Business

Published on October 31st, 2009 | by Steve Savage

23

Are Large, For-Profit Corporations Intrinsically Less Ethical?

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In the comment streams on my blog posts there is a recurrent theme from one segment of the respondents – they have a deep distrust in the large companies that are involved in modern agricultural technology.  They don’t believe these companies will behave ethically because they are for profit entities “only answerable to their shareholders.”   

I’d like to speak directly to this as a long-time Ag industry insider whose experience does not support these suspicions. I know that some will dismiss this perspective assuming I am biased, but one has to balance potential for bias with actually having first-hand experience from which to speak.  Over the last 32 years I’ve work for or with most of the companies, large and small, that provide agricultural technologies.  Fourteen of those years have been as an independent consultant so I get to know what is going on inside of many companies in a given year.  I have still only had direct knowledge of a subset of what happens, but in all of that exposure I’ve never witnessed an unethical decision or action – not even the consideration of one.  I’ve seen certain decisions that were short-sighted.  I’ve sometimes seen decision-making processes that are more driven by fear than by opportunity.  I’ve seen missed opportunities because vision was lacking.  I’ve occasionally seen failures to take advantage of synergies that could have been realized between divisions of large organizations. I’ve seen problems, but I believe that some level of dysfunction is inevitable in any organization involving people.  Still, unethical behavior isn’t something I’ve seen so I disagree that it is automatically likely just because of the characteristics of the company.  

On balance I’ve also seen these organizations, large and small, frequently make important contributions to society in terms of the productivity and safety of our food supply.  I’ve seen these companies continue to do that in an environment of constant activist attack and very limited public understanding because so few people farm.

Real Examples of Ethical Lapses

Of course unethical things have occurred in the history of the food and farming industry.  There are definitely examples – but they trace back to particularly unethical individuals and are not linked to scale or to a particular kind of technology (as is often alleged).  For instance, back in the 1970s the rules for Organic certification had to be worked out because there was widespread fraud even in that tiny market.  The melamine milk scandal in China was epic.  The Peanut Corporation of America stands out on the spectrum of unethical for knowingly shipping Salmonella and Aflatoxin contaminated nuts to some of its hundreds of customers.  

The Case of “Organic, Not”

There was a notorious, recent fraud case in the Organic industry – a realm that my commenters may believe to be more ethical.  There have been several small organic fertilizer companies that were caught selling liquid fertilizers supposedly made from fish and feathers that were actually spiked with synthetic ammonium sulfate.  The story has actually been extensively covered in the Sacramento Bee and by my favorite produce industry blogger, The Perishable Pundit.  It turns out that much of the Organic produce sold over the past several years didn’t really qualify and technically speaking all those farms should have to go through another 3 year transition to be strictly Organic according to the rules.  In reality, no one was hurt by this (to a plant, nitrogen is nitrogen) except that the consumers and farmers were paying a substantial premium and the fertilizer companies were pocketing the dough.  I’m not saying the Organic industry is any more or less ethical than others, this is just one example.

Reasons Big Companies Might Actually Behave More Ethically

So, we see that ethical lapses are something that is associated with certain individuals independent of their type of business or the scale of their company.  In fact, large publically held corporations are under more intense scrutiny by shareholders, NGOs, regulators, and activists, not to mention lawyers who are always attracted to the “deep pockets.”  I would argue that these companies people love to hate, have less, not more, potential for unethical activity.  People are people, but its not like we don’t have some checks and balances in our society.  I know some people believe that there is something intrinsically unethical about making a profit (I’ll address that in the next post), but I’m not quite sure how they imagine to have a functioning modern society without for-profit entities.  

“What About Patents?”

I know many people think it is intrinsically unethical to patent a specific variety of plant or a certain gene, but their argument is with a broader principle.  For one thing, plants could be patented before there was ever biotech.  The patent system was designed to encourage investment through provision of a temporary “monopoly” while driving innovation through the requirement that the patent “teach.”  It is sometimes not a pretty process, but overall it works and has served us well.  Potential for patent coverage is encouraging investment in alternative energy and other conservation technologies so we still need the system.  

The Role of Myths

I think some of the “unethical” reputation comes from Urban Myths.  There was one that emerged last June and lead to a huge spike in Google Searches for “Potatoes and flu.”  The story began with an article on a site called Macedonia Online.  It apparently (the link is now blank) said that Russian scientists had given a secret report to Putin showing that the reason people were dying from the H1N1 flu was that they were exposed to an enzyme from GMO potatoes.  

OK, is it just me, or is there something intrinsically fishy about that story?  Wouldn’t an adult want to check on that one before spreading it around? Apparently not! you can still find site after site breathlessly repeating this myth in full conspiratorial splendor – “McDonalds is killing us!”  

