Chapter Three: Philosophical Ethics and Business

1. Chapter Three: Philosophical Ethics and Business

2. Chapter Objectives • After reading this chapter, you will be able to: • Explain the ethical framework of utilitarianism. • Describe how utilitarian thinking underlies economic and business decision making. • Explain how the free market is thought to serve the utilitarian goal of maximizing the overall good. • Explain some challenges to utilitarian decision making. • Explain the principle-based, or rights-based, framework of ethics. • Explain the concept of human rights and how they are relevant to business. • Distinguish moral rights from legal rights. • Explain several challenges to principle-based ethics. • Describe and explain virtue-based framework for thinking about ethical character.

3. Philosophical Ethics and Business Integrity without knowledge is weak and useless, and knowledge without integrity is dangerous and dreadful. Samuel Johnson, 1709-1784

4. Ethical Frameworks • An ethical framework is nothing more than an attempt to provide a systematic answer to the ethical question: • How should human beings live their lives? • Ethics attempts to answer the question but also gives reasons to support the answers. • Philosophical ethics must answer the “why?” question as well. • “why” matters because without offering reasons, it is only an opinion. • “why” matters because superficial agreement can mask underlying disagreement. • Many people attempt to answer “why” in religious terms but religions differ from culture to culture. • Philosophical ethics provides justifications applicable to all people.

5. Ethical Frameworks • Ethics is not comprised of a single principle or framework. • Here, the focus is on three ethical frameworks proven influential with practical relevance in modern business. • Utilitarianism is an ethical tradition that directs us to decide based on overall consequences of our acts. • The principle-based framework directs us to act on the basis of moral principles such as respecting human rights. • Virtue ethics tells us to consider the moral character of individuals and how various character traits can contribute to, or obstruct, a happy and meaningful human life.

6. Philosophical Ethics and Business A man does what he must – in spite of personal consequences, in spite of obstacles and dangers and pressures – and that is the basis of all human morality. John F. Kennedy

7. Utilitarianism: Ethical Consequences • Utilitarianism’s insight is that outcomes matter, • and we should consider the consequences of our actions. • Utilitarianism has been called a consequentialist approach to ethics. • We should act in ways that produce better consequences than the alternatives. • What is meant by “better consequences”? • “Better consequences” are those that promote human well-being. • “the greatest good for the greatest number.” • Utilitarians are pragmatic thinkers and no act is ever absolutely right or wrong. • The utilitarian position is that happiness is the ultimate good.

8. Utilitarianism and Business • The free market is decidedly utilitarian. • So, utilitarianism has a strong impact on business and business ethics. • How to achieve the goal of maximizing the overall good? • Some utilitarians agree with Adam Smith, claiming that free and competitive markets are the best means for attaining the goal. • Other utilitarians turn to policy experts who are in a position to determine which policy will maximize the overall good. • The dispute between the “market” and the “administrative” versions of utilitarianism characterize many disputes in business ethics. • Egoism is also a consequentialist theory but it focuses exclusively on the happiness of the individual making the decision.

9. Challenges to Utilitarian Ethics • Problems with the need to count, measure, compare, and quantify consequences. • Utilitarians determine both ethical and unethical acts by their consequences – so the end justifies the means. • This seems to deny one of the earliest ethical principles that the end doe not always justify the means. • We have certain duties or responsibilities that we ought to obey even when doing so does not produce a net increase in overall happiness. • Utilitarian reasons contributes to ethical decision by requiring we consider the consequences of our actions. • Utilitarian reasoning does not exhaust the range of ethical concerns. • Ethical decisions also involve duties, principles, and personal integrity.

10. An Ethics of Principles and Rights • Some decisions should be a matter of principle, not consequences – the ends do not always justify the means. • Which principles should be followed? • When does a principle outweigh producing good consequences? • Principles are ethical rules that put values into action. • Principles create ethical duties requiring certain actions or decisions. • What principles or rules should guide our decisions? • Legal rules. • Organizational rules. • Role-based rules. • Professional rules.

11. An Ethics of Principles and Rights

12. Human Rights and Duties • Are there any fundamental or “categorical” duties? • Immanuel Kant believed we all have a duty to treat each person as an end in themselves. • And never only as means to our own ends. • Persons must never be treated as mere tools. • Human, or moral rights is central to principle-based ethics. • Human rights protect individual dignity. • Rights imply that some acts are “off-limits.” • Our moral duty is to respect the human rights of others. • Humans are said to have a fundamental human right of autonomy, or “self-rule.”

