Uses and Abuses of Business Ethics
Nonconformist takes on business ethics
© 2013 Paul Charles Gregory 4500 words
I. Basics
Not surprisingly, there has been much mention in the literature on
business ethics of morality, ethics, even of values and, increasingly
fashionable, virtues. Yet these concepts are rarely, if ever, defined
or elucidated. It is as if we were all agreed on what they mean. But
we are not. Further below I advocate a radically different approach
to the subject which largely dispenses with these concepts. It is an
approach which, once spelt out, will likely resemble what you
understood intuitively all along.
At a descriptive level, we might understand morality as an
informal and ill-defined set of customs and rules, obedience to
which is accepted in a given society as the right way to behave. But
morality – or mores – may differ considerably from one society to
another, with each morality changing over time and, most painfully,
from one generation to the next. So there has to be reflection about
morality, and this examination is the task of moral philosophy or, as
it has been traditionally called, ethics. Recently, the word metaethics has come to be used instead in response to the widespread use – abuse – of the word ethics to refer to compliance to a code. A code is generally presented as a lawlike catalog of rules, rather than being understood as a checklist and as a learning guide for those whose moral character is underdeveloped.
Ethics is, therefore, totally different in kind to rulebooks and
compliance, whether compliance with the law or with a code. An
action may be thoroughly immoral yet completely legal.
Conversely, an action may be illegal, and even subject to severe
punishment, yet morally imperative. If this were not the case, we
could manage with the words legal and compliant alone, and entirely abolish the words morality and ethics.
These distinctions are very basic, and it pains me that they
have to be spelt out for people who count as educated. As to the
nature of the complex and dynamic relationship between law and
morality, more is said further below.
II. The vanity of Principles
Much effort has gone into inventing and examining principles that
would allow a judgement to be made as to the right way to behave
in (almost) any given situation. Some say one should look to the
consequences, others that one should look at the agent’s motivation
or the intrinsic nature of the act. Some say one should seek to
promote dignity and respect, including respect for the freedom of
others to behave badly. Others say that happiness is key, but object
when this is reduced to pleasure, or else they devise a hierarchy of
pleasures. Some say one should be true to oneself and live
authentically, while others that one must live for others. There is a
positive golden rule, that goes too far, and a negative golden rule,
that does not far enough.
It has been demonstrated time and time again that none of
these principles works except, at best, for a narrow band of cases.
That is, each principle generates, when applied to a wide spectrum
of ethical dilemmas, many results that are controversial at the least
and sometimes intuitively wrong for all but the most stubborn of
ideologues.
Therefore, a word of caution is in place. Beware of grand words,
abstract nouns, and generalizations, and beware even more of
people who use these without preparing their ground. Further
below, I shall argue that ethics mostly involves making distinctions
and paying attention to detail while being on guard against received
ideas.
III. Moral motivation
What is crucially left out of account in much of the literature, or else
answered inadequately, is the issue of why anyone should be moral,
i.e. as opposed to prudently taking the perceptions and reactions of
others into account. Leaving aside any religious considerations,
there is no compelling answer in terms of logic and reason. In any
individual case it will be a matter of old habits persisting. We are
indeed creatures of habit. A overly truthful person will find it
difficult to lie even when the situation requires them to. Someone of
a peaceful disposition will hesitate to use violence even in self-defense. And so on. We do not easily jump over our own shadows, although, note, each of our shadows is different.
This is a result of our socialization. In terms of psychology, it
will not be doubted that over the many years of childhood and
extending into adolescence we acquire many layers of habits such
that, eventually, they are embedded in our subconscious and in our
instinctive reactions. Not all of these habits should be classified
under morality, only those that affect our interactions with other
people. As the word layers implies, some are more basic and deeply rooted that others. Stealing from kith & kin may be taboo whereas
fiddling a figure on a form is fair game. A young child may understand the first transgression, but not the second.
More is said on the subject of moral motivation further below.
