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Ethical Theory and Business

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Good Governance and Social Responsibility

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Ethical Theory and Business

  1. 1. Good Governance and Social Responsibility LESSON 2: ETHICAL THEORY AND BUSINESS RESEARCHED AND PREPARED BY: EDEN U. ALBERTO, MBA, LLB, MPA PROFESSOR
  2. 2. Learning Objectives  Understand the basic categories and concepts of ethical theory  Identify the errors of ethical relativism  Explain the ethical theory of utilitarianism  Explain how utilitarian ethics provides support for market economics and business policy;  Clarify several major challenges to utilitarian ethics  Explain the rights and duty of ethics of deontology
  3. 3. Question to Ponder?  Have you ever been in a situation where you disagreed with somebody else (friend, parent, teacher) about what was wrong or right?  Who was “right” in that situation? You or the other person?
  4. 4. What is Ethical Relativism?  Ethical relativism – holds that ethical values and judgments are ultimately dependent upon, or relative to, one’s culture, society, or personal feelings.  Ethical Relativism is the belief that there are no universal standards for what is right and wrong; something that may be considered “right” in one society could be considered “wrong” in another.
  5. 5. Utilitarianism  the ethical doctrine that the moral worth of an action is solely determined by its contribution to overall utility, defined as happiness or pleasure (versus suffering or pain),
  6. 6. Modern Ethical Theory: Utilitarian Ethics ROOTS OF UTILITARIANISM Philosophers Years Thomas Hobbes 1588-1697 David Home 1711-1776 Adam Smith 1723-1790~ Classic Formulation Jeremy Bentham 1748-1832 John Stuart Mill 1806
  7. 7. Utilitarianism: Jeremy Bentham  Greatest Happiness Principle: • Intensity: How strong is the pleasure? • Duration: How long will the pleasure last? • Certainty or Uncertainty: How likely or unlikely is it that the pleasure will occur? • Propinquity or Remoteness: How soon will the pleasure occur? • Fecundity: The probability that the action will be followed by sensations of the same kind. • Purity: The probability it will be followed by sensations of the opposite kind. • Extent: How many people will be affected?
  8. 8. Utilitarianism: Jeremy Bentham  Begin with any one person of those whose interests seem most immediately to be affected by it and take an account:  Of the value of each distinguishable pleasure which appears to be produced by it in the first instance.  Of the value of each pain which appears to be produced by it in the first instance.  Of the value of each pleasure which appears to be produced by it after the first. This constitutes the fecundity of the first pleasure and the impurity of the first pain.  Of the value of each pain which appears to be produced by it after the first. This constitutes the fecundity of the first pain, and the impurity of the first pleasure.
  9. 9. Utilitarianism: Jeremy Bentham  Sum up all the values of all the pleasures on the one side, and those of all the pains on the other. The balance, if it be on the side of pleasure, will give the good tendency of the act upon the whole, with respect to the interests of that individual person; if on the side of pain, the bad tendency of it upon the whole.  Take an account of the number of persons whose interests appear to be concerned; and repeat the above process with respect to each. Sum up the numbers expressive of the degrees of good tendency, which the act has, with respect to each individual, in regard to whom the tendency of it is good upon the whole. Do this again with respect to each individual, in regard to whom the tendency of it is bad upon the whole. Take the balance which if on the side of pleasure, will give the general good tendency of the act, with respect to the total number or community of individuals concerned; if on the side of pain, the general evil tendency, with respect to the same community.
  10. 10. Utilitarianism: Jeremy Bentham  Practical example:  Imagine you are a doctor driving to a patient, a young mother who is about to give birth. It looks like she will need a Caesarian section. It is late at night and you come across a car accident on the country road you are traveling on. Two cars are involved in the accident and both drivers are unconscious and have visible injuries. One of the men is the father of the child you are going to deliver, and the other man is very old. You do not know the extent of their injuries but in your opinion, without immediate medical help, one or both may die. You as a Utilitarian are now faced with one of three possible solutions:
  11. 11. Utilitarianism: Jeremy Bentham You help the young mother who's about to give birth. You help the young woman's husband. You help the old man.  The outcome of The Greatest Happiness Calculus would be: Attending to the mother first is your primary concern as the doctor. The death of both mother and child is almost a certainty if you do not act now, whereas the death of the men is uncertain. Furthermore, the pain of the mother is clearly greater than that of the men at this time. There is a greater richness and purity in saving the life of a young child who has, in all probability, a long happy life ahead. Therefore the extent and duration of the utility created by these two people is a clear likelihood.
