringe on its sovereignty. The list is long including the International Criminal Court, the Landmines Treaty, the Kyoto Protocol, many of the ILO conventions and many more arcane conventions like the Law of Sea Convention and convention of Biological Diversity. Hence he says that the pursuit of hegemony comes into direct conflict with the vision of a global open society. United States wants to be an unmoved mover.

So it is not simply eliminating poverty but rather reducing inequality. The first is impossible to resolve without solving the second. The real problem, again, is not absolute resources but the social distance and different degrees of control over one’s own resources. And this holds true in every society.

In this context, Habermas’s view adds a socio-cultural dimension to the political economy. Habermas does tie economic globalization and global terrorism, but does not believe that the latter is ultimately a manifestation of a clash of cultures. Instead Habermas regards global terrorism as an economically based reaction to the gross inequities perpetrated by globalization. Accordingly, Habermas regards global terrorism as arising from a breakdown of communication and as only amounting to an external threat to modernism.

This gives the liberal sociologist Richard Munch reason to fear that we will be faced with the depletion of non-renewable resources, cultural alienation on a mass scale, and social explosions unless we succeed in politically fencing-in markets which are, as it were, running away from enfeebled and overburdened nation-states.

As Habermas wrote in 1997, globalization ‘threatens to dissolve the social glue that holds together already fragmented national societies.’ In Germany, questions of nation, national identity and culture, along with the search for a binding ‘social glue’, have arisen just as globalization challenges the possibility of the national unification process. Anti-globalization there, as elsewhere, seeks to protect local identity, economies and culture from both the European Union and the more powerful American ’empire’.

For Amartya Sen, the central issue of contention is not globalization itself, nor is it the use of the market as an institution, but the inequity in the overall balance of institutional arrangements–which produces very unequal sharing of the benefits of globalization. He says that the question is not just whether the poor, too, gain something from globalization, but whether they get a fair share and a fair opportunity. There is an urgent need for reforming institutional arrangements–in addition to national ones–in order to overcome both the errors of omission and those of commission that tend to give the poor across the world such limited opportunities. Globalization deserves a reasoned defense, but it also needs reform.

III

Globalization : Road to injustice

Globalization has not only affected all aspects of human life but also influenced the social institutions to a great extent. It operates in an uneven and unequal manner. The neo-liberal economy, i.e., liberalization, privatization and globalization, has further compounded the unevenness and inequality in society. The small minority of world’s population holds maximum resources and majority of people are grappled in poverty.

Before the melt down, there were 1.3 billion desperately poor people in the world who survived on less than $1 per day. There were an additional 1.5 billion very poor who lived on $2 each day. This means that 2.8 billion, almost half of the global family were living on $2 a day or less (Sider, 2002). But today things would have gone even worse.

Many do not have access to safe water (1 bil.) and they do not have access to improved sanitation (2 bil.). These poor public health conditions cause approximately 34,000 children to die every day of diarrhea and other easily preventable diseases (Sider, 2002).

In answer to the question “What is globalization?” Susan George, president of the Observatory on Globalization in Paris, associate director of the Transnational Institute of Amsterdam, and author of nine books, stated that there is already a world government – which is not democratic; one set of people can change the futur
e of others who are not involved in decision-making. Its objective is to put all human activity in the market, including education, culture, and health. Globalization is responsible for pushing wealth upward both between countries and within countries. Since 1980 every country has experienced increasing inequalities. 85% of people live in countries where inequalities are increasing and this includes China, Russia, E. Europe and West Europe and the US, and at the same time inequalities are increasing between North and South.

She gave the illustration of the upturned champagne glass, showing the top 20% of humanity capturing 82% of the wealth, while the bottom 80% of the graph must get along with 1.3% of the world’s wealth. These inequalities are becoming more extreme. There are now 485 billionaires in the world, who control the equivalent of the wealth of half the world. And only three of those billionaires control wealth equaling the national production of 48 countries.

These inequalities have drastic consequences. The recently series of financial crises was caused by the institutional investors of the world. The ‘electronic herd’ all act at the same time e.g. someone says Thailand is not doing very well or Mexico and all run for the door at the same time. Then the financial crisis occurs and the IF steps in to say what the country must do. She emphasized  “the rules that the IF sets KILL ordinary people”. For example in Mexico after the 1995 financial crisis 28,000 small firms failed because they could not keep up with the interest rates imposed upon them. Half of Mexico is now living below the poverty line. In Indonesia, after the financial crisis, 20 million people who thought they were becoming middle class were pushed violently into poverty. In Russia 4% of people used to be classed as really poor, but now because there are no rules as the ‘market’ is supposed to do everything 50% are living in poverty. Everywhere health, social and educational structures have been cut because of structural adjustments. Now there is only one ideology left in the world after the collapse of communism.

Who are the managers of the global system? The power behind the throne is the large multinational corporations. They do not want to govern directly so they do so through the WB, IMF and WTO. These corporations support even the UN. Kofi Annan has signed the Global Contract with 50 multinationals, many of whom have terrible human rights and environmental damage records.

The system works well for the top 10% of the world’s population, but not for anyone else. The central political question of our time is changing. It used to be one of hierarchy, where you are on the hierarchical ladder – a king or a beggar; that was the main organizing principle of politics. For the past 100 years or so the central political question has been – Who is going to get the biggest piece of the pie? Elements of both of these – hierarchy and share of the pie – remain today. But the new question is ‘Who has a right to survive?’ and ‘Who has not?’ Now there are hundreds of millions of people in the world who do not contribute to the market as producers or consumers. Do they have the right to survive?

The first thing people have to understand is that the present system is not the only choice. God never said to Moses that globalization must dominate the world. There are many possibilities.

IV

Melt down: Lessons

The sudden set back in the economic scenario of the world shook every one. It is mind boggling that till the other day, country after whether hailing from North America or Europe or Africa or Asia was celebrating its perpetual increased economic growth rate, enhanced access to information technology and rising amongst its population suddenly getting traumatized by the possibility of getting swept away under the current of regression and depression deeper than 1930s brought out in and by the financial melt down initially in the US and Europe. “The global financial system is in deep and unprecedented crisis. Central Banks and governments the world over are facing several complex and compelling challenges. There have been serious disruptions in money markets. Stock markets across the world have been in a free fall and there has been extreme risk aversion in all financial markets. Policy makers across the globe are responding with aggressive, radical and unconventional measures to restore confidence and impart stability to the system”. (The Hindu October 27,2008 Editorial).

One major impact of this financial crisis in Krugman’s assessment is that advanced countries are likely to hit near zero growth next year with the world economy expanding only 3 percent. He fears that this down turn will be deep and prolonged as it was during 1930s.

As the financial turmoil continues to batter economies across the globe, the bailout packages from different governments globally is nearing the US dollar 3 trillion mark- about three times the size of the Indian economy. The UK administration in the first week of October came up with a mammoth 500 billion pounds bailout package primarily to shore up the fortunes of the nation’s banking sector. Russia too has approved a host measures estimated to be worth US dollars 86 billion to salvage the country’s banks hit by the credit squeeze. European Union pumped in 1.7 trillion Euros for underwriting of banks. Besides, a handful of European countries have also, already announced packages worth a similar amount in efforts to have their troubled financial institutions. In fact most of the world central banks moved to flood the system with money lest there should no occur total collapse.

Describing the situation Krugman observed: “all signs point to an economic slump that will be nasty, brutish and long”.

Japan’s Prime Minister Tar also announced as 27 trillion Yen stimulus package on October 30 for the world’s second largest economy including credits and loans to help small businesses, a reduction in highway tolls and cash pay back to households. He said that the financial outlook is severe and that he global financial crisis is almost certain to affect Japan’s real economy.

The burdens and impact of this so called financial tsunami is not only cutting across the globe but more significantly it is cutting across every aspect of life and in particular of poor and depressed sections of society in all most every part of the world that includes even richer nations like US and Europe. According to Director General of International Labour Organisation(ILO),Juan Somavia in an article he wrote for Times of India (October 25,2008)” the impact of the crisis on the lives, working conditions and hopes of millions of people will be strong and systemic. Arresting the crisis would require reaching beyond the financial system. This is not simply a crisis on Wall Street; it is a crisis on all streets”.

While talking of burdens, let us note the findings of a recent estimate of the impact made by the ILO. In its estimate the world unemployment could increase by 20 million marks of global unemployed for the first time. People working in such sectors as construction, automotive, tourism, finance, services and real estate will be hit hardest first. What is more disturbing that according to this ILO estimate as quoted by Juan Somavia, the number of working poor living on less than a dollar a day could rise by some 40 million and those living on tow dollars could rise by more than 100 million. It may be of crucial importance to note that job cuts are happening not only in towns, industry or elite services alone rather shocks from Wall Street are traveling even to rural India and even to small scale cottage and handloom industries and other small occupations. According to reports (Times of India Oct 24, 2008) thousands of skilled workers in two small towns, 100000 in Moradabad( UP) and 25000 in Panipat (Haryana) have been laid off after orders from their global markets
mostly from the US and Europe dried up this month. In Moradabad, artisan adept at centuries- old art of crafting brassware of European and American show rooms are pulling cycle rickshaws and selling fruits. Panipat, from where rugs, bed sheets and other textiles wind up in US stores like Wal-Mart has weavers migrating or working at jobs that now pay 1/18th what they did. According to K. Subrahmanyam in The times of India 0ctober 28, 2008 a large number of workers in toys factories in China have not only been thrown out of the jobs but have been denied payment of arrears because of economic slow down in the West. Again according to various estimates including byu the US government’s own agency the job cuts and increase in unemployment level has aroused great sense of insecurity amongst common Americans. Thus the voice is loud and clear that the crisis is not simply financial or one country centric, it is global as well as one that has the potential to devastate life and livelihood of even an average member of humankind in many parts of globe.

Today a global food crisis coexists with unprecedented financial collapse and a recession which may well turn into a depression. Utsa Patnaik says,” The domination of finance over industry and the pursuit of economic policies favouring finance capital, at the expense of growth of the real economy particularly the out put of basic necessities required by the masses. The domination of finance in the modern world and its ideology known as neo liberalism and has been evident since 1970s. We might as well call it neo- deflationism, for the ideology of finance capital always involves policies deflating the level of mass demand”.(People’s Democracy-03 November 2008)

· Whether it is development or the economic recession, common people of the world are being terribly affected by globalization.

· When Capitalisms in crisis, it immediately seek for Social Intervention by the state. eg. Bail out packages that are in vogue now in US, UK, Germany and other places. Whereas when it is on the monstrous growth based on social injustice, it insists the state to keep away from its control and interference. Crisis-control measures are taken to suit the seekers of the supernormal profits in this high capitalist set up.

From the foregoing it becomes clear that the process of globalization that was initiated by the US and its likes since the beginning of 1990 or may be little earlier is a misnomer. The process has failed to make globe as one. It remains divided between developed, rich , powerful and haves on one side and have-nots on the other with US and its allies representing the unipolarity and monopoly of economic power, trade, commerce and market. THE idea that process of globalization would ensure global prosperity, progress, peace and security leading to a global family or what we during our ancient period termed as ‘vasudeva kutumbakam’ is missing. The process of globalization has no doubt yielded into global oneness but only oneness of the kind and one kind only namely ‘a global economy’- a economy whose centre of gravity of fulcrum- its controlling mechanism and draining out its fruits resides only at one place. It is this kind of global economy with its global interconnectivity largely founded on fundamental capitalist ideas and absolute free market that resulted into financial meltdown in one place and that is place of monopoly over global market, namely the US which ultimately and due to its interconnectivity encircled almost every nation. This no doubt affected the richer nations but it brought with it tremendous potential to pierce even the livelihoods of poor nations and also of poor even in richer societies.

It is too late at this hour of the day to reverse the cycle of globalization. But equally the kind of globalization and free market philosophy practiced and professed could prove dangerous not only for the poor nations but also for the super power itself. The anger and civil unrest kind of situation prevailing in US resulting from meltdown is the testimony to it. The kind of globalization followed today that for some time brought deceptive prosperity is largely the outcome of culture of consumerism, egotism, excessivism, greed, lust and total loss of ethics and values – it is not simple failure of financial policy. Fighting these menaces of currently practiced globalization and turning it to serve the cause of humanity and human welfare is a complex and multi dimensional agenda. It requires substituting voice of monopoly, isolating and subjugating other with global consensus, global co-operation and global concerns for humanity. Of course, it would demand devising new kinds of regulatory framework monitoring mechanism, institutional structures ensuring that they represent collective wisdom and collective consensus, unlike the Bretton Woods Institutions* (IMF, WB, etc.)Of today which can be manipulated of arm twisted. We are reminded of what Dr.Manmohan sigh while addressing the ASEM said, “the sad truth is that in this age of globalization we have a global economy of sorts, but it is not supported by a global polity to provide effective government”. Speaking in the same vein European Commission President Jose Barroso said,’ we are in a moment where we need global team work, we either stick together or sink together”. Thus in short, what we are pleading is a case for global co-operation for an International economic order inspired by global consensus that works on the principles of equity, fairness and distributive justice and serves the cause of bringing welfare, peace and security to every single member of the global community.

