CONTEMPORARY REFLECTIONS ON BUSINESS ETHICS Issues in Business Ethics VOLUME 23 Series Editors Henk van Luijk, Emeritus Professor of Business Ethics Patricia Werhane, Darden Graduate School of Business and DePaul University, U.S.A. Editorial Board Brenda Almond, University of Hull, Hull, U.K. Antonio Argandoña, IESE, Barcelona, Spain William C. Frederick, University of Pittsburgh, Pittsburgh, PA, U.S.A. Georges Enderle, University of Notre Dame, Notre Dame, IN, U.S.A. Norman E. Bowie, University of Minnesota, Minneapolis, MN, U.S.A. Brian Harvey, Manchester Business School, Manchester, U.K. Horst Steinmann, University of Erlangen-Nürnberg, Nürnberg, Germany The titles published in this series are listed at the end of this volume. Contemporary Reflections on Business Ethics by RONALD DUSKA The American College A C.I.P. Catalogue record for this book is available from the Library of Congress. ISBN-10 1-4020-4983-8 (HB) ISBN-13 978-1-4020-4983-5 (HB) ISBN-10 1-4020-4984-6 (e-book) ISBN-13 978-1-4020-4984-2 (e-book) Published by Springer, P.O. Box 17, 3300 AA Dordrecht, The Netherlands. www.springer.com Printed on acid-free paper All Rights Reserved © 2007 Springer No part of this work may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, microfilming, recording or otherwise, without written permission from the Publisher, with the exception of any material supplied specifically for the purpose ofbeing entered and executed on a computer system, for exclusive use by the purchaser of the work. To my grand children—the joys of my present and the hopes of the future: Jack, Luke, David, Nicholas, Bryan, Mary Kate, Gabriel, Kyle, Kaitlyn, Sarah, Jessica, Jacob, Samuel, Jonathan, Daniel, Timothy, Genevieve, Beatrice and whomever else might join the family. CONTENTS Preface xiii Acknowledgements xv Introduction xvii Business Ethics Chapter 1: What is Ethics? 3 1 The Discipline of Ethics 3 1.1 Moral Beliefs 4 1.2 Actions, Social Practices, Institutions, and Systems 4 1.3 Why Study Ethics in Business? 6 2 Ethics in Business 7 2.1 The Social Responsibility of Business 9 2.2 How to Determine What is Ethical 11 3 Ethical Theory 13 3.1 Questions to Ask to Justify Any Action 15 3.1.1 “Is the Action Good for Me?” 15 3.1.2 “Is the Action Good or Harmful for Society?” 16 3.1.3 “Is the Action Fair or Just?” 16 3.1.4 “Does the Action Violate Anyone’s Rights?” 16 3.1.5 “Have I Made a Commitment, Implied or Explicit?” 17 3.2 Using the Reasons 18 3.3 Ethical Dilemmas 19 3.3.1 A Classic Moral Dilemma 20 3.4 Egoism 22 3.5 Utilitarianism 25 3.6 Deontology 28 3.6.1 The First Formulation of the Categorical Imperative 30 3.6.2 The Second Formulation of the Categorical Imperative 31 3.7 Is Ethical Knowledge Possible? 32 3.7.1 Intellectual Subjectivism 33 3.7.2 Emotivism 34 3.7.3 Relativism 35 viii CONTENTS 4 Virtue Ethics 37 5 Conclusion 38 Chapter 2: The Why’s of Business Revisited 39 Chapter 3: Business Ethics:Oxymoron or Good Business? 51 1 Business Ethics as Oxymoron 52 2 Business as Pursuit of Self-Interest: The Bottom-Line Perspective 52 3 Countering the Friedman Approach to Ethical Business 54 4 Ethics as a Prerequisite for Social Stability 55 5 Ethics as a Strategy for Good (i.e., Profitable) Business 56 6 The Purpose of Ethics 57 7 Two Notions of Justice 59 8 A Moral Schizophrenia 60 9 The Soulless Corporation 61 10 On Refurbishing Business Ethics 62 11 Is Business Ethics Impossible? 