4 Copyright 2016. Routledge. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. UTILITARIANISM Learning Objectives Upon completing this chapter, the reader should be able to: •• •• •• •• •• Define utilitarianism Discuss what is meant by the greatest happiness or good for the greatest number Identify and discuss similarities and differences between utilitarianism as an approach to ethics and cost benefit analysis as used in business Identify and discuss two major problems with the utilitarian approach Identify and discuss the main benefit of the utilitarian approach to ethics. Throughout the history of philosophy, thinkers have addressed the question of what makes an act moral or immoral (for purposes of this and the following discussions, we will use the terms “moral” and “ethical” interchangeably).1 A variety of answers have been given. In this and the following two chapters, we will consider in some detail the three most common answers to the question. In this chapter, we examine the approach to ethics or morality known as utilitarianism. The Greatest Happiness or Greatest Good Utilitarianism is the philosophical approach which says that the moral act is the one that creates the greatest happiness or good for the greatest number of people. Because this approach judges morality based on consequences, it is classified as teleological. Are the greatest happiness and the greatest good the same thing? Broadly speaking, utilitarians answer yes. In the last chapter, we saw EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS AN: 1249059 ; Joseph Gilbert.; Ethics for Managers : Philosophical Foundations and Business Realities Account: s4264928.main.edsebook Utilitarianism 49 that Aristotle discussed ethics at length, principally in his Nicomachean Ethics.2 In the first chapter of that work, he asks what might be the ultimate reason to do something. I might practice the flute because I want to be a better flute player, but a further logical question is why I want to become a better flute player. Finally, there must be something which people pursue for itself (an ultimate end) and not just because it leads to something else (an instrumental end). After discussing various possibilities, Aristotle concludes that humans pursue as their ultimate end “eudaimonia.”3 This Greek word has no exact English translation. It literally means good-spiritedness. It is sometimes translated as “happiness” but this does not capture the full flavor of the idea which Aristotle describes. The term does not simply refer to an emotional state, but also has the sense of wellbeing of the spirit.4 Different philosophers have provided different answers to this question of the ultimate end of human action. For Kant, it involved doing one’s duty with a good will. For others, it involves being fully rational. Still others would describe it as acting in accord with one’s own nature, without influence from social conventions. The two philosophers most often associated with utilitarianism were both Englishmen: Jeremy Bentham (1748–1832) and John Stuart Mill (1806–1873). Bentham was particularly interested in the reform of British law. In 1789, he published An Introduction to the Principles of Morals and Legislation,5 which is perhaps the clearest statement of his views on utilitarianism. Chapter 1 opens with this statement: Nature has placed mankind under the governance of two sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do, as well as to determine what we shall do. On the one hand the standard of right and wrong, on the other the chain of causes and effects, are fastened to their throne.6 He defines the principle of utility as follows: By the principle of utility is meant that principle which approves or disapproves of every action whatsoever, according to the tendency which it appears to have to augment or diminish the happiness of the party whose interest is in question: or, what is the same thing in other words, to promote or to oppose that happiness.7 John Stuart Mill’s work Utilitarianism was first published in 1861. In this extended essay, he develops further and comments on Bentham’s writing on the subject. In chapter 2, Mill says the following: The creed which accepts as the foundation of morals, Utility, or the Greatest Happiness Principle, holds that actions are right in proportion EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use 50 Ethical Theory as they tend to promote happiness, wrong as they tend to produce the reverse of happiness. By happiness is intended pleasure, and the absence of pain; by unhappiness, pain, and the privation of pleasure. To give a clear view of the moral standard set up by the theory, much more requires to be said; in particular, what things it includes in the ideas of pain and pleasure; and to what extent this is left an open question. But these supplementary explanations do not affect the theory of life on which this theory of morality is grounded—namely, that pleasure, and freedom from pain, are the only things desirable as ends; and that all desirable things (which are as numerous in the utilitarian as in any other scheme) are desirable either for the pleasure inherent in themselves, or as means to the promotion of pleasure and the prevention of pain.8 Results Orientation Although it could be interesting to actually sit back and think about what our ultimate ends might be, in most cases we make decisions based on more immediate concerns—what philosophers would call instrumental or intermediate ends. We approve adding six new salespeople because we are persuaded that the additional revenue they generate will not only cover their own costs, but also provide an increment of profits to the company. However, an immediate need or opportunity for increased sales is the driving force for hiring additional salespeople. We choose to go to the dentist and have a root canal performed not because we enjoy pain as an ultimate end, but because the temporary pain of the dental procedure will result in a longer pain-free period afterward. However, current pain and its relief may provide the stimulus to seek dental treatment. We promote this person rather than that person not so much because it will make either us or them happy (although it may do both) but because we expect that they will perform well in their new job and thus produce desirable results. However, the amount of work being delayed by having this position vacant is an important factor in making the choice. When we decide on the morality of an action based on the results that will be achieved, we are engaging in utilitarianism. This is different from choosing an action because it is simply the right thing to do. The charge is sometimes raised that utilitarianism is wrong because it is based on the notion that the end justifies the means. This is a saying that is often quoted, and seldom analyzed. It is true that utilitarianism is based on ends justifying means. Because an action will cause the greatest good for the greatest number (our end in taking the action), the means to that end are justified or found moral. Without examining what we are doing, we often make decisions on precisely this basis. The decision to pursue an MBA degree may mean that for the next two years the student will have less time to spend with family and friends, less money to spend EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use Utilitarianism 51 on clothes or a car or other desirable things, and less energy left over for recreational pursuits or even for work. What justifies these results? Utilitarianism requires that we examine second-order and even third-order results, as well as immediate or first-order results. In the prospective student’s mind, the knowledge and skills gained in an MBA program, or the higher level jobs open only to individuals with this degree, or the increase in career compensation that the degree will bring, or all of these factors justify the time spent in studying and the pleasures foregone during the MBA program. In other words, the end justifies the means. Suppose we consider this same investment from a different perspective. If I ask whether it is ethical for a man to choose to spend a good part of every weekend for an extended period sitting alone reading or typing on his computer, while depriving his wife and child of his company, you might answer that it is certainly not ethical. At least not if he is reading about the history of the National Football League and its teams and players, and typing his entries in a fantasy football league. In both cases the man spends his weekends reading and typing, but in one (pursuit of an MBA) both the man and his wife may agree that the end (obtaining an MBA and the career opportunities that it will bring) does justify the means. In the other case, where the end is improved performance in his fantasy football league, perhaps no one except his fellow players will agree that the end justifies the means. To many people, the statement “the end justifies the means” is the same as “a good end justifies any means.” Increased profit for my business is a good end, but it does not justify my employing eight-year-old children for twelve hours a day and paying them a dollar an hour. It also does not justify ignoring safety concerns and selling a product or service with a high likelihood of harming or killing my customers. However, if my employees are seriously overpaid and my company is about to go bankrupt due to uncompetitive pricing caused by labor costs, reducing either wages or staff or both may well be justified in order to keep the company operating and prevent all employees from losing their jobs. Truth might be better served by re-phrasing the principle to say “ends often justify means.” Most actions of managers cause more than one result. Quite often, significant managerial actions cause happiness for some affected individuals, and unhappiness for others. This would be true if no one had ever identified a certain approach to ethics as utilitarianism. It does not matter in terms of the results whether the manager intended or was aware of them or not. When ocean surf is breaking near the shore, it is sometimes possible to stand waist-deep in water and have approaching waves break over one’s head. If the swimmer faces the waves, she can choose to dive into the next wave, or move quickly back toward shore, or swim out beyond where the waves are breaking. If the swimmer stands facing the shore and refuses to acknowledge the waves, the next one that breaks over her head will knock her off her feet, tumble her around a bit, and provide a less-than-pleasant experience. EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use 52 Ethical Theory A manager can look forward, consider the consequences of a proposed action, and perhaps take one of several actions to change those consequences, up to and including not taking the proposed action. Or, the manager can refuse to face the consequences.9 However, refusal to face them does not usually change consequences. More often it results in being knocked off one’s feet, tumbled around a bit, and enduring a less-than-pleasant experience. Utilitarianism maintains that the moral thing to do is to face the consequences, and to act in ways that will maximize the happiness or the good that will result from an action. The recent Great Recession might have been avoided or at least mitigated if managers at financial firms had faced the likely consequences of their actions and changed their behavior accordingly.10 The statement was made in the introductory chapter that this book has two purposes: to make the reader aware of the ethical consequences of managerial actions, and to provide tools for thinking through difficult ethical questions. Utilitarianism as a perspective on ethics performs both of these functions. If we consider whether an action will provide the greatest good or happiness for the greatest number of people, we automatically must think about what people will be affected, for good or for ill, by our action. Consider the action of laying off