Business, Globalization, and the Logic and Ethics of Corruption

By Cragg, Aw | International Journal, Fall 1998 | Go to article overview

Business, Globalization, and the Logic and Ethics of Corruption


Cragg, Aw, International Journal


INTRODUCTION

THERE CAN BE FEW TOPICS AT THIS JUNCTURE in the development of human civilization that are more in need of careful exploration than ethics and capitalism. It is now virtually the unanimous view of political leaders in both the industrialized and the developing worlds that capitalism, or, as some put it, a free market economy, is the only viable model for organizing efficient and productive economies. This view, emerging as it has from the dramatic, non-violent, worldwide collapse of communism,(f.1) is no longer remarkable. What is striking is the way in which the emergence of this global consensus has been paralleled by the emergence of a 'global market-place.'

The phenomenon of globalization is significant because of the way in which increasingly free and global markets appear to have under-mined both the willingness and the capacity of governments to exercise their traditional responsibilities for co-ordinating economic with social development. The result is a global market whose operation appears often to be quite divorced from any recognition that development or increasing economic wealth is of value not for its own sake but only insofar as it leads to improvements in the quality of life of the people and the communities that make it possible.

This sense of political impotence on the part of individuals and governments is disturbing enough in its own right. It is magnified, however, by the realization that many individuals and corporations doing business in the global market-place have no clear sense of responsibility to the societies, cultures, and individuals they encounter in the course of their international ventures. This is cause for alarm because the activities of corporations operating multinationally can have both devastating and beneficial impacts on individuals, communities, and even nation states.

My purpose in this article is to examine a phenomenon that has accompanied globalization, namely corruption. It is clearly not the only challenge posed by globalization. It is, however, an important one. Furthermore, although it is not often acknowledged, the long-term viability of free markets is very much tied to the capacity of those in a position to provide leadership to respond to this and a number of other ethical challenges to which globalization has given rise.

IS CORRUPTION A SERIOUS PROBLEM?

Corruption is now widely thought to be thoroughly entrenched in the global market-place. George Moody-Stuart chair of the British chapter of Transparency International, an international anti-corruption coalition with its headquarters in Berlin, Germany, suggests that while there were pockets of corruption thirty years ago, the great majority of countries in the developing world were 'clean.' By the mid-1970s, however, there was 'a growing awareness of the rapid spread of grand corruption in Africa' aided and abetted by European contractors who were 'all too willing to cooperate.' Nevertheless, he suggests, it was still possible for experienced business people to do business internationally without encountering corruption in any serious form.(f.2)

Over the past ten years, however, grand corruption has become the general rule rather than the exception in major government-connected contracts in the developing world. Moody-Stuart concludes that in the 1990s 'nobody in the business world pretends any more that it is not one of the most important and damaging factors in third world development.'(f.3)

There is much to confirm these observations both in Canada and abroad. Media descriptions of the machinations of Canadian gold mining companies in Indonesia, in response to the discovery of what was thought for a time to be one of the largest gold deposits in the world, reveal graphically both the problem that corruption can pose for multinational companies and the market and non-market solutions to which those companies turn to resolve it.(f.4) Nor is the problem of corruption restricted to Third World business transactions. …

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