On the Use of Social Contract in BE

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Volume 13 Number 4 October 2004

On the use of the social contract model in business ethics BenWempen Introduction This article focuses on the use of the contract model as a basis for a theory of business ethics. We will refer to the various contributions made to this type of argument as contractarian business ethics (CBE). One of the more authoritative recent contributions to this field was the book Ties that Bind: A Social Contracts Approach to Business Ethics, which was published in 1999 by business ethicists Tom Donaldson & Tom Dunfee. Both these authors had published about the social contract model separately but started to work together in the early 1990s. This led to a number of co-authored articles and eventually resulted in what may be seen as a definitive statement of their doctrine of Integrative Social Contract Theory (ISCT) in Ties that Bind. A considerable number of commentaries on ISCT seem to encourage the authors to be more specific about hypernorms resulting from the contract, thus providing more practical guidance (Mayer & Cava 1995, Rowan 2001, Soule 2002, Hartman et al. 2003). In contrast to this line of criticism, we have argued elsewhere that the major problem of ISCT stems from a misunderstanding of the nature of the contract argument (Wempe 2005). Our criticism of the ISCT project comprises two main points. First, if one wants to use the contract model as a basis for a theory of business ethics, one should take into account not only the nature, and the application possibilities, but also the limits of the model. In order to point this out we

have coined the idea of a self-disciplined contract theory of business ethics. Our claim is that Donaldson & Dunfee insufficiently stick to this criterion and that a theory that is used for a more appropriate goal will produce better results. A second point of criticism is that using the contract model as a basis for a theory of business ethics requires that the model should be adequately adapted to the domain to which it is applied. Hence our second label: we argue for a domainspecific contract theory of business ethics. And once again our claim is that Donaldson & Dunfee pay insufficient attention to this point and that a better attunement of the model to the domain to which it is applied, i.e., business ethics, will produce better and more convincing results. In the original article we have especially set out the critical part of the project. In the present article we will first summarize the ISCT project for the benefit of readers of Business Ethics: A European Review. We will then summarize our conceptual criticism by situating ISCT against the background of contractarian theories applied to two other domains. Third, we will work out some proposals on how to set up a domain-specific, selfdisciplined CBE that lives up to these boundary conditions. In order to underline the limited ambitions we have in this respect, we liken these exercises to the preliminary sketches a painter makes by way of preparation for a larger painting.

ISCT

Lectures on business ethics at the Rotterdam School of Management, Erasmus University, Rotterdam, The Netherlands.

The authors of ISCT proceed from an alleged shortcoming in current theories of business ethics.

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These are all general ethical theories such as utilitarianism, Kantianism or (Aristotelian) virtue ethics. Donaldson and Dunfee suggest that it is precisely owing to their general perspective that these current theories suffer from a lack of concrete guidance to business practitioners (Donaldson and Dunfee 1999: 13). In the social contract model Donaldson and Dunfee seek a conceptual framework that would be better attuned to solve political problems by these practitioners. In their version of the theory, the social contract model operates at two levels. First there is the level of microsocial contracts at which moral norms emerge from converging consensus among the members of a certain economic community. Such community-specific norms may well conflict with local norms developed in other economic communities. A case in point would be Foreign Direct Investment. Companies based in Western democracies usually will have stricter norms on human rights and environmental pollution than the corresponding norms in developing host countries. Wherever these sort of norms conflict we need some comprehensive norm or perspective in terms of which these conflicts can be accommodated. For that purpose the authors of ISCT introduce a second type of social contract that operates at the macro-level. The problem with this idea of a macrosocial contract is that the authors of ISCT pay insufficient attention to the manner in which such a macrosocial contract would need to be set up. They in fact posit a number of characteristics of an initial contractual situation and then go on to assert that these conditions will convince rational contractors to accept four contractual terms. These conditions are characterized as moral free space, authenticity, legitimacy and priority rules, respectively. Moral free space stands for the idea that within economic communities and insofar as these do not conflict with other norms, economic actors must be held to be free to adopt their own local norms. Such norms can be considered as authentic if a set of procedural hypernorms are met, i.e., if the community allows any possible dissenters to have their objections taken into account (voice) or if that does not produce a satisfactory result, to leave the community altogether (exit). Authentic

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norms become legitimate to the extent that they do not conflict with relevant substantive and structural hypernorms. To the extent that such norms do not contradict hypernorms they are fit to serve as comprehensive norms governing the economic activities of more communities. The idea of priority rules, finally, is intended as a sort of rest-category in case the three earlier terms do not provide sufficient indication to resolve conflicts between community-specific norms.

