Individualism (Friedman's Economic Theory), Utilitarianism, Kantianism, and Virtue Theory Analyses of Business Controversies
Tuesday, April 16, 2013
De Beers Mining Group: Diamonds, The Root of All Evil (2013)
Based on a paper by Jourdan Parkinson
Summary by Jourdan Parkinson
In the year 2006 for the first time in history the American public became aware of the impoverished living conditions of the people of Sierra Leone through the unveiling of a groundbreaking movie, Blood Diamond, that starred Leonardo DiCaprio. The heart-breaking portrayal of how hard life is in these diamond enriched jungles are accurate to how life is lived today in the diamond mines, owned by the De Beers Mining group. The De Beers group, the largest diamond mining organization in the world was founded in 1888 by British explorer and adventurer Cecil Rhodes. Rhodes, who began renting out water pumps to miners during the diamond rush of 1871 began his own diamond excavation after finding an 83.5 carat diamond when he was working. Rhodes invested his new found wealth into acquiring small mining companies throughout the land to form one mining organization under his control. He would later receive funding from Rothschild investment banking and create what would become the largest monopoly of diamond mining operations in the world, generating nearly $7.5 billion in revenue per year. In 2011 an international business consultant by the name of Tandra Aldridge wrote an article with a focus on the link between the notorious diamond mines and child labor problems, as well as civil war within countries where these diamonds are being mined. This article spoke of how the De Beers company takes advantage of cheap labor and forces their workers, (most of them children) to work long hours for little pay, and force them to live in these working villages with sub-standard living conditions. Children that age between 5 and 16 are used in mining the diamonds, for ten hours a day; suffering from vision problems, malnutrition, and respiratory problems. Because of insufficient labor laws in Africa, companies like De Beers are allowed to get away with such inhumane actions.
According to the Individualism theory, The De Beers mining companies actions are not unethical because they're entitled to their own personal interests', which in this case is maximizing the amount of diamonds they can mine which in turn will lead to profit for the company and it's stakeholders. De Beers has found a way to maximize their profit and overall efficiency as a company by having their workers work long, hard hours for little pay. This decision has lead to the company increasing it's profit margin because it has decreased it's costs, which has lead to satisfying the interests of the stockholders by improving their own personal interest, return on investment (ROI). That being said, while maximizing profit is good overall for the corporation, the publicity that goes along with using cheap child labor can drive away potential consumers who are opposed to the insensitive business protocol that comes with overseeing the mining of diamonds. This could potentially hurt De Beers in the future if there were to be a large scale strike against their diamond group for its controversial ways.
The Utilitarian view is that the person should try to maximize the amount of happiness for all parties involved. A Utilitarian would view this as unethical because the De Beers mining company did not maximize happiness for all parties involved. The stakeholders involved in this are the investors, the corporate executives, and the miners themselves. While decreasing labor costs and increasing profit margins satisfies the interests of investors and company executives, it ignores the needs of the workers who are in fact the most involved. The interests of the workers themselves are reasonable pay, reasonable hours, a healthy working environment, and standard living conditions. Looking into this case it is prevalent that none of the interests of the workers were satisfied. In order for the De Beers Group to follow the Kantian theorist beliefs properly they drastically improve living conditions for their workers in nearly every aspect, respecting them as human beings instead of means to an end.
In the Kantian theory, people should be treated with respect, and never as means to an end. The overall emphasize is that people should do what is right to do, because it is the right thing to do. Looking upon the motivations of The De Beers company, its clear that their main objectives were to maximize profit and lower costs, but in doing so they conflicted with all principles of the Kantianist theory. The actions of the De Beers company would be viewed as highly unethical by Kantian standards because their main motivation is profit, not having respect for their workers and their autonomy.
The final ethical theory is the Virtue Theory, which hold an emphasis on developing character traits and habits that will allow you to live a fulfilling life. Within this theory there are four core virtues which are courage, honesty, temperance, and justice. De Beers did not show courage or honesty because they have failed to make any changes to their business model so that worker conditions and pay can be improved. The company failed to show temperance by demanding unreasonable hours of labor from children that work in their mines that are adolescent by age. And lastly De Beers did not show justice in any way because they have allowed this style of business to continue since the beggining of their history as a company, with little or no change to worker conditions.
Virtue theorists would view this company as highly unethical taking into consideration all of the known facts.
2.)Institute, S. A. (n.d.). South Africa's De Beers: The Most Unethical Corporation in the World from the St. Antoninus Institute. EWTN Global Catholic Television Network. Retrieved April 16, 2013, from http://www.ewtn.com/library/business/antdebrs
3.)Salazar, Heather. Business Ethics and Virtue. N.p., Spring 2013. Web. 04 Apr. 2013.