Monsanto’s Business Model: Ethically Less than the Sum of its Parts

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, but just because the net result of their business practices is bad, namely an unhealthy domination of the seed industry.

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About Chris MacDonald

I'm a philosopher who teaches at Ryerson University's Ted Rogers School of Management in Toronto, Canada. Most of my scholarly research is on business ethics and healthcare ethics.
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7 Responses to Monsanto’s Business Model: Ethically Less than the Sum of its Parts

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