V

What to do?

The state, as an institution, supposes to guarantee social welfare and social justice to the marginalized groups. Globalization has not only threatened it but also made it weak. State has now retreated back from its welfare role. In the contemporary context, social justice agenda is taken over by non-state organizations that are critical. The older theories of social justice, which are either inadequate or inapplicable, today cannot cover the new developments that have taken place in the era of globalization and therefore they have to be reviewed. Whether or not you see globalization as a positive or negative trend, it has given rise to increased interdependence of world economic markets leading to increasing economic disparities between the rich and the poor of all nations. While the wealthy develop more wealth at an increasingly rapid pace, the desperate poor are barely surviving.

Evolving global consensus as to the nature of process of globalization desiring and effective regulatory mechanism, evolving an institutional structure which is transparent and democratic unlike the present Bretton Woods Institutions where the decision making remains opaque and controlled by few powerful nations and thus ensuring that market behave responsible to society is so simple. It is a complex affair requiring engagement not only of states alone of course which is most fundamental essential , but in addition it also demands engagement of political experiences, social and economic expectations of different societies; and evolving a sensitive and reflective opinion of public and citizenry at global as well as local level. In short evolving such consensus would demand building common understanding and a common approach to new International economy order amongst every stake holder. In fact it is this kind of engagement right from political leadership to professionals, universities and voluntary groups that ultimately resulted into institutionalization of EU which initially did not look like a reality. In fact it is through this kind of engagement that the consensuses on matters like: common currency, common passport, common market, common human rights adjudicating mechanism could be arrived at.

No doubt it would demand new base of knowledge; different kind of professional approach to dealing with issues political,
social, legal and economic in nature, and evolving more vibrant and sensitive public opinion at global as well as local level.

Some proposals to safeguard social justice:

· Equal and fair commerce and not free trade

· Education, medical care, social welfare must not be in the market.

· We need to make transnational companies responsible for their actions all over the world.

· It is very much required to cancel 3rd World Debt, and reduce the power of the WB and IMF.

· Already there have been substantial victories defeating multilateral agreement on investments. The value of Monsanto’s agricultural division has been reduced to zero dollars, because people won’t accept genetically modified foods and products. National coalitions are growing.

· The economic and political spheres of society are to be subordinated human development.

· The consumption patterns and the life styles of the people must be changed towards the sane consumption. This cannot happen overnight or by decree, but will require a slow educational process, and in this the government must play an important role. The function of the state is to establish norms for healthy consumption as against pathological and indifferent consumption. There fore we need a humanistic science of Man as the basis for the applied science and Art of Social Reconstruction.

· The production shall be directed for the sake of sane production.

· A concerted effort to stimulate the appetite for sane consumption is likely to change the pattern of consumption.

· Production for use instead for profit must be slogan of the Government.

· Militant consumer movement that will use the threat of consumer strikes

as a weapon. 20% of consumers can do wonders. The great advantage of consumer strike is that they do not require government action. Realization of their power is essential. It could be a manifestation of genuine democracy.

· Bureaucratic control that would forcibly block consumption would only make people all the more consumption hungry.

· The value of other commodities and services can be determined by panel of psychologists, anthropologists, sociologists, philosophers, theologians, and representatives of various social and consumer groups.

· Industrial democracy implies that each member of a large industrial or other organization plays an active role and participates in decision making.

· The Government can greatly facilitate the educational process by subsidizing the production of desirable commodities and services, until these can be profitably produced. A large educational campaign in favour of same consumption would have to accompany these efforts.

· Passive spectator democracy must be changed into active participatory democracy. Political life requires maximum decentralization through out industry and politics.

· Active and responsible participation further requires that humanistic management replace bureaucratic management. The realization of the new society and new man is possible only if old motivations of profit and power are replaced by new ones. Being, sharing, understanding; if the marketing character is replaced by the productive, loving character; If cybernetic religion is replaced by anew radical humanistic spirit.

· All brain washing methods in industrial and political advertising must be prohibited.

· There is an urgent need for reforming institutional arrangements–in addition to national ones–in order to overcome both the errors of omission and those of commission that tend to give the poor across the world such limited opportunities.

VI

How to do?

Strong political movements that must be built upon the process of class struggle should take place in each country. As Hugo Chavez said, “it cannot be mere movement of protest and celebration like Woodstock.. It is an enormous struggle, an endeavor in which organization and coordination are keys”. This is the challenge to international intellects and activists.

References:

Amartya Sen, “How to Judge Globalism,” The American Prospect, Vol. 13 no. 1, January 14, 2002.

Erich Fromm, (1981) ‘To have or To be’, Bantham Books, New York.

Friedrich Hayek, Economic Freedom and Representative Government (Chicago: University of Chicago Press, 1976).

George Soros “ On Globalization” Public Affairs, New York,2002.

Giddens, A. (1990) ‘The Consequences of Modernity’. Stanford: Stanford University Press.

Habermas, (2001) ‘The Postnational Constellation: Political Essays’, translated and edited by Max Pensky. MIT Press.

Held, D., McGrew, A., Goldblatt, D. and Perraton, J. (1999) ‘Global Transformations – politics, economics and culture’, Cambridge: Polity Press.

Joseph E.Stiglitz.(2003) Globalization and its Discontents, W.W. Norton Company,New York,.

_______________. (2007) Making Globalization Work, W.W. Norton Company,New York,2007.

Klein, N. (2001) ‘No Logo’, London: Flamingo.

Kellner, D. (1997) ‘Globalization and the Postmodern Turn’, UCLA , http://www.gseis.ucla.edu/courses/ed253a/dk/GLOBPM.htm

Sam Gindin, ‘Anti-Capitalism and the Terrain of Social Justice’ Monthly Review, Feb 2002.

Smith, M. K. and Smith, M. (2002) ‘Globalization: The Encyclopedia of Informal Education’, www.infed.org/biblio/globalization.htm.

Strange, Susan. (1996) ‘The Retreat of the State: The Diffusion of Power in the World Economy’, Cambridge University Press.

· The Bretton Woods Institutions are the World Bank, and the International Monetary Fund (IMF). They were set up at a meeting of 43 countries in Bretton Woods, New Hampshire, USA in July 1944. Their aims were to help rebuild the shattered postwar economy and to promote international economic cooperation. The original Bretton Woods agreement also included plans for an International Trade Organisation (ITO) but these lay dormant until the World Trade Organisation (WTO) was created in the early 1990s.

Business Ethics And Purpose

Naz Daud asked:

The purpose of business is to generate maximum returns for its owners and shareholders. So therefore should the business pursue all activities that enhance profitability and increase the value of the business for the owners and / or shareholders?

I also believe that a business should behave ethically in achieving the above purpose. It is not right just to operate within the letter of the law. Businesses should also try and serve their local community and help its employees lead better lives. They should examine every decision they make based on profitability, long term business value and social responsibility.

By having real policies in place that take care of your employees and the local community it might be argued that long term this will enhance your business brand and over time lead to higher profitability.

By constantly training members of staff and wherever possible promoting from within the organisation will lead to employees that feel empowered to work harder and make better decisions. Having regards to the true well being of your employees will lead to a healthier and therefore happier workforce.

By reducing waste and promoting recycling at every opportunity, overheads will be reduced and in the longer term lead to better shareholder value. It is staggering how much resources including energy are wasted by larger companies. Having a regular energy audit and investing long term to reduce demand can only serve to make the business more efficient.

Many businesses try to serve their community by supporting local charities and sponsoring local people to better their lives. There are many ways to do this including education, sports and the environment. In the short term there will be very few perceivable benefits in terms of profitability but these actions will serve to enhance the business brand and increase profitability over the longer term.

Greed is no longer good and focusing purely on profits is unacceptable to your existing and potential customers. By embracing business ethics and social responsibility the business can benefit from increased goodwill.

Business Ethics: A Quiz with Many Right Answers

Sally Rhys asked:

You can find various business ethics quizzes around thPick the one answer you think is wrong. This one is different. Each question has only one WRONG answer, doesn’t analyze your answers and tell you where you went wrong. Rather, it is simply intended to raise your ethical consciousness, maybe even stimulate a little discussion between you and your peers or family.

In this quiz, try to pick the answer that is wrong. I hope the “wrong” answers are obvious if you care about business ethics.

Enjoy!

1. My reputation

a. Is only as good as my word

b. Precedes me

c. Once lost is hard to regain

d. Is the legacy I’ll leave behind

e. Doesn’t matter to me.

2. Following my employer’s Code of Ethics

a. Could be important to my success

b. Requires interpretation to get it right

c. Will make me a better leader

d. Is a waste of time

e. Requires a certain level of consciousness and some attention to detail

3. Pointing out ethical transgressions at work

a. Can be awkward

b. Helps raise awareness for us all

c. Is a career ending move

d. Can backfire

e. Could be educational all the way around

4. Keeping the workplace ethical

a. Makes it a better place to work

b. Is hopeless

c. Requires clarity around ethical standards

d. Means top management has to do it

e. Leads to a more profitable company

5. My employer’s ethical reputation

a. Is in the dumps and dropping

b. Reflects on me

c. Is partially set by how I behave

d. Makes a difference in the bottom line

e. To some extent determines whether people will buy our products

6. Accepting gifts from vendors

a. May be fine within limits

b. Should under no conditions affect my willingness to buy from them

c. Has stricter rules in the US than is some other countries

d. Is a great idea to get as much as you can!

e. Should probably be disclosed to the ethics office, particularly if it is valued at over a certain amount

7. I care about business ethics because

a. America’s reputation has suffered recently

b. Good business ethics can restore better profits

c. I don’t want to work somewhere slimy

d. Good business ethics creates a more just workplace

e. They substitute for my complete lack of business ethics.

The wrong answers would likely come from someone who is apathetic and/or cynical. Sometimes, we do feel either of those feelings. However, life is short and the well-lived life is a life of integrity. Living a life of integrity means caring about business ethics.

If you enjoyed taking this quiz, share it with your friends. If you work in an office that cares about ethics, share it at the next staff meeting. Leave it in the lunch room. Pick the one question that you like most and talk about it over beers this weekend. On your commute home, think about what you want to do differently going forward. Send the quiz anonymously to your boss. Keep the discussion going about the importance of ethics in business!

Copyright by Sally Rhys of Coaching for Perspective, July 2008

Patents and Ethics in the Pharmaceutical Industry

Kamil Kanji asked:

Abstract

This paper is concerned with the impacts of strict patents in the pharmaceutical industry, focusing on the Trade Related Aspects of Intellectual Property Rights (TRIPs) Agreement. It discusses the historical and current policy context, to better understand how strict patents affect the availability of essential drugs in developing countries.

The research shows that the pharmaceutical industry prioritises profit above health. Strict patents reduce the availability and affordability of new essential drugs in developing countries, and thereby have a negative impact on the health of the world’s poor. Larger pharmaceutical companies benefit more than smaller companies because they have a monopoly in the industry. They invest more in research and development and, linked to economies of scale, are better positioned to exploit markets for new drugs.

The example of India highlights the importance of generic production and essential drugs in developing countries. It shows that while TRIPs promotes economic growth of the industry and encourages investment in research and development of new drugs, it increases the prices of new essential drugs, thereby isolating benefits from the majority poor populations in developing countries.

The paper suggests that based on historical and current trade policy, developed countries have an ethical obligation to allow poorer countries to develop infrastructure for their pharmaceutical industry, a responsibility not being fulfilled. It suggests TRIPs be revised under a more ethical framework. This includes increasing public funding of research and development, shortening the length of patents and allowing developing countries to generically produce essential drugs.

The paper highlights the interconnectedness of social, economic and political factors that could increase the availability of essential drugs in developing countries. It highlights the importance of better understanding the issues surrounding strict patents, and why the scientific community is critical to this process, in terms raising awareness and collaborating with independent organisations and concerned citizens to ultimately press governments for change at the national and international level.

Table of Contents

1. Introduction

1.1 What are Patent Laws?

1.2 What is TRIPs?

1.3 Focus and Structure of the Paper

2. Pharmaceutical Industry for Profit or for Improving Health?

2.1 Scale of Profits

2.2 Investment Priorities

2.3 Diffusion

3. Essential Drugs and Generic Production

4. Impacts of TRIPs

4.1 Main advantages

4.2 Main disadvantages

4.3 The Doha Agreement and Compulsory Licensing

5. Conclusions

6. References

1. INTRODUCTION

‘As the ancient scourge of polio was rolled back by his vaccine 50 years ago, Jonas Salk, the inventor of the polio vaccine was asked why he never took a patent out on the medicine, a patent that would have made him wildly rich. “There is no patent,” he replied … “Could you patent the sun?”’ (Salon.com magazine 2001).