62 Chapter 4: Aristotle:A Pre-Modern Post-Modern? Implications for Business Ethics 67 1 Postmodernism 69 2 The Aristotelian Solution 76 3 Conclusion 84 Chapter 5: The Religious Roots of Business Ethics 89 1 Meaning of Spirit 91 2 The History of the Right to Property 93 3 Locke’s Theory 94 4 The Invention of Money 96 5 Putting Money to Work 96 6 A Changing View of Usury 97 7 A New View of Man 98 8 The Protection Against Unconstrained Egoism 100 9 The Laws of Justice Smith’s Appeal Fails 100 10 Justice, Capitalism, and Religion 101 CONTENTS ix 11 Turning Psychological Impulse into a Social Function Versus Aims 101 12 A New Ideal Type 102 13 Recommendations 103 14 Can Rawls’View be Justified? 105 Chapter 6: Life Boat Ethics:A Problem in Economic Justice 109 Ethical Issues in Employment Loyalty and Agency Chapter 7: What’s the Point of a Business Ethics Course? 121 1 Skepticism as a Pervasive Attitude 124 2 Relativism as Skepticism 126 3 Critiques of Relativism 127 4 The Possibility of Moral Knowledge 129 5 Implications for Teaching Business Ethics Courses 131 6 Is There a Solution? 132 7 What Ethics Courses Need to Add to Common Opinion 133 8 A Final Difficulty: “Who Are You To Say?” Teaching One’s Values 134 9 Conclusion 136 Chapter 8: Whistleblowing and Employee Loyalty 139 Chapter 9: Why Be A Loyal Agent? A Systemic Ethical Analysis 149 1 Agency and the Problem of Agency 151 2 The Economists’Problem of Agency 152 3 Agency Costs 156 4 Glaucon’s Problem 158 5 Self-Interested Pursuit of Profit is Egoistic 159 6 Challenging the Corporate Ethos 161 7 The Neo-Egoistic Purpose of Business 161 8 A New Paradigm for Business: Agency and Professionalism, the Enlightened View 162 9 The Agent in Business as Professional, or the Professional as Agent 166 10 Is the Enlightened View Also naïve? 167 x CONTENTS Chapter 10: Employee Rights 171 1 Employee Rights 175 1.1 The Right to Meaningful Work 178 1.2 The Rights of the Employee 178 1.2.1 The Right to a Safe and Healthy Work Environment 179 1.2.2 The Right to Job Security and Due Process in Disciplining, Demoting, Promoting, and Firing 179 1.2.3 The Right to Privacy 180 1.2.4 The Right to Compensation for Injury 181 1.2.5 The Right to Participation or Voice in Matters Affecting Workers 181 1.2.6 The Right to Equal Treatment without Regard to Race or Gender 182 1.2.7 The Right to Pension Protection 182 1.2.8 The Right to Organization Bargaining and The Right to Strike 182 1.2.9 The Right to be Free From Harassment 182 1.2.10 The Right to a Living Wage 182 Ethical Issues in Financial Services Chapter 11: Ethical Issues in Financial Services 187 1 The Financial System 189 2 Financial Markets 189 3 Types of Markets 189 3.1 Markets According to Time 189 3.2 Markets According to Purpose 190 4 Capital Generation 190 5 Security Exchange 190 6 Financial Instruments and Institutions 191 7 Financial Intermediaries 192 8 The Ethics of the Market System 193 9 Ethical Practices within the System 194 10 A Litany of Unethical Practices Deception and Fraud 194 11 Basic Ethical Principles 197 12 The Avoidance of Deception and Fraud 197 13 Types of Roles in Financial Markets 200 14 Regulatory Procedures 200 15 Professionalism 200 16 The Legal Environment 201