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International Business vs. Globalization: Implications for Business Ethics
Article in Business & Professional Ethics Journal · January 2003

DOI: 10.2307/27801311
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International Business vs. Globalization: Implications for Business Ethics
Author(s): Anita Ho
Source: Business & Professional Ethics Journal, Vol. 22, No. 2, Selected Papers from the
2003 Markkula Center Conference: Business Ethics in a Global Economy (Summer 2003), pp.
51-69
Published by: Philosophy Documentation Center
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BUSINESS & PROFESSIONAL ETHICS JOURNAL, VOL. 22, NO. 2
International Business vs.

Globalization: Implications for
Business Ethics1
Anita Ho
Introduction
In recent years, many policy makers, business executives, and economists

have argued for the necessity of global business in promoting economic
development and reducing world poverty. Multinational corporations
(MNCs), the World Trade Organization (WTO), the G8 summit, and various
international financial institutions are supposed to advance free trade and
promote economic development for the people of various participating
countries, including those that are less developed. However, many scholars
and ethicists are increasingly concerned about various moral implications
global business may have on labor issues, democracy, human rights and the
environment.
What is worth noting in the literature is that the terms "globalization"
and "international business" are often used interchangeably to depict busi
ness activities that go beyond national borders. I will first argue that there
are fundamental ideological differences between "globalization" and
"international business," and that these two concepts have different ethical
implications. While the idea of international business focuses on cross
cultural differences, competition, and the alienating mentality of "us" versus
"them," the concept of globalization encourages a moral community that
? Business & Professional Ethics Journal 2003. Correspondence may be

sent to Anita Ho, Assistant Professor, Department of Philosophy, The
College of St. Catherine, 2004 Randolph Avenue, P.O. Box 4056, St. Paul,
MN 55105; or via email: atho@skate.edu.
52 Business & Professional Ethics Journal
adopts overlapping consensus in building an ethical global economy.

Second, I will argue that, instead of continuing to adopt the international
business model, we should shift to the concept of globalization in promoting
ethical economic endeavors that go beyond national borders. In particular,
I will examine how Rawls's ideas of original position and overlapping con
sensus can guide us in building an ethical global economy that respects all
participants.
The Concept and Ethical Implications of "International Business"

Discussions about transnational economic activities often tie to the idea of
either globalization or international business, two terms that are usually used
interchangeably. However, these two concepts seem to represent different
ideologies. The concept international business implies national borders that
separate one country from another. It highlights the fact that different na
tions are distinct units that have various cultural norms, traditions, laws,
safety standards, and business practices. It also reinforces the perception
that separate national units have different economic, technological, and so
cial realities or identities, and that their traditions and customs may conflict
with those of other countries. For example, gifting is a common practice in
Japan, but it is often considered an immoral and illegal act of bribery in the
United States. Child labor is frowned upon in this country, but it is widely
practiced in many developing countries.
The concept of international business captures the current economic
situation. Multinational corporations often operate under the concept of
international business. These corporations engage in business practices in
various countries, but are usually chartered in a developed country that has
its set of values, customs, and laws. For example, they may purchase raw
materials from or manufacture their products in other countries. Many
clothing companies, for instance, are MNCs that set up headquarters in
developed countries but build factories and employ foreign workers in less
developed countries (LDCs) to produce their products, most or all of which
are then imported back to the developed countries. Given that various
countries have different levels of economic, human, and natural resources,
they often have different tax levels, labor laws, trade restrictions, and safety
standards. Since MNCs are established to utilize all economic advantages
on an international level, they often seek out foreign markets that have lower
or less restrictive standards.
International Business vs. Globalization 53
Many economists have praised international economic endeavors for

