Social contract theory states that people in society live together in accordance with an agreement that establishes moral and political rules of conduct. Some people believe that if we live by a social contract, we can live morally by our own choice and not because a divine being demands it. Elements of the social contract are often codified in legislation, even if they are understood implicitly and almost globally. In the United States, for example, there are anti-murder laws that further classify crime by gravity: first- and second-degree murder, murder, manslaughter, and premeditated murder. The social contract is an essential element of democracy. In a democratic nation, government is supposed to be organized to serve the will of its citizens and, therefore, citizens are obliged to follow the laws and customs of the nation as long as the government fulfills its mandate and the legislation is considered to be in conformity with the social contract. The basic assumption of social contract theory is the idea that societies and cultures evolve on the basis of a normally implicit agreement between individuals about the type of environment in which they want to live. On the basis of this assumption, the individual is obliged to behave in accordance with the rules that apply to the societies and cultures in which he lives. Social contract theory is a controversial concept in the study of business ethics because it is associated with broader political issues that many people disagree with.

People who strongly believe in capitalism`s laissez-faire model generally argue that corporations benefit society by creating wealth, providing services, and employing people. According to this view, companies can do the most good when they focus on making profits and not on difficult and subjective ethical concerns. People who believe in the concept of corporate social responsibility argue that companies should receive significant benefits from society and reciprocate by acting in the common interest. At the time of publication, there are three dominant theories of business ethics. The shareholder theory states that a company has no ethical obligation to the company other than to make the greatest possible profit to its shareholders or owners within the limits of business ethics and the law. Stakeholder theory states that a company is morally committed to all parties involved in the outcome of its business, including employees, the community and the environment, and shareholders. Social contract theory states that all companies operate under an unwritten contract with the company as a whole, in which the company allows the company to conduct activities on the condition that its actions benefit the company. The philosopher Jean-Jacques Rousseau popularized the idea of the social contract in the 1700s, but it is equally applicable today. As members of a society, we accept the social contract – we cooperate with each other and obey the laws of society.

We also give up certain freedoms because we want the protection that society can offer. The founders of the United States believed that the social contract made citizens powerful and gave them a collective voice in their government. The concepts behind the theory of the social contract come from ancient Greek philosophers: Socrates used an argument similar to the theory to explain to Krito why he must submit to prison and the death penalty in accordance with the law. The philosopher Thomas Hobbes expanded the theory of social contracts during the Enlightenment; Since that time, philosophers from different perspectives have contributed to our understanding of the theory. Social contracts can be explicit, like laws, or implicit, like .B. Raise your hand in class to speak. The U.S. Constitution is often cited as an explicit example of part of the American social contract.

It determines what the government can and cannot do. People who choose to live in America accept to be governed by the moral and political obligations set forth in the social contract of the Constitution. Social contract theory is an old philosophical idea that asserts that an individual`s ethical and political obligations relate to an agreement he has with all other individuals within a society. The agreement may be in writing, as in the form of laws, or it may be an implied agreement, a tacit or unwritten agreement of social norms and customs. In economics, social contract theory encompasses the obligations that companies of all sizes owe to the communities in which they operate and to the world as a whole. .