Ethical considerations must for business success
The concept of ethical consumption gained huge attention in wealthy nations around the world during the past couple of decades.
It was April 2013 when Rana Plaza incident took place in Bangladesh causing massive destruction. The owner came under the scrutiny right after the incident for lack of proper working environment and lower wages. Criticism spread out worldwide stating the responsibility of actual buyers from Europe who are actually taking advantage of these poor wages. Global brands awarded compensations to all the families who suffered loss but many argue that a stitch in time could have saved nine. It is often believed that capitalism never serves well to the underdeveloped countries as the buyer seeks good quality products with lower price without worrying about the incentive to actual manufacturers. If consumers only consume products which are socially and ethically good, capitalism will bring good to the society. The question is-- is ethical consumption possible under capitalism?
The concept of ethical consumption gained huge attention in wealthy nations around the world during the past couple of decades. In 2009, Time Magazine published issues under the banner 'The rise of the ethical consumer'. The magazine itself featured articles on 'The responsibility revolution' and in a poll of 1003 Americans, nearly 40 per cent respondents said that they purchased products of the company of which the social and political values they liked. Consumers are thus becoming alert of the products they buy. The environment, corporate practices, supply chain etc. are coming under the inquiry of the consumers worldwide and the issue of ethical consumption under capitalism is getting more attention than ever. Capitalism is often pronounced to label the society where we live in. Almost all the countries of world now follow capitalistic social system. It is a system where privately-owned entities run business in free market for the best interests of society. The main feature of capitalism theory is to make profit. In most economies, the privately owned organisations are owned by a very small minority of people whereas majority people have to sell their capabilities in order to earn wages. The minority portion of this group are labelled as capitalist class.
In order to succeed capitalism, free market economy is required. Capitalism ensures that consumers will get the preferred product at a vastly affordable rate. The owner supplies goods what the consumer is seeking for. The suppliers have to compete against other suppliers in order to survive in the market and thus to maximise their own profit. For that, they try to sell their product at a premium price with as much as low amount possible. Consumers choose the most desired and most affordable product from the market. This is the way only the fittest manufacturers enjoy the profit. Thus capitalism drives to innovation of new products resulting in maximisation of profit. As Steve Jobs said, "You can't just ask customers what they want and then try to give that to them. By the time you get it built, they'll want something new." Consumers are the king who makes smart choices. They punish poor quality products with not buying them and thus companies manufacturing poor quality products will suffer from a dearth of revenue. On the other hand, suppliers with good products will delight in profit from it. Thus, capitalism is a win-win situation both from consumer's and supplier's point of view. Suppliers and consumers exchange goods freely and they provide each something in return.
But the other side of the coin has a different story too. Capitalism does not ensure any job for those who lack required skills. Thus children, elder people and the physically challenged people most often are the vulnerable segment of the society requiring special intervention from the government. The biggest problem is that capitalism ignores pollution as external cost. This reduces cost of the product and consumers buy these cheaper products without worrying the depletion of natural resources. As the consumer is the king in capitalism and keeps buying these products affecting environment, the businesses with any ill-motive enjoy higher profits also damaging environment. As the consumer seeks quality products at affordable price without getting the details about manufacturer, manufacturer with good ethics is likely to suffer.
Under capitalism theory, the rich become richer and the poor become poorer. We often miss out that the Bangladeshi economy is the huge beneficiary of free-market economy. Over the last two decades, garment industry grew beyond imagination. Despite being a small country, Bangladesh has become the second largest garment exporter right after China. There is no doubt that labour rights and workplace safety still remains concern. But at the same time, this industry has employed over four million Bangladeshis --mainly women-- by more than five thousand factories across the country. This export oriented industry supplies $20 billion in exports to the world. This is the positive corner of capitalism that people often miss out.
Unemployment has always been a worry of our country, capitalism has created huge job opportunities. Forbes organised a survey in spring 2014 among 44 countries, where Bangladeshi people showed positive faith on capitalism. Bangladesh became the world's second most supportive of a free market economy after Vietnam right among 44 countries surveyed. Public opinions reveal the faith in open market economy as trade creates more jobs, more foreign investment and better salaries.
Global Market Insite (GMI 2005) organised a poll across 17 countries including USA, China, India, Australia, Japan and various European countries. The result was quite encouraging that 54 per cent of online consumers are interested in paying more money for environment friendly products. But the problem is that consumers are environment conscious, not actually price conscious. For that, in West African nations, the idea of 'Fair Trade' comes in. A 3.5-ounce candy bar with 'organic fair trade' can be exchanged for $3.49 whereas it's only $1.50 which has no such label. Though there is such a hefty price, the farmers get only three cents out of it. Tim Harford, English Economist said, "Fair-trade programmes make a promise that the producers will get a good deal. They do not promise that the consumer will get a good deal." This provokes the question-- how should consumers react to such issue when fair trade can't even ensure a fair trade-off?
There are no coins without two sides in all likelihood. Capitalism has undoubtedly two sides of stories. Ethical consumption assuredly can bring prosperity to all parties under capitalism.
The writer is a student of MBA programme at the Institute of Business Administration (IBA), University of Dhaka.
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