their effectiveness in improving efficiency and employment opportunities
for people in LDCs. However, frequent protests against the WTO and the
World Bank as well as continual power differentials among various eco
nomic participants make one wonder if supporters of international trade
have underestimated or ignored the hidden costs of such activities.
Various problems are inherent in the concept of international business.
First, the concept or practice of international business reinforces exploitation
that arises out of competition and promotion of self-interests. Certainly,
competition and promotion of self-interests are expected and perhaps even
welcomed in domestic and international business realms. After all, business
entities are established primarily or even solely for economic reasons. As
many economists would agree, competition and promotion of the company ' s
self interests can in general increase efficiency and lower costs, which can
benefit both buyers and sellers. However, there is a fine line between fair
competition and exploitation. Given that there is an oversupply of export
and labor markets, various countries must constantly compete with each
other to attract investment from MNCs, which are established to seek an
optimum allocation of resources on an international basis. LDCs that are
desperate for foreign investment to help improve their economy may feel
that they have no other choice but to lower their wages, safety standards,
and trade barriers to attract foreign investments. Given the power disparity
among various countries, we need to question if the distribution of burden
is fair, since most of the time LDCs have no power to resist various requests
by MNCs and are at higher risks of being exploited for the sake of inter
national business.
The second problem of the concept of international business is that the
emphasis on separate national borders encourages the tendency to see those
who may be disadvantaged as outsiders and to ignore their well-being. It
fosters the dichotomy of "us" versus "them." This is perhaps understand
able, since psychologically we have the tendency to be partial towards
people who are part of our collective entity and consider those who are out
side of that community as moral strangers. We may consider them as
distanced peoples who are not part of our responsibility. Proponents of
nationalism, for example, often argue that members of the same nation, i.e.,
"conationals," are permitted or even required to give some degree of priority
to one another's interests over those of foreigners or non-members.2 They
appeal to our nature as persons and point out that our sentiment of partiality
towards certain individuals is elicited by a variety of relations that one may
bear to those individuals. Many may be moved to help and protect those in
close relationship or vicinity because of their specific relationships. How
ever, they may feel distanced from those needy people who are abroad. For
example, many people often do not feel personally affected by famine or
war in other countries, even when they may feel compelled or inclined to
donate to or volunteer for local charities. In relation to international
business transactions, a focus on internationalism may reinforce the idea
that economic and social problems that arise in other countries are not our
concerns. Even if our actions and products may be exploiting workers,
harming residents, or destroying the natural resources and environment of
the local country, the mere distance or separate national border can help us
to stay aloof and think of these issues as other people's problems. After all,
we are not confronted with their conditions face to face, and these people
are simply distanced foreigners.
This problem of treating people in foreign countries as distant moral
strangers is perpetuated by the inequality of power among nations. Power
disparities may lead to various international actions that continue to benefit
the stronger countries at the expense of poorer nations that do not have the
means to resist. For example, as Donaldson points out, in the late 1980s,
many countries on Africa's west coast received offers from American and
European companies seeking cheap sites for waste dumping, since the
United States and Europe had strict and costly safety measures.3 However,
these companies did not use such strict safety measures as a guideline to
consider the dangerous impact these toxic wastes may have on human
beings. Rather, they tried to find loopholes in import permits to unload the
waste in other LDCs that did not have the sophisticated rules and regulatory
procedures necessary to control high-technology hazards. Since the local
governments were not fully aware of the danger involved with such dump
ing, they agreed to be the dumping grounds for economic reasons. These
rich and powerful MNCs did not feel morally wrong to dump toxic wastes
in poor countries, even when they hid important information from the
government of LDCs about the potential harm of such poisonous sub
stances.
The third problem involving international business relates to the issue
of ethical relativism. Many have argued for the importance of understand
ing and respecting local customs when engaging in international business.
They argue against ethical imperialism and promote respect, tolerance, and
sensitivity towards local customs and contexts. They worry that MNCs may
impose their home country's value on developing countries. Certainly,
there are many ethical, practical, and economic reasons to respect local
customs and avoid imperialism. However, for MNCs chartered in devel
oped countries and operating in third-world countries, very often the
concern is not one of violating the local country's customs. In fact, some
MNCs are quick to adopt these LDCs' standards and regulations, which are
often much lower than those of the MNCs' home country. For example,
sometimes MNCs rigorously search for foreign markets to export products
that do not meet the high safety standards in their home country. When the
U.S. Consumer Product Safety Commission banned the sale of pajamas with
toxic chemicals that had been found to cause kidney cancer in children, or
when the U.S. Environmental Protection Agency forbids the sale of a
cancer-causing weed killer, exporters decided to dump these products on
overseas markets to make profit or at least to avoid financial losses resulting
from having to withdraw a product from the U.S. market.4 Some corpora
tions operate in or sell products to other countries precisely to take advan
tage of the lower standards in the local countries.
While we need to be cautious about imperialism and acknowledge the
need to be sensitive to various economic and social contexts, relativistic
approaches in international business endeavors are problematic. First, adop
tion of lower standards in local countries in some situations may give the
impression that MNCs can simply ignore the regulations when it is con
venient to do so or when there is a legal loophole. Second, disregarding the
higher standard in the host countries creates a double standard and mixed
message for government officials and business associates in LDCs. After
all, developed countries like the United States often impose sanctions on or
refuse business transactions with LDCs unless they would adhere to the
former's much stricter rules. This seems hypocritical, since these powerful
countries and corporations often use their own high standard to exclude
participation from LDCs, but then happily trade and invest in these LDCs
and adopt their "worse" standards when it is convenient and profitable for
the powerful countries and MNCs.
When powerful nations and corporations adopt the lower standard, we
should be careful about their motivation for doing so. Are they adopting the
local standard because they want to respect the local culture or to benefit the
citizens of the local country? Or are there other motives involved? For
example, MNCs may use the idea of diversity to mask the fact that they are
adopting local rules and abandoning their home country's regulations
mainly to benefit themselves.
A Shift to Globalization
As we can see, the concept of international business is inadequate to ensure

