Ethical Principles in Business

Chapter 2
January 19, 2016
OAW
Learning Objectives
Should be able to:
Understand the basic tenets and
methodologies of utilitarianism, both its
traditional (act) and its revised (rule) versions.

Describe the difficulties inherent in the

utilitarian approach to ethics.

Describe and apply both formulations of

Kant's categorical imperative.
Learning Objectives (cont.)
Define the libertarian approach to ethics.

Show how considerations of justice and

fairness enter into ethical considerations.

Understand how the ethics of care and the

ethics of virtue respond to and modify other
ethical positions.
Apartheid

Vs
Apartheid Impact for Caltex
Facts:
Operated South Africas oil refineries
Supplied South Africa with the oil
(25% of its energy needs)
Stockholders opposed to operate in
South Africa
(to show the disrespect to apartheid gov)
Management believed that they are there
to help all races
Ford
The Ford Pinto facts:
rushed onto the market after only 2 yrs. in
development (rather than the usual 4)
when struck from the rear at >20 mph the
gas tank sometimes ruptured tests show
Question: whether to modify the design
or go ahead with production?
Calculation
The social cost-benefit analysis
Costs:
$11 x 12.5 million autos = -$137 million
Benefits:
less 180 deaths x $200,000
less 180 injuries x $67,000
less 2100 burned vehicles x $700
TOTAL BENEFITS: $49.15 million
Utilitarianism
From many views:
consequentialist: actions derive their moral
value (or disvalue) from their consequences
altruistic: (for all who are affected)
whatever course of action maximizes benefits
over costs for all concerned is right
Egoism: whatever course of action maximizes
benefits over costs for me (the agent) is right.
Traditional Utilitarianism
Jeremy Bentham (1748-1832) generally
considered as the founder

The utilitarian principle:

An action is right from an ethical point of
view if and only if the sum total of utilities
produced by that act is greater than the sum
total of utilities produced by any other act the
agent could have performed in its place.
Utilitarian Moral Reasoning vs.
Rule-based moral reasoning
Rule-based approaches
View morality as a kind of "higher
law"
Moral reasoning on the model of legal
reasoning
Question what are the statutes
(moral principles) and which apply to
the action in question
Consequentialist approaches
View morality as a kind of "higher
economics"
Moral reasoning on the model of
economic calculation
Marx derided Utilitarianism as "the
ethics of English shopkeepers"
Assumptions & Clarifications
Assumes the commensurability of various
benefits & costs

Cost-benefits compared for different possible

courses of action
does not say that any action whose benefits
outweigh its costs is right
says that the action that produces the greatest
benefit (or least cost) in comparison with any
alternative course of action is right
Assumptions & Clarifications
(cont.)
Impartially considers cost-benefits for all
concerned
not just for the individual or company considering
the action (that's egoism)
egoism, due to its partiality, is not a moral theory or
policy at all

Includes long term not just immediate benefits

& losses: calculation of long-term benefits &
costs needs to be adjusted for probability of
the outcome
Intuitive Appeal
Fits nicely with intuitive criteria invoked in
discussions of public policy & personal
conduct

Plausibly explains why certain types of

activities we regard as generally immoral
generally are so, but are not so without
exception

Promotes efficiency
Measurement Problems
Comparative measures of the values things have for
different individuals cannot be made

Some benefits and costs seem immeasurable

Many of the benefits & costs of an action are

unpredictable

Unclear what's a "benefit" and what's a "cost

Critics contend these measurement problems

undermine the would-be objectivity of utilitarian
calculation
Utilitarian Replies to
Measurement Objections
Accurate measurement not essential

Common sense criteria

Quantitative measurement is more

feasible than the critics think
Problems with Rights & Justice
Objection: in a wide variety of
circumstances applying the Utilitarian
Principle would dictate actions that are
unjust and violate peoples rights.