employees. Some employees who now work for the company will be told they no longer have jobs. The reason is not that they have performed badly enough to be fired, or have committed offenses that make it impossible for them to continue in their jobs. Rather, they are being laid off because the company has more employees than it needs, and they have been chosen for termination. Obviously the laid off employees are affected by this decision; more than likely, so are their families. What of their fellow employees? Someone will have to do the work formerly done by those laid off, and the prime candidates are their fellow employees. It is logical that other employees who were formerly comfortable in their positions will now fear for their jobs. Morale among these employees is likely to go down. If work is not done as well following the layoffs, customers may be affected. If the layoffs and resultant decrease have their desired effect, profits may rise, the stock price may go up, and stockholders may benefit. The results described above will occur whether or not the manager deciding on layoffs foresees them. Some people will benefit, some will be burdened. Whether the net result is the greatest good for the greatest number or not, a number of individuals and groups will be affected by the decision that the manager makes. Utilitarianism requires that the manager think about these results, and calculate their net impact, before deciding. Obviously no one can mathematically calculate the total impact on all parties, but the manager who fails to consider and estimate the various impacts of her action is not being moral, according to utilitarianism. Not everyone does take such consequences into account. Financial analysts generally applaud layoffs. When a company announces that it is laying off employees, and taking a one-time charge to cover the costs of these layoffs, EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use Utilitarianism 53 it is often the case that the company’s stock rises immediately following the announcement. The logic that seems to lead to this result involves the conclusion that layoffs mean fewer workers, less labor cost, and hence more profits. The impact on laid off workers and on remaining employees, and the possible consequences of being understaffed and having employees whose morale is reduced by layoffs does not seem to be factored into the analysis that leads to increasing stock prices as a result of layoffs.11 Cost-Benefit Analysis Cost-benefit analysis is a utilitarian approach to evaluating proposed expenditures in business or in government. The basic concept behind cost-benefit analysis is that spending money, time, and effort might be justified by the results to be achieved, but it also might not. Since this sort of analysis is future-­oriented, it will necessarily be less precise than analysis of expenditures that have already been made, and results that have already been achieved. As we will see in Chapter 11 on ethical analysis of financial reporting, it is somewhere between very difficult and impossible to give a fully accurate financial picture of a company or a division even using skilled accountants and analysts and the best tools available. If this is true of events already past, the degree of accuracy obtainable about the future is obviously even less. Cost-benefit analysis conceptually underlies the whole process of budgeting. It does not make good business sense to plan to spend money, under either expense or capital budgets, that will not yield a benefit at least equal to the expenditure. The budget process is often conducted with a good deal of politics involved, and as the saying goes, the devil is in the details. However, when money could be spent in one of several ways, but not all of them, then aiming to get the biggest bang for the buck is not really different from aiming to create the greatest good for the greatest number, at least in principle. While cost-benefit analysis is utilitarian in spirit, it is more narrow in scope. Whether in business or in government, the most common benefit weighed against costs is financial in nature. If a project or an addition to staff will either generate enough revenues or reduce enough future financial cost, then it is approved. The principal metric used in cost-benefit analysis is efficiency—will the expenditure in question generate the most output with the least input. While it might legitimately do so, cost-benefit analysis does not always take into account impacts beyond expenses and revenues. To give one example frequently raised in business ethics textbooks, a cost-benefit analysis of a plant closing in a small town might not address the impact on the town’s unemployment rate or tax base, while a utilitarian analysis would also factor in these issues Cost-benefit analysis, by its nature, stresses quantifiable factors. However, projects or expenditures are sometimes approved on the basis of necessity rather than amount of dollar benefits. One relatively small hospital group with which EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use 54 Ethical Theory I am familiar recently decided to spend tens of millions of dollars integrating its more than twenty software systems so relevant information would be available to everyone involved with a patient from pre-admission medical work-ups to post-discharge follow-ups. The executives of the hospital group felt that they simply could not continue to provide adequate service without such systems integration. The project was approved on the basis of necessity rather than of quantified savings or additional revenue and profits. It appears that, in deciding to spend this amount of money on systems integration, they were aiming in a broad sense to achieve the greatest good for the greatest number. Utilitarian analysis certainly takes costs into account. Spending money, time, or other resources that could be spent in other ways does not, by itself, create happiness or good for anyone except the recipients. The spending is justified only if the money, time, or other resources spent create more good or happiness than they amount to in cost. By its focus on impacts, and its method of identifying and justifying them, utilitarianism provides a way for managers both to be aware of the impacts of their actions and to think through the moral issues involved in a course of action. It is good to remember that acts that are morally right can also be right in other senses. For instance, if we consider that the goal of for-profit companies is to make a profit (by selling airplane rides or audit services or blue jeans), then acts that lead to or increase profits are strategically right for these companies and their managers. If the acts are also moral (in the present case, if they lead to the greatest good for the greatest number), then strategy and morality coincide. If the acts are immoral (for instance, lying in financial reports), they may lead to greater profit and hence appear strategically correct, but they are not morally right. We will see in Chapter 11 on financial reporting that lying on financial reports does not create the greatest good for the greatest number. Two Important Criticisms Two major criticisms have been made of utilitarianism as a way of viewing morality. The first is that it is simply impractical. For most decisions that a manager makes, there is not time to do any sort of serious analysis of the possible impacts. Some managerial decisions have very little impact beyond the immediate and obvious. Others are simply decisions to continue a decision process. Major decisions are often preceded by numerous partial decisions, small steps, decisions to investigate further, and so on. In fact, by the time a major decision is made, these smaller partial decisions may have shaped the process in such a way that there is only one viable option left, and what appears to be the final decision is actually anticlimactic.12 Difficulty of Implementation If a major decision point is clearly present, the direct and indirect impacts are likely to be such that it is difficult or impossible to quantify them even to a EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use Utilitarianism 55 reasonable degree of approximation. The time to conduct such an analysis may not be available. Decision processes, particularly in large organizations, often have timetables that are not determined by key participants or final decisionmakers. An issue not clearly dealt with by most utilitarians is whether to simply count those affected positively and negatively or to also assign weights to the degree of happiness or unhappiness that various individuals will experience as a result of the decision. Obviously this is an important point in determining the morality of an action by means of a utilitarian analysis. If no weight is given to degrees of happiness or unhappiness, the analysis clearly ignores an important element of the decision and its consequences. An individual who will suffer a momentary bit of unease counts as much as one who will experience deep and lasting anguish. Yet, if weights are to be assigned to varying degrees of happiness and unhappiness, an almost overwhelming complexity is added to an already difficult calculation. Jeremy Bentham, the earlier of the two major utilitarian philosophers, proposed a detailed method for calculating the greatest good for the greatest number. He did assign degrees of importance to various forms of happiness, and to the likelihood that an act would produce these forms. His so-called felicific calculus, or method for determining degrees of happiness, is quite complex. As he presents this calculus in An Introduction to the Principles of Morals and Legislation, he identifies fourteen kinds of simple pleasures, seven kinds of simple pains, and seven circumstances affecting the value of a pain or pleasure considered by itself.13 Bentham did indicate in the same work that it is not necessary to perform a full calculation before each action. He says that, once a person becomes used to the method of calculation, he will do it almost automatically, and without long formal process, except perhaps for the occasional major decision with clear widespread impacts. Writing some fifty years later, John Stuart Mill, the second major utilitarian philosopher, had the advantage of hindsight. Bentham’s work had been taken seriously, and among the most serious criticisms leveled against it was the lack of practicality. Mill suggests another way of determining which of two pleasures or pains is greater. His approach is to ask those who have experienced both of the pleasures or pains under consideration, and to accept their opinion on the ranking of the pleasures or pains in question.14 This approach is experience-based, and does not depend on theorizing. It is also open to the charge of impracticality, since few decisions are worth the effort or can be postponed until the opinions of several experienced persons can be gathered. All of this may make it seem that utilitarianism is a hopelessly impractical approach to ethics. Yet, in spite of the difficulties of doing a complete analysis, the emphasis of utilitarianism on the consequences of acts is an important element in thinking about managerial morality. If those who packaged and repackaged subprime mortgages had considered who would benefit and who would suffer as a result of their actions, it would have been clear quite quickly EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use 56 Ethical Theory that many investors, lenders, business partners, and others would be hurt with very few people deriving benefits. It would also have been clear that, by inserting bits and pieces of individual mortgages into complicated derivatives, then selling portions of these derivatives to different investors, dealing with delinquent mortgages would become almost impossible. This is what happened, and it caused large amounts of additional harm to individuals and institutions.15 Even a very rough utilitarian analysis is sometimes