Philosophical Ethics

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Chapter 3

PHILOSOPHICAL

ETHICS AND BUSINESS

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CHAPTER OBJECTIVES

o After exploring this chapter, you will be able to:

1. Explain the ethical tradition of utilitarianism.

2. Describe how utilitarian thinking underlies much economic and business decision-making.

3. Explain how the free market is thought to serve the utilitarian goal of maximizing the overall good.

4. Explain some challenges to utilitarian decision making.

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CHAPTER OBJECTIVES

5. Explain principle-based, or deontological, ethical traditions.

6. Explain the concept of human rights and how they are relevant to business.

7. Distinguish moral rights from legal rights.

8. Explain several challenges to deontological ethics.

9. Describe and explain virtue-based theories of ethical character.

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INTRODUCTION: ETHICAL THEORIES AND TRADITIONS

o Reasons which guide an individuals ethical judgment fall into three general categories:o Consequences - What was the consequences of paying the bonus?o Principles – one should not break a contractual promiseo Personal character – accepting bonus is greedy or paying the

bonus that were due is the face of public criticism was courageous.

o An ethical theory: An attempt to provide a systematic answer to the fundamental ethical question:

How should human beings live their lives?

o Ethical theories provide reasons to support their answers.

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o Ethics seeks to provide rational justification for why we should act and decide in a particular prescribed way.

o Anyone can offer prescriptions for what you should do and how you should act but, a philosophical and resoned ethics must answer the “WHY” questions as well.

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o Many people and cultures across the world answers the why question in terms of religious terms and base their normative judgement on religious foundation. For eg ‘You ought to live your life in a certain way because God commands it’

o What is the problem with this approach?

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o People differ widely in terms on religious beliefs.

o If ethics is based on religion, and if different cultures have widely divergent beliefs, then it would seem that ethics cannot escape the predicament of relativism.

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ARE YOU AN ETHICAL RELATIVIST?

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o Imagine a scenario in which a teacher returns them an assignment with a grade of “F.” When the student asks for an explanation, she or he is told that the teacher does not believe that people “like you are capable of doing good work in this field (e.g., science, engineering, math, finance). The student objects and says that this is unfair and wrong. The teacher then offers a relativist explanation, saying “Fairness is a matter of personal opinion.” The student asks “Who determines what is fair or unfair?” and the teacher claims that her view of what is fair is as valid as any other.

o

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o Would you accept this explanation and be content with your failing grade? If not, how would you defend your own, opposing view?

o Are there any relevant facts on which you would rely on to support your claim?

o What values are involved in this dispute? o What alternatives are available to you?o Besides you and your teacher, are there any other people who

are or should be involved in this situation, any other stakeholders?

o What reasons would you offer to the dean in an appeal to have the grade changed?

o What consequences would this professor’s practice have on education?

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WHAT IS ETHICAL RELATIVISM

o The doctrine that there are no absolute truths in ethics and that what is morally right or wrong varies from person to person or from society to society.

o Ethical relativism is a concept in which most simple minded individuals adhere to. As a broad definition, ethical relativism is a theory where morals are determined by each person rather than a general census.

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For example….

o In a rural village 50 miles east of Calcutta, a mother kills her newborn baby girl without threat of scorn, punishment, or criticism of her morality from her community.

o Indeed, the practice of infanticide is commonplace in poverty-stricken regions around the world. Many outside observers of this culture would label this act murder and condemn the woman as an immoral person deserving penalization.

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For example….

o The theory of moral relativism, however, holds that the mother has committed no violation because she was acting in accord with the societal standards of her culture. Moral relativism is a form of conventionalism, which explicitly states that "an act is morally right if and only if it is permitted by the conventions of its society" (Feldman p. 164, Introductory Ethics, c.178 Prentice Hall, Inc).