Three families of contract theories Such are in brief the outlines of the ISCT project. In order to substantiate our criticism of this conceptual framework, the original research project embarked on a comparative analysis of the manner in which the contract model works in two other, earlier domains, i.e. classical social contract theories and modern social contract theories. The result of this comparison is summarized in Table 2 that forms the basis of the three sketches, which will be discussed later in the present article. Classical social contract theories characteristically argue the conditions under which a political power can legitimately issue laws. Modern social contract theories aim to provide principles of social justice. The principal landmark in this connection was of course John Rawls’ book A Theory of Justice which was published in 1971. Rawls did not use the model to set out the conditions under which political authority could legitimately issue laws, but to identify criteria, which the basic structure of society should meet in order to ensure social justice. That is to say: he inquired how society should be organized (in terms of its principal institutions) so that the cooperative surplus was to be fairly distributed among the various stakeholders who competitively claim the added value resulting from human productive cooperation. For that purpose he had to adapt the contract model fundamentally. The working method adopted in the original research project consisted in a comparison of these two earlier families of social contract theories along a number of points of comparison. This comparison allowed us to draw conclusions

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with respect to the corresponding parameters of CBE. To understand how the contract model can be appropriately employed in business ethics, we first sought to understand how the model operated in these two earlier fields of application. To that aim, we began with a survey of classical social contract theories originating from the history of political theory. These are presented in Table 1.

The argumentative strategy of classical social contract theories: external and internal logic Table 1 lists five important contributions from political theory. Two things emerged from this survey. First, all these momentous contract theories strive for some goal or other. For the purposes of this survey, we distinguished between historical and theoretical goals a theory can have. By historical goals we refer to the kind of goals a theoretician may have before him in formulating his theory. But, as will be obvious, some historical goals are easier to point out than others. To complement any historical goals we therefore came up with the idea of a theoretical goal: this refers to the function that may be attributed to concrete theories by academic commentators (or scholars of political theory). Proceeding from the idea of a theoretical goal, it becomes clear that Hobbes and Rousseau, for example, offer a good basis for an argument for a strong political authority. Locke’s version of the social contract, on the other hand, is more feasible as a basis for an argument on constitutional limits set to the state, or in support of the rights of the individual. The first important idea that we derived from the comparative analysis presented in this table is that some goal (historical or theoretical) can be attributed to all important classical contract theories. We have coined the phrase external logic to refer to this function of any particular theory. The second idea that we derived from Table 1 has to do with the manner of argumentation in which such a goal can actually be supported. With respect to this question, one also sees that all five theories attempt a diagnosis of life in the state of

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nature. In fact, each contract theorist invites his audience to engage in a thought-experiment and to imagine what life would be like if there were no political authority. And the manner in which this diagnosis is made points again in the direction of the solution envisaged by the political theorist. So, in the case of Hobbes, for example, we see that he entertains a gloomy vision of life in the state of nature, because the dynamism of human interaction turns individual people into wolves. It is not that people by nature want to kill others, but individuals are constituted in such a manner that everyone feels he is obliged to use violence as a precaution not to fall victim to the aggression of his fellow men in the state of nature. Essentially, it is owing to the insecurity in the state of nature that everyone feels obliged to use violence. Rational individuals see the inescapability of this mechanism and realize that this would be an unwelcome outcome (a war of all against all). And it is on that rational insight that Hobbes bases his case for a strong and unlimited government. Other political theorists included in Table 1 also argue in their own way for a conclusion concerning the most desirable constitution of the state or the conditions under which legitimate political authority can be established. We refer to this link between the diagnosis made and the solution envisaged as the internal logic of the theory. The contract theory of Locke, for example, has an essentially different internal logic than Hobbes’ or Rousseau’s. What is true for all theories listed here, however, is that the ‘narrative’ behind the contract model is eventually determined by the aim they sought to establish by their theory.