sufficient to make clear which course of action is ethical and which is not.16 Some Conclusions Seem Unethical Besides the difficulty of accurately calculating the sums of happiness and unhappiness that an act might produce, the second major objection to utilitarianism in practice is that it sometimes declares acts to be moral that would not be approved as moral by the other two approaches to ethical reasoning, or by most people’s basic sense of right and wrong. For instance, if I start a business, hire nine other people, and the ten of us are doing quite well, what sort of response can I morally make if one of my employees leaves and starts a competing business? Can I hire someone to kill my former employee? Burn down their place of business? Tell lies about them and their product to keep my customers from switching to them? Set my prices below theirs, even if I temporarily lose money, in order to drive them out of business and then raise my prices? We will see in the next two chapters that neither rights and duties nor fairness and justice condones killing business opponents, or burning down their place of business. These actions would also violate almost everyone’s basic sense of right and wrong.17 Yet, if my employees and I would all benefit from the elimination of competition from my former employee, and only the former employee (and perhaps his family) would suffer, at least a surface reading of utilitarianism indicates that the greater good for the greater number would come about as a result of murder or arson. There are ways to modify utilitarianism to deal with this kind of problem. The most obvious is to assign weights to the good and harm caused by an action, as well as simply counting those affected. We saw above that this was proposed by Bentham, and has been criticized as creating a system which is practically impossible to use. However, we also suggested above that even a very crude calculation using rankings of the good and harm created might suffice to provide a clear answer. Another way to deal with this problem is to switch from act utilitarianism, which judges the morality of individual acts, to rule utilitarianism, which judges the morality of following a rule by whether the rule results in the greatest good for the greatest number.18 One of the issues that we will see again and again in the applied chapters of this book is that individual actions create patterns. For instance, a manager who fills ten openings in a row within his department by internal promotion has in fact created a pattern of excluding outside candidates, EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use Utilitarianism 57 perhaps not from consideration but indeed from being hired. Which of the ten individual hiring/promotion decisions created this pattern? No one of them, but all of them. A manager who overhears one racist or sexist remark from one of her employees to another and takes no action has not created or allowed a pattern of discrimination. However, if she overhears ten such remarks within a month and takes no action, there is a pattern of at least tolerating discrimination. Was it the second remark overheard without reaction that created the pattern? The fifth? No one by itself created a pattern, but all of them, taken together, did. Utilitarianism, at least indirectly, takes this issue of individual actions and patterns into account when analyzing managerial decisions. Philosophers elaborating on the utilitarianism of Bentham and Mill have identified two ways of viewing the subject: act utilitarianism and rule utilitarianism.19 Act utilitarianism asks the basic question of the greatest good for the greatest number about the results of an individual act. This approach has as one of its major drawbacks the fact that it does not deal well, if at all, with the problem of patterns of behavior because it concentrates its analysis only on a single act. Rule utilitarianism, in contrast, asks what the results would be in terms of the greatest good for the greatest number if a given rule were followed. By doing so, this approach is able to deal with the problem of patterns of behavior. However, it adds a major level of abstraction by introducing a generalized rule that may or may not cover an individual act, and may cover some acts more completely or partially than others. Rule utilitarianism is consistent with Bentham’s writings. His major work, referred to above, is titled An Introduction to the Principles of Morals and Legislation. Bentham was very interested in reform of England’s legal system. His view was that morality and law should be very closely joined together. A law should be passed or kept on the books only if it created the greatest good for the greatest number. John Stuart Mill wrote a famous essay On Liberty.20 He saw liberty as the most basic good, and explained that all law is bad in that it constrains liberty. However, because some selfish individuals would interfere with the liberty of their fellow citizens, some laws are necessary to prevent them from doing so or to punish them and provide retribution when they have done so. The test of a good law is simply the utilitarian principle: does it provide the greatest good for the greatest number? If it does, it should be passed or maintained. If it does not, it should be amended or abolished.21 If we take this view one step further, and say that such an approach should also be applied to rules of behavior that are not laws, we arrive at something very much like rule utilitarianism. This approach to determining morality is almost identical, in one respect, to that taken by Immanuel Kant, the most famous proponent of a duty-based approach to morality. As we will see in the next chapter, Kant bases his view of morality on asking whether an individual act complies with a rule that could be made universal. There is a major philosophical difference, though, in how we arrive at this point. Kant starts from the premise that EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use 58 Ethical Theory acts are moral if they comply with our intrinsic duties, and without regard to their consequences. Bentham and Mill start from the premise that acts are moral if they produce the greatest good for the greatest number of people, without regard to their intrinsic rightness or wrongness. It may well appear to the practical manager that we have now reached such a point of useless abstraction that we will soon be discussing how many angels can dance on the head of a pin. However, the way we arrive at a basic approach to ethics matters a lot. If you as an individual feel that results are what matter (and it is hard to be an effective manager without such a view), then you may find talk of intrinsic duties to be somewhere between irrelevant and repulsive. If, however, you as an individual feel that an excessive orientation toward results brought us the Great Recession and an irrational emphasis on “making the quarterly numbers,” then considerations of intrinsic duty may have a good deal of appeal. Any theoretical basis for morality is not going to affect the actions of individuals unless it is something with which they are at least somewhat comfortable. The sort of discussion being conducted here of how we reach rules of conduct is going to be very important in later chapters when we discuss whether and when it is good to require drug tests of employees, or to indulge in creative accounting, or to lay off “excess” workers. We will talk then of patterns of behavior and their results, and of the rights of employees, and of the duties of managers. Such talk will not have much meaning unless we have paid serious attention to the bases of moral and immoral decisions, and how to tell them apart. An Ethic Based on Prediction The two major criticisms of utilitarianism discussed above have been widely proposed and discussed. There are ways to at least lessen its alleged impracticality, and by focusing on rules instead of individual acts, and on the quality as well as the mere fact of pleasures and pains, the problem of the tyranny of the majority (let’s kill him) can be eased. A third objection can be raised against utilitarianism, and it is one that might be of particular concern to managers. If the morality of an act (or a rule) is determined by its impacts in the future on persons and groups known and unknown, the basis for deciding morality seems rather frail.22 Both the physicist Neils Bohr and the baseball manager Yogi Berra are reputed to have said, “predicting is always difficult, especially about the future.” If a manager, who must make a lot of decisions and very seldom has full information on which to base them, wants to be ethical, and tries to be ethical, but may or may not succeed in being ethical because she lacks the ability to see the future, have we really provided her with any help at all? The central point of utilitarianism as an approach to ethics is the fact that actions have consequences. Looking forward to an action being contemplated, this approach requires that the manager who wants to be ethical in his actions EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use Utilitarianism 59 think through the impacts or consequences of that action. Since the manager cannot see the future with certainty, there is room for two individuals each doing the best job they can to disagree about a utilitarian analysis. An individual can also be honestly mistaken in his analysis of impacts—intending to create the greatest good for the greatest number, and choosing one action rather than another for precisely this reason, he might end up being wrong and doing more harm than good. A manager, according to this view, might be immoral or unethical by failing to do an analysis of the impacts of a projected action. He might also be immoral by failing to do an honest or a competent analysis. But if he does analyze the impacts of his actions to the best of his ability and subsequently proves wrong, he cannot really be held to have failed morally. While this point is often missed in explanations of utilitarianism, it is an important one. It might be more accurate to amend the definition given at the beginning of this chapter to the following: according to utilitarianism, an act is moral if its intended consequences following careful analysis create the greatest good or happiness for the greatest number of people. The message for the manager wishing to be moral, then, is that accountability matters. You need to think in advance about consequences, immediate and remote, of your actions and to balance the good that they might do with the harm that they might create. Thinking about consequences, immediate and remote, coincides nicely with an approach to strategic management known as stakeholder theory that was mentioned briefly in the previous chapter. First elaborated by Richard Freeman in 1984,23 this theory is intended as a balance to the view that the sole proper concern of managers is to maximize the wealth of the owners (stockholders) of the corporation for which they work. The stakeholder view asserts that there are a number of groups of people that either affect or are affected by a company, and that it is the responsibility of managers to consider and balance the interests of these stakeholder groups. To take one example, as we will see in Chapter 11 on financial reporting, there are different groups that rely in various ways on the public financial reports of corporations. These groups include current and potential stockholders, creditors, regulators, taxing agencies of various governments, and others. Each group is affected by the financial reports of the company, and makes important decisions based at least in part on these financial reports. Most of these groups can and sometimes do have a major impact on the success or failure of the company. Therefore, managers who do not take these various stakeholder groups into account when making decisions (in this case, when preparing financial reports) are ignoring a part of reality that should not be ignored. Since