The Pinto case: What went wrong?

not that they made mistaken utilitarian calculations
but something intrinsic to all utilitarian calculation:
it ignores considerations of justice or fairness and
considerations of rights
Conclusion
Utilitarianism seems to ignore certain
important aspects of ethics.
Considerations of justice: which look at how
burdens and benefits are distributed
Considerations of rights: which look at
individual entitlements to freedom of choice
and well-being
Utilitarian Replies to
Objections on Rights & Justice
Bite the bullet (if needs be) or spit it out
Framing an innocent man
Bite: it really would be right to frame an innocent
man if the situation were as described
Spit: there can't be a situation like the one
described: always a high probability that such a
conspiracy would be found out -- which would have
very grave costs (loss of respect for law &
authority).
Rights & Duties
Rights are entitlements
to act in certain ways (without blame or
punishment)
to be treated in certain ways (with
mistreatment being subject to blame &
punishment)

In the most important sense rights involve

prohibitions or requirements on others
(duties)
3 Features of the Protecting and
Enabling Functions of Rights
Rights impose correlative duties on others

Rights provide individuals with autonomy and

equality in the free pursuit of their interests

Rights provide a basis for justifying one's

actions and invoking the aid or protection of
others
Contrast with Utilitarian
Considerations
Express the requirements of morality from
the standpoint of the individual rather than
society as a whole

Rights limit the validity of appeals to social

benefits and numbers

But it's a limited limitation: great enough social

benefits can sometimes justify violations of
rights
Negative and Positive Rights
Negative rights can be distinguished as those
which impose only the negative duty of
noninterference on others.
the right to privacy: means no one has the right to
interfere in my personal affairs
the right to property: means no one has the right to
interfere with my using & disposing of it as I choose
Positive rights impose positive duties on others -
- not just to refrain from interfering with me -
- but to do something to assist me in the
exercise of that right if needs be
Contractual Rights and Duties
Special duties arising from acceptance of a
position or role in an organization or
social institution
e.g., parents have special duties toward their
children
spouses have special duties toward each other
Doctors have special duties to care their
patients and keep their patients' confidences.
etc.
"Ethical rules" Underlying & legally
Limiting Contractual Obligation
Both parties must have full knowledge of the
nature of the agreement

Neither party must intentionally misrepresent

the facts of the contractual situation.

Neither party must be forced to enter the

contract under duress or coercion.

The contract must not bind the parties to an

illegal act.
A Basis for Moral Rights: Kant
(Background)
Doubtful that Utilitarianism can provide a
satisfactory basis for moral rights
Weak: "People have moral rights because
conferring moral rights on them maximizes
utility."
Because: a right entitles you to do something
regardless of the benefits it provides or costs
it imposes on others.
A Basis for Moral Rights: Kant
Immanuel Kant (1724-1804) and his
theory.
Moral rights and duties all human beings
possess regardless of any utilitarian benefits
or costs
Based on the categorical imperative: a
philosophical adaptation of the Golden Rule:
"Do unto others as you would have them do
unto you."
First Formulation of the
Categorical Imperative
Act only on that maxim through which you can at
the same time will that it should be a universal
law.
a maxim is the policy -- or expression of the policy
-- governing your act: your reason for doing it
to will it to be universal law is to will that everyone
should follow the same policy.
2 Criteria for Determining the
Moral Rightness or Wrongness
UNIVERALIZABILITY
Must be willing that everyone should act on that maxim.
My mama used to say to me, "What if everyone did that?

REVERSIBILITY
Crucial case where "the shoe would be on the other foot":
whether you would be willing to be done unto by others as
propose to do unto them.
My mama used to say, "How would you like it if your
brother did that to you?"
Second Version of the
Categorical Imperative
Act in such a way that you treat humanity,
whether in your own person or in the person of
any other, never simply as a means, but always at
the same time as an end.

Kant thought the two versions of the CI were

equivalent: just said the same thing in other
words.
What the Second Version
Emphasizes Is
Respecting other peoples autonomy:
their right to choose for themselves

Not doing things to or for them without

their consent
Problems with Kant
Imprecise & Impractical
Not so easy to figure out
Nor so easy to know when you're using
someone merely as a means

Heteronymy (Different Strokes)

Counterexamples & Rejoinder
Justice & Fairness
FundamentaL: disribute
benefit & burden equally

Justice as Equality
= Egalitarianism
Principles of:
Justice Distributive Justice Based on Contribution
= Capitalist Justice

Based on needs &

Abilities
= Socialism

Justice as Freedom
= Libertarianism

Rawls: distribute by
equal liberty,equal
opportunity,and needs of
disadvantages
3 Categories of Justice
Distributive justice: concerned with the fair
distribution of society's benefits and burdens

Retributive justice: concerned with the fair

imposition of punishments on those who do
wrong.