Rawls’ innovation of the contract model So the suggestion from this survey of classical contractarian theories was that the internal logic of the social contract is nested in an external logic. The second important point concerns the manner in which modern theories are distinguished from classical social contract theories. This can be illustrated from the example of Rawls. In an important sense, Rawls’ theory is more ambitious than the various classical social contract theories

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Glorious Revolution 1689

Signal corruptive impact of society on man

Unchecked government in Geneva Raise the state into a moral idea

Locke

Rousseau (2nd Discours)

Rousseau (Du Contrat Social) Kant

Man is naturally good

Practical reason

Political community

Perfectibility and compassion

Reasonable man; Natural Law

Rational man; mechanistic psychology

Image of man

Popular sovereignty

Social and political equality

Individual basic freedoms

Order, stability

Theoretical aim

Uncertainty and anticipation to perceived threads causes a spiral of violence Two problems: inconvenience and partiality in redress Psychological addiction to luxury causes dependency; but the rich have more to lose than the poor Social life brings limitations; but nobody can contract out Society is inevitable; but there is also a moral obligation to support civil condition

Diagnosis of life in the state of nature

Internal logic

Unlimited and unalienable popular sovereignty Ruling government must in all cases be respected

State of society is inescapable, but exploitative

Sovereignty within clear boundaries

Sovereignty unlimited and undivided

Proposed solution: nature of political authority

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Table adapted from Wempe (2005).

End to religious civil wars

Hobbes

Historical aim

External logic

Table 1. The External and Internal Logic of Some Classical Social Contract Theories

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that were discussed in the previous section. Central to the argument of all classical social contract theories is that everyone would be better off in the state of politics, i.e. the situation in which some political authority is set up. For that reason it is rational for every contractor to consent to the institution of political authority. For the purposes of Rawls’ project, this argument would not work. To fit the aim of designing a just basic structure of society, Rawls had to model the thought-experiment in the original position much more precisely than any of his predecessors in the social contract tradition. If Rawls were to make use of the rough thought-experiment of a comparison of some state of nature to a state of politics, all contractors in the negotiation of the terms of the social contract no doubt would insist on the qualities they themselves happen to possess. Since we have no standard how to weigh intelligence against muscular strength, smart people would argue that intelligence is of utmost importance and must be higher rewarded than physical strength. Similarly, strong people would argue that bundles of muscles are our most vital asset. This type of dispute could never be resolved by a classical contract model and it was with a view to correcting these sorts of biases that Rawls added a number of elements to his model so that a biased choice would be rendered impossible. The central device in this connection of course was the famous ‘veil of ignorance’. By ensuring that interested parties are unaware of the position they will eventually occupy themselves, he hopes to ensure a fair deliberative process. On Rawls’ model of the original position, the average contractor does not know his or her social position, race or gender. In this fashion Rawls invoked a number of corrections so as to make his contractors opt for the right choice. The manner in which his particular version of the contract argument was set up corresponds closely to the sort of theoretical exercise Rawls envisaged and the sort of outcomes he wanted to establish with his theory. That idea will help to structure the discussion of the implications of the comparative analysis for the design of a contractarian theory of business ethics. For the purpose of this discussion consider Table 2.

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Three working sketches for a self-disciplined, domain-specific CBE In view of this comparative analysis of two earlier families of social contract theories we can spell out some implications for a better social contract theory for business ethics. This will enable theoreticians to get to informed decisions concerning the manner in which such an advanced CBE could be set up. The idea is, in other words, to look at each point of comparison with the manner in which this is instantiated in the earlier two families, so as to work out a corresponding CBE equivalent. Generalizing from the earlier reconstruction of both classical and modern social contract theories, we suggest three points of comparison, i.e. the external and internal logic, domain characteristics and assumptions made by the various theories. Modelling CBE: external and internal logic The first point of comparison raises the question as to what would be an appropriate result to establish with a social contract for business. And what would be the sort of factors we want to correct so as to get to a result that best corresponds to our established intuitions on corporate social responsibility? Where classical theories focus on arguing the conditions under which political authority can legitimately issue laws, and modern theories aim to provide principles for a just basic structure of society, a natural subject for CBE would seem to be the legitimacy of the Western system of entrepreneurial production. Evident parties to this contract are two collective actors: business & society. A problem focus in line with this profile is the question we have labelled the problem of normativity: that is, the question why economic actors should take into account moral norms in the first place. The question as to the internal logic of CBE is the most detailed level at which the comparative analysis can be used. When considering the various narratives concerning some imaginative state of nature in classical contract theories, it is obvious that a specific function can be ascribed to the contract narrative in each separate theory.