The reason I can easily dismiss this as a myth is that there don’t happen to be commercial, GMO potatoes of any kind in the markets where people have been dying (e.g. Mexico, the US, Canada...) and the specific trait they cited, resistance to Potato Virus X, has only ever been experimental.  Potatoes are not grown from seed (they are cloned = vegetatively propagated) so the trait could not have “escaped and contaminated all the world’s potatoes.”  Yet I fully expect this “event” to make its way into the lexicon of anti-GMO myths and many innocent folks will be frightened by it and further lose their trust in the companies that actually help get the world fed.  Hm, what are the ethics of being a naive Blogger who facilitates that process? 

So if you have a non-mythical example of unethical activity, please share it.

You are welcome to comment on this post or to email me a feedback.sdsavage@gmail.com

Oragami Dollar Image from cmpalmer

 


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About the Author

Born in Denver, now living near San Diego. Agricultural scientist for 30+ years with a Ph.D. in Plant Pathology. Have worked for Colorado State University, DuPont and Mycogen and for the last 13 years consulting for all sorts or companies, universities and grower groups. Experience in biological control, natural products, synthetic chemicals, genetics, GMOs and agronomic practices. Have given multiple invited talks on the interaction between agriculture and climate change (both ways)



  • The role of myths about the horrors of GMOs is particularly frustrating to me. In the past week we saw a story about how an artificially inserted virus resistance trait in squash was actually selected against when it outcrossed into wild relatives turn into: GMO squash, another failure of genetic engineering.

    How do we combat those myths? They’re quickly picked up and retold by sites across the web all linking to each other as sources giving a false sense of certainty that can usually be traced back to either misreading of real data or (as in the case with the potatoes and swine flu) an original story with no sources what-so-ever.

  • Mary

    Did you hear about the organic scandal in the UK? Organic corp was buying produce and repackaging it as organic–for years.

    http://www.guardian.co.uk/environment/2009/sep/26/organics-fooddrinks

  • James,
    I’m not sure how we do it, but you and I both seem to be doing out little part. I really like your blog – glad to know about it. Pam Ronald is out there working on this as well. I’m trying to talk more people who actually know about agriculture to join the “bloggosphere”

    For others, James’ site is http://www.jamesandthegiantcorn.com

  • Mary,
    Thanks for that link. I had not been aware of it.

    I think it is a great thing that there are people who are willing to pay more for what they believe to be noble reasons (safety, environment…). I just wish there was a good system to tell them which food to buy to achieve that goal. Unfortunately even legitimate Organic is not as good a thing as so many people believe.

  • Mary

    Sure. I pay more for local produce to support farmers in my community for a number of reasons. But as I said to my housemate–I don’t have any evidence that this farmer is any more clean/healthy/ethical/sustainable/etc than the guy who runs the produce department at my supermarket. In fact, I used to know a guy who was produce manager at my local supermarket and he was one of the most trustworthy humans I’ve ever known.

    I’ve recently discovered both Steve and James via Biofortified. I was combatting myths by myself for a long time on the blogs, and I feel like I found my community 🙂 I’m glad to know y’all are around.

  • Mary,
    I just discovered Biofortified today myself. Good stuff.

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  • Steve,

    Glad you like it! I’ve only gotten the hang of doing regular updates in the past couple of months. I also found your work through biofortified’s link yesterday to your post on anti-science forces across the political spectrum. Great piece, and I couldn’t believe I’d never come across this site before.

    Mary,

    I think one of the best thing Biofortified has done so far is to start connecting some of the previously isolated voices advocating science-based sustainability in agriculture. As the foodie blogs (and dozens of other examples) show, interconnected networks can be a lot more effective than individuals.

  • Speaking for myself, I think the question of whether a large, for-profit institution can be ethical depends on one factor: conflict of interest. A company will do what’s in its best interest, even if that is at odds with science, social good, even long-term catastrophic damage to humanity. This is what we see with the climate change “debate” and the lies that the corporate world has been perpetuating. I actually don’t see how these companies cannot be held accountable for their crimes against humanity.

  • James,

    I think you are on to something about a network. I’m the 54 year old guy who has barely figured out how to put the tweet button on my posts, so I’m not the one to figure this out. My son has a web company so I might ask his advice about whether we should do a pbwiki or what, but at the very least we could start emailing each other when we make posts. No obligation to link or anything

    What does everyone think?

  • Stone 1343,
    As a consultant I live every day with the issue of “conflict of interest.” The trick is that everyone has them.