  12. 12. Utilitarianism: Jeremy Bentham Attending to the young husband is the next priority. The pleasures of a new family—its intensity, duration, extent, richness, and purity—are all clear probabilities. If, as the doctor, you attend him first his wife and child would in all probability die. The man would then experience pain. The pain experienced by the widowed husband is likely to outstrip any pleasure to be gained from continued life without his loved ones. Attending to the old man is the last priority. The duration and certainty of his future pleasure are questionable owing to his age—he has all but lived his life. This is sometimes known as the 'good innings' argument, according to which the older you are the less claim you have to life
  13. 13. Utilitarianism: John Stuart Mill  On liberty: • each individual has the right to act as he wants, so long as these actions do not harm others • If the action is self-regarding, that is, if it only directly affects the person undertaking the action, then society has no right to intervene  Free Speech: • Society must allow people to air false opinions • individuals are more likely to abandon erroneous beliefs if they are engaged in an open exchange of ideas • Debate keeps beliefs from declining into mere dogma
  14. 14. Utilitarianism: John Stuart Mill Quote: “The sole end for which mankind are warranted, individually or collectively, in interfering with the liberty of action of any of their number, is self-protection. That the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not sufficient warrant. He cannot rightfully be compelled to do or forbear because it will be better for him to do so, because it will make him happier, because, in the opinion of others, to do so would be wise, or even right...The only part of the conduct of anyone, for which he is amenable to society, is that which concerns others. In the part which merely concerns himself, his independence is, of right, absolute. Over himself, over his own body and mind, the individual is sovereign.”
  15. 15. Utilitarianism: John Stuart Mill  The maximization of happiness of pleasure or happiness is the moral end of society  Quality, not quantity (as in Bentham’s theory) of pleasure matters more  Humans collectively develop rules to aid them in achieving happiness  Each person wants to appropriate goods to satisfy their own material needs  These goods are scarce  There will be competition over these goods (others will covet what each person has)
  16. 16. Utilitarianism: John Stuart Mill  What one really wants is not a maximization of goods but a satisfactory level of goods, along with security that these goods will not be taken away  Social norms for the distribution of these goods may be can be established  Rules for the enforcement of these norms may be agreed upon  These rules result in the maximization of the general well-being
  17. 17. Things to Ponder: Utilitarianism  Tells us that we can determine the ethical significance of any action by looking to the consequences of the act.  Is typically, identified with the policy of “maximizing the overall good” or on a on a slightly different version of producing “the greatest good for the greatest number” ~
  18. 18. Things to Ponder: Utilitarianism  It is often times perceive to be a Consequentialist ethics.  Good and bad act are determined by their consequences.  In this way, utilitarian's tend to be pragmatic thinkers. No act is ever right or wrong in all cases in every situation.  It will all depend on consequences
  19. 19. Objections to Ethical Relativism  However, most ethicists (people who study ethics) do not believe in this theory.  There are a variety of reasons for why they do not fully agree with ethical relativism.
  20. 20. Objections Continued  Some argue that the principles of ethics remains the same across the world, even if people express it in different ways.  For instance, in a culture where people were killed when they became old (so that they would enter the afterlife stronger), they argue that the reason for doing this was a universal reason: the need to take care of one’s parents.
  21. 21. Objections Continued  Another argument that the ethicists have is that while some beliefs are based within a culture, some are universal.  This is especially true for practices that are forbidden or regulated by international laws (slavery, torture).
  22. 22. Objections Continued  In addition, ethical relativism has come under fire because it implies that people must do whatever their society tells them to do.  This is obviously not true in many cases, and if people did not challenge their societies’ beliefs, many things would have never changed.
  23. 23. Objections Continued  Even if we reject a lot of what ethical relativism says, it is still important because it reminds us that different societies and different cultures have different beliefs on issues of what is wrong and right.
  24. 24. Challenges to Utilitarianism 1. Problems raised from within a utilitarian perspective that involve finding a defensible version of utilitarianism; 2. Problems raised from outside that challenge the plausibility of the entire utilitarian project.