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o According to Individual Ethical Relativism, whatever I choose to believe is right or wrong just because I believe it. I may have reasons to support my belief, but then again I may not.

o In other words, it really does not matter whether I have reasons to support my moral beliefs. For it is consistent with the theory to assert that whatever moral beliefs I hold, they are true simply because I believe them.

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o Ethical relativism is the theory that, because different societies have different ethical beliefs, there is no rational way of determining whether an action is morally right or wrong other than by asking whether the people of this or that society believe it to be right or wrong by asking whether people of a particular society believe that it is.

o .

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o In fact, the multiplicity of moral codes demonstrates that there is no one “right” answer to ethical questions. The best a company can do is follow the old adage, “When in Rome, do as the Romans do.” In other words, there are no absolute moral standards

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An Ethical Relativist

o Mary stole a copy of the final for Biology and circulated it among her friends.

o You have an opportunity to see the final and are particularly torn about if you should look or not...after all you are in about the middle of this class grade wise and only those students who score in the top 50% will be allowed to go on to the advanced class (which is highly regarded on a college application).

o Of course if you say nothing your chance of being in that top 50% is pretty slim.

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An Ethical Relativist Response

o Rita: I think that in today's society cheating of this sort is so usual that there is no particular reason not to look at the test.

o Robert: Yea, look at all the security around testing; it wouldn't be necessary if they didn't think we were going to cheat. It's like they almost expect it.

o Roger: I've heard of those schools with strict honor systems and if you went there you might feel differently, but we're here...You know, when in Rome do as the Romans do.

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DECISION POINT: WHO IS TO SAY WHAT IS RIGHT OR WRONG?

o An ethical relativist holds that ethical values are relative to particular people, cultures, or times.

o The relativist denies that there are can be any rationally justified or objective ethical judgments.

o When there are ethical disagreements between people or cultures, the ethical relativist concludes that there is no way to resolve that dispute and to prove that one side is right or more reasonable than the other.

o Ethical relativists believe that ethical values depend on one’s own background, culture, and personal opinions.

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This chapter will further introduce several ethical

frameworks that have proven influential in the development

of business ethics.

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Ethical Theories and Traditions

oUtilitarianism is an ethical tradition that directs us to decide based on overall consequences of our act.

oDeontological ethical traditions direct us to act on the basis of moral principles such as respecting human rights.

oSocial justice takes fairness as the primary social principle.

oVirtue ethics direct us to consider the moral character of individuals and how various character traits can contribute to, or obstruct, a happy and meaningful human life.

o

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Utilitarianism

o Background: Utilitarianism was part of the same social movement that gave rise to modern democratic market capitalism. Much of neoclassical economics, and the model of business and management embedded in it, has its roots in utilitarian thinking.

o o Tenets of Utilitarianism: Utilitarianism begins with the

conviction that we should decide what to do by considering the consequences of our actions.

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UTILITARIANISM: MAKING DECISIONS BASED ON ETHICAL CONSEQUENCES

o Utilitarianism is identified with the principle of:

o “Maximize the overall good.”

ORo “The greatest good for the greatest number.”

o The economy and economic institutions are utilitarian:o They exist to provide the highest standard of living

for the greatest number of people.o They do not exist to create wealth for a privileged

few.

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Example

o Telling a lie that has no negative effect on anyone and saves someone grief is good.

o Killing someone is always bad but killing someone to save others is OK.

o A consequentialist would say that it is OK if the outcome is positive.

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DOES THE ENDS JUSTIFY THE MEANS?

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If the goals are good and noble, and the means we use to achieve them are also good and noble, then yes, the ends do justify the means. But that’s not what most people mean when they use the expression. Most use it as an excuse to achieve their goals through any means necessary, no matter how immoral, illegal or unpleasant the means may be. What the expression usually means is something along the line of “It doesn’t matter how you get what you want as long as you get it.”

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“The Ends Justifies the Means”

oMeans doing anything whatsoever that is required to get the result you want, regardless of the methods used.It means that the morality of an action is based solely on the outcome of that action and not on the action itself.

