Trading Ethics: Auditing the Market

By Zadek, Simon | Journal of Economic Issues, June 1994 | Go to article overview

Trading Ethics: Auditing the Market


Zadek, Simon, Journal of Economic Issues


Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their shareholders as possible. --Friedman, 1962

... songs, not things, are the principal medium of exchange. Trading in 'things' is the secondary consequence of trading in song. --B. Chatwin, 1987

A critical perspective emerging from the "Earth Summit" at Rio concerned the nonsustainability of the current pattern of trade. Links between "environmental trade," such as in pollutants, and trade in goods and services were stressed. Equity, seen as a prerequisite to long-term survival, requires that the terms of trade take greater account of human and environmental needs.

Those who argued this viewpoint spoke against the inequitable dimensions of such trade agreements as Maastricht, GATT, and NAFTA Today, however, all of these exist. The industrial world has failed, at least at this broad legislative level, to directly address the matters of equity raised at Rio and elsewhere. Such shortfalls should not, however, minimize the value of other initiatives to establish a trading ethic based on acceptable human rights and environmental needs. Ignoring these developments undermines the insight they offer for the wider debate. It is necessary, in particular, for evolving forms of economic theory to be based on an understanding and integration of these new approaches to trade and ethics.

Poverty of Economics

Economics leaves little room to explore the complex texture of ethical behavior. Few practitioners deviate qualitatively from the subject's tidy approach to ethics, which Sen dubs the paradigm of "ethical egoism" [Sen 1978]. Recent work has maintained a lively debate about the treatment of ethics in economics [Burgenmeier 1992!. However, there remains a dearth of analysis supporting alternatives to the main thrust of economics.

The treatment of ethics within economic theory has become divorced from the ethics of economic research and of business [Rothchild 1992]. This in turn divorces practice from theory. Recent developments in business ethics, for example, offer a rich source of data on the manner in which complex values influence market behavior [Adams et al. 1992]. These developments, however, have not impacted on the discourse on ethics and economic theory. Theoretical work in other disciplines, similarly, has been shunned by economists. Anthropological literature on "reciprocity," work on the social psychology of economic behavior, and the sociological and philosophical literature on needs and entitlements generally remain marginal to mainstream economic discourse. This paper seeks to overcome these shortfalls in the process of evolution of economic theory by offering perspectives from both practice and theory.

Social Auditing: The Principle

Social auditing is the process of defining, observing, and reporting measures of the ethical behavior and social impact of an organization in relation to its aims and those of its "stakeholders." Stakeholders are people who can affect, or who are affected by the activities of the organization or by the set of events under consideration [Zadek and Evans 1993].

Critique of economic behavior predates the industrial revolution and arguably can be traced to early philosophical texts. More recently, an extensive applied literature has emerged examining the social consequences of particular commercial ventures [Gray et al. 1987!. Social auditing is, however, different from such previous work.

1. It is comparable to a statutory financial audit in that it involves external verification, publication of findings, and is repeated annually. 2. It takes a comprehensive, inclusive view of the scope of market relationships to be accounted for in the social audit. 3. Assessment criteria are chosen by stakeholders on the basis of their own agendas and values. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Trading Ethics: Auditing the Market
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.