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Summary Ethics & Future of Business - all you need to know!
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Session 1: Moral & Ethics.Lecture 12 sept. 2022
EXAM: 4 MC – elke lecture //4 Defintions – elke lecture // 1 open casus
Morality, ethics, and ethical theory
- Morality is humans’ ability to distinguish between right and wrong.
- Ethics is the systematic study of morality.
- Ethics theories are principles and rules that determine right and wrong in different situations. Today we
focus on normative ethics, i.e. the study of how we ought to behave.
Ethics
Ethics pertains to an on-going discussion about morality with a very long history. Ethics typically examines right and
wrong from the perspective of a human being (anthropocentric), instead of, for instance, nature. Key questions
include:
- What kind of moral principles should guide our actions?
- What kind of aims should we have?
Ethics is not just theorization of morals, but the aim is also to affect practice. Ethical theories can give contradictory
solutions to the same problem.
Business ethics
Business ethics is the study of business situations, activities, and decisions where issues of
right and wrong are addressed. Challenges are:
1. Comprehensive: Addresses challenging questions at individual, organizational, and societal levels.
2. Cross-disciplinary: Philosophy, management, economics, political science, earth system, sciences, etc.
3. Abstract nature: It can be difficult to recognize the practical implications of ethical theories.
4. Critical thinking: You should not take the theories and related practices as given.
5. Experience: Experience in business can be helpful.
Do we need ethics when we have the law?
In society, morality is the foundation of the law. Law and ethics are partly overlapping. Nonetheless:
• The law does not cover all ethical issues (e.g. cheating on your partner);
• Not all legal issues are ethical (e.g. driving on the right side of the road);
• Law and ethics can involve contradictions (e.g. apartheid).
The road from unethical to illegal is short and slippery. Companies can operate in locations with lacking legal
infrastructure to ‘run away’ from ethical responsibilities.
Normative ethical theories
Normative ethical theories state what’s right and wrong. These theories pertain to the ethical actions that you must
perform. Personal principles fuel these actions and eventually lead to outcomes. There are 2 theories for each of
these interactions.
,Consequential based: Ethical Egoism & Utilitarianism
Theory 1: Ethical Egoism
Usually not considered as an ethical theory, although this view is very influential in economics. An action is morally
right if the decision-maker freely decides in order to pursue their (short- term) desires or their (long-term) interests.
Authors in relation to this perspective are Thomas Hobbes, Adam Smith, and Ayn Rand.
The influence of egoism is related to the perception of ideal markets and Adam Smith’s invisible hand: “It is not from
the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard of their
own interest.”
Problems with ethical egoism
This perspective is inconsistent as it condones blatant immoral wrongs, since anything goas- violence against the
vulnerable, theft, even murder-as long as the egoist’s needs are served. Thus, a moral view based on short term
satisfaction of needs is contradictory with our moral principles.
Enlightened egoism is a variant that helps to solve this problem; enlightened egoism focuses on the meeting of long-
term human interests. It does not take a stance on the nature of the interests and desires of individuals, which can
still lead to problems due to conflicting interests. Although taking care of your needs and interests is morally
important, the theory need to be complemented by more developed ethical theories.
Theory 2: Utilitarianism
This theory states that an act is morally right if it results in the greatest amount of good to the greatest amount of
people affected by the action. Important authors are Jeremy Bentham and John Stuart Mill. Utilitarianisms is very
influential in normative economics, which is related to the egoistic view of humans in economics.
Egoism in economics tends to function within a utilitarian societal moral theory. Acting in accordance to this theory
means assessing whether a single act is right or wrong by analyzing the amount of common good it produces. Rules
based on this theory focus on creating rules that produce the most common good. In practice, utilitarianism
becomes an analysis of advantages and disadvantages, a cost/benefit analysis.
