ETHICAL ISSUES IN A BUSINESS SCHOOL ENVIRONMENT
Efficiency-oriented business-school faculty – and students - want to get to principles and guidelines ASAP. But ethical questions and the underlying moral philosophies take time to think through and talk through. In an attempt to mediate between these conflicting goals, I submit some perennial questions of moral philosophy tailored to a business context.[1]
1.How should a company establish itself as ethical? What's the best basis for making ethical decisions?
Start with a company code of conduct. A code typically refers to the company’s stakeholders and promises to serve them equitably. If the code is weak, beef it up. If you want to go a step further, develop performance-based standards on issues such as the environment and workplace, build them into the company's management systems, and report on your progress.
The two main ways of making ethical decisions are not necessarily mutually exclusive:
- What is your duty as a manager and as a company? What is the right thing to do? What passes the smell test? What would you not want to read in the NY Times the next day with your name attached? This approach has the advantage of what Walter Lippmann called “governing simplicity.” You do something because your eternal life or your peace of mind or reputation depends on it. In the old days people could understand "Go fetch a goat." The peasant could understand the obligation to sacrifice a goat to appease the gods.
- What action will benefit most people via its impact or consequences? Utilitarianism advises choosing whatever "maximizes utility." For a corporation, this test could be defined as: “What is the best thing to do for our stakeholders?” What makes business sense? What is in the long-run interest of shareholders, employees and others with a stake in the company?
In most cases, there will be no conflict between what seems to be the company's duty and what is best for most people. A company should be able to say, as Tiffany does regarding its efforts to ensure no-sweat procurement: “We are doing this because it is the right thing to do and because it makes good business sense.”
2. What about when the right thing conflicts with a business opportunity?
The interesting cases for philosophers and dramatists are when there is a conflict between two moral standards, such as workplace conditions in the consumer country and the producer country. The gravity of the decision depends on the gravity of the violation of duty is implied by the business opportunity. One can again identify two approaches to drawing a line in the sand about a manager's duty:
- Religious principles. The ten commandments still have a place in our society, backed up in some cases by the law. Thou shalt not steal. Thou shalt not lie. Thou shalt not kill.
- Kantian principles, derived rationally but ruling out certain classes of actions like lying or murder as being inherently right and wrong regardless of their consequences. Truth-telling and not killing are “categorical imperatives” – even if they might not produce good consequences, i.e., profits for shareholders. The means never justify the ends. For a utilitarian, the act must be judged against one’s intention (i.e., how one perceives what one is doing), but not one’s motive (why one is doing it, which is irrelevant).
Example 1. You are a running a business in Holland and the SS asks you if any of your employees is Jewish. You do have such employees. If you are Roman Catholic, you might rely on the Catholic Church's ruling that it is not lying to withhold information from someone like the SS who is not entitled to the information because it will be used for nefarious purposes. A utilitarian might agree on the baiss that telling the truth would cause the SS some transient satisfaction, but lying might save the jobs or lives of the Jews, a more important consequence. However, Kant contends it would be wrong to lie and say "None here"— even if you are convinced that the SS will murder the Jews. You control only your own actions, not those of the SS. It is up to you to do good even if others do not.
Example 2. In a hypothetical that has a real-life counterpart, you are put in charge of the Bogota office of a fruit company. Your car is stopped one evening and a commander of a rebel army introduces himself. He says that another rebel group plan to kill ten of the company's employees tomorrow night. The commander says his group can stop them. To have the authority to intervene, he needs money to buy more ammunition and wants $10,000 by the next morning or he won’t be able to do anything. Your contacts tell you that the danger to your employees is real. Do you pay the bribe? Kant might say it would be wrong for you to give money to a terrorist group. But a utilitarian might say you should pay up to protect your employees.
3. Is utilitarianism compatible with justice?
Justice seems to be duty-based, so where does a utilitarian approach fit?
Example. You are the manager of a factory in a southern town. An outlaw has been terrorizing the town, committing a series of murders and workers are not showing up out of fear. The sheriff have been unable to track him down. Residents have taken matters into their own hands and have started rounding up innocent blacks in preparation for lynching. You have reason to believe that the outlaw has left town. The sheriff tells you that he recently captured a black man (homeless and friendless) on a charge of vagrancy. He is thinking of framing this man, and executing him, knowing that then the lynchings would stop, it would save the lives of many innocent people. A wink or a nod from you, and he will do it. Should you indicate your support? Utilitarians seem to be required to say yes, whereas duty-based ethicists would say no.
