U2 - Class 10 - Social Contracts Theory

Question 1

ISCT - Town in Mexico

Answer 1

Town in Mexico Video
Walmart vs. Locals
Widespread bribery by Walmart
Bodega supermarket build by a landmark
Residents fought against its inception because it was on their land
$200,000 bribe to get the store on local land

Question 2

Bribery and corruptions

Answer 2

Are bribery and corruption wrong? Is it ethical?
What if it can ultimately bring jobs and goods to many people?
EX: Walmart in Mexico
What if it maximizes company profits and growth?
What if that’s how things are done in some countries?

Do I think it’s wrong?
Yes. Nearly force someone to change their morals and actions

Question 3

Integrative social contracts theory

Answer 3

In their work on “Integrative Social Contracts Theory (ISCT), Tom Dunfee and Tom Donaldson sought a way for managers to balance conflicting norms and values, creating a synthesis between empirically discoverable community norms and more general normative ethical principles.

Question 4

relativism

Answer 4

Relativism - it all depends. When in rome.. Do as the Romans do. There is no universal ethics rather you go to different times in history and there are different norms and ethics and its ok

Question 5

absolutism

Answer 5

Absolutism - there is one universal single set of norms that can be applied anywhere at anytime in history

Question 6

bounded moral rationality

Answer 6

What does it mean?
Our ability to make moral reasoning is limited
Rationality is our reason to make a decision

Bounded moral rationality is our ability to make decisions by rationality that is limited
If we don’t assume bounded moral rationality then the theory of social contract isn’t needed because we need to know its limited to understand different cultures and times

Question 7

why bounded moral rationality

Answer 7

1. Our own capacity to comprehend and absorb all information is finite
2. Ethical theories have a limited ability to make ethical decisions
   Maybe more ethnic problems to solve now than before
3. Economic systems are products of artifacts, not nature
   By Product from human beings not nature

Question 8

examples of social contracts

Answer 8

What are some examples of social contracts?
Laws and regulations (e.g., laws against bribery)
Social norms (e.g., beliefs about child labor)
Business contracts?

Rawls was obsessed with contacts too
People were having a hard time choosing the theory so he wanted people to forget their background so they can decide ethically through the veil of ignorance

Question 9

how does a society choose terms of social contracts

Answer 9

“Fairness is secured simply by including among the contractors all persons whose interests are affected and by requiring consensus in the adoption of the terms of the contract–without the additional device of a veil of ignorance.” (p.260)

According to this theory you just need the contract not the veil of ignorance
You don’t sign social contracts
Contractors are people who participate in a society

Question 10

basic units - community

Answer 10

“A self-defined, self-circumscribed group of people who interact in the context of shared tasks, values, or goals and who are capable of establishing norms of ethical behavior for themselves” (p. 262)

“Firms, departments within firms, informal subgroups within departments, national economic organizations, international economic organizations, professional associations, industries, and so on” (p. 254)

Question 11

two levels of social contracts: macrosociety and microsociety

Answer 11

Macrosociety and macrosocial contracts (macrocontracts)
EX: Mexican town

Microsociety and microsocial contracts (microcontracts)
EX: Mexico or Global community

Question 12

ultimate relativism

Answer 12

“When is different just different, and when is different wrong?”
How do we make an ethical decision (i.e., what is right and what is wrong) when there are different levels of society (macro- vs. micro)?
How do we allow each community to have its own social contracts while making sure that they are ethical?

Question 13

principles of the macrosocial contract

Answer 13

1. Local economic communities may specify ethical norms for their members through microsocial contracts
2. Norm-specifying microsocial contracts must be grounded in informed consent buttressed by a right of exit
3. In order to be obligatory, a microsocial contract norm must be compatible with hypernorms
4. In case of conflicts among norms satisfying Principles 1-3, priority must be established through the application of rules consistent with the spirit and letter of the macrosocial contract (NOT ON EXAM)

Question 14

the first principle of macrosocial contract

Answer 14

“1. Local economic communities may specify ethical norms for their members through microsocial contracts”

Microsocial contracts (microcontracts): “agreements or shared understandings about the moral norms relevant to specific economic interactions”
Moral free space: the freedom represented by the ability to endorse your own microsocial contracts
What if it was forced initially? Then it isn’t a moral free space. Everyone has to agree. Must be a consensus.

