Should Companies Judge the Ethics of Those With Whom they Do Business?

Wikileaks under examinationThe Wikleaks backlash continues. I suggested here two days ago that Mastercard was probably justified in ceasing to act as a conduit for donations to Wikileaks. I said that, at very least, it’s not surprising that a company whose business depends on its reputation as a trustworthy keeper of secrets would find it hard to endorse the behaviour of an organization that exists entirely for the purpose of exposing secrets.

But quite a few people have suggested that Mastercard (and Visa and PayPal and perhaps others) have been inconsistent, and perhaps even hypocritical, in deciding to cut off Wikileaks. As an editorialist for the Guardian pointed out

while MasterCard and Visa have cut WikiLeaks off you can still use those cards to donate to overtly racist organisations such as the Knights Party, which is supported by the Ku Klux Klan.

For that matter, you can use Mastercard or Visa to donate to any number of controversial charities and political causes, from PETA to the NRA to Planned Parenthood — all of which are organizations about which at least some people have serious moral reservations. Similarly, you can use either card to buy cigarettes, to buy guns, to buy drug paraphernalia, to reserve the services of a call girl, or to pay for hardcore pornography online. So, really, just how careful are Visa and Mastercard with regard to the companies they deal with?

And if Visa & Mastercard are on thin ice with regard to judging Wikileaks morally, that reduces the force of their ostensible reason for cutting off the organization, and lends credibility to the claim that all they’re doing is caving to government pressure.

Trying to divine the actual motives of the credit card companies here is probably nearly impossible. But this also raises the very general question of whether companies should pass moral judgment on their customers and business associates. Is it OK for a company to refuse to do business with someone — whether that someone is an individual or another company — because they have ethical objections to their behaviour?

(I touched on this topic a couple of years ago, in discussing the right of a bakery not to decorate a cake with the name “Adolf Hitler” on it. And more recently I blogged about corporate participation in the death penalty.)

Now in some cases, of course, moralistic discrimination is simply impossible, because the grounds upon which a company might choose to discriminate are invisible to them. In many markets, companies simply don’t know enough about their customers to pass judgment. The store I buy my groceries from has no idea how I live my life, what my values are, etc. Maybe if they knew more about me they would refuse to sell to me. But they don’t, so they can’t, and they aren’t likely to start going to the trouble of finding out more.

And in many (most?) cases, discrimination on moral grounds is off the agenda simply because it reduces profits. Maybe you have moral qualms with the behaviour or character of 25% of the population (or maybe even with the 50% who don’t vote the way you do), but are you really going to refuse to do business with them, and accept the resulting huge reduction in income?

And clearly, generally, this paucity of moralistic discrimination is a good thing. A lack of discrimination likely leads to greater economic efficiency (good for the community as a whole). And the fact that businesses are generally (though unfortunately not always) unable to discriminate based on, e.g., what they see as moral objections to someone’s sexual orientation, is a good thing for gays, lesbians, the transgendered, etc.

On the other hand, there are some clear cases in which it is widely accepted that companies will and should discriminate based on the character and behaviour of their customers. Think of banks, which are obligated (often legally required) to “discriminate” against criminal organizations by, for example, reporting large financial transactions to the government.

Note also that many people believe that companies should judge other companies they do business with, for example with regard to their environmental record and labour standards. In fact, lots of companies have faced serious criticism for failing to do so. Companies today are supposed to care about the ethical standards of their suppliers.

So, is it OK (or even good) for companies like Visa and Mastercard and PayPal to judge the morality of Wikileaks? Your initial answer to that is likely to depend on your opinion of Wikileaks more generally. I’d be curious to know if there’s anyone out there who says either:

  1. “Wikileaks is evil, but Mastercard, Visa, and PayPal should stay neutral and continue funneling funds to them,” or
  2. “Wikileaks is great, but Mastercard, Visa, and PayPal are fully justified in cutting them off.”

10 comments so far

  1. Jayaraman Rajah Iyer on

    Madam of the brothel is not all virtuous.What after all virginity madam, once lost ten times be regained, but ever kept is ever lost!

