Week One Journal
Objective
You will outline and explain ethical theories and then apply that knowledge to how organizations
would function were they to adopt those ethical principles. In addition, you will also examine
punishments for corporations and present your own ideas about the relationship between ethical
demands on business entities vs. those on individuals in society.
Instructions
In this assignment you will reflect on the topics of Week One and apply them to an analysis of
ethical paradigms. You will be asked to respond to two prompts below. The first asks you to
explain three of the ethical philosophies you encountered in Chapter 1 of Introduction to
Business Ethics, and then determine how companies that abide by these policies would act. In the
second prompt, you will be asked to explain various punishments that can be given to
corporations and the behaviors that are ethically dangerous to corporations.
Please answer all questions in detail. Because this journal is worth 5% of your final grade, there
is a high expectation for your participation. Grades for the journals are based on content, critical
engagement, quality of reflection, and detail. Please submit the completed journal via the
Assignment Basket found in the Week One Journal tab on the left navigation toolbar by Day 7.
Organizations
Select a Not-For Profit and a For Profit organization you would like to study. These will be the
organizations that you will be focusing on throughout the course so be sure to choose
organizations that you find interesting and that you think will be engaging as you learn
about the ethical climates of these organizations.
Place the Name of the Not-For-Profit Organization here:
Place the name of the For-Profit Organization here:
1
Reflection Prompts
Please think about and answer the following prompts. These reflections will not be graded on
grammar and syntax, but on the depth of critical reflection and the analysis that composes your
answers. Utilize this space to gather information and notes that you think will aid in your
analysis of business ethics.
Reflection Prompt #1
Summarize three of the ethical theories that are explained in Chapter 1 of Introduction to
Business Ethics. Explain how people running businesses would construct their companies if they
utilized these ethical theories. For example, you might personally think that people should act to
increase the overall happiness for the greatest number of people (utilitarianism). You would
explain utilitarianism and then explain how a company based in utilitarian ethics would function.
In other words:
▪
What products would they make?
▪
How would they treat their employees? How would they treat their customers?
▪
How would they manufacture their products?
▪
How would they utilize their resources and profits were they to become successful?
Reflection Prompt #2
Analyze three of the punishments that corporations undergo when they have acted unethically
(i.e., name them, define them, explain what they are). In addition, explain three threats to running
an ethical corporation. Finally, from your own perspective, explain whether or not a corporation
should have to function by the same codes of morality that individual people in society have to
abide by or if they should be allowed to get away with certain actions that people in society
cannot get away with.
2
Comstock/Thinkstock
1
Ethical Principles and Business
Decisions
Learning Objectives
After completing this chapter, you should be able to:
• Describe moral objectivism, moral relativism, and divine command theory.
• Explain the theories of psychological egoism and psychological altruism, and the relation between gender
and morality.
• Explain how virtue theory, duty theory, and utilitarianism provide standards of morality.
• Describe the relation between morality and government in social contract theory, human-rights theory,
and the four principles of governmental coercion.
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CHAPTER 1
Section 1.1 Introduction
Chapter Outline
1.1 Introduction
1.2 Where Moral Values Come From
Moral Objectivism and Moral Relativism
Religion and Morality
1.3 Ethics and Psychology
Egoism and Altruism
Gender and Morality
1.4 Moral Standards
Virtues
Duties
Utilitarianism
1.5 Morality and Government
The Social Contract
Human Rights
Principles of Governmental Coercion
1.6 Conclusion
1.1 Introduction
Some jobs have higher moral reputations than others, and national surveys are routinely conducted to reveal public attitudes about various professions. One poll asked people to rate the
honesty and ethical standards of people in different fields (Jones, 2010). The results of the survey
were as follows (the numbers indicated the percentage of those surveyed who ranked the respective vocations very high in terms of honesty and ethical standards):
Nurses: 81%
Military officers: 73%
Druggists, pharmacists: 71%
Grade school teachers: 67%
Medical doctors: 66%
Police officers: 57%
Clergy: 53%
Day care providers: 47%
Judges: 47%
Auto mechanics: 28%
Nursing home operators: 26%
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Bankers: 23%
TV reporters: 23%
Newspaper reporters: 22%
Local officeholders: 20%
Lawyers: 17%
Business executives: 15%
State officeholders: 12%
Advertising practitioners: 11%
Members of Congress: 9%
Lobbyists: 7%
Car salespeople: 7%
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Section 1.2 Where Moral Values Come From
CHAPTER 1
There is a clear pattern here. The highest ranking professions involve helping people, and nurses,
who are at the very top, are clear examples. Among the lowest ranking occupations are those
associated with the business world: bankers, business executives, advertisers, and, at the very
bottom, car salespeople.
What is it that makes us have such low opinions of the moral integrity of the business world? Part
of it may be that, in contrast with nurses, businesses have the reputation of caring only for themselves and not for others. Part of it may also be that the competitive nature of business pushes
even the most decent of people to put profits above responsibility to the public. The concept of
business ethics is by no means new; in fact, some of the earliest written documents in human
civilization wrestle with these issues. The Mesopotamian Code of Hammurabi, from almost 4,000
years ago, had this to say about the responsibility of building contractors:
If a builder build a house for some one, even though he has not yet completed
it; if then the walls seem toppling, the builder must make the walls solid from his
own means.
...
If a shipbuilder build a boat for some one, and do not make it tight, if during
that same year that boat is sent away and suffers injury, the shipbuilder shall
take the boat apart and put it together tight at his own expense. (trans. 1915 by
L. W. King, sections 233 and 235; see http://www.fordham.edu/halsall/ancient/
hamcode.asp#text)
This entire book is devoted to understanding the ethical challenges that businesses face and what
can be done to meet those challenges. In this chapter, we will explore several basic and timetested principles of morality. Some of history’s greatest minds have reflected on the nature of
morality and devised theories of where morality comes from and how moral principles should
guide our conduct. Many of these principles have direct application to ethical issues within business, and we will explore that connection.
1.2 Where Moral Values Come From
A good definition of ethics is that it is an organized analysis of values relating to human conduct,
with respect to their rightness and wrongness. Ethics is not the same as etiquette, which merely
involves customary codes of polite behavior, such as how we greet people and how we seat guests
at a table. The issue in ethics is not what is polite, but what is obligatory. Ethics is closely related
to morality, and although some ethicists make subtle distinctions between the two, they are more
often used interchangeably, as will be done throughout this book.
One of the most basic ethical issues involves an understanding of where our moral values come
from. Consider the moral mandates that we should not kill, steal, or lie. Are these universal and
unchanging truths that are somehow embedded in the fabric of the universe, or are they changeable guidelines that we humans have created ourselves to suit our needs of the moment? The
question of where our moral values come from often involves two issues: The first is a debate
between objectivism and relativism, and the second concerns the relation between morality and
religion. We will look at each of these.
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Section 1.2 Where Moral Values Come From
CHAPTER 1
Moral Objectivism and Moral Relativism
Some years ago, the Lockheed Corporation was caught offering a quarter of a billion dollars in
bribes overseas. A major U.S. defense contractor, Lockheed fell on economic hard times. The U.S.
government commissioned the company to design a hybrid aircraft, but after one crashed, the
government canceled orders. Because of this and other mishaps, Lockheed believed that the solution to its financial woes was to expand its aircraft sales into foreign countries. To get military
aircraft contracts with foreign governments, it made a series of payoffs to middlemen who had
political influence in West Germany, Japan, Saudi Arabia, and several other countries. The company was eventually caught and punished with a heavy fine, and its chairman and president were
forced to resign. A consequence of this event was the creation of the U.S. Foreign Corrupt Practices Act, which includes an anti-bribery provision that involves stiff fines and prison terms for
offenders. The message of the law was that, when in Rome, you should not do as the Romans do.