it is usually not possible to please all of these groups simultaneously (taxing agencies want more tax revenue, employees want higher wages, stockholders want more profits), deciding on the greatest good for the greatest number is one way to approach the demands placed on managers who consider the stakeholder view. In this sense, the stakeholder view is at least compatible with utilitarianism. EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use 60 Ethical Theory A manager who makes no decisions does not earn her salary. Decisionmaking is basic to the work of the manager. It is not her only task, but it is absolutely, fundamentally one of her tasks. Whether she manages accountants, sales clerks, nuclear physicists or bus drivers, she must make decisions to do her job as manager. So, a book on managerial ethics, such as this one, cannot escape the serious consideration of managerial decision-making. Is the premise that you may or may not have been ethical in your decision-making—wait and see—the best that utilitarianism can offer? Once upon a time, there was a program for evaluating and compensating managers known as Management by Objectives. The program has largely gone away, but the idea and the practice are still very much alive.24 The basic idea was as follows. At the beginning of some period (usually a calendar year), the manager and her boss would sit down together and discuss what the manager could contribute in the following period to the progress of the organization. If she managed the mailroom, the objectives might involve timeliness of mail handling, cost of operation of the mailroom, success in supporting the new business brought in by the sales goal of 15 percent more customers, and personal growth in the manager’s business knowledge. These might all be agreed to be worthy goals and objectives that would help the boss help the company with its overall objectives. The goals would then be specified and, to the extent possible, quantified. They would be put in writing. A year later, the manager and her boss would sit down for a performance evaluation or appraisal. The agreed-upon goals would be brought out and discussed. If the manager met or exceeded her goals, she would be praised, and rated highly, and at least in a good year, properly compensated for her fine performance. The interesting question is what happened if she did not meet or exceed one or more of her goals. She would undoubtedly plead unforeseeable circumstances, or inadequate resources, or failure to cooperate by other managers whose input was essential to her goals, or bad karma, or almost anything except personal failure. If the discussion remained rational (not always the case), the manager might successfully plead that, in light of unpredicted and unpredictable circumstances, her performance had been heroic. She might argue that, but for her outstanding managerial efforts, the results would have been even worse, as indeed they were for the company’s three main competitors. Her boss might argue that, but for her lack of foresight in making predictions, the manager would have met and indeed, exceeded her goals. However, this is a tricky argument for the boss to make, especially if he signed off on the objectives a year ago. The boss might argue that the objectives were sound, but the manager’s decisions through the year as to how to meet the objectives were a wee bit shaky (or perhaps, spectacularly dumb). If the boss was not asked to approve these interim decisions, he can argue more firmly as to their inadequacy. There are several things to note here. The stakes are relatively high. The manager may receive a lower raise, or no raise, or a negative performance EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use Utilitarianism 61 appraisal that not only offends her personally but also remains permanently in her personnel file. The boss may have a difficult interview with his boss, because the manager’s failure to achieve objectives has now become the boss’s failure to achieve objectives. The basis for judgment is predictions. As it turns out, the future was indeed difficult to predict. The present argument turns on that very point. Things change over the course of a year—any year. If the manager and the boss are being even semi-rational, they will both acknowledge this. The key issue is whether the changes could or should have been foreseen, and what reaction was appropriate once they came into evidence. In this scenario, performance is being evaluated not on the basis of morality, but on the basis of practical achievement or non-achievement of stated objectives. The criterion of evaluation is not morality but efficiency, or economic soundness, or some other roughly quantifiable basis. However, we can note several similarities to out earlier problem with basing moral decisions on future events. The manager’s job includes prediction of the future. When she and her boss sit down to set the next year’s objectives, it is assumed that whatever happens next year, it will not be an exact repeat of this year. History does not repeat itself in this way. It is also assumed that everything will not be different. Some of the same products or services will be sold to some of the same customers using some of the same resources to deliver the goods. The basis for next year’s goalsetting is rational analysis, not poetry or science fiction or astrology. Managers take it for granted that it is both possible and useful to think about the future using the past as a guideline. Similar thinking can be used for the predictions necessary to make moral judgments using utilitarian principles. It is reasonable to assume that employees laid off from their jobs will find this disrupting to their lives. Unless there are special circumstances, it is reasonable to assume that they will see the layoff as having a negative impact on them, or in our present terms, in creating unhappiness rather than happiness. It is possible that one of these employees who has been deeply dissatisfied with his job may find the layoff to be the stimulus to find a new and more suitable job, thus seeing the end result as producing more good than harm for him. In spite of this possibility, it is reasonable for a manager trying to sort out the morality of layoffs to predict that for the employees involved, the action will create more unhappiness than happiness. Management by Objectives is not as widely popular a program as it once was, but the principles embodied in it continue to be used in management planning. Budgets, whether expense, capital, or sales are standard tools. In a real sense, a budget is a means of setting and monitoring objectives and progress toward them. Since managers are routinely expected to predict the future economic impacts of their decisions, it seems reasonable to ask that they also predict the future moral impacts. Thus the objection to utilitarianism that it makes morality depend on results in an uncertain future can be dealt with. Any system of ethics, including the ones we will examine in the next two chapters, is useful only if it EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use 62 Ethical Theory helps to analyze the future impacts of proposed actions. A system that could only analyze the results already achieved of actions already taken might provide an interesting historical perspective, but could not really guide the decision-making that is an essential part of a manager’s job. Usefulness of Utilitarianism Utilitarianism is one of three perspectives on morality that we consider at length in this book. It is not an easy system to use, especially for a time-constrained manager who does not have the luxury of reading great books and thinking great thoughts. It does have a tendency, at least in some of its forms, to find morally acceptable acts that most of us would instinctively agree are morally repugnant. If it were the only way to assess the moral validity of our proposed actions, it would leave us in deep trouble some of the time. Given all of that, this approach to morality does something valuable and provides insights that might not otherwise be seen. With its focus on the results of our actions, it makes us examine the likely impacts of our choices, including those we might prefer not to think about. Earlier in the chapter, the analogy was used of a swimmer who can face the waves and deal with them, or face away from them and be tossed by them. Utilitarianism, with all its imperfections, requires us to face the waves. To use an example we have been citing, consider the decision to implement layoffs. If we confine the analysis to financial results, layoffs often look desirable. After all, fewer employees means less labor cost, and less cost usually means more profit. Utilitarianism does not automatically bar layoffs, but it makes us consider that among the results of our managerial decision to reduce staff, one certain consequence is unhappiness on the part of those laid off. As we will see in Chapter 9, this may be an acceptable price to pay for the continued employment of the rest of our employees. Nonetheless, the consequence is real and utilitarianism requires us to consider it as one element in our decision-making. It is not always moral to make people happy, or immoral to make them unhappy. If we reduced prices by 50 percent across the board, and raised wages by a similar amount, we could create happy customers and happy workers, at least for a short while. Why not do so? We would almost certainly create a bankrupt company, with fewer (or no) workers, very unhappy investors and lenders, and longer-range happiness would be pretty much limited to bankruptcy attorneys. Most managers instinctively know this, so we do not see many companies simultaneously slashing prices and inflating wages. Sometimes industries, especially if they have strong labor unions, get caught up in the situation where they take actions almost certain to produce long-term unhappiness for many individuals. Tens of thousands of retired American auto workers now receive health insurance and pension benefits that create enormous burdens for the companies paying them, and for their current workers, EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use Utilitarianism 63 investors, lenders, and customers. Even though they were threatened with very costly strikes at the time these retiree benefits were granted and augmented, it might be that the greatest good for the greatest number in the long run would have been achieved if executives had denied or limited these benefits. It was undoubtedly easier for managers to grant these benefits because of the practice of pattern bargaining, by which benefits gained by the union at one company were automatically granted by their competitors in the same industry. Similar issues exist as local and state governments strain to fund retirement benefits for public employees. This is another example of the importance of patterns of decisions, as well as individual decisions. In Chapter 3, we said that ethics has to do with social interactions. We have seen that the nature of managerial work requires such interactions, no matter what industry the manager works in, or at what level the manager is situated. One of the more interesting issues in organizational theory is the question of what it means to say that an organization decided something or did something. Ultimately, organization decisions are human decisions. Managers, alone or in groups, decide how an organization will acquire and use resources, what it will sell, to whom it will sell it, and how all of this business will be conducted. These decisions have consequences. Utilitarianism helps managers to think through the ethical consequences of their decisions. This is no small contribution. Discussion Questions •• •• •• •• •• Give examples of current laws that are based on utilitarian thinking. These can be civil or criminal laws. Give examples of laws that are clearly not compatible with utilitarian thinking. Teachers often tell classes that it is unethical to