Hartman: Business Ethics: Decision−Making for Personal
Integrity and Social Responsibility
Overview – Philosophical Ethics and Business
INTRODUCTION: ETHICAL THEORIES AND TRADITIONS
Ethics involves what is perhaps the most significant question any human being can ask: How should
we live our lives. An ethical theory is nothing more than an attempt to provide a systematic answer
to this question. Not only do ethical theories attempt to answer the question of how we should live,
but they also provide reasons to support their answer. Accountable decision making requires giving
reasons to justify your actions. Ethical theories seek to provide a rational justification for why we
should act and decide in a particular way.
Many people and cultures around the world base their ethical views on certain religious or
theological foundations. However, people differ widely in their religious beliefs. If ethics is based only
on religious principles, and if people disagree about those religious starting points, then ethics would
never escape the predicament of relativism.
Philosophical ethics provides justifications that must be applicable to all people, regardless of
their religious starting points. Philosophical ethics seeks foundations that all people can accept,
regardless of their religious convictions.
UTILITARIANISM: MAKING DECISIONS BASED ON ETHICAL CONSEQUENCES
Utilitarianism begins with the conviction that we should decide what to do by considering the
consequences of our actions. Utilitarianism tells us that we should act in ways that produce better
overall consequences than the alternatives we are considering. “Better” consequences are those that
promote human well-being.
If a basic human value is individual happiness, then an action that promotes more of that
than an alternative does is more reasonable and more justified from an ethical point of view. A
decision that promotes the greatest amount of these values for the greatest number of people is the
most reasonable decision from an ethical point of view.
The emphasis on producing the greatest good for the greatest number makes utilitarianism a
social philosophy that provides strong support for democratic institutions and policies and opposes
those policies that aim to benefit only a small minority. Therefore, it could be said that the economy
and economic institutions are utilitarian in the way that they exist to provide the highest standard of
living for the greatest number of people.
Because utilitarians decide on the basis of consequences, and because the consequences of
our actions will depend on specific facts of each situation, utilitarians tend to be very pragmatic
thinkers. No act is ever absolutely right or wrong in all cases in every situation; right and wrong will
always depend on the consequences.
Utilitarian reasoning also usually supplies some support for each competing available
alternative. Deciding on the ethical legitimacy of alternative decisions requires that we make
judgments about the likely consequences of our actions. The utilitarian tradition has a strong
inclination to rely on the social sciences for help in making such predictions.
Utilitarianism and business: profit maximization versus public policy approaches
Utilitarianism answers the fundamental question of ethics by reference to a rule: Maximize the
overall happiness. But how do we achieve this goal?
One movement within utilitarian thinking invokes the tradition of Adam Smith, claiming that
free and competitive markets are the best means for attaining utilitarian goals. This version would
promote policies that deregulate private industry, protect property rights, allow for free exchange,
and encourage competition. In such situations, decision of rationally self-interested individuals would
result in the maximum satisfaction of individual happiness.
, Given this utilitarian goal, neoclassical free market economics advises us that the most efficient
economy is structured according to the principles of free market capitalism. This requires that
business managers, in turn, should seek to maximize profits. This idea is central to one common
perspective on corporate social responsibility.
By pursuing profits, businesses ensure that scarce resources go to those who value them and thereby
insures that resources will provide optimal overall satisfaction.
A second influential version of utilitarian policy turns to policy experts who can predict the
outcome of various policies and carry out policies that will attain utilitarian ends. These experts are
familiar with the specifics of how society works, and they therefore are in a position to determine
which policy will maximize the overall good. From this view, the legislative body establishes the
public goals that we assume will maximize overall happiness. The administrative side executes
policies to fulfill these goals.
Problems of Utilitarian Ethics
If utilitarianism advises that we make decision by comparing the consequences of alternative actions,
then we must have a method for making such comparisons. In practice, however, some comparisons
and measurements are very difficult. One problem that follows is that, because of these difficulties,
there will be a tendency to ignore the consequences, especially the harmful consequences, to
anyone other than closest to us. This problem is intensified when we recognize that our actions may
impact the happiness of ourselves and those people surrounding us, but unknown and untold people
in distant places and in the distant future. Some utilitarians argue that the happiness of future
generations ought to be considered; others include animals and all living beings capable of feeling
pleasure and pain. The more expansive the list we should consider, the less practical utilitarian
thinking becomes.
A second challenge had to do with the fact that the essence of utilitarianism is its reliance on
consequences. In short, the end justifies the means. But this seems to deny one other ethical
principal: the ends do not justify the means. When we say that the ends do not justify the means, we
are saying that there are certain decisions we should make or certain rules we should follow no
matter what the consequences. We have certain duties or responsibilities that we ought to obey,
even when doing so does not produce a net increase in overall happiness.
Since utilitarianism focuses on the overall consequences, utilitarianism seems willing to
sacrifice the good of individuals for the greater overall good. Some ethicists would argue that we
make certain commitments, we have certain duties, that should not be violated even if doing so
would increase the net overall happiness. Violating such commitments and duties would require
individuals to sacrifice their own integrity for the common good.
Such commitments and duties play a large role in business life. Contracts and promises are
exactly the commitments that one ought to honor even if the consequences turn out unfavorable.
The duties that one takes on as a professional function in a similar way.
Nevertheless, utilitarian ethics does contribute to responsible decision making in several important
ways. First, and most obviously, we are reminded of the significance of consequences. Responsible
decision making requires that we consider the consequences of our acts. But, as an ethical theory,
utilitarianism also reminds us that we must consider the consequences to the well-being of all people
affected by our decisions.
But the shortcomings of utilitarian reasoning must also be kept in mind. It is difficult to know
everyone who will be affected by our decisions and how they are impacted. Also, utilitarian
reasoning does not exhaust the range of ethical concerns. Consequences are only part of the ethical
landscape. Responsible ethical decision making also turns to matters of duties, principles and
personal integrity.