This paper explores the impacts of pharmaceutical patents on drug availability in the third world, focusing on the impacts of the Trade Related Aspects of Intellectual Property Rights (TRIPs) Agreement. It highlights the value of essential drugs and generic production in developing countries, using India as a case study. It also explores alternatives to TRIPs and the role of the scientific community.

1.1 What are patent laws?

A patent can be defined as ‘a monopoly right granted to person who has invented a new and useful article, an improvement of an existing article or a new process of making an article’. It consists of an exclusive right to manufacture the new invented article, or manufacture an article according to the invented process for a limited period. During the term of patent, the owner of the patent, i.e. the patentee can prevent any other person from using the potential invention .

Figure 1: Brief History of Patent Law

The timeline below illustrates the brief recent history of patents in the world .

1880-1882

Patent statutes introduced in most European countries

1883

Paris Convention for the Protection of Industrial Property – cornerstone of the modern international patent system.

1947 International Patent Institute (IIB) established at the Hague

1970

Patent Co-operation Treaty signed in Washington, D.C.

1978

International Patent Institute integrated into the European Patent Office (EPO)

1979

Bayh-Dole Act passed-granted permission to U.S. universities to license and profit from federally sponsored research*

1980

International Patent Documentation Centre (INPADOC) integrated into the EPO

In the pharmaceutical industry patents have a straightforward objective. They provide a strong incentive for companies to invest in the research and development of new drugs, knowing that they will be able to recuperate costs and, subsequently, profit from the new drug. However, patents enable parent companies to control the price and availability of new drugs. There is no competition from other companies to produce the drug, which would usually lower the price. Thus, increasing the length of patents can reduce the availability of new essential new drugs in developing countries, with knock on health problems.

Essential drugs can be broadly defined as those that satisfy the health care needs of the majority of the population. They should, therefore, ideally be available at all times in adequate amounts; in the appropriate dosage forms; at reasonable (affordable) price; and, meeting the criteria of quality, safety and efficacy (New Strait Times 1998).

Under the term of a patent, drugs, essential or non-essential, can only be produced by the parent company. This means that there is no competition from other companies to produce the drug, and the parent company can charge a high price for the drug, effectively making the drug unavailable for poorer people.

New drugs tend to be more available to developed countries, because people are more affluent and can afford higher prices. For this reason, pharmaceutical companies tend to market their drugs at developed countries. Overall, developed countries benefit more from new technology and advances in science because their governments, companies, and people can afford to buy into the technology.

The World Trade Organisation’s (WTO) Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement, which extends the length of patents, enables companies to significantly increase their profits and increase the technology gap between developed and developing countries.

1.2 What is TRIPs?

The Trade Related Aspects of Intellectual Property Rights (TRIPs) was added to the General Agreement on Tariffs and Trade (GATT) at the end of the Uruguay Round of trade negotiations in 1994. It came into full force in January 2005, and its inclusion by the World Trade Organisation (WTO) was the ‘culmination of a program of intense lobbying’ by the United States, supported by the EU, Japan and other developed countries .

The United States strategy of linking trade policy to intellectual property standards can be traced to senior management at Pfizer (a large United States pharmaceutical firm) in the early 1980s. Pfizer mobilised corporations and made maximising intellectual property privileges the number one priority of United States trade policy .

According to the WTO, ‘TRIPs is an attempt to strike a b
alance between the long term social objective of providing incentives for future inventions and creation, and the short term objective of allowing people to use existing inventions and creations’ .

The following requirements of TRIPs all have a bearing on the pharmaceutical use of patents .

? Copyright must be granted automatically, and not based upon any “formality”, such as registrations or systems of renewal.

? National exceptions to copyright (such as “fair use” in the United States) must be tightly constrained.

? Patents must be granted in all “fields of technology” (regardless of whether it is in the public interest to do so).

? Exceptions to patent law must be limited almost as strictly as those to copyright law. In each state, intellectual property laws may not offer any benefits to local citizens which are not available to citizens of other TRIPs signatories (this is called “national treatment”). TRIPs also has a most favoured nation clause.

? Patents in the pharmaceutical industry will apply for 20 years, instead of 10 to 15 years.

Some developing countries began to grant their own patent protection in the late 1980s, but TRIPs is a compulsory requirement for any country who wants to be a member of the World Trade Centre, and with that memberchip access to international markets and trade relationships. Countries which do not adopt TRIPs can be disciplined through the WTO’s dispute settlement mechanism, which is capable of authorising trade sanctions against dissident states . Therefore, the economic and poltical threats, which could cripple a poor economy, effectively forced developing countries to ratify the agreement.

The TRIPs agreement makes it easier to obtain and enforce patents. It increases the length of pharmaceutical patents, from 10 to 15 years to 20 years, which encourages companies to invest more in research and development and promotes economic growth. However, it favours developed countries, which have the capacity to enforce their rights globally, and create more exclusive trade options under the Intellectual Property Rights (IPRs). Developed countries have more pharmaceutical infrastructure and companies that are used to using patents to make profit.

1.3 Focus and structure of this paper

Chapter 1 introduced the main contentions of using strict patents in the pharmaceutical industry. It explained how patents work, and the main changes that TRIPs will make to the pharmaceutical industry.

Chapter 2 shows the monopoly of a handful of large pharmaceutical companies in the pharmaceutical industry. It provides a sense of the scale of the profits made by these companies, contrasting the investment priorities and types of drugs produced with those that are needed in developing countries. The Chapter debates whether the industry is for profit or health, briefly highlighting how companies make false claims through advertising in developing countries.

Chapter 3 introduces the idea of essential drugs and generic production, exploring the benefits with a case study of India. Chapter 4 shows how TRIPs will restrict generic production of essential drugs, and the impacts this will have on the majority poor populations in developing countries. The conclusion, Chapter 5, suggests how TRIPs could be revised under a more ethical framework, exploring the historical and current drug policy context, with particular emphasis on the role of scientists.

2. PHARMACEUTICAL INDUSTRY FOR PROFIT OR HEALTH?

In an attempt to understand how pharmaceutical companies control the availability of essential drugs, and use patents to make substantial profits, this chapter debates whether the pharmaceutical industry is for profit or health. It looks at the scale of profits made by the pharmaceutical industry and their investment priorities, also challenging whether ‘diffusion’ of biotechnology works to provide essential drugs to developing countries.

2.1 Scale of profits

There is a very familiar trend in the international pharmaceutical industry. A handful of multinational companies, originating from developed countries, have a great deal of economic power, which gives them control over drug availability and health. They also lobby governments to make trade policy which suits their profit making agenda. In 1996 the first ten multinational pharmaceutical companies accounted for approximately 36 per cent of the world pharmaceutical sales of US$ 251 billion .

Table 1: The World’s Top Ten Pharmaceutical Companies in 2003

Company Pharma Profit ($million) Pharma Sales ($ million) Pharma Operational Profit Margin

Pfizer 12,920.0 28,288.0 45.7%

Merck & Co. 10,213.6 21,631.0 47.2%

GlaxoSmithKline 7,598.2 26,979.0 28.2%

Johnson & Johnson 5,787.0 17,151.0 33.7%

AstraZeneca 4,006.0 17,841.0 22.5%

Novartis 3,857.3 13,497.4 28.6%

Wyeth 3,505.5 12,386.6 28.3%

Aventis 2,969.6 15,705.4 18.9%

Abbott 2,739.0 9,304.0 29.4%

Takeda 2,446.6 6,838.3 35.8%

Group Subtotal 56,042.9 169,621.8

Average 31.8%

Source: Adapted from Scrip Report 2003

The pharmaceutical sector racks up the largest legal profits of any industry, with an average 18.6 % return on revenues in 2001 (Resnik 2001).

However, Table 1 shows that the top ten companies achieved a much higher average profit margin of 31.8% in 2003. Thy have a monopoly over the industry. Linked to economies of scale, larger companies can exploit larger market penetration to increase their profits. For example, Pfizer and Merck & CO, two out of the top three pharmaceutical companies in 2003 according to gross sales, had a profit margin of 45.7% and 47.2% respectively. This was much higher than the average profit margin of the top ten companies (31.8%), which illustrates the relationship between economic power and power of market exploitation.

The pharmacetical industry justifies their high profits with the argument that a great deal of time and money is invested in the research and development of new drugs. In 1998, developed countries spent US$520 billion on research and development, more than the total economic output of the world’s poorest 30 countries. In 2003, it was estimated that the average cost of producing a new chemical compound is around US$ 200 million . Thus, the industry is keen to protect their investments and subsequently reward their efforts by making a great deal of profit. However, there are ethical issues as to whether the scale of the profit can be justified, given the healthcare problems that exist in developing countries resulting from the unavailability of essential drugs.

Large pharmaceutical companies maintain their monopoly by investing great sums in legalities to lobby governments into protecting the industry, by making strict patent law. ‘The combined worth of the world’s top five drug companies is twice the combined GDP of all sub-Saharan Africa and their influence on the rules of world trade is many times stronger because they can bring their wealth to bear directly on the levers of western power’ (Borger 2001).

One of the leading US biotechnological companies, Genentech, has four times as many lawsuits to protect its patents as it has products (Fowler 1996). At least one company has been created in the US whose ‘main business,’ according to the Wall Street Journal, ‘is buying up broad patents and then sueing other companies for alleged infringements’ (Fowler, 1996).

Thus, there is also the issue that investing so much money and time in litigtion is highly unproductive, when this money could be better spent on research and development of new drugs, and subsidising the cost of essential drugs in developing countries.

2.2 Investment priorities

The world market for pharmaceuticals shows a clear division: non essential drugs are produced and targeted at developed countries promising high profits, while developing countries are s
till in need of basic healthcare and essential drugs.

Of the 1223 new drugs marketed between 1975 and 1996, only 13 were developed to treat tropical diseases – and only four were directly the product of pharmaceutical industry research. In recent years, drug companies have produced thousands of new compounds but less than 1% are for tropical diseases .

In 1998, global spending on health research was US$70 billion , but 90% of the money spent on health research and development focuses on medical conditions responsible for only 10% of the world’s burden of diseases (Benatar 2000). Only US$300 million was dedicated to research for vaccines for HIV/AIDS and only US$100 million to malaria research, diseases with the highest mortality and morbidity rates in the world, and devastating in developing countries.

‘It would be more profitable to develop a drug designed to enhance sexual performance for Anglo-American males than to develop a medicine designed to treat or prevent malaria’ (Resnik 2001).

There is also the suggestion that pharmaceutical companies focus more effort on a certain drug in developing countries when it is in their research interest; “Of diseases in the Third World, AIDS is getting the most attention and focus. Not coincidentally, it is also one of the few diseases that remain a threat to First World countries” (Censored 2000).

Pharmaceutical companies are able to devote their resources to non-essential drugs targeted at the richer markets of developed countries and at the same time, exploiting the markets in developing countries by influencing the world price for drugs. For example, pharmaceutical companies have long resisted “differential pricing” on their US$12,000-a-year courses of anti-AIDS drugs, which would allow a course to cost less in Cameroon than in Canada . Thus, the effect of purchasing power parity means that the prices are even higher in real terms in developing countries.

Drug Aid

In many cases, drug companies will provide drugs to developing countries at cheaper cost as aid. For example, in March 1998 Glaxo Wellcome (UK) announced that it would sell its anti-HIV drug AZT for 70 per cent below the normal price to pregnant women in developing countries . However, drug aid is not always beneficial. Reich et al (1999) found that out of 16,566 drug donations shipped from the US to 129 countries between 1994 and 1997, 10-40% were listed on neither the national essential drug lists nor the WHO model of essential drugs in developing countries. Also, 30% of shipment items had a year or less of shelf life (ibid.).

Advertising and false claims

There is also evidence that companies, in addition to prioritising non-essential drugs for developed countries, exploit markets in developing countries by convincing people that they need non-essential drugs. A survey, in the Annals of Internal Medicine found that ‘62 per cent of the pharmaceutical advertisements in medical journals were either grossly misleading or downright inaccurate’ (Madeley 1999).

There has been much criticism of the advertising in developing countries, claiming it is particularly persuasive in nature and that people are misinformed and encouraged to believe wild promises. This illustrates the exploitative nature of the pharmaceutical industry, and the quest for profit at the expense of health.

“In the corporate headquarters of major drug companies, the public relations posters display the image they like to present: of caring companies that bring benefit to humanity, relieving the suffering of the sick. What they don’t say, is that, so far, their humanity has not extended beyond the limits of the pockets of the sick” (Hilton 2000).

In summary, the pharmaceutical industry is for profit. A handful of economically powerful companies use economies of scale to exploit the markets of developed and developing countries. As a whole, the pharmaceutical industry is:

? Priortising investment in non-essential comfort-oriented drugs for the wants of the more affluent in developed countries, whilst neglecting the needs for essential drugs for poorer people, particularly in developing countries.

