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Ethics and the Future of Business summary/notes of lectures 1-4

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Universiteit Van Amsterdam (UvA)

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Business Ethics

A summary and notes of lecture 1, 2, 3 and 4 of the general part of the course Ethics and the Future of Business. Got a 9.4 (out of 10.0) on the exam for Ethics and the Future of Business with this summary.

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Ethics & Future of Business Lectures

Lecture 1: Morals & Ethics

1. Introduction to business ethics
Morality = human’s ability to distinguish between right and wrong.
Ethics = the systematic study of morality → how should we analyze what is right and wrong?
Ethical theories = principles and rules that determine right and wrong in different situations.
Normative ethics = the study of how we ought to behave.

How do we need to behave?

Ethics
- Ethics typically examines right and wrong from the perspective of a human being
(anthropocentric), instead of, for instance, nature.
- Key questions include:
1. What kind of moral principles should guide our actions?
2. What kind of aims should we have?
- Ethics is not just theorization of morals, but the aim is to affect practice.
- Ethical theories can give contradictory solutions to the same problem.

Business ethics
This is the study of business situations, activities, and decisions where issues of right and wrong are
addressed. In business ethics the following challenges can be seen:
- Comprehensive: addresses challenging questions at individual, organizational and societal
levels.
- Cross-disciplinary: philosophy, management, economics, political science, earth system
sciences…
- Abstract nature: it can be difficult to recognize the practical implications of ethical theories.
- Critical thinking: you should not take the theories and related practices as given.
- Experience: experience in business can be helpful.

Do we need ethics when we have the law?
- In society, morality is the foundation of law.
- Law and ethics are partly overlapping. Nonetheless:
o The law does not cover all the ethical issues (e.g., cheating on your partner).

1

, o Not all legal issues are ethical (e.g., driving on the right side of the road).
o Law and ethics can involve contradictions (e.g., Apartheid in South-Africa).
- The road from unethical to illegal is short and slippery.
- Companies can operate in locations with lacking legal infrastructure.
o ‘What we did was legal’, stakeholders and society most of the time expect more
from a company than only following the law.
o Do not only think about things as ‘legal’ but also as ‘ethical’ and ‘human’.

Moral machine (reading Awad et al., 2018)
The moral machine shows us our preferences in sparing lives in situations where an autonomous car
will either kill one or the other group of people (and dogs/cats). This study shows the following
results:

2

,2. Normative ethical theories

How should we behave?

Ethical egoism and utilitarianism are consequentialist theories, thinking about the consequences of
our actions.
Ethics of duties and rights and justice are about principles that guide our actions.

Perspective 1: Ethical egoism
- Usually not considered as an ethical theory, although this view is very influential in
economics.
- Individuals are self-interested, rational, and essentially try to maximize their own interest.
- An action is morally right if the decision-maker freely decides in order to pursue either
(short-term) desires or their (long-term) interests.
- Authors: Thomas Hobbes (1588-1679), Adam Smith (1723-1790), popularized by Ayn Rand
(1905-1982).
- The influence of egoism is related to the perception of ideal markets and (a limited reading
of) Adam Smith’s ‘invisible hand. Through individual self-interest and freedom of production
as well as consumption, the best interest of society, as a whole, is fulfilled.
o ‘It is not from the benevolence of the butcher, the brewer, or the baker that we
expect our dinner, but from their regard to their own interest.’ (Smith, 1776).
- Smith’s invisible hand is part of laissez-faire (‘let do/let go’) approach to the market. This
means that it is assumed that the market will find its equilibrium without government
intervention or other interventions forcing it into unnatural patterns.

Problems with ethical egoism:
- Inconsistent as it ‘condones blatant immoral wrongs, since ‘anything goes’-violence against
the vulnerable, theft, even murder – as long as the egoist’s needs are served (Crane et al.,
2019, 96).
- Thus, a moral view based on short term satisfaction of needs is contradictory with our moral
principles.
- Enlightened egoism focuses on the meeting of long-term human interests.
o 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 needs to
be complemented by more developed ethical theories.

3

, Ethical egoism and the self-driving car
- If an ethical egoist is buying a car, she/he would protect the people inside the car.
- If an ethical egoist is manufacturing the car, she/he would likely aim to serve egoist
customers to sell more cars.

Theory 2: Utilitarianism
- 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 (1748-1832) and John Stuart Mill (1806-1873).
- Utilitarianism 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.
- Act utilitarianism: whether a single act is right or wrong depends on the amount of common
good it produces.
- Rule utilitarianism: focuses 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
does not think about the background structures).
- Utilitarianism can be contradictory with the idea of respecting basic rights (e.g., would you
kill baby Hitler if you knew beforehand what he would cause?)
- Maximizing is generally speaking not the best approach to addressing all values.
- Utilitarianism does not include the idea of reciprocity (= wederkerigheid), it thinks about the
consequences and is not thinking in a relational/reciprocal type of way.

Utilitarianism and the self-driving car
- According to act utilitarianism, you should conduct a cost/benefit analysis of what causes
the most benefit or least harm in each situation. A utilitarian would aim to harm as few as
possible.
- According to rule utilitarianism, self-driving vehicles should minimize casualties. They should
be introduced only if they are likely to make driving in general safer.

Theory 3: Ethics of duties (= plichtethiek)
- Most famous author: Immanuel Kant (1724-1804).
- 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. Emphasize on ourselves as moral decision makers, we
should not take rules as they are but think about these rules in terms of their implications.

4

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