    These guys have to revisit their business ethics.

  2. John Pollabauer on

    I will have a much clearer picture of the situation in the event the United States Department of Justice were to initiate espionage charges against the head of Wikileaks. There is just so much which remains unknown to the ordinary person on the street that it just becomes almost too difficult to take a position on it without making qualifications all over the place.

    In retrospect, this situation will likely look rather simple, when it will be much easier to connect the dots.

  3. Paul Chippendale on

    “Innocent until proven guilty”–Organisations such as VISA, Mastercard, PayPal should provide the service they are set up to provide to all clients except those who the courts have deemed to be undertaking illegal activities. We will have absolute chaos if our financial infrastructure (these days via the internet) starts making moral judgments about its transactions.

  4. […] is that Mastercard, Visa, and PayPal stopped acting as conduits for donations to Wikileaks not on principled grounds, but rather due to government pressure. If that’s true, is it ethically acceptable for […]

  5. jilly on

    If a business makes very clear up front that it can choose, unilaterally, to suspend service at its own whim, then it should certainly be allowed to do so. How many people would choose to use it must be a question, but those who do could not reasonably complain should service be stopped. If the business does not do so, then surely it is obligated to continue service. If it wishes to drop a client, then it must provide a reasonable period of notice, to allow the client to make other arrangements.

    Anyone has the right to refuse to invest in, donate to, shop from or use the services of any organization, on moral grounds. If the relationship has been ongoing and significant, however, it seems only fair that the organization know why the business relationship is changing, and be given a chance to defend its position or make changes. A business receiving pressure about doing business with a company that uses questionable practices certainly has the right to make inquiries, and even to state that it will cease to use that company’s products or services unless the practices change. However, it seems fair that there be a reasonable period for investigation and then compliance or adjustment.

    Finally, there is the question of alternatives. Mastercard could claim that Wikileaks has several alternative ways of receiving donations, and this may be true overall. But for some percentage of those who wish to donate, Mastercard is the only service provider available. Were I a Mastercard holder, I would be looking to change my credit card company rather than continue to deal with a financial institution that had the unmitigated gall to make decisions for me on moral grounds.

    Cheers

  6. emirjame on

    There seems to be a huge misunderstanding in the USA on “government secrets”. In a democracy a government is not supposed to have secrets. That is to say: all information belongs to the public and can only be hidden if the government has asked proper permission to label information as confidential. In the process of granting this permission things like the justification, period of time and alternative procedures for accountability can be established.

    From the cables I get the clear impression that the people writing them did not realize that they did not own the information they produced. This despite the fact that they were paid by the State and that, as a result, all of their work belongs to the American people. The question where the ‘stealing’ occurred: in the withholding/ classifying of information or in the publication by Wikileaks is a very good question to ask.

  7. […] December 11, 2010 Should Companies Judge the Ethics of Those with whom They Do Business? […]

  8. […] (I’ve already blogged on the more general question of whether companies are justified in ceasing to do business with WikiLeaks. See: Should Companies Judge the Ethics of Those With Whom they Do Business?) […]

  9. Julian Friedland on

    It’s certainly a Pandora’s Box to expect corporations to do have a say in the ethics of their suppliers, clients, and customers. For what if they uphold the wrong values? This is often already the case arguably with Wal-Mart, which has refused to sell music by John Mellancamp simply because he criticizes provincial American values. And the founder of Domino’s Pizza used to fund Operation Rescue, which was eventually forced to stop harassing women at close range as they entered abortion clinics.

    But I think there really is no choice any longer now that we (though not you Chris in Canada) live in a country so dominated by corporations. With that greater power comes greater responsibility.

    It’s possible that Visa and Master Card are being pressured by the U.S. government. It could also be that they are losing very little by doing this and share the government’s fear that their unethical practices may too be exposed. For Wikileaks is preparing major leaks on corporations: http://businessethicsmemo.blogspot.com/2010/11/wikileaks-prepares-megaleak-on-major-us.html


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