ethical business dealings around the globe. However, this does not mean
that transnational economic endeavors can never be ethical. What is
necessary, however, is a change in the way we think about such activities
and the participants in these endeavors. I argue in this section that a shift to
the concept of globalization can facilitate ethical economic activities that go
beyond national boundaries. A focus on the global community can help us
to construct an ethical economic structure that avoids some of the problems
associated with international business.
Instead of concentrating on differences and national borders, thereby
encouraging the idea of moral strangers, the concept of globalization goes
beyond national boundaries and adopts the ideology of respecting universal
humanity and promoting partnership. Unlike the concept of international
business, globalization requires that we think of each other not as selfish
competitors who are willing to exploit and sacrifice each other, but as equal
and respectful partners in a team. It promotes the idea of fraternity and
recognizes the intrinsic value of mutual cooperation in a global network.
The shift to globalization encourages the construction of a global
moral community that tries to reach an overlapping consensus that will
guide economic institutions and business practices that can benefit all
participants within the global community. It also demands corporations that
go beyond national borders to think of themselves as "global corporations"
(GCs) and not simply multinational corporations that engage in interna
tional business. Unlike MNCs, GCs are less nation-specific. While GCs
may still be chartered in a particular country, they do not identify them
selves as being tied to this nation. GCs consider themselves and all other
participants, wherever they might reside, as members of the same global
community. Certainly, globalization recognizes the importance of different
contexts and acknowledges that various countries have different economic
realities and political power. For example, a living wage in the United
States is different from that in Nicaragua, and it is reasonable for GCs to set
different wages proportionate to the costs of living in respective countries.

However, instead of allowing corporations to exploit citizens or LDCs in the
former's quests for economic interests, globalization requires that all GCs
and participants of global economy see each other as partners of a mutual
cooperative scheme who advance their respective economic interests by
supporting and respecting each other.
One may worry that the concept of global moral community is unat
tainable and problematic. Critics have noted the difficulty of setting abso
lute and universal moral principles in the face of diversity. Others also
worry that GCs may impose their home country's moral and cultural norms
on people of other less powerful countries.
Certainly, a legitimate concept of globalization needs to avoid imperi
alism that presumes that the values of more powerful countries are always
the best, or that we can legitimately impose such values on every participant
of global economy. However, caution against imperialism and sensitivity
towards the cultures and practices of local countries do not necessarily
prevent various participants of global economy from constructing a frame
work that can be mutually accepted. Even if we grant that there are
diversities in national institutional arrangements and in national conceptions
of domestic justice, it is still necessary and possible for diverse participants
to arrive at overlapping consensus and form a global basic structure that will
guide various economic activities.5
The analogy of a multicultural country can shed some light on how we
can reach fair and mutually acceptable agreements in a global context.
Countries such as the United States and Canada have diverse population
groups. Since many citizens in these countries are immigrants, there are
multiple languages, religions, and cultural traditions in these countries.6
While such diversity asks for tolerance and mutual respect, it does not
preclude the possibility that diverse citizens can deliberate with each other
to achieve an overlapping consensus on what a fair system would look like.
Diverse citizens can still reach fair terms of cooperation and set up laws and
regulations that would govern all citizens regardless of their religious and
cultural background. It is generally accepted that such rules are essential in
keeping harmony within a pluralistic population.
The question is, how should we set ethical economic rules in a global
context, when we are dealing with people of various backgrounds, tradi
tions, and unequal power? Given that corporations enter the global market
to benefit themselves, how can we have an ethical global economy that will
benefit not only those from powerful GCs but all participants? For example,
one may question if GCs are simply economic agents with limited economic
objectives, or whether they have any moral obligations to ensure the welfare
of people in other countries.
It is beyond the scope of this essay to discuss in detail the moral status
of corporations. However, it is worth noting that many business ethicists
agree that corporations are not mere economic agents. As Kevin Jackson
points out, corporations often assume significant noneconomic roles.7 For
example, they often contribute to election campaigns and form political
action committees. Even if their political and social involvement are moti
vated by economic interests, that does not absolve them from social respon
sibility. They can still be bound by the idea of social justice.
Moreover, those who argue that corporations have no obligation except
to promote their own economic interests are often in privileged positions.
They usually benefit from various social inequalities, such that their sense
of obligation is perhaps influenced by their own social and economic posi
tions. In the following section I argue that the Rawlsian ideas of original
position and overlapping consensus can help us construct an ethical global
economy that will minimize such bias and promote mutual benefits in a
global community.
A Rawlsian Conception of Globalization?