IV. Values of no consequence
The word values must count as the most useless and misleading
concept in this whole sorry story. Quite apart from its misleading
use in business to refer to purely monetary value, it seems to refer to
a number of mostly unspecified qualities or principles whose
relationship with each other is never clarified. Integrity,
sustainability, respect, truthfulness would, it seems, count as values,
as would some other abstract nouns. All of these are problematic;
that is, it is not clear what they really mean or whether what they
specify is always desirable — quite apart from the observation that
organizations frequently fail to abide by these values however
understood. If there were talk of priorities, this at least would make
some sense. For instance, “We go for environmental sustainability
and be it at the expense of truthfulness or of the well-being of our
workforce.” Indeed, a major reason for engaging with ethics is to
face up to juggling and changing priorities. The earnest word values serves solely, it would seem, to produce the appearance of consensus.
V. What is the point of the word virtues?
A slightly better concept is that of the virtues, and some so-called
values would indeed seem to be virtues. They have a venerable
history, going back to Aristotle and early Christian teaching,
through the Middle Ages and up to the present day.
They are best understood as commendable qualities which are
relative. One is courageous or generous by comparison with the
average in one’s surroundings. It would not make sense to talk of
everybody being courageous, although it might be expected that all
firemen should be brave, i.e. physically more courageous than the
average non-fireman. But it would be conceivable for everyone to
possess at least one virtue, i.e. to possess a quality that they excel in.
Note that it is doubtful whether it would be possible to possess all
the virtues since it is not self-evident that they are all compatible.
This said, if such a person should exist, they might be admirable,
but they would likely not be someone we could relate to, or love.
For each virtue, there is a matching vice. Someone who is too
“courageous” is foolhardy; someone who is too generous a
spendthrift. And so on. Hence each virtue must be tempered by
prudence. Yet prudence itself counts as a virtue, itself though,
arguably, not always desirable; or perhaps it must be seen as the
virtue that fine-tunes the others, rather than being a proper virtue in
its own right. Hence the virtues are not all of a sameness. Some
become manifest only on particular occasions, whereas others
involve continuous exercise. One may never be called upon to be
brave. But in living well one will always need some self-discipline,
i.e. the virtue of temperance.
It has recently become fashionable to talk of virtue ethics, but much less fashionable to explain what this means. Apparently, though, it is desirable for us all to be virtuous. Presumably, this means we should pursue virtues as mindlessly as corporations swear allegiance to values.
Let us instead turn our attention to virtues as they may be relevant to particular lines of work. It may be expected of a fireman, it has been noted, that he or she should be physically courageous. The same does not apply to a white-collar worker, for example, a finance professional. There is no particular expectation of firefighters that they should be morally courageous (moral courage being a readiness to risk the contempt of others for doing what one believes to be right). It might, however, be expected of the finance professional that she be willing, if the occasion arises, to make herself unpopular by exposing financial misdemeanors.
A journalist might need to be persistent, insensitive and
deceptive in order to get at the truth. A businessman might need to
play his cards carefully — or play naive — in order to negotiate
successfully. Hence respect, openness and honesty, authenticity
even, are no virtues here. In order to be generous, mostly you (or
your benefactor) must first have saved, or have overcharged. In
order to protect your dearest and nearest you may need to be unjust
in your dealings with strangers. Sometimes you must be cruel to be
kind (tough love).
Hence the “goodness” of the virtues is relative to the role. Virtues
are not good in themselves, irrespective of context. Those who are
physically “courageous” where there is no call for courage are
called foolhardy; those who are morally “courageous” when moral
courage is out of place are simply insensitive. Aristotle claimed that
the virtues must be exercised in order to be maintained: one
becomes courageous by making a habit of performing courageous
acts. But we know now that this is not exactly true: eventually, the
bomb disposal hero can take no more.
So no, not only should we not aim to be virtuous all round: we
cannot. In a particular line of work, in a specific role, which we will likely find ourselves in because of our disposition, there may be qualities in which we may be expected to excel (i.e. relative to those
in very different occupations), and these qualities may be called
virtues, the virtues requisite and proper to the task in hand. They
may well exclude other virtues. (For example, is it psychologically
possible to be a good salesman simultaneously with being,
successfully, in charge of the purchasing department?)
A more rewarding focus may be vice. Pursuit of material self-interest is not a vice, but greed is. Famously, the “invisible hand”
turns the former to the benefit of all. An error of recent years was to
suppose the invisible hand would be strong enough to turn greed to
good too. (This was partly the error of scaling up. The fact that a
little of something works some of the time does not mean that a lot
of it will work better or will work all the time. The dynamics mutate
as the proportions shift until there is a step change.)
