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Lecture 05

The document discusses moral reasoning and its role in business ethics. It provides three key points: 1. Moral reasoning involves understanding moral standards and evaluating whether a person, policy, or behavior adheres to those standards based on evidence. However, people often do not make their moral standards explicit. 2. To evaluate moral reasoning, it must be logical, use accurate evidence, and have consistent standards that are applied uniformly across similar circumstances. 3. Arguments against business ethics are not compelling, as markets are not perfectly competitive, employees do not have an obligation to only serve their employer's self-interest, and obeying the law is not the same as being ethical. In contrast, ethics should govern all

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12 views

Lecture 05

The document discusses moral reasoning and its role in business ethics. It provides three key points: 1. Moral reasoning involves understanding moral standards and evaluating whether a person, policy, or behavior adheres to those standards based on evidence. However, people often do not make their moral standards explicit. 2. To evaluate moral reasoning, it must be logical, use accurate evidence, and have consistent standards that are applied uniformly across similar circumstances. 3. Arguments against business ethics are not compelling, as markets are not perfectly competitive, employees do not have an obligation to only serve their employer's self-interest, and obeying the law is not the same as being ethical. In contrast, ethics should govern all

Uploaded by

dopofe8559
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Business Ethics

Lecture# 5
Handout
Moral reasoning itself has two essential components: an understanding of what
reasonable moral standards require, and evidence or information concerning
whether a particular policy, person, institution, or behavior has the features of
these moral standards. People often fail to make their moral standards explicit
when they make a moral judgment, mainly because they assume them to be
obvious. This assumption is not always true, however; often we must retrace a
person's moral reasoning to deduce what their moral standards are. Of course, it
is not always easy to separate factual information from moral standards.

Moral reasoning refers to the reasoning process by which human behaviors,


institutions, or policies are judged to be in accordance with or in violation of moral
standards. Moral reasoning always involves two essential components: (a) an
understanding of what reasonable moral standards require, prohibit, value, or
condemn; and (b) evidence or information that shows that a particular person,
policy, institution, or behavior has the kinds of features that these moral
standards require, prohibit, value, or condemn.

To evaluate the adequacy of moral reasoning, ethicists employ three main


criteria:

1. Moral reasoning must be logical.


2. Factual evidence must be accurate, relevant, and complete.
3. Moral standards must be consistent.

Consistency refers not only to the fact that one's standards must be able to
coexist with each other, but also to the requirement that one must be willing to
accept the consequences of applying one's moral standards consistently to
others in similar circumstances. The consistency requirement is, in fact, the basis
of an important critical method in ethics: the use of counterexamples and
hypothetical examples.

This consistency requirement can be phrased as follows:

If I judge that a certain person is morally justified (or unjustified) in doing A in


circumstance C, then I must accept that it is morally justified (or unjustified)
for any other person:
(a) To perform any act relevantly similar to A
(b) In any circumstances relevantly similar to C.
Arguments For and Against Business Ethics

Some people object to the entire notion that ethical standards should be brought
into business organizations. They make three general objections.

First, they argue that the pursuit of profit in perfectly competitive free markets will,
by itself, ensure that the members of a society are served in the most socially
beneficial ways. Of course, the assumption that industrial markets are perfectly
competitive is highly suspect. Even more, there are several ways of increasing
profits that will actually harm society. Producing what the buying public wants
may not be the same as producing what the entirety of society needs. The
argument is essentially making a normative judgment on the basis of some
assumed but unproved moral standards ("people should do whatever will benefit
those who participate in markets"). Thus, although the argument tries to show
that ethics does not matter, it can do this only by assuming an unproved moral
standard that at least appears mistaken.

Second, they claim that employees, as "loyal agents," are obligated to serve their
employers single-mindedly, in whatever ways will advance the employer's self-
interest.

As a loyal agent of his or her employer, the manager has a duty to


serve his or her employer as the employer would want to be served (if
the employer had the agent's expertise). An employer would want to
be served in whatever ways will advance his or her self-interests.

Therefore, as a loyal agent of his or her employer, the manager has a


duty to serve his or her employer in whatever ways will advance the
employer's self-interests.

But this argument itself rests on an unproven moral standard that the employee
has a duty to serve his or her employer and there is no reason to assume that
this standard is acceptable. An agent's duties are defined by what is called the
law of agency, (i.e., the law that specifies the duties of persons [agents] who
agree to act on behalf of another party and who are authorized by the agreement
so to act). Also, agreements to serve another do not automatically justify doing
wrong on another's behalf.

Third, they say that obeying the law is sufficient for businesses and that business
ethics is, essentially, nothing more than obeying the law. However, the law and
morality do not always coincide (again, slavery and Nazi Germany are relevant
examples). Some laws have nothing to do with morality because they do not
involve serious matters. These include parking laws, dress codes, and other laws
covering similar matters. Other laws may even violate our moral standards so
that they are actually contrary to morality.
Thus, none of the arguments for keeping ethics out of business seems forceful.
In contrast, there are fairly strong arguments for bringing ethics into business.

One argument points out that since ethics should govern all human activity, there
is no reason to exempt business activity from ethical scrutiny. Business is a
cooperative activity whose very existence requires ethical behavior. Another
more developed argument points out that no activity, business included, could be
carried out in an ethical vacuum.

One interesting argument actually claims that ethical considerations are


consistent with business activities such as the pursuit of profit. Indeed, the
argument claims that ethical companies are more profitable than other
companies. The data is mixed on this question, but even though it cannot
demonstrate that ethical behavior is always more profitable, it does clearly show
that it is not a drag on profits.

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