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Table 2. A Comparative Analysis of Three Families of Social Contract Theories

External family logic Subject of inquiry

Classical social contract theories

Modern social contract theories

Contractarian business ethics

The state

Basic institutions of society Continuous persons Social justice

System of corporate production Business and society The status (and contents?) of moral norms for business Lack of moral norms mutually binding all stakeholders affected by corporate action ! the problem of normativity

Parties to the contract Individual citizens Theoretical aim Political authority political obligation Problem focus Lack of political order

Internal family logic Problem–solution frame

Function initial contractual situation

Reconciling political order with individual freedom

State of nature: models moral equality of individual citizens

Domain characteristics Background conditions Circumstances of authority

Target group

Lack of fair starting positions in distribution of cooperative surplus

Designing an endowmentAccommodation insensitive, ambition-sensitive distributive scheme Incommensurability Collective action Original position: models fair State of individual production: social cooperation models corporate morality at system level Circumstances of justice: moderate scarcity and mutual disinterestedness

Natural target group: Target group fixed by national political community stipulation: ‘the domestic case’

Theoretical assumptions Access Membership of target group is unproblematic

Authority

No political authority (authority results from the contract)

Membership of target group limited to domestic society; regarded as a closed system: membership given Rule of law, to cope with problem of ‘partial compliance’

Exit

Formal exit

No exit (by stipulation)

Circumstances of business ethics:  a system of production cooperation;  a sanctioning authority The affected group includes interests:  beyond national borders  beyond domestic law  beyond economy ! target group not yet fixed: ! the problem of stakeholder legitimacy No such presuppositions can realistically be made: ! the problem of stakeholder legitimacy Rule of law, sanctions some social-economic order (e.g. property, market economy, etc) Burdened exit

Table adapted from Wempe (2005). ......................................................................................................................................

Generally speaking, state of nature theories serve to argue the moral equality of all individual citizens (cf. Kymlicka 1990: 60).

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In the case of modern social contract theories the sketch of an original position serves to ensure a correct process of negotiation on the principles

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of justice, i.e. to eliminate biases such as irrelevant qualities or characteristics that should not impact the establishment of principles of justice and filter them as it were out of the process of negotiation. Modern contract theories seek to develop an ‘ambition-sensitive’ but ‘endowment-insensitive’ distributive scheme (Dworkin 1981 quoted in Kymlicka 1990: 75). In view of Rawls’ adaptation of this design, the question then suggests itself how the initial contractual situation for a social contract theory for business should be shaped in order to produce an adequate theoretical underpinning of a framework for corporate morality. In order to answer that question, we need a better insight into the main questions of the field of business ethics and the main goals we want a theory of business ethics to achieve. What, in other words, are the kinds of problems we want to resolve for which the internal logic of CBE needs to be modelled? Now, this is of course quite a big question, confronting the state of the art of business ethics ‘head-on’. The world of business is subject to rapid and continuous change and it would be presumptuous to suggest that any proposed theory could seek to resolve these in one stroke. But we would just like to suggest that there are at least three common issues that may be discerned in many discussions and concerns constituting the subject-matter of business ethics. These are not intended as an exhaustive list, but we believe that whatever else may be taken to form part of the realm of business ethics, at least the following three should also be addressed. First, there is the question as to how mutually exclusive claims made by different stakeholders (such as employee wages vs. return-on-investment) can be reconciled. We have called this the problem of accommodation. This problem involves mutually dependent parties, each of which is needed to operate a ‘venture for mutual advantage’. Note that, in their pure form, problems of collective action are zero-sum games. Each dollar spent on wages cannot be used to reward the shareholders. The stakeholder model can do no more than identify various interested parties, but is not equipped to adjudicate the rival claims of workers and shareholders, or of shareholders and custo-