Problems of utilitarianism
A utilitarian good is subjective, context-dependent, and difficult to compare between people. Utilitarianism runs into
difficulties in questions related to the just distribution of wealth. It can also be contradictory with the idea of
respecting basic rights; maximizing is generally speaking not the best approach to addressing all values given that is
does not include the idea of reciprocity (mutual benefit).
Principle based: Ethics of duties + Right & Justice
Theory 3: Ethics of duties
Most famous author behind this theory is Immanuel Kant. Central concepts to Kant’s moral philosophy are duty,
consistency, dignity, and universality. Duties do not mean mechanistically following rules, but they involve human’s
ability to develop moral law and moral rules. Kant’s deontological theory develops principles or categorical
imperatives to guide our actions. The other concepts include:
Consistency
- Categorical imperative: ”act according to that maxim by which you can at the same time will that it should
become universal law”.
- Main idea: What is right for one is right for all, i.e. the rules you apply to yourself should be applicable to
others.
Dignity:
- Categorical imperative: “act so that you treat humanity, whether in your own person or in that of another,
always as an end and never as a means only”.
- Main idea: A human being is in itself a valuable autonomical being, and not as a means to an end or a tool.
Universality:
- Categorical imperative: "act only so that the will through its maxims could regard itself at the same time as
universally lawgiving.”
- Main idea: Check that the principle is acceptable to every human being (e.g. tomorrow’s newspaper test).
Problems with ethics of duties
Ethics of duties is a rather difficult and abstract theory; morality can be seen as a heavy burden to bear. Morality is
founded perhaps too strictly on the use of reason. Moreover, ethics of duties undervalues outcomes of actions.
, Theory 4: Rights & justice
Natural (human) rights are certain basic, important, inalienable entitlements that should be respected and protected
in every single situation. These are based in human dignity and lead to a duty for others to protect, respect, and
support them. Main natural rights are: right to life, freedom, property, speech, privacy, conscience, and fair trial
among others. Central authors behind this theory are John Locke and John Rawls.
Rights-based thinking are a central part of Western political and ethical thought and the foundation of universal
human rights. Justice pertains to the simultaneous fair treatment of individuals in a given situation with the result
that everybody gets what they deserve. Key ideas dominating this theory are: procedural vs. distributive fairness;
veil of ignorance; social contract; system of basic liberties, judgement of society by the state of the least advantaged,
and equal opportunity.
Problems with rights of justice
Most lists of basic rights can be seen to be relatively arbitrary. Rights are criticized as being too Western and/or
neocolonial. Basic rights presuppose institutions that allow for recourse in case of breach. Furthermore, this theory
does not offer practical guidance in extreme situations.
Alternative perspectives on ethics
There are also other interesting perspectives on ethics:
Virtue ethics
- The central aim is not to fulfill duties or aim for the greatest good, but to lead a good life. Virtue ethics
focuses on the character of the individual decision-maker.
- Authors: Aristotle & Alasdair MacIntyre.
Feminist ethics
- Instead of abstract moral principles, feminist ethics emphasizes caring, empathy, and harmonious and
healthy social relationships.
- Authors: Carol Gilligan & Virginia Held.
Discourse ethics
- Discourse ethics focuses on solving ethical conflicts through democratic dialogue and providing a process of
norm generation.
- Author: Jürgen Habermas.
Postmodern ethics
- Moving away from rationality, postmodern ethics focuses on emotional moral impulses towards others, and
focuses on individual questioning of universal rules.
- Author: Zygmunt Bauman & Emmanuel Levinas.
Business Pragmatism in relation to Philosophy
Bazerman (2020) guidelines for creating more value:’
1. Compare alternatives: Allows us to implement utilitarianism.
2. Look for tradeoffs: Allows us to consider on what each of values in negotiations.
3. See time as a scarce resource: Allows us to prioritize and focus our efforts.
4. Integrate your ethical self: Allows us to identify opportunities for improvement.
5. Design the choice architecture: Allows us to make positive value creation easier
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