Aristotle's Approach to Business Ethics

Business Ethics – Thomas A. Package
Lecture 4
I. RUN Inc. Case
II. "Corporate Roles, Personal Virtues" Solomon
A) Solomon on relevance of Aristotle - persons should think of
themselves as members of a larger community and strive to
excel, to bring out the best in themselves and the community.
An Aristotelean approach to business ethics begins with the
virtue of the individual in a corporate setting and the virtues of
the corporation will follow.
Package on relevance of Aristotle. Aristotle thought the
interesting questions were about the tensions between an
individual and her group. He dealt with the polis or city-state.
Contemporaries triangulate between many groups, the most
important are often state and corporations.
B) Solomon contrasts Aristotelean approach with Kantian and
Utilitarian:
Kantian - too much emphasis on rational principles. Contra
Kant, all that is morally significant is not a matter of
rationalized principles. Cultivation of Character counts, not
rationalizing our behavior. I assume he means rationalize as in
to make rational, not excuse making. Most importantly, duties
are formed in terms of community and how the greater whole is
effected by actions, not monistic principles of rationality.
Besides, it's dry and we just don't "DO" ethics that way. It ain't

inspirational. Shifts emphasis from greatness of a person in a
roll to roll-transcendant principle which may be "empty-
handed" for solving corporate dilemmas and giving corporate
direction.
Utilitarian - also too obsessed with doting over principles,
namely maximizing good consequences. Like Kantian ethics,
Utilitarianism compulsively focuses on decision procedures
instead of the idea of personal responsibility. Shifts focus of
ethics from being personally responsible and instead appeals to
the almighty decision procedure.
C) Rights v. Responsibilities.
Solomon does not wish to deny the relevance of rights to ethics
or the centrality of civil rights. But rights talk is not meant to
replace talk of responsibilities. We should move from talking
about having rights to recognizing the rights of others.
Solomon thinks the latter can be best accomplished by talking
about what the virtuous person would or wouldn't do, but he
acknowledged that virtue theory can be provincial or ethno-
centric.
Solomon's Six Dimensions of Virtue Ethics
1) Community - What is good for the community is co-extensive
with what is good for the individual. Our self-interest is for the
most part identical to the larger interests of the group. In this
case, the good of the company and the good of the individual
stand or fall together
2) Excellence - Just that. Means not just avoiding mistakes, but
excelling and doing a good job, whatever that job may be.

3) Role Identity - The particularity of being an employee, of
taking on that role and accepting the attendant obligations and
performing conscientiously. Knowing which hat you just put on.
4) Integrity - As in the ability to integrate the roles you inhabit
- a fluidity of deference to the proper virtue.
5) Judgment - particularly good moral judgment. This is the
ability to make the right decisions, to correctly choose from
among competing moral considerations.
6) Holism - a state of harmony. Where there is less emphasis on
a job being just a job, and more on your job being a facet, not a
component, of your life.
E) Business and the virtues - Business ethics is too often
conceived as restrictions or regulations placed upon business
instead of a driving force behind business. A virtue theory
approach removes the emphasis from prohibitions, and it places
the emphasis on what a good person would do. A short list of
virtues - honesty, loyalty, sincerity, courage, reliability,
trustworthiness, benevolence, sensitivity, civility, decency,
cheerfulness, liveliness...etc. Not to mention strength, skill,
charm and others.
Toughness - a difficult virtue. Making the tough choices, doing
what might be described, in other circumstances, as the wrong
thing. In other words, the virtuous person makes the tough
choice to fire otherwise good employees when the situation
demands cost-cutting. Doing something that may appear wrong
in order to do something right, making painful sacrifices for a
greater good. This is sometimes called strength of will.
The Aristotelean Bottom Line.

Business ethics is better conceived as what good people do, not
what ought to be done while at work. We would be better
served to see how our lives could be enriched by a better, even
excellent, corporate world than to continue to foster a useless,
damaging, and false dichotomy between our jobs and our lives.
In other words, business ethics should show us how to fit our
work lives into the broader scheme of a life well lived.
III. "Virtue in Ancient Philosophy" - Holmes Chapter 3
A) Be a Good Person - the directive of virtue theory. Virtue
theory is the oldest of the moral theories we will study. For the
most part, the strongest version is that given by Aristotle. The
Ancient Greeks were concerned with how one should live a
good life, eudiamonia was the term they used. The good life is
not limited to good food and good wine, the pleasures of the
world, but means a life well lived, as evidenced by what a good
person would do. When faced with a moral problem, the
question of what should I do is answered simply by "Do what a
good person would do" or even simpler "Be a good person." In
this sense, think of the theory as a top down approach. You
begin with the directive of being a good person, then you try to
figure out what it is to be a good person. Well, a good person
has certain qualities of goodness, or the virtues.
B) Kinds of Virtue
1) Natural Qualities - strength, speed, intelligence
2) Acquired Qualities - musical abilities, foreign languages
3) Qualities of Temperament - good or amicable disposition,
patience

4) Religious Qualities - faith, piety
5) Qualities of character - benevolence, kindness, perseverance,
courage
If these qualities are to be action guiding, we need to figure out
which are moral virtues and which are not.
C) The Function Argument. Some things have specific
functions. Body parts have functions like eyes see and ears
hear. Artifacts also have functions: hammers drive nails and
drills make holes. This also applies to living things. Horses
can either run races or do various kinds of labor. The virtue or
excellence of something is a quality possessed by the thing
which allows or enables it to function well. Dull knives
function poorly and sharp knives function well. Weak horses
function poorly and strong or fast horses function well.
This gets tricky when we ask what is the function of people and
how do they perform well. It involves, for Plato, a conception
of the person as a unification of body and soul, unified under
the capacity of reason. The soul, for Plato, is comprised of 1)
reason, 2) the appetites or appetitive part, and 3) the spirit. The
spirit contains the emotions, like anger and fear, as well as
feelings like honor and ambition. The appetitive part contains
the bodily drives or appetites for food, drink, or sex. Reason
sits in the drivers seat directs the soul. The soul functions well
when reason is not subordinated to the other parts, when reason
allows the soul to be directed by wisdom. Just as justice is the
first virtue of a well ordered society ruled by wise people, so to
justice is a state of the soul when all parts are in harmony under
reason.

D) Virtue, Goodness, and Right Conduct
How is virtue or a properly aligned soul achieved? The answer
is through virtuous conduct or actions. We must act justly or
virtuously to achieve the state of being a virtuous person.
There are two options here: 1) either the actions are just or good
because they make the person virtuous or 2) the acts are
virtuous as judged by some other standard independent of the
effects on one's soul. In 1, acts are good because the causally
effect or align one's soul. You need to know what effect an act
had on a persons soul, and possibly on others and the state as a
whole, in order to determine whether the act was just or unjust.
In the latter, you can judge the actions as just or unjust without
having to figure out what effect the act had on the person's soul.
You just need to check the act against the independent standard.
The former is more plausibly Plato, and though the latter may
be more plausible. In the latter, virtue is then produced or
sustained or promoted by just or good conduct. We then require
an antecedent or prior knowledge about good or just conduct.
If we put this question in more contemporary and formal terms
we would ask "Where is the goodness that determines rightness
located? Is it in the good and thus right character, or is it in the
actions themselves?" Here are the two options:
1) Right actions are those actions done by good or virtuous
people. – Plato
2) Good or virtuous people are those that perform right actions.
– Aristotle
In the latter, virtue is then produced or sustained or promoted
by just or good conduct. We then require an antecedent or prior
knowledge about good or just conduct. This seems like the

much better answer, if for no other reason than Plato's position
seems to give saints and paragons of virtue a pass to do
anything, while saying that all actions taken by bad or vicious
people are necessarily bad. It should be possible for even
Mother Theresa to perform a wrong act, and it should also be
possible for Hitler to perform a right act.
E) Aristotle and the Habits of Virtue
Aristotle also viewed the world in terms of purposes, ends, or
functions. The distinguishing function of humans is to reason
and from this capacity Aristotle also produces a theory of
virtue. Aristotle broke from Plato over the nature of the soul
and denied the immaterial or ethereal quality of the soul. As an
early proponent of natural science, he found no evidence or
argument to support an immaterial part of the soul and since the
functioning of humans can be explained without it, he ejected it.
The soul, if you want, has just rational and appetitive parts.
Anyway, Reason has theoretical and practical functions.
Theoretic reason gathers and gains knowledge and practical
reason directs conduct. When you are good at both, you have
theoretical and practical wisdom, two intellectual virtues. You
need not have both and having one does not entail having the
other. Physicists may be very good at physics and very bad at
moral conduct. Moral virtues are then habits, traits or
dispositions of character and directed by practical reason. In
this sense, the moral virtues are under the regulation or control
of the intellectual virtues. They are appetitive and non-rational,
one might say habitual acts. This makes the moral virtues
acquired through practice, namely the practice of virtuous acts.
If you consciously employee practical reason to regulate your
behavior to the point where you habitually act generously at the
appropriate time or courageously at the appropriate time, then

you will eventually attain a generous and courageous character.
F) The Golden Mean
When is the appropriate time for generosity…or courage?
Sometimes courage or bravery is just silly, not virtuous. Is the
man who charges overwhelming odds and forces brave or just
foolish since his death not effect the outcome of the battle?
Aristotle's answer to this question of appropriateness is the
golden mean. On one extreme, the man who never gives a
penny to strangers, friends, or loved ones, is stingy. On the
other extreme, the man who gives nearly all of his time and
money to others is too generous. The mean is somewhere in the
middle...just where in the middle is left up to those with good
judgment to determine. The people who see it will be able to
see the mean, and those who can't are left to try or fail.
Aristotle was big on the idea that there were just some people
who don't get it when it comes to matters of practical (moral)
wisdom.
IV Does the Ethics of Virtue Presuppose and Ethics of Conduct?
The Priority of Conduct to Character
A) Aristotle runs head long into the same problem we found in
Plato. What are the determining criteria for right actions?
Aristotle answers, somewhat unsatisfactorily, the golden mean,
or acting in some particular way like generously or
courageously, when appropriate. That seems to be deference to
right actions, not good actions. The good act, the act which
approaches the mean, is defined in terms of appropriateness or
rightness. In this sense, it would seem the good is defined in
terms of the right, or right is prior to good. In other words,
Aristotle NEEDS a theory of conduct to make his theory of
character work. He provides us a theory of conduct in the form

