class: middle, title-slide # Business Ethics — Ethics and Economics ## Normative Theories of Ethics ### Dennis A. V. Dittrich ### 2022 --- layout: true <div class="my-footer"> <span><img src="img/tcb-logo.png" height="40px"></span> </div> --- ## What appropriate principles do we rely on when making moral judgments? .row[.col-6[ * There is no consensus among those who study ethics. * A variety of different moral principles and ethical considerations intertwine and sometimes compete. ] .col-6[ **Ethical dilemmas** Situations involving conflict between ethical principles or normative priorities * Dilemmas have deep impact on the evolution of ethical reflection. * Solving ethical dilemmas involves: * Appeal to theoretical constructs * Reevaluation of established moral standards and inherited intuitions ]] --- ## Consequentialist and Nonconsequentialist Theories .row[.col-6[ **Consequentialist theories** Those that determine the moral rightness or wrongness of an action based on the action’s consequences or results <br/> .your-turn[ “Winning isn’t everything, it’s the only thing.” ] <br/> .question[ In considering the consequences, we are considering the effects that performing an action or following a rule can have. But the effects on whom or on what? On humans? On all sentient creatures? On ecosystems? ] ] .col-6[ **Nonconsequentialist (or deontological) theories** Those that do not only determine the moral rightness or wrongness of an action based on the action’s consequences ]] --- # Consequentialist theories .row[.col-5[ Consequentialist thinkers proceed by 1. choosing whose interests to count 2. identifying desired outcomes or values 3. evaluating how an action or policy would impact the most important desired value(s) using some metric of comparison ] .col-7[ Important (_economic_) outcomes 1. Satisfying preferences * human welfare consists in the preferences that can be satisfied when net economic value is maximized * economic value is **instrumentally** worthy 2. Economic justice * Procedural justice: The rules of the game are fair * Distributive justice: The outcomes of the game are fair 3. Freedom 4. Greatest net pleasure (or happiness) ] ] --- # Egoism .row[.col-7[ The view that morality coincides with the self-interest (well-being) of oneself or an organization one is part of ]] .row[.col-7[ **Egoists** Those who determine the moral value of an action based on the principle of self-interest * An action is morally right if it promotes one’s long-term self-interest. * An action is morally wrong if it undermines the agent's self-interest. Egoists do not necessarily care only about pursuing pleasure (**hedonism**) or behave dishonestly and maliciously toward others. Egoists can assist others if doing so promotes their own well-being. ] .col-5[ **Personal egoists** Those who adopt an egoist ethic for themselves but do not make the universal claim that all individuals should do the same **Impersonal egoists** Claim that the pursuit of one’s self-interest should motivate everyone’s behavior ]] --- # Psychological egoism .row[.col-7[ The theory of ethical egoism is often justified by psychological egoism – the belief that human beings are only motivated by self-interest Even acts of self-sacrifice are inherently self-regarding, insofar as they are motivated by a conscious or unconscious concern with one’s own advantage. <br/> .question[ We all care about ourselves, but how much sense does it make to see self-interest as the basis of right and wrong? Do we really want to say that someone acting altruistically is behaving immorally? ] ]] --- # Objections to Egoism .row[.col-7[ **The theory is not sound** The doctrine of psychological egoism is false – not all human acts are selfish by nature, and some are truly altruistic. **Egoism is not a moral theory at all** Egoism misses the whole point of morality, which is to restrain our selfish desires for the sake of peaceful coexistence with others. **Egoism ignores blatant wrongs** All patently wrong actions are morally neutral unless they conflict with one’s advantage. ]] --- # Utilitarianism .row[.col-6[ The moral theory that we should act in in ways that produce the most pleasure or happiness (and least amount of suffering) for the greatest number of people affected by our actions ]] .row[.col-5[ **Main representatives of Classical Utilitarianism** The British philosophers Jeremy Bentham (1748–1832) and John Stuart Mill (1806–1873) ] .col-7[ .your-turn[“Natural rights is simple nonsense ... nonsense upon stilts.” _Bentham's reaction to the Declaration of Rights issued during the French Revolution_ ] ]] .row[.col-5[ **The principle of utility** Actions are right if they promote the greatest human welfare, and wrong if they do not ] .col-7[ .your-turn[ By utility is meant that property in any object, whereby it tends to produce benefit, advantage, pleasure, good, or happiness, or to prevent the happening of mischief, pain, evil, or unhappiness to the party whose interest is considered _Bentham, 1789, Introduction to the Principles of Morals and Legislation_ ] ] ] --- #### Six points concerning utilitarianism .row[.col-7[ 1. In choosing between alternative courses of action, we should consider the _net worth_ of happiness vs. unhappiness produced by each course of action. 