Question 15

the second principle of macrosocial contract

Answer 15

“2. Norm-specifying microsocial contracts must be grounded in informed consent buttressed by a right of exit”

Both informed consent and a right of exit must be satisfied
Coercion invalidates consent
Authentic norms: When the second principle is fully satisfied, its norms are called authentic norms

Question 16

the third principle of macrosocial contract

Answer 16

“3. In order to be obligatory, a microsocial contract norm must be compatible with hypernorms”
If we stop after the second principle, we would be liable for ethical relativism
How do we allow moral free space while preventing a moral free-for-all?

Hypernorms: the principles that are “fundamental to human existence that they serve as a guide in evaluating lower level moral norms” (p.265) in macrosocial contratcts
Examples: core human rights, dignity of each human being (p.267)
Legitimate norms: When the third principle is fully satisfied, its norms are called legitimate norms

Question 17

hypernorms vs legitimate norms

Answer 17

Hypernorms: the principles that are “fundamental to human existence that they serve as a guide in evaluating lower level moral norms” (p.265) in macrosocial contratcts
Examples: core human rights, dignity of each human being (p.267)

Legitimate norms: When the third principle is fully satisfied, its norms are called legitimate norms

Question 18

how to apply social contracts theory

Answer 18

1. Local economic communities may specify ethical norms for their members through microsocial contracts
   What is the local economic community? Who are the contractors?
   What is the microsocial contract?
   Does the community have moral free space?
2. Norm-specifying microsocial contracts must be grounded in informed consent buttressed by a right of exit
   Informed consent?
   A right of exit?
3. In order to be obligatory, a microsocial contract norm must be compatible with hypernorms
   What are the two hypernorms?
   Does the microsocial contract satisfy the hypernorms?

Question 19

discussion questions (fix later)

Answer 19

1. How is ISCT different from other ethical theories that we studied so far?
2. What is bounded moral rationality?
3. Why does ISCT need to assume bounded moral rationality?
4. What is moral free space?
5. What are some weaknesses of ISCT?
6. How is a utilitarian analysis of the Walmart bribery case different from ISCT?

Question 20

integrative social contrast theory’s decision rule

Answer 20

DONALDSON AND DUNFEE

Decision rule
Action does not violate a global hypernorm or local authentic norm
- Global vs local

• Global hypernorm
  People come together and come together to form rules that everyone can agree with it as our cultures all agree on it
  Common morality
• Two key hypernorms
  1. Respect the dignity of all human beings
  Look at who is harmed by your decisions
  2. Respect human rights
  Basic human rights cannot be violated
  Context matters too in this theory
  If it doesn’t violate a hypernorm and in sync with a local norm then it is ethical
• Local authentic norm
  1. How to figure this out? Do the locals approve if you do this behavior?
  2. How would they disapprove of you if you do not do this behavior?
  3. Everyone these does it (check out what the local business community do as long as it does not go against hypernorms)

Question 21

integrative social contracts theory’s pros, cons and examples

Answer 21

Biggest pro
- Adapts to variations in local norms within some global limits
You care about the local culture (no “where I can from we..”
Respect other cultures

Biggest cons
- Local norms are vague and may give actors too much flexibility
Really hard to figure out local norms
How do you know if locals will disapprove of certain behaviors?
-Vague nature of norms
Individual beliefs can be rocky because if you respect your hypernorms and go to another country and behave differently, than can leave you at odds with personal beliefs

Example
- Levis Strauss and underage workers in Bangladesh
Levi was hiring children under 14 to do construction work on clothing
American consumers though this was unethical
Locals disagreed with activists
In the that country it does not violate local norm
Levi decided to stop child labor and pay for their school until they turn 15

Question 22

donaldson and dunfee’s principles

Answer 22

In sum, Donaldson and Dunfee believe the following principles will emerge from the macro-social contract:

1. Local economic communities may specify ethical norms for their members through micro-social contracts
2. Norm-specifying microsocial contracts must be grounded in informed consent buttressed by a right of exit, which establishes their authenticity.
3. In order to be legitimate and obligatory, a microsocial contract norm must be compatible with hypernorms