Rawls's earlier works, such as A Theory of Justice and Political Liberalism,
focus on domestic institutions.8 His later work, The Law of Peoples, extends
his ideas of the original position to the political conception of right and
justice at the international level.9 While Rawls does not directly deal with
global business practices, his idea of constructing an ethical basic structure
may be more applicable to the global economic framework than he himself
realizes, and the original position may help us to construct a fair global
economic community that will lead to mutual advantages.
As a contractarian, Rawls is concerned about how we can have a well
ordered society that is effectively regulated by a political conception of
justice.10 Rawls is aware that "no general moral conception can provide a
publicly recognized basis for a conception of justice in a modern democratic
state."11 After all, in most pluralistic societies, there are diverse conflicting
and incommensurable conceptions of the good. Rawls is also aware that
people's intuitions about what is just and unjust are often influenced by their
social position. He employs the thought experiment of the original position,
which is designed to rid us of our biases based on our privileged position
and to find the most appropriate principles for realizing liberty and equality
in a fair system of cooperation between free and equal citizens.12 As Rawls
says, the idea of the original position "is to set up a fair procedure so that
any principles agreed to will be just."13 Representatives to the social con
tract only know about general facts of society, but they do not know the
natural endowments or social positions of those they represent. They also
do not know their constituents' individual comprehensive religious,
philosophical, or moral doctrines. This "veil of ignorance" helps to
eliminate bargaining advantages that arise within the background institu
tions of any society from cumulative social, historical, and natural
tendency.14
When people do not know of their specific circumstances and have no
way of predicting the probability that they will end up in any particular
situation, Rawls believes that they would "try to acknowledge principles
which advance their system of ends as far as possible."15 In other words,
representatives behind the veil of ignorance are still choosing on the basis
of self-interests. They would only agree to principles that will satisfy fair
terms of cooperation and advance their constituents' benefits.
Given that representatives to the original position are choosing under
uncertainty, they have to consider the possibility that their constituents
would end up being in disadvantaged positions through no fault of their
own. People can be born into a society at any particular position. This is
a natural fact that is beyond their control. To make sure that their constitu
ents would not have to suffer the pains of inequality because of such
morally arbitrary factors, the rational strategy in choosing the basic princi
ples of justice would be the strategy of the maximin, i.e., to maximize the
minimum. Representatives behind the veil of ignorance would direct their
attention "to the worst that can happen under any proposed course of action,
and to decide in the light of that."16 To ensure that the arrangement they
choose will guarantee a satisfactory minimum for their constituents, the
parties behind the veil of ignorance would give more attention to those with
fewer native assets and to those born into the less favorable social
positions.17 They would redress the bias of contingencies in the direction of
equality, and would want to protect their basic rights and insure themselves
against the worst eventualities.18 They would want an equal basic structure
that would ensure that various citizens would treat one another not only as
means but as ends in themselves.19
In addition to protecting basic liberties of all citizens, Rawls believes
that representatives behind the veil of ignorance would also want to improve
the long-term expectation of the least advantaged. While equality of basic
liberty is generally important, representatives in the original position would
not insist on social and economic equality at all costs. If allowing disparity
of economic distribution would result in the least advantaged being better
off than it would have been under a strictly equal division, disparity would
be preferred. Representatives would adopt the difference principle and want
a system that benefits all, especially those who are in most vulnerable
situations.
Rawls is mostly concerned with the basic structure of the society and
not global business transactions. However, recognizing that perfect isola
tion is no longer possible, Rawls notes that each society needs to think about
how it ought to relate to other societies and conduct itself with respect to
them. In his later work, The Law of Peoples, Rawls acknowledges that the
constructivist approach of the social contract tradition and the liberal ideas
of justice as extended to the international arena are acceptable to both liberal
and decent non-liberal peoples,20 such that these ideas may be applied to
ongoing cooperative political arrangements and relations between peoples.21
He also believes that his political idea of justice is supported by an
"overlapping consensus" that includes all opposing philosophical and
religious doctrines.22
Some commentators have argued that Rawls's conception of justice
cannot be applied to the realm of business ethics, since Rawls distinguishes
a well-ordered democratic society, to which his theories of justice apply,
from any other "voluntary associations" such as corporations. Robert
Phillips and Joshua Margolis, for example, argue that political theory such
as that of Rawls's cannot adequately address ethical issues that arise in
business organizations.23 Their concern is based on Rawls's contention that
it is necessary to construe the social contract for the basic structure of the
society in a special way that distinguishes it from other agreements.24 First,
membership in our society is given, in the sense that we cannot know what
we would have been like had we not belonged to it. This is different from
voluntary membership of an economic organization. Citizens are not free
to leave a bad government, but employees or economic participants are

