Introduction
Many of you may be reading this with a dose of skepticism saying to yourself “there is no such thing as business ethics” or “business ethics is an oxymoron.” I hope to demonstrate that these statements are, in the main, untrue. Sure, some business executives and whole businesses perhaps act in unethical ways sometimes. But, by and large, the world of business runs according to some basic and universally held ethical principles. Just as well that the world of business is ethical since we all spend at least some of our time in this world daily as employees, employers, customers, or simply members of the community where businesses are located.
The main goal of this course, then, is not to indict all businesses for their lack of ethics nor is it to blindly maintain that there are no ethical problems or lapses in the business world. Rather, we will be examining some basic ethical principles and examine how these might be applied to the world of business. In so doing, we’ll be looking at some issues that affect the business world in very specific ways. So, this course really can be seen as having two distinct parts: theory and practice. In the theory section, we’ll examine such issues as truth-telling, the concept of justice, employee rights and responsibilities as well as corporate responsibilities. The application section will examine these questions in light of specific cases that have arisen in the business world. Some of the issues you are probably already familiar with from the news stories associated with them such as the Enron case. Others you may be unfamiliar with but would benefit from learning about simply because the ethical issues involved are always relevant to the world of business and learning how to resolve the conflicts that sometimes arise in business is another important aspect of what this course is about.
Business ethics provides a challenge because it requires that we draw information from two distinct fields and synthesize them. To do this, it helps to know about the fields of economics and ethics. While neither class is a prerequisite for this one it goes without saying that the more we know about the two disciplines of economics and ethics the better we’ll be at making decisions in business ethics. Throughout the book I’ll draw your attention to relevant aspects of both of these fields and, of course, we’ll be reading selections from both ethicists and economists.
To start let’s examine exactly what is involved in each field and how business ethics attempts to synthesize them. Economics has been well defined by Thomas Sowell as the study of the allocation of scarce resources that have alternative uses. This definition will come up time and again in this class and be used to help address difficult problems of allocation. We can think of ethics as the study of values and moral beliefs and how these can be justified. So, with those two definitions in mind, we can think of business ethics as the study of which values and moral beliefs should guide us in our allocation of scarce resources which have alternative uses.
Two important points should be emphasized in this preliminary definition of business ethics. We are concerned about justifying our moral beliefs and this, as we’ll see very soon, will require that we reason through various ethical theories. Secondly, we will never be free from the constraints of economics which entail that there are always alternative uses for inherently scarce resources. It is this scarcity that gives rise to many of the ethical problems encountered in business ethics.
This raises an important consideration that is well understood in economics but not often understood or applied in ethics. This is the concept of the trade-off. In a world where resources are limited and have alternative uses, there will always be cases where we have to decide among competing options each of which has advantages and disadvantages. We often don’t have the luxury of an option that is the obvious best choice. We will have to be prepared to sacrifice some of one good for the sake of more of another. The question then becomes how much of one is worth sacrificing for how much of the other? This is always hard to deal with in specific situations which bring up ethical dilemmas.
One of the best examples of this concept of trade-offs and their effects on ethical decisions is in the world of budgets. Imagine being a member of Congress and your job is to decide how much money we should spend on what programs. Assuming (which is no safe assumption!) that you are not going to spend money you don’t have (i.e. practice deficit spending) you have only a limited resource of capital to spend on a seemingly unlimited amount of useful projects. So, something must be sacrificed. What criteria should be used to determine what should be sacrificed and what should be funded? This is where ethics become helpful because this is, in part, a decision about values. The difficulty arises because we often think in terms of black and white when it comes to ethics. Ideally, each case would have only one right answer and one wrong answer and we would pick the right answer. This ideal is rarely a reality. Hence the need for some guidance when making these decisions. This is where a course like this comes in and hopefully helps in this difficult task.
In his book Ethics and the Limits of Philosophy, Bernard Williams points out the importance of setting priorities when addressing ethical values. Not only does this illustrate another example of trade-offs but also a point about our implicit ability to recognize right and wrong. Some actions are immediately recognized as right and wrong before any moral deliberation. This turns out to be a good thing. As Williams puts it “an effective way for actions to be ruled out is that they never come into thought at all, and this is often the best way. One does not feel easy with the man who in the course of a discussion of how to deal with political or business rivals says, ‘Of course, we could have them killed, but we should lay that aside right from the beginning.’ It should never have come into his hands to be laid aside. It is characteristic of morality that it tends to overlook the possibility that some concerns are best embodied in this way, in deliberative silence.” To the concerns that require our more vocal deliberation, we now turn towards.