In the final analysis, though, the generic terms virtue and vice confound more than they clarify. The virtues set out in Antiquity are not the same as those of Christianity, and meanwhile others have been added haphazardly. Those who like to praise virtues and virtuousness do not normally take the trouble to spell out exactly a
number of virtues they have in mind; at best, they come up with one
or two. If some general term is needed, then let us speak of
character and of strengths and weaknesses of character. This is less pretentious. Mostly, it is enough to speak of specific qualities such as courage or generosity, or of moral courage and generosity of
spirit. And so on. They rarely need an umbrella term.
VI. Character and Responsibility
Constancy counts as a virtue, though one might be beware of the
pursuit of consistency for its own sake. The point about character is
that it varies from one person to another, while it is said, broadly, to
remain constant (to persist) in a given individual. It is not simply
that life would be less colorful without character and characters; it is
that character involves possessing certain strengths at the expense of
others and, one dare say, indulgences too. More importantly, others
need to be able to predict roughly how a person will behave. If Bert
started acting like Arthur, or Arthur like Bert, we should be
disconcerted and have difficulty relating to either.
The essence of human society is that it is made up of different
people interacting with each other in response to their mutually
different talents, life stories and stage in life. Not only are diverse
skills necessary, but a variety of virtues too. No-one is expected to
master every skill or each virtue. That is:
Everyone is responsible for something, but no-one is
responsible for everything.
It is here that it becomes possible to provide a motivational
rationale for behaving morally that goes beyond the appeal to habit
or prudential conformity. Once one has constructed a sense of self,
this is tied up with the responsibilities one has assumed. Or rather,
one’s sense of self expands to encompass parts of one’s social
setting. Either way, one has identified with the responsibilities
adopted, and this would be a reason for following through on them.
There is an informal separation of spheres such that each
person may make themselves useful in a different way while not,
normally, treading on the patch being attended to by another. This
does not mean there cannot be fluidity as circumstances change.
Depending on the nature and extent of the responsibilities one
has taken on, one has, moreover, a right and perhaps a duty to hold
others to account. How that right or duty is discharged, with what
sensitivity and circumspection, is another matter.
It may also be that there are essential matters that no-one is
attending to. For example: When in a country the politics goes to
pot, this may not be the responsibility of most people, who are busy
caring for home and family, but of those who, though talented and
educated, fail to engage because the football is more fun. Bad things
happen when good men look away. People will always be found to
engage in politics, but not always those one would choose to elect if there
were a choice about it. Creating such choice — attending to the
proper structures — is the task of democratic politics.
A feature of modernity is not only multitudinous division of labor in
the economic sphere, but also strict separation of duties in the body
politic. The police must not usurp the authority of the courts. A
parliament must pass legislation, but does not enforce it, this also
being the prerogative of the courts. An executive (a government)
must act within the law. And so on.
Reviewing this essay from 2013 in 2025, our challenge now, at the far end of our civilisation, is that those separations have been breached. Those remaining upright may need to assume responsibilities they have not chosen and are ill-fitted for. As I perceived back in 2013. Read on.
There is an equivalent separation of duties in the sphere of
business. Within a corporation, it might be argued, every
professional must be responsible for something, but no professional
for everything. Note that, although the separation of duties may be
strict, in times of breakdown (civil disorder, gross malgovernance) it
may be right to take on responsibilities outside one’s proper sphere
(just as one might take in the children of neglectful neighbors, or, in
times of war & pestilence, care for their orphans).
This would be a rationale for profit-oriented corporations to
assume social tasks that are unrelated to their core business. Such
public-spirited inter vention would be justified only (and only!) as long as neither government nor civil society were equipped to perform their
proper tasks. However, government may be unable to perform
because corporations are avoiding taxes; civil society may be unable
to step in because discretionary income is too low, or professionals
are too busy with corporate work (for example, organizing tax
avoidance).
The political duty of the corporation would be to work for the
restoration of the institutions and the separations of powers that
provide the essential checks & balances for a flourishing society.
This would be veritable corporate citizenship.