? Investing heavily in litigation and patents to restrict competition from other companies, and enable control over the price and availability of drugs.

? Exploiting people in developing countries, using persuasive advertising to make false claims.

? Motivated by profit, not health.

As Smith (1994) points out, ‘There is a direct conflict between the pursuit of health and the pursuit of wealth.’

2.3 Diffusion

Policymakers and representatives of the pharmacetuical industry argue that relevant technology reaches poorer people by means of ‘diffusion.’ This describes the process by which drugs become available to the poor after patents expire, and when competition to make the drugs drives down the prices of the drugs so that poorer people can afford them. However, as agents of disease, including bacteria and viruses, are continually adapting to drugs and developing resistance to them, new drugs are often essential and life saving, which means it is critical they are available very soon after production in developing countries. Patents reduce the availability of new essential drugs, because they increase the time it takes for diffusion to take place, if it happens at all.

The lack of infrastructure in developing countries makes it difficult for essential drugs to reach those who need them, which can increase the time it takes for technology to ‘diffuse’ to the poor, even after patents have expired. For example, oral rehydration therapy, a simple and cheap salt-and-sugar solution, has been mass distributed since the 1980s and has greatly reduced child deaths from diarrhoea, ‘but even though it only costs 10 cents a sachet, it is still unavailable for 38% of diarrhoea cases in Third World countries.’ Another example, Penicillin, discovered in 1928 and first marketed in 1943, is unavailable to 2 billion people. (Healey 2001)

The unavailability of essential drugs therefore extends beyond a lack of access to new drugs designed to treat devastating infectious diseases [essential drugs] (Resnik 2001). 50% of people in developing nations do not have access to even basic medications, such as antibiotics, analgesics, bronchodilators, decongestants, anti-inflammatory agents, anti-coagulants and diuretics (Reich 1979-1981).

In the 1980s structural adjustment programmes were enforced on developing countries by the International Financial Institutions (IFIs), such as the World Bank and International Monetary Fund. These trade liberalisation policies involved the establishment of ‘export-processing’ zones, which offered financial incentives, such as tax concessions, to companies. By favouring privatisation and encouraging multinational companies to move their operations to developing countries, one of the supposed objectives of economic liberalisation was to assist ‘development’ and the transfer of pharmaceutical technology to developing countries.

However, there has been a lack of ‘diffusion’ of knowledge and technology. In fact, it is the lack of technology transfer measures in export-processing zones that attract pharmaceutical multinational companies. With firm control over technology, even when high-tech methods of production are used they can be kept away from the domestic economy. The southern Indian city of Bangalore has, ‘thanks to Western companies’ passion for outsourcing, grown into one of the world’s premier technology hubs and is the centre of the India’s growing IT industry’ (its export revenues rose from US$150 million in 1990 to $4 billion in 1999). However, areas surrounding Bangalore are in fact extremely ‘low-tech’. In Karnataka (also state capital), there were still only 2.73 internet connections per 1000 people in 1999; in even poorer states (like Orissa), that rate dropped to 0.12 connections per 1000 people.

‘As it
turned out, there has been virtually no transfer of relevant technology by these companies to developing countries … in fact, by using the power that control over technology brings, they have eliminated many potential competitors and prevented indigenous pharmaceutical industries from developing to meet the real needs of the people of the third world’ (Kanji et al 1992). Thus, the evidence leads me to personally agree with this line and disagree that diffusion can be relied upon to make essential drugs available at times when they are needed most in developing countries.

Multinationals provide employment in developing countries, it is typically very low paid with little security, and the products (and the techniques and profits) go back to the companies of developed countries. Unfortunately, even though direct foreign investment provides low-paid jobs and does not transfer technology, those jobs are still vital for many that live in poverty and have limited employment options. This highlights why re-regulation of the corporate sector is required so that markets meet certain social criteria. For example, interfering with markets to reduce the price of essential drugs in developing countries.

“Pharmaceuticals, they are a commodity. But they are not just a commodity. There is an ethical side to this because they’re a commodity that you may be forced to take to save your life. And that gives them altogether a deeper significance. But they [big pharmaceutical companies] have to realize that they’re not just pushing pills, they’re pushing life or death. And I believe that they don’t always remember that. Indeed I believe that they often forget it completely.” (Drummond 2003)

3. GENERIC DRUG INDUSTRIES AND ESSENTIAL DRUGS

In many countries with large poor populations, such as Argentina, China, Egypt and India, national policy enabled a locally financed pharmaceutical industry to develop almost exclusively engaged in manufacturing generic drugs. These industries could ‘copy cat’ certain drugs and in some cases the manufacturing processes of other pharmaceutical companies.

This Chapter illustrates the main benefits to health of generic production in developing countries, in terms of increasing the availability of essential drugs. It uses India as a case study.

Benefits

In countries with generic drug industries, drug prices are low because the primary national objective is for the government to provide affordable drugs for its people, and develop the industry for economic welfare and greater self-sufficiency. India holds a record, with prices for many drugs 10 to 100 times lower than in developed countries. The introduction of generic antiretroviral drugs by Indian companies reduced the price of these drugs by 97% (Henry et al 2002). Research and development efforts by generic drug industries have also led to the development of vaccines against leprosy and hepatitis B, and anti-cancer drugs .

Multinational companies have less economic control over the market because the domestic drug industry controls the domestic market. Therefore, poorer people are less dependent on multinational companies and the extortionate prices that they can charge for drugs. In addition to lower cost, as will be seen from the case study of India, generic drugs have the advantage of being competitive in quality to those produced by large multinationals, originating from developed countries.

A case study of India

In India, multinationals held only a 20 per cent market share in 2000 : national pharmaceuticals have gained knowledge and capacities in research and development, which has enabled them to replicate manufacturing processes for already known drugs, and develop a bulk drug industry for various chemicals and antibiotics.

India’s local drug companies have long benefited from a relaxed patent regime.

History of patent law in India (up until the 1970s)

1856 The Act Vi Of 1856 On Protection Of Inventions Based On The British Patent Law Of

1852 Certain Exclusive Privileges Granted To Inventors Of New Manufacturers For A Period Of 14 Years.

1859 The Act Modified As Act Xv; Patent Monopolies Called Exclusive Privileges (Making. Selling And Using Inventions In India And Authorising Others To Do So For 14 Years From Date Of Filing Specification).

1872 The Patents & Designs Protection Act.

1883

The Protection Of Inventions Act.

1888

Consolidated As The Inventions & Designs Act.

1911

The Indian Patents & Designs Act.

1999

On March 26, 1999 Patents (Amendment) Act, (1999) Came Into Force From 01-01-1995.

1972

The Patents Act (Act 39 Of 1970) Came Into Force On 20th April 1972.

Source: Adapted from http://www.legalserviceindia.com/articles/patents_geographical.htm accessed 10th November 2004

In the past, India honoured patents on manufacturing processes but not patents on products, which allowed generic drug companies to ‘reverse engineer and manufacture drugs’ without paying royalties to the companies who own patents on those drugs (McNeil 2001).

The features of the 1970 Patents Act helped to promote India’s pharmaceutical industry, which specialises in generics. It has enabled considerable technological innovations and development of knowledge, with its provisions enabling the drug industry to grow at a rapid pace. (The Lancet, 2004)

The Indian Pharmaceutical industry is the pre-eminent sector in India, in terms of scientific and technological developments. India ranks among the top 15 drug manufacturing countries in the world. In 2004, the domestic drug industry met approximately ‘70% of India’s demand for bulk drugs, drug intermediates, chemicals, pharmaceutical formulations in the form of tablets, capsules and orals’ (Lancet 2004). India’s generic drug industry has enabled a huge number of people to afford essential drugs that would have otherwise been out of reach because of patent induced high prices and unavailability. Generic production therefore promoted self-sufficiency and assisted economic development.

“The Indian firm Cipla’s offer to MSF [Médecins sans frontiéres] to provide a cocktail of antiretrovirals for less than $350 a year (compared to the big boys’ $10,000) resounded like a thunderbolt. Suddenly, the emergence in the South of very low cost generics producers seems credible” .

4. IMPACTS OF THE TRIPs AGREEMENT

This chapter discusses the impacts of the TRIPs agreement (January 2005) on India’s pharmaceutical industry. It starts by mentioning the pressure and reasoning behind India’s decision to comply with TRIPs, and then examines the positive and negative aspects of the agreement, which might emerge in the next few years.

India amended the law governing patents i.e. Patents Act, 1970 by Patent (Amendment) Act, 2002, on 20th May 2003.

The main features of Patent Act, 2002, were:

? Enlargement of non-patentable inventions

? Twenty year patent term for all patents

? Burden of proof on defendant in case of infringement when a patent is for the process of producing a new product

? Making importation a right of a patentee

This Act prepared India for full TRIPs compliance, and currently, India is adapting to the changes to the pharmaceutical industry under the TRIPs Agreement, which came into force on January 1st 2005.

Indian companies have now lost the opportunity to develop processes for patent protected drugs. This could allow multinational companies to establish a monopoly over the Indian drug market, unless Indian pharmaceutical companies can compete.

Pressure to comply with TRIPs

There was pressure for India to meet TRIPs requirements because India would have otherwise been disciplined by the WTO, and ‘India’s market access rights would have been jeopardised’ along with other benefits (Lancet 2004).

There was intense lobbying, pre
dominantly by the United States pharmaceutical industry, to impose the TRIPs agreement. PhMRA claimed that the US pharmaceutical industry loses US$500 million annually only through a lack of patent protection on drugs in India . The GlaxoSmithKlein CEO Jean-Pierre Garnier described the Indian pharmaceutical industry as price-undercutting “pirates”, and said the company “is not doing this to get a Nobel Prize.”

In response, Hamied, on behalf of the Indian pharmaceutical firm CIPLA, said “Indeed, we are a commercial company. But I market 400 products in India. If I don’t make money on a half-dozen of them, it’s no big deal. I don’t make any money on the cancer drugs we sell or drugs for thalassemia, a blood disorder that’s common in India. We sell these drugs virtually at cost because I don’t want to make money off these diseases which cause the whole fabric of society to crumble. India alone will have 35 million HIV cases by 2005, and it’s something we can’t afford.” (Lindsey 2001)

4.1 Main advantages

On the one hand, TRIPs could promote more research and development and stimulate competition to produce new drugs. On the other hand, India will lose its ability to generically produce essential drugs for its majority poor population.

Generic drug production in India has meant that research and development of new drugs has taken a back seat. Indian companies are ‘getting actively engaged in research and development of their own molecules/pharmaceutical products and processes . The Indian government is providing a range of tax concessions designed to encourage research and development, including a 10-year tax holiday on income arising from research and development. (Lancet 2004)

Thus, TRIPs is increasing investment in the research and development of new drugs. It promotes economic growth of the Indian drug industry, because companies now have patent induced control over the price and availability of new drugs. India already has more pharmaceutical products approved by the United States Food and Drug Administration (FDA) than any foreign country, which is helping the industry to obtain and enforce patents. The Indian pharmaceutical industry will be able to increase its contribution to drug discovery and development, which, given the cost-effectiveness of research and development in India, can only increase. (BJU 2003)

‘TRIPs will cement India’s position as a global pharmaceutical outsourcing hub and offshore location for research and development and other support services including strategic services in patenting and related matters.’ India is also becoming an attractive location for the outsourcing of patent drafting . In addition to these benefits to the industry as a whole, TRIPs has also imposed higher quality standards for drugs and processing.

Proponents of TRIPs argue that patent induced privatisation of the industry will lead to growth of the domestic industry that will increase the availability of all biotechnology products to poor people i.e. diffusion. However, as mentioned before, patents can reduce the availability of new essential drugs by restricting short term diffusion. Thus, although TRIPs may encourage more research and development of drugs, these drugs will be less available to poorer people who cannot afford them at times when they need them most.

However, there are counter-arguments that TRIPs will not make new drugs unaffordable. For example, Shantha Biotech, which was first to launch the indigenously developed hepatitis-B vaccine in the country in 1997, has secured the World Health Organisation (WHO) certification for its product “Shanvac B” (now marketed at “Hepashield”). Shantha is the only company in India to get this certification for the hepatitis-B vaccine, and it is being provided at a quarter the price of the previously imported vaccine (Jayaraman 2001).

However, despite greater availability of a few specific drugs, linked to some Indian companies obtaining licenses, the price of new drugs over the next few years is likely to be relatively high in terms of what the population is used to and can afford.

4.2 Main Disadvantages

Under TRIPs, there will be more consolidation in the pharmaceutical industry, as larger companies are more capable of using patents to secure higher profits. Linked to economies of scale, these companies will be able to exploit the patent system to out-compete other companies. Multinationals such as GlaxoSmithKline, which already operate in India, will have a particular advantage. Smaller companies will be less capable of buying into the strict patent system. Merely securing a patent from America’s patent office costs at least $4000. Defending it in court can cost millions (Economist 2002).