There are overarching standards of ethical conduct that business are expected to follow, regardless of where they are in the world and what the local business practices are there.
When Lockheed engaged in systematic bribery, did it violate a universal standard of morality that
is binding on all human societies, or did it just violate a standard of morality that is merely our
personal preference in the United States? On the one side of this question is the theory of moral
objectivism, which has three key components:
1. Morality is objective: Moral standards are not created by human beings or human societies. According to many objectivists, they exist in a higher spirit realm that is completely
apart from the physical world around us.
2. Moral standards are unchanging: Moral standards are eternal and do not change
throughout time or from location to location. No matter where you are in the world or at
what point in history, the same principles apply.
3. Moral standards are universal: There is a uniform set of moral standards that is the
same for all people, regardless of human differences like race, gender, wealth, and social
standing.
The classic champion of this view is the ancient Greek philosopher Plato (424 BCE–347 BCE), who
argued that moral truths exist in a higher level of reality that is spiritual in nature. According to
Plato, the universe as a whole is two-tiered. There is the lower physical level that consists of
rocks, trees, human bodies, and every other material object that we see around us. All of this is
constantly changing, either decaying or morphing into something else. Within this level of the
universe, nothing is permanent.
On the other hand, Plato argued, there is a higher level of the universe, which is nonphysical
and is the home of eternal truths. He called this the realm of the forms, which are perfect patterns or blueprints for all things. Mathematical principles are good examples. They are completely
unchanging and in no way dependent for their existence on the changing physical world. Even if
the entire physical universe were destroyed, and another emerged, the principles of mathematics
would remain the same, unchanged.
According to Plato, moral principles are just like mathematical principles in that respect, and they
also exist in the higher realm of the forms. Just as the principle that 1 + 1 = 2 exists permanently in this realm, so too do moral principles of goodness, justice, charity, and many others. The
greatest appeal of Plato’s theory is that it gives us a sense of moral stability. When someone is
murdered, we often believe that an absolute and unchanging moral principle has been violated
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Section 1.2 Where Moral Values Come From
CHAPTER 1
that goes well beyond the shifting preferences of our
particular human community.
On the other side of this dispute is the theory of moral
relativism, which has three contrasting key features:
1. Morality is not objective: Moral standards are
purely human inventions, created by either
individual people or human societies.
2. Moral standards are not unchanging: Moral
standards change throughout time and from
society to society.
3. Moral standards are not universal: Moral
standards do not necessarily apply universally
to all people, and their application depends
on human preference.
Defenders of moral relativism are typically skeptical
about the existence of any higher realm of absolute
truth, such as Plato’s realm of the forms. Although
notions of eternal moral truths are appealing, the fact
is, says the moral relativist, we do not have any direct
experience that such higher realms exist. What we
know for sure is the physical world around us, which
contains societies of human beings that are everchanging. The moral values that we see throughout
these societies are ones that are created by human
preference and change throughout history and with
geographical location. Simply put, morality is a human
creation, not an eternal truth.
Associated Press/Jim Mone
Many hospitals have password protected
medication cabinets to prevent drug theft.
But is stealing always wrong? Would your
answer change if you knew the person
stealing the drug needed it for her cancer
treatment? What if she were stealing it for
her child?
Between moral objectivism and moral relativism, which is right? Some philosophical questions are
not likely to be answered any time soon, and this is one of them. However, we can take inspiration from both sides of the debate. With the Lockheed bribery incident, the position of the U.S.
government was that there is a standard of integrity in business that applies worldwide, not just
within U.S. borders. This is a concession to moral objectivism. On the other hand, some business
practices are culturally dependent. In Japan, new businesses typically have an opening ceremony
in which a Shinto priest blesses the company building. U.S. companies operating in Japan often
follow this practice, and this is a concession to moral relativism.
Religion and Morality
An organization called the Center for Christian Business Ethics Today offers a Christian approach to
ethical issues in business. According to the organization, God is the ultimate source of moral values: “God’s standards as set forth in God’s Word, the Bible, transcend while incorporating both the
law and ethics” (Center for Christian Business Ethics Today, n.d.). This view is by no means unique,
and is in fact part of a long history of efforts to ground morality in some aspect of religion. According to the classic view of religious ethics, true morality does not emerge from human thought
processes or human society alone. It begins with God establishing moral truths, instilling moral
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CHAPTER 1
Section 1.2 Where Moral Values Come From
convictions within human nature, and reinforcing those moral truths through scripture. Religious
believers who follow God’s path will be motivated to follow God’s established moral truths, perhaps more so than non-believers who view ethics as a purely human invention. This classic view of
religious ethics raises two questions:
1. Is God the creator of moral values?
2. Do religious believers have better access to moral truth than non-believers?
Regarding the first question—whether God creates moral values—a position called divine command
theory answers yes: Moral standards are created by God’s will. God in essence creates them from
nothing, not even basing them on any prior standard of reason or logic. God pronounces them into
existence through a pure act of will. There are two challenges that divine-command theory faces:
1. It presumes in the first place that God exists, and that is an assumption that non-believers
would reject from the start. Many religious believers themselves would hold that belief in
God is a matter of personal faith, not absolute proof, and so we must be cautious about
the kinds of activities that we ascribe to God, such as creating absolute moral truths.
2. The moral standards that God willfully creates would be arbitrary if they were made
purely from scratch, without relying on any prior standard of reason. What would prevent God from willfully creating a random set of moral values, which might include principles like “lying is OK” or “stealing is OK”? God could also willfully change his mind about
which moral principles he commands. Maybe he could mandate that stealing is wrong on
Monday, Wednesday, and Friday, but that stealing is OK during the rest of the week.
Many ethicists throughout history—even ones who were devout religious believers—have rejected
divine command theory for this reason. To avoid arbitrariness, it seems that morality would need to
be grounded in some stable rational standard, such as
with Plato’s view of absolute moral truths. That is, God
would merely endorse these absolute moral truths
since they seem rationally compelling to him; and he
does not literally create them from nothing. If morality, then, is really grounded in preexisting truths, then
we humans can discover them on our own, and do not
need to depend on God for our moral knowledge.
Copyright Bettmann/Corbis/AP Images/Anonymous
Voltaire (1694–1778), the French philosopher who famously stated that “if God
did not exist, it would be necessary to
invent him.”
fie66722_01_c01_001-026.indd 6
Again, the second question raised by the classic view
of religious ethics is whether believers have better
access to moral truth than non-believers. The answer
to this throughout much of history was yes: Religion is
an essential motivation for moral conduct. To behave
properly, people need to believe that a divine being is
watching them and will punish them in the afterlife for
immoral conduct. The French moral philosopher Voltaire (1694–1778) famously stated that “if God did not
exist, it would be necessary to invent him,” precisely
because moral behavior depends so much on belief
in divine judgment (quoted in Gay 1988, pg. 265). In
more recent times, this position has fallen out of favor,
and there is wider acceptance of the view that believers are not necessarily more moral than non-believers.
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Section 1.3 Ethics and Psychology
CHAPTER 1
One reason for this change in attitude is that our society as a whole has become much more
secularized than Voltaire’s was, and, from our experience, non-believers do not appear to be particularly bad citizens. Also, it appears that believers fall into the same moral traps as everyone else.
