Download Click here to chapter3_B.Ethic

Chapter
3
Philosophical Ethics and Business
McGraw-Hill/Irwin
Business Ethics: Decision-Making for Personal Integrity
& Social Responsibility
Copyright © 2008
3-2
1-2
The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Objectives

After exploring this chapter, you will be able to:
1.
2.
3.
4.
5.
Explain the ethical tradition of utilitarianism
Describe how utilitarian thinking underlies much
economic and business decision-making
Explain how free markets might serve the utilitarian goal
of maximizing the overall good.
Explain strengths and weaknesses of utilitarian decisionmaking
(continued)
3-3
1-3
Chapter Objectives

After exploring this chapter, you will be able to:
6. Explain principle-based, or deontological, ethical
traditions
7. Explain the concept of moral rights
8. Distinguish moral rights from legal rights
9. Explain the Rawlsian theory of justice as fairness
10.Describe and explain virtue-based theories of ethical
character
3-4
1-4
The Ethical Question:
How should we live our lives?




This discussion will suggest a more accessible understanding of ethical
theories to shed some light on the practical and pragmatic application of
these theories to actual problems faced by business people.
An ethical theory is nothing more than an attempt to provide a systematic
answer to the fundamental ethical question above.
Not only do ethical theories attempt to answer the question of how we
should live, but they also provide reasons to support their answer.
Ethical theories seek to provide a rational justification for why we should
act and decide in a particular way.
3-5
1-5
Theological vs.
Philosophical Ethics


Many people and cultures across the world base their ethical views on
certain religious or theological foundations.
 The biggest practical problem with this approach, of course, is that
people differ widely in their religious beliefs.
 If ethics is based only on religious origins, and if people disagree about
those religious starting points, then ethics would never escape the
predicament of relativism.
Unlike theological ethics, which explains human well-being in religious
terms, philosophical ethics provides justifications that must be
applicable to all people regardless, of their religious starting points.
 Philosophical ethics seeks foundations that all reasonable people can
accept, regardless of their religious convictions.
3-6
1-6
Utilitarianism: Making Decisions
based on Ethical Consequences






“… “the ‘greatest happiness principle’ holds that actions are right in proportion as
they tend to promote happiness; wrong as they tend to produce the reverse of
happiness.” - John Stuart Mill
Utilitarianism begins with the conviction that we should decide what to do by
considering the consequences of our actions.
Utilitarianism tells us that we should act in ways that produce better overall
consequences than the alternatives we are considering.
“Better” consequences are those that promote human well-being: the happiness,
health, dignity, integrity, freedom, respect of all the people affected.
If a basic human value is individual happiness, then an action which promotes more
of that than does an alternative is more reasonable and more justified from an ethical
point of view.
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.
3-7
1-7
Utilitarianism:
Lessons from Examples


Because utilitarians decide on the basis of consequences, and
because the consequences of our actions will depend on the
specific facts of each situation, utilitarians tend to be very
pragmatic thinkers.
No act is ever absolutely right or wrong in all cases in every
situation; it will always depend on the consequences.

For example, lying is neither right nor wrong in itself, according to
utilitarians. There 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.
3-8
1-8
Utilitarianism and Business: Profit
Maximization vs. Public Policy
Approaches


Another question remains to be answered: How do we achieve maximum overall
happiness? What is the best means for attaining it? Two answers prove
especially relevant in business and business ethics.
Profit-Maximization Perspective: Based on the tradition of Adam Smith,
claims that free and competitive markets are the best means for attaining
utilitarian goals.



This version would promote policies that deregulate private industry, protect property
rights, allow for free exchanges, and encourage competition.
In such situations, decisions of rationally self-interested individuals would result, as
if led by “an invisible hand” in Adam Smith’s terms, in the maximum satisfaction of
individual happiness.
Public Policy Perspective: Turns to policy experts who can predict the
outcome of various policies and carry out policies that will attain utilitarian ends.
3-9
1-9
Problems of Utilitarian Ethics
1. Comparing and measuring the consequences of alternative
actions is very difficult.

One problem that follows from this is that, because of these
difficulties, there will be a tendency to ignore the consequences,
especially the harmful consequences, to anyone other than those
closest to us.
2. Do the ends justifies the means?

Are there not certain decisions that should follow no matter what
the consequences?
3-10
1-10
Benefits of Utilitarian Ethics




Liberal (no one’s happiness is more important than another’s)
Able to describe much of human decision making
Easy to understand
Forces us to examine the outcomes of our decisions
3-11
1-11
Deontology: Making Decisions
based on Ethical Principles




Making decisions based upon the consequences certainly
should be a part of responsible ethical decision-making.
But some decisions should be matters of principle, not
consequences - the ends do not always justify the means.
How do we know what principles we should follow and how
do we decide when a principle should trump beneficial
consequences?
Principle-based, or “deontological” ethical theories, work out
the details of such questions.
3-12
1-12
The source of these
principles




The law is one example of a type of rule that we ought to follow, even when it
does not promote happiness.
Other rules are derived from various institutions in which we participate, or from
various social roles that we fill (such as our professional roles)
So far we have mentioned legal rules, organizational rules, role-based rules, and
professional rules. These rules as part of a social agreement, or social contract,
which functions to organize and ease relations between individuals. No group
could function if members were free at all times to decide for themselves what to
do and how to act.
The foremost advocate of this tradition in ethics, the eighteenth century German
philosopher Immanuel Kant, argued that there is essentially one fundamental
ethical principle that we should follow, no matter the consequences:

Respect the dignity of each individual human being.
3-13
1-13
Respecting Human Dignity