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The Ends Justifies the Means”

o By utilitarian standards, an individual’s decision or organization’s policy is good if it promotes the general welfare more than any other alternative.

o Utilitarianism encourages managers to focus on the results of actions or policies. Managers may still question whether actions are wrong even when they produce some good. According to the utilitarian doctrine it is acceptable to sacrifice someone’s happiness in order to serve the greater good.

o

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o Utilitarianism has been called a consequentialist approach to ethics and social policy.o We should act in ways that produce better consequences than the

alternatives we are considering.

o What is meant by “better consequences”?

o Better consequences are those that promote human well-being: the happiness, health, dignity, integrity, freedom, respect of all the people affected.

o A decision that promotes the greatest amount of these values for the greatest number of people is the most reasonable decision from an ethical point of view.

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oUtilitarianism a social philosophy that provides strong support for democratic institutions and policies and opposes those policies that aim to benefit only a small social, economic, or political minority.

o oIt could be said that the economy and economic

institutions are utilitarian in that they exist to provide the highest standard of living for the greatest number of people, not simply to create wealth for a privileged few.

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Example:Child Labor

oIn judging the ethics of child labor, utilitarian thinking would be to advise us to consider all the likely consequences of employing young children in factories.

o Obviously, there are some problematic consequences: children suffer physical and psychological harms, they are denied opportunities for education, their low pay is not enough to escape a life of poverty, and so forth.

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oBut these consequences must be compared to the consequences of alternative decisions. What are the consequences if children in poor regions are denied factory jobs? These children would still be denied opportunities for education; they are in worse poverty; and they would have less money for food and family support. In many cases, the only alternatives for obtaining any income available to young children who are prohibited from joining the workforce might include crime, drugs, and prostitution.

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oFurther, we should consider not only the consequences to the children themselves, but to the entire society. Child labor can have beneficial results for bringing foreign investment and money into a poor country.

o In the opinion of some observers, allowing children to work for pennies a day under sweatshop conditions produces better overall consequences than the available alternatives.

oThus, one might argue on utilitarian grounds that such labor practices are ethically permissible because they produce better overall consequences than the alternatives.

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oAccording to Utilitarianism: No act is ever absolutely right or wrong in all cases in every situation; it will always depend on the consequences.

o oFor example, lying is neither right nor wrong in itself,

according to utilitarians.

o oThere might be situations in which lying will produce greater

overall good than telling the truth. In such a situation, it would be ethically justified to tell a lie.

o

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FREE AND COMPETITIVE MARKETS

o One movement within utilitarian thinking invokes the tradition of Adam Smith.o Claims that free and competitive markets are the best

means for attaining utilitarian goals.o Classic free market economics: Economic activity aims to

satisfy consumer demand.o The goal of free market economics is to maximize the

satisfaction of wants.o To attain the utilitarian goal, current free market economics

advices to structure our economy according to he principles of free market capitalism.

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Why did utilitarianism become popular? There are a number of reasons for its appeal.

oFirst, it is a relatively simple ethical system to apply. To determine whether an action is moral you merely have to calculate the good and bad consequences that will result from a particular action. If the good outweighs the bad, then the action is moral.

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Why did utilitarianism become popular? There are a number of reasons for its

appeal.o Utilitarianism is attractive to many because it

matches the views we tend to hold when discussing governmental policies and public goods. Most people agree, for example, that when the government is trying to determine on which public projects it should spend tax monies, the proper course of action would be for it to adopt those projects that objective studies show will provide the greatest benefits for the members of society at the least cost. It also fits in with the intuitive criteria that many employ when discussing moral conduct

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o Third, most people already use a form of utilitarianism in their daily decisions. We make lots of moral decisions every day based upon consequences.

o At the checkout line, we try to find the shortest line so we can get out the door more quickly. We make most of our financial decisions (writing checks, buying merchandise, etc.) on a utilitarian calculus of cost and benefits. So making moral decisions using utilitarianism seems like a natural extension of our daily decision-making procedures.

