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Summary Literature Ethics and the Future of Business
This is a summary of al the literature for the course Ethics and the Future of Business, which is a part of the Business Administration Master (EMCI)
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Ethics and the future of businessWeek 1
101 Crane Chapter 3
Ethical judgements are part of our everyday lives → situations where values are in conflict
and we have to make a choice about what is right or wrong. We all have prior beliefs about
what is right or wrong that help us to decide what to do.
Coming to an ethical conclusion in business situations is more complex than most of the
situations where private individuals have to make ethical decisions. In business context there
is a need for decisions to be based on systematic rationale and widely understandable
argument, so that they can be defended, justified and explained to stakeholders.
Normative ethical theories = rules, guidelines, principles, and approaches that determine
right and wrong / code of conduct that all rational beings would adhere to → counterpoint is
descriptive ethical theory. Descriptive morality = code of conduct adopted by a particular
group or society.
Normative = ethical theories that aim to prescribe the morally correct way of acting.
Ethical absolutism = there are eternal, universally applicable moral principles → right and
wrong are objective qualities that can be rationally determined, irrespective of the
circumstances.
Ethical relativism = morality is context-dependent and subjective.
Ethical pluralism = accepts that we ought to recognize that incompatible values can be
equally legitimate and tolerate them as such.
Primary value of ethical theories → they help to rationalize, explain, and understand the
hunches or gut feelings we all have about what is right or wrong → they make it possible to
engage in a rational discourse between individuals whose moral values are different from
each other.
Religious teaching about ethics and normative ethical theory from philosophy both tend to
have the same aim when applied to business, namely how to decide what is the right thing to
do when faced with moral problems in commerce → two main differences between the
approaches:
- source of rules and principles → religions typically invoke a deity or an organized
system of belief as the source of determining right and wrong. philosophical theories
are based on the belief that human reason should drive ethics.
- consequences of morality and immorality → in religious teaching, there is an
important element of spiritual consequence for the decision-maker.
In Western societies, the ethical theories traditionally regarded as appropriate for application
to business contexts are based on philosophical thinking beginning with the Enlightenment in
the 18th century. They generally offer a certain rule or principle that one can apply to any
given situation- hence, they are absolutist in intention. These theories are normative
because they start with an assumption about the nature of the world, and more specific
assumptions about the nature of human beings. The main advantage is that they normally
provide us with a fairly unequivocal solution to ethical problems.
Division: consequentialist and principle-based theories. On the one hand, theories that base
moral judgement on the outcomes of a certain action (goal oriented → consequentialist) →
ethical egoism and utilitarianism. On the other hand, theories that base moral judgements on
the derivation of principles and the procedures by which they are arrived at (principle based
,→ prioritize what is right rather than what is desirable → deontological) → ethics of duties
and rights and justice.
Consequentialist theories:
- Ethical egoism
- Utilitarianism
Ethical egoism = theory that suggests that an action is morally right if in a given situation all
decision-makers freely decide to pursue either their desires or interests (Thomas Hobbes,
Ayn Rand). Adam Smith and Milton Friedman have been associated with egoism via their
defences of capitalism and the free market. It is important to distinguish egoism based on
desire from selfishness. Whereas the ego- ist can be moved by pity for others, the selfish
person is insensitive to the other. An important criticism of egoism based on desire is that it
ren- ders patently different approaches to life as being equivalent.
Weaknesses in egoist ethics;
- this theory works fine if there is a mechanism in society that makes sure that no
individual egoist pursues their own interests at other egoists' expense.
- some do not see ethical egoism as a moral theory at all. Egoism, it is argued, cannot
be a moral theory because it is internally inconsistent, since each person pursues
their own self-interest and must accept that others do too, despite the fact that this is
not in their own self-interest. It also condones blatant immoral wrongs, since
'anything goes'- violence against the vulnerable, theft, even murder- as long as the
egoist's needs are served.
