ABSTRACT
To say that the relationship between economics and business ethics has been antagonistic would be to risk enormous understatement. Perhaps the low point was reached in 1978, the year the Ford Motor Company lost the first of two important “Pinto” lawsuits, after having failed to issue a product recall to fix a known problem with the fuel tank in their vehicles that made them likely to explode in the event of a rear-end collision. During the trial it was discovered that the company had decided against a recall, based on the calculation that the cost of effecting the repairs was greater than the value of the anticipated loss of life (Birsch and Fielder 1994). Public outrage reached such a fever pitch that the State of Indiana decided to press criminal charges against Ford—a legal novelty at the time. To this day, the “Ford Pinto case” remains a staple of the business ethics curriculum, a seemingly uncontroversial example of a corporation putting the search for profit ahead of basic human decency. And yet that same year, Milton Friedman, recent recipient of the Nobel prize in economics, gave a public lecture in which he offered a spirited defense of Ford (Friedman 1978). He lamented the public fixation on the fact that it would have cost only $11 per vehicle to fix the fault. What if it had cost $1000? or $10,000 or $1,000,000? Should Ford have gone ahead and fixed it at any price? Obviously there is some point at which the repair would be too expensive—consumers would rather drive the unsafe vehicle than pay to have it modified. So the question is not really one of principle, Friedman argued, everyone agrees that there is some point at which doing the repair is not cost-effective. The only question was whether the number chosen by Ford is one that actually matched consumer preference.