of the theory of the golden mean, but this should strike you as
particularly unsatisfactory.
Let's try this from another angle. How can Aristotle's theory
ever be said to be action guiding? Perhaps, as something like
the function arguments would indicate, his theory is based on
the directive "Be a good or virtuous person" or "One ought to be
a virtuous person." OK, then suppose we have a prior
commitment to this directive so we can make the theory action
guiding and suppose we ask what it means to be a virtuous
person, then Aristotle can't answer "following the directive"
because that would be fairly obviously circular and vacuous. So
if he wants to remain coherent, then a virtue theorist would
need an independent theory of right and wrong actions which is
not determined by the same grounds of his theory of value, else
circularity.
Here's another problem for Aristotle: what if I don't care about
virtue or being a virtuous person. Is that morally wrong?
Suppose I am a really lack-luster person. I may be an
uneducated, beer drinking, comic-book reading, layabout, BUM
who lives in his parents’ basement, but I don't ever hurt or harm
a single person. Is that so obviously MORALLY wrong? Not
without the prior commitment or moral directive to be a good
person. True, I could be a much better person if I got a job,
stopped drinking so much beer, and started reading books with
hard covers, but you could only say I was morally terrible if you
thought I had some prior obligation or commitment to be a good
person.
B) What is character? Aristotle seems to define it in terms of
the propensity to commit certain acts, maybe even certain acts
at the right time. But if that is all there is to character, then
why not talk about acts or conduct instead of character. What

we are owed is a very specific account of character and it
cannot be entirely defeasible in terms of actions or else we have
an ethics of conduct. But what else could character be? Could it
be a state of mind, or having certain feelings about actions, or
persons or whatever? All attempts to explicate character seem to
be reducible to actions. If that is the case then why not just talk
about an ethics of conduct right from the beginning? At the
very least, we think a theory of right conduct or action is
needed to ground the theory of character so we should perhaps
attend to first things first and decide how we are going to
determine right and wrong actions.
Questions to Answer:
1. Solomon's *Corporate Roles, Personal Virtues.* Why does
Solomon favor a virtue theoretic approach to morality? What
does he not like about the other approaches he mentions? Does
this preference seem reasonable?
2. What does Solomon mean when he says it's possible for a
virtue ethic to be ethno-centric or provincial? What do these
terms mean? Isn't this a nice way of saying something else? Is
this a deeper problem than he lets on?
3. What is the golden mean? What role does it play in
Aristotle's theory of virtue ethics? How does Holmes argue for
the priority of a theory of right conduct to a theory of right
character? Can you consider a theory of virtue to be also an
ethics of virtue without a theory of right conduct?
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Lecture 3 - Addendum
I. What is Cultural Relativism (CR)?

A) Cultural Diversity is a descriptive claim about culture - how
cultural principles such as etiquette, dress, music and arts, and
even a culture’s moral values and principles change or vary
from culture to culture.
Cultural Relativism is a theoretic claim about the nature of
morality, namely that moral principles are true or false, but only
RELATIVE to some culture. CR is one form of relativism, such
as subjectivism or extreme relativism.
“X is wrong” means X is not embraced, endorsed, preferred or
practiced by my society,
CR implies that you ought to obey YOUR culture’s agreed upon
or embraced principles, moral and otherwise.
B) Argument from Variance. Proponents of CR are often swayed
by this argument:
1. Cultures disagree, or vary, upon which moral principles are
true. (Cultural Diversity)
2. Therefore, since whole cultures and people disagree, there is
no truth of the matter, just varying cultural assertions. (Cultural
Relativism)
CR implies that you ought to obey YOUR culture’s agreed upon
or embraced principles, moral and otherwise. Bowie incorrectly
states the motto of CR as “When in Rome, do as the Romans
do”, when the motto should be “When you are a Roman, do as
the Romans do.” CR is not Geographical relativism, so the even
for CR, the moral rules don’t simply depend on where your feet
are standing.

II. Criticisms of the Argument From Variance and CR.
Sidney Morgenbesser – ANY and ALL responses to an
opponent’s arguments can be classified as either an “Oh,
Yeah!?!” response or a “So What!” response. “Oh, Yeah!?!”
means your opponent’s argument fails because of some internal
flaw in her reasoning, or the argument is not valid. “So What!!”
means your opponent’s argument fails because even if her
reasoning is internally valid, it is not sound because she has
failed to account for other variables external to her account.
A) Bowie’s “Oh, Yeah!?!” #1. Stop the Argument from
Variance at the assertion of Variance. Bowie asserts that
variance might not be as widespread as it seems. What looks
like variance is in fact thinly veiled convergence... witness the
conversion on the treatment of the elderly. Eskimos and
Americans agree – don’t be cruel, and merely seem to disagree
since there are explanatory circumstances to justify the
differing treatment. In other words, if convergence is important
then notice how there is more convergence than divergence or
variance. Thus, perhaps CR is defeated by first denying
variance.
Response : This attack on variance simply seems implausible.
Were the Nazis and the Allies united over the treatment of
people, but disagreed over simply who turned out to be a
person? Who counts as a person is itself a moral question.
There is widespread variance on deep moral issues, and some
variance on simple moral issues. Witness the Ik and their
treatment of human babies.
B) Bowie’s So What! #1 Principles can be instantiated by
different behaviors in different places – Minimum wage is
different in Oaxaca from the wage in C-ville. The difference in
the cost of living would dictate that a smaller wage could be
enough to live on in a cheaper place.

Response: What UNIVERSALLY accepted principles are there?
The Chinese embrace torture and the Ik embraced everything
bad. Perhaps the same principles demand different behavior in
different circumstances, but what UNIVERSAL agreement is
there over very basic moral principles? The Chinese embrace
torture and imprisonment of dissidents, and the Ik embraced
nearly everything bad.
C) Bowie’s So What! #2 Believing something is so don’t make
it so. Believing something is morally acceptable does not make
it morally acceptable.
Response: RIGHT ON! Thinking something is so don’t make it
so in physics (see Copernicus) nor does it make it so in moral
theory (see MLK) Of course adding up the number of people
who believe X does not make X true! As Bowie argues
“Thinking something is morally permissible does not make it
so!” If it did, you wouldn’t need moral philosophy, just
anthropologists and polling companies.
D) Bowie’s So What! # 3 CR is inconsistent with our moral
language and concepts. We defer to universal principles to say
the other side is incorrect. CR can’t represent disagreements as
disagreements in any meaningful sense.
1. Inter-schemic – CR can’t represent disagreements between
cultures as disagreements.
Chinese – “Torture of dissidents is justified” – True, if the
Chinese culture embraces the practice.
Americans – “Torture of dissidents is not justified” – True, if

the American culture disapproves of the practice.
But saying both statements are true is not a disagreement! But
we certainly DO disagree with the Chinese with regard to
torturing, imprisoning, and “re-educating” our political
dissenters.
2. Intra-schemic – MLK is a reformer, and we talk about him as
right not because he was successful, but because he was always
right. For CR, MLK must be a counter-cultural moral criminal
with a minority view, and then just a common person with a
shared opinion after the civil rights movement. This is surface
problem regarding the way we talk about reformers, AND a
deep problem since the position of a person in possession of the
truth who changes a culture for the better does not exist in the
CR scheme.
Response: RIGHT ON!
E) Bowie’s So What #4. Just what is a culture and which one is
relevant? CR trades in the difficult subject of moral theory for
the difficult subject of determining two things: what is a culture
and how do you determine which culture takes moral
precedence? National boundaries are insufficient since culture
clearly crosses those boundaries. In a multi-cultural society,
this question is even more problematic for the proponent of CR.
Within a culture there are sub-cultures, counter-cultures, and
cultural dissidents. For business ethics, there is also the
problem of Corporate Culture, probably something more
important than business casual versus business dress. In order
to make CR work, you’d need a workable theory of how to pick
out the relevant culture at play.
Response: RIGHT ON!