But the utilitarian can reply that, as often happens, in the long term the framing of the innocent will be discovered with catastrophic results for the system of justice, so better not to yield to the impulse to deny the innocent person his rights. To Elizabeth Anscombe, the idea that a person might consider for even a moment the possibility of framing the innocent shows a morally corrupt mind.
4. Does utilitarianism justify inequality?
Utilitarianism would certainly frown on plantation slavery in the Antebellum South. A few owners were supported by many slaves; the pleasure gained by the masters did not outweigh the pain caused the slaves. However, suppose with technology 51 percent of the population could become idle masters supported by 49 percent in slavery (which some believe is the direction that Social Security and Medicare are taking us), would Utilitarianism say that this is the right way to organize society? Consider, though, the possibility of envy, with all its pains. You need some story to prevent revolts. When religions promise rewards after death for those who are meek, it gets people to accept their lot on earth. But what about when religions get behind revolt? Or people no longer believe?
5. Does utilitarianism require business to do more than the law requires?
Does a business – or its executives - have a responsibility to do something for society as well as make a profit? In fact, one could argue that utilitarianism would demand that we continue working later than we do, but send to famine relief everything in excess of the money we absolutely need to survive and work (i.e., we must do superogatory acts). Normally, anyone who did this would be seen as a saint, going well beyond "the call of duty." However, utilitarianism seems to require it.
This question shows that utilitarianism can have an austere face. But the utilitarian might respond that no one is perfect and that this is an ideal to which executives and the businesses they run might aspire. Or they might point to long-run uncertainties or the paradox of the unintended consequences of philanthropy - food sent for short-term famine relief may upset the market for local production and put local farmers out of business, thereby only exacerbating the problem in the long term.
6. Do utilitarianism have a special affinity for the marketplace?
Yes. It comes from the attempt to calculate the greatest good for the greatest number. How do we make interpersonal comparisons of pleasure? I may get more pleasure from eating Hershey chocolate than Ben & Jerry’s ice cream. But how can we tell whether I get more pleasure from eating Hershey than you get from eating Ben & Jerry’s? This metric seems necessary to make utilitarianism work. Preference utilitarianism requires measuring the strength of different people's desires. Economists use the concept of “effective demand” which is “willingness to pay” plus “ability to pay” to measure utility. This does the job but is subject to the problem that rich people are willing to pay much more than the poor. The common denominator of money shows how much each will pay for their pleasures, and for many people this solves the problem.
7. You are the manager of a factory. Someone takes ten people hostage on the roof of the building next to yours. What is the ethical thing to do?
You have both a regular pistol and a sniper rifle and he doesn't see you. His demands, broadcast on television, are for an unreasonably large amount of money, which he says he will turn over to a terrorist group.
Possibilities:
- Snipe at him, save ten lives for one without putting one’s own life at risk. (A possible utilitarian response).
- Not do anything, because killing is wrong. (Duty-based response.)
- Decide that a true man of virtue fights enemies fairly (with honor) and challenge the hostage-taker with a regular pistol. (Virtue ethics.)
Watch out for these hypotheticals. Elizabeth Anscombe dealt with the case where if you step with one foot forward you kill two young people in their prime, but if you step backwards you kill eight feeble old men, and you have to go forward or backward. Her answer: "Quite obviously, you jump with both feet and polish off the lot."
Killing is irreversible. The hostage-taker may actually be deranged and not likely to follow through on a threat to kill. Or the hostage taker may have explosives that will go off if he is shot. In his last dying move he is able to pull the switch, say. It makes the hypothetical situation harder to assess.
The virtue ethics hero is the one who is willing to risk her own life in order to mediate, to prevent harm from happening. It doesn't take much courage to pull a trigger at no risk to oneself. If the 9/11 story about the foilers of the Pennsylvania-crashing plane is true, they were genuine heroes who called out: "Let's roll."
[1] I thank Prof. Randal R. Marlin (my brother) of the Philosophy Department at Carleton University in Ottawa, for his help over the years with these kinds of questions and Prof. Bruce Buchanan and the MEL Program at the Stern School for providing the context.
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