The upshot is that both components of classic religious ethics are difficult to establish: It is not
clear that God creates moral values, assuming that God exists, and it is not clear that believers
have a special advantage in following moral rules. It is undeniable that, for many believers, religion
is an important source of moral inspiration, and that fact should not be minimized. Undoubtedly,
this is true for the members of the Center for Christian Business Ethics Today. At the same time,
though, there are plenty of nonreligious motivations to do the right thing, such as a fear of going
to jail, a desire to be accepted by one’s family and friends, or a sense of personal integrity. In the
business world there are additional motivations to be moral, such as the desire to avoid lawsuits,
costly fines, or tarnishing the company name.
1.3 Ethics and Psychology
An important set of ethical issues involves our psychological makeup as human beings. There is
no doubt that our personal expectations, desires, and thought processes have an impact on what
motivates us to behave morally. In this section, we will look at two issues of moral psychology;
one focuses on our psychological inclination to be selfish, and the other on how gender shapes
our moral outlook.
Egoism and Altruism
When the U.S. Gulf Coast was pummeled by Hurricane Katrina, the home-improvement company
Lowe’s donated millions of dollars and coordinated busloads of volunteers to help with the cleanup.
Working alongside the nonprofit organization Habitat for Humanity, they helped rebuild homes for
people across the Gulf Coast region. Since the time of Katrina, Lowe’s has continued the practice
of partnering with charitable organizations to help rebuild disaster-stricken areas. Why do they do
this? Is it purely from a sense of goodwill towards those in need, or do they expect to get some
benefit out of it, such as free publicity? We can ask this same kind of question about our conduct
as individuals: Are we capable of acting solely for the benefit of others, or do we always act in ways
that ultimately benefit ourselves? There are two competing theories that address this question:
•
•
Psychological egoism: Human conduct is selfishly motivated and we cannot perform
actions from any other motive.
Psychological altruism: Human beings are at least occasionally capable of acting selflessly.
Both of these theories are “psychological” in the sense that they are making claims about what
motivates human behavior.
Psychological egoism maintains that all of our actions, without exception, are motivated by some
selfish drive. Even when I am doing something, like donating to charity, that appears to be purely
for the benefit of someone else, there are hidden selfish motives at work within me and I am only
acting to benefit myself. Maybe through my charitable action I secretly hope that I will receive a
Citizen of the Year award. Maybe I desire to hear the recipient of my charity thank me with gushing words of appreciation so that I can feel good about myself. The English philosopher Thomas
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CHAPTER 1
Section 1.3 Ethics and Psychology
Associated Press/Shane Bevel
Do companies like Lowe’s, which donated supplies such as this
shipment of water to Hurricane Katrina victims, act charitably
out of a sense of goodwill towards those in need, or do they
expect to get some other benefit out of it?
Hobbes (1588–1679) argued that
all acts of charity could be reduced
to our private desire to exercise
control over other people’s lives.
For Hobbes, I am the one who
decides whether a poor person
will have enough food to eat today,
and I am on a private power trip if
I help that person out (1650/1811
Human Nature). A psychological
egoist would look at Lowe’s with
similar suspicion: Their public acts
of charity are great public-relations
tools that associate their name and
products with social responsibility.
Through press releases and advertisements, Lowe’s spreads the news
of its charitable work far and wide.
The rival theory of psychological
altruism concedes that much of
our human conduct is indeed motivated by selfish desire. But, according to the altruist, there is
more going on with us psychologically than just that. We have the capacity to break free of the grip
that selfishness has on us and at least occasionally act purely for the betterment of other people.
Perhaps we have an instinct of human kindness that exhibits itself when we see people who are
truly in need. Our hearts go out to them and we want to help, regardless of whether there is any
benefit to ourselves. Maybe some of that is behind Lowe’s charitable programs. Its corporate officers and managers are personally moved by tragedies such as Katrina and recognize that Lowe’s
has unique resources to help. The public relations benefit it gains from those acts is secondary,
and the spark that ignites its charitable response is genuine concern.
Like the dispute between objectivism and relativism, this debate between psychological egoism
and altruism will not be resolved any time soon. But even if psychological egoists are correct
that all of our actions are selfishly motivated, the fact remains that human beings do perform
acts of charity, and, morally speaking, it is good for us to do so. What matters is that Lowe’s
engages in charitable projects, regardless of whether their main motivation is to bolster their
corporate image.
Gender and Morality
A recent study suggested that businesses led by women place a higher value on social responsibility than do those led by men. According to the director of the study, “women are taking the lead in
showing that profit and social responsibility can go hand-in-hand” (Llanza, 2011). Women tend to
look for a balance between profits and non-economic goals such as environmental sustainability,
charity, and community involvement. Do businessmen and businesswomen really have differing
attitudes about the role of ethics within their companies?
Underlying this question is the issue of whether men and women generally speaking have different ways of thinking about morality. The long standing assumption about morality has been that
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Section 1.4 Moral Standards
CHAPTER 1
there is only one way of thinking about it, regardless of gender. There are moral rules that guide
our conduct; we all need to learn those rules and follow them in our behavior. It is much like any
other task that we perform: If I am playing a sport, performing on a musical instrument, or operating a circular saw, there are clear rules for how I should proceed. If I do not follow those rules, then
I will not be good at the task. So too with morality: We all need to understand the rules of ethics
and follow them in order to be morally good people.
However, in recent years, this one-size-fits-all assumption about morality has been called into
question based on a reexamination of the different psychological tendencies of men and women.
Consider the types of college majors that attract men and women, respectively. Some are very male
dominated, such as mathematics, physics, and engineering. Others are dominated by women, such
as psychology, social work, nursing, and education. This suggests that men have a thought process
that emphasizes rules and are thus attracted to those disciplines that emphasize them. Women,
by contrast, place greater value
on nurturing and caring for others
and are thus attracted to those disciplines. It may well be that these
gender issues are operating on our
conceptions of morality: For men,
morality mainly involves following
rules, and for women, it mainly
involves caring for others.
A recent theory called care ethics
advances this view, maintaining
that women see morality as the
need to care for people who are
in situations of vulnerability and
dependency. They are not suggesting that we should leave the task
of caring and nurturing to women,
while letting men adhere to their
rule-following inclinations. Rather,
the task of moral care falls upon all
of us, although we should expect
women to place greater emphasis
on this than men.
Associated Press/Manuel Balce Ceneta
In this 2009 photo, first lady Michelle Obama stands at the
Capital Area Food Bank with Jill Biden (left) and Vicki Escarra
(right). Escarra was the chief marketing officer of Delta Air Lines
before becoming the CEO of Feeding America, “the nation’s
leading domestic hunger-relief charity” (Feeding America, n.d.).
Within the business world, are women are more predisposed
to integrate social concern with profit-driven business goals?
Within the business world, it may well be that women are more predisposed to integrate social
concern with profit-driven business goals, as the study mentioned before suggests. But again, this
does not mean that socially responsible conduct should be left to women. Rather, men may just
need to try harder at integrating ethical values into business planning.
1.4 Moral Standards
So far we have looked at where morality comes from and how it is shaped by human psychology.
Although these theories are important for telling us about the nature of morality, they do not necessarily tell us how we should behave, and what the moral standards are that we should follow.
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Section 1.4 Moral Standards
We turn next to that issue and explore three approaches to moral standards: virtue theory, duty
theory, and utilitarianism.
Virtues
One of the strangest business stories in recent years is that of Bernard Madoff, who scammed
investors out of $65 billion in a Ponzi scheme. He started out as a small-time investment manager,
but, courting wealthy investors from around the globe, he eventually built his roster of clients up
to 4,800. Offering a steady return of about 10% per year, he covered these payouts with money
coming in from new investors. But when his clients rushed to withdraw $7 billion during a major
stock-market decline, he could not cover those expenses and he confessed to the fraud.
