The Business Ethics Blog

(By Chris MacDonald)

Chris MacDonald

Chris MacDonald
Location
Canada
Birthday
January 12
Bio
I'm a philosophy professor who specializes in business ethics. My blog (businessethicsblog.com) is about business ethics. I also blog occasionally at researchethicsblog.com, biotechethicsblog.com, and food-ethics.com.

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FEBRUARY 6, 2010 12:05PM

Monsanto's Business: Ethically Less Than Sum of its Parts

Rate: 5 Flag

Monsanto is widely considered to be Public Enemy #1 by critics of the biotech industry. But most who've heard complaints about Monsanto don't know much more than what's contained in the single-sentence slogans. 

But if you're going to form an opinion, it's good to know a little more. As a start, here's a good story by Christopher Leonard, writing for the Associated Press (and coming to you via The Atlanta Journal-Constitution), Monsanto seed biz role revealed. I strongly recommend the whole article. But here's a taste:

Confidential contracts detailing Monsanto Co.'s business practices reveal how the world's biggest seed developer is squeezing competitors, controlling smaller seed companies and protecting its dominance over the multibillion-dollar market for genetically altered crops, an Associated Press investigation has found.
With Monsanto's patented genes being inserted into roughly 95 percent of all soybeans and 80 percent of all corn grown in the U.S., the company also is using its wide reach to control the ability of new biotech firms to get wide distribution for their products, according to a review of several Monsanto licensing agreements and dozens of interviews with seed industry participants, agriculture and legal experts....
Here's a particularly interesting bit:
Monsanto's business strategies and licensing agreements are being investigated by the U.S. Department of Justice and at least two state attorneys general, who are trying to determine if the practices violate U.S. antitrust laws....

At issue is how much power one company can have over seeds, the foundation of the world's food supply. Without stiff competition, Monsanto could raise its seed prices at will, which in turn could raise the cost of everything from animal feed to wheat bread and cookies....
This got me thinking: is Monsanto the Microsoft of the biotech world? How so?

Well, consider:
  • Like Microsoft, Monsanto makes a product that is increasingly part of the basic infrastructure.
  • Like Microsoft, it has a big enough market share to border on monopoly.
  • Like Microsoft, Monsanto's behaviour has been unseemly enough to make it a magnet for criticism, particularly criticism claiming that the company has too mcuh power.
  • And, like Microsoft, Monsanto just might be a candidate for a government-forced breakup.
But the problem with Monsanto, it seems to me (and maybe with Microsoft too), isn't in each individual action or even each practice, taken in isolation. The problem is actually an emergent feature of Monsanto's business activities, taken as a whole. Consider each of the individual business practices for which Monsanto is known:
  • Making seeds for plants with novel, useful traits available to farmers? Nothing wrong with that.
  • Licensing your technology to other companies that find it useful? Seems fine.
  • Attaching "strings" (contractual limits) to the use to which other companies put the technology they license from you? Sure!
  • Protecting your intellectual property rights — ones entrenched in law — against encroachment? What business wouldn't do that?

But a thousand perfectly ethical actions don't necessarily add up to a practice that is ethically OK. And the same principle applies from a legal point of view. So, maybe the point here is that Monsanto should be broken up. Not because they've necessarily done anything spectacularly unethical (for the sake of argument), but just because the net result of their business practices is bad, namely an unhealthy domination of the seed industry.

 

[This was originally published on my Biotech Ethics Blog, in December.] 

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Comments

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yeeesh it's going to take me a while to wrap my mind around the full consequences of this one...
Your conclusion is quite similar to the one that I come to abstractly in my article Rethinking Mega-Corporations, which basically suggests the idea that it is simply possible for a company to be “too big.” It's not just the issue of monopoly, but the issue that a healthy market should include a lot of players, and by that I mean a lot of human minds, independently operating, not networked under a single command structure. This is especially true of a market as important as food.

By the way, the argument you make is similar, too, to the one against cloning. On its face, cloning would seem benign and full of virtue. We could erradicate all sorts of known problems by its use. But it creates a fragility that comes from lack of option, from the notion that a single coordinated attack on one entity could bring down the entirety of all. Structurally a monopoly is not like a clone, in the sense that there are many clones and only one monopoly, but internally a monopoly is like a clone in that there is a harmonization of approach in order to serve that one organism, not to serve the community that the organization serves.
Kent:

Re cloning: are you talking about reproductive cloning? Or therapeutic cloning?

It sounds like you're worried about something like a genetic "monoculture," which would really only be a worry if reproductive cloning were carried out on a massive scale, using just one individual's DNA as the source for all the clones. Pretty unlikely.