  25. 25. Challenges debated WITHIN utilitarian Perspective 1st: all utilitarian's must find a defensible way to measure happiness.  Phrases like “maximize the over good” and the “greatest good for the greatest number” require some form of measurement and compassion.
  26. 26. Solutions  Jeremy Bentham went to great lengths to develop a “hedonistic calculus”  Hedonic calculus a method of working out the sum total of pleasure and pain produced by an act, and thus the total value of its consequences, also called the felicific calculus. When determining what action is right in a given situation, we should consider the pleasures and pains resulting from it, in respect of their intensity, duration, certainty, propinquity, fecundity (the chance that a pleasure s followed by other ones, a pain by further pains. Purity, (the chance that pleasure is followed by pains and vice versa) and extent (the number of person affected). The Penguin Dictionary http://www.utilitarianism.com/hedcalc.htm
  27. 27. Solutions  John Stuart Mill left it to the judgment of a majority of well informed, competent judges  Economists substitute such measures as the Gross National Product for determining overall happiness  But there simply is no consensus among utilitarian's on how to measure and determine the overall good.
  28. 28. Challenges debated WITHIN utilitarian Perspective 2nd : Problem with utilitarian perspective deals with differing versions of the good and the implication for human freedom.
  29. 29. Note:  There is a tension between objective accounts of the good and individual freedom  Free individuals not always choose to do what is good for them  If we know what is truly good, then individuals ought to act in certain ways (to maximize the good) even if they don’t want to.  Finding a balance between individuals freedom and the overall good is a challenge that confronts most version of utilitarianism
  30. 30. Challenges debated WITHIN utilitarian Perspective 3rd and Final Challenge the final challenge is raised not from within the utilitarianism perspective but goes directly to the core of utilitarianism.  The essence of utilitarianism is its consequentialism. Good and bad acts are judged by their consequences.  But this seems to deny one of the earliest and most fundamental ethical principles that many of us have learned “the ends don’t justify the means”
  31. 31. Utilitarianism and Business Policy  At its most basic, utilitarianism is a social philosophy, offering criteria by which the basic structure of social institutions, such as business and the economy, ought to be determined.
  32. 32. Utilitarianism and Business Policy 1st – one version of utilitarianism is that public policy holds that there are experts who can predict the outcome of various policies and carry out policies that will attain our ends.
  33. 33. Utilitarianism and Business Policy (cont’d)  This approach to public policy underlies one theory of the entire administrative and bureaucratic side of government
  34. 34. Utilitarianism and Business Policy (cont’d) 2nd – a second influential version of utilitarian policy invokes the tradition of Adams Smith.  He claims that competitive markets are the best means for attaining utilitarian goals.
  35. 35. Utilitarianism and Business Policy: Conclusions  Policy experts at all levels are focused on results and on getting things done~  The utilitarian emphasis on measuring, comparing, and quantifying also enforces the view that policy makers should be neutral administrators~  The job of social policy is to help them attain these goals in an efficient manner possible. EFFICIENCY is simply another word for maximizing happiness.
  36. 36. Utilitarianism and Business Policy: Conclusions  Finally, like utilitarian’s policy experts are concerned with the well being of the whole community.  Their focus is on the collective or aggregate good policy makers take a broad social perspective.
  37. 37. Deontological Ethics  The word is derived from the Greek word, deon, meaning duty. Plato suggests a duty to be just and a duty to obey laws.  The concept of acting out of duty, goes back at least to the ancient Hebrews and relates to Divine Command Theory.
  38. 38. Divine Command Theory  is the idea that we have a duty to obey God, and therefore a duty to do or not do whatever God has commanded us to do or not do.  Divine Command Theory is a moral theory, and moral theology, but, strictly speaking, it is not normative moral philosophy. WHY NOT?
  39. 39. Divine Command Theory  Divine Command Theory is not normative moral philosophy, if philosophy is defined as the systematic inquiry into the nature of things (such as norms), based on logical reasoning or rationality.  Divine Command Theory has been variously categorized as moral prescriptivism, as moral theology, and as deontological ethics.
  40. 40. Duty  A duty is something one is required to do. It is an obligation, a responsibility. We may have a variety of duties to others:  employers and employees  parents and children  citizens and government officials  God (?) WHAT ARE SOME OF YOUR DUTIES?