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Using the earlier example….

o Tim: I think the real issue here is do the ends justify the means.

o Tom: On the whole cheating may be bad but in this case the greater good might come because I can do a decent job on this test and be able to take that next class.

o Tonya: When you look at all the alternatives, like doing poorly, dealing with mad friends if you turn them in, or just using the answers, and weigh the pros and cons it seems like just using the answers comes out on top for me.

o Theresa: Maybe for you, but I think the costs of a guilty conscience and fear of being discovered outweigh the risks of telling. The individual might benefit from cheating, but we need to consider the people who would be cheated out of their rightful spot in the advanced class.

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Problem with this theory

o There are also a number of problems with utilitarianism. One problem with utilitarianism is that it leads to an "end justifies the means" mentality. If any worthwhile end can justify the means to attain it, a true ethical foundation is lost. But we all know that the end does not justify the means.

o The end never justifies the means. The means must justify themselves. A particular act cannot be judged as good simply because it may lead to a good consequence. The means must be judged by some objective and consistent standard of morality.

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o Though utilitarianism offers a superficially clear-cut method of calculating the morality of actions, it relies upon accurate measurement, and this can be problematic.

o Some benefits and costs are impossible to measure. How much is a human life worth, for example?

o The potential benefits and costs of an action cannot always be reliably predicted, so they are also not adequately measurable.

o It is unclear exactly what counts as a benefit or a cost. People see these things in different ways.

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o Utilitarians defend their approach against the objections raised by these problems by saying that though ideally they would like accurate measurements of everything, they know that this is largely impossible. Therefore, when measurements are difficult or impossible to obtain, shared or common-sense judgments of comparative value are sufficient.

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DEONTOLOGICAL APPROACH

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DEONTOLOGY: AN ETHICS OF RIGHTS AND DUTIES

o Deontological ethical theories are principle-based.

o Ethical principles can simply be thought of as a type of rule, and this approach to ethics tells us that there are some rules that we ought to follow, even if doing so prevents good consequences from happening, or even if it results in some bad consequences.

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oRules or principles create duties that bind us to act or decide in certain ways.

For example, many would argue that there is anethical rule prohibiting slave labor, even if this

practice would have beneficial economicconsequences for society.

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“Following Rules”:

What rules should we follow? Legal rules, obviously, are one major set of rules that we ought to follow.

Example: We have a duty to pay our taxes, even if the money might be more efficiently spent on our children’s college education.

We ought to stop at red light even if no cars are

coming and I could get to my destination much

sooner.

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oDecision-making within a business context will involve many situations in which one ought to obey legal rules even when the consequences, economic and otherwise, seem to be undesirable.

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oOther rules: Derived from various institutions in which we participate or from various social roles that we fill.

oExample: As a teacher, I ought to read each student’s research paper carefully and diligently, even if they will never know the difference and their final grade will not be affected. In the role of teacher and university faculty member, I have the duty to enforce the rules fairly, even when it would be easier not to do so.

oSimilar rule-based duties follow from our roles as friends, family members, students, church members, citizens, and good neighbors.

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o Deontologists do not look at how much good might be caused by an action. They look at the action itself, deciding whether it is prohibited or made obligatory by one of their rules. Usually, the rules are expressed negatively: do not lie, do not steal, do not harm the innocent. In a few cases, the rules are expressed positively: keep your promises; treat all persons as beings with rights, tell the truth.

o o These rules are often called constraints. A "constraint" is like a

set of handcuffs - it stops you from doing something, even if you want to do it.

o

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o Deontology maintains that the wrongness of (some) actions is intrinsic, or resides in the kind of action that it is, rather than the consequences it brings about. So, for example, an act of killing an innocent man is wrong because it is the killing of an innocent man, rather than because it deprives someone of future happiness and causes grief to a family.

o In this, deontological ethics is opposed to consequentialism, which defines the moral rightness of an action in terms of the consequences it brings about.