F) Bowie’s So What #5 What if some culture embraces a claim
to Universal moral principles? Relativist’s must admit that some
kinds of moral principles are not relative. Some deal with what
other cultures should or should not do.
Response: RIGHT ON!
G) Bowie’s So What #6 The priority of morality to culture.
Bowie claims some principles are necessary to all cultures.
Some principles that seem like moral principles are necessary to
be called a culture. To count as a culture, it seems reasonable
to say that there must be certain restrictions on behavior in
place, such as don’t lie, steal, or kill from others in your
culture. This seems to indicate that to be properly called a
culture is dependent on a having a unifying moral view of some
kind. If true, it seems absurd to say that culture precedes or
explains morality as a moral view is a necessary condition for
having a culture!
Response: RIGHT ON!
III. CR & Imperialism
A) Many people want CR to be true to avoid moral conflicts,
physical and otherwise. Perhaps there would be less violence if
we all just stopped believing in the truth of our own narrow
points of view. The first step in Imperialism and nation
building is to believe in the truth of your position. Maybe if we
don’t hold fast to outdated notions of moral truth, we can rid
ourselves of distasteful moral conflicts that disintegrate into
vicious squabbles and violence.
B) Holmes addresses this argument directly. In the first place,
this assertion cannot be verified from the armchair. More
importantly, it is just as likely a priori that more conflicts
would result in violence if CR were to be believed. Afterall,
why talk to somebody to convince them of the truth of your

position instead of fighting for converts, when no such truth
exists?!?
At this point, an exasperated proponent of CR might say
“what’s the right answer regarding the so-called true moral
theory?” In reply to III D, apart from an assertion, it may be
possible that there are no real moral reformers or perhaps
you’re possessed of false consciousness since maybe there
aren’t such things and we shouldn’t talk like that. I’ll join
Bowie in saying that at this point, you simply have to engage
the skeptic at the level of justifying a full normative moral
theory, principles and all.
IV. Back to Anzen.
1) According to CR, Stan should behave according to his
cultural principles. Okay, but which ones? The Canadian
principles or the Motorolan cultural principles? What if the two
conflict? According to CR, Stan should do what his culture
prescribes, probably fire his workers.
2) But what about Willard’s recommendation to keep both
employees and let the event pass? That is what Nambunese
culture requires and is thus what Willard should recommend,
according to CR. Here is a very bad problem for CR. In CR’s
analysis, these two contrary positions are not in disagreement.
They both are correct, since they are both properly reporting the
background culture’s view. But we know, contra CR, that this
is a deep disagreement!
V. Questions you should now be able to answer!
1) What is the difference between a deontological and an
axiological approach to moral theory, with regard to theories of
the right and theories of the good. Do all kinds of axiological
theories consider consequences exclusively?

2) What is the difference between a theory of good character
and a theory of right conduct as an approach to morality?
3) How do you distinguish between a micro-ethical view and a
macro-ethical view?
4) What is the difference between cultural diversity and cultural
relativism?
5) What is the argument from variance and how does it relate to
cultural relativism?
6) Should a reasonable person be convinced by cultural
relativism? Why or why not? What are the toughest problems
for CR as a theory about the nature of the Moral Point of View?
7) What does CR tell Stan to do? Can CR make sense of the
moral concerns at Anzen?
8) Who injured Tommy? Did Tommy's employer also fail
Tommy in some way, and would CR be able to make good sense
in describing this failing? Worse yet, would CR be able to argue
in favor of rectifying this failure?
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2
Lecture 3
I. Case - "What Price Safety?"
What should Stan do?
II. Holmes Chapt. 2
A) 2.2 Right v. Rights. Holmes makes an interesting point
about rights. He claims that one need not complicate the moral
language with talk about rights. All of the work can be done by
talking about what it is right or wrong to do. This is a simple

application of the principle of Occam's razor. It's true that
nothing is lost by talking about right and wrong instead of using
the language of entitlements. Imagine you have made a contract
with me to paint your house. Instead of saying you have a right
to my performance on our contract we can just as easily
understand what's happened if we say it would be wrong for me
not to paint your house since you paid me to do just that. In
other words, saying you have a right or entitlement to my
performance can be understood as shorthand for saying it would
be wrong for me to fail to paint your house since I was paid to
do so. This would apply to duties as well. It would be wrong
for me to fail to refrain from killing practically anyone; though
it is easier for us to say people generally have a right to life,
liberty, etc. This puts the deceptively simple idea of a right in
need of justification. That is a deep and difficult task, but not
an insuperable task. In any event, Holmes's formulation allows
you to refrain from explaining exactly what a right is, natural or
otherwise, and where one comes from
B) Forms of Moral Theories: Deontology vs. Axiology.
1) Deontological - "Deontic" - duty or law "ology" - the study
of. Rightness is partly or wholly independent of value.
a) Strong - what is right is separate and independent of good.
Another way to put this position is to say that for a Strong
Deontologist "Consequences Never Matter. Moral Principles
and Rules are the only way to determine appropriate conduct."
b) Weak - right is not entirely independent of good. Good is
related though not necessary to right. In the vein from above,
"Moral Principles are Primary in determining appropriate
conduct, but Sometimes Consequences Matter."

2) Axiological - right is defined in terms of good. This type of
theory develops a concept of the good or what is good in the
world, and derives or defines right actions according to that
theory of goodness. Value is prior to rightness or wrongness.
C) More Forms of Moral Theories: Consequentialism vs. Non-
Consequentialism
1) Consequentialism – an axiological theory where goodness
and rightness is defined solely in terms of the consequences of
actions. (Contra Strong Deontology)
2) Non-Consequentialism or Virtue(Character) Ethics – an
axiological theory where goodness and rightness are defined in
terms of an act or acts which are considered valuable for their
own sake or performance usually in reference to a theory of
virtue and vice, but apart from the consequences of the act.
These distinctions are helpful for categorizing or mapping
moral theories but note that some theories can cut across the
distinctions, or we can argue about how a theory should be
classified. For example, what happens if somebody advocates a
theory where actions are right if and only if they maximize
adherence to a scheme of rights or minimizes rights violations?
D) Axiological theories are distinguished by how they answer
three questions:
1) Where is the good which determines rightness located?
Consequentialists think the good is located or is derived
entirely from the consequences of an action. Teaching this
class is a good and right act if and only if the consequences of
teaching, like you learning something, are good. Non-
consequentialists think right action derives from good acts, not
consequences. Here, good acts must be defined independently

of their consequences. For example, maybe my teaching is
entirely ineffective and no good consequences result from my
attempts to teach this class. However, my actions in teaching
may still be right since my intentions were good. Or maybe
teaching is good and therefore right, since that is what a good
person would do, that is, attempt to teach and endeavor to
persevere. This latter option is something like an ethics of
virtue or character
2) What is the relevance of bad consequences? Put differently,
nearly every action has good and bad consequences. Going to
the dentist hurts or is at least unpleasant, though it does good
by preserving your teeth. Getting drunk or high is fun, which is
good, but it kills brain cells and often gives you a hangover,
which is very bad. Consequentialists need some way of adding
all of this up, a tremendous project to say the least. You can
easily run into the problem of non-additive goods. How would
you add up the goodness of fun minus the badness of lost brain
cells? Let's say you could find some way to add goodness and
badness. Which is more important and at what levels of
acceptability? There are various strategies here like aggregate
maximizing, or minimizing bad consequences, or maximizing
good consequences simpliciter.
3) Which consequences are relevant and to whom? Here
conceptions of consequentialism can fall between two theories
at opposite ends of a spectrum:
1. ethical egoism - what matters is maximizing the good
consequences to me.
2. utilitarianism - what matters is maximizing the good
consequences to everybody.

Some theories consider the consequences to not only persons,
but the consequences to collectives or groups of people and
sometimes even sentient or feeling animals. If what we cared
about was the avoidance of pain and it seems that some higher
animals feel pain, it follows that we should allow their pain to
factor into our right-making calculus. Another problem is
deciding which consequences are relevant. Some things follow
or a happen after an action and we refer to them as
consequences since they happen as a direct result of an action.
Some things just follow or happen after an action and we refer
to these as consequents. A consequentialist needs a strong
theory of what distinguishes these two. Without the distinction,
a consequentialist justification could be given for just about any
action when you consider that if you look far enough into the
future you are bound to find enough good consequents to
outweigh the bad consequences.
E) Micro vs. Macro ethics. Another distinction used mainly in
Teleological theories, where some end or telos is maximized.
The main point here is whether you allow something other than
singular persons (usually) to have moral value. Micro ethics
allows you to consider or calculate the effects of actions on
individual persons or animals. Macro ethics allows either
collectives or super entities to be counted in the calculus. The
good of a nation, institution, or even the earth is considered not
just as an aggregate of the people which comprise its
membership, but as a good over and above or in addition to the
people.
F) Conduct vs. Character. Most of the above refers to how
actions are guided by moral theory and can be called an ethics
of conduct. This can be juxtaposed with an ethics of character
where the good of a person's character, or virtue, is judged apart
from the deeds they do. This notion of character is notoriously
difficult to define without reference to acts, which would
collapse the distinction entirely. What is virtue besides the

tendency to commit acts of a certain sort?
III. Bowie Article “Relativism, Cultural and Moral” and Homes
Chapter 11
A) Take the statement "X is wrong." Do you think this
statement has truth value, by that I mean, do you think the
statement can be considered true or false in the same way a
statement like "Y is a red car" can be true or false? Engaging
the question in this manner treats the issue as a metaethical
issue. Now, we don't think the truth or falsity of statements
about the colors of cars will vary between cultures or from
person to person, so what reason do we have to think statements
about rightness or wrongness should vary across cultures? A
red car is a red car in New York, Charlottesville, Bangladesh,
Rome, Lhasa or anywhere in the universe. So why wouldn't an
act X be wrong in all five cities?
B) One thing we want to distinguish is the difference between
cultural diversity and moral relativism. Some of the authors we
read are a bit confusing on the following points, and it’s best to
be clear. There are certainly different practices and customs in
different cultures and some of these practices are moral
practices. But would any difference .indicate a difference in
morality itself? Cultural diversity is a descriptive claim about
the nature of culture and its variance around the globe and
throughout history. Ethical or moral relativism is a claim about
the nature of morality, namely that the truth of moral terms
turns on the standard embraced by the relevant group, usually in
the form of a culture. Cultural relativism is then best described
as one form of moral relativism, one which anchors moral
concepts to cultural practices. For example, some cultures
support the practice of forced female genital mutilation as part
of the transition to adulthood. Other cultures find this practice
suspect, to say the least. Some cultures, like ours, consider the
death-penalty permissible while other cultures consider the

death-penalty to be barbaric and have long abolished the
practice. The moral relativist is often persuaded by what's
known as the "argument from variance." On this view, the fact
that moral opinions vary not only from person to person, but,
more importantly, from large cultural group to large cultural
group, indicates nothing beyond local agreement, if that, is
warranted on moral matters.
For those keeping track ...Here's a few new terms!
Objectivism - the view that the statement "X is wrong" has truth
value and that value is determined by a standard external to the
speaker
Subjectivism- the view that the truth value of the statement "X
is wrong" is determined solely by the thoughts, attitudes, or
emotions of the speaker. They are true when the accurately
reflect the views of the speaker, but nothing more deep than
that.
Nihilism - the view that statements like "X is wrong" have truth
value, but they are all false, since no such concepts exist.
Emotivism - the view that statements like "X is wrong" mean "I
don't like X" and are only reports of the speakers belief or
preference, but nothing deeper. You are only emoting when you
report your moral beliefs.
Relativism - the view that statements like "X is wrong" are true
or false so long as they are indexed against some other, usually
local, standard, but nothing deeper. "X is wrong" is true, around
here.
Universalism - the view that statements like "X is wrong" have
truth value and is true or false of and for everyone, by the same
criteria, hence universality.

