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“ Changing the Social Contract: A Role for Business” Melvin Anshen <ul><li>Historical relationship between business and so...
Historical Roots of Social Contract Theory <ul><li>Epictetus-Greek Stoic philosopher </li></ul><ul><li>Thomas Hobbes-moral...
Terms of the Historical Social Contract for Business <ul><li>Social progress is a by-product of Economic progress </li></u...
Historic Social Contract (cont.) <ul><li>Internal Costs: the costs businesses incur in obtaining materials and labor. </li...
The New Social Contract for Business <ul><li>Shift in the conceptual relationship between economic progress and social pro...
New Social Contract (cont.) <ul><li>The internalization of cost once placed on society will not be passed on to consumers....
Response of Business to the New Social Contract <ul><li>Business needs to develop the tools to accurately measure external...
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Ch 10 Changing The Social Contract Anshen

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Ch 10 Changing The Social Contract Anshen

  1. 1. “ Changing the Social Contract: A Role for Business” Melvin Anshen <ul><li>Historical relationship between business and society is changing. </li></ul><ul><li>Business is being pressured into taking on more social responsibilities. </li></ul><ul><li>Anshen’s Conclusion: Business ought to help set the terms of the relationship (social contract) between business and society. </li></ul>
  2. 2. Historical Roots of Social Contract Theory <ul><li>Epictetus-Greek Stoic philosopher </li></ul><ul><li>Thomas Hobbes-morality/society as a set of rational self-interested agreements. </li></ul><ul><li>John Locke-government is based upon the consent of the individuals it will govern. </li></ul><ul><li>Jean Jacques Rousseau-implicit contract defines the norms of human behavior and the terms of exchanges and trade-offs among competing interests. </li></ul>
  3. 3. Terms of the Historical Social Contract for Business <ul><li>Social progress is a by-product of Economic progress </li></ul><ul><li>Engine of economic growth was identified as the drive for profits by unfettered, competitive, private enterprise. </li></ul><ul><li>Minimal Constraints on Business: child labor, anti-trust legislation, labor’s right to organize, consumer protection. </li></ul>
  4. 4. Historic Social Contract (cont.) <ul><li>Internal Costs: the costs businesses incur in obtaining materials and labor. </li></ul><ul><li>External Costs: those costs generated by business but borne by the public. </li></ul><ul><ul><li>Unemployment </li></ul></ul><ul><ul><li>Retirement </li></ul></ul><ul><ul><li>Environmental contamination </li></ul></ul><ul><ul><li>“No responsibility for the general conditions of life or the specific conditions in local communities”(352) </li></ul></ul>
  5. 5. The New Social Contract for Business <ul><li>Shift in the conceptual relationship between economic progress and social progress </li></ul><ul><li>Quality of life issues will matter as much as economic progress. </li></ul><ul><li>Business must now take into consideration the unpleasant side-effects of capitalism. </li></ul>
  6. 6. New Social Contract (cont.) <ul><li>The internalization of cost once placed on society will not be passed on to consumers. </li></ul><ul><li>“ What is implied is not a simple pass-through of newly internalized social costs. The ultimate results will alter relative market positions among whole industries, and within industries, among firms”(353) </li></ul>
  7. 7. Response of Business to the New Social Contract <ul><li>Business needs to develop the tools to accurately measure external costs. </li></ul><ul><li>Business needs to enter the ‘negotiations’ that create the new contract. </li></ul><ul><li>Business should help solve the problems of unemployed and underemployed minorities, and urban decay. </li></ul><ul><li>Business should address environmental issues before more authoritarian measures are taken. </li></ul><ul><li>Motivation for business will be the bottom line. </li></ul>

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