supposedly free to exit an unsatisfactory organization or business commu
nity. Second, society as a whole has no final ends and aims in the way that
associations and individuals do. Democratic societies are supposed to be
neutral in their preference for any conception of the good, but other
associations such as corporations have their objectives, and people join, stay
with, or leave these voluntary associations on the basis of these objectives.
Third, there is no way to identify someone's potential contribution to society
who is not yet a member of it, and so it is illegitimate to view some people
as having more or less worth to society than others and assigning them
different basic rights and privileges accordingly.25 However, associations
can rank potential participants' expected contributions and on that basis
determine their role or their worth from a social standpoint.26
In his works on business ethics, Edwin Hartman argues that corporate
governance is important for the same reasons that political governance is,
and that there are more similarities between associations and the basic
society than Rawls realizes. Hartman argues that organizations cannot sim
ply authoritatively impose any purpose on employees, while liberal states
are not as neutral as Rawls says they are. He contends that there is a
continuum between political philosophy and organizational ethics, one along
the dimension of the appropriateness of exit as opposed to voice in response
to institutional inadequacies. Sometimes it is easier to change one's
citizenship than to detach oneself from one's employer.27
Putting aside the question of whether or not organizations are as dif
ferent from the basic social structure as Rawls contends, Rawls does
recognize that his conceptions of justice have important implications on
various associations. Even though Rawls thinks that the principles of
political justice are to apply directly to the basic structure of society and not
to the internal life of the many associations within it, such as business firms
and labor unions, he admits that the principles of justice "do protect the
rights and liberties of their members by the constraints to which all . . .
associations are subject."28 While we should leave room for a free and
flourishing internal life appropriate to the association in question, Rawls
admits that these political principles do impose essential constraints and
specify the basic rights of equal citizens who are members of the global
economic structure.29
Realizing that global interdependency is on the rise, Rawls also recog
nizes the needs to "formulate guidelines for setting up cooperative
organizations and agree to standards of fairness for trade."30 He assumes

that a free competitive-market trading scheme is to everyone's mutual
advantage, and that wealthier nations "will not attempt to monopolize the
market, or to conspire to form a cartel, or to act as an oligopoly."31 As
suming also that the veil of ignorance holds, Rawls contends that coopera
tive organizations that have unjustified distributive effects between peoples
would have to be corrected.
Rawls's machinery can help us to look at the framework of the global
economy. Using his political conception of fairness, we can imagine that
representatives of all parties that are involved in or might be affected by
global economy were to come up with a political conception of justice that
their constituents would be able to follow on due reflection. We can also
imagine that these representatives possess all general information and real
ize that natural resources are distributed unevenly over the earth's surface.
Some areas are rich in resources while other societies do not fare so well.32
However, behind the veil of ignorance, representatives do not know their
constituents' economic or social position, country of origin, or their indi
vidual comprehensive religious, philosophical, or moral doctrines. They
also do not know the size of the territory, the population, the extent of
natural resources, the level of economic development of the territory, or the
relative strength of the people whose fundamental interests they represent.
Their constituents may be the CEOs of a MNC of a rich country, or they
may be the unskilled workers in a developing country.
While these participants from different countries may have various
notions of the good, Rawls acknowledges that a world society of liberal and
decent peoples is possible.33 Given such uncertainty, rational and autono
mous representatives would have good reasons to choose a global coopera
tive structure that would further everyone's mutual interests over time,
including those who are most vulnerable, such as people in LDCs. We can
imagine that upon mutual deliberation liberal and non-liberal decent peoples
will be able to reach overlapping consensus and agree to the two principles
of justice that define the basic equality of all participants.34
First, representatives would want to ensure that a global system
respects the equal liberty of each participant. Not knowing their constitu
ents' specific situation, these representatives would protect the basic rights
and liberties of all and prohibit exploitation. They would want to make sure
that any global economic effort will treat all participants fairly and with
respect, and that no participant will be coerced or manipulated into any ar