    As for “lies that the corporate world have been perpetuating” that is a pretty broad brush assertion. I’m not saying there are not companies saying these things, but I would point out that there are a lot of major companies who are much more on-board with the climate change issue than the FOX NEWS driven segment of the public. If you are concerned about climate change, there are a lot of companies that are your allies. Don’t write them all off. Each individual also needs to do their part – we have our own conflicts of interest.

  • Mary

    I’m looking for a science bat signal–like Pharyngula, but not having to wait for PZ to do it. That worked GREAT on the Biofortified competition. It’s not just our own posts, but egregious stuff elsewhere that should be addressed. But I’m struggling with which sites to bother doing that.

    I focus a lot on political blogs and larger sites (generally not small personal blogs) because there people are trying to influence larger readership. But I’m open to strategy discussions.

    • trueindigo

      I know this was all posted a long time ago, but if anyone is still listening to the comments, I would suggest you try to get your information into blogs with high readership of health-minded mothers, particularly stay at-home-moms and single moms, who are on tighter budgets than 2-income families. Many of us take our responsibilies to purchase and prepare healthy food for our families very seriously, and we have a huge say in how food dollars are spent. We experience tremendous pressure from the various fear merchants who want our money. I have been relieved to learn that there are so many things I DON”T need to be afraid of, and many different ways to help the environment besides organic agriculture. The friends I have told are also quite relieved. Anyway, just a suggestion for another target audience, many of whom are probably reading homemaking blogs rather than political blogs.

  • I imagine the folks at Biofortified also would be interested in anything we came up with, since increasing dialog and combating misinformation definitely falls into their mission statement. Probably also Matt at TheScientistGardener.

    I’m not sure what the most beneficial approach would be… this isn’t my field of expertise either.

  • I find it quite curious that you choose to not add my comment.

    This is what I received on your website [this is not the full comment]

    S Trend said on November 1st, 2009 at 2:13 am
    Your comment is awaiting moderation.
    WHERE ARE THE MICROORGANISMS FOR BIOLOGICAL PRODUCTS FOUND?
    Biotechnology companies have made very public just where they search for these microorganisms (novel); in soil, plants, plant roots, lichen, leaves and/or it’s litter, mulch and other decaying organic matter, fruit, bird feathers, dead insects, lake beds, forests, dunes and ocean caves, animals from terrestrial sources, marine sources (sponges, sea urchins, etc.) insects of all kinds, rain forests, jungles, dry creek beds, orchards, farm fields, and gardens. They have published they have microorganisms from New Zealand, the Amazon, Mexico, Honduras, and Micronesia to name just a few, and this is only what has been published.
    WHAT DOES THIS HAVE TO DO WITH OUR FOOD AND OUR SAFETY?
    I find it most disturbing, given the numerous outbreaks of e-coli and salmonella, that the EPA’s, Biopesticides and Pollution Prevention Division preprinted Form; 8570-6 states:
    “After fermentation and prior to further processing, each batch must be tested for the following microbial contaminants and have levels below those listed.”
    # E. coli Coliform Bacteria
    # Salmonella
    # Shigella
    # Staphylococci
    # Vibrio
    # Yeast
    # Mold

  • S Trend,
    You are right about the testing requirements for biopesticides (but that is something different from biotech crops). I used to work at the biocontrol company, Mycogen, and we had to check for those potential contaminants in every batch of fermented biopesticides (Bt-based insecticides). This had nothing to do with the exotic source of the original Bt strain but with fully local sources. We actually had the most contamination problem with the organism used to make Yogurt – it wasn’t a danger but it messed up our spray-dried formulation.

    You are also right that people have looked all over the place for the microbes – particularly for new Bt strains. I remember I was skiing with a guy from Abbot labs and I exposed some dirt because the snow depth wasn’t that great. He quickly took out a little vial and collected a sample.

    Biopesticides like Bt are not related to biotechnology in the sense of GMO crops. They are widely used in Organic crops and to some extent in conventional. Its a logical thing to test to see if the batch got contaminated. I know we always ran those tests because we had to document that for EPA. We also had to test for “exo-toxin” which is something that Bt can make under certain circumstances and which isn’t safe for humans like the main “endo-toxin” that makes Bt work against insects. I don’t know of a situation where any food poisoning incidents were linked to biopesticides. There was an isolated report of allergic reactions from farm workers picking in an Organic field. The Organic is actually more at risk from incompletely composted manure. The companies that make the biopesticides are relatively small with the exception of Novo in which case it is a small division of a large enzyme company. These are not the companies that have developed biotech crops.