  41. 41. Duty: Kinds Duties may be of different kinds:  positive and negative duties  duties to self and duties to others  direct duties and indirect duties WHAT ARE SOME OF YOUR DUTIES?
  42. 42. Positive and Negative Duties
  43. 43. Duties to Self and Duties to Others
  44. 44. Direct Duties and Indirect Duties
  45. 45. What are my duties, according to reason?  A duty to preserve reason.  A duty to preserve truth. This duty is necessary to preserve reason.  A duty to preserve life. This duty is necessary to preserve my reason.  A duty to preserve freedom. This duty is necessary to preserve reason and the inquiry after truth.
  46. 46. Deontological Ethics :IMPERATIVES An imperative is a command to act. It is prescriptive. There are two kinds of imperatives: 1. HYPOTHETICAL imperatives 2. CATEGORICAL imperatives SO, WHAT IS A HYPOTHETICAL IMPERATIVE?
  47. 47. Hypothetical Imperatives  Are commands that are not absolute, but conditional, and premised on one’s desires.  The form of a hypothetical imperative is: “If you want Y, you ought to X.” (Y = goal/consequence/end; X = means)  An example of a hypothetical imperative is: “If you want to pass this test, you ought to study.”
  48. 48. Categorical Imperatives  Are absolute and unconditional moral commands.  The form of a categorical imperative is: “You ought to X.” (X = END-IN-ITSELF, without regards to MEANS or other ENDS)  An example of a categorical imperative is: “You ought to study [because you are a student].”
  49. 49. Categorical Imperative (1) (The Principle of Autonomy) “Act in regard to all persons in ways that treat them as ends in themselves and never simply as means to accomplish the ends of others.” THIS IS THE BASIS FOR THE ETHICS OF RESPECT AND A BASIS FOR THE ETHICS OF RIGHTS
  50. 50. The Categorical Imperative (2) (The Principle of Universality) “Act only from those personal rules that you can at the same time will to be universal moral laws.” THIS IS A BASIS FOR THE ETHICS OF RIGHTS WHAT ABOUT RIGHTS …AND DUTIES?
  51. 51. Rights and Duties If we act on the assumption that we have rights because of the principle of autonomy/respect, we must act on the assumption that others have rights as well, because of the principle of universality.
  52. 52. Rights and Duties If we have a duty to protect our rights, we have a duty to protect the rights of others as well.
  53. 53. Rights and Duties Rights correlate with duties.  If I have a right, others have the duties to respect that right.  If I have a right by virtue of my autonomy, then others have rights as well, and I have a duty to respect those rights.
  54. 54. Rights and Duties Rights correlate with duties.  If I have a right, others have the duties to respect that right.  If I have a right by virtue of my autonomy, then others have rights as well, and I have a duty to respect those rights.
  55. 55. Rights and Duties  A legitimate right is a claim that can limit the freedom of others.  Some duties are determined by special roles that we have, and so do not directly correlate with others’ rights.
  56. 56. Some Applications of Deontological Ethics:  Kantian ethics holds that animals exist for the sake of man because they are not autonomous, or rational. He holds that we do not have any direct ethical obligations toward animals, but may use them as a means to our end (e.g., for food).
  57. 57. Some Applications of Deontological Ethics:  However, Kant did write that we may have indirect duties toward animals. In his thinking, we ought to be kind to animals out of respect for humanity. For Kant, non-human animals had no rights.
  58. 58. Some Applications of Deontological Ethics:  Some modern deontological ethicists such as Tom Regan argue that we must consider the rights of nonhuman animals.  He argues that we should define autonomy in terms of the ability to initiate action to satisfy preferences. This definition includes some animals as well as humans.
  59. 59. Some Applications of Deontological Ethics:  In the matter of suicide, according to Kant, we all have a negative duty not to commit suicide, because such an act contradicts the concept of human rationality and freedom (autonomy). It is choosing not to choose, not to live.
  60. 60. Some Applications of Deontological Ethics:  In the matter of punishment, Kant despised the Utilitarians who said that punishment should be rehabilitative.  He believed that rehabilitation was using people as a means to an end, because we are trying to mold people into what we think they should be.
  61. 61. Reference  An Introduction to Business Ethics Joseph DesJardins (2009) McGraw-Hill To God Be the Glory

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