Although TRIPs does not patent old drugs already on the market, there is still a backlog of products waiting for grant of product patents, some which may already be on the market, as product claim applications have been filed since January 1 1995. Unless Indian companies have stopped manufacturing such drugs completely, a large number of litigation and infringement suits will ensue .

TRIPs restricts India’s generic industry and longer patents provide additional incentive for foreign investment in India. This could actually pose a threat to India’s pharmaceutical companies. At an international level, Indian companies’ advantage in cheap vaccines for hepatitis or rabies may be eroded by potential development of cocktail vaccines that promise delivery of multiple vaccines in a single shot (Jayaraman 2003). Although TRIPs encourages growth of the industry and creates some large winners, it creates many losers.

Since the 1970s, India’s poor population has benefited from a range of drugs available at relatively low prices. The industry is efficient at making generic varieties and has a number of different companies able to produce such drugs, which means that new drugs on the market can be imitated both quickly and easily. This provides a means of sharing the benefits of technological advancement in developed countries with developing countries, usually isolated by a gap in technology. According to some reports, India is home to the fastest growing rate of new infections in the world (Hankins 2003). Without the benefits of generic drug production, the population of India could suddenly be faced with a health crisis.

According to a recent Times of India report; the price of cancer drug Gleevac has risen from to Indian Rs120, 000 ($2,590) from its price just a few months ago of Indian Rs4000 ($86.35) – 30 times more, because of TRIPs .

4.3 The Doha Agreement and Compulsory Licensing

TRIPs has a clause that allows governments to override patents and provide essential drugs to the poor in some circumstances. Working with Non Government Organisations (NGOs), Brazil and a group of African countries pressured policymakers to revise TRIPs. The meeting in Doha, November 2001, between the world’s trade ministers attempting to organise a new round of trade negotiations (Health Affairs 2004), led to the Doha “Declaration on the TRIPS Agreement and Public Health.” This declaration affirmed that TRIPS “should be interpreted and implemented in a manner supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all.”

‘It affirmed the right of nations to use the exceptions of TRIPS, such as the compulsory licensing provision, to meet public health concerns, specifically stating that “public health crises, including those related to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency” and thus facilitate the right to use compulsory licensing’ (World Trade Organisation Declaration 2001).

‘Governments can issue compulsory licenses to allow other companies to make a patented product or use a patented process under licence without the consent of the patent owner, but only under certain conditions aimed at safeguarding the legitimate interests of the
patent holder’ . For example, the Supreme Court of India may interfere to justify the dispensation of drugs at an affordable price on the grounds of concern for public suffering. They can grant a compulsory license for companies to produce a generic drug. If required, the government may also fix the price of these drugs as well as the royalties to be paid to the inventor for the remaining term of patent .

A further 30 August 2003 Amendment to the Doha Agreement enables governments to let their pharmaceuticals generically produce drugs for other countries, as well as their own people, in times of ‘acute suffering.’ Previously, Article 31(f) of the TRIPS Agreement stated that products made under compulsory licensing must be “predominantly for the supply of the domestic market”. (WTO Press Release 2003) This applied directly to countries that could manufacture drugs, limiting the amount they could export. It will now be possible for countries to import cheap generic drugs in times of ‘acute suffering’.

This was regarded as a victory by the developing world and as a defeat by the research-based drug industry.

However, there are serious questions as to whether compulsory licensing can even work. ‘No generic medicines have been manufactured this way in the past decade, treating no patients in any country worldwide’ (Attaran 2003). ‘Threats of compulsory licensing might be useful when rattling sabres with drug companies to lower medicine prices, but only a single (and unusually powerful) developing country, Brazil, has ever succeeded in doing so. As such, compulsory licensing or the threat of it has seldom had any practical effect for public health’ (Attaran 2004).

Nevertheless, the pharmaceutical industry in developed countries has objected, with the United States leading the objections. ‘America’s drug industry has fought tooth and nail to impose the narrowest possible interpretation of the Doha declaration, and wants to restrict the deal to drugs to combat HIV/Aids, malaria, TB and a shortlist of other diseases “unique to Africa” .’ This means that the industry is against the use of compulsory licencing, and only prepared to accept its use in Africa, which is very unethical when most developing countries do not have sufficient access to essential drugs. It highlights the ruthlessness of paharnceutical companies, in terms of seeking maximum profit even at the expense of the world’s health.

Compulsory licensing and the amendments to TRIPs are positive in respect to health care in developing countries. The changes suggest that governments do respond to pressure and there has already been some admission on their part that TRIPs could be revised under a more ethical framework. However, even with these amendments, TRIPs does not tackle the root problems of unequal power relations between developed and developing countries, which give rise to the unequal access to pharmaceutical biotechnology.

5. CONCLUSION

This chapter argues in favour of alternatives to TRIPs. It starts by summarising the benefit of increased public funding in research and development. It shows the close ties between science, business and government and goes on to explores wider policies, highlighting the ways that the scientific community can promote more ethical drug policy.

Public funding

If a larger proportion of research and development of new drugs was publicly funded, then this would encourage more investment into the development of essential drugs, which are needed in developing countries.

Data submitted to the Joint Economic Committee of Congress by the National Bureau of Economic Research reveals that public research, not private, led to 15 of the 21 most essential drugs introduced between 1965 and 1992, and other studies in the 1990s suggest that only a minority of important drug discoveries in recent years (estimates range from 17% to 40%) were the result of commercial research (O’Leary 2002). This shows that public funding is paramount to the production of essential drugs, and therefore to health in developing countries. The combined effect of shortening patents and increasing public funding in the pharmaceutical industry would ensure that not only are more essential rugs produced, but that they also reach those who need them.

The next section shows that scientists need to devote more attention to the unethical nature of drug policy and voice concerns to the public. This involves deconstructing a scientific agenda from the economic agenda of government and big business.

Governments, science and big business

Scientists ideally work to discover “truth” and gather knowledge to help people. Research and development, however, tends to be profit-driven, and there are conflicts between seeking scientific advancement and helping people, because helping people is not always profitable. Government policy supports the pharmaceutical industry, as strict patents favour the expansion if the industry and economic growth. Although business and governments are therefore dependent on scientists to design new drugs and technology, their common agenda allows them to exert political and economic control over science. Any social objective to deliver essential drugs to the poor is lost in this agenda. Scientific search for ‘truth’ therefore becomes a quest for profit, because of the vested interests of government and business.

The United States Office of Management and Budget reported that academia, in addition to federal funding, receives millions of dollars for research from donors and the private industry.

“Bioethicists at the University of Toronto take funding from GlaxoSmithKline, Pfizer and Merck to write editorials on bringing biotechnology to the developing world . . . Bioethicists at the University of Pennsylvania take money from Pfizer to write an article explaining why physicians should not accept gifts from companies like Pfizer. (Engler 2004) This shows the irony whereby large companies control information which should criticise their activities.

In the United States, even federal money comes with strings attached. Federally funded experiments and research are subject to massive amounts of bureaucratic regulation and oversight. Members of academia are now increasingly involved in the private sector. ‘This means that, even in basic research, funding is not free from profit motives or federal regulation, and the research is not necessarily a pure drive for more knowledge .’ Thus, it is hard to separate science from the profit motives of business and politics, which share a common agenda. Scientific information can be biased because it is conditioned by this agenda.

‘Today the most powerful players outside government are private corporations. They contribute financially to political parties in the US, Europe and elsewhere and a neo-liberal trade agenda has become the mantra of virtually all elected political parties. The price governments have to pay for this support is to ensure that their electoral platform corresponds quite closely to the agenda of big business.’ (Shutt 2001)

It is unfortunate that science, politics and business are so intertwined that it is difficult for the benefits of biotechnology and knowledge to jump the political and economic hurdles to reach developing countries.

It means that scientists need to be more vigilant about the type of drugs they help to produce, and what they endorse. Moreover, the scientific community need to play a more active role in raising awareness about pharmaceutical issues, so that people become more informed and capable of working with other groups, such as NGOs and members of the scientific community, to press governments for change. Scientists and the public can apply pressure to regulate the corporate sector, by imposing corporate social standards in the trade of drugs, and deconstruct those pressures from big business that controls science and information.

Public mistrust

Governments have cont
rol over science. They manipulate the science often finding a balance between where public support lies and where the money lies. This has resulted in public mistrust and scepticism in science. In the UK, for example, the public was informed by government that BSE could not be transmitted from cattle to humans, and the government promoted British beef and the industry for around ten years, before it emerged that there was a human form of the disease, variant CJD. Mistrust and scepticism was the result.

Scientific ignorance can also weaken the ties between science and the public. People may ignore the science because it is viewed as obscuring a larger picture (Michael, 1996). Science can be difficult to understand and, as mentioned, communication through the media reflects the agenda of business and government. If people do not trust the scientific media or understand the science of issues, their uncertainty can be compounded by a general mistrust of science and the scientific community. It is also important to consider that people also have different views on issues, which highlights the need for better communication and debate. New abortion procedures to people who are already pro-life are simply ‘more efficient ways to kill unborn babies,’ whereas to pro-choice advocates they are safer, less intrusive ways of protecting the choices and health of mothers .

People need to feel that a scientific organisation has no vested interests. This is why independent organisations for public scientific awareness and education are important to build up this trust. In Britain, this includes COPUS (Committee on Public Understanding of Science) run by the Royal Society. There is also the Wellcome Trust, which informs the public on science policy and practice (as well as contributing to researching social implications of sciences) “The culture of science needs a sea-change, in favour of open and positive communication with the media.’ If these independent scientific institutions, collaborating with NGOs and the scientific community, can succeed in informing and educating people, ‘it will pay for itself many times over in renewed public trust’. (UK Select Committee on Science and Technology 2000)

Agreeing with this line of thinking, if independent scientific organisations can give more attention to health problems in developing countries, then they can raise public awareness about these issues. The potential to change policy rests on a more informed public.

Individual scientists and the scientific community, collaborating with independent organisations, can debate ethical issues and highlight the importance of improving health in developing countries by increasing the availability of essential drugs. “Some of the favourite topics of bioethicists seem trivial compared with the important health issues facing people in the world’s poor countries and in impoverished regions in rich countries” (BMJ 2004). “The risk of dying from maternal causes in sub Saharan Africa is 1 in 16. In Western Europe it is 1 in 4000.” Bioethicists could focus their attention on the morality of a world system that allows “500 000 girls and women [to] die every year – 99% in developing countries – from preventable conditions and injuries related to pregnancy and childbirth.” (Lancet 2004)

It is especially important to make younger people more aware of the issues pertaining to the use of strict patents, in order to produce an informed public in the long term. Thus, there needs to be more attention to such issues in colleges and universities, as part of a curriculum, then younger people could debate for themselves the fairness of TRIPs. Again, a more informed public would be less likely to accept the ‘unfair’ policies enforced by their governments.

Therefore, policy must change. After all, it is the wider policies that enable corporations to exploit poorer people, who cannot afford to buy into technology. Roy Vagelos, the former head of Merck, claims that “‘A corporation with stockholders can’t stoke up a laboratory that will focus on Third World diseases, because it will go broke’ … ‘That’s a social problem, and industry shouldn’t be expected to solve it .’ Although biased from an industry viewpoint, he does make the point that companies are by definition profit motivated and that giving companies greater freedom is not in the best interests of health, especially poorer people.

Historical policy context

‘One cannot separate economics, political science, and history. Politics is the control of the economy. History, when accurately and fully recorded, is that story.’ (Smith, 1994). There are wider policies that need to be considered. Patents are a form of imperialism.

In the nineteenth and twentieth centuries rich, powerful states, including Britain and other European countries, exploited third world colonies. Richer states exploited the natural resources and workforce of the colony, and efficient supply chains were constructed for this purpose, based on unequal power relations. Although developing countries gained economic dependence in the 1960s and early 1970s, an economic dependence continued. Developed countries lent large sums of money to developing countries, and these debts became unpayable due to the rise in interest rates. Developing countries, instead of investing in health, still have to repay these debts, and they have become economically dependent on the companies and governments of developed countries, who control trade policy.

Thus, based on a historical trade policy context, governments in developed countries have the responsibility to help developing countries supply drugs to their populations.

‘Enormous agricultural subsidies ($310 billion) in developed countries deny the agrarian populations of poor countries the opportunity to export products and accumulate wealth’ (OECD, Paris 2002). The subsidies alone are roughly equal to the entire gross domestic product (GDP) of sub-Saharan Africa. ‘Redirecting just 1 percent of this government spending to global health would more than double the foreign aid spent to control HIV/AIDS, malaria, and tuberculosis combined.’