An inference from this analysis would be that the efforts of the
EU and many governments to encourage or, indeed, impose
corporate social responsibility (CSR) involves an abdication of power, a
dereliction of duty, a betrayal of democratic principles, and a retreat
from the modernist principle of the separation of responsibilities.
Whereas, if only in theory, governments are democratically
answerable to their electorates, this is no longer the case when
corporations assume extraneous tasks. Corporations are
democratically answerable only to their shareholders (and this only
in theory; in practice they are autocratic). It might be argued that
corporations are subject to the court of public opinion, but it is
exceedingly rare that public opinion (in the form of boycotts or
exercise of consumer choice) has substantial power, nor can public
opinion be relied upon to be properly informed, least of all when
public relations firms are paid to meddle.
Responsibilities cannot long be assumed in a vacuum, nor duties
upheld without some kind of coercive authority. For most people,
neither the force of habit ingrained in early years nor allegiance to
principles will be strong enough on their own to withstand the
temptation to shirk responsibilities or to interpret their
responsibilities in a self-serving manner.
What are needed are structures to reinforce professional
responsibilities. To this end we need a conception of what a
profession is that extends beyond a sphere of expertise. Traditional
professions had an overarching concern that was separate to their
conducting a business or performing an individual service, however
honorable. For example, the ultimate concern of a medical doctor,
as a doctor, is health (and not her patients or the health insurance
scheme); the ultimate concerns of a lawyer would be justice and due
process (and not merely advocating the case of a client); a teacher
will seek to educate, rather than train pupils just to pass exams. A
translator or interpreter will enable communication between
speakers of different languages (rather than the impression of
communication). An architect will, ideally, seek to create a built
environment for people to be happy to live and work in, ideally for
generations to come. An accountant will attend to a fair and true
view of the commercial affairs of a business. And so on.
Traditional as well as some emergent professions are organized
in associations which have a code of conduct and the power to
discipline or exclude aberrant members. A key prerogative in the
past has been for professions to police themselves.
It is not with codes and compliance, nor with corporate social
responsibility, certainly not with values, but here that business
ethics can get real.
When things go wrong in business, recourse to the law is largely
useless unless the monetary stakes are very high. The weak will not
dare go to court because, even if they win their case, they will likely
be ostracized. The legal process is lengthy and costly, and its
outcome uncertain, not least because, despite or maybe due to their
formal qualifications, many judges are myopic, or else the law
outdated.
The whole rationale — justification — for business ethics may be
summed up, moreover, in the insight that, regularly and extensively,
market mechanisms fail. Theoretically they are self-correcting, but
the correction takes too long, with meanwhile untold harm being
done to employees, suppliers, consumers and others. Management
moves on, untarnished.
Bureaucrats and their allies in politics imagine there is a
mechanical fix to the mechanisms that fail; a market cure for the
market malaise. Only a few more rules and norms and codes and
penalties for non-compliance, — and the malfunctioning will surely
cease. They may even call for ethics, but they mean compliance, which is much the opposite. The psychological defect driving their obsession is the belief in control, rather than faith in professionals to monitor each other and apply professional judgement.
VII. Making management a profession
Whereas some professions involve (rightly) formal training, induction and qualification by examination, others (rightly) do not. Our free society allows people to become entrepreneurs or go into
management without a formal approval process. It is success that
counts. However, once such managerial responsibilities have been
assumed, it should be requisite that practitioners join – and be
admitted into – a professional body. There would be several, even
many, such professional bodies for different kinds of managers and
also for those working in areas of emergent expertise comparable
with traditional professions.
Such bodies would have ethics committees to examine cases
not only of isolated instances of professional misconduct but of
patterns of misconduct.
Note: Since this was written in 2012/2013 it has emerged (mid 202o’s) that almost every body with the name “ethics committee” or similar is through & through corrupt, with members not only ignorant about ethics but of vile character.
For readers whose red flags have been triggered, please read on and do not confuse my stance with the opposite. Read the story that follows.
Allow just one example (one could fill a book with the most diverse horror-stories.) About 2011 a fourteen-year-old foolishly — is it not the prerogative of someone so young to be foolish? — downloads bursts of tune. The mobile phone company invoices a ruinous amount, and refuses to revoke its invoice. The family has neither the financial means, nor the intellectual capability, nor the time & energy (parents ruining their health with work) to pursue the matter through the courts, which would probably prove useless anyway. The daughter is told that she will have to forgo her Christmas presents.