Few people are outright nihilists, fewer still nihilists take
classes in ethics!
C) Bowie seems to think there are reasons to doubt cultural
relativism with regard to moral practices. What seems like a
difference in moral practices, like killing the elderly in some
cultures, is really an application of a similar principle; avoid
cruelty, under different particularized circumstances. Bowie's
argument is that similar underlying principles are at play in
different cultures. This seems reasonable. For example, most
cultures agree about what should not be done to persons or
agents, but they often disagree on exactly who turns out to be
persons. Many really heinous crimes, like racial genocide, are
perpetrated against people and groups of people the perpetrators
didn't consider human.
He is right to point out what little difference the truth or falsity
of cultural diversity has to the debate over moral relativism.
From the fact that people disagree over moral facts and their
status as facts, nothing follows for the ontological status of
morality and nothing about the truth of moral relativism is
indicated by this disagreement. When people disagree, nothing
about the truth of who is correct follows from that
disagreement. The only way variance could be taken as
evidence would be to have previously agreed that convergence
or consensus was necessary. As Holmes's example of Thoreau
eloquently shows, variance can just as easily indicate that only
one person is right.
D) Bowie also points out that moral relativism is inconsistent
with much of our moral language. We use moral language to
criticize not only other cultures, but also our own culture and
moral practices. If moral relativism were true, inter-cultural
moral comparisons would not make sense. We would not be able

to speak sensibly about human rights abuses in China, Eastern
Europe, or Sierra Leone. And we certainly do use language to
make these comparisons and criticisms and we can often make
them stick. The onus falls on the relativist to explain how such
communication would be possible and how we could use
language to lever agreement between cultures. We also use
language to criticize our own moral practices. In both the
domestic and international cases, the language we use is of
static and unchanging ascriptions of moral qualities. Strictly
speaking, if I oppose some local practice on moral grounds, and
I become a vocal critic of that practice and successfully change
the practice, I have changed right into wrong, though the act
itself has not changed. In other words, if all you have to defer
to is local moral practice then the reformer starts off as "wrong"
and after her reform efforts, she is now "right." Note that the
human rights practices of China start off as right in China and
then after the efforts of Amnesty International succeed, what
was right is now wrong, and something else is right. Again, this
is just not how our language works. We think reformers are
right all the way through, else we wouldn't end up agreeing with
them.
IV The Argument From Variance
A) Relativism, Variance, and Consensus - Ethical relativism,
like wholesale truth relativism, will commit a person to thinking
some strange things at the pain of inconsistency. The sort of
relativism we are concerned with here is the kind which may be
thought to follow from cultural diversity. From the fact that
many people and cultures disagree about moral claims, some
think that no consensus has been reached with regard to moral
claims, therefore there is no truth in an objective sense about
moral claims. If you were convinced by the argument from
variance, then you must have some prior commitment to
consensus. But notice that if consensus were your criteria for
establishing moral truth, then you would have no need for ethics
classes, religious studies, or practically any classes on theoretic

matters at all. All you would need to guide your actions was an
accurate accounting of who thought what about moral matters.
And you don't need a philosopher to do that, you just need to
ask a sociologist, anthropologist, or someone trained in taking
polls.
Another consequence of a commitment to relativism is that it
leaves you no resources to adjudicate what seem like genuine
moral quandaries when conducting business in countries other
than your own. In fact, the relativist would have to say such
quandaries don't exist in any meaningful way. How would an
ethical relativist decide what to do when faced with dilemmas
like the practice of forced labor in some countries in the Pacific
Rim, or a racially biased distribution of rights and wealth (a
problem here in the US as well), or child labor when she does
business in parts of the world where such practices are common
and accepted? She would probably think such practices are
wrong, but she has no theoretic right to condemn or refrain from
participating in anything other than some sub-scripted "for me"
sense. So without moral philosophy, she is left high and dry.
B) Moral Language and Relativism - An important point
stressed by both Bowie and Holmes is that the moral language is
not friendly to relativism. We do not speak as though
relativism is correct. We talk about right and wrong in simple,
straightforward ways that don't reference cultural standards at
every utterance. This is most evident when we discuss the
moral reformers like Mohandas K. Ghandi and Martin Luther
King, Jr. We think they were morally right to oppose the
racially unjust systems they did oppose. If ethical relativists
are correct, then both Ghandi and King were wrong when they
started to oppose the racially unjust system. If they succeed in
changing the culture, then Ghandi and King become morally
justified, but only AFTER they succeed in wreaking massive
cultural change. Had their efforts not succeeded, the relativist

would have to be committed to saying Ghandi and King were
wrong all along. Let's take an example from literature. At the
end of Huck Finn, Huck is struck with what he takes to be a
moral problem, one where he feels he can't do the "right" thing.
Huck knows his society legally and morally requires him to turn
in his friend Jim, he knows that turning Jim in is the "right"
thing to do. But since Jim is his friend, Huck decides to help
Jim escape to freedom, at what Huck thinks is a risk to his
immortal soul. Of course, we know, as Twain probably knew,
that what Huck was doing was the right thing. But the relativist
is forced to disagree. In other words, there is no room in the
relativist scheme to talk about any deep sort of moral reform.
Notice that the position of the relativist would force you to
deny that any tension or conflict can result between moral and
conventional considerations. In chapter 1 of Holmes, we had
the example of the Chinese woman whose son is experiencing
trouble in kindergarten. The relativist would be forced to say
such conflicts are not moral conflicts at all, they are just cases
where someone has failed to understand the moral force of her
cultures practices.
C) At this point the relativist may then ask, if there is a correct
or true moral theory then which moral theory is correct? If
relativism isn't true, then what is your argument for the true
conception of morality? As Bowie notes on p. 383, the
appropriate response is to try to justify your conception of
morality and duties and obligations. When faced with some
moral choice, such as the "What Price Safety?" case, you need
to have a set of beliefs and justifications from which to
adjudicate a decision. Philosophers have been debating the
three main options: virtue theory, consequentialism, and
deontology. To answer the relativist, or just to have an answer
for your own moral problems, you need to understand the
strengths and weaknesses of competing moral theories and that
is the exercise of this class.

D) Universalism and Imperialism. Throughout human history,
much harm has been done in the name of moral truth. Those
claiming to have access to the truth about moral matters have
committed many horrible acts, from religious crusades to
religious inquisitions to genocide. This has led some people to
embrace some form of relativism. They reason that if we don't
think we have the truth where others don't, or put differently, if
we don't feel we have a better opinion than someone else on
moral matters, then we will be less likely to engage in wars or
conflicts over very weighty concerns. In other words, they
think relativism will lead to greater levels of tolerance. Strictly
speaking, the consequences of accepting relativism would not
make the doctrine either true or false. But if we are adding up
the consequences to decide which theory to embrace, then I
think we would again have to refer the matter to sociology or
some discipline other than philosophy. As Holmes notes, there
seems to be as much evidence that relativism would lead to
intolerance as it would lead to tolerance. Inter-cultural
disagreements would possibly be resolved more often by wars
and conflicts since there would be no way to decide these
disagreements by argument, because no such resolution would
be conceptually possible. Further, intra-cultural intolerance
would go on entirely justified under such a scheme, since no
resources would be available for dissent. So how would the
acceptance of relativism improve tolerance? Keep in mind that
having the truth about some moral matter does not necessarily
license someone to take any action. One would want to separate
the truth of some matter from what one would be justified in
doing while in possession of the truth. Again, if embracing
relativism would lead to fewer nefarious actions and less
suffering in the name of supposed moral truth, then we would
have to defer to the social scientists to figure this out. But
whatever verdict they return would not affect the truth or falsity
of the doctrine of relativism.
Questions to Answer