The humiliation for Madoff’s whole family was so great that he and his wife attempted suicide,
and shortly afterward their son did kill himself. When we look at Madoff as a human being, we
see that his immoral business conduct was a consequence of his flawed character. His desire
for money, power, and a lavish lifestyle became so excessive that it created a trap for him from
which he could not break free. He
had what moral philosophers call
vices: bad habits of character that
result in a serious moral failing. He
was unjust, deceitful, intemperate, overambitious, and immodest. What Madoff lacked were
virtues—the opposite of vices—
which are good habits of character
that result in morally proper behavior. He did not have the virtues of
justice, truthfulness, temperance,
restraint, and modesty.
Virtue theory is the view that
morality is grounded in the virtuous character traits that people
This 2011 photo shows rows of Bernie Madoff’s shoes, which
acquire. The ancient Greek phiU.S. marshals put up for auction, along with many of his other
losopher Aristotle (384 BCE–322
belongings, to help repay the victims of his crimes.
BCE) developed the most influential analysis of virtues, which even
today is considered the standard view of the subject (trans. 2002 by J. Sachs). It all begins with
our natural urges. For example, we all have natural desires for pleasure, and we automatically
gravitate towards pleasurable activities such as entertainment, romance, eating, and even social
drinking. With each of these pleasurable activities, though, there are three distinct habits that we
can develop. On the one hand, we might eat too much, drink too much, and become addicted
to all sorts of pleasurable activities. This is the vice of overindulgence. At the opposite extreme,
we might reject every form of pleasure that comes our way, and live like monks locked in their
monastery cells. This is the vice of insensibility, insofar as we have become desensitized to the
happiness that pleasures can bring us. There is, though, a third habitual response to pleasure that
stands midway between these two extremes: We can enjoy a wide range of pleasures in moderate
amounts, and this is the virtue of temperance.
Jeff Daly/Picture Group via AP Images
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According to Aristotle, most virtues and vices match this scheme:
•
•
•
•
There is a natural urge,
there is a vice of excess,
there is a vice of deficiency, and
there is a virtue at the middle position between the two extremes.
Take the virtue of courage, which is driven by our natural fear of danger. If we go to an excess, we
develop the vice of rashness, where we lose all fear of danger and rush into hazardous situations
that might kill us. If we are deficient in courage, we become timid and develop the vice of cowardliness. The virtuous middle ground of courage is one in which we respect the dangers before us
but, when the circumstances are right, we rise above our fears.
A large part of our childhood involves cultivating virtuous habits and avoiding vicious ones, and
during our formative years our parents bear much of the responsibility to shape us in virtuous
directions. As I become older, though, the responsibility becomes mine alone, and I must think
carefully about exactly where that virtuous middle ground is. How much habitual eating can I do
before I become overindulgent? How much can I habitually hide from danger before I become a
coward? Finding that perfect middle ground, Aristotle says, is not easy, but it is something that
the moral person must figure out nonetheless. Madoff did not even come close. His desires for
wealth, power, and fame were so all-consuming that the virtue of temperance became out of
reach for him.
Duties
A small computer software company named Plurk accused the software giant Microsoft of computer code theft. The product in question was blogging software that Microsoft developed for its
market in China and which it hoped would catch hold in that country the way Facebook has in
the United States. Around 80% of the computer code for Microsoft’s product was lifted directly
from blogging software created by Plurk. Microsoft apologized for the episode and said that the
fault rested with an outside company it had hired to develop the blogging software. It was that
outside company that copied Plurk’s computer code (Nystedt, 2009). The irony is that Microsoft
zealously guards against software piracy and code theft of its own products, but here it did that
very thing, even if only indirectly. In this situation, there was no moral gray area: Theft is wrong,
the evidence for code theft was incontestable, and Microsoft had no choice but to immediately
admit to it and apologize.
This Microsoft case highlights the fact that there are at least some principles of morality that we all
clearly recognize and endorse. One moral theory in particular emphasizes the obvious and intuitive nature of moral principles. Duty theory is the position that moral standards are grounded in
instinctive obligations—or duties—that we have. It is also called deontological theory, from the
Greek word for duty. The idea behind duty theory is that we are all born with basic moral principles or guidelines embedded in us, and we use these to judge the morality of people’s actions.
There are two approaches to duty theory. First, some moral theorists hold that we have a long
catalog of instinctive obligations. The list of the Ten Commandments is a classic example. Among
those listed are obligations not to kill, steal, bear false witness, or covet your neighbor’s things.
These are all basic moral principles that cultures around the world have endorsed from the earliest
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times. If you are thinking about stealing your neighbor’s car, these principles tell you that it would
be wrong to do so. With enough principles like these, we will have some standard for judging a
wide range of human actions. Many moral philosophers have developed and expanded the list of
our intuitive duties beyond the Ten Commandments to include a few dozen of them.
The second approach is that there is a single instinctive principle of duty that we all should follow; the Golden Rule is the best example of this. That is, I should do to others what I would want
them to do to me. If I am thinking about stealing someone’s car, I should consider whether I
would want someone to steal my car. If I am thinking about lying to someone, I should consider
whether I would want someone to lie to me. So too with good actions: When considering whether
I should donate to charity, I should consider how I would feel if I were a needy person dependent
on the charity of others. Like those in the Ten Commandments, the Golden Rule is a time-honored moral
principle that we find in cultural traditions around the
world, dating back thousands of years.
In more recent times, one of the most influential theories of duty is that developed by the German philosopher Immanuel Kant (1724–1804). Inspired by the
Golden Rule, Kant offered a single principle of moral
duty, which he called the “categorical imperative”—
a term which simply means “absolute command”
(1785/1996). The categorical imperative, for Kant,
was this: Treat people as an end, and never merely as
a means to an end. His point was that we should treat
all people as beings that have value in and of themselves, and not treat anyone as a mere instrument for
our own advantage.
There are two parts to his point. The first involves
treating people as ends that have value in and of
themselves. We value many things in life, such as our
cars, our homes, and a good job. Most of the things
we value, though, have only instrumental value, that
is, value as a means for achieving something else. Our
cars are instruments of transportation. Our homes are
instruments of shelter. Our jobs are instruments of
obtaining money.
Copyright Bettmann/Corbis/AP Images
Immanuel Kant (1724–1804), the German
philosopher who developed the moral
principle of the categorical imperative, stating that we should treat people as an end,
and never merely as a means to an end.
Other times, though, we appreciate things because they have intrinsic value: We value them for
the special qualities that they have in and of themselves, and not because of any instrumental
value that they have. Human happiness has intrinsic value, and so too do experiences of beauty
and friendship. The first part of the categorical imperative, then, says that we should treat all
people as beings with intrinsic value and regard them as highly as we would our own happiness.
If I steal someone’s car, I am not respecting the owner the way I value my own happiness. The
second part of the categorical imperative is that we should not treat people as things that have
mere instrumental value. People are not tools or objects that we should manipulate for our own
gratification. If steal a car, I am using the owner for my own gain.
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Like the Golden Rule, the categorical imperative provides a litmus test for determining whether
any action is right or wrong. It not only detects immoral actions such as lying and stealing, but it
also tells us when actions are moral. When I donate to charity, for example, I am thinking of the
value of the needy people who will benefit from my contribution; I am not merely thinking of any
benefit that I may receive through my charity.