rangement. Representatives would also ensure that rich nations and cor
porations cannot monopolize and hold sole power of decisions, and that
each participant has an equal chance to vote for or deliberate on various
regulations and policies that will affect them.35 For example, representatives
would condemn the practice at WTO meetings, which are sometimes held
only between twenty to thirty key countries and leave the other one hundred
member countries that are less powerful out of the deliberative process.
Second, while representatives would be concerned with equality, they would
approve of unequal economic distribution if such inequality can benefit
everyone, including those who are least advantaged. For example, in
accordance with the difference principle, representatives might agree with
certain participants of global economy having more economic resources
than others, or that workers in certain countries receiving higher wages than
those in other places. Representatives might allow such inequalities, if they
are required to advance the interests of the least advantaged participants as
much as possible, such as those who are in developing countries. For
example, under the equal liberty principle, representatives would disagree
with exploitation. However, they might agree to lower wages in LDCs
compared to developed countries, if such wage differentials are necessary
to attract foreign investments that can help desperately poor people in LDCs
to gain at least a living wage.
The difference principle applied to the global context may also be
helpful in promoting the idea of fraternity in the global community. When
participants of global economy see each other not as egoistic competitors
but as partners working toward mutual benefits, there is a higher chance that
representatives would not want to have greater advantages unless this is to
the benefit of those who are less well off.36 While these participants are still
thinking of promoting their own self-interests, its meaning in the context of
global community can be broadened to accommodate relations to others.37'38
In addition, considerations of possibility of being in the least advantaged
position can promote understanding of such situations. Even if one's
position in the global economy might increase and eventually become
dominant, one who adopts the ideology of globalization would still likely
support such a political conception of justice.
Rawls's conception of justice is particularly attractive for a global
economy that involves diverse participants because it is practical, and not
metaphysical or epistemological.39 Unlike other comprehensive religious

or non-religious doctrines, Rawls's political conception of justice is
grounded on weak stipulations and does not present itself as a "true" or
independent conception of moral order that governs all of life for all
different peoples. It serves as a basis of informed and willing political
agreement among free and equal participants through public reason.
Rawls's conception of justice can guide us to determine what basic structure
of global economy can be beneficial and fair to all diverse participants who
have different conceptions of the good and economic or social realities.
Is the Idea of Globalization Necessary and Possible?
One may ask, if it is possible for different nations and MNCs to come up
with various agreements that can protect the interests of all parties, is it
really necessary for us to think in terms of globalization? Cannot the
concept of international business promote the same type of international
agreements? After all, there are already different international financial
institutions and treaties that direct business practices. Why do we need to
move to the global ideology?
It is important to note that treaties between competing international
parties may still not protect harmony or guarantee compliance. As men
tioned before, the concept of international business is inadequate in ensuring
that competing economic participants who view each other as moral
strangers would respect each other. Certainly, they can set up a modified
version of modus vivendi, "a treaty between two states whose national aims
and interests put them at odds."40 However, under a similar type of modus
vivendi between competing international economic participants, members
of the cooperative scheme are mainly motivated by their own self-interests
that are narrowly defined.41 While the scheme may satisfy the condition of
prudential equilibrium, such that all participants have reason to participate,
these participants do not necessarily believe that the modus vivendi is an
ideal agreement for all concerned or the most desirable agreement from a
partisan perspective.42 They do not have sincere mutual respect and trust for
each other, and do not believe that the agreement holds any particular
intrinsic value for them, except for its ability to secure short-term stability.
These participants are generally ready to pursue their own goals at the
expense of the other, and, should conditions change, they may do so.43
Cooperation is not guaranteed but is only contingent, depending upon
contingent, depending upon circumstances that do not upset the fortunate

convergence of interests.44 It is primarily based on prudential grounds, and
not moral reasons or true unity of various groups. Interaction among groups
may also favor those who are the strongest and disadvantage others who are
weaker. As discussed at the beginning of this essay, international economic
endeavors often impose different burdens and benefits on participants, such
that a modus vivendi can still allow for indefinite inequalities among
participants.
This contingent cooperation under the concept of international busi
ness is unstable and can also be ethically problematic. Similar to the current
law of nations, international business is not committed to promoting justice
in a global economic community and is entirely insensitive to the fact that
"inequalities in information and bargaining power may still be so great as
to render international interactions unfair and coercive."45 Each participant
worries that mechanisms of adjudication and enforcement will be dominated
by those who dislike its way of life, and that these mechanisms will be
dependent upon the strongest parties' temporary bargain and not the rule of
law.46 Those who are vulnerable often do not have the same opportunities
to participate in the deliberations and to influence the outcomes. As the
previous example of WTO meetings shows, participants from LDCs often
have little or no power to bargain with various powerful countries and
MNCs, and competitive participants are ready to exploit each other for their
own benefits.
A shift from international business to globalization can help promote
and sustain stable economic arrangements. It can also strengthen cohesion
among participants. Even though participants in international business may
initially think of their cooperative scheme as a modus vivendi, a shift to
globalization can help all members recognize that their mutually beneficial
framework is no longer a contingent consensus on accepting certain author
ities or complying with certain institutional arrangements, founded on a
convergence of group interests. A true sense of global overlapping
consensus signifies a commitment to build a unified community that
respects all its members. Instead of emphasizing national borders and
separateness, globalization encourages economic participants to acknowl
edge and go beyond their differences and think of each other as members of
a common economic community. It represents a moral commitment to
promote reciprocity that treats all participants as equal and respectable
partners. For example, it encourages GCs to see foreign workers not as

