Applying Ethical Theories to Business

Utilitarianism 

  • Utilitarianism considers the majority affected by a certain action – general welfare is the most important
  • This is often seen as a good business policy as criticism frequently arises from businesses damaging the majority (for example workers in factories) for the benefit of the minority
  • This does however lead to the neglect of certain individuals sometimes leading to negative effects, for example a subsistence farmer having to give up his livelihood for a dam
  • The best business transactions can be said to be the ones which benefit all those involved – the consumer, the employee, the employer etc.
    • All stakeholders need considering, not just the majority benefit (Singer’s preference approach)
  • Economically utilitarianism seems to be a sensible approach due to the use of cost/benefit analysis 
  • However as so often is the case when criticising utilitarianism, one cannot ignore the fact that we cannot predict all consequences
    • The Ford Pinto Case, 1970’s 
      Ford wanted to create a small affordable car, each of which would cost $2,000
    • To save money making them the fuel tank was moved to the back, which led to a fault resulting in 8/11 explosions when tested & would cost Ford $11 per car to fix.
    • A cost benefit analysis was done; the estimated cost to fix was $137 million, the estimated cost of possible damages/lawsuits was $48 million – therefore Ford decided not to fix the fault
    • Over 500 were burn victims as a result of explosions, one case awarded $125 million in punitive damages
    • Cost/benefit had failed
  • The other obvious downside to cost benefit analysis aside from the inability to predict outcomes leading to inaccuracies, is that human life/health cannot be quantified as a monetary value – cost benefit cannot be used ethically and can barely be used economically

Kantian Ethics 

  • Kant believed that morality in all spheres of human life should be grounded in reason
  • Kant’s categorical imperative formulation relating to universalisation obstructs such acts as abuse of workers, lying to customers as these cannot possibly be made universal maxims
  • Kant also maintains that the highest form of good is acting from “the good will“; acting due to duty alone, not for any other motives
    • Therefore for businesses to cultivate a positive image or treat consumers well in order to maximise profits is not genuinely moral
    • Kant would argue that the only motive behind this should be one’s duty of being honest, fair, giving etc.
    • While this may be seen as idealistic, Kant has a point – why should businesses (which as established are merely the people behind them) be allowed to be calculative & cruel whilst appearing to be moral? Though it may not be the main or only motive as Kant would wish, acting due to duty should be part of business ethics
  • Another formulation of Kant’s categorical imperative states that one should never treat someone as a means to an end
  • This means that as all business transactions are essentially relationships; consumer – employee, consumer – business etc. no one must be used or taken advantage of in business

John_Rawls

  • Modern Kantian John Rawls argued for a fairer society in terms of business and business ethics
  • Rawls argued that we can see how unfair and unbalanced the world is by stepping back and looking upon it behind “a veil of ignorance”
    • By this Rawls meant we should look upon the world as if we have not yet been born, as if we are being offered the chance to take the lottery of life and be born anywhere in the world
  • He asks would anyone actually want to be born into such a world? The answer is no as millions live below the poverty line, live without clean water or shelter etc.
  • By looking at the world in this way, we can then ask ourselves what would we do to make the world a fairer place? To make the birth lottery odds seem more favourable?
  • We can then go about correcting the inequalities in our world
    • This is seen as idealistic by some, though a simple look back through history shows us that there have been times when change has come about for no reason other than to create equality 
    • During WW2 many children from the inner cities of the UK were evacuated out to live in the countryside for their own safety
    • The wealthier people living in the country were horrified at the state of the evacuees and their living conditions back home
    • This spurred on the 1942 Beveridge report which promised an end to poverty and inequality – which was then fortified by the creation of the welfare state & then the NHS by the post-war labour party
    • People in a position of power saw atrocities in the world and sought to change them for the better

Virtue Ethics 

  • Virtue ethics from Aristotle shows that business cannot be separated from society as everyone is part of the wider community
  • Virtue ethics is concerned with the traits which make harmonious living possible, avoiding extremes and following the golden mean
  • Following this, ethics in business should be based upon avoiding corruption and abuse which would violate these principles as well as reaching eudaimonia
  • However; one of Aristotle’s initial ideas was based upon every human having a telos in his or her community
    • Aristotle’s functionality can be applied to a slave and a slave owner. The slave’s way of reaching eudaimonia is to be a good slave – not overwork, obey orders without grovelling
    • This suggests that slave labourers could be justifiable in business ethics as long as they do their job to achieve eudaimonia
    •  This is a part of virtue ethics rectified by modern ethicists such as Alasdair MacIntrye, who did not feel that Aristotle’s functionalism could translate to modern times

Religious Ideas 

Biblical Ethics 

  • St John Chrysostom“wealthy people steal money from society by hoarding it” 
  • In the Bible and indeed in early Christian society (and even with the development of Protestantism) the church was based upon the peasantry expressing their love for God
  • Wealth was seen as corruption – something which could not make a man and could even turn him from God
  • Despite this, corruption in the Catholic church flourished, with Bishops committing the crime of pluralism (multiple titles) and hoarding wealth
  • This was one factor which led to the spread of humanism and then Lutheranism – the people’s growing discontent with the Catholic church
  • Protestantism promised a more true to the Bible way of faith, away from the Pope who was criticised for the corrupt church

Natural Law 

  • Businesses have to work well and fairly in order to promote an ordered society
  • Scams, lying to customers or abusing workers would all be considered against this primary precept

The Protestant Ethic 

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  • Max Weber, a sociologist, identified the influence of the church on early development of capitalism
  • He stated that developments in Protestantism such as Calvinism gave the population a need for evidence of election – if only a certain number of people went to heaven, a person wanted to be in that number
  • Those who are elected by God naturally act in a truly Christian way, for example they work incredibly hard and give back what they earn into the church and community
  • A chosen person would selflessly do this, meaning that in the 16th century onward people were eager to prove that they too were elected by God
    • Hard work was evidence of salvation

The Prosperity Gospel 

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  • Joel Osteen, an American pastor, promoted the idea of the prosperity gospel; get rich, get healthy, get happy
    • You are not a sick person trying to get well, you are a healthy person trying to shake sickness
    • God didn’t create you to be average
  • Osteen argues to be a victor not a victim – obtain wealth health and maintain good relationships
  • He argued that there was no reason for people to live in squalor or accept poverty
    • Jesus himself however came from poverty, he was also victimised and abused
    • As well as this people’s traumas or situations often are not easily overcome by a change in mindset
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