1. What is the difference between deontological and axiological
theories of morality? How does "strong" and "weak" apply to
these theories?
2. What is the distinguishing characteristic of
consequentialism? What are the types of consequentialism?
3. What is cultural diversity? What is cultural relativism? What
is the motto of cultural relativism? Are there other types of
moral relativism, besides cultural?
4. What is the argument from variance? Does it establish the
conclusion of cultural relativism?
5. What would cultural relativism say of a moral reformer, such
as Martin Luther King Jr.? How does cultural relativism treat a
person who acts against their cultural tradition?
6. Suppose cultural relativism is not true. How does one defend
an answer to the question of "What should I do?"
PAGE
8
Lecture 2
I - Syllabus, Requirements, and Administrative Stuff
A) Call Roll
B) Cover Syllabus & Requirements
1) Papers, Tests. Tests will be open book, but I do not
encourage you to copy directly from any texts. It would be

particularly unwise to copy from my notes to answer questions
or insert passages from the reading into papers. When writing
your papers and tests, try to focus on why you think something.
I'm not only looking for what you think about some issue, but
why you might be taking your position. For example, you may
advocate some conclusion about the justification of a certain
labor practice from a consequentialist perspective or for
consequentialist reasons. It would be advisable to show why you
think that sort of reasoning is particularly pertinent to the issue
at hand, as well as anticipating objections a reader may have to
your position and addressing possible replies to these
objections.
2) Class participation expectations. You need to be talking
through this material to fully understand what's been said. You
need to engage different positions to find their strengths and
weaknesses. While I think there are answers to the problems we
are considering, they are often things upon which reasonable
minds can disagree. In other words, you don't have to agree
with the authors we read, the instructor, or even other class
members, on all of the issues we will explore this semester. But
you do have to understand the points upon which your opinion
diverges from others, and justify why someone ought to be
convinced by the evidence or arguments which convinced you,
or at least give us your best defense. It is best to think of the
idea of transparency of positions. We don't merely need to
know what you think, but why you think something and why
anybody who accepts or believes some of the things you believe
should draw the same conclusion. On class participation, you
don't need to have something to say everyday, but the less often
you speak, the more I will expect cogent and lucid thinking and
criticism.
3) Course assignments. Assignments for reading will be made in

class. The syllabus will serve as a guide to topics we will cover.
II - Holmes Chapter 1
A) Evaluating
In 1.2 and 1.3, Holmes discusses the genesis of evaluative
behavior and he speaks in historical terms about the nature of
the activity of evaluating. Humans, at least since we were
plausibly called humans, have always had things they valued, be
they food, clothing, shelter or just human interaction like love
and friendship. Now, what is important for the development of
moral philosophy is that we started to think about these things
as having value or being valuable to us. Thinking in evaluative
terms is one thing which separates us from animals. His most
interesting point here is that evaluating and making value
judgments is necessary for human action. For instance, the fact
that you all signed up to take this class reflects your evaluative
judgment about this class, even if you just think the class is
only instrumentally valuable for some other end, i.e. you just
needed three credits to complete your schedule and to graduate
on time. Rational judgments of any kind require some end, or
telos if you want, to which the action is aimed. Think about
how playing puts or calls demonstrates your evaluative
judgment about the quality and price of some stock, or how
drinking coffee demonstrates your preference for coffee over
tea, water, or drinking nothing at all. Such judgments reflect
the idea that you believe the end or aim in question is better
than some other end or aim, even if the choice is between your
action and refraining from acting.
B) Is v. Ought
In 1.5, Holmes notes the importance of the development of the
distinction between what is and what ought to be. Another very
useful way to make the distinction is to ask the question "why
should I do what is done?" or "why ought I follow some local

tradition or practice?" If you want to understand the importance
of this distinction in the history of ideas, imagine trying to have
a conversation with someone who operated without it! Let's say
you were without this distinction and happened upon someone
beating a child with a rake. When you ask why they are doing
such a horrible thing, they reply that is what you do with an
errant child! If neither, or just one, of you have the distinction
between 1)what is done, beating children with rakes, and 2)what
ought to be done, perhaps merely scolding them, then how
would you express your opinion that they ought stop in any
meaningful way besides just recoiling in horror or crying or
something non-verbal? It is difficult to point to a time in
recorded history when we were without this distinction,
especially since the ancient Greeks seem so well versed in its
use. It has been said that the distinction fell on hard times
during the middle and "Dark" ages right up to the
Enlightenment. Ask someone why we drive on the right side of
the road, why they dress up for football games, or why the
university won’t put air conditioning in the old dorms and see
how far we've come since the enlightenment development of is
versus ought to be!!
C) Holmes employs the scheme of classification for normative
judgments we've already covered. Remember that normative
judgments are distinguished from purely descriptive statements
about the world. Normative judgments can be either value
judgments or prescriptive judgments. Both value and
prescriptive judgments can be about either moral or non-moral
matters, it depends on the perspective or frame of reference for
the statement. The frame of reference should be fairly obvious
from the content of the statement. The details, the moral
principles, which make these statements moral statements are
matters we will need to flesh out as we proceed through our
readings.
D) Sources of Moral Conflict and the Moral Point of View

Consider the sorts of tensions and interests at play in the Vioxx
recall and try to see how these could present not only legal and
economic problems, but moral or ethical quandaries. Holmes
offers three possible sources from which moral conflicts can
derive:
1)conflict between morality and conventional beliefs.
2)conflict between morality and law
3)conflict arising from competing moral considerations.
A case could be made for applying any or all of these categories
to the case of any product withdrawal or recall, though a good
case could be made for 1, but the best case could be made for 3.
Like the case of the Chinese kindergartner, there are certain
conventions and conventional beliefs we have about the limits
of corporate responsibility. After all, this isn't the first
dangerous product withdrawal or recall, and it probably won’t
be the last. As for conflicts arising between morality and law,
the law would seem to be decidedly in favor of recalling
dangerous products, though only after they are proven
dangerous. What if the law required less of the corporation
than did moral claims or claimants? And finally, there are
competing moral claims at play in the recall. There are stakes
or rights to be protected on all sides of the equation. One
would want to take into account the interests of employees,
shareholders, consumers, and the public at large. Some
philosophers in business ethics refer to addressing the claims or
interests of people other than just shareholders and employees
as a "stakeholder" analysis. We will address that analysis in
detail later.

While moral conflict can arise from different spheres, the most
important thing to remember is that the moral point of view or
frame of reference is a final accounts frame of reference. We
all know that the words "right" and "wrong", so to "good" and
"bad" and "ought" and "ought not", can be used with reference
to lots of different kinds of practice. There are right and wrong
ways to play piano or bake a cake. But the moral use of the
term stands in a special relation to all the others. Think of the
moral frame of reference as a filter through which all decisions
and actions flow, restricting the wrong actions and allowing the
right or merely permissible actions to flow through. Sometimes
the filter functions so well as to be nearly imperceptible in its
regulatory actions, but it does function nonetheless. So while
not everything is a moral matter, it is true that moral
considerations should trump or defeat non-moral considerations,
else we fail to understand, much less take up, the moral point of
view.
III Sen "Does Business Ethics Make Economic Sense"
A) Sen begins by challenging a conventional interpretation of
Adam Smith, often referred to as the father of modern
economics. The following passage is often quoted from Smith:
"It is not from the benevolence of the butcher, the brewer, or
the baker, that we expect our dinner, but from their regard to
their own self-interest. We address ourselves, not to their
humanity, but to their self-love". This passage is usually
interpreted to indicate Smith's skepticism about the necessity of
ethics to economic activity. In other words, Smith is often
interpreted as holding the position that self-love, also referred
to as self-interest, is both a necessary and a sufficient condition
for an economic relationship. Sen wants to deny the all too
common interpretation of Smith as a scholar who advocated an
ethics free view of economics since such an interpretation has
bad historical and contemporary implications. In other words,

Sen is arguing that an ethics free view of the science of
economics is not sensible, and that only a fool would believe
economics in theory and practice can function merely through
reference to self-interest. He asks two questions:
1) Did Smith think business activities consist of only such
activities?
2) Did Smith think business activities would be just as good, or
work just as well, if both parties were trying to swindle and
defraud each other in an attempt to maximize benefits to them?
Sen thinks it would be both bad historical scholarship and bad
economics to answer either question in the affirmative. Sen
argues that for Smith, and for all of us, self-interest can be seen
as a sufficient condition for motivating economic transactions.
My needs and my desire to meet them can be sufficient for
bringing me to the market. So in that sense, it is correct to
interpret Smith as saying we should look to the self-love or
prudential interest of parties in an exchange to explain and
understand the behavior. However, self-interest alone is not a
sufficient condition to complete or achieve an exchange or
transaction, much less a whole system or repeated iterations of
exchange. Another necessary condition is, you guessed it,
ethics or moral considerations. Some minimum level of
adherence to moral principles is necessary for a complicated
system of exchange to function. If you are unconvinced thus
far, think about what would conceptually separate a single
economic transaction, where we exchange goods or services for
money, from an outright theft or "grifting" where there is an
attempt to appear as though a just transaction has taken place
but no money was exchanged for goods. Note well that the
butcher-brewer-baker example deals only with the motivation
for a single exchange, not with the supposed necessity of self-

interest for a system or institution of exchange or what
motivations we might require for a system of production and
distribution as well.
B) Sen also argues that Smith, as any good economist would be,
was not only interested what is necessary for exchange and
markets, but also interested in production and distribution. We
are also interested in a full system or institution of economic
activity which grows and persists over time, not just single
transactions. Also, we are not just interested in what would be
necessary for an individual or single transactions of exchange,
but what would be necessary for an economic system of
exchange to grow and persist over time.
1) Systems of Exchange. To explain, Sen thinks it is a
necessary condition of a system of exchange that certain moral
behaviors adhere over time, namely rules regarding shared trust
and mutual confidence in acceptable behavior. Without a
minimum level of mutual confidence or shared trust in the
behavior of participants, systems of exchange cannot operate.
If the baker doesn't trust the brewer to deliver the yeast on time
or without pre-payment, they won't continue to make economic
exchanges. This also holds for arrangements between baker and
truck driver to deliver the bread to market. Without a
proliferation of certain business ethical values, unless some
threshold of promise or contract keeping is met, the institutional
system of exchange cannot get off the ground. Notice that these
practices need not be explicit in law or government edict, they
can function as effectively if a sufficient number of parties
adhere to contracts or agreements.
2) Ethics and Production - Some goods which we want produced
would not be produced if we only relied on self-interest in the
market. Self-interest and the market are good for producing

private goods like pizzas, toilet paper, and clothing, which for
the most part, are consumed by one and only one person. Self-
interest is not so clearly good for producing what is known as
"public" goods such as pollution free environments and a lack
of viral threats. These are goods where we do not compete for
the benefits of their use and equilibrium prices are hard to come
by. All of us have an interest in the maintenance of these
goods, though my breathing fresh air does not interfere with you
doing so as well. Without the competing demands the profit or
self-interest motive does not get much conceptual purchase for
producing these public goods. In a related point, some private
goods, like my clean home next to a dirty factory, are not easily
sorted out by the bare bones self-interest of the market. The
waste produced by the factory is external to the price of the
factories goods in the market, unless some other principles,
such as moral or legal, force the factory to “internalize” these
external costs. The means of "producing" or protecting public
goods and internalizing such costs can be:
1)addressed by publicly owned enterprises, (not in this life-
time)
2)regulate to internalize the cost to business (read: tax or
penalize), or
3)socially regulate or sanction and encourage a structure of
values to accommodate production, encourage something other
than self-interest.
Sen also argues that the overall success of a business firm is
itself a public good, one which cannot be encouraged within a
simple version of mere self-interest.