,Utilitarianism = theory which states that an action is morally right if it results in the greatest
amount of good for the greatest amount of people affected by the action (Jeremy Bentham,
John Stuart Mill). The basic foundation is the greatest happiness principle →
consequentialist. This theory is one of the most commonly accepted ethical theories in the
Anglo-Saxon world.
Utility measured in terms of:
- pleasure and pain (hedonistic)
- happiness and unhappiness (eudemonistic)
- intrinsically valuable human goods (ideal)
Utilitarianism has been very powerful, since it puts at the centre of the moral decision a
variable that is very commonly used in economics as a parameter that measures the
economic value of actions: 'utility'.
Core problems utilitarianism:
- Subjectivity
- Equal weighting
- Problems of quantification and calculation
- Distribution of utility
Act utilitarianism looks to single actions and bases the moral judgement on the amount of
pleasure and the amount of pain this single action causes.
Rule utilitarianism looks at classes of action and asks whether the underlying principles of an
action produce more pleasure than pain for society in the long run.
Another branch of traditional ethical theory is principle-based theories:
- Ethics of duties
- Ethics of rights and justice
Ethics of duty = ethical theories that consist of abstract, unchangeable obligations, defined
by a set of rationally deduced a priori moral rules, which should be applied to all relevant
ethical problems (Immanuel Kant/Kantianism) → Kant developed theoretical framework
through which these principles could be derived: categorical imperative - must be obeyed
in all circumstances. Categorical imperative = act only according to that maxim by which
you can at the same time will that it should become a universal law.
Problems with Kantianism:
- Undervaluing motivation; Kant's emphasis that the only morally acceptable motivation
for a certain act is to do one's duty for its own sake, as defined by the categorical
impera- tive, is a little extreme.
, - Undervaluing outcomes; Given that this approach is based on duty, not outcomes,
Kant does not allow for cases where a little rule-bending might be for the best.
- Assumption of rationality; Kant's theory is quite optimistic: his view of humans as ra-
tional beings who act according to self-imposed duties seems more of an ideal than a
real- ity with regard to fast-paced contemporary lifestyles.
Ethics of rights (human rights) = basic, inalienable, and unconditional entitlements that
are inherent to all human beings, without exception. John Locke → ‘natural rights’ that
humans are entitled to and which should be respected and protected. Significance lies in the
fact that these rights typically result in the duty of others to respect them. UNGP → UN.
Responsibilities are primarily directed at:
- State; state duty to protect human rights
- Business; corporate responsibility to respect human rights
- Judiciary; access to remedy for victims of business-related abuses
Ethics of rights (justice) = the simultaneous fair treatment of individuals in a given situation
with the result that everybody gets what they deserve. Whenever two parties enter an
economic transaction there has to be agreement on a fair distribution of costs and benefits
between the parties. Individual rights have to be realized in such a way that they are
addressed equally and fairly. This is where the issue of justice arises, since justice is all
about how fairly individuals are treated so that they get what they deserve. The crucial moral
issues here are what exactly 'fairness' should mean in a particular situation and by which
standards we can decide what a person might reasonably deserve. According to Boatright
(2014), useful ways to view justice see fairness in two main ways:
- Fair procedures
- Fair outcomes
Social contract = a hypothetical agreement between members of a society and those who
govern it that establishes the inter-relationships, rights, and responsibilities on a fair basis
(Jean-Jacques Rousseau). Rights, obligations, and justice bind the members of society,
business, and government together to create a good society. John Rawls → a theory of
justice → he distils clearly that society is just when:
1. Each person has an equal right to the most extensive total system of basic liberties
com- patible with a similar system of liberty for all.
2. Social and economic inequalities are arranged so that they are both:
(a) To the greatest benefit of the least advantaged- known as the 'difference
principle'.
(b) Attached to offices and positions open to all under conditions of fair equality of
opportunity - known as the 'principle of equal opportunity'.
Main criticisms of Western modernist ethical theories:
- Too abstract
- Too narrow
- Too objective and elitist
- Too impersonal
- Too rational and codified
- Too imperialist
Alternative perspectives on ethical theory
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