Someone – or more likely a group of people — in the phone
company is responsible for this boost to company revenue; was
even rewarded for this policy with promotion or a bonus. Likely
the action of the company was illegal. But how can it be
challenged? And punished so that it hurts not the shareholders, who
are innocent, but the perpetrators? And punished severely enough to
serve as a warning to others?
In a properly constituted corporation there needs to be an
identifiable senior employee (a “professional”) who takes
responsibility for any given policy and its implementation. Such a
person must, it is advocated here, be a member of an appropriate
professional body. Such a body would have, on its disciplinary
committee, representatives from other professions. This is to counter
the tendency of members of a profession to be prejudiced either in
favor of or against colleagues. It is in any case a well-established
principle of corporate governance that a board include people from
a variety of backgrounds in order to avoid group-think.
A record needs to be kept on professionals, who could
eventually emerge as a formally distinct social class. Anyone who
did not wish to be tracked would be free to work at a more junior
level and receive less remuneration.
Any professional can — indeed will — make errors of
judgement. Often it will be possible to correct for these, for
example, cancel invoices, pay compensation, forgo the promotion or
the bonus. However, if the errors of judgement persist, probably
with basic moral tenets being ignored, it must be possible, under due
process, for a diverse, well-educated and independent jury to rule
that the professional concerned be excluded from practice for
however long seems fitting. Due process would include the right of
appeal. The appeal process could well constitute a learning
experience.
VIII. Free-riders
A decisive test for any conception of business ethics is whether it
can deal with the free-riders, i.e. the opportunistic characters who
make a pretense of playing to the rules but in fact circumvent them
for their own advantage.
Many advocates of business ethics would seem to rely on an
appeal to the sense of common purpose. Free-riders think that a
sense of common purpose is excellent in other people, it is just that
they do not see why they should apply it to themselves. And indeed,
why should they?
Note in 2025: “Common Purpose” was used here in the sense traditionally understood. At the time (2013) I was unaware that there was a subversive and secretive organisation which had hi-jacked this expression and pinned it to its mast: Common Purpose. .
Free-riders are enthusiastic advocates of discourse ethics, an expression invented by the renowned Jürgen Habermas. This now aged man, with origins in the so-called Frankfurter Schule, has long been the most venerated — official — “philosopher” in Germany.
This form of debate (discourse ethics) enables them to spin out any discussion indefinitely.
Eventually the adversary will be exhausted. There is indeed no end
to how evasive one can be, nor is there any formulation that cannot
be misinterpreted.
Free-riders thrive on anonymity and forgetfulness, which are
abundant in the world of work. If no-one knows anyone for long,
and if no record is kept of individual past behavior, good or bad,
why should someone care? All the more so if there are legal
restrictions on the reporting of incompetence.
The response advocated here is, as described above, to maintain a
watchful eye on all who assume a professional function.
For those observing, this does, it is true, involve, after due
consideration of the details of the case, a willingness to pass
judgement. While it is true that some people are too ready to pass
judgement, others are too hesitant. One purpose of a study of ethics
is help in this judgement call.
Judgement indeed is the raw heart of ethics. Not only judgement in
the sense of censure or praise, but in the discrimination needed to
weigh up the rights & wrongs of a matter. Judgement is also needed
in recognizing which way of thinking is appropriate in a given case.
In ethics there is no “one size fits all”. Indeed, part of ethics
involves combatting ideologies (simplistic received ideas) of what
morality is; which is what this essay has done.
Ethics might be described as the area where the rules break
down: either they are so many that they form, overlapping, a
labyrinth, or they are so vague that interpretation is needed ad
infinitum. Judgement is then the fine sense of discrimination that can weigh the differences between similar cases while seeing the
connection with cases that seem dissimilar. But it will also extend
beyond the sometimes myopic (legalistic, autistic) focus on isolated cases, and look to the bigger picture, namely to character and context and the ultimate good of a society that enables many kinds of people to
live flourishing lives.
www.contra-dnwe.de
Major case study in German and English of malgovernance and censorship at DNWE,
the German chapter of EBEN, the European Business Ethics Network
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