3)Distribution Sen addresses distribution in the economist’s
sense, where we are thinking about how goods are distributed
throughout all levels of a society and whether or not such a
distribution would be just, though he talks about distributional
equity. He is not talking about how someone like perhaps cola
companies distribute and vend their products, but rather, who
holds the goods a society produces and how it is distributed
differently to different classes within the society. When
economists talk about distribution, they are necessarily talking
about the intersection of ethics, in this case political theory, and
economics.
This is the case in the simplest sense of maximizing wealth or
GDP, since the distribution in a scheme, or what groups will
receive larger portions of the pie and which will receive smaller
portions, will affect the overall size of the distributive pie. If
you want to grow the GDP, you should decrease the largest tax
bracket. So even those people only instrumentally interested in
distributive shares will have to engage something other than
mere self-interest and engage in some normative terminology.
This is also the case if you are interested in a deeper sense of
distributive justice, or what some might call political
economics, where economists and others are arguing about
distributive shares and who should get what size piece or
portion of the pie. That question would not be available to an
economist who dealt with only self-interest.
Good distribution makes economic sense if by economic sense
you mean achieving a good distribution of stuff in a society.
But, if you mean "does a good distribution contribute to my
bottom line" or some other self-interested formulation, then
you've formulated some instrumental conception of distribution
where you only care about distribution insofar as it effects your
profits. Now, even this so-called enlightened self-interest

regarding distribution will still call for you to treat not only
your workers well, but also your actual and potential customers
with respect by fostering a just system of distribution. Either
way, the sense in which business ethics is involved should be
obvious.
C) Let's give Sen what he wants and agree that Smith has been
misinterpreted and business ethics makes economic sense. Of
course, he has drawn a distinction between 1) the science of
economics and how business ethics makes sense in that
discipline and what you may have thought he was going to talk
about, namely 2) how the profit motive, or self-interest, is best
served by ethical behavior. This point is addressed in A) above
when we note the conceptual necessity of ethics to continued
economic transactions. Sen’s thesis is that something other
than mere self-interest is required or necessary for the
economist to do her work – ethics, moral principles, and other
regarding behavior is also necessary to make sense of the
academic discipline of economics.
In Section 5, Sen also talks a little about 2) the profit motive, or
a company’s values and how they can affect the bottom line.
This might be the interpretation of the title you were expecting
Sen to concentrate upon for the majority of the article – how
does ethical behavior affect profits? He intimates that doing
good things, like treating one’s employees with respect and
rewarding or properly compensating good work, can lead to
profits and rewards in the markets. In other words, being a good
person or acting in the right manner can increase one’s profits –
good business is good business. Sometimes a good reputation
in the market can allow you to increase your profits. That much
seems reasonable. Sen also says that such behaviors should also
lead us to a better society, economically and otherwise.
This is a very interesting position, one we will revisit in future
readings. Note well what Sen is NOT saying. Sen does not say

that profits will be maximized by morally good and principled
behavior with your customers, employees, etc. Sen is making
the qualified and more reasonable claims. On one hand, a better
society wherein all parties treat each other with dignity, respect,
and fairness is a good or a good thing in itself. This is an
axiological claim not just about profits, but about the virtues of
a business and a society comprised of such businesses and
individuals. On the other hand, he is asserting, quite
reasonably, that a reputation for having and living by certain
values and principles in business can be an avenue to profits.
Some firms are able to trade on their, morally speaking, good
names or brand image – Ben & Jerry’s, The Body Shop,
Benetton, green or ethical investment funds. These firms can
compete in the market environment where not all parties play by
the rules or have the same values. Again, Sen does not say “Be
good or do the right thing in business because such behavior
will benefit you in the long run.” People who read this article
and even those who write other works are tempted to advocate
the position of “Profit Maximization through Proper Moral
Principles.” Do it because it’s right and because it makes more
money. Is that really plausible? Does proper behavior put you
at the top of the profits curve?
But what if it wasn't the case that “enlightened” self-interest
required ethical behavior? In other words, what do you do when
you can get away with it and make more money by violating? Is
it possible to make more money by doing the wrong thing?
Better still, what ought you do when you can get away with it?
What if profits can be maximized by shaving a point here or
fudging a number there? And nobody's looking? In other words,
what should you do when maximizing profits or economic gain
conflicts with only ethical or moral constraint?
IV. Plato – Why Should I be Moral?
Introduction This dialogue is attempting, in this selection, to
explore some possible answers to that question. Is it better in

every way to be just than to be unjust? Socrates says yes! So if
justice is good, then there are at least three options: Justice is 1)
good for its own sake, like joy, 2) good for its own sake but
also for the consequences from it, such as health and sight, or 3)
good only as the means to some other ends, like going to the
dentist or physical training. Socrates says that justice and
rightness is 2) good for its own sake and good for what comes
from it as well. The wearisome class says justice is like
dentistry – unpleasant, but necessary for other goods. Glaucon
is prepared to defend injustice or the unjust way of life as better
than the just. But, Glaucon realizes that others may be orienting
their life this way as well, so a cagey player will take the moral
gambit and see most of what morality requires as a series of
commands towards rational self-interest. The smart player
interested in having a good life will compromise or check the
quest for self-enrichment and play by mutually agreed upon and
mutually beneficial rules, like refraining from lying, cheating,
stealing, etc.
A) Glaucon on the Nature of Justice. To do wrong is naturally
good, and to be wronged is bad. Stealing gets you goods without
paying the price, and to be victimized by the thief is bad since
you lose your stuff! But in the land of thieves, your stuff will
eventually and often be stolen. Glaucon asserts that the badness
of getting ripped off is much worse than the good you derive
from occasionally stealing. That's too high a price to pay for the
pleasure of taking from others – it's also too risky. So the wise
person enters into a compact or contract with other people to
refrain from stealing willy-nilly. Justice is this mean between
two extremes: splitting down the middle the best, taking freely
without paying, and the worst, being a victim of a thief.
B) Glaucon on the (IN)Voluntariness of Justice. People only
follow justice, the ones who do actually end up being just,
because they are too weak or too unskilled at injustice. They
lack the power to do wrong. But the real man, the powerful

man, would be crazy to do that since he can steal at will and
defend himself. Even the justice folks follow the commands of
so called morality against their will, since if they could lie,
cheat, and steal with impunity, they would! If they had the ring
of Gyges, they all, and we all, would act as Gyges did. Even the
so-called just man would behave badly if you gave him the ring,
because the only thing holding him back from lying, cheating,
and stealing is the possibility of being caught and the
possibility that others will do the same to him. If you had two
rings and gave one to the just man and another to the unjust
man, they would act in identical ways – robbin, killin, and
stealin!
C) Gloucon on the Life of the Unjust Man. Put the most unjust
man next to the most just man and make a comparison. By that
he makes clear he means somebody really good at injustice, or
someone that approaches the Gyges limit of without reprisals.
Maybe he doesn't hit every opportunity to cheat or steal, but he
certainly recognizes the times he can do it and get away with it,
and takes those opportunities and his reputation is unsullied!
Compare him to the perfectly just man, and that's also a
perfectly just man that is the obverse of Gyges – nobody knows
he is just so he gets no reputational benefits from that justice.
And worse, he goes to his grave knowing that the rest of the
world thinks he's a lying, thieving, murdering bastard. In other
words, the just man endures much if not all of the punishment,
and none of the ill-gotten rewards of injustice, save the actual
justice itself. Now, which one is happier? The first guy who
everybody thinks is a real standup prince of a guy, but is
actually enjoying all the trappings and rewards of the life of
Tony Soprano, or the second guy who everybody thinks is the
biggest scumbag around, but is actually a very principled and
just fellow? Who has a more pleasant life? Who has a better life
might be a better question. For Glaucon, justice is a means to an
end, not an end in itself. The end is a good, perhaps peaceful,
life. However, if you can get a good and peaceful life in other

ways, then it is so much the worse for morality and ethics.
D) The Socratic Reply. Justice for cities and states is to have all
of the parts of the city functioning well. Justice for a person is
also to have all his constituent parts functioning well – the soul
(I think we can say "will" or "theory of mind" here and nothing
is lost or changed). The soul has to be functioning well to say
you are living well and having a good life. The problem with
our rapscallion is that his mind and soul are out of natural well
functioning alignment – he's got mental problems! He is feeding
the beastly part of himself, but not the better more human parts
(p. 66). Ask him if our traditions of greater things, even the
rapscallion's ability to pilfer, didn't they come from us pushing
down our more animal like qualities of the war of all against
all, "subordinate the beastlike parts of our nature to the
human…can it benefit anyone to acquire gold unjustly if when
he takes the gold he enslaves the best part of himself to the
most vicious (animal) part?" Right actions have the same aims
that laws do in cities, it allows us to live a better life. And even
Glaucon agrees with that as the point of law; it got started to
allow us to live a life without fear of others and without having
to nail all of your belongings to the floor! The law keeps us in
check. To maneuver around Glaucon, Socrates analogizes from
laws of man to the laws of virtue and the soul. It seems like an
outright denial of the point raised by Glaucon, that the
rapscallion is better off than his counterpart. At best Socrates
has an assertion that the virtuous character gained by acting
appropriately is more worthy than all of the riches of this world.
But I'm not sure Plato can say that given what we know about
his view on the priority of Character to Conduct. I think he's
saying that what's wrong with Glaucon's powerful man as
rapscallion is that his actions are either decreasing his virtue
and his better nature, or they are not allowing him to express
those better natures. Either that, or Socrates is merely asserting
that it's better to be Socrates unsatisfied than a pig satisfied.
But does this seem fair? Does Glaucon's point still hold if we