cheat on exams, even though it is not illegal. Discuss whether and how this position is consistent with the utilitarian approach to ethics. In the United States, workers (even those who are decades away from old age) must pay Medicare tax on their wages. This tax provides payment for health care for those who are sixty-five or older, with some exceptions. Is this consistent with utilitarian thinking? Why or why not? Jeremy Bentham and John Stuart Mill, the two philosophers most identified with utilitarianism, both maintained that the only reason to pass or retain any law was that it would create the greatest good for the greatest number. Do you agree with this? Why or why not? Some coaches of youth sports (Little League baseball, youth soccer) for younger children make it a rule that every player, whatever their skill level, will play part of every game. Other coaches play their best players for the whole game, increasing the team’s chance of winning and following the practice of most competitive sports. Which of these practices is most in accord with the utilitarian approach and why? EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use 64 Ethical Theory •• •• As quoted in a previous chapter, Milton Friedman argued that the duty of managers is to make money for a company’s owners, and not to spend the company’s money on other causes. He would oppose using company profits to support community schools or hospitals. Could or should a utilitarian endorse this position? Why or why not? Some large companies in the United States, such as Walmart and McDonald’s, have made an effort to hire older workers (past normal retirement age) for some positions. Would a utilitarian approve or disapprove of this effort, and why? Notes 1 Both Plato and Aristotle, two of the earliest and most influential philosophers in Western history, wrote extensively about ethics. Many of Plato’s dialogues have ethics either as their main theme or as a major subject. The Republic, a long dialogue in which Plato suggests that we can best understand justice for individuals by examining it “writ large” in the State, is still widely read and cited in college courses and in writings on ethics. Aristotle’s Nicomachean ethics, his major work on this topic, is also widely read and cited. 2 Aristotle. (1990/1926). The Nicomachean ethics, trans. H. Rackham. Cambridge, MA: Harvard University Press. It should be noted that Aristotle’s basic approach to ethics is not utilitarian. He espoused an approach since known as virtue ethics. 3 “Happiness, therefore, being found to be something final and self-sufficient, is the End at which all actions aim.” Ibid., p. 31. 4 In his translation of the Nicomachean ethics, Rackham notes in a footnote that “This translation [happiness] of eudaimonia can hardly be avoided, but it would perhaps be more accurately rendered by ‘Well-being’ or ‘Prosperity’; and it will be found that the writer does not interpret it as a state of feeling but as a kind of activity.” Ibid., p. 10 footnote a. 5 Bentham, J. (1996/1789). An introduction to the principles of morals and legislation. New York: Oxford University Press. 6 Mill, J. S. & Bentham, J. (1987). Utilitarianism and other essays. New York: Penguin Books, p. 65. 7 Ibid., p. 65 8 Ibid., p. 278. While this statement refers to “the party in question,” it is clear throughout Bentham’s writings that he is concerned not just with an individual’s happiness or good, but with that of the greatest number. 9 This may seem like a rather childish approach for a manager to take. Nonetheless, one is struck in reading about the various companies that went bankrupt because of managerial irresponsibility (including numerous criminal acts) in the early years of the twenty-first century how many managers simply refused to face consequences. Parmalat, the Italian dairy company, falsified a bank account said to contain just under $5 billion in company assets. Managers simply made up the account. How they could think there would be no consequences is hard to fathom, but apparently they simply did not consider consequences. Enron managers constructed such a convoluted tangle of special purpose entities and internal accounting transfers that it appears even the company’s top management did not know the full extent of its debt at the time it fell. HealthSouth’s top managers met every quarter to decide what accounts to falsify and in what amounts in order to report the earnings expected by financial analysts. The consequences of such repeated lies did not deter them from continuing such practices. Many a manager in real life has refused to face the waves. Bad things often followed. EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use Utilitarianism 65 10 Financial Crisis Inquiry Commission. (2011). The financial crisis inquiry report. New York: Public Affairs. 11 For a more detailed analysis of this issue, see Gilbert, J. (2000). Sorrow and guilt: An ethical analysis of layoffs. SAM Advanced Management Journal 65:2, 4–13. 12 An excellent, book-length treatment in plain English of how such decisions actually work in large companies is Bower, J. (1986). Managing the resource allocation process: A study of corporate planning and investment, revised edition. Cambridge, MA: Harvard Business School Press. 13 Mill & Bentham, Utilitarianism, pp. 86–98. 14 Mill & Bentham, Utilitarianism, pp. 279–282. 15 Gilbert, J. (2011). Moral duties in business and their societal impacts: The case of the subprime lending mess. Business and Society Review 116:1, 87–107. 16 In his book The idea of justice, Amartya Sen argues that many writers on ethics concern themselves only with describing the perfectly just society. He says that it is as important or more important to think carefully about how to cure or improve individual situations that are unjust, making the pursuit of philosophy in this case closer to the real world. Sen, A. (2009). The idea of justice. Cambridge, MA: Belknap Press of Harvard University Press. 17 Sen discusses the importance of recognizing ethical intuitions as well as using reason and objectivity in his book The idea of justice, ch. 1 18 Nathanson, S. (2014). Act and rule utilitarianism. The internet encyclopedia of philosophy, www.iep.utm.edu/ (accessed August 17, 2015). 19 See Frey, E. (2000). Act-Utilitarianism. In LaFollette, H. (Ed.), The Blackwell guide to ethical theory. Malden, MA: Blackwell, pp. 165–182; and Hooker, B. (2000). RuleConsequentialism. In LaFollette (Ed.), The Blackwell guide to ethical theory, pp. 183–204. 20 Mill, J. S. (1974/1859). On liberty. London: Penguin Books. 21 Many philosophers, beginning with Plato and Aristotle, have taken the view that political theory is simply ethics writ large. They have seen, as did Mill, the issue of law as being very much intertwined with the issue of individual behavior and morality. In this sense, Mill is in line with the history of philosophy on the relation of ethical and legal issues. Mill also discusses why it is necessary to have a law prohibiting murder, even if the victim causes more harm than good to the world. Mill, J. S. (1965). Dr. Whewell on moral philosophy. In Schneewind, J.B. (Ed.), Mill’s ethical writings. New York: Macmillan, p. 189. 22 See Nathanson, Act and rule utilitarianism, Section 1c. 23 Freeman, R. E. (1984). Strategic management: A stakeholder approach. Englewood Cliffs, NJ: Prentice-Hall. See also Donaldson,T. & Preston, L. (1995).The stakeholder theory of the corporation: Concepts, evidence, implications. Academy of Management Review, 20: 65–91. 24 Management by Objectives has been considered by some to be a passing fad. For an interesting perspective on whether this is true, on management fads in general, and on the ways that Management by Objectives continues to be operative in current management practice, see Gibson, J. & Tesone, D. (2001). Management fads: Emergence, evolution, and implications for managers. Academy of Management Executive, 15:4, 122–133. EBSCOhost - printed on 4/3/2022 11:20 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use 5 Copyright 2016. Routledge. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. RIGHTS AND DUTIES Learning Objectives Upon completing this chapter, the reader should be able to: •• •• •• •• •• Define the rights and duties approach to ethics Discuss the meaning and importance of human rights Discuss the social contract theory explaining why governments can award rights and impose duties Identify and discuss some of the ways that contracts can create rights and duties that would not otherwise exist Identify and discuss examples of position rights and duties that managers have by their position as manager. The second of the three major approaches to ethics that we consider in this book is that of rights and duties. This title refers to several somewhat different ethical views, and the works of many philosophers can be included under this title. Broadly speaking, the rights and duties approach focuses on doing things that are right in themselves, rather than right because of their consequences. This approach says that the moral act is the act which recognizes the rights of others and the duties that those rights impose on the actor. Ethics, as we have seen, is the study of interpersonal values and the rules of conduct that follow from them. The rights and duties approach to ethics puts a high value on the rights of others in our interpersonal conduct. While utilitarianism is concerned with general impacts (the greatest good for the greatest number), rights and duties are concerned more with people as individuals. This perspective accepts the fact that we have duties, or moral obligations, to do things or avoid doing things because we care about the rights of others. While this EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 4/3/2022 11:21 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS AN: 1249059 ; Joseph Gilbert.; Ethics for Managers : Philosophical Foundations and Business Realities Account: s4264928.main.edsebook Rights and Duties 67 p­ erspective implies that we also have rights, and other people have moral duties to us, the main focus is on deciding whether an act is ethical based on the rights of other individuals and the duties that those rights impose on us. Why should we put such a high value on other people’s rights and let them influence or determine our own rules of conduct? Sometimes it is from a basic sense of how people ought to be treated—humans should not own each other (as in slavery). Sometimes the answer involves reciprocity—do unto others as you would have them do unto you, or I will observe your rights and you will observe mine. Sometimes the reciprocity involves terms agreed to in a contract—I will perform certain acts in exchange for certain compensation. Sometimes it involves fear—if I fail to recognize someone’s legal right, the punishment that I will incur will be more costly to me than acting in a way that does recognize their right. Americans are perhaps the most rights-oriented people in history. We speak of having a right to free speech, a right to public education, a right to our place in line, and a right to health care. We often do not give much thought to these rights, but simply proclaim them. A right is worthless if no one has a corresponding duty. My right to free speech imposes a duty on others not to censor my comments or writings. My right to privacy imposes a duty on others to leave me alone. If I have a right to health care, someone or some organization must have a duty to provide it, or else my right is worthless. It is a commonplace of contemporary culture in many countries that people are far more conscious of and insistent on their rights than they are on their duties. Definitions of Rights and Duties While rights are often proclaimed, and duties sometimes acknowledged, there is often a lack of clarity in the discussion of rights and duties once it proceeds beyond proclamation and acknowledgment. Just what are rights and duties? One common approach divides rights into claims and privileges. A