In the business world, there are occasionally times when an action is so obviously wrong that
there is no point in defending it. That was true of Microsoft and also of Madoff, who immediately
admitted to his crime once his company became insolvent. In cases like these, duty theory is at its
best. In other cases, though, morality is a little more blurry. Napster is a good example. Napster
was the first widely used peer-to-peer file-sharing program, and it enabled users to easily pirate
MP3 music files, directly violating the copyrights of record companies. While this at first appears
to be a clear case of a software product that intentionally enabled users to steal, many people
within the music industry itself defended Napster. Record companies had become stuck in their
old ways of selling records and CDs and had not developed a good mechanism for consumers to
purchase MP3 files separately at a reasonable price. Napster entered the music market as a rogue
competitor, and forced record companies to be more responsive to the needs of their consumers.
In a sense, Napster was a positive force within the music industry. Duty theory may not be well
suited for making moral pronouncements in complex cases like Napster’s; other moral theories
discussed in this chapter may need to be drawn upon.
Utilitarianism
Some years ago, a pesticide factory in Bhopal, India, owned by Union Carbide, exploded, killing
2,500 people and injuring an additional 300,000. The active ingredient for the pesticide was stored
in 600-gal tanks. The size of the tanks themselves was a problem. Larger tanks are economically
efficient, since they hold more gas, but they pose greater risks in case of a tank leak. For this reason, regulations at a similar Union Carbide factory in Germany required tank sizes to be restricted
to 100 gal. Also, the tank that exploded in the Indian plant was supposed to be refrigerated to 0 °C.
Instead, the refrigeration unit was not working and the tank was at room temperature. Although
the Indian factory had safety features to prevent disasters, several of the safety systems were not
functioning. The explosion started when someone added water to a 600-gal tank of the chemical,
perhaps an act of sabotage by a disgruntled employee. The temperature in the tank rose in a chain
reaction, and the tank blew up. A fog of the gas drifted through the streets of Bhopal, killing people
on the spots where they stood. Although Union Carbide responded quickly and compassionately
to the disaster, the tragedy raised questions about their views on safety in developing countries.
All businesses make decisions based on a cost-benefit analysis: They research both the costs and
the benefits of a particular decision, then determine whether the costs outweigh the benefits or
vice versa. In Union Carbide’s case, they determined that economic savings outweighed the economic costs of stricter safety protocols. In retrospect, it is clear that the company miscalculated
and should have given greater weight to safety.
Cost-benefit analysis is the distinguishing feature of the moral theory of utilitarianism: An action
is morally right if the consequences of that action are more favorable than unfavorable to everyone. When determining the morality of any given action, we should list all of the good and bad
consequences that would result, determine which side is weightier, and judge the action to be
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right if the good outweighs the bad. There are three components to this theory. First, it emphasizes consequences. One of the founders of utilitarianism was the British philosopher Jeremy Bentham (1748–1832), who argued that by focusing on consequences, we make our moral judgments
more scientific (1789/1907). To ground morality in the will of God requires that we have a special
ability to know God’s thoughts. To ground morality in conscience or instinctive duties requires that
we have special mental faculties and know how to use them properly. None of this is precise, and
it all relies too much on hunches. According to Bentham, a more scientific approach to morality would
look only at the facts that everyone can plainly see,
and consequences of actions are those facts. If I steal a
car, there are very clear consequences: I gain a vehicle,
but I cause financial harm and distress to the victim
and put myself at risk of a long stay in prison. We all
can see these consequences and assess their weights.
Bentham held that we can even give numerical values
to the various consequences and mathematically calculate whether the good outweighs the bad, a practice that we now call the utilitarian calculus. Not all
utilitarians go this far, but it does highlight the central
role that publicly observed consequences play in the
utilitarian conception of morality.
Associated Press/nmg
Jeremy Bentham (1748–1832), the British philosopher who developed the moral
principle, which we now call the utilitarian
calculus, that morality is determined by
numerically tallying the degree of pleasure
and pain that arises from our actions.
The second component of utilitarianism is that it
focuses on the consequences of happiness and unhappiness. While businesses assess costs and benefits
in terms of financial gains and losses, utilitarianism
focuses instead on how our actions affect human happiness. Some utilitarians, like Bentham, emphasize
pleasure and pain; others emphasize goodness and
badness; and still others emphasize overall benefit
and disbenefit. What they have in common, though, is
that moral conduct is in some way linked with human
happiness and immoral conduct with unhappiness.
The third component of utilitarianism is that we need to assess the beneficial consequences of
actions as everyone is affected. If I am thinking about stealing a car, I need to consider the consequences of my conduct for myself, my family, the victim, the victim’s family, and anyone else who
might be affected by my action. This is reflected in utilitarianism’s famous motto that we should
seek the greatest good for the greatest number of people.
Because businesspeople are so familiar with financial cost-benefit analysis, utilitarianism is a natural way to make moral assessments with business decisions. Take the Bhopal catastrophe as an
example. In retrospect, we can see that the company and its stockholders gained a certain amount
of benefit through financial savings from lax safety regulations. However, at the same time, we can
see that this was greatly outweighed by the disbenefit from the deaths and injuries. It also created
disbenefits for the company itself in terms of bad public relations, lawsuits, and decreased stock
value. At the time, of course, Union Carbide could not have known with certainty that its lax safety
standards would have resulted in a disaster of such magnitude. However, an impartial risk assessment of its facility would have revealed that there were serious safety hazards, and that alone
would have tipped the utilitarian scale.
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Section 1.5 Morality and Government
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1.5 Morality and Government
In this final section, we will examine some moral theories that pertain to governments and the
laws that they create. From the start, it is important to look at the boundaries that separate morality and the law that governments create. What they have in common is that they both command
us to behave in certain ways, and often their edicts are the same. It is immoral to steal, and it is
also illegal. It is immoral to assault someone, and it is also illegal.
However, there are many instances where morality and legality do not overlap. Adultery, for
example, is immoral, but in the United States it is not illegal in most states. So too with cheating
on school exams. Similarly, there are some actions that are illegal but not immoral. Going 36 in a
35-mph zone is illegal but not necessarily immoral. Similarly, some instances of mercy killing may
be morally justifiable, even though they are currently illegal.
Morality is an important source of inspiration for the law, but it is not the last word on the issue. In
business ethics, it is often important to consider issues of morality and legality separately. Perhaps
we will find some immoral actions in business which are not illegal but should be. Or we might find
some morally permissible actions that are illegal, but should be made legal.
The three main issues that we will focus on are social-contract theory, human-rights theory, and
theories of governmental coercion. The driving questions here are: What is the origin of governmental authority? What is the main purpose that governments serve? What are the limits to the
laws that governments can create?
The Social Contract
Business by its very nature is dog-eat-dog, where one company tries to draw customers away from
the competition, perhaps to the point of putting the competition out of business. Sometimes
efforts to succeed can go too far and involve intentionally sabotaging the competition by stealing trade secrets, publishing misleading attack ads, or even vandalizing property. For example, an
owner of a pizza restaurant in Philadelphia was charged with releasing mice into two competing
pizzerias. The owner went into the bathroom of one competitor and placed a bag of mice in the
drop ceiling. He then crossed the street, entered a second one, and placed another bag of mice
into a garbage can. When caught and arrested, he claimed that he was just getting even for his
competition doing the same thing to him (Kim, 2011).
Even though business is inherently cutthroat, there are still requirements for civil behavior and
limits on how far one can go in defeating the competition. Without those requirements, business
competition would descend into gang warfare and ultimately destroy the economic playing field
that is required for businesses to even exist.
This is precisely the rationale behind social contract theory: To preserve our individual lives, we
agree to set aside our hostilities towards each other in exchange for the peace that a civilized
society offers. The champion of this view is Thomas Hobbes, who, as we saw earlier, defended the
theory of psychological egoism. Hobbes began by having us think about what the world would be
like if there were no governments and laws to keep society peaceful. In his words, what would the
state of nature be like, in which every person was seeking to survive in competition with everyone
else, without the protection of the government? His answer was that it would be a condition of
war between every person, and two factors make this so:
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1. First, life’s necessities are scarce, and it is a constant struggle for us to adequately supply
our basic needs like food, clothing, and shelter.