President Yoweri Museveni of Uganda opines that giving priority to medicine patents in trade negotiations has been a “red herring” and that “if there were no agricultural subsidies…we [Africans] would earn enough money to buy all the drugs we want” (Wall Street Journal Editorial 2003). Although I think that reducing agricultural subsidies is just one element of improving pharmaceutical infrastructure in developing countries, he makes a valid point that improving the distribution of drugs is linked to redistributing wealth between countries.

Kanji et al (1992) take this further to point out that a country’s pharmaceutical and health policy cannot be isolated from its general development startegy. November et al 1982 elaborates by stating that ‘dependence on products [drugs] and the agents and institutions which make them available, fosters the notion that the solution to illness resides in the purchase and consumption of medications rather than improvements in living condtions’ (November et al 1981).

I agree with this line of reasoning that links the unavailability of essential drugs in developing countries to wider policies, and highlights the need for more sustainable development that takes into account the vulnerability of the poor by imposing strict social criteria in drug policy and trade, rather than strict patents (economic criteria). It should be emphasised that shortening the time length of patents is one important factor among many that could improve the avilability of essential drugs and all round healthcare in developing countries.

Melrose, 1982, says that ‘companies should keep to their declared obligation of making sure that drugs “have full regard to the needs of public health” and demonstrate special social responsibility in poor countries by not advertising non-essential multivitamin tonics, cough and
cold preparations and expensive and irrational combination drugs (Melrose 1982).’ Although I agree that corporations need to behave more responsibly, this should be a legal prerequisite rather than an ‘obligation.’

Ironically, there is great potential and ability of the large pharmaceutical firms, which have been so criticised in this text, to develop more essential drugs for the poor. The private sector has a great deal of knowledge and capital, which can be used to produce new essential and non-essential drugs. Thus, although public funding would help to give priority to essential drugs, the private sector should still contribute significantly. This is especially the case in the foreseeable future because the private sector is largely responsible for the production of all new drugs. ‘If Pfizer, Merck, Glaxo-Wellcome, and other pharmaceutical companies do not develop drugs that plague developing nations then …there is a real danger that people in developing nations will become therapeutic orphans’ if the pharmaceutical companies lack the proper incentives to develop drugs for the developing world’ (Reich 1979-1981).

Thus, the final part of the conclusion looks at ways of regulating the corporate sector.

Regulating the corporate sector

Governments can regulate the pharmaceutical industry in two broad ways, either by direct control, usually by making legal requirements, or by creating incentives. A mixture of the two strategies can be effective.

Control involves regulating and monitoring biotechnology companies and pharmaceuticals through the creation of legal requirements. For example, when these organisations develop drugs/ vaccines, governments can mandate them to comply with research and manufacturing standards to ensure products are safe and efficacious . Governments can control drug prices furthermore because they often have authority over the granting and use of patents. For example, in the US, the government has the right to license drugs to other companies if the patentee does not make it available to the public on reasonable price and terms. Such a right is currently focused on drugs that have been developed with public support . It needs to extend to drugs developed with private support.

Although laws are paramount in regulating corporate conduct, there is the issue that corporations have no moral obligations over and above the requirement to comply with the law (Friedman 1970). Governments can, in this regard, create further incentives for these organisations to engage in developing drugs/ vaccines that benefit populations in developing countries. For example, it could create subsidies or offer grants for research in certain areas. The Orphan Drug Act, introduced in the US in 1983, creates tax and marketing incentives for those companies that engage in creating drugs for rare diseases. Also, governments could commit to purchasing future critical drugs/ vaccines in order to minimise the ‘private entity’s financial risk’ .

Ideally, TRIPs should be replaced by policy which curtails the power and influence of the private sector, by shortening the time length of patents, allowing generic production in developing countries, and at the same time increasing public funding of research and development.

In summary, making more ‘ethical’ drug policy is dependent on:

? International policies

– removing TRIPs, shortening the length of patents; allowing developing countries to generically produce essential drugs.

– subsidising research and development of essential drugs.

– regulating the corporate sector: ensuring that essential drugs are reasonable priced; ‘a price that allows the company to earn its money but also promotes accessibility and equity’ (Brody 1996) & (Spinello 1992).

? National policies

– providing funding and technical support for NGOs who raise awareness of the issues surrounding the use of strict patents in the pharm,aceutical industry.

– Promoting education in schools; collabortaing with independent scientific organisations to provide information publicly, through the media.

– Setting an example by increasing public funding in research and development; prioritising investments in essential drug production; greater transparency; governments more accountable to the public than companies.

– Campaigning for fairer drug policies at the international level

? Education and public awareness

– Informed people in developed countries, able to raise issues pertaining to the use of strict patents and resist ‘unfair’ policies.

? The role of the scientific community

– a scientific community that focuses more on third world issues and health problems, and raises awareness about the underlying policies that cause an imbalance in wealth and health.

– Independent scientific organisations that can communicate information to the public and collaborate with scientists and NGOs, and raise concerns with business and government.

– campaigning for ‘truth’ and sharing of knowledge, as well as more regulation of the corporate sector, and governments who are more accountable to the public.

This paper highlights the interconnectedness of social, economic and political factors which can improve the availability of essential drugs in developing countries.

To end on a more positive note, pharmaceutical companies have created life-saving drugs which have helped to save millions of lives, but these drugs have tremendous potential to save many more lives and alleviate suffering by helping to curb the incidence of various infectious diseases, which cripple the social and economic fabric of developing countries. The paper also highlights the importance of better understanding the impacts of TRIPs in developed countries, so that governments are pressed to change policies at the national and international level. The role of the scientific community is critical, in terms of having more say and control over drug policy, and helping to increase public awareness about drug policy. Ultimately, a concerted effort between the scientific community, public and NGOs can resist ‘unfair’ drug policy and some of the exploitative practices of pharmaceutical companies.

7. REFERENCES

Books/Journals

Attaran, A. (2003) Assessing and Answering Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health: The Case for Greater Flexibility and a Non-Justifiability Solution. Emory International Law Review 17, no. 2 (2003): 743–780.

Benatar, S. (2000) Avoiding Exploitation in Clinical Research. Cambridge Quarterly of Healthcare Ethics 2000; 9: 562-65

BJU (2003) Fitzpatrick (Ed) International Volume 92 No

Implementing Business Ethics

Tim Bryce asked:

“The ethics of a business are whatever the top-dog says they are.”

– Bryce’s Law

INTRODUCTION

We hear a lot these days about the deterioration of ethics in business, e.g., graft,

corruption, cheating, favoritism, skimming money, etc. This has resulted in a public

relations nightmare for business. If consumers do not trust a company, its a matter

of time before it goes out of business. This is supported by recent studies that give

evidence there is a correlation between business performance and ethical practices

(see the Institute of Business Ethics).

Basically, the Institute’s study suggests there are long-term benefits associated with

enacting an ethics programs. Such studies and recent corporate snafus (e.g., Enron)

are impetus for companies coming to grips with ethics in the workplace.

There are essentially two considerations for devising an ethics program in

business; first, knowing what your ethics are, and, second; implementing them

in a consistent manner.

INTERPRETING ETHICS

There is little point in my telling you what is ethically right or wrong. You already

have an interpretation of this. But let us understand what influences our interpretation

of ethics; our interpersonal relations with others, such as our family, friends, neighbors,

fellow workers, as well as the media. Ethics is learned more than it is taught. It is based

on observations of the conduct of others, people we like and respect as opposed to those

we do not. It is then up to each of us to interpret these perceptions from which we will

base our conduct and behavior. The point is, we act on our perceptions, however accurate

or inaccurate they may be. Another influential factor are our own human frailties of

competitiveness, love, greed and ambition. But then again, this goes back to

interpersonal relations.

Let us recognize that ethical behavior is interpreted differently from person to person. What

one person may consider right or wrong may be different for the next person. The objective

in business is to implement a uniform form of behavior thereby instilling consumer

confidence in a company overall.

IMPLEMENTATION

Writing a corporate code of conduct is in vogue today as a means of articulating the

ethics of a business. Such codes are proudly displayed on web sites and in corporate

brochures more for public relations than anything else. True, they are useful for

disciplining an employee for an infraction of the rules, but I do not see them as an

effective way of implementing an ethics program. Understand this, regardless of what

the code of conduct states, the ethics of a business are whatever the top-dog says they

are. Too often I have seen companies say one thing, then act another, e.g.,

Enron.

Printed codes of conduct are nice, but we have to recognize that it is one thing to

enact legislation, quite another to enforce it. As stated earlier, ethical behavior

is based on observations. Regardless of what a code of conduct says in print, ethical

behavior is based on the relationship of superior and subordinate worker

relationships. If a subordinate observes an indiscretion by his superior, in all

likelihood it will be emulated by the subordinate. This phenomenon occurs

top-down in the whole corporate chain of command. If it breaks down anywhere

in the corporate hierarchy, it will become visible to the subordinate layers and

potentially create a “trickle-down” effect. This means the boss has to be a role

model for ethical behavior; they must “walk-the-walk” as well as “talk-the-talk.” If

they do not, it will not go unobserved by their subordinates. Managers, therefore,

should avoid the “do as I say, not do as I do” phenomenon. They must lead by

example. Anything less is sheer hypocrisy and will inevitably lead to changes

in behavior.

It is simply not sufficient to issue platitudes as to what is and what isn’t ethical

behavior. The manager must follow-up and assure ethical behavior is implemented

accordingly. In other words, we shouldn’t just “desire” truth and honesty, we

must “demand” it. If one person gets away with an indiscretion, others will surely

follow. As such, when writing out a code of conduct, be sure to stipulate the

penalties for its violation.

The success of a business ethics program is ultimately measured by how well it

becomes ingrained in the corporate culture. As we have discussed in the past,

corporate culture pertains to the identity and personality of the enterprise. All

companies have a culture; a way they behave and operate. They may be organized

and disciplined or chaotic and unstructured. Either way, this is the culture which

the enterprise has elected to adopt. What is important is that in order for an employee

to function and succeed, they must be able to recognize, accept and adapt to the

culture. If they do not, they will be rejected (people will not work with them).

The intuitive manager understands the corporate culture and how to manipulate

it. Changing the Corporate Culture involves influencing the three elements of the

culture: its Customs, Philosophy and Society. This is not a simple task. It must be

remembered that culture is learned. As such, it can be taught and enforced. For

example, a code of conduct is useful for teaching, as is a system of rewards and

penalties. Designating people to act as watchdogs of the culture can also be useful,

but be careful not to create a climate of paranoia. Ultimately, as a manager, you

want to create a culture that promotes the ethical behavior you desire.

For more information on “Corporate Culture,” see:

http://www.phmainstreet.com/mba/pride/eespcc.htm

CONCLUSION

We now live in strange socioeconomic times. 40-50 years ago we

normally had one parent staying home to raise the kids. Now it is commonplace

to find families where both the husband and wife are working and paying

less attention to their children, thereby relegating their parenting duties to

teachers and coaches. In other words, the family unit, which is the basic

building block for learning ethical behavior, is becoming severely hampered.

In business today we have a “fast-track” competitive mentality which does not

encourage a spirit of teamwork but, rather, more rugged individualism. Nor

does it promote employee loyalty. Further, we now live in a society that

encourages people to go into debt, thereby causing financial tensions.

Bottom-line, ethics is about people and trust. Consequently, we should be

sharpening our people skills as opposed to avoiding it. We don’t need more

maxims of how we should conduct our lives; we need to lead by example. As

such, we need more role-models and heroes than we do paperwork.

Let me close with one last thought on how ethics impacts business; there

is probably nothing worse in business than being caught in a lie, particularly

by a customer. Any trust that there may have been before disintegrates

immediately and business is lost. In this day and age, there is something

refreshingly honorable about a person where their word is their bond. Ethics

just makes g
ood business sense.

MLM Ethics

Dr Robin Rushlo asked:

Are MLM/Network Marketing Businesses A

Honest Way to Earn Income?

The MLM/Network Marketing Business

MLM (Multi-Level Marketing) is based on the concept of distributing the process of selling onto independent businesspersons. Honest MLMs give everyone (and anyone) the opportunity to start and grow their own business. Consider that the MLM concept can be applied to selling every good and/or service, and that every person is a potential future representative. One can say that everything has the potential to become a MLM opportunity.

Think about where you work. Isn’t it true that the boss (or company) is raking in the big bucks out of the money YOU are making for the company? Maybe you aren’t in sales. You still contribute something of value to the company. If you didn’t, they wouldn’t pay you! Your paycheck is a reflection of that value. Whether you work in sales, for a nonprofit, or in the service industry, somebody somewhere is making money and you are contributing to that effort. If they weren’t making money, the company would collapse.