restrict the analysis to just bank accounts? How about bank
accounts and friends? How about bank accounts, friends, and
love? The more we pack in to what might be missing in the
rapscallion's life, the more we want to side with Socrates. But
again, is that fair or are we changing Glaucon's hypothetical?
Questions to Answer
1. What sources of moral conflict does Holmes consider?
2. What does the title of Sen's article mean? Does he intend to
show that acting according to moral principles while doing
business will make or return profits – that business ethics makes
economic sense because good people make more money than
bad people? Or, does Smith intend to show something more
complicated about the discipline of economics and the necessity
of moral terms and concepts to that discipline.
3. Does behaving properly in business maximize profits?
4. What is the Ring of Gyges in Plato's Republic and how does
it relate to the question above?
PAGE
3
Business Ethics
Lecture 1
I- Introduction
A) Is Business Ethics is an oxymoron? Perhaps the saying
merely refers to how people tend to forget how they should
behave when money and wealth are involved, or simply that
people tend toignore moral constraints in business. Or, it might
mean something deeper, and more sinister, as some people
argue moral principles don’t apply in business, or that business
relationships are not subject to moral constraints. This position

is also known as the “separation thesis.” To begin to formulate
an answer to that question, consider the following:
1) Who are Sherron Watkins, Sam Waksal, Richard Grasso or
Bernie Madoff? Do you own an Explorer? Ever heard of Vioxx
or Merck?
2) What kind of problem do these people have on their hands?
Put differently, from what different perspectives can we
evaluate these situations and what should we take as evidence in
these evaluations? If you were in their shoes, to whom would
you turn for advice? In what way, if any, would you try to
justify your decisions and your actions?
3) Are the people involved in the issues in #1 good people or
bad people and why? What would make a person a good or
virtuous person?
4) Perhaps a better question to ask is what harmful
consequences followed these actions and what good would have
resulted from other alternative actions.
5) Finally, maybe is there something about the actions
themselves that should be referenced when talking about right
and wrong, quite apart from the type of person who would tend
to perform an action of one type, and quite apart from the good
or bad consequences that result from an action. Such actions
violate some moral principles, such as a prohibition on using
other people as a mere means to your own ends or projects.
Defrauding or stealing from the shareholders is wrong because
it uses the shareholders as a mere means to enrich the thief.
B) The point of the class is to begin to understand the
relationship between morality and business, that is, the
requirements morality places on business. What actions are
morally acceptable when selling iPhones, buying oil, selling

your services to a boss, or when you have other people working
for you? The method here will be to develop a way of analyzing
some interesting questions and developing a decision procedure
to help us answer these questions. We will use both the standard
case method employed in many business schools as well as a
more philosophical approach. We are interested in moral
justifications, for some, the only kind of justification that
matters, or at least the ultimate form of justification. First and
foremost, this is a class in ethics, a subject which, whether it's
taught in business schools, religious organizations and orders,
philosophy departments, day care facilities, or by your mom, is
about no less a subject than how we ought to live. And that
seems like a subject worth studying and discussing at some
length.
C) Roll/Admin
III - Moral Philosophy and The Philosophical Method
A) The word "Philosophy" comes to us from the ancient Greek
and means, literally, the "love of wisdom." "Philo" - love and
"sophos" - wisdom. It is somewhat unfortunate that strictly
speaking, wisdom cannot be taught
To explain, the Greeks distinguished between wisdom and
knowledge. When you watch CNN, attend a lecture on particle
physics, or even look at a map, you gain knowledge. You know
something more about the world and the facts within it than you
did before. You gain knowledge in the form of what
philosophers call justified, true, beliefs. Knowledge can be
taught since it is based on good reasons to believe something,
the justified part of a justified, true, belief. For example, I
know that DC is 112 miles from Charlottesville and my
justification can be either that I've driven the 112 miles to DC
or I've looked on a map.
The problem here is that knowledge does not entail wisdom.
Knowledge, for the Greeks, is a necessary, but not a sufficient

condition for wisdom. Wisdom is comprised of understanding,
good judgment, and the capacity to guide one's actions and
conduct well. So, many otherwise well educated people can be
very knowledgeable about anything from how to run a multi-
national corporation to the intricacies of classical concert piano,
but they can lack wisdom. In other words, both concert pianists
and CEOs can fail to act wisely. Wisdom can be understood as
knowledge plus the capacity for practical application, or simply
good judgment. For the Greeks ethics, or moral philosophy, is
the love of the pursuit of wisdom with regard to making moral
choices.
If wisdom, including ethics and moral philosophy, cannot be
taught then why take a class in business ethics or any ethics
class? I'm here to teach business ethics, but I'm not going to be
teaching strategy, organizational management, or debt
investment instruments. And, according to the Greeks, I can't
teach you ethics so what can I do? The answer to the paradox is
that we can read what people, including philosophers, business
persons, economists and others, have written about ethical
matters in business, analyze these works, and we can discuss
what we should learn from the reading and from each other.
The best I can hope for is that I do something which encourages
you to develop a love of both knowledge and wisdom about the
matters we will be exploring in the class.
B) The Contemporary Philosophical Method
So far, we've been talking about philosophy as the Greeks did
it. As you would hope, if not expect, philosophy has come a
long way since ancient Greece. Contemporary academic
philosophy, the kind done here at the University and in other
philosophy departments in the Anglo-American tradition, is a
vast discipline which encompasses many areas of thought. The
unifying characteristic of each area is the method, which could
be put as follows:" the systematic examination, through the

application of rational, critical thinking, of the general nature of
reality", or "the ordered and systematic exploration and scrutiny
of all of our beliefs and their justifications." Philosophers, of
course, have written whole books on just what philosophy is,
and they often disagree. There is general agreement on one
thing: philosophy is something you not only read, but it is
something you do. It requires a specific kind of activity,
namely speaking and thinking aloud. To take a philosophy class
is to engage in the activity of doing philosophy through
rational, consistent thinking and discourse.
C) Philosophy and Its Sub-disciplines
i) Metaphysics - the study of ontology or theories about what
exists, causation, mind/body problems and other issues
ii) Epistemology - the study of theories of knowledge and
justification.
iii) Logic - valid formal and informal reasoning, truth value and
truth preservation in arguments
iv) Value Theory - ethics, political philosophy, and aesthetics.
Ethics falls under iv, though it is not entirely independent of the
other three sub-disciplines. Ethics is the section of value theory
which deals with both what is good and bad, and what is right
and wrong. Ethics deals with these issues from what we call the
"Moral Point of View." In ethics, there are two kinds of
propositions: 1) evaluative propositions, statements, or
judgments and 2) prescriptive propositions, statements or
judgments. These two kinds of propositions fall under the
broader rubric of normative statements. Ethics can be said to be
an enterprise in normative theory.
Notice that not all normative statements are ethical. For

example, "A Ferrari is a good car" is both evaluative and
normative. It expresses an evaluation of the quality of the car
made by Ferrari, but it does not express an ethical proposition.
"One ought to drive a Ferrari" is a prescriptive statement, and it
is also a normative statement, but it is not an ethical statement.
Both statements express propositions from an aesthetic point of
view.
What makes a statement an ethical statement is somewhat
complicated and it seems best to start with clear cases like
"unnecessary pain is bad" and "one ought not kill human babies
just for the fun of it." The first is morally evaluative and the
second is morally prescriptive. One necessary condition for
being an ethical statement is that the statement be issued from
what is known as the moral point of view. Unlike the above
aesthetic judgments directing one to drive a Ferrari, one cannot
opt out, deny the truth of the statements, or resist the
prescription and remain rationally consistent when directed to
refrain from the recreational killing of human babies. Put
differently, the statements about Ferraris only direct or
prescribe hypothetically, that is, the prescriptive statement
would only direct someone who cares about the aesthetics of
cars. Ethical statements are thought to be prescriptive and
evaluative for all moral agents. A person can fail to follow
these prescriptions or agree with the evaluative judgments, but
to do so would be morally wrong.
D) Ethics and Its Sub-Divisions
1) Meta-ethics - Meta-ethics evolved around the turn of the 20th
century when philosophers became very interested in the use of
language and the relation between language and the world. At
the time, they were very concerned with how language and the
words we use could be said to hook-up or correspond to the
world around us. Philosophers who work in meta-ethics debate

how we might know not only what "good" means and how it is
used in our language, but also if "good" refers to anything
actually in the world. For example, I may say "Sally is a good
person." Meta-ethics would compare that statement to others
like "Sally has shoes on her feet" and ask if both statements
have parallel truth conditions and whether or not goodness can
be said to be in the world in the way that shoes can be said to be
in the world.
2) Normative Ethics - This field of ethics engages in deriving
and formulating principles of right and wrong actions, as well
as good and bad events or actions or things. Normative ethics
also develops and explores solid justifications for these
principles.
3) Applied Ethics - At last we come to the field of philosophy
where business ethics resides. Applied ethics concerns itself
with rightness and wrongness, as well as goodness and badness
in actual applied cases. Applied ethics includes not only
business ethics, but also bio or medical ethics, as well as a large
range of professional ethics. The important thing to remember
is that at even the applied level, some stance on all of the above
areas of philosophy must be taken. For example, one cannot
avoid a stance on meta-ethics and engage in ethical debate.
You must at least think ethical terms have some meaning, even
if you think they are empty place holders or some such non-
sense. In other words, you operate with a meta-ethical theory
when you use ethical terms, whether you've considered you
position on the meaning of ethical terms or you have not.
E) Normative, Especially Ethical, Thinking
Thinking in normative terms might be new to some of you. In
particular, thinking in normative terms and evaluating not only