2. Second, we are not by nature generous, and we will not be inclined to share what we
have with others.
As a psychological egoist, Hobbes held that we will
always be interested in our own personal interests
and that we are not capable of acting towards others
with true altruism. If we were capable of acting selflessly, then we would peacefully divide up the scarce
resources that we all need. If I find an apple, and then
see that you are hungry, I will naturally be inclined to
split the apple with you. But, according to Hobbes, our
natural inclination towards selfishness prevents us from
doing this. The result, then, is that the state of nature
is really a state of war, which he vividly describes here:
In such condition there is no place for
industry, because the fruit thereof is
uncertain, and consequently, no culture
of the earth, no navigation, nor use of
the commodities that may be imported
by sea, no commodious building, no
instruments of moving and removing
such things as require much force, no
knowledge of the face of the earth, no
account of time, no arts, no letters, no
society, and which is worst of all, continual fear and danger of violent death,
and the life of man, solitary, poor, nasty,
brutish, and short. (Hobbes, 1651/1994)
Copyright Bettmann/Corbis/AP Images/Anonymous
Thomas Hobbes (1588–1679), the English
philosopher who developed the concept
of the social contract, and famously stated
that in the state of nature, “the life of man
[is] solitary, poor, nasty, brutish, and short.”
Within the state of nature, there is no point in my even trying to grow a garden, build a home, or
furnish it: Someone would just come along and take it from me by force.
How, then, do we escape from the horrible conditions of the state of nature? The answer for
Hobbes was the social contract, which has three steps:
1. First, I must recognize that seeking peace is the best way for me to preserve my life. I will
always be selfish, and that will never change. However, I must see that I can better my
own situation by seeking peace with my competition.
2. Second, I must negotiate a peace settlement with you: I will set aside my hostilities
towards you if you set aside your hostilities towards me. If we mutually agree to be civil
to each other, then we will both have the hope of living better lives.
3. Third, we must establish a governmental authority that will punish us if we break our
agreement. Talk is cheap, and I can verbally agree to a peace treaty with you but then
attack you when your guard is down. And you can do exactly the same thing to me. But if
we create a policing power to watch over us, then I will be strongly motivated to hold to
my agreement with you, and so will you.
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In the business world, it is essentially a social-contract agreement that keeps us from sabotaging
our competitors. Our natural selfish inclination might be to destroy our competition by any means
necessary, but doing so would lead to a savage state of war where we would all be losers. The
best business strategy, then, is a negotiated peace settlement where all businesses play by a set of
rules. To keep us from cheating on those rules, there are governing bodies such as governments
and professional business associations that can punish us when we break them. Business is still
motivated by self-interest, but it is now constrained to be civil.
Human Rights
The U.S. Civil War was in many ways the result of a business-ethics dispute. The earliest Spanish
settlers of North America brought African slaves with them to help cultivate the land and build
towns, and slavery quickly became integral to business activities throughout the colonies. By the
time of the American Revolution, slavery in the North had declined, partly because of a manufacturing economy where it cost more to own and maintain slaves than the slaves could economically
produce. However, in the agricultural economy of the South, slave labor was still cost-effective.
As the antislavery movement took hold, Southern slaveholders asked who would compensate
them for their financial investment in their slaves if the slaves were to be freed. There were no
clear answers to this question, and so the slaveholders saw abolitionism as a direct threat to their
economic rights. They saw the North as posturing to steal their property and gut their capacity to
compete in the agricultural marketplace.
We now see slavery as one of the worst chapters in American history, regardless of the economic
arguments of the slaveholders. And even today, we are horrified to hear of slavery-like conditions around the world, where laborers are sometimes kidnapped or otherwise coerced into
working in sweatshops or on farms with grueling hours, horrible conditions, and meager pay. We
see these as rights violations that can never be morally justified by any economic benefit to the
business owner.
The central idea here is that of a right, which is a justified claim against another person’s behavior.
For example, I can rightfully claim that you cannot steal from me, torture me, enslave me, or kill
me. I am making a claim about what you can and cannot do. When asserting our various rights, it
is important to distinguish between two types:
•
•
Legal rights are those created by governments. The government, for example, has established laws that grant me the right to drive when I reach a certain age, or carry certain
types of weapons, or visit publicly owned parks.
Human rights—also called natural rights—are not created by governments but are rights
all people around the world have regardless of the country in which they live. The rights
against slavery and torture are commonly listed among these.
There are three distinct features of human rights:
•
fie66722_01_c01_001-026.indd 17
They are natural in the sense that we are born with them. They are not given to us by the
government or any other human institution, but are part of our identity by our merely
being born as human beings.
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Section 1.5 Morality and Government
•
•
They are universal in that all humans worldwide
possess them. No matter who you are or where
you live, you have human rights.
They are equal in the sense that we all have the
same list of fundamental human rights, and no
one has more or fewer than another person.
The concept of human rights was first developed by
the English philosopher John Locke (1632–1704), who
argued that by nature everyone has the basic rights
to life, health, liberty, and possessions. God gives us
these when we are born, and we retain them throughout life, so long as we do not violate the rights of others. For Locke, the right to acquire possessions was
the source of our economic freedom and the ability
to conduct business transactions. Once I rightfully
acquire possessions, I can keep them or sell them as I
Copyright Bettmann/Corbis/AP Images/Anonymous see fit. However, just as Hobbes warned, the world is
a nasty place, and many out there will want to violate
John Locke (1632–1704), the English phimy rights and take what I have. According to Locke,
losopher who developed the concept of
we establish governments specifically for the purnatural rights and the right of citizens to
pose of protecting our fundamental rights: We suboverthrow governments that fail to protect contract to the government the job of keeping the
their rights.
peace. If the government adequately performs its
task of protecting our rights, then we all benefit. If
the government fails in that task, however, we have a right to overthrow the government and
replace it with a better one that can more adequately do its job.
Thomas Jefferson, when penning the Declaration of Independence, latched onto this exact part
of Locke’s theory:
We hold these truths to be self-evident, that all men are created equal, that they
are endowed by their Creator with certain unalienable Rights, that among these
are Life, Liberty, and the pursuit of Happiness. That, to secure these rights, Governments are instituted among Men, deriving their just Powers from the consent
of the governed. That, whenever any form of Government becomes destructive
of these ends, it is the Right of the People to alter or to abolish it, and to institute
new Government.
Through Jefferson, the concept of human rights has become embedded into the American mindset, and it has inspired countries around the world to similarly acknowledge human rights.
But the concept of human rights took its modern form through a document called the Universal
Declaration of Human Rights, which was adopted by the United Nations General Assembly in 1948.
The Universal Declaration reiterates the same core set of human rights as Locke and Jefferson:
“Everyone has the right to life, liberty and security of person” (1948, Article 3). However, the document continues by listing a range of very specific rights, such as these pertaining to businesses:
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Section 1.5 Morality and Government
1. Everyone has the right to work,
to free choice of employment,
to just and favourable conditions of work and to protection
against unemployment.
2. Everyone, without any discrimination, has the right to equal
pay for equal work.
3. Everyone who works has the
right to just and favourable
remuneration ensuring for himself and his family an existence
worthy of human dignity, and
supplemented, if necessary, by
other means of social protection.
4. Everyone has the right to form
and to join trade unions for the
protection of his interests.
Everyone has the right to rest and leisure,
including reasonable limitation of working hours and periodic holidays with pay.
