Am I Right?

How to live ethically

Is Business Ethics an Oxymoron?

A book on business ethics must be a very short book

When I told colleagues and friends that I was writing a book on business ethics, they replied with something like, "It must be going to be a very short book" or "Isn't that an oxymoron?"

This reflects a widely held view. Many outside of the business world believe that these comments from David Liss's novel, The Coffee Trader, are an accurate description of what occurs in the realm of business. Liss writes, "A man of business lies all the time. He lies to put trades to his advantage or to construct circumstances just so. A man may lie to make his position look better than it is, or weaker than it is, depending on his goals. None of these are the same as lying in a way that may harm another man. These lies are merely the rules of business . . ."

These comments are wrong on two counts. First, lying in business is the same as lying anywhere else. It is wrong because it gives an unfair advantage to the liar and, therefore, harms the person who is lied to.

And second, it isn't true that lies are merely the rules of business. Lying is the exception in business, as it is anywhere else. Businesses (and any social order) would come to a halt but for the fact that people can depend upon and fundamentally trust one another. Business begins with trust. Without it nothing would move forward. No one could count on anyone's word and all verbal agreements would be bogus. Meetings couldn't take place, or, if they did, what was said would be worthless.

Perhaps the best-known philosopher in business circles is Adam Smith, author of The Wealth of Nations. In this 1776 text, Smith presents his famous "invisible hand" metaphor. " Every individual endeavours to employ his capital so that its produce may be of the greatest value. He generally neither intends to promote the public interest, nor knows how much he is promoting it. He intends only his own security, only his own gain. And he is in this led by an invisible hand to promote an end which was no part of his intention. By pursuing his own interest he frequently promotes that of the society more effectually than he really intends to promote it."

Far from being a call to selfishness, Smith's theory assumes that individuals will act morally. Capitalism works to everyone's advantage if and only if those doing business are moral in the first instance. Moral values must be the background and the values upon which business rests. Without moral behavior, the market system fails, as it slides into chaos caused by the lack of trust.

Smith was first and foremost a moral philosopher. For him economics was a subset of ethics. Smith would be slightly bewildered by The Greensboro North Carolina Chapter of the Society of Financial Service Professionals in accepting nominations for the Triad Business Ethics Award. This award acknowledges businesses that "demonstrate a commitment to ethical business practices in everyday operations, management philosophies, response to challenges, treatment of employees and to involvement in civic and environmental concerns." "Of course," Smith might say. "But what businesses aren't ethical to begin with? It is the unethical business that is the exception, not the ethical one."

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Despite the numerous examples of bad behavior in business, most business people are still ethical. But being ethical in business becomes increasingly problematic as companies become outsized and impersonal, when the stakes are huge and the people who are hurt are faceless masses. Under these circumstances, it is difficult to resist temptation and it is easy to rationalize unethical acts.

It is for these reasons that society can't rely upon goodwill and personal rectitude alone and regulation becomes necessary. Smith didn't anticipate the development of multinational corporations. It seems to me that he would have understood the importance of government intrusion into the business world as a way of keeping it honest-something business people want to do in the first place but sometimes can't.

Government regulations keep cheaters (those who can't regulate their own ethical behavior) from gaining an unfair advantage and causing a race to the bottom of the ethical barrel. At its best, regulations help people become their better selves.

 

Arthur Dobrin, D.S.W., teaches applied ethics at Hofstra University. He is the author, coauthor, and editor of more than twenty books.

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