Explaining the Libertarian: Corporate Responsibility
This is the second installation of the Explaining the Libertarian series, view the first here
Businesses should be held accountable for the bad things they do by both consumers and government, this is the belief of the libertarian. However, the areas in which each group is responsible differs and it is all too often not clear which group is responsible for what.
It is obvious that businesses often do very little policing of themselves, especially when there is no incentive to do so. Since this is the case, it is clear that they need external pressure to ensure they have good business practices. So where does the role of the consumer, and the role of the government begin and end in this matter? Let’s begin with government.
As stated in the first article of this series, libertarians believe that the government has two functions as it relates to businesses. First, businesses should be required to give full and accurate information to consumers on the products and services they consume, and second, that businesses are held fully accountable for any negligent actions. This ensures that businesses are allowed to operate in a manner that is best suited to each individual business’s needs, provides the consumer with access to any goods they may want, complete with all of the information they need to make an informed decision, and gives businesses an incentive to do right or else face unrestricted legal action from both the government and the infringed-upon. Beyond requiring information on products and services and enforcing accountability, the rest falls on the shoulders of the consumer.
In order for a business to place their product or service for sale on the market, they would have to provide full information about what their product is intended for, and any hazards associated with using their product. When a consumer buys something from a business, they are basically entering into a contract, that being they are agreeing to buy whatever it may be in the condition that the business describes the product as. So long as you have been given the option to be informed about your purchase and use of a product, by purchasing the product, you agree to release the business that made the product from any liability associated with the use of their product, so long as the business made available full information on the intended usage and dangers of their product. Say you want to buy medicine for a headache, so you go to the store and buy a medicine that you approve of based on cost, intended use, and side-effects. If the business has made available information that states you may get rectal bleeding from taking their product, then you assume the risks of using the product since you agreed to purchase it knowing that problem could happen. Now say the business had not made that information available, both you and the government could pursue legal action against the company and receive a settlement. The fines and injury awards would be enough to ensure that most companies are thorough in their actions to inform consumers about their products.
Aside from being an informed consumer, there must also be consumer activists. These are people and groups who publicly protest and boycott businesses and products for various reasons. Say that a restaurant treats a disabled child and their family badly because of their disability. On instinct, many people would call for a government of some sort to pass laws requiring that restaurants such as this give this boy the same service as it would anyone else. Making this restaurant treat people equally in a case like this is not the role of the government, but of the consumer.
Why is this the job of the consumer? Ultimately businesses live or die because of consumer preference. In our current system, it is not always this way because of special treatment from the government. Without the special treatment, a business can only succeed by delivering a product or service in a manner that people like. When a business acts in a way such as the above mentioned scenario, it is the duty of consumers to boycott and protest that business. If an act is really egregious to someone, they should have no problem refusing to do business with a particular establishment, and to urge their friends, family, and others to do the same. Organizing people to confront and boycott businesses that do things people don’t agree with is the most effective way to get results. No business likes bad PR, and if they are hurt enough financially they will either collapse or change their ways. One last thing to add, it is better to see businesses discriminate out in the open in order to better target them, than to have that discrimination hidden away.
So what about businesses that just can’t protect the consumer, and must have the government step in? This mindset is very rampant, but does not hold water. The best example is airport security, where government has stepped in to take control. Obviously the airline industry has failed to protect its passengers, seeing as how they allowed terrorists to take over their planes and crash them, right? When you consider that prior to this, the government prevented the airline companies from allowing their employees to carry weapons on board planes, they pretty much tied their hands and helped the terrorists out with those regulations. Going back to what has already been stated, if a business is allowed to conduct its operations in a way that is best suited for their needs and is held accountable for their negligence, there will be relatively few problems. Each airline could have its own safety practices, and consumers are free to choose which airline is best for them based on how far the airline goes to protect its passengers. The airlines that do bad will fold because no one will be willing to pay them for their poor services, and any time an airline is negligent, they will have to pay for it through the nose.
One last example here are traveling carnivals. Often these rides are thrown up and taken down without any inspection. The role of government here would be to ensure that the carnival provides information to its patrons about the state of their attractions. This would involve requiring that notices be posted about whether or not an attraction has been inspected, how old it is, any past issues it may have had, and how many times it has been dis-assembled and re-assembled. Notice that this type of regulation does not restrict either the business or consumer, it only provides the grounds for a consumer to make an educated decision. As for the consumer’s role here, it is their job to make judgments about how safe a carnival is, and alert other consumers about its track record and shortcomings. It should be obvious by now that consumer activism requires some effort, but not as much as you might think. Accomplishing these tasks is as simple as requesting information from the carnival, which it would be required to disclose fully, and then bring that information to local news outlets, as well as spread this information through word of mouth. If people decide that the carnival is not doing something right, they will abstain from anything they deem unsafe due to their new-found knowledge, and the carnival will lose money and customers until it makes sufficient changes. Imagine how many people would pause and think for a moment if they were to see a sign on the ride they are about to get on that says the ride has not been inspected and may not be safe.
Some may see this as a contradiction to libertarian values, as we do not advocate the use of force against others. We are however permitted to use force in the defense of others. Observing this, this permits government to force businesses to provide full and accurate information about their products in the defense of consumers. If a business knowingly sells a service or product to a consumer that can harm them, but does not disclose this, the business is in effect depriving the consumer of their liberty.
It all comes down to holding businesses accountable and promoting consumer knowledge. Rather than restrict businesses and consumers from doing business with one another, the libertarian prefers to allow the consumer to make the decision as to whether or not a transaction should take place. Remember, knowledge is power, use it rather than force to help make the world a better place.