(Universal Declaration of Human Rights,
1948, Articles 23–24)
Although not all of the human rights listed in the Universal Declaration have yet become a reality around
the world, it is nevertheless the standard towards
which all countries within the United Nations have
pledged to work.
Principles of Governmental Coercion
What Would You Do?
Say you are a midlevel supervisor at
a sportswear company that specializes in athletic footwear. You have just
found out that some of your manufacturing facilities in Bangladesh hire
child workers as young as age 10. They
work 14 hours a day, 7 days a week,
and receive wages as low as 20 cents
an hour. You know that this is a clear
human-rights violation.
1. Would you discuss your moral
concerns with your superiors in
the company?
2. Suppose you did discuss your concerns with them and their response
was essentially that this was standard practice in Asian countries,
and what your company was doing
was no different from what any
other company does that has textile facilities in those countries.
Also, if your company set higher
standards, it would not be able
to compete in the marketplace.
Would this explanation satisfy you?
3. Suppose that the response of your
superiors was that they acknowledged the problem and were
working on it, but that it would
take several years before this practice could be eliminated. Would
this explanation satisfy you?
4. Suppose that your company stated
in its advertising and packaging
that no child labor was used in
manufacturing its products. You
knew, though, that this was not
true. Would you bring this to the
attention of a government agency?
To effectively compete in the marketplace, businesses
are continually pushing the boundaries of tasteful advertising. Presenting shocking and even offensive images
in advertisements will attract attention, and may generate sales. A quick online image search for “offensive
advertisement” will reveal a range of troubling ads that
are sexually explicit, demeaning to women or minority
groups, or offensive to religious groups. A case in point
is an advertisement by the Italian clothing company
Benetton that contained an altered image of the Catholic pope romantically kissing a Muslim imam. In keeping with the company’s theme of multiculturalism, a spokesperson said that “the meaning of this campaign is exclusively to combat the culture of
hatred in all its forms” (Rocca, 2011). When the Vatican threatened to sue, Benetton removed the ad.
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While ads like Benetton’s may be offensive to some people, they nevertheless may be perfectly
legal. That raises the question of how bad an action needs to be before the government steps in
and makes it illegal. All governments are coercive in the sense that they force us to conform to
laws under threat of punishment. PepsiCo would not burn down Coca-Cola’s company headquarters, even if it wanted to, because of how the government would punish it. But governments cannot randomly single out some actions as criminal and allow others to be legal. There are reasons
why some actions are prohibited and others are not. There are four common justifications of governmental coercion: the harm principle, the offense principle, the principle of legal paternalism,
and the principle of legal moralism.
The first is the harm principle: Governments may restrict our conduct when it harms other people.
Burning down Coca-Cola’s headquarters could injure and kill many people, and would undoubtedly cause financial harm to the company. However, for the government to step in and outlaw
harmful actions, the injury must be serious, not trivial. For example, almost all fast-food products
are harmful in comparison to organic food alternatives. However, serving unhealthy food is far less
serious than serving food tainted with salmonella, which causes severe illness and even death.
Thus, the government cannot reasonably outlaw fast food, whereas it justifiably can do so with
salmonella-tainted food.
Second is the offense principle: Governments may keep us from offending others. We cannot
walk naked through the streets, be publicly intoxicated, or shout obscenities in playgrounds. As
with the harm principle, the offense principle also looks at the degree to which a particular action
is objectionable: Is it outrageously offensive or merely a nuisance? Benetton’s ad touches on this
very issue. It was certainly offensive to specific groups of Catholics and Muslims, but whether it
was deeply offensive to society at large is another matter. Again, Benetton’s ad was perfectly legal,
which means that in our present cultural climate, it was not offensive enough to be illegal.
Third is the principle of legal paternalism, which is a sister concept to the harm principle. While
the harm principle focuses on the harm our actions cause to other people, legal paternalism looks
at the harm that we cause ourselves through our actions and maintains that the government can
restrict such conduct. I can hurt myself by participating in a dangerous sport such as cliff diving or
by working in a dangerous occupation such as tree trimming. When the government mandates
that I wear a seat belt when driving, the concern is principally with protecting me from my own
careless conduct. The term paternalism comes from that Latin word for father, which implies that
the government is overseeing my conduct in the way that parents try to protect their children. But
does the government have any business in doing this? Yet again, the question is one of degree.
With our stupidest and most dangerous actions, we may want the government to protect us from
ourselves. However, with an action that does not cause serious harm to me, I may want the government to just leave me alone.
Finally, there is legal moralism: Governments may restrict conduct that is especially sinful or
immoral. Prime examples of this are laws against blasphemy and some sex acts, such as sodomy.
The question here is not whether a type of conduct is harmful to others, publicly offensive, or
harmful to oneself. It is a matter of whether an act, even when done privately, crosses some
moral boundary that justifies the government’s stepping in. Of all the principles of governmental coercion, legal moralism is probably the weakest. One reason is that many moral and
religious standards vary widely, and by outlawing an action solely on moral or religious grounds,
the government may be unfairly adopting the standards of one cultural group and applying
them to everyone.
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Section 1.6 Conclusion
CHAPTER 1
Although legal moralism may be the weakest of the
four principles, some of the others may also be seriously questionable. The British philosopher John
Stuart Mill argued that, in fact, only one principle of
governmental coercion is justifiable, namely the harm
principle. The government has no right to restrict our
conduct on the other three grounds. In Mill’s words:
The only purpose for which power can
be rightfully exercised over any member
of a civilized community, against his will,
is to prevent harm to others. His own
good, either physical or moral, is not a
sufficient warrant (1859/1999).
The reason, according to Mill, is that a wide sphere
of personal liberty is essential for a happy society,
and that includes the possibility of offending others,
harming ourselves, or crossing some traditional moral
boundary. Do we want to decide for ourselves what
makes us happy, or do we want the government to do
so? From Mill’s perspective, I am a better judge of my
own happiness than the government ever could be,
and society on the whole will be a happier place when
we are each allowed that freedom.
Copyright Bettmann/Corbis/AP Images/Anonymous
John Stuart Mill (1806–1873), a British
philosopher who defended personal liberty and argued that government should
restrict our conduct only when we harm
others, not when we merely offend others,
harm ourselves, or behave immorally.
All of these principles of governmental coercion apply
to businesses just as they do to individual people.
Again, with Benetton, although their ad was offensive
to some groups, the offense was not serious or widespread enough to justify its being illegal. But
with many ad campaigns, merely being legal may not be good enough. Public opinion can be as
coercive as any government-imposed restriction. If Microsoft, PepsiCo, or any other Fortune 500
company published an ad with the pope kissing a Muslim, the backlash would likely be financially
crippling. Catholics and Muslims worldwide might boycott their products. Benetton is a much
smaller company, with a specialized market niche and a history of using shocking ads to get consumers’ attention. Not so with Microsoft and PepsiCo, which have much broader customer bases
worldwide. With them, consumer coercion is as powerful as governmental coercion.
1.6 Conclusion
In this chapter we have looked at a wide spectrum of classic moral theories and showed how
they apply to an equally broad spectrum of business ethics issues. These are moral theories
that, 1,000 years from now, will be just as important as they are today; in a sense, they define
the moral thought process for humans. The philosophers who proposed these various theories
were not always in agreement with each other; in fact, they rejected many rival moral theories.
Bentham believed that all moral and social issues should be decided solely using the utilitarian
principle, not through theories about religion, virtue, duty, social contracts, or human rights.
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Similarly, Kant believed that the categorical imperative was the single moral litmus test. But
exclusive claims like these are much like efforts at brand loyalty in the business world. Walmart
would like us to shop at only their stores. Coca-Cola would like us to drink only their beverages.