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mers, etc. The contract model, on the other hand, was traditionally always employed precisely to solve problems of accommodation. A second question that seems to us to form part of the core of business ethics is the question as to how incommensurable qualities may be weighed against one another. Typical examples of this issue would be the clash between economic results and the environment (profit vs. planet) or the clash between workplace security and profit (people vs. profit). The difference with the problem of accommodation is that these sorts of clashes are not only mutually exclusive, but moreover lack a common standard to weigh conflicting claims. We have called this the problem of incommensurability. This problem clearly also goes to the core of many business ethics concerns. Once a corporation has decided it should make an effort to produce in a more environmental-friendly manner, how much extra cost is deemed sufficient? Shell prides itself on its efforts in the field of solar energy, but its critics would typically argue that, being such a big player, Shell could invest much more, thereby making solar energy a more economically viable energy alternative. Once again, if we compare the potential of the contract model and the stakeholder model to resolve problems of incommensurability, the contract model seems to be in a much better position. For, as can be seen from other modern contract theories, the contract works as a device constituting agreement on the distribution of all sorts of essentially incommensurable goods and values. A third characteristic issue for business ethics would be the question what background institutions are needed in order to hold a corporate agent to some moral duty or other. Arguably, it would be unreasonable to require corporate agents to make certain sacrifices in the absence of an institutional background to prevent other, less scrupulous competitors from taking advantage of such dutiful conduct. This is commonly known as the problem of collective action. And this problem not only plays in decision-making between corporations, it also constitutes the basic rationale of individual organizations (Hartman 1996: chapter 3). Here, too, the contract model seems to have the better testimonials. Both in classical and modern theories the contract

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model was called in to resolve problems of collective action. Our suggestion is that the internal logic of CBE could well be set up so as to resolve these three types of problems. After all, classical and modern contract theories have been seen to resolve analogous problems. One of the primary aims of establishing government was to deal with the problem of collective action concerning important matters of public order and welfare arrangements. In distributing the burdens of these collective goods the state typically issued decisions on how to accommodate rival claims from various (groups of) citizens. Also, it was granted the discretion to decide on the use of public funds for incommensurables such as economy, environment and safety. For these reasons, we expect that, once the idea of a commons is established and the problem of stakeholder identity is thereby resolved, the social contract for business would be capable of resolving the problem of accommodation, the problem of incommensurability and the problem of collective action. The domain characteristics of business ethics So far we have dwelt on the consequences of the requirements for a self-disciplined CBE. Now we must consider what would be the main characteristics of the field of business ethics that CBE should take into account. As is well known, John Rawls, in the course of formulating his theory of social justice, launched the idea of circumstances of justice. With this term he referred to certain structural conditions forming the background against which all questions and issues characteristic for the realm of social justice need to be considered. The main conditions Rawls singles out are relative scarcity and mutual disinterestedness. Analogous to this terminology we ask what must be taken to be the circumstances of business ethics. What are the structural factors shaping the background against which all issues in business ethics are staged? All defining questions of business ethics presuppose a system of entrepreneurial production in which added value is created through cooperation, i.e. division of labour and coordination of people. A further necessary

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condition for any question of business ethics properly so-called is that there should be something like an ordered society, which in turn requires an effective political authority to ensure that promises and commitments taken on in the free market (ordinary common-or-garden contracts) are actually carried out. This means that the contract for business presupposes a classical political contract. A second important characteristic of the domain of business ethics is the question as to whom theories of business ethics actually address. In other words: who should be taken to be the audience of the business ethicist? In the case of two earlier families of social contract theories this question can be answered relatively easily. Classical social contract theories all presuppose a more or less natural group of people constituting the political community. The 17th and 18th century saw the formation of many of the national states as we know them today. The majority of citizens spent their days within the territory of one and the same national state. The question as to who forms part of the target audience therefore never was an issue in classical theories in the social contract tradition. With Rawls this point did not play a role either, for the simple reason that this author stipulates his theory for the domestic case. It will be clear that the question as to the target audience of CBE leads to a radically different answer. For, the defining issues of business ethics address the question how to deal with conflicts of interest extending well beyond the national state in at least three aspects. First, these are questions as to the extent to which entrepreneurs in the Western world can ‘buy’ a cleaner environment by transferring the production to developing countries with less stringent legislation. Often this simply means that environmental problems are being exported to developing countries. Such forms of FDI are defended on the basis of the argument that developing countries cannot yet afford the strict legislation that is enacted in Western economies. But it is also clear that these practices can never amount to a sustainable solution. Second, in any case, typical questions of business ethics extend to matters beyond the legislation enforced in national states. To consult