your ethical beliefs, but also the justifications or reasons for
your ethical beliefs may be difficult at first. This is sometimes
called "feeling the ground move beneath you." Where once you
felt steady and sure in your thinking, you might find yourself on
shaky ground and unsure of what to do. Remember, changing
your mind in the face of new evidence is not a weakness, but
stubbornly redrawing and restating the same position is
As we have seen, ethics deals with normative statements. Few
parts of the academy try to instruct you in this kind of thinking.
Most academic disciplines deal with descriptive statements and
understanding what it means to describe the world in a certain
way. These two kinds of statements are often juxtaposed, in
philosophy as well as in other disciplines:
1) "Kenneth was the CEO of Enron" is obviously descriptive.
2) "Kenneth did a poor job as CEO" is normative and
evaluative.
3) "Kenneth should have resigned his post and donated his
wealth to the shareholders before he died" is normative and
prescriptive.
As you can imagine, we will be concerned with building to
statements, or directives, like 3, though both 1 and 2 will be
helpful in formulating statements like 3.
AICPA Case Development Program
Case No. 93-11: RUN, Inc. ♦ 1

_____________________________________________________
_______________________________________
Copyright 2001 by the American Institute of Certified Public
Accountants (AICPA). Cases developed and
distributed under the AICPA Professor/Practitioner Case
Development Program are intended for use in higher
education for instructional purposes only, and are not for
application in practice. Permission is granted to
photocopy any case(s) for classroom teaching purposes only.
All other rights are reserved. The AICPA neither
approves nor endorses this case or any solution provided herein
or subsequently developed.
RUN, INC.: A CASE STUDY ON THE RESPONSIBILITIES
OF ACCOUNTANTS IN INDUSTRY*
(Year 2001 Update)
Prepared by the American Accounting Association Committee
on Liaison with the Securities and Exchange Commission
Committee Membership, 1992-1993.
Thomas R. Weirich, Chair, Central Michigan University
James C. Flagg, Texas A&M University
Marcia S. Niles, University of Idaho

Robert W. Rouse, College of Charleston
Robert J. Sack, University of Virginia, Darden School
Jack E. Wilkerson.- Jr. , Wake Forest University
Committee Membership, 1993-1994.
Robert J. Sack, Chair, University of Virginia, Darden School
Dan S. Dhaliwal, University of Arizona
Robert Eskew, Purdue University, Krannert School
Jack Krogstad, Creighton University
Marcia S. Niles, University of Idaho
Thomas R. Weirich, Central Michigan University
With the assistance of practitioners in industry and public
practice:
From the industry side,
Mr. Lawrence D. Handler, member of the AICPA Professional
Issues Subcommittee of the Members in Industry Executive
Committee
and active in the development of the new ethics interpretations
cited in the Teaching Notes for this case.
From the public practice side,
Mr. Lynn Turner, partner in the Denver office

of Coopers & Lybrand and former SEC practice fellow.
____________________________
*This case was prepared by the American Accounting
Association's Committee on Liaison with the
Securities and Exchange Commission, to provide a basis for
class discussion. The case is based on issues
raised in SEC enforcement actions, and on general business
experience, but the facts have been disguised.
The work of preparing the 2001 financial statements for RUN,
Inc. was largely complete and the
company's controller, Martin Field, recognized that this final
reading of the draft statements was
a critical time. Once the statements were released to the printer
and distribution was begun there
would be no chance for second thoughts. He had been on the job
at RUN for only five months,
but they had been the most tumultuous months of his career.
Now all of that tumult was coming
down to this single February afternoon. He was proud of the
work he had done in cleaning up the
company's balance sheet, and he had satisfied himself that there
would be no more unpleasant
surprises in that area. He had also pretty well convinced himself
that the compromise that had

been developed by the CEO, for the presentation of the income
statement, was acceptable - but
compromises had always made him uncomfortable. It was soon
going to be time to accept that
compromise or do something else, although what the something
else might be was not really
clear.
THE COMPANY
RUN, Inc. manufactured and marketed a variety of products and
parts for automobiles, from
starters, alternators and brakes to complete replacement
interiors. The company had originally
been known as Rebuilt and Used Auto Parts, Inc. but the
acronym RUN had been adopted as the
company's name when the product line was expanded to include
new replacement parts and other
auto accessories. Sales had been good during the early 1980's as
interest rates and credit
problems discouraged people from buying new cars and
encouraged them to repair and
rehabilitate their existing cars. The strong economy of the
1990’s had a perverse impact on the
company, as people began to worry less about preserving their
older cars; and, intense foreign
competition magnified the impact of what would otherwise have
been a normal cyclical
downturn. When the company went public in the 1980’s (on
NASDAQ) the stock had done
reasonably well. However, the market’s recent focus on high
tech issues had left the company’s
share price in the dust. (Earnings data and stock price activity
for the period 1997-01 is detailed
in Exhibit 1.)
The company sold its products primarily to independent and

chain auto parts retailers in
the Southeast. Most of the products in the company’s line were
either rebuilt from parts that had
been scrapped or were manufactured by RUN to meet original
equipment specifications. The
Company also sold parts and accessories manufactured by
offshore suppliers. There were several
other companies in the field about the same size as RUN and
there was very little to distinguish
one firm's rebuilt starter (for example) from another. RUN
stressed its distribution system and its
prompt delivery as its competitive advantage. The company's
primary facilities were in
Montgomery, Alabama, but 12 warehouses had been established
at strategic locations throughout
the Southeast.
RUN's management team included the Chairman (and founder)
Harry White; the Chief
Executive Officer, John Harvey; the Sales VP, Joanne Jones; the
Operations VP, Tex Armor; and
the Secretary/Treasurer (and Harry's Wife), Mary White. All of
those people were members of
the Board of Directors, together with a partner in the company's
law firm, and a vice-president
from the company's bank. Both of those men were long time
friends of the Whites, and had been
associated with the company since its earliest days. The
management team was a close-knit
group and met frequently for working lunches. Because of the
strength of that working
relationship, and the strength of the White's personalities, the
Board was not significant to the

structure of the firm. Board meetings tended to be formalities,
where the results of the previous
period and plans for the next period were reviewed and
approved.
The company's accounting functions were Mary White's
responsibility but the day-to-day
accounting activities had been the primary responsibility of
Lester Foote, until his retirement in
the summer of 2001. Martin Field assumed those day-to-day
responsibilities in October, 2001
with the title of Controller. He had taken the job with the
understanding that he would become
Chief Financial Officer (CFO) and Treasurer in two years when
the Whites were planning to step
out of active involvement in the firm.
MARTIN FIELD
Martin Field was a very good accountant and he enjoyed his
work. He had graduated from a
good public university with straight A's in Accounting. His
other grades had not been quite up to
that level, but he was still able to land a job with the Atlanta
office of a major CPA firm as a
junior auditor. He easily passed the CPA exam on the first try
and moved through the ranks of
his firm. As he moved up in the firm he found that he was
measured against different and more
intangible standards: he was expected to resolve accounting
problems with client managements
at higher and higher levels, and he was asked to look
aggressively for opportunities where the
firm's tax and consulting services might be brought to bear on

clients' business problems. He
didn't really like the new marketing-type responsibility he was
being asked to undertake and,
because he was uncomfortable in that role, he did not do it very
well. When one of the firm's
partners pointed him to an assistant controller's job with one of
Atlanta's most prestigious
companies, Martin jumped at the chance.
In that new job, Martin was responsible for the preparation of
the company's annual and
quarterly filings with the SEC, and was the company's primary
liaison with the external auditors.
It was easy for him to learn the annual reporting process from
the other side of the desk and after
several years he was bored. He decided that he wanted to get
into the financing aspect of
business and to move toward a CFO position.
Martin first heard about RUN when a headhunter, looking for a
replacement for Lester
Foote, called in early 2001. After some initial interviews, the
company expressed real interest in
Martin and he was sorely tempted. The company's suggestion,
that he start as controller and then
in two years move up to CFO, seemed to be exactly what he had
in mind. Still, he wavered
because he was uncomfortable with what he took to be a very
unstructured management
environment. He reasoned that that nonchalant environment was
partly a reflection of the
family-style management the company had experienced in its
early years, and partly the
shirtsleeve nature of the industry.
John Harvey assured him that the company's management style
was evolving and would
continue to become more business-like as the Whites phased out
into retirement and played a

decreasing role in the firm. Martin understood that the industry
would always be a little rough
and tumble, but those concerns were somewhat offset by the
company's very attractive salary
offer. He was finally convinced to take the job when the Whites
offered him a five-year option to
buy 5,000 shares of stock in the firm at $1.50 a share.
Earlier, when Martin had first left public practice, he had
carefully weighed the cost of
maintaining his membership in the American Institute of
Certified Public Accountants (AICPA)
and his state CPA society. Ultimately he decided to retain those
memberships because he was
proud of his CPA status, and because those memberships gave
him a network of professional
associates and brought him journal subscriptions. He also
complied with the Continuing
Professional Education requirements imposed by his state
society and the AICPA, because he
felt it was important that he keep his skills up to date.
He had joined the Institute of Management Accountants when
he first took the assistant
controller's job and he found their publications to be of interest
as well. When he decided to take
the job with RUN, he checked into the membership
requirements for the Financial Executives
International, but found that they would not consider him until
he achieved the CFO position.

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