Exxon would like us to buy only their gas. But in the real world, our purchasing habits are more
diverse and we are drawn to a range of different stores and products.
So too with moral theories: In the real world, when we reflect on moral issues, some theories will
be more relevant or illuminating than others. Bentham’s utilitarianism may be helpful with some
types of moral evaluations, but not with others. The same is true for the other theories that we
have examined. We are trapped in a morally complex world that demands that we make moral
choices. One way or another we will do that, and drawing on all of the various moral theories can
help make the job easier.
In the following chapters of this book, all of the issues covered can be analyzed using these classic
moral theories. As authors, though, we have not forced that approach. Issues such as price fixing,
corporate punishment, consumer advocacy, insider trading, and others are challenging enough in
their own right, without the added intricacies of a utilitarian or duty-theory analysis. Nevertheless, classic moral theories are always lurking in the background of most of these discussions. Does
a particular government regulation serve the greatest good for the greatest number of people? Do
affirmative action policies violate the rights of majority groups? Do we have special moral duties
to protect the environment? A full evaluation of business-ethics issues may greatly benefit from
the contributions of classic moral theories.
Summary
We began this chapter looking at theories of where morality comes from and the debate between
moral objectivism and moral relativism. Moral objectivists claim that moral standards are not created by human beings, are unchanging, and are universal. Moral relativists hold the opposite view,
that moral standards are created by human beings, change from society to society, and are not
universal. Also relevant to the question of where morality comes from is the connection between
religion and ethics. Divine command theory is the position that moral standards are created by
God’s will, but we saw some challenges to this view. Religious ethical theories also commonly hold
that religious believers have a special moral ability; we looked at challenges to this view as well.
We next looked at ways in which our human psychological makeup might affect how we view
morality. One issue concerns our ability to act selflessly. Psychological egoists hold that human
conduct is selfishly motivated and we cannot perform actions from any other motive. By contrast,
psychological altruists hold that people are at least occasionally capable of acting selflessly. Also
of relevance is how gender shapes men’s and women’s conceptions of morality. Care ethics is the
theory that women see morality as the need to care for people who are in situations of vulnerability and dependency.
One of the central concerns of ethical theory is to present and explain the moral standards that
guide our behavior. One such approach is virtue theory, which is the view that morality is grounded
in the virtuous character traits that people acquire. According to Aristotle, virtues are good mental
habits that regulate our urges and stand at a mean between vices of deficiency and vices of excess.
Another approach is duty theory, which holds that moral standards are grounded in instinctive
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obligations. Some duty theories propose a list of obligations, such as the Ten Commandments, and
others propose a single principle, such as the Golden Rule. Kant offered a single principle that he
called the categorical imperative, which states that we should treat people as an end and never
as a means to an end. A third approach is the theory of utilitarianism, which holds that an action
is morally right if the consequences of that action are more favorable than unfavorable to everyone. Bentham developed the idea of the utilitarian calculus, whereby numerical values could be
assigned to the positive and negative consequences of actions.
The final component of this chapter explored the relationship between morality and government.
One major theory on this is social contract theory. Hobbes described a warring state of nature generated by human selfishness and scarcity of necessities. The solution is the social contract, which
holds that, to preserve our individual lives, we agree to set aside our hostilities towards each other
in exchange for the peace that a civilized society offers. A second important theory on the relationship between morality and government is the concept of human rights. These are rights that are
not created by government, but are held equally by all people around the world regardless of the
country in which they live. The theory was developed by Locke, who held that by nature, everyone
has the basic rights to life, health, liberty, and possessions. People establish governments for the
purpose of protecting those fundamental rights, and governments can be overthrown when they
fail to perform that task. A third theory on the relation between morality and government involves
four principles of governmental coercion. They are the harm principle, whereby governments may
restrict our conduct when it harms other people; the offense principle, which restricts our behavior that offends others; legal paternalism, which restricts an individual’s actions that harm him- or
herself; and legal moralism, which restricts especially sinful or immoral conduct. Mill argued that
only the harm principle is justified, and the other three are not.
Discussion Questions
1. There are several theories about where moral values come from, including moral objectivism, moral relativism, and divine-command theory. Which if any of these theories
works best when understanding the moral obligations of businesses?
2. Assume that the theory of psychological egoism is true, that all human actions are selfishly motivated. Is there a way that the decision-making process within a large corporation can overcome this fact of human selfishness? Could the corporation, for example,
establish a charity program that was designed only to benefit the needy, with no public
relations benefit to the company at all?
3. According to virtue theory, to be morally good people we should develop virtuous habits
like courage, temperance, wisdom, and justice. Can there be such a thing as a “virtuous
corporation”? If so, what are the virtuous habits that it would need to have?
4. According to duty theory, there are fundamental principles of moral obligation that we
all know instinctively, such as do not kill or steal. Are there any fundamental principles of
business ethics that everyone in business automatically knows they should follow?
5. According to Kant’s theory of the categorical imperative, we should treat people as an
end, and never merely as a means to an end. Think of an example in business that violates this principle and explain how it does that.
6. Consider the issue of child labor mentioned in the “What Would You Do?” box. Use a
utilitarian analysis to determine whether use of such labor would be morally permissible
for your company.
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7. The Universal Declaration of Human Rights lists several rights that pertain to businesses
(see that list in the chapter). Would you agree that all of those are genuine human
rights? Explain.
8. There are four principles of governmental coercion that explain why the government is
justified in restricting our actions. It is clear how the harm principle applies directly to
businesses: Businesses should not engage in conduct that causes serious harm to others,
such as by manufacturing unsafe products, dumping toxic waste, or having unsafe working conditions for employees. Explain how the other three principles of governmental
coercion might apply to business conduct.
Key Terms
care ethics The theory that women see morality as the need to care for people who are in
situations of vulnerability and dependency.
human rights Rights that are not created by
government, but held by all people around
the world regardless of the country in which
they live.
categorical imperative The moral principle
proposed by Immanuel Kant that we should
treat people as an end, and never merely as a
means to an end.
legal moralism The view that governments
may restrict conduct that is especially sinful or
immoral.
cost benefit analysis The economic modeling of a project to check whether the benefits
outweigh the costs.
legal paternalism The view that governments
can restrict the conduct of an individual who
harms him- or herself.
divine-command theory The view that moral
standards are created by God’s will.
legal rights Rights that are created by
governments.
duty theory The view that moral standards
are grounded in instinctive obligations, that is,
duties.
moral objectivism The theory that moral standards are not created by human beings, are
unchanging, and are universal.
ethics An organized analysis of values relating
to human conduct, with respect to their rightness and wrongness.
moral relativism The theory that moral standards are created by human beings, change
from society to society, and are not universal.
Foreign Corrupt Practices Act A U.S. Federal
law regulating the operation of U.S. companies
in foreign countries, which includes an antibribery provision.
offense principle The view that governments
may keep us from offending others.
harm principle The view that governments
may restrict our conduct when it harms other
people.
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psychological altruism The theory that human
beings are at least occasionally capable of acting selflessly.
psychological egoism The theory that human
conduct is selfishly motivated and we cannot
perform actions from any other motive.
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right A justified claim against another person’s
behavior.
social-contract theory The moral and political
theory that, to preserve our individual lives,
we agree to set aside our hostilities towards
each other in exchange for the peace that a
civilized society offers.
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utilitarianism The theory that an action is morally right if the consequences of that action are
more favorable than unfavorable to everyone.
virtue theory The view that morality is
grounded in the virtuous character traits that
people acquire.
virtues Good habits of character that result in
morally proper behavior.
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