worker who starts a job with a company at an agreed-upon salary has a right to be paid that salary as long as she is performing the job adequately and the agreement is not changed. That right is a claim on the employer to pay the specified salary to the worker. The same worker has a right to walk on a public sidewalk on her way to a nearby restaurant for lunch, but it is difficult to define this right as a claim against someone or some organization. It makes more intuitive sense to think of this right as a privilege, but it can be seen as a claim against government to honor her freedom to public access. Philosophical discussion of rights frequently involves discussion of liberty. Isaiah Berlin, in a very famous essay on “Two concepts of liberty,” defines what he calls positive and negative freedom or liberty. He says that the positive sense of liberty “is involved in the answer to the question ‘What or who is the source of control or interference that can determine someone to do, or be, this EBSCOhost - printed on 4/3/2022 11:21 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use 68 Ethical Theory rather than that?’” He says that the negative sense of liberty “is involved in the answer to the question ‘What is the area within which the subject—a person or group of persons—is or should be left to do or be what he is able to do or be, without interference by other persons?’”1 Positive liberty might be viewed as corresponding to claim rights, and negative liberty to privilege rights. Without liberty, the freedom to choose between alternative actions, ethics is meaningless. If all of our choices are determined, whether by genetics or circumstances or some combination of factors, then we do not choose because we place some values over others. Rights can also be defined using logic to identify situations where one person or group has a claim on another. This approach is almost mathematical in nature, and makes extensive use of definitions that include such terms as “if and only if.” This approach lends itself more to legal than to ethical analysis. It appears to follow the goal of clear thinking which is characteristic of philosophy, but its main goal is precise determination of who has rights rather than a definition of what they are.2 Duties are sometimes defined simply as the other side of rights. This approach makes sense especially with claim rights. If I have a right to be paid for my work, my employer has a duty to pay me. Somewhat more generally, if I have a right to be considered as a job applicant without regard to my race, any employer to whom I apply for a job has a duty to consider me without regard to my race. More generally still, if I have a right to walk on a public sidewalk, government in particular and people in general have a duty to let me walk there unimpeded. Some philosophers such as Immanuel Kant begin from duties and reason their way to rights. Kant emphasizes the duty to be consistent in our ethical rules and to treat all humans with proper respect. We discuss Kant’s views in more detail later in this chapter. Some natural rights philosophers put at least as much emphasis on duties as on rights. This involves a difference in emphasis, but such reasoning often ends up with the same ethical conclusion as an approach that emphasizes rights and views duties as the logical consequence of someone having a right. It is generally agreed that groups as well as individuals can have both rights and duties. As we will see below, some rights are granted by governments to their citizens. Each individual citizen of the United States has a right to free assembly, but an assembly by its nature involves a group. Companies, which are legal persons, have both rights and duties as a group of employees. One of the difficult questions in analyzing rights and duties is the extent to which groups rather than individuals have rights and duties. We will discuss this issue further in the second part of the book when we take up particular issues of discrimination. Sources of Rights and Duties There are four basic sources of rights. Some rights we have as humans, without regard to position or citizenship or wealth or skill. Some rights we have by law. EBSCOhost - printed on 4/3/2022 11:21 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use Rights and Duties 69 Some rights accrue to us by reason of our position. Finally, some rights have their source in contracts. Rights from each of these sources imply duties. Depending on the source of the rights, the corresponding duties fall upon individuals or groups that might be in daily contact with us, or might be quite remote from us. In order to understand how rights and duties can serve as a basis for ethical judgment, we will now consider each of the four sources of rights. Human Rights Human rights is a term that is used very loosely.3 The concept has roots extending back hundreds of years, and is built into the American legal system as a foundation.4 The Declaration of Independence says, “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.”5 Almost a hundred years later, at a battlefield in Gettysburg Pennsylvania, Abraham Lincoln said, “Four score and seven years ago, our fathers brought forth on this continent a new nation, conceived in liberty and dedicated to the proposition that all men are created equal.”6 One hundred years later, in a historic speech to a quarter million of his fellow citizens gathered before the Lincoln Memorial, Martin Luther King said, “When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men would be guaranteed the inalienable rights of life, liberty, and the pursuit of happiness.”7 Another approach to defining rights comes from the theory of natural law. According to this view, an individual who reasons correctly about the nature of humans and their relation to each other and to the rest of the world will identify and recognize rights that all humans have, and the duties that correspond to those rights. This approach refers to the natural law in the sense that all humans have a special nature that sets them apart from other living things and from inanimate objects.8 For instance, humans, because of their ability to reason, have a right to think and to speak freely and should not be owned as slaves. What are these natural or inalienable rights, and are they American or British or Brazilian, or are they human? The most basic right that a person can have is the right to life. In this context, we are not using the phrase as code for an anti-abortion position, but rather we are talking of the right not to be randomly killed. As far as I am aware, no society has ever condoned random killing—the taking of another’s life for no reason at all. If someone said to us, “I hope Steve feels better tomorrow—this morning he woke up grumpy and killed the first three people he met,” we would not accept this as a fact of life like the weather. If Steve killed even one person just because he was grumpy, we would find him and incarcerate him. EBSCOhost - printed on 4/3/2022 11:21 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use 70 Ethical Theory Different societies and cultures have different concepts of what makes a valid reason to take another person’s life. Capital punishment is hotly debated in the United States, and is abhorred in some parts of the world, but underlying the debate is the question of whether the State can take a person’s life because of any crime they have committed, no matter how serious.9 Through most of history, most people have felt that it was moral for combatants in a just war to take the lives of enemy combatants.10 There has been considerably more debate about whether it is moral to take the lives of civilians on the other side in a war. Self-defense is generally considered to be a valid reason to take an attacker’s life. Because ethical systems, religions, and legal systems all deal with many of the same values, it should not be surprising that all major religions have some form of “Thou shalt not kill” as part of their commandments or behavioral codes.11 Similarly, all of the major legal systems proscribe murder, and define the illegal taking of human life, along with its prescribed penalties. Donald Brown, an anthropologist, developed a list of universal human values which occur in every known society. Among these values are distinguishing right and wrong and proscribing murder.12 Using induction, the method of reasoning that proceeds from specific examples to form general rules, it seems clear that the right to life is not based simply on societal norms or legal systems or religious belief, but is fundamental to human value systems and has been throughout known history.13 The next human right is called by various names, and sometimes identified as several different rights. We will simply call it the right to dignity. This encompasses the right to some freedoms, to truth-telling, and to privacy. Various arguments can be made for why all humans have the rights included under dignity. However, as K. Anthony Appiah has stated, “We do not need to agree that we are all created in the image of God, or that we have natural rights that flow from our human essence, to agree that we do not want to be tortured by government officials, that we do not want our lives, families, and property forfeited.”14 A number of philosophers have noted that human rights can be grounded in several different theories, and that it is a sign of the strength of the argument for human rights that different approaches lead to the same conclusions.15 While it may seem strange at first glance, a very strong case can be made for including truth-telling as part of the right to dignity.16 There are two ways to establish such a right. One, using the deductive approach, is to consider the fact that ongoing significant interaction between humans is impossible if there is no distinction made between lying and truth-telling. There are certainly instances where lying is expected—consider the rituals of early claims and demands in labor–management negotiations—but if lying is as likely as truth-telling, discourse breaks down very quickly. We do not often think about this, but in normal human discourse the default setting is truth-telling. Otherwise, “Are you lying to me?” would be a meaningless question, since the answer would have an equal chance of being the truth or another lie. EBSCOhost - printed on 4/3/2022 11:21 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use Rights and Duties 71 The second way to establish a human right to truth-telling is to consider that religious, legal, and moral systems all deal with this issue as an important one, and all start from the basis that it is wrong to lie. Using inductive reasoning, we can conclude from this large and diverse body of value systems that truth-telling is a central value. No religious, legal, or ethical system starts from the premise that lying is neutral or positive. Most systems provide at least some circumstances when lying might be acceptable (although some are absolute in their prohibition), but none treats lying as a valid starting point and then asks when it is acceptable to tell the truth. The human right to dignity also includes protection against such things as slavery and torture, and some right to privacy. The frequent appearance throughout history of both slavery and torture, and various violations by many societies of even rudimentary individual privacy make the argument here more difficult. While it is hard for contemporary citizens of the United States to imagine a satisfactory life without such a right, our previous method of establishing rights inductively by finding universal or near-universal examples does not work so well here. However, as noted above, the fact that some individuals find the basis for such rights in one theory, and others in other theories, does not weaken the argument for such rights. Legal systems deal in various ways with the elements of the right to dignity. Just what the right consists of is a difficult question to which no generally