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Business Philosophy

Foundational to the understanding of business ethics are the philosophical writings of Immanuel Kant*. According to his views a business person may be ethical but in the same moment may not be moral . Simply because one follows all of the professional and ethical rules does not mean a business is acting in a socially responsible way. As important as Kant is to fully understand the ethical dimension of business he did not understand the practical world of business where decisions must be made in the moment—nor of the passions, risks, temptations and emotions that define the daily course of a businesses activities.

Kant's deontological approach makes an important distinction between "principled actions and prudential ones." All to often businessmen go through life thinking they are moral because they see themselves as following all the laws and ethical commands required of them. It is prudent to be ethical, but if that action did not come from a higher purpose other than "appearing ethical" to the society the essence of being ethical is lost. Ethics, to many philosophers has a temporal and transcendent aspect to it. However, business people experience the world in a more utilitarian way due to the sometimes "Red Tooth and Claw" Darwinian nature of transacting goods and services. There is, it seems, a priority to things in business. If a businessman focuses on being virtuous instead of running a business for profit, they increase the likelihood their business will fail. And, being virtuous for the sake of "doing good," and feeling good for that action, also gives rise to questions of moral legitimacy for the Kantian. As later will be pointed out a legitimate form of virtue does exist in business but it is seen in terms of "indirect virtue."

Comparing schools of ethical thinking has led to little understanding of ethics. In fact, there is a certain element of gridlock between theories that is never resolved. Contemporary philosopher Peter Singer, has pointed out to the effect that "even after twenty-five hundred years of ethical reasoning philosophers still cannot tell you with any certainly whether rape is right or wrong." There seemsto be anunresolvable tension between the Utilitarianism of Jeremy Bentham and the deontology of Immanuel Kant. But much of this conflict can be resolved reasoning ethics in an evolutionary context. It is a fallacy of reasoning to believe that all elements of the debate must exist in the same time and space. Evolutionary ethics provides the key to the middle ground between competing theories but in the last hundred years this approach has been rejected as a viable way of describing ethics. Much of this resistance can be traced to the belief of philosophers who think the Naturalistic Fallacy is a credible perspective in ethics. For an explanation of views in support of the Naturalistic Fallacy see The Temptations of Evolutionary Ethics by Lawrence Faber. A response to this illogic can be found in The Evolution of Ethics: An Introduction to Cybernetic Ethics.

In the twenty-first century "Enlightened Darwinian Ethics," not virtue, drives the basic business model. A civilization has been evolving slowly over thousands of years of time and there is an inherent priority to events as the world evolves. Civilization-building is an evolutionary process; a self-organizing, bootstrapping process, Civilization starts out rough and raw, mean and unfair and slowly evolves in the direction of something principled and enduring. Virtue is the long-termed desired result of ethical actions but it perhaps should not come at the price of destroying a business that later could become virtuous and principled.

The business world is a highly organized, hierarchical society that has its own set of customs and ethics that must be acknowledge as well as the moral demands of the greater society. Its' first order moral commands seem to be: survive, maximize profits and do business in a "business like way." Its second order moral commands reaffirm the first but they are on a higher moral plane. Minimize risks and maximize profits buy adhering to professional codes of conduct, following established protocols and decorum require of every businessperson, and build a reputation as a trustworthy business. But, as Kant would object these second order commands in practice have more to do with prudence and appearances than principled actions. It should be noted that if one considers the Red Tooth and Claw Darwinian approach to business the only moral commands are "keep up appearances and don't get caught."

The Role of Indirect Virtue in Business Operations

Virtue has a role in business, but in the right time and place. When it operates it operate as" indirect virtue" and exists on a higher ethical plane that being virtuous for virtues sake. But, Kant admonishes the giving and charity of people who do it for the pleasures of seeing themselves as noble, heroic and moral. Giving to feel good seems to be what is going on in every corner of the economy. However, real virtue in business does seem to exist in business. Its nature is abstract and difficult to grasp. In order to understand ethics on this level one must view an ethical action as a dynamic, not a static, phenomenon. Ethical actions in business are defined in theory in terms of their "ethical moment." The word moment is an engineering term used to describe the sum total of stresses and forces on a building structure in a particular moment in time. Likewise ethical decisions in practice are the product of all forces, temptations, dangers, and ideology in a given moment in time. Business people are constantly tempted, stressed and challenged to make the right choices day in and day out. With time a workable ethical path emerges for business people that can accommodate both their principles and their business needs.