The main goal of this course, then, is not to indict all businesses for their lack of ethics nor is it to blindly maintain that there are no ethical problems or lapses in the business world. Rather, we will be examining some basic ethical principles and examine how these might be applied to the world of business. In so doing, we’ll be looking at some issues that affect the business world in very specific ways. So, this course really can be seen as having two distinct parts: theory and practice. In the theory section, we’ll examine such issues as truth-telling, the concept of justice, employee rights and responsibilities as well as corporate responsibilities. The application section will examine these questions in light of specific cases that have arisen in the business world. Some of the issues you are probably already familiar with from the news stories associated with them such as the Enron case. Others you may be unfamiliar with but would benefit from learning about simply because the ethical issues involved are always relevant to the world of business and learning how to resolve the conflicts that sometimes arise in business is another important aspect of what this course is about.
Business ethics provides a challenge because it requires that we draw information from two distinct fields and synthesize them. To do this, it helps to know about the fields of economics and ethics. While neither class is a prerequisite for this one it goes without saying that the more we know about the two disciplines of economics and ethics the better we’ll be at making decisions in business ethics. Throughout the book I’ll draw your attention to relevant aspects of both of these fields and, of course, we’ll be reading selections from both ethicists and economists.
To start let’s examine exactly what is involved in each field and how business ethics attempts to synthesize them. Economics has been well defined by Thomas Sowell as the study of the allocation of scarce resources that have alternative uses. This definition will come up time and again in this class and be used to help address difficult problems of allocation. We can think of ethics as the study of values and moral beliefs and how these can be justified. So, with those two definitions in mind, we can think of business ethics as the study of which values and moral beliefs should guide us in our allocation of scarce resources which have alternative uses.
Two important points should be emphasized in this preliminary definition of business ethics. We are concerned about justifying our moral beliefs and this, as we’ll see very soon, will require that we reason through various ethical theories. Secondly, we will never be free from the constraints of economics which entail that there are always alternative uses for inherently scarce resources. It is this scarcity that gives rise to many of the ethical problems encountered in business ethics.
This raises an important consideration that is well understood in economics but not often understood or applied in ethics. This is the concept of the trade-off. In a world where resources are limited and have alternative uses, there will always be cases where we have to decide among competing options each of which has advantages and disadvantages. We often don’t have the luxury of an option that is the obvious best choice. We will have to be prepared to sacrifice some of one good for the sake of more of another. The question then becomes how much of one is worth sacrificing for how much of the other? This is always hard to deal with in specific situations which bring up ethical dilemmas.
One of the best examples of this concept of trade-offs and their effects on ethical decisions is in the world of budgets. Imagine being a member of Congress and your job is to decide how much money we should spend on what programs. Assuming (which is no safe assumption!) that you are not going to spend money you don’t have (i.e. practice deficit spending) you have only a limited resource of capital to spend on a seemingly unlimited amount of useful projects. So, something must be sacrificed. What criteria should be used to determine what should be sacrificed and what should be funded? This is where ethics become helpful because this is, in part, a decision about values. The difficulty arises because we often think in terms of black and white when it comes to ethics. Ideally, each case would have only one right answer and one wrong answer and we would pick the right answer. This ideal is rarely a reality. Hence the need for some guidance when making these decisions. This is where a course like this comes in and hopefully helps in this difficult task.
In his book Ethics and the Limits of Philosophy, Bernard Williams points out the importance of setting priorities when addressing ethical values. Not only does this illustrate another example of trade-offs but also a point about our implicit ability to recognize right and wrong. Some actions are immediately recognized as right and wrong before any moral deliberation. This turns out to be a good thing. As Williams puts it “an effective way for actions to be ruled out is that they never come into thought at all, and this is often the best way. One does not feel easy with the man who in the course of a discussion of how to deal with political or business rivals says, ‘Of course, we could have them killed, but we should lay that aside right from the beginning.’ It should never have come into his hands to be laid aside. It is characteristic of morality that it tends to overlook the possibility that some concerns are best embodied in this way, in deliberative silence.” To the concerns that require our more vocal deliberation, we now turn towards.