There are many good examples of traditional businesses that function very much like a MLM. Examples include the Insurance business, the Yellow pages guys, your local Auto Dealers, etc. Look at a sales force. The salesman makes a commission of 12%. That’s all he makes unless he makes his quota or sale goals and then he may get a bonus. The sales managers for these companies may have 10 salespeople to train, keep track of, and motivate. As reward for this extra work, he makes 3% of everything that each salesman makes plus commissions and bonuses for his own effort. He may make an additional bonus for all of his salesmen making their sale goals. And the owner of the company makes money on everyone!

Gee, that would mean Honest MLM is everywhere we just do not see it like a MLM company.

An Honest MLM versus a Pyramid Scheme?

Pyramid schemes are illegal scams involve a large number of people at the bottom of the pyramid, all of them paying money to a few people at the top. Each new participant pays for the chance to advance to the top and profit from cash paid by others who join down the line. You receive no products or services for your participation. Pyramids resemble a legal honest MLM in structure, but there is an important difference. Pyramid schemes seek to make money from you, while multi-level marketing seeks to make money with you by offering top quality products and/or services. Pyramid schemes are much like chain letters; they require mathematical gymnastics that cannot possibly work. Pyramids always collapse in the end, and only a very few (usually the con artists themselves) make any money on them at all.

Many people associate the MLM technique with pyramidal schemes. An MLM does not work this way. You must do work to earn money—it is as simple as that. The main objective of an MLM is to enlarge the area of distribution for different goods by involving as many people as possible, either as customers or as possible representatives. Each company representative earns their money through honest work. They may receive commissions for selling and may also receive a bonus for offering the business opportunity to others.

Anyone who works a conventional job is in a pyramid scheme. Every company, army, and government in the world is built on the pyramid concept. However, with multilevel marketing, you aren’t held back by the people above you like you are in a conventional job.

With an MLM, you can build your business as large and as profitable as you want and you do not need to be at the top. In fact, with many MLMs, you can surpass the earnings of the person that introduced you to the business.

How Can You Tell if an MLM is a Good and Honest Company?

MLM opportunities are all around us, but only a few of them are turned into profitable businesses. Be sure to make the most out of every honest MLM opportunity.

The Direct Selling Education Foundation suggests that, before you sign up with a company, you ask yourself these three questions:

1) How much am I required to pay to become a distributor? An honest MLM company will generally charge a small start- up fee. Pyramid schemes make most of their money from signing up new distributors, so their start-up charges are often very high. These start-up fees may be called many things and you may be told they are required or are recommended purchases for training, computer services and product inventory.

2) Will the company buy back unsold inventory? Honest companies will usually buy back any products that you fail to sell. Bogus companies will stick you with the inventory.

3) Are the company’s products sold to customers? Pyramid schemes gain nothing by actually selling a product and often don’t sell anything at all. They focus only on gaining new investors. Be wary if you must start by buying a large amount of product. Also, take a good look at the product itself. Multi-level marketing depends on quality products that are well-priced; pyramid schemes do not.

As with any other investment, before you commit ask questions about the company, its leadership, its ethics and its earnings. Take your time and investigate any information you’re given. Talk to other people who have joined and research the company. Don’t act hastily!

Ethics of the MLM

Many people question the ethics of MLM. They claim that the people on the top get all the benefit from the people working below them, while the people below don’t get much if anything at all. Nothing could be further from the truth! The main income for an honest MLM comes from selling goods or services. With an honest MLM, you can easily make more than the person that brought you into the company if you put the effort into it. He gets a little bit from your sales, but you get the lion’s share. Work equals money!

An honest MLM also focuses both on sales and on recruiting people (increasing the distribution system) to earn you more money. When a MLM representative contacts a person, he views that person as a potential customer and as a potential future representative. A representative will give you the opportunity to purchase his merchandise (which you were going to buy anyway) and to become a representative yourself, giving you the chance to earn money, grow your own business, become part of the company and share in the profits!

The recruited person benefits since he is now part of the company and is also the owner of his own business. Some benefits of joining the honest MLM can include products at a reduced cost and the opportunity to build their own business by selling and recruiting themselves. However, recruiting alone is not enough. You must recruit, motivate, train and supply the persons you recruited to get your share of their sales profit.

I Don’t Know How to Sell or Recruit!

If you do not know how, don’t panic! There are many honest MLM guides online. All the tips, tricks and the knowledge you need to start and grow a MLM company are available. The good news is that a lot of these are free.

Expand your business over the Internet. It is easier and cheaper. People are much more comfortable buying things from perfect strangers over the Internet, rather than buying them from total stranger at their doorstep. Save time and avoid stress by doing all your managerial tasks from your computer. Recruiting can also be performed online. As can selling.

The Future of Multi-Level Marketing

The home-based business boom, also know as MLM or Network Marketing, isn’t really booming at all. Now it’s true that in the last decade the number of MLM companies popping up all over the United State
s have grown by over 500%. Yet, the number of distributors has only grown by 15%! So, yes there is a “MLM Boom”, but it’s the number of companies that have boomed, not the number of distributors.

What does that mean? It means that there are too many companies competing for the same distributor base, plain and simple. Ever seen a small town “boom” really quickly only to go “bust” in a few years? You know the type I’m talking about. You drive through the town and see closed businesses and shopping malls all through the town and you ask yourself “what happened here?” Now, I’m not saying that the MLM industry is ever going to “bust”.

Quite the contrary, the MLM industry will continue to grow with or without you—it’s that strong of a business model. But, it’s not 1977 anymore where Amway, Shaklee and Herbalife are not the only games in town. Instead, there are literally thousands of “good” MLM programs to choose from. To grow a profitable MLM company needs work and dedication, but once you have it rolling, you will enjoy the benefits. Grab a MLM opportunity and make your first step towards your honest MLM Empire.

The Legal Aspects of Honest MLM

The Inevitable Question

OK, you have either been recruited for a network marketing opportunity or you are the one doing the recruiting. Inevitably, this question will come up: Is this a pyramid scheme or a legitimate business opportunity?

This Tuna’s for Selling

Although this is a complex legal area, a simple story draws a clear line in the sand. Party No. 1 sells Party No. 2 a case of cans of tuna fish for $10. Party No. 2 sells the same case to No. 3 for $20 and so on until No. 9 sells the case to No. 10 for $500. No. 10 opens the case and opens one of the cans, which turns out to be rancid. He goes back to No. 9 who refers him to No. 8 and so on until No. 10 goes to No. 1 to complain.

“I have major problem,” he says.

“So, what’s your problem?” says No. 1.

“Well,” says No. 10, “the tuna is rancid, it’s inedible.”

“So, what’s your problem,” No. 1 says again

And there lies the difference. Distributors in a network marketing program that are merely buying product to buy into the deal as opposed to an intention of really making a market for it, are really working a pyramid scheme, not a legitimate direct selling business. Remember, when you offer this opportunity to your next-door neighbor or your best friend, it’s your credibility that’s going to be on the line for years to come.

What to Look for – A Checklist

So, what do you look for with respect to legitimacy vs. pyramid? Here’s a good checklist to consider.

1. Product and Price

Does the company offer a high quality product for which there is a strong demand in the real world marketplace? Is the product fairly priced and priced competitively with similar products? Can the product be demonstrated, and does it stand out when you show it to friends? Is the product proprietary to the company, and available only through its distributors? (Have you ever noticed that you can’t buy Avon products in stores or Shaklee vitamins at pharmacies?) Is it backed up with a customer satisfaction guarantee?

Is post-sales service or customer assistance available? Do the people who participate in the program buy the product enthusiastically based on its own merits, even if they don’t participate in the compensation program?

2. Second, No Investment Requirement

Can you participate in the company’s program without having to make any investment other than purchasing a sales kit or demonstration materials sold at company cost?

3. Third, Look at Purchase and Inventory Requirements

Can you become a distributor or sales representative without having to fulfill a minimum up-front purchase or inventory requirement? (When you are pitched to put thousands of dollars of inventory at the very beginning, run fast in the opposite direction.) Does the company’s compensation plan discourage inventory loading? Garages and backrooms filled with product serve no useful purpose to anyone.

4. Fourth, Look at the Sales Commissions Sources

Are sales commissions paid only on actual products or services sold through distributors in the network to the end-user or ultimate consumer? (This means that products don’t end up in basements and closets. They are used, because they have genuine value.) Does the compensation plan avoid paying commissions or bonuses for the mere act of sponsoring or recruiting? (If it pays headhunting fees, it is illegal.)

5. Fifth, Check the Buy-Back Policy

Will the company buy back inventory and sales kit materials from distributors who cancel their participation in the program, as long as these items are in resalable condition? (This policy is required in states that have adopted multilevel distribution statutes.)

6. Sixth and Very Important, Look for Retail Sales

Is there an emphasis on actual retail sales to end-consumers? Can the company demonstrate efforts to market products to the ultimate consumer? Do the company’s distributors have ongoing retailing requirements to qualify for commissions? What is a “retail sale?” The industry and many MLM statutes include both sales to nonparticipants and purchases in reasonable amounts for personal use by distributors. Some regulatory groups, including the FTC, have historically rejected personal use as a legitimate retail sale. Stay tuned as this debate continues. The legislative trend is definitely supportive of the industry position.

7. Seventh, Expect an Active and not Passive Role for Distributors

Are distributors in the company required to actively participate in the development and management of their networks? (Many of the MLM statutes require that distributors perform bona fide, supervisory, distributing, selling, or soliciting functions in moving product to the ultimate consumer.)

8. Eighth, Watch Out for Earnings Misrepresentations

Do the company’s literature and training materials scrupulously avoid claims of income potential that is promises of specific income levels other than demonstrations of verifiable income levels within its program? (The Federal Trade Commission, attorneys general, and postal inspectors all have their eyes on the matter of earnings representations. The acceptable approach emerging is that there should be no earnings representations unless they are based on a verifiable track record of the average earnings of distributors. For instance, a company should have statistics to show the percentage of active distributors and the average earnings of active distributors.)

9. Finally, Look for Good Training

Does the company offer its independent distributors solid training opportunities in sales and recruitment? Are different levels of training offered to match the increasing levels of experience and responsibilities of distributors?

Authored by Dr. Robin Rushlo

Copyrighted May 2006

Rights owned by Soaring Eagle Companies LLC

No Net Needed

Blindguy55

May not be sold in any form or for any gain

Of any kind

File Sharing Ethics

Jason Cole asked:

Ever since the invention of the internet, people have used it to share files. Be it music, movies, video games, and other copyrighted and non-copyrighted electronic material. This has raised some interesting ethical issues. The debate over whether file sharing is legal and right is one of the most important issues dealing with the internet right now, and has sparked many lawsuits. Some of these lawsuits have even reached the United States Supreme Court. Today we’re going to be looking at both sides of the coin, the case for file sharing and the case against file sharing. You may decide yourself which argument you’re going to side with. And hopefully after reading this article you’ll be informed enough to make a decision.

The Case For

Many people that do share files over the internet believe that it does not cause anyone any harm, and in fact helps the industry who’s files are being shared. They believe that it allows the consumer to sample the product before purchasing the product, thus gaining the artist exposure that they wouldn’t normally have access to. There’s also the issue of file quality, as most files being traded are compressed and otherwise untrue to the quality of the original content. That and the fact that most of the time you cannot get materials like an instruction manual or DVD bonus features, which forces you to go out and buy the original, if those materials are of interest to you. Another argument for file sharing is that some people believe that CDs are far too expensive, and consumers who only want one or two songs should not have to pay the entire cost of a CD. Plus another justification for file sharing is that the companies from which the intellectual property is being stolen are large and generate high profits, and can thus afford the price of some copies being obtained illegally.

The Case Against

The case against file sharing is pretty simple. Some people believe that the music and other files that are downloaded are the work of the artist who made them, and is not public property. When people share files, one song that someone shares can be downloaded by another person and shared by them, then two copies can be shared and the process repeats to effectively create thousands of digital copies of a song from the one original file. Thus the band that recorded the song does not get paid for any of the thousands of illegal copies that were made. They believe that the effects of file sharing domino down the line and ultimately affect the salaries of all people involved with the production of the media in question.

So, in the end, the decision to share or download files online is up to you. Please beware that right now downloading and sharing files is illegal and you can be prosecuted. This being said, most people that share files are not prosecuted, and it seems that the government is looking more towards the actual file sharing networks (P2P) instead of single users. The most noticeable case was when the recording industries brought down Napster in 2001, and since then they continue to pursue the P2P networks.

Business Ethics: Five Things You Need to Know

Sally Rhys asked:

You may think that business ethics pertains to OTHER people. You learned good ethics at your mother’s knee. Well, what did she tell you about conflicts of interest?

As a former Director, Ethics and Compliance for a $1.5B publicly traded organization, I learned a few important bits of information I would like to share with you.

1. A conflict of interest is when someone puts their own interest above those of the organization they work for. I found this to be the most commonly misunderstood concept in business ethics.