In business there are two basic models and variants in between. First there is the powerful-predator approach and then there is the powerful-prey approach. Powerful predators employ any nefarious means to deceive manipulate a person to act against their interest. By device they deny their client autonomy of choice by any means possible. On the other hand powerful prey are basically "straight shooters" with sufficient intelligence to grow and manage a business without using low-minded tactics. They create highly efficient business that are well-managed and so do not suffer the large expenses of poorly run predatory establishments. Competence and talent allow them the space to treat people fairly being far from the constant clash of emotions that predatory businessmen create for themselves. By acting in a dignified way they do not necessarily maximize their profits but the foster little collateral blowback from their society for their existence. Thus, without reflecting on their virtue this approach addresses ethical actions that what Immanuel Kant might consider virtuous.

Mathematical Game Theory and Levels of Business Competence.
Businessman to businessman ethical concepts

What contemporary ethics philosophers cannot appreciate is that "business" as a dynamic ongoing process has certain customs that define ethical actions among veteran business people. These standards of moral and ethical conduct do not affect the buying public, rather they define the "fitness" of the individual business person to even be a business person. Business in some sense might be thought of as a form of social warfare in which any personality weakness is fair game. Unscrupulous businessmen make up for a lack of intellectual capacity and talent by inciting and provoking conflict. Handling such people without taking a loss can be facilitated in certain instances by using mathematical game theory as a guide. Since such competitors will "push every possible emotional button" it is difficult for a well-intended business person to follow the high moral standards of Kant in every instance. Some method such a game theory must be available to keep the conflict from spiraling down into spiritless combat. The business experience can be a pressure cooker of conflicts that come from contact with a wide spectrum of life styles and moral codes. Conflict lowers the efficiency of any business operation. Without the spirit of cooperation and trust evident in such a world principled ethics will not endure long. Thus, it is important to recognize that principled actions are ultimately necessary to truly gain in business. If a person operates at the level of spiritless struggle they create walls for themselves they cannot surmount. They restrict themselves from a larger community of principled people who can easily discern their predatory nature. Being bared from certain "nectars of civilization" those who are unprincipled must make up for the difference by endlessly accumulating wealth and power. So when Kant says principled ethics are necessary he means to the effect that people do not get something for nothing. A type of Heisenberg principle operates with ethics. You can have the money and power but you cannot have all the "nectars" you desire. You can have the nectars but you may not have a significant amount of wealth and power. One may want to be seen as sophisticated but at the same time that person cannot trash the culture with their backwoods ways.

Kant's approach as well as the approach of the Utilitarian's are important to understanding ethics in a business context. Finding the balance is what is difficult.

*Immanuel Kant is perhaps the most difficult philosopher to understand yet he is key to understanding "principled ethics," To this end Professor Michael J. Sandel has a book and CD entitled Justice: What's The Right Thing To Do? Here, he has a talent for presenting the issues in understandable terms.

Categorical Imperative

The Categorical Imperative is a an Eighteenth-Century idea that derives from Immanuel Kant's book Groundwork for he Metaphysics of Morals. The simplified essence of what Kant is saying is "do that which you would deem universal law." There are many deep subtleties to this statement that covers a wide spectrum of issues. Think of the imperative as a conceptual laboratory in which a person striving to be ethical takes their ideas to test them for their relevance and ethical selflessness. Would you want to universalize the belief that taking candy from a baby is right? If you believe it is right then the foundations of an entire galaxy of moral and ethical rules that define civilized behavior is placed at risk. Your motives for adopting such an approach would immediately come into question because if "might makes right" becomes a foundational idea in the early twentieth-century then all of civilization would begin to de-evolve in the direction of a time and place where "might is right" was a relevant moral position as civilization-building was in its formative moments. Such a self-serving view overlooks the cooperative nature of civilization in which hoarding scarce resources is an implicit "defection" from the cooperative effort of most people have towards building a better world. If one takes the evolutionary position that human being are as a whole competing with other life-forms for the Earth's resources to survive, the hoarding of wealth by less than moral means puts the entire species at risk at some mathematically defined point.

