The Ethics of Offshoring and the Duties of Business

Business and Society

Since the industrial revolution, business has become somewhat more depersonalized. One of the complaints of Marx was that Industrialization had divorced the laborer from the fruits of his labor: he was no longer connected to the actual good effect of accomplishing something but was instead reduced to a cog in a pin factory, using Adam Smith’s example of the “division of labor” in Wealth of Nations. Society, however, became used to the idea of the division of labor, and, having no other options, workers accepted their inhuman roles in the factory world. Today, one sees the same thing going on in Amazon factories where workers complain of inhuman conditions (Sainato, 2020).

In other ways, business has changed so that labor itself is completely offshored. For instance in America, industries like the steel industry have been nearly totally decimated because steel production has been offshored to other countries. China is a large manufacturer of a lot of items that Americans purchase that could easily be made in the US, but businesses are more interested in the cheap labor that they can obtain by outsourcing production to the East. And while outsourcing might enable a company to be more competitive on the global stage, it has adverse effects on the labor market at home (Amadeo & Estevez, 2021).

That is why Sir James Goldsmith was so outspoken about the duties that businesses owe to stakeholders at home—in particularly the duty to provide jobs domestically rather than offshore them to other countries (Roberts, 2011). Goldsmith was himself a large business owner. He believed businesses have a moral obligation to look out for the society that fosters their rise. A business that outsources labor but tries to sell its products domestically is a business that is alienating the community from that natural relationship that should be cultivated between laborers, owners and consumers. That is a relationship that should be integrated rather than exploited. Yet in today’s globalized world it is too often exploited. The effect is that it undermines the various aspects of society and the supports that should exist.

The general consensus on the moral obligations of business and on acceptable business practices has evolved over the last centuries, however. When the Industrial Revolution got underway, there was a great migration of people to urban areas. These people were looking for work and the industrialists gave them work in the cities. Oftentimes people were exploited, as were children, and factories were unsafe. People worked long hours; there were no unions, and it was not until the 20th century that things began to change, thanks in no small part to journalists and authors like Upton Sinclair. These people brought attention to what went on in factories, and governments began to take action to ensure worker safety, workers’ rights, and the right to unionize. Businesses, however, then began pushing for the right to send jobs overseas, and through NAFTA and other trade agreements that become even more possible. People generally accepted it because they felt they were getting good deals on trade—but in terms of labor markets some did not realize how it was going to undermine their chance to have a good job in industry. People like Goldsmith did see the risk and urged businesses to do their duty to their local communities by keeping jobs onshore. But few listened, and that is why today there is such pushback against globalization, manifested in Brexit, the election of Trump in 2016, and the overall condemnation of China for attempting to control too much of the global economy.