Chris.
I saw the lecture by the famous Indian activist (some lady Shiva) some years ago at UC Berkley. Unlike Monsanto, Microsoft does not force governments to force their people to buy Microsoft. They are nothing alike.

Incidentally, "business ethics" is a contradiction in terms.
Rated.
Does anybody have information about the difference between a Monsanto crop and a heritage crop? Do you get more crop in the same acreage? Fewer pests? What are the selling points? What about soil depletion issues? What are the advantages and disadvantages of both kinds of seeds? In other words, why would any farmer choose to grow Monsanto seeds?
Thoth:

Citing one difference doesn't exactly gut my comparison. They're still similar in plenty of ways. But that difference, if true, (I can't verify your claim) would certainly be a significant one.

As for the contradiction in terms: that's an old (old) joke, and the idea behind it is of course false. To *seriously* say that "business ethics" is a contradiction would be an insult to every upstanding human being who happens to work in a business (i.e., most people). People act ethically in business quite frequently -- probably most of the time. The exceptions, of course, make the news. So people think business is unethical for the same reason they think air travel is unsafe.

Chris.
geezerchick:

There are a bunch of different genetic modifications in Monsanto's seeds. Some of them affect the plant's ability to resist Monsanto's own herbicides (so the herbicide will kill weeds without killing the crop). In other cases, the seeds are altered so that the plant gives off a natural pesticide (so that farmers can use less artificial pesticides).

More info here:
http://www.monsanto.com/products/seeds_traits.asp

Chris.
The movie The World According to Monsanto is an eye opener regarding Monsanto's business practices.

Monsanto actually sues small farmers who are not using Monsanto products but have crops growing next to other farmers who are using Monsanto. When the wind blows and some of the seeds get mixed up in the neighboring crops Monsanto sues the farmers for copyright infringement or stealing their product or some B.S. They force the small farmers to settle and pay large sums of money because they can't afford to defend the suits.

Thoth: Vandana Shiva is the person you are thinking about. She is great. I've seen a number of her lectures on the internet.
I did not want to "gut" anything. I rated the post. Yes, tens of thousands of farmers in India committed suicide because they went broke after they were forced to buy Monsanto seeds and that is a fact.

Unless the banks, Wall Street, insurance companies, etc, are not businesses, then business, at least in America, is not so ethical, is it?
Again, good post, rated.
Thoth:

Ah, ok. Thanks. I guess I took you too literally when you said the 2 companies were "nothing" alike.

The suicides story turned out to be false, as I recall. The same newspaper that reported that story took it back 2 days later:
http://www.biotechethics.ca/blog/2009/05/gm-crops-stir-indian-farmer-suicides-or.html

As for unethical businesses: yes, there are unethical businesses. Just as there are unsafe planes and immoral humans and unpatriotic citizens. But that's very different from there being a contradiction in terms. There are literally millions of businesses in America. Most of them don't make the news.

Chris.
Chris, for a healthy business ecology, the DNA of corporations needs diversity every bit as much as products do. I'm surprised if you disagree since it seems like the conclusion you came to above. The issues you raise, just for example, about ability to extort price are effectively consequences of too little competition. In a properly functioning market, it wouldn't happen.
Kent:

No no, I don't disagree about that at all. You said something about cloning. I assumed you meant actual biological cloning. That's why I asked if you meant reproductive cloning (for making babies) or therapeutic cloning (tissue cloning for medical purposes).

So, yes, absolutely, markets work best under conditions of diversity.

Chris.
Ah, yes, I meant reproductive cloning, like Dolly the sheep or of a prize-winning cow, not tissue cloning, which I don't see a downside to.
"At issue is how much power one company can have over seeds, the foundation of the world's food supply."

That's a pretty big issue, considering how much the government all subsidizes the food supply of corn as well, which in turn effects the whole world food market. Where I think have come to see the idea of, "Monsanto just might be a candidate for a government-forced breakup" is that it isn't in our "government's" best interest.

The government is corporate America at this point. The blending is becoming final and third way politics will take it to a whole new level. Decisions like Citizens United vs. FEC are a great smoke screen for politicians to use to distract the American populace from seeing the last 30 years of legislative and judicial rulings which have placed our interests in the hands of Corporate rights.

I think it will take a supreme act of informed consciousness on the part of Americans for corporations like this to be put back on a level playing field and/or reprimanded for potentially unethical behavior, I doubt anyone within the government is going to champion this cause.

If so, Kevin's law would be in affect by now and we would have an FDA which actually has some teeth, which means it wouldn't hire former employees of the corporate giants they are now entrusted to regulate.

Our government is a complete conflict of interest. It's on Americans to make the changes.