moral strangers, but as their workers who are part of the same team.47
In the face of substantial inequality of power, one may question if it is
ever possible for diverse participants to reach overlapping consensus and
build a fair and sustainable global economic community. For example,
some may argue that the world is simply too large and too diverse to reach
general agreements or support a global sense of justice or community,
especially when financial rewards and power are involved.
Certainly, overlapping consensus and true partnership in the global
community are not easy to achieve. It is often difficult to set absolute and
universal moral principles in the face of diversity. For example, we may
have difficulties in reaching consensus regarding a comprehensive moral
doctrine. However, a consensus on the political conception of justice does
not require that we adopt a particular comprehensive moral doctrine. In a
global economic structure, unity of global participants to the common
cooperative structure is not founded on their affirming the same moral
conceptions domestically, but on their accepting the principles of justice to
regulate the global economic structure.
The idea of globalization is one of ideal theory, the actualization of
which can be difficult. However, as Charles Beitz points out, ideal theory
prescribes standards that serve as goals of political change in the non-ideal
world. It assumes that impediments that corrupt a society are capable of
modification over time, such that a just society can, in due course, be
achieved by altering such impediments.48 In a sense, a coherent ideal theory
is a necessary condition of any attempt to conquer such impediments by
supplying "a set of criteria for the formulation and criticism of strategies of
political action in the non-ideal world."49 While it is no easy task to
establish a global community, there is no evidence to show that people can
never develop sufficient motivation for compliance and cooperation in a
global community.
Notes
1. For critical and constructive feedback on prior versions of this
paper, I thank Joseph DesJardins, Ronald Duska, Edwin Hartman, Laura
Hartman, Urs Martin Lauchli, Ian Maitland, Patricia Werhane, three
anonymous reviewers, and meeting participants from the Business Ethics in
a Global Society Conference. I also thank the Markkula Center for Applied
Ethics for the Young Scholar Award, which enabled me to participate at the
conference.
2. Jeff McMahan, "The Limits of National Partiality," in The Morality
of Nationalism, eds. Robert McKim and Jeff McMahan (New York: Oxford
University Press, 1997), 109.
3. Thomas Donaldson, The Ethics of International Business, (New
York: Oxford University Press), 1989, 67.
4. William Shaw and Vincent Barry, Moral Issues in Business, 8th ed.
(Belmont, CA: Wadsworth/Thomson Learning, 2001), 27-8.
5. Thomas Pogge, for example, argues that respect for domestic dif
ferences does not preclude the possibility of reaching standards that guide
global activities. See Thomas Pogge, Realizing Rawls (Ithaca: Cornell
6. Pogge also realizes that the difficulty of diversity "is not unique to
the global plane." See Pogge, 270.
7. Kevin Jackson, "Global Distributive Justice and the Corporate Duty
to Aid," Journal of Business Ethics 12 (1993): p. 547.
8. Rawls does discuss briefly how his theory of justice may apply to
foreign policy. However, his focuses there are the rights of each nation to
self-determination and the idea of just war. See Rawls, A Theory of Justice
(Cambridge, Mass.: Harvard University Press, 1971), 377-9.
9. John Rawls, The Law of Peoples (Cambridge, Mass: Harvard
10. John Rawls, Political Liberalism (New York: Columbia Univer
sity Press, 1993), 14.
11. John Rawls, "Justice as Fairness: Political not Metaphysical,"
Philosophy and Public Affairs 14 (1985): p. 225.
12. Rawls, "Justice as Fairness," p. 225.
13. Rawls, A Theory of Justice, 136.
14. Rawls, Political Liberalism, 23.
20. According to Rawls, decent non-liberal societies are hierarchical
societies that are non-expansionist and respect the political and social order
of other societies. While these societies have a state religion, and that their
political institutions specify a consultation hierarchy as well as a hierarchy
of estates or castes, their political institutions are organized around a