13. Human Rights and Social Justice • Two rights emerged as fundamental components of social justice: • liberty and equality. • More fundamental and persistent than legal rights. • They are particularly fundamental to theories of social justice upon which democratic and capitalist economies have been built. • Crucial to an understanding of business ethics.

14. Human Rights and Social Justice Libertarian Egalitarian Here, equality is the most central element. Socialist egalitarian theories argue for equal distribution of basic goods and services. Other theories argue the equal opportunity is crucial. Supports greater governmental responsibility in the economy to guarantee equality. • Here, individual liberty is the most central element. • A just society is one in which individuals are free from government intrusion. • As long as they are not harming others. • Ethical business pursues profit within the law. • Unethical businesses do not.

15. Human Rights and Legal Rights • What is the difference between human rights and legal rights? • Using employee rights as an example, there are three kinds of employee rights common in business. • First, there are those legal rights granted to employees on the basis of legislation or judicial rulings. • Minimum wage, and equal opportunity are examples. • Second, employees have rights to entitled goods based contractual agreements with the employer. • Health care, pension, and paid holidays are examples. • Finally, employees have rights grounded in moral entitlements. • Examples include the right not to be bullied, or lied to. • Legal rights and human rights lie outside the bargaining that occurs between employers and employees.

16. Challenges to an Ethics of Rights and Duties • There are two big challenges to this ethical tradition. • There is disagreement about what rights truly are basic human rights. • It is unclear how to apply this approach to practical situations, especially in cases where rights appear to conflict. • Critics point out that the ethical tradition of rights and duties has been unable to provide a persuasive and systematic account for how such conflicts are to be resolved.

17. Philosophical Ethics and Business It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction. Warren Buffett

18. Virtue Ethics: Integrity and Character • Virtue ethics seeks a full and detailed description of those character traits that constitute a good and full human life. • Ethics of virtue is the goal of every parent who hopes to raise happy and decent children. • To understand how virtue ethics differs from utilitarian and principle-based frameworks, consider egoism. • There is a gap between self-interest and altruism. • Ethics requires us to act for the well-being of others at times, something egoism claims is not possible. • An ethics of virtue shifts the focus from questions of what a person should do, to a focus on who that person is.

19. Virtue Ethics: Integrity and Character • A person’s character is not independent of that person’s identity. • This shift changes the nature of justification in ethics. • Ethical controversies often involve a conflict between self-interest and ethical values. • How much we act for the well-being of others depends on our character.

20. Virtue Ethics: Integrity and Character • Virtue ethics recognizes that human beings act according to who they are, according to their character. • Given that character plays a key role in out behavior, and • given that our character can be shaped by controllable factors, • virtue ethics seeks to understand how traits conducive to, and traits that undermine, a meaningful, worthwhile, and satisfying life. • Virtue ethics reminds us to examine how character traits are formed and conditioned. • Many moral dilemmas arise when tension between who we seek to be and the type of person business expects us to be.

21. Virtue Ethics: Integrity and Character • Virtue ethics should lead us to ask questions about the choices we make and how those choices affect our character. • This can happen in two ways. • First, note that each decision you make has a subtle but meaningful impact on subsequent decisions. • This suggests a reciprocal relationship between character and action. • Our character affects how we act, but how we act ends up affecting our character. • The second way choices affect character is through the people we choose to associate with and the organizations we become part of. • This has important implications for the companies we choose to work for. • The organizational culture will inevitably change who we are, so choose carefully.

22. Decision-Making Model Revisited • This chapter introduced three ethical frameworks. • Understanding the philosophical basis of ethics enables you to: • become more aware of ethical issues, • better able to recognize the significance of your decisions, • more likely to make better informed and more reasonable decisions, and • articulately explain yourself when asked about a decision. • These theories also provide ways to develop the decision-making model introduced in chapter 2. • These theories provide systematic and sophisticated ways to think and reason about ethical questions. • The decision-making model now has ethical theories integrated into the procedure.

23. Decision-Making Model Revisited • Determine the facts. • Identify the ethical issues involved. • Identify stakeholders. • Consider the available alternatives. • Compare and weigh the alternatives. • Consequences. • Duties, rights, principles. • Implications for personal integrity and character. • Make a decision. • Monitor and learn.