Compensatory justice: concerned with fair

recompense of individuals for losses suffered
due to others misconduct or mistakes.
The Ethics of Care
Impartiality & Traditional Ethics
Utilitarianism & Kantianism agree: moral
behavior is impartial behavior
Utilitarians: each counts one, none counts
more than one
Kantians: universalizability accords no special
concern for me & mine
Doubts concerning impartiality
Freud: to love everyone equally is not to give
a damn about anyone
"I love humankind. It's people I can't stand!"
Counterexample
save your father from drowning vs. some stranger (a
heart surgeon)
Utilitarianism says you have a moral duty to rescue
the stranger!
In Defense of Partiality or Care
View intimacy & relationships as values in
their own rights

Argument from identity of the self: "no man is

an island

Communitarian ethics: endorses person-to-

group as well as person-to-person partiality
Objections to Care Ethics
Can degenerate into unjust favoritism
(e.g., nepotism) or factionalism in the
Excess of care can result in self-neglect or
"burnout
Case for care more compelling at the
level of individual than of institutional
morality
Possible conflicts with other values
with justice: the South Africa case of Caltex
Integrating Utility, Rights,
Justice, and Caring
Conflicts cut both ways
if it's an objection to care based ethics that
care can conflict with justice & rights it's an
objection to justice & rights based ethics that
these considerations can conflict with care
likewise utility v. care
likewise utility v. justice & rights
Integrating Utility, Rights,
Justice, and Caring (cont.)
Conflicts ye have always with ye: for that
matter,
rights can conflict with rights
& caring for one with caring for another
Integrating Utility, Rights,
Justice, and Caring (cont.)
Points up the need to weigh the relative
importance of different types of
considerations in specific situations.
no hard & fast general rule for doing so seems
available
only rough criteria & subjective judgments of
comparative value
An Alternative to Moral
Principles: Virtue Ethics
Virtue ethics focuses on character as
opposed to conduct.
not the person one ought to be
not the kind of actions one ought to perform
An Alternative to Moral
Principles: Virtue Ethics (cont.)
Conduct will take care of itself:
Good (kind, loving, generous, brave) people do
good deeds regardless of their moral
convictions:
Huck Finn example
"Love and do as you will."
Bad (cruel, hateful, stingy cowardly) people do
bad things in spite of the lofty moral
principles they espouse
witch hunters
"The mercy of the wicked is cruel."
Virtues Actions and Institutions
Knock on virtue ethics is that it is an
insufficient guide to action
Key action guiding implications:
do what exercises or develops morally
virtuous traits of character: the morally right
actions are those
avoid doing what exercises or develops
vicious traits of character: the morally wrong
actions are these.
Virtues Actions and Institutions
(cont.)
Also applicable to the evaluation of
institutional arrangement
ask what kind of character traits do the
institutional arrangements foster
if virtuous, the organization is good
if vicious, the (form of) organization is bad:
e.g., corporate cultures that encourage back-stabbing as the
path to advancement.
capitalism encourages greed
communism encourages laziness & incompetence
CASES FOR DISCUSSION
Publius
Analyze the ethics of marketing Publius using
utilitarianism, rights, justice, and caring. In your
judgment, is it ethical to market Publius?
Are the creators of Publius in any way morally
responsible for the criminal acts that criminals are able
to carry out and keep secret by relying on Publius? Is
AT&T in any way morally responsible for these?
In your judgment, should the U.S. government allow the
implementation of Publius? Why or why not?
CASES FOR DISCUSSION
Unocal in Burma (ABC News)
Assess whether from a utilitarian, rights, justice, and
caring perspective, Unocal did the right thing in deciding
to invest in the pipeline and then in conducting the
project as it did. According to your assessments, did
Unocal do the right thing?
Is Unocal morally responsible for the injuries inflicted
on some of the Karen people? Why or why not?
Do you agree with Unocal's view that "engagement"
rather than "isolation" is "the proper course to achieve
social and political change in developing countries with
repressive governments"?