agreed-upon answer has been found. Most philosophers agree that liberty is part of this concept.17 The reason why such an issue matters is that rights that are fundamental to all humans will provide an important starting point in dealing with issues concerning multinational business practices. It is one thing to establish that a given society or country disapproves of bribery or full-time work by twelve year olds. It is another to establish that a given practice violates fundamental human rights, because these rights do not depend on the laws or even the customs of a given country or society. There is almost certainly a human right to own property, although there is a small body of evidence to the contrary. Thomas Hobbes was an English philosopher who influenced many of the Founding Fathers of the United States. He maintains in his famous work Leviathan18 that without some arrangement to keep the strong from taking whatever they want from the weak, there would be a constant war of all against all, and life would be “solitary, poor, nasty, brutish, and short.” Human history is full of examples of individuals and groups who were not satisfied with “their own” food, property, wives, or slaves and took “someone else’s” without permission or compensation. However, in those societies where the norm has been to simply answer in kind, life has typically degenerated to a point where Hobbes’s description seems accurate. Again, religious, legal, and moral systems all deal with some variation of “Thou shalt not steal.” The exception referred to above is that some examples exist of groups that do not allow for individual ownership of any property. EBSCOhost - printed on 4/3/2022 11:21 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use 72 Ethical Theory Economic communism maintains that society should operate on the basis of “from each according to his ability; to each according to his needs.”19 For the most part, countries under the political system of communism have modified this pure economic theory to varying degrees, but they have functioned, some for several generations, according to this basic principle. Needless to say, this principle does not easily co-exist with private property. Some religious groups, such as Catholic religious orders, have practiced a very pure form of economic communism for hundreds of years. Each member of the group takes a vow of poverty, and all property is owned by the group rather than by any individual member. In the early decades of the kibbutz movement in Israel, common ownership of property and the means of production was a key feature of this way of life.20 Various utopian groups have lived more or less without individual property in different countries at different times. In spite of the exceptions cited above, the overwhelming majority of people throughout history have recognized some form of individual ownership of property. This is true at least in the sense that something (food, clothing, a hut, or house) is mine or yours, but is not anyone’s simply for the taking. Under varying conditions and to varying degrees, humans have been viewed as property and have come under property laws, but this is a complex issue not directly relevant to contemporary managers.21 Again, religious, legal, and moral systems all deal with some variant of “Thou shalt not steal.” Such prohibitions are meaningless if no one owns anything. This, then, is evidence that in most religions and societies through most of recorded history there has been an acceptance of the notion that individuals own things. Human rights, then, if carefully examined, are relatively few but very important. Of course, it is not necessary that all humans everywhere agree that something is a human right for it to be so. There is a tendency to widen the range of human rights when discussing this subject. It is important to remember that rights are practically useless without corresponding duties. Perhaps some people who are quite free in listing a wide range of human rights would be somewhat more cautious in this endeavor if they gave full consideration to the range of human duties that they are simultaneously positing. Legal Rights The second source of rights is legal rights. These are rights granted to citizens of a government unit or to corporations or other groups by law.22 They are enforceable through court systems. Some legal rights embody human rights; others do not. There is both a legal right and a human right to life which manifests itself in a duty not to randomly kill people. We showed above why this is a human right. It is also a right in legal systems, although different legal systems have different definitions of random killing. There is a legal right to walk on a public sidewalk, but it scarcely qualifies as a human right. In contrast to human EBSCOhost - printed on 4/3/2022 11:21 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use Rights and Duties 73 rights which are the same everywhere, legal rights vary by place and time. As we will see in Chapter 9, companies in the United States have fewer legal restrictions on terminating employees than companies in many European countries. In Chapter 13, we discuss at length several issues that arise for multinational companies as a result of varying laws, regulations, and customs. Different jurisdictions within a country can and do grant different legal rights, but the hierarchy of jurisdictions is made clear by legal systems. In the United States, the Federal Constitution spells out the areas in which federal laws take precedence. Generally speaking, areas not specifically reserved to the federal government are open for law-making by states and lower governments such as counties and cities.23 In some countries, there is a single state religion, and religious authorities also make and interpret the laws. The United States, more than many other countries, is very careful to recognize the separation of church and state. Perhaps this is because from its founding the United States has been a pluralistic society, accommodating individuals of many different beliefs and of no belief. The first ten amendments to the U.S. Constitution, generally known as the Bill of Rights, guarantee freedoms to American citizens that are greater than those provided under many other governments. We may well ask where governments get the power to grant rights and impose duties. In a democracy, the standard answer is that governments derive their power from the people. Some individuals are elected by the voting citizens to represent them (the voters) in deciding what government shall do, and how it shall do it. If these elected representatives do not in fact represent the people at large in a satisfactory way, they can be voted out of office at the next scheduled election. In extreme cases, they can be removed before a scheduled election by impeachment or by recall. In a monarchy, government power resides in the monarch. He or she may hold that position by heredity or by force, but the literal meaning of democracy is rule by the people, while monarchy means rule by one. In a government of religious establishment, the leader or leaders derive their power from God.24 Social contract theory is a view in philosophy that explains government power by saying that it is as if all the citizens yield by contract some of their individual rights in order to obtain the benefits of social stability available only through a recognized government.25 It fits best in discussing democratic governments. Thomas Hobbes, cited earlier, is one of the early proponents of this theory. It was his view that people contemplating life without government and foreseeing a war of all against all willingly cede some of their individual liberties in order to provide an organized check against man’s baser impulses. John Locke was another English philosopher who held the social contract theory.26 These two, along with several French philosophers, strongly influenced the founders of the American government and legal system. According to social contract theory, each of us gives up some rights to government and in return gains some rights that we would not otherwise have. EBSCOhost - printed on 4/3/2022 11:21 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use 74 Ethical Theory Again, rights are worthless without corresponding duties. Citizens who have agreed to give up some rights to strengthen others also take on some duties as part of the social contract. Just as others are obliged to respect my private property, and the state will enforce this right for me, so I must also respect the private property of others. If the state is to provide for common defense against aggressors, and I have a right to be defended, then I also have a duty to provide some share of the cost of providing such defense. We buy products or services from brokers or dealers or retailers. We buy common defense (and other common goods) through taxes and sometimes through serving in the government. Obviously all citizens do not sign social contracts, individually or collectively. This view of social rights and duties is on an “as if” basis. It is sometimes referred to as a thought experiment. It does make a certain sense as an explanation of why government has rights, why individuals are designated or elected and have position rights as agents of government, and why government has duties to respect and protect the rights of its citizens. Distinguishing democracy as practiced in the United States from other forms of government, it is sometimes said that ours is a government of laws rather than of men. This means that individuals hold government power and enforce it under the constraint of law, and that a change in the individuals in power will not change the laws or rules of government.27 Do legal rights have a place in a discussion of morality? As we indicated in Chapter 3, there is a starting assumption in most moral systems that civil laws are to be obeyed. In other words, it is moral to be legal. While this assumption is not universally true, we will argue that it is unethical for a manager to violate the law and cause her company to face legal penalties. Thus legal rights can and do impose moral as well as legal obligations on companies and their managers and employees. Note that, because we have a government of laws, when we say that it is moral to follow the law, we are not saying that it is moral to follow the political leader. Position Rights A third source of rights is position. If he has probable cause to do so, a policeman has the right to stop a motorist, require him to get out of his car, make a physical search of his person, handcuff him, and take him to jail. These are powerful rights. An accounts payable clerk may have authorization to spend a company’s money without further approval up to $1,000. The chief financial officer may have similar authority up to $100,000. A manager has the right to hire one applicant while denying other applicants the job. She has the duty by her position as manager to do this fairly. She also has the position right to terminate an employee for unsatisfactory performance, as well as the duty to do so. We will explore these issues further in the second half of the book. EBSCOhost - printed on 4/3/2022 11:21 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use Rights and Duties 75 Again, there is some overlap between classes of rights. The policeman has his authority by law as well as by position, but there is no law authorizing chief financial officers or accounts payable clerks to disburse certain amounts of company funds.28 Rights by position are just that: they accrue to holders of certain positions while they are in those positions. A former police officer does not have arresting authority, nor does a former chief financial officer any longer have company disbursement authority. We hope that the holders of positions granting rights have the knowledge and skills to exercise the rights appropriately, but knowledge and skill by themselves do not carry these rights. Positions carry duties as well