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o "My duty is to make sure that I do not do evil. If I kill to save a life, by killing I am causing evil. My first duty is always to ensure that I am good in myself. Killing or lying or stealing would make me bad in myself.“

o "Why ought I to be faithful to my wife?"

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HUMAN RIGHTS AND DUTIES

o According to Immanuel Kant, German philosopher, there is essentially one fundamental ethical principle that we should follow:o Respect the dignity of each individual human being.

o Kant claimed that this duty to respect human dignity could be expressed in several ways. o Act according to those rules that could be universally

agreed to by all people. o Treat each person as end in themselves and never only as

means to our own ends.

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o The Kantian tradition claims that our fundamental human rights are derived from our nature as free and rational beings:

o Humans do not act only out of instinct and conditioning; they make free choices about:

oHow they live their lives.oTheir own ends.

o Humans are said to have a fundamental human right of autonomy, or self-rule.

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oA Kantian would object to child labor because such practices:

oViolate our duty to treat children with respect.oViolate the rights of children by treating them as mere

means to the ends of productions and economic growth.oAs children, they have not rationally and freely chosen

their own ends, so they are used as tools or objects.

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Using the same example…

o Deb: It seems like I ought to look at the moral rules that come into play in a situation like this, rather than just looking at the consequences.

oDoris: Yeah, what about justice, equal treatment and refraining from evil?

o Don: Maybe the best thing to do would be to see which rules you feel most bound by qualified by the specifics of this situation.

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A simple difference….

o For example, imagine a situation where there are four critical condition patients in a hospital who each need a different organ in order to survive. Then, a healthy man comes to the doctor’s office for a routine check-up.

o According to consequentialism, not deontology, the doctor should and must sacrifice that one man in order to save for others. Thus, maximizing the good. However, deontological thought contests this way of thinking by contending that it is immoral to kill the innocent despite the fact one would be maximizing the good.

o Deontologists create concrete distinctions between what is moral right and wrong and use their morals as a guide when making choices. Deontologists generate restrictions against maximizing the good when it interferes with moral standards.

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FLAWS OF THIS THEORY

o Although deontology contains many positive attributes, it also contains its fair number of flaws. One weakness of this theory is that there is no rationale or logical basis for deciding an individual's duties.

o For instance, businessman may decide that it is his duty to always be on time to meetings. Although this appears to be a noble duty we do not know why the person chose to make this his duty. Perhaps the reason that he has to be at the meeting on time is that he always has to sit in the same chair.

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o Sometimes a person's duties conflict, and that deontology is not concerned with the welfare of others.

o For instance, if the deontologist who must be on time to meetings is running late, how is he supposed to drive?

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o Since deontology is not based on the context of each situation, it does not provide any guidance when one enters a complex situation in which there are conflicting obligations.

o Is the deontologist supposed to speed, breaking his duty to society to uphold the law, or is the deontologist supposed to arrive at his meeting late, breaking his duty to be on time?

o So, when they come into conflict there is no rule for which one is more important.

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VIRTUE ETHICS

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VIRTUE ETHICS: MAKING DECISIONS BASED ON INTEGRITY AND CHARACTER

o Virtue Ethics is a tradition within philosophical ethics that seeks a full and detailed description of those character traits, or virtues, that would constitute a good and full human life.

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VIRTUE ETHICS

o An ethics of virtue shifts the focus from questions about what a person should do, to a focus on who that person is.

o Implicit in this distinction is the recognition that our identity as a person is constituted in part by our wants, beliefs, values and attitudes.

o The self is identical to a person’s most fundamental and enduring dispositions, attitudes, values, and beliefs.

o It may, initially, be identified as the one that emphasizes the virtues, or moral character, in contrast to the approach which emphasizes duties or rules (deontology) or that which emphasizes the consequences of actions (consequentialism).