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affected stakeholders in decisions often is not positively prescribed, but nevertheless forms part of the basic manners of parties in business life that constitute the core of business ethics. Shell is not legally obliged to consult with Amnesty on their human rights policies, or with Greenpeace on the environmental impact of their industry. Such a ‘stakeholder-dialogue’ is based on voluntary consensus. Third, typical questions of business ethics extend beyond purely economic incentives. A company that claims to conform to moral norms but which at the same time expects economic profits (‘business ethics is good strategy) is likely to be suspected. Because of these three important differences, CBE faces a problem that does not arise for the two earlier families of contract theories. We have identified this as the problem of stakeholder legitimacy. This problem stems directly from the fact that the subject and the target audience of business ethics cannot be indisputably defined beforehand. And it is worth noting that this is a problem that the contract model is ill-equipped to solve. Classical social contract theories would not be able to conceptualize, let alone resolve, questions concerning immigration, for example. The social contract argument cannot answer these questions convincingly since there is no selfevident and unquestioned notion of community. Similarly, CBE can only produce satisfactory results once the idea of a commons is established. This remains the ultimate condition that is presupposed by any contract argument and consequently it must be provided by some means other than the contract model. Theoretical assumptions to be made by a theory of business ethics A third point of comparison involves the assumptions made by the respective families of social contract theories. There are at least three assumptions any theory of business ethics (thus including CBE) must make. These are the question as to access, authority and exit. Access refers to the conditions under which new members are allowed to form part of the community; political authority focuses on the conditions needed for a well-

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ordered society; and exit concerns the question in how far the community can be quit again when an individual disagrees with otherwise legitimate collective decisions. Regarding these assumptions classical social contract theories do not make really hard conditions in any of these three respects. We already saw that membership of the political community was unproblematic in the 17th and 18th century. With Rawls, membership is stipulated because of his assumption that society forms a closed system, which one can join only by birth and leave only by death. It will be obvious that, with respect to the domain of business ethics, these assumptions cannot meaningfully be made. In the context of CBE, the access issue therefore leads to the problem of stakeholder legitimacy. The idea of an effective political authority to secure a wellordered society does play a part as a precondition for the political contract as it essentially is the result of such a contract. In Rawls the wellordered society is assumed. But applied to the domain of business ethics, such a corresponding assumption would render the argument utterly irrelevant to business practice. If we were to restrict the domain of business ethics to matters that are regulated by effective political authority only, a very substantial part of typical business ethics questions would have to be left out. A cross-family comparison on the exit option leads to the following picture: a classical theorist like Locke laconically states that people who cannot agree with a certain political regime are always still free to move to the untouched plains of America. And we saw that Rawls avoids the question of exit by stipulating society as a closed system. However, with respect to the defining questions of business ethics the exit problem is more complicated. It is true that individuals are formally free to leave an organization if they disagree with its working climate. But such exercise of the exit option involves costs that effectively limit the formal possibility to exit. Not every employee can change her employer from one day to the next. Similarly, stakeholders which can only withdraw from unwelcome effects of economic activity are not always materially free to leave. A case in point would be people living in

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the vicinity of an expanding airport, who are exposed to ever greater noise levels. The exitoption, while certainly not impossible in the circumstances of business ethics, may carry a certain price. It follows therefore that the exit option will play a far more central role in CBE than it ever did in the two earlier families of contract theories.

Conclusion In this article we have sought to draw attention to two crucial shortcomings that can be discerned in the present state of CBE. The social contract model forms a good framework by which some of the present fragmentation in theory building can be remedied. But in order to make any progress with this model, it is necessary to acquire a better insight into the working and presuppositions of the contract-argument. A comparative analysis of the manner in which the contract model was applied in two more established domains, political authority and social justice, has made clear that the contract model always works within certain application conditions. These boundary conditions arise from the theoretical suppositions, the characteristics of the domain and the task set for the theory. This requires, above all, a better insight into the proper function of the contract model. As to the implications for future contractarian theories of business ethics, we have made the case for the social contract model as a foundation for norms of corporate morality. We have also argued for a self-disciplined use of the contract model, taking into account its external and internal logic. While the model can be employed in a wide variety of ways, it should not aspire beyond the task the model can adequately support. Therefore, the contract model should restrict itself to a relatively formal argument, and not be tempted to prescribe substantive norms for corporate morality. On the other hand, the contract model only makes sense if it is used in a truly argumentative fashion, and not just as a device for stipulating norms. A balanced use of

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the contract model requires that the model should be adequately adapted to the characteristics and suppositions of the domain of business ethics. This means, among other things, that we should be clear what sort of aims a theory of business ethics should fulfil and what theoretical assumptions need to be made to get to an adequate representation of the defining problems of business ethics. Only if the contract argument is set up in accordance with these conditions will it help us to shape our intuitions about corporate morality.

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