Here is an example: You sometimes buy lunch for your staff. As it turns out, your wife recently invested in a nearby sandwich shop which will deliver lunch. Isn’t it okay to throw your lunch business her way? Well, probably not. But no answer is absolute. It may be that she can bid on delivering lunches just like any other nearby sandwich shop, and she may get the business now and then like her competitors.

But, if she becomes your exclusive provider, thereby enriching your household income, you have just put your interest above that of the company’s. To avoid this situation, just ask yourself, “Will I personally profit from this decision, to the detriment of the company I work for?” If the answer is yes, it is probably best to just avoid the action you are considering.

2. Theft is when you take something that isn’t yours; that is obvious, right? Like taking some money from the company till.

Well, theft — of time — can also be taking time to do personal work on company time. This doesn’t mean making a phone call to arrange a dental appointment, it means picking up your laundry, getting your hair cut, and talking to a friend for a good long chat while being paid by the company. Theft is also taking a handful of pens or notepads home to your kids when school starts in the fall. Both of these examples constitute theft. Not outrageous, but theft all the same.

3. Gifts are a tricky matter. You’ve worked hard to get a contract signed and the vendor is appreciative so he offers you two tickets to the local professional football team game, worth about $350.00. Can you accept the gift?

Check your company’s Code of Ethics or Code of Conduct. There may be a limit or prohibition from accepting (or offering) gifts. Just check to be sure. It may simply be a matter of declaring receipt of the gift, or getting permission to accept it from your boss. It is also possible that you can not accept the gift.

4. Federal Sentencing Guidelines: What the heck are THOSE? The Federal Sentencing Guidelines were issued by the US Sentencing Commission, and encourage actions to help a company avoid fines and penalties for ethical wrongdoing.

Examples of actions to avoid fines and penalties include communicating standards and procedures around ethics and compliance, and requiring participation in related training programs. Your company may have some obligation to adhere to these guidelines or similar ones depending on whether your company is public or private sector. The part that applies to you is that the company should promote a culture of ethical behavior. Your obligation as an employee is to do your level best to behave in an ethical manner.

5. A Code of Ethics sets the tone for company regarding ethical behavior. Many companies have such a document. At the very least, the Securities and Exchange Commission requires a Code for officers of a publicly traded corporation.

If your company has a Code of Ethics (or Conduct), it is probably on your internal web, or may be housed in Human Resources or the Legal Department. Inform yourself about it and plan to live up to it. If you have questions, find out who to ask so you can stay on the right side of ethics.

As a final thought, why wouldn’t you want to be ethical? If you have a good reason for not being ethical, please write and let me know your thoughts.

Business Ethics and Ethnicity

Dana Smith asked:

Proverbs 24:27 ¶Prepare thy work without, and make it fit for thyself in the field and afterwards build thine house. Darby

Proverbs 18:9 ¶He also that is slothful in his work is brother to him that is a great waster.

The principles of right and wrong that are accepted by an individual or a social group..Ethics..Wordweb

America, for many fulfills these ideas for many who come here. America has been from the start a multi-cultural project. Groups of people from many nations such as Britain, France, Spain, Italy, and others made up this New World. The main idea was to find a quick route to Asia. Asia was the place for riches obtained in the trading and transporting goods. These goods were taken from the point of origin to the home country of the ship. As America, grew, the business people here wanted freedom from the tyrannical rule of the foreign powers who wanted to keep grip on this New World. Thus, the idea of Multi-culturalism was born. This idea being that several different cultures (rather than one national culture) can coexist peacefully and equally in one nation.

America has not only shown that this can exist. She has shown it to flourish, though business ethics have changed from the infant it was in the beginning. Once a Plantation owner could have slaves. Using them in business was considered fair and equal. However, even then some people hated slavery, people aside from the slaves themselves. . As the people of this nation grew in ethics, they realized such avenues such as slavery was wrong. Although, Abraham Lincoln did abolish slavery, it took many years for the full realization to take hold. Today, in the high rise of power and prestige you will find many whose roots date them to slaves.

Within the confines of many larger cities are conclaves of multi-culturalism. You have “little Italy”, “Chinatown”, and many others. All people from differing nations that bring them one desire. That is to make a better life for them and their families. When doing this, they all agree to one thing. That is the Ethics of America. To do and follow our laws. To live peaceable with each other and live freely. This Multi-culturalism is what makes America what it has become.

The problem we have in the midst of business ethics and ethnicity is when the total framework of America’s business’s is changed for one group or individual. This is seen by the legislation that is being hammered out for illegal aliens. Most of which we have seen on the news is Mexican, South American, and speak Spanish. This is not the case. For history proves that Chinese have been smuggled into America since the early goldrush and the building of the railroad. Also let us not forget the Cubans, and those boatloads of Vietnamese. All these wanted to migrate to our country. Live a free life and do business. The legislation and recent debates, however, focus on one group alone. This is wrong.

Ethics for many business’s are regulated first by what is legal and what is illegal. A quick search on Wikipedia with the word Ethics, will provide a glimpse into this world. Revealing the hidden dangers that have been in the news. From Martha Stewart to WorldCom, we have seen ethics in motion. The ethics of some in business have been seen as illegal by those in the legal area’s. Thus, the people in power who ran the business schemes under cloak and danger were held accountable. Thus ethics are related to legality in America. The enforcement of which cover all Ethnics and races who do business in this country.

Moreover, we find Ethics and Ethnicity relating to World issues as well. This is on the forefront of many discussions today. One example is found in Denmark where just this issue was pursued “Ethics and Ethnicity”. A forum by a major Denmark university conducted a seminar in 2005 on this. Their basis for doing this and reasoning stated:

Since moral decision making fundamentally has to do with how we should treat each other, a unifying goal of the seminar group will be to understand and critically evaluate how cultural and racial affiliations influence the reasonable and unreasonable expectations we have of each other.

This points to the need to discuss the distinctive obligations of students, faculty, administrators and other staff within academic institutions, in terms of their similarities and differences, regarding potential areas of conflict as well as social enrichment stemming from our encounters with people ethnically different from ourselves. The implications for our participation in the larger international community of which we are all inescapably members also will be explored, along with the recurring moral theme of the contribution to be made by institutions of higher learning to the improvement of relations among all peoples of the world. www.think.aau.dk/default.htm

Furthermore, the drive line that connects many nations today is commerce. Commerce is business, and business is propelled by people with ethics from all ethnic tribes in the world. As a result, nations, ethnic tribes, and peoples traverse the world doing business. The one avenue that all people have in common is business. That is the ability to do something to make money or barter. This translates in being able to provide for your family no matter whether you live in India, China, or America. Today, however, America still is the Grand Lady of this enterprise called Commerce. Within the Commerce you will find Multi-culturalism. The foundation of this commerce is also Ethics and Ethnicity. Without rules, regulations, and laws, the whole system would not work. It must work for all cultures, races, and Ethnic tribes.

As we look at this Ethnicity, we also find the threats. The first and paramount threat to the Ethics and Ethnicity is terrorism. Muslim’s who are totally against this kind of thing. For them, trade and commerce are the enemy. It’s paramount provider is always seen as the USA. Who is their enemy, of course. The ethnic tribes who are terrorist come from many different countries. The one link for all of them is their aberrant desire to follow Jihad against all enemies of Islam. As a result you can see this attack against the warlords of commerce and trade. No matter what Ethics you have, when you face a harsh enemy like death, life is seen as paramount. This is the reason terrorism targets the business sector. To shut down this pipeline of commerce will shut down America and the industrial nations for sure. The main target, however, seems always to be America. The USA is the leader in purveying commerce. Ethics or not, the ethnic terrorism will find a way to bend your will to his or destroy you. This is also seen in many of the oil producing countries, especially in Africa where Terrorists have shut down pipelines of oil. As well, it can be seen in Venezuela’s dictator and his hatred for the USA and its government. Within all these scenarios are ethics. Ethics that face society and declare I will destroy you if you do not bend to my wishes.

What happens if this Ethnicity and ethics come to America? What happens if groups pop up and cannot get along with each other? Will business end? It is true, that if we cannot live peaceable, then business is the first to go. America has enjoyed a long history of peace in its borders with the exception of the Civil War, the Indian Wars, and other clashes. When the Civil war was going, business was virtually stopped down south. After the war, the whole south was destroyed.

Today, America has her Ethics, but within this is the desire to keep the global business going. Facing this, are those who want to destroy this business climate and trade we know as commerce. It is kept alive by the ethics of ethnic tribes all over the world. Many of whom live in Amer
ica.

Ethnicity and Ethics. We see when good people say a bad thing is okay, such as Slavery, it is not morally ethical. Society accepted it, then decided it was wrong. We also see bad people who foment hatred and death through terrorism. Their ethnic backgrounds are from all over the world. These have ethics that declare destruction, war, and hatred against society in general. Business’s who come in contact with this later group will face a hardened foe willing to destroy to get their way. But for many in America, no matter the Ethnic background, ethics are the foundation of what they do. No matter the race, the tribe, religion, for the most part, they walk the path of ethics that American business has presented. To do things in a fair way, to do it well, to be honest, and follow all the laws of the land. The only people ‘who violate this’, are those who are greedy and dishonest. The ones who cling to power and prestige. These hold that money and fame are a higher goal than any moral ethic. For them ethics cannot get in the way of what they want. Just like terrorism, they destroy to obtain.

Why Buy Fairtrade And Ethical Bags?

Indiann Davinos asked:

Why were the quintessentially English clothing company Mulberry selling African Bags? And what part do bottle tops play in the battle against Aids?

Bottle-top bags may sound like an idea straight from Blue Peter, but Mulberry’s version is miles away from double-sided sticky tape and coat hangers. The bags, crafted in Africa from recycled wire and bottle tops are lined with luxurious Congo leather, contrasting perfectly with their eye-catching, deconstructed image. And these bags are not just the latest fashion accessory, but an inspired way of raising money for Action Aids HIV/AIDS campaign.

Mulberrys non-profit bags are the focus of their campaign to halt the rising tide of people infected with HIV/AIDS. The company hopes the bags, retailing at 99 pounds, could raise as much as 100,000 pounds. And just in case you find you have nothing to wear or your budget doesn’t quite stretch to the bags, they have also brought out bottle top campaign T-shirts and key rings. Susan Mears of Action Aid is thrilled with the scheme, This is a dream come true project- the money will come in very, very useful.

DEATH SENTENCE

40 million people worldwide are infected with HIV/AIDS, and the majority of them are young: between 15 and 25. The International Aids conference in July warned that in 30 African countries average life expectancy by 2010 would be 27 years of age. Karen Stanecki whose branch compiled the report for US Aid, told The Guardian these levels have not been seen since the end of the 19th century. Many of those dying today from Aids are financial providers, whose deaths leave poor families destitute- 14 million children have lost one or both parents to Aids.

The greatest obstacle to controlling Aids is the stigma surrounding it. In many cases people with the disease are shunned. Prisca, HIV positive for twelve years, has lost her husband, two children and three siblings to AIDS related illness and has been ostracised for speaking out about the disease, Up to this very day, I dont speak to my sister. She says I have tarnished our family name, she told Action Aid. This attitude can obstruct education, the most effective way to prevent the rate of infection rising.

Uganda is one of the few countries to subdue its Aids epidemic. The mobilisation of communities and a willingness to confront the epidemic led to falling prevalence rate. This is largely due to 5,000 projects throughout the country tackling the problem. Educating women and girls is essential in cutting the rate of infection. Unfortunately girls are often removed from education to care for relatives with Aids. In the last 5 years the number of women and girls infected has risen by 40% according to Oxfam.

Cameron, the son of Mulberry chairman, Roger Saul, experienced Ugandas effective education strategies first hand while teaching sexual health education for Students Partnership Worldwide. Anxious to find ways to support the charity, he found inspiration on the arm of a village girl: a bottle-top bag. He believed, once Mulberry-fied, the bag could raise the profile of Aids awareness. The attraction of the bags is partly their novelty, which he hopes will get people asking questions – theyre a fun way to engage people with the serious issues of AIDS/HIV. His father, Roger, visited him in Uganda and was equally pleased to have found such an original way to help the 14,000 people who are infected everyday.

FASHION CONSCIENCE

Action Aid plan to spend the money in Kenya, looking after the 730,000 children who have been made orphans by Aids and the more then 2 million who are currently living with the disease. The charity has fifteen years experience of pioneering prevention and community based care. They believe the best ways to change peoples attitudes and counteract the secrecy and ignorance allowing HIV to gain so many new victims is through loca groups. They support them through training, resources and advice to ensure the people most affected by the disease are at the centre of developing effective responses to the epidemic. SPW will also receive some of the money to allow them to continue to train students to give sexual heath education.

In East Africa, where the bags are made, there is another reason to celebrate. Not only are the bags created from recycling wire and bottle-tops and so are environmentally friendly, but Action Aid pledges the workers who create the bags are both paid and treated fairly. Let’s hope Mulberrys bags set a trend for fashion without victims.