common good conception of justice that honors certain traditional distribu
tions of basic rights and duties. For a detailed discussion of the decent non
liberal people, see Rawls, The Law of Peoples, 59-88. For a critique of
Rawls's notion of the decent non-liberal states, see Patrick Hayden, John
Rawls: Towards a Just World Order (Cardiff: University of Wales Press,
2001), 123-138.
21. Rawls, The Law of Peoples, 17, 32.
22. Rawls, "Justice as Fairness," 225-6.
23. Robert Phillips and Joshua Margolis, "Toward an Ethics of
Organizations," Business Ethics Quarterly 9 (1999): 619-638.
27. Edwin Hartman, "Moral Philosophy, Political Philosophy, and
Organizational Ethics," Business Ethics Quarterly 11 (2001), 677. Also see
Edwin Hartman, Organizational Ethics and the Good Life (New York:
Oxford University Press, 1996), 96, 178.
28. Rawls, "The Idea of Public Reason Revisited," in The Law of
Peoples, 158-9.
29. Hartman contends that Rawls is perhaps more reluctant than he
needs to be about applying his political conception of justice to organiza
tions. See Hartman, Organizational Ethics and the Good Life, 178.
30. Rawls, The Law of Peoples, 42.
32. Charles Beitz acknowledges that unequal natural resources might
give rise to moral conflict among states, and thus need to be considered in
the "international original position." See Charles Beitz, Political Theory
and International Relations (Princeton: Princeton University Press, 1979),
136-7.
35. This is especially important when such regulations, policies, and
economic activities will severely affect various participants' cultural iden
tities and their ways of life.
37. It is important to note that even though Rawls believes that repre
sentatives behind the veil of ignorance would still be thinking about their
own interests, he does not think that justice as fairness is an egoistic theory.
After all, the two principles of justice and the principles of obligation and
natural duty require us to consider the rights and claims of others. See
Rawls, A Theory of Justice, 147-8.
38. Rawls also acknowledges that stronger ties among people are
possible once they start to cooperate as equals. He says, "as cooperation
between peoples proceeds apace they may come to care about each other,
and affinity between them becomes stronger." See Rawls, The Law of
Peoples, 113.
39. Rawls, "Justice as Fairness," 230.
41. Pogge, 219.
42. Hayden, 92. Also see Pogge, 219.
43. As the U.S. withdrawal from the greenhouse gas reduction treaty
(Kyoto Treaty of 1997) shows, long-term compliance of international
agreements under the model of modus vivendi can be unstable. While the
treaty was enacted to legally bind industrialized countries to reduce emis
sions of greenhouses gases, which have devastating effects on the global
climate and environment, the U.S. government withdrew its support in 2001,
arguing that the treaty would harm the American economy and workers.
45. Pogge, 248-9.
46. Hayden, 94-5.
47. One of the companies that has been working hard to treat its
suppliers fairly is Green Mountain Coffee Roasters (GMCR) in Waterbury,
Vermont. One of the best corporate citizens, GMCR pays fair trade prices
for coffee beans grown in Peru, Mexico, and Sumatra. The company does
not pay "the market price of twenty-four to fifty cents per pound, but a
minimum of $1.26 per pound for conventional coffee and $1.41 for
organically grown." GMCR also cuts out some of its middlemen and
purchases about a quarter of its coffee directly from the farmers, thereby
delivering higher prices to farmers. See "The 100 Best Corporate Citizens
for 2003", Business Ethics: Corporate Social Responsibility Report, 20 June
2003 (10 July 2003). <http://ww.business-ethics.com/100best.htm>.
48. Beitz, 155-6.
49. Beitz, 170.
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International Business vs. Globalization: Implications for Business Ethics

Article in Business & Professional Ethics Journal · January 2003

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International Business vs.

In recent years, many policy makers, business executives, and economists

? Business & Professional Ethics Journal 2003. Correspondence may be

adopts overlapping consensus in building an ethical global economy.

The Concept and Ethical Implications of "International Business"

Many economists have praised international economic endeavors for

As we can see, the concept of international business is inadequate to ensure

different wages proportionate to the costs of living in respective countries.

A Rawlsian Conception of Globalization?

to leave a bad government, but employees or economic participants are

organizations and agree to standards of fairness for trade."30 He assumes

respect, and that no participant will be coerced or manipulated into any ar

metaphysical or epistemological.39 Unlike other comprehensive religious

Is the Idea of Globalization Necessary and Possible?

contingent, depending upon circumstances that do not upset the fortunate

partners. For example, it encourages GCs to see foreign workers not as

of estates or castes, their political institutions are organized around a

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