Social Contract

One central idea about “society” is that it cannot possibly be based on a plan, nor can it be founded on a social contract. Hence, the nexus of social integration had been the state, which needed the legitimating contract with the citizens. Governmental policies that functioned as a part of social contracts were restricted over the centuries to regulate the employment relationship (Donaldson et al, 1999).

It is difficult to observe how social justice could be obtained through voluntary agreement, or even a series of voluntary agreements, within a complex global economy that features widely divergent interests, perspectives, and massive differences in power and access to resources. Thus, key assumptions of the social contract ethics are now prevalent in large corporations around the world.


Indeed, voluntary social contracting approaches, that remain consistent with Locke’s methods (his insistence on limited government), may help to guide decision-making among those executives who seek such guidance, but it does not offer, and probably are not intended to offer, a method for analyzing and evaluating changes in the relationship between business activity and the promotion of social and economic justice (Greenberg, 1990).

Furthermore, the more immediate problem is finding any business of significant size and importance that treats its employees voluntarily as if they were members of a community. Even when a community can be identified, it is difficult to find an example where the norms and standards it generates lead to positive consequences in terms of social justice, without also finding extensive, government involvement in the process. Social contracting has a long venerable tradition and deserves a great deal of credit for reviving that tradition and adapting it to the problems faced by the modern world.

Consequently, social contract theory should be existed within moral free space. A pragmatic business ethics approach must recognize both universal moral truth and more particular embodiments of moral learning within communities. In order to conduct an ethical evaluation of the social contract, it is also necessary as an initial step to establish and justify the moral standards: trustworthiness (including notions of honesty, integrity, reliability, and loyalty); respect (including notions of respect for human rights); responsibility (including notions of accountability); fairness (including notions of process, impartiality, and equity); caring (including notion of avoiding unnecessary harm); citizenship (including notions of obeying laws and protecting the environment) (Donaldson et al, 1999).

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Next, priority rules could offer considerable help. Certain “rules of thumb” provide a roadmap of sorts through such an ethical thicket, namely:

  1. local community norms have priority unless adopting them harms members of another community (local norms trump unless there is harm);
  2. local community norms designed to resolve norm conflicts have priority unless adopting them harms members of another community;
  3. the more global the source of the norm, the greater the norm’s priority (size);
  4. norms essential to the maintenance of the economic environment in which the transactions occur have priority over norms potentially damaging to that environment (essentialness);
  5. patterns of consistency among alternative norms add weight for priority (consistency);
  6. priority is given to well-defined norms over less well-defined ones (Donaldson et al, 1999).

Finally, the six moral standards would necessarily be required to take priority over other key assumption such as profit maximization or self-interest. By doing so, the company will be providing its agents with a set of moral standards which act as an ethical framework within which the financial goals of the firm or self-interest of its agents can be pursued. One of the features of demonstrating responsibility is to exercise self-restraint and to avoid “winning at any cost.”

To conclude, it should be mentioned, that the conception of the social contract is very difficult to defend, because it bears no relation to the facts; there are no only societies that have had such an origin, but there is none whose present structure that bears the slightest trace of a contractual organization. The social order of any kind can depend on human will and intention and let alone agreement between several individuals. Still, by including employees in the creation process to live up to the universal moral standards of respect and fairness, this attempt could be used to construct a code of the social contract ethics.