Kant's moral and ethical view stresses the fact that ethical behaviors must contain a principled element to be legitimate ethical concerns. A well-founded principle is an abstraction of mathematical efficiency that furthers the survival of the human species. Deviation from a principle is like putting a big rock in the middle of a flowing stream. Many turbulence and eddy currents will arise if there are too many rocks impeding the stream, turning a placid stream into an unpredictable river from the viewpoint of a person using the river as a means of transportation. Commerce can also be thought of as a river in which minimizing pain, suffering and tragic accident is a goal while at the same time maximizing peace, prosperity and productivity.

Human being by the time they are an adult already have a good idea of fundamental principles of the particular society that they live in. The human brain has an immense capacity to grasp the complex behaviors abstraction implicit in laws, customs, manners and ethics. For example, the California motor vehicle code is more than two hundred pages in length. It can be reasonably said that few people out of tens of millions of adult citizens have ever read the code or even see the book. Nevertheless, many people drive safely on the streets for thirty or forty years with out much conflict with the written laws. There are, quite simple principles of action that can be abstracted from the mere process of driving on the roads. Likewise early childhood training and the training received in school imbues students with a good understanding of the law and its expectations of the citizens of a country. In this light Kant appears to say we should act according to principle in the sense we already know right from wrong. After about ten years of driving a person has at least a foggy idea that they have run a stop sign even if they do not admit it to themselves. The police who cite people for unending lights and stop signs already have sensed impropriety but over the years they have conditioned their minds not to see their impropriety.

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From the link social responsibility in the menu

Unedited Ntes
1/8/11

Social Responsibility

What the small business owner has that the corporate community is rarely seen to possess is a sense of social responsibility sufficient to attract a local following and survive and flourish by acknowledging social conventions instead of exploiting them.

At the heart of the meaning of social responsibility is the idea that each individual in the society is responsible for his or her actions; that they, as good citizens, abide by the conventions, the morals, laws and ethical codes of the land. Every person from early childhood is taught moral right and wrong, laws, customs and conventions. Everyone knows what cheating is and they are expected to be honest. In contrast to this are powerfully influential economic theories promote the idea that a business is not a person, therefore is not subject to the ethics and morals of society. In effect it is as if owning business grants a person license to break the rules of convention and ignore ethical and moral codes, all in the belief that it for the better economic good of the nation. Ethical standards exist to bring peace, stability and prosperity to the world. To suggest that business owners have license to break the rules and profit by that advantage is an illogical and self-serving assertion. If an individual exploited the rules of social convention the same way large corporations have they would be deemed to be a sociopath. In other words this Darwinian "Red Tooth and Claw" approach to reasoning economic theory is based on the principle of "profits before people." Here, cheating is good because it stimulates the economy. Such economic theory might be more accurately thought of as elegant nonsense.

There are good reasons as to why this predatory state of affairs exists overlaid on more civilized aspects of twenty-first living.. The civilizing process works in stages. One of the later stages called capitalism refines the savage impulses of humans to exploit one another into an orderly system of commerce (although not a totally fair one). The relative peace capitalism engenders inspires a high level of social cooperation and productivity. It is a system that mitigates the turbulent conflicts that lead to systemic inefficiencies. Capitalism is an efficient model of an economic system. It promotes "peace prosperity and productivity," and avoids considerable social "pain, suffering, and death." This is not difficult to see when comparing a prosperous capitalist system with a third world social and economic system.

As an economic system comes near the end of its useful life it begins to be dragged down by its own inefficiencies; inefficiencies that have gradually and almost imperceptibly grown. This is a natural process leading to another stage of economic development. And, in the next stage of social and economic growth the culture more and more must be governed by reason and not self-serving theories that benefit the few at the expense of many. Cheating is more often than not accompanied by elegant rationalizations. The notion that businesses can be irresponsible while individuals must needs to go. A climate of responsibility and trust certainly can engender a social harmony far greater than what capitalism provides in the twenty-first century. Economist have long taken it upon themselves to redefine social morality when it comes to issues of money and fairness. As the issue of social responsibility comes more and more to the forefront of human thinking the economist's role of the arbiter of ethical standards will be wrested from them.

 

The foundation of ethics ultimately rests on actions and their consequent reactions. This extends to inactions that themselves inspire reactions and the political and social forces that shape the world and influence the human spirit to produce and prosper. "The Evolution of Ethics."

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