2. We should give _equal_ consideration to all individual preferences, then calculate the net worth of the various kinds of pleasures and pains. 3. Anything can be morally praiseworthy in some circumstances if it promotes the greatest balance of pleasure vs. pain for the greatest number of people. 4. We should seek to maximize happiness, not only immediately, but in the _long run_. 5. We should do what is likely to cause happiness and likely not to cause suffering when we lack certainty. 6. We must guard against bias in our utilitarian calculations when our own interests are at stake. So it is advisable to rely on _rules of thumb_. ]] --- # Utilitarianism in an organizational context .row[.col-7[ Provides a clear and straightforward standard for formulating and testing policies Offers an objective way for resolving conflicts of self-interest Suggests a flexible, result-oriented approach to moral decision making ]] --- # Criticisms of utilitarianism .row[.col-6[ The practical application of the principle of utility involves considerable difficulties. Some actions seem to be intrinsically immoral, though performing them can maximize happiness. Utilitarianism is concerned with the amount of happiness produced, not how the amount is distributed, so the theory can run counter to principles of justice. ] .col-6[ **Utility and self-interest** Businesses are concerned with increasing profit and can be viewed as egoistic, but pursuing one’s own economic advantage can increase the well-being of society as a whole. **Adam Smith (1723–1790)** The main promoter of classical capitalism who argued that society can flourish if businesses are left to freely pursue their self-interests. ]] <br/> .row[.col-7[ .question[ What sorts of consequences should we be interested in? For instance, John Stuart Mill and Jeremy Bentham focused on pleasure and pain, which they equated with happiness and suffering. But is this what we want to focus on? If so, is there only one kind of pleasure? ] ]] --- # Kant’s Ethics .row[.col-6[ **Immanuel Kant (1724–1804)** A German philosopher with a nonconsequentialist approach to ethics * Said the moral worth of an action is determined on the basis of good will **Good will** The capacity to act from rational moral principles. A person who acts from good will acts “out of duty”. ].col-6[ **The categorical imperative** Morality as a system of laws analogous to the laws of physics in terms of their universal applicability The morality of an action depends on whether the **maxim** (or subjective principle) behind it can be willed as a universal law of nature without committing a logical contradiction. Perfect duties are violated when universalizing our maxim leads to a contradiction, but imperfect duties are not violated in this way. ]] --- # The categorical imperative .row[.col-7[ .tip[ * A building contractor promises to install a sprinkler system in a project * But he is willing to break that promise to suit his purposes * His maxim can be expressed as: “I’ll make promises that I’ll break whenever keeping them no longer suits my purposes” * By willing the maxim to become a universal law, the contractor undermines promises in general | Duties | To oneself | To others | | :-: | :-: | :-: | | Perfect | Not to commit suicide | To keep one’s promises | | Imperfect | To cultivate one’s talents | To help others in need | ]]] --- # Formulations of the categorical imperative .row[.col-7[ **Universal acceptability** To determine whether a principle is a moral law, we need to ask whether the command expressed through it is acceptable to all rational agents **Humanity as an end, never only as a means** All human beings have inherent worth because they possess rationality and they should be treated with respect ]] .row[.col-6[ ] .col-6[ .question[ What determines our duty? How do we know what morality requires of us? Kant answered these questions by formulating what he called the “categorical imperative.’’ Do you agree? ]] ] --- # Kant in an organizational context .row[.col-7[ The categorical imperative provides a solid standard for the formulation of rules applicable to any business circumstances. Kant emphasizes the absolute value and dignity of individuals. Kant stresses the importance of acting on the basis of right intentions. ]] --- # Criticisms of Kant’s ethics .row[.col-7[ Kant’s ethics is too extreme insofar as it excludes emotion from moral decision making and makes duty paramount. Kant fails to distinguish between excepting oneself from a rule and qualifying a rule on the basis of exceptions. It is not always clear when people are treated as ends and merely as means. .question[ Is the categorical imperative an adequate test of right? A moral rule must function without exception, according to Kant. How applicable is that tenet to torture? ] ]] --- # Prima Facie Obligations .row[.col-4[ **W. D. Ross (1877–1971)** British scholar who held that our moral experiences are too complex to be reduced to the principle of utility or the categorical imperative. His beliefs: * We have various duties that oftentimes come into conflict with each other. * There are no universal rules for the resolution of conflicts of duties. * Different situations generate different priority orders of duties. ] .col-4[ **Prima facie obligation** Can be overridden by a more important duty in specific circumstances .tip[ * We are in conflict over the duty to keep our promise to a friend and the duty to help a person in need. * We may have to override the promise and favor the more important duty to help the person. * But in some other circumstances we ought to do the opposite. ]] .col-4[ **Basic prima facie obligation** Duties of fidelity Duties of reparation Duties of gratitude Duties of justice Duties of beneficence Duties of self-improvement Duties not to injure others ]] --- # Prima Facie Obligations .row[.col-7[ **Assisting others** _Nonconsequentialists_ believe that we have a much stronger obligation to refrain from violating people’s rights than to promote their happiness or well-being. Moral philosophers argue that _utilitarianism_ fails to distinguish between morally required acts and supererogatory acts (i.e., those acts that exceed the call of duty). **Moral rights** A **right** is an entitlement to act or have others act in a certain way. * Some moral rights derive from special relationships, roles, or circumstances in which we happen to be. * Moral rights that are not the result of particular roles, special relationships, or specific circumstances and apply to all people are called “human rights.” ]] --- # Prima Facie Obligations: Human Rights .row[.col-6[ **Key features of human rights** Human rights are universal Human rights are applied equally to all Human rights are inalienable and not transferable Human rights are natural in that they do not depend on human institutions ] .col-6[ #### Categories of human rights **Negative rights** Those that reflect the vital interests that humans have in being free from outside interference (such as the freedom of speech, assembly, religion, etc.) **Positive rights** Those that reflect the vital interests that humans have in receiving certain benefits (such as the right to education, medical care, equal job opportunity, etc.) ]] --- ## Nonconsequentialism in an organizational context .row[.col-7[ Moral decision making involves the weighing of different moral factors and considerations. This theory acknowledges that the organization has its own legitimate goals to pursue. It stresses the importance of moral rights and especially human rights. ]] --- # Criticisms of nonconsequentialism .row[.col-6[ Ross maintained that moral truths are known intuitively, i.e. they are self-evident. Critics question whether intuition is always a reliable guide for establishing moral truths. They say that appeals to intuition and should be critically assessed. It is not always clear how issues with conflicting rights and principles ought to be resolved. ] .col-6[ .question[ Imagine that a murderer comes to your door, wanting to know where your friend is so that he can kill her. Your friend is in fact hiding in your bedroom closet. Kant maintained that you must always tell the truth—that is, in all circumstances and without exception. For him, telling the truth is an absolute or categorical obligation, not a prima facie one. What would you do if you were in this situation? Do you agree with Kant? ] ] ] --- # Utilitarianism Once More .row[.col-6[ **Rule utilitarianism** This modified version of utilitarianism aims to avoid the criticisms directed at the classical account of utilitarianism known as **act utilitarianism** . Rule utilitarians maintain that the utilitarian standard should be applied