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VIRTUE ETHICS

o Emphasizes the more affective side of our character.

o Seeks to understand how our traits are formed and which traits bolster and which undermine a meaningful, worthwhile, and satisfying human life.

o Encourages a fuller description, rather than simply describing people as good or bad, right or wrong.

o Reminds us to examine how character traits are formed and conditioned.

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VIRTUE ETHICS

o An ethics of moral character is also called a virtue ethics because it focuses on character traits.

o Positive character traits are virtues; negative character traits are vices. It takes the fundamental question of ethics to be: "What should I be?"

o In other words, "What kind of person should I be?"

o

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VIRTUE ETHICS

o Why is virtue is not just a feeling.

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VIRTUE ETHICS

o Virtues" are attitudes, dispositions, or character traits that enable us to be and to act in ways that develop this potential.

o They enable us to pursue the ideals we have adopted. Honesty, courage, compassion, generosity, fidelity, integrity, fairness, self-control, and prudence are all examples of virtues.

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How does a person develop virtues?

o Virtues are developed through learning and through practice. As the ancient philosopher Aristotle suggested, a person can improve his or her character by practicing self-discipline, while a good character can be corrupted by repeated self-indulgence. Just as the ability to run a marathon develops through much training and practice, so too does our capacity to be fair, to be courageous, or to be compassionate.

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How does a person develop virtues?

o Virtues are habits. That is, once they are acquired, they become characteristic of a person. For example, a person who has developed the virtue of generosity is often referred to as a generous person because he or she tends to be generous in all circumstances. Moreover, a person who has developed virtues will be naturally disposed to act in ways that are consistent with moral principles. The virtuous person is the ethical person.

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Example..

oA lie is wrong not because of its consequences and not because it violates rules but because it is not what a virtuous and honest person would do.

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Virtue Ethics

o Valerie: I think to deal with this dilemma you ought to look deep inside yourself and see what your motives are for the action you might take.

o

Victor: I think I would feel better about myself if I overcame the temptation to use the answers because I knew it was wrong instead of just because I knew it was expected of me, or I was afraid of being caught.

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o it doesn't provide clear guidance on what to do in moral dilemmas o although it does provide general guidance on how to be a

good person

o there is no general agreement on what the virtues are o and it may be that any list of virtues will be relative to the

culture in which it is being drawn up.

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A DECISION-MAKING MODEL FOR BUSINESS ETHICS REVISITED

1. Determine the facts

2. Identify the ethical issues involved

3. Identify stakeholders

4. Consider the available alternatives

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5. Consider how a decision affects stakeholdersa. Consequences

i. Beneficial and harmful consequences

b. Duties, rights, principlesi. What does the law say? ii. Are there professional duties involved?iii. Which principles are most obligatory?iv. How are people being treated?

c. Implications for personal integrity and characteri. What type of person am I becoming through this decision?ii. What are my own principles and purposes?iii. Can I live with public disclosure of this decision?

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6. Guidance7. Assessment

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DISCUSSION OF OPENING DECISION POINT: EXECUTIVE COMPENSATION

o June 2009, the U.S. Treasury Department appointed Kenneth Feinberg to oversee compensation packages that are offered to executives at firms that received significant government bailout money.o The companies included AIG, CitiGroup, Bank of America, and

General Motors.

o Soon Feinberg was dubbed as the first ever “compensation czar.”o Critics saw this appointment as a first step towards government wage

controls.o Defenders saw this as long-overdue and a necessary step to bring

fairness to executive compensation and hoped that this practice would extend beyond only those firms receiving government funding.

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CHAPTER THREE VOCABULARY TERMS

o After examining this Chapter, you should have a clear understanding of the following Key Terms and you will find them defined in the Glossary:o Autonomy o Categorical imperative o Character o Consequentialist theories o Deontological ethics o Dutieso Egoism o Ethical relativism

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CHAPTER THREE VOCABULARY TERMS

o Human rightso Moral rights o Rightso Utilitarianism o Virtue ethics

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Philosophical Ethics