Intentional Morality

Adam Smith’s notion of the invisible hand is often applied in modern day economics, as it denotes that free-markets are the most efficient economy and nothing else need be considered. In a perfectly competitive market where businesses are small and run by individuals, this notion succeeds. However, in our current global economy, multinational corporations do not fit this mold, so “individuals are often not easily held responsible for the consequences of [their] decisions” (Stiglitz, 193).

The introduction of limited liability and incentives such as bribes result in an imbalance of power that prevent the invisible hand from correctly guiding the economy. While Wolf may be correct in saying that competition is not driving a race to the bottom, but a race for incentives, we still must be wary of detrimental effects from these incentives. Multinationals may provide higher wages or living standards relative to the domestic countries, but that does not mean they will avoid bribes or other incentives that serve their self-interest.

As Stiglitz says, community based companies drive down the success of incentives because “individuals often take some moral responsibility for their actions,” (Stiglitz, 196) but when multinationals are operating overseas, they don’t see anything morally wrong with paying $500 for a death compensation.

When Smith wrote Wealth of Nations, morality did not need to play an intentional role because self-interest promoted the general welfare; individual action promoted both. However, large corporations have extrapolated this theory in a dangerous way. They have taken their responsibility to involve shareholders rather than society, their employees, the environment, and their communities (Stiglitz, 190). Smith’s ideology must be adapted to fit the current global economy or corporations will continue to heighten the inequality between corporations and consumers and place morality on the backburner.