as rights. Attorneys have a fiduciary duty to their clients. Employees have a duty to carry out the responsibilities of their job. Government officials have a duty to uphold the Constitution. Managers have a number of duties. We will explore some of these duties in detail in the chapters comprising the second half of this book. One individual can have multiple duties because of the different roles that he plays in life. He can have spousal and parental duties at home, managerial duties at work, fiduciary duties as treasurer of his church, and coaching duties as a Little League baseball coach. According to the rights and duties approach to ethics, an individual’s actions will be moral if they recognize the rights of others, and observe the duties imposed on him by those rights. Everyone has a duty not to randomly kill other people. Not everyone has a duty to prepare accounting reports in accordance with generally accepted accounting principles, or to show up thirty minutes early and bring the bats and balls for a youth baseball game. However, some individuals do have these duties, and under this view of ethics, they are morally obliged to carry them out. By becoming a manager, one takes on position rights and duties, and ethics for managers must take this fact into account. Contract Rights The fourth and final source of rights is by contract. My wife has no right, as a human, by law, or by her position, to collect $100,000 from Metropolitan Life Insurance Company. Correspondingly, the company has no duty to pay her this amount (or any amount) of money. However, if I purchase a life insurance policy from Metropolitan Life, they will agree to pay my designated beneficiary (in this case, my wife) a given amount of money if I die while the policy is in force. The life insurance contract is what establishes the right and the duty. It is a legally enforceable contract, but this is not a right of citizenship or a legal right in the sense discussed above. Contracts are formal agreements between two or more parties. The agreement of both parties to the contract initiates rights and duties spelled out in the contract, and they will remain in force as long as the contract is valid. This description of how contracts work is vastly simplified, but it is not false. Contract law is extensive, well developed, and contains precedents for an extremely wide variety of EBSCOhost - printed on 4/3/2022 11:21 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use 76 Ethical Theory contracting situations and disputes.29 Nonetheless, the basic idea of contracts is simple enough. It is important for the rights and duties view of ethics because contracts create both rights and duties where none existed before, and would not exist except for the contract. In Chapter 9 on ethics and terminations, we will see that some people work under explicit employment contracts. The question of whether others work under an implicit employment contract, and what rights and duties such an implicit contract might impose, is a particularly troublesome one. Contracts obviously play an important role in managerial ethics. Labor– management contracts spell out the terms and conditions of employment for employees who are covered under a collective bargaining agreement. Such contracts typically oblige managers to pay certain wages and benefits, provide certain working conditions, and refrain from firing employees except under specified circumstances. Contracts may also affect relations with customers, suppliers, and other company stakeholders. We have now seen four sources of rights and their corresponding duties. Before we leave this subject of sources of rights, some observations are in order. Perhaps the most fundamental is that no right is absolute. The most general or universal rights are human rights, because they are not dependent on a given legal system, position, or contract. The most basic of human rights is the right to life. However, there are times when even this right does not prevail against all other considerations. If you are actively and immediately trying to kill someone else, a policeman is morally justified in taking your life to prevent you from committing murder. A soldier in battle may not leave the field because he fears for his life. Since this most basic of all rights can sometimes be over-ridden by other considerations, it stands to reason that other rights also have less than absolute strength. Clearly, if the most basic of all rights can be out-weighed by other considerations, lesser rights are also subject to prioritizing. Finally, since some rights are granted by law and others have other sources, it is clear that law and ethics are not identical. Kant’s Duty-Based Approach Immanuel Kant is the philosopher most often associated with the rights and duties approach to morality. He wrote a number of widely cited works, some of which are difficult to read and some of which are nearly impossible. A flavor of his approach can be obtained by reviewing some of his titles. Among his most noted works are the Critique of Pure Reason,30 Critique of Practical Reason,31 and Groundwork of the Metaphysics of Morals.32 While his writings are difficult, his influence on subsequent philosophers has been great. Kant emphasizes duties rather than rights. He identifies two kinds of rules (he calls them “imperatives”): hypothetical and categorical. Hypothetical imperatives are conditional. If you want to be a good flute player, then you ought to practice every day. The categorical imperative is not conditioned: it applies EBSCOhost - printed on 4/3/2022 11:21 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use Rights and Duties 77 always and everywhere, according to Kant. He phrases this categorical imperative in three different ways: 1. 2. 3. Act only according to that maxim whereby you can at the same time will that it should become a universal law.33 Act in such a way that you always treat humanity, whether in your own person or in the person of any other, always at the same time as an end, and never as a means.34 Therefore, every rational being must so act as if he were through his maxim always a legislating member in the universal kingdom of ends.35 The first phrasing is perhaps the easiest to understand. Kant gives the example of a man who borrows money, but then has difficulty coming up with enough to pay it back. The question Kant poses is whether this individual can morally fail or refuse to repay the borrowed money. He explains that a universal rule that says “repay loans only if it is convenient” could not work, because no one would lend money under such circumstances. The same sort of analysis would apply to a rule that said “lie when it is inconvenient or embarrassing to tell the truth.” The Categorical Imperative imposes duties on everyone, all the time. Kant is more rigid in his interpretation of universal duties than most other philosophers. If we consider the different kinds of rights enumerated above, we will see that the universal duty required by the Categorical Imperative fits best with human rights, because they are not dependent on anything else to be applicable. One could form a universal rule to obey the tax laws of the countries where your business is conducted, but this already introduces a certain degree of contingency. Even here, though, Kant’s approach seems to many to be too rigid. Suppose that I am home at night reading a novel, and my next-door neighbor knocks frantically on my door. When I open the door, she has terror in her eyes and asks me to hide her, because her husband is trying to kill her. I tell her to hurry upstairs and go in the room to the right. One minute later, her husband pounds on my door. When I open it, he is holding a gun and asks me where his wife is, because he wants to kill her. Is the moral answer “Upstairs to the right”? Most people would say not. This brings us back to the point made earlier: that no right is absolute. His right to be told the truth is not as great as her right to life. This seemingly simple example has profound consequences. Since we have established one time when it is moral to lie and immoral to tell the truth, we must at some point enter the swamp of real life and sort out when else it might be moral to lie. While something like the Categorical Imperative has a certain conceptual attractiveness to many people because of its simplicity and its message of universal duties, in the real world where managers make decisions, simple universal rules do not always work. In other words, real-life rules for EBSCOhost - printed on 4/3/2022 11:21 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use 78 Ethical Theory morality cannot be simple and universal. From this it does not follow that everything is always up for negotiation. It does follow, though, that some decisions will not be easy to sort out from a moral point of view, and that the comfort of certainty may not always be obtainable. We will examine some examples of cases where lying might be permissible in the following chapters. General Observations Another general point about the rights and duties approach to ethics is that it is not completely different from the utilitarian approach. One could argue that we have a duty to perform those actions that will result in the greatest good for the greatest number of people. However, the emphases of the two approaches are notably different. Utilitarianism focuses on the results of actions, and determines their morality by calculating those results (or a prediction of them). Rights and duties call attention to obligations to act in a certain way. These obligations do not arise from the projected results of our actions but from intrinsic rights or duties. One other general point about the rights and duties approach to morality should be noted. There are important areas of life and human relations where this approach is not enough, or perhaps sometimes even appropriate. Family life is one such area. If a husband and wife, or mother and child deal with each other on the basis of rights and duties, the relationship will lack important elements that ought to be present. Certainly the rights and duties approach has something to say about family relationships. Each spouse does have a right to some time alone, or to pursue their own interests, and children do have some rights (as they are quick to remind parents). Laws govern the property rights of each spouse, and parents have a legal obligation not to neglect their children. However, the love that motivates spouses and parents is really not captured in a discussion of rights and duties. Churches and religious organizations have rights and duties regarding their members, but again this is not the kind of discussion that captures the actions and relationships of pastors and church members most of the time. Volunteer groups of many kinds use the time and skill of members. Boy scouts and girl scouts, youth sports activities, and homeless centers all flourish largely because individuals are willing to give their time and talent without employment relations or direct compensation. Again, some basic rights and duties do exist, but this form of discussion does not begin to capture the full scope of human relations that exists in volunteer groups. Even in work situations, it is not rights and duties that causes people to organize potluck luncheons or take up a collection for a co-worker about to get married. In the workplace, where managers have specific roles to play, rights and duties often provide an appropriate language and set of concepts for thinking about the morality of actions. The whole stakeholder approach to business deals EBSCOhost - printed on 4/3/2022 11:21 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use Rights and Duties 79 with issues of what individuals or groups that affect or are affected by organizations have rights or duties with regard to those organizations. Within the organization, managers have duties both to their bosses and to their sub...
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