Kant claimed that this duty to respect human dignity could be expressed
in several ways.
Act according to those rules that could be universally agreed to by all
people.
 This is the first form of the famous “Kantian categorical imperative.”
Another, less abstract version, requires us to treat each person as end in
themselves and never only as means to our own ends.
 In other words, our fundamental duty is to treat people as subjects
capable of living their own lives and not as mere objects that exist for
our purposes.
3-14
1-14
Distinguishing between Moral
Rights and Legal Rights





Legal rights may be granted on the basis of legislation or
judicial rulings.
Legal rights might also arise from contractual agreements.
One cannot contract away one’s moral rights - moral rights lie
outside of the bargaining that occurs in a contract.
Moral rights establish the basic moral framework for legal
environment itself, and more specifically for any contracts
that are negotiated within business.
Thus, as described in the United States Declaration of
Independence, governments and laws are created in order to
secure more fundamental natural moral rights.
3-15
1-15
Social Justice: Rawlsian Justice
as Fairness




The American philosopher John Rawls has developed one of
the most powerful and influential accounts of justice.
Rawls offers a contemporary version of the social contract
theory that understand basic ethical rules as part of an implicit
contract necessary to insure social cooperation.
Rawls’ theory has proven influential in political theory,
economics, and the law.
Rawls’s theory of justice consists of two major components: a
method for determining the principles of justice that should
govern society, and the specific principles that are derived
from that method.
3-16
1-16
Rawlsian Justice as Fairness:
Application of his method





Imagine: rational and self-interested individuals choose and agree on the
fundamental principles for their society.
To ensure that the principles are fair and impartial, these individuals do not
know the specific details or characteristics of their own lives. They do not know
their abilities or disabilities and talents or weaknesses; they have no idea about
their position in the social structure of this new society.
They are, in Rawls’s terms, behind a “veil of ignorance” and must choose
principles to which they will agree when they come out from “behind the veil.”
To ensure that each individual is treated as an end and not as a means, imagine
finally that these individuals must unanimously agree on the principles.
These initial conditions of impartiality, what Rawls calls the “original position,”
guarantee that the principles chosen are fair – the primary value underlying for
Rawls’ concept of justice.
3-17
1-17
Rawlsian Justice: Lessons Learned for
Economics and Business Institutions



Rawls derives two fundamental principles of justice from this
original position.
The first principle states that each individual is to have an
equal right to the most extensive system of liberties - equal
rights are a fundamental element of social justice.
The second principle that is derived from the veil of
ignorance holds that benefits and burdens of a society
should generally be distributed equally.

An unequal distribution could be justified only if it would benefit
the least advantaged members of society and only if those benefits
derive from positions for which each person has an equal
opportunity.
3-18
1-18
Virtue Ethics: Making
Decisions based on Integrity
and Character






Ethics also involves questions about the type of person one should become.
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.
Virtue ethics recognizes that human beings act in and from character. By
adulthood, these character traits typically are deeply ingrained and
conditioned within us.
Virtue ethics seeks to understand how our traits are formed and which traits
bolster and which undermine a meaningful, worthwhile, and satisfying
human life.
Rather than simply describing people as good or bad, right or wrong, an
ethics of virtue encourages a fuller description.
Faced with a difficult dilemma, we might ask what would a person with
integrity do? What would a virtuous person do?
3-19
1-19
A Decision-Making Model for
Business Ethics Revisited
1.
2.
3.
Determine the facts. Gather all of the relevant facts. It is critical at this
stage that we do not unintentionally bias our later decision by gathering
only those facts in support of one particular outcome.
Identify the ethical issues involved. What is the ethical dimension? What
is the ethical issue? Often we do not even notice the ethical dilemma.
Avoid normative myopia.
Identify stakeholders. Who will be affected by this decision? What are
their relationships, their priorities to me, and what is their power over my
decision or results? Who has a stake in the outcome? Do not limit your
inquiry only to those stakeholders to whom you believe you owe a duty;
sometimes a duty arises as a result of the impact. For instance, you might
not necessarily first consider your competitors as stakeholders; however,
once you understand the impact of your decision on those competitors, an
ethical duty may arise.
3-20
1-20
A Decision-Making Model for
Business Ethics Revisited
Consider the available alternatives. Exercise “moral imagination.” Are
there creative ways to resolve conflicts? Explore not only the obvious
choices, but also those that are less obvious and that require some creative
thinking or moral imagination to create. Imagine how the situation appears
from other points of view.
5. Consider how a decision affects stakeholders. Take the point of view of
other people involved How is each stakeholder affected by my decision?
Imagine a decision that would prove acceptable to all parties. Compare and
weigh the alternatives: ethical theories and traditions can help here.
a.
Consequences
4.
b.
c.
Duties, rights, principles
Implications for personal integrity and character
3-21
1-21
A Decision-Making Model for
Business Ethics Revisited


Guidance. Can you discuss the case with relevant others; Can you
gather additional opinions or perspectives? Are their any guidelines,
codes or other external sources that might shed light on the
dilemma?
Assessment. Have you built in mechanisms for assessment of your
decision and possible modifications, if necessary? Make sure that
you learn from each decision and move forward with that increased
knowledge as you are then faced with similar decisions in the future
or to make changes to your current situation.
3-22
1-22
Chapter Three Vocabulary Terms

After examining this Chapter, you should have a clear understanding of the following
Key Terms and you will find them defined in the Glossary:
 Autonomy
 Categorical Imperative
 Character
 Consequentialist Theories
 Deontological Ethics
 Duties
 Egoism
 Ethical Relativism
 Loyalty
 Morality
 Rights
 Social Contract Theory
 Social Ethics
 Utilitarianism
 Veil of Ignorance
 Virtue Ethics
3-23
1-23