not to individual actions but to moral codes as a whole. ] .col-6[ Moral discriminations must be based upon the principles of an **optimal moral code** . What should an optimal moral code should look like? Rule utilitarians argue for a pluralistic moral code on three grounds: People will make mistakes if they try to calculate the results of every given action in advance. Important rules will be undermined if all individuals were **act utilitarians** . It is too demanding for individuals to ask them to promote total well-being. ]] --- # Criticisms of rule utilitarianism .row[.col-7[ By sacrificing the priority of the principle of utility, they tend to overestimate the value of rules. They are still bound by the consequentialist approach to morality, which is to evaluate the worth of various acts in terms of their results. Therefore they fail to acknowledge the independent value status of moral and human rights. ]] --- # Virtue ethics .row[.col-7[ The focus of virtue ethics is what makes a good person rather than when an action is right or wrong. <br/> **Aristotle**'s main concern is what makes a **good person** and what we need to do to become ethical human beings. * Requires us to know how to actually behave ethically and be motivated to do what we believe is right. ] .col-5[ .your-turn[ Find more on virtue ethics at: https://plato.stanford.edu/entries/ethics-virtue/ and Arsitole's ethics at: https://plato.stanford.edu/entries/aristotle-ethics/ ]] ] .row[.col-7[ Aristotle argues that the main goal in life is to attain **personal happiness**. This is what he calls our “most *final end*” or “*ultimate end*.” ] .col-5[ A '**final end**' is a good that we understand to be worthy of seeking for its own sake. **Happiness** might be something that can't be used to achieve anything greater than itself ] ] --- # Virtue ethics .row[.col-7[ Aristotle argues that we have habits and skills that help us attain greater happiness * These skills should emphasize what we are (i.e. human beings) * Becoming the best kind of person will make us the happiest kind of person by developing distinctly _human capacities_: 1. our ability to reason well because we are **rational animals** and 2. our ability to cooperate and socialize with others because we are **political animals**. ] .col-5[ Being a **political animal** is why we have a natural tendency to care about people in general, and love family and friends in particular. A general goal of being a political animal is to get along with people and help them. ] ] --- # Virtue ethics .row[.col-6[ Aristotle argues that virtues require us to avoid **extremes** by finding a **golden mean**. ] .col-6[ _Courage_ requires us to be afraid when appropriate by avoiding _cowardice_ (being afraid when we shouldn't) _Foolhardiness_ (not being afraid when we should be); and _temperance_ (moderation in satisfying our desires) requires us to avoid _over-indulgence_ and _under-indulgence_. ] ] <br/> .row[.col-6[ Aristotle doesn't think we can know how to be virtuous through theorizing alone. * We need to refine our ability to be ethical thoughtlessly * Requires an ability to _intuitively_ know what should be done without the need for argument ] .col-6[ Aristotle would be skeptical of 1. the idea of using a decision-procedure to determine right and wrong, and 2. boiling right and wrong down to a set of rules. ] ] --- # Virtue ethics .row[.col-7[ .question[ Is Aristotle right that happiness is the most final end? What other final ends are there? ] <br/> .question[ Is he right to be skeptical of moral rules and decision procedures? ] ]] <br/> .row[.col-7[ ] .col-5[ .question[ Is there any reason to prefer one ethical theory above the rest? ] ]] --- # Moral Decision Making .row[.col-6[ .tip[#### How do we reach an agreement on controversial ethical issues in business? In any moral discussion, make sure participants agree about the relevant facts. Once an agreement on factual matters is reached, try to spell out the moral principles endorsed by the participants. Articulate the common grounds between the diverse ethical viewpoints of the participants. ] .tip[ #### V. R. Ruggiero’s two-step approach to moral decision making Identify the relevant considerations involved – obligations, ideas, and effects Determine which of these considerations deserve emphasis in the situation at hand ]] .col-6[ .tip[ #### Guidelines for handling cases involving conflicting obligations, ideals, and effects Choose the stronger of two or more conflicting obligations. Honor the more important of two or more conflicting ideals. Of two or more rival actions, choose the one that produces the greater good or the lesser harm. ]]]