    When a gene from Bt is inserted in a plant (as with cotton and corn) there are no longer these issues to do with human pathogens

    I hope that helps

  • Derek

    -So if you have a non-mythical example of unethical activity, please share it.-

    Ripped from the headlines:

    http://in.reuters.com/article/oilRpt/idINLT30489120091029

    Not just a corporation, but a conglomerate of corporations (European non-ferrous metals producers) state blatantly that economics trumps ethics. Period.

  • Derek,
    I guess I look at that as a slightly different problem. Still a problem, but more of one of competitively. If the European companies did not move off shore, someone else would go into that business in the low cost area and the European company would go out of business. The energy would still get used. If there was some way to protect the domestic market from that, then the European company would have lots of incentive to work on energy reductions – a good thing. However, if that is a highly international market, that wouldn’t really work

  • I’m sure there are any good entity within large and for-profit corporation. However, their system is built to make profit and profit, and not for greener reasons such protecting forests or wildlife.

    Ethical or not, it’s a second problem after profit or not. Corporation will seeks the first one and then try to reach the second one, if really succeed.

    What I’m really sure is, that big corporation will easy to achieve ethical practice if only they have reach the efficient level of operation.

  • Derek

    You know Steve against my better judgment I’m beginning to like you.

    I see it as the tighter the fist, the more slips through the cracks (in regard to the European non-ferrous metals producers).

    As ‘economy of scales’ kicked on in a big way (can’t get much bigger than world trade) it was a revolution not qualitatively un-like the agricultural revolution. Part of the baggage that came along with economy of scale (this pertains to the distaste for ‘big business’ in agriculture as well) was that competition is no longer between ‘neighbors’.

    Just as every organism has a ‘scale’ at which it functions (think of the scale at which termites function, or honey bees, or deer) so does our human interactions. In the past, with little (wind and water power being non-biogenic) more than biogenic sources of energy, mans economic interactions were limited. That part of our interactions we call economics (aka trade) were limited to a geographic range determined by horse power (literally).

    Perusing a map of Denmark shows a common scale to the layout of cities, less than 30km from one to the next and a network of roads making each city its own hub, this is because trade was determined by the distance possible (in a day) from one city (and back) by horse drawn cart. This scale has a history some 100 times greater than that of the current fossil fueled scale world trade (and hence ‘big’ corp.) functions at. I’m assuming 100 years since the development of this new ‘economy of scale’ society; and therefore 10000 years since agriculture with animal power (I’m leaving alone [right now] that entire range of ‘other’ systems employed by myriad cultures around the world not based wholly in agriculture).

    If a business must increase in scale in order to function at the ultimate level of world trade made possible by cheap high-energy density fuel, than that is the problem i have with big corporations; they are discounting the long term interest of people (at biogenic scale) for the profit available at world-trade (‘economy of scale’, fossil fuel) scale.

    Regardless of when, CHEAP fossil fuel must end; this is not a question of politics (opening nature reserves to drilling) or laissez-faire economics (supply/demand driving pricing to mobilize hard to reach oil), it is about physical limits on a finite sphere.

    Therefore; Big-Business is un-ethical from the standpoint of man functioning through perpetuity. Period. Big-Business is leveraging a finite resource to ‘squeeze’ those who would function at a scale closer to ‘sustainable’ (i realize bringing up this word carries a good deal of baggage that requires an entire rant all its own to defend, but what the hay).

    What say you to this ‘long-view’ of ethics and how it undermines your position of defending big-business?

  • Derek,
    Thanks, I think…
    I understand your cheap oil issue – it has definitely changed the course of history, but I don’t think it can explain all of the scale of human endeavors. The Roman Empire or the Chinese Empire were some extremely large, organized human endeavors long before oil. Interesting that you should bring up Delaware. I lived there for 7 years so I know about the little winding roads. It was a really confusing place to drive! But it is another example of cheap energy. Mr DuPont was able to tap into cheap hydro-power to begin his dynamite business.

    Some of your ideas sound a little bit like primitivism, and that has an appeal. I’m more on the realist side trying to figure out how to use the power of a large organization to do something good. We are in the middle of exactly such a project right now to do with truly sustainable farming.

    I think even dysfunctional organizations can enable good things. Consider the Roman Catholic Church (not a hero of mine). By creating one common language across Europe (Latin) they facilitated the possibility of the Renaissance and later the Enlightenment. Maybe you consider those to be bad things, but its not like the Dark Ages were a really fun time to be a human being for anyone but a tiny elite.

    Steve

  • Yes.

    When Good Companies Do Bad Things

    http://www.sciencedaily.com/releases/2009/11/091118143257.htm

    Seems the bigger and more successful a corporation is the more likely it is to tend away from ethical considerations.

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