Business Ethics Concepts and Cases

Manuel G. Velasquez
7th Edition
Chapter No #01
“Ethics And Business”
Important Topics:
 What Is “Business Ethics”?
 What Is Corporate Social Responsibility?
 Is Ethical Relativism, Right?
 How Does Moral Development Happen?
 What Role Do Emotions Have In Ethical Reasoning?
 What Are The Impediments To Moral Behavior?
 When Is A Person Morally Responsible For Doing Wrong?

Important Definitions:
1. Morality
The Standards That An Individual Or A Group Has About What Is Right And Wrong Or Good
And Evil.
2. Moral Standards
The Norms About The Kinds Of Actions Believed To Be Morally Right And Wrong As Well
As The Values Placed On What We Believe To Be Morally Good And Morally Bad.
3. Nonmoral Standards
The Standards By Which We Judge What Is Good Or Bad And Right Or Wrong In A
Nonmoral Way.
4. Six Characteristics Of Moral Standard
 Involve Serious Wrongs Or Significant Benefits.
 Should Be Preferred To Other Values Including Self-Interest.
 Not Established By Authority Figures.
 Felt To Be Universal.
 Based On Impartial Considerations.
 Associated With Special Emotions And Vocabulary.
5. Moral Norms And Nonmoral Norms
 From The Age Of Three We Can Distinguish Moral From Nonmoral Norms.
  From The Age Of Three We Tend To Think That Moral Norms Are More Serious Than
Nonmoral Norms And Apply Everywhere Independent Of What Authorities Say.
 The Ability To Distinguish Moral From Nonmoral Norms Is Innate And Universal.
6. Ethics
The Discipline That Examines One’s Moral Standards Or The Moral Standards Of A Society
To Evaluate Their Reasonableness And Their Implications For One’s Life.
7. Normative Study
An Investigation That Attempts To Reach Conclusions About What Things Are Good Or
Bad Or About What Actions Are Right Or Wrong.
8. Descriptive Study
An Investigation That Attempts To Describe Or Explain The World Without Reaching Any
Conclusions About Whether The World Is As It Should Be.
9. Business Ethics
A Specialized Study Of Moral Right And Wrong That Concentrates On Moral Standards As
They Apply To Business Institutions, Organizations, And Behavior.
10. Business Ethics Is A Study Of
 Our Moral Standards Insofar As These Apply To Business.
 How Reasonable Or Unreasonable These Moral Standards We Have Absorbed From
Society Are.
 The Implications Our Moral Standards Have For Business Activities.
11. Kinds Of Ethical Issues
 Systemic: Ethical Questions About The Social, Political, Legal, Or Economic Systems
Within Which Companies Operate.
 Corporate: Ethical Questions About A Particular Corporation And Its Policies,
Culture, Climate, Impact, Or Actions.
 Individual: Ethical Questions About A Particular Individual’s Decisions, Behavior, Or
Character.
12. Should Ethical Qualities Be Attributed Only To People Or Also To Corporations?
 One View Says Corporations, Like People, Act Intentionally And Have Moral Rights,
And Obligations, And Are Morally Responsible.
 Another View Says It Makes No Sense To Attribute Ethical Qualities To Corporations
Since They Are Not Like People But More Like Machines; Only Humans Can Have
Ethical Qualities.
 A Middle View Says That Humans Carry Out The Corporation’s Actions So They Are
Morally Responsible For What They Do And Ethical Qualities Apply In A Primary
Sense To Them Corporations Have Ethical Qualities Only In A Derivative Sense.
13. Law Of Agency
A Law That Specifies The Duties Of Persons Who Agree To Act On Behalf Of Another Party
And Who Are Authorized By An Agreement So To Act.
14. Arguments Against Ethics In Business
 In A Free Market Economy, The Pursuit Of Profit Will Ensure Maximum Social Benefit
So Business Ethics Is Not Needed.
 A Manager’s Most Important Obligation Is Loyalty To The Company Regardless Of
Ethics.
 So Long As Companies Obey The Law They Will Do All That Ethics Requires.
15. Arguments Supporting Ethics In Business
 Ethics Applies To All Human Activities.
 Business Cannot Survive Without Ethics.
 Ethics Is Consistent With Profit Seeking.
 Customers, Employees, And People In General Care About Ethics.
 Studies Suggest Ethics Does Not Detract From Profits And Seems To Contribute To
Profits.
16. Corporate Social Responsibility Is A Business’s Societal Obligations
 The Shareholder View Of Friedman Says A Manager’s Only Responsibility Is To
Legally And Ethically Make As Much Money As Possible For Shareholders.
 Stakeholder Theory Says Managers Should Give All Stakeholders A Fair Share Of The
Benefits A Business Produces.
 Business Ethics Is Both A Part Of Corporate Social Responsibility And Part Of The
Justification For Corporate Social Responsibility.
17. Information Technology
The Use Of Extremely Powerful And Compact Computers, The Internet, Wireless
Communications, Digitalization, And Numerous Other Technologies That Have Enabled Us
To Capture, Manipulate, And Move Information In New And Creative Ways.
18. Cyberspace
A Term Used To Denote The Existence Of Information On An Electronic Network Of Linked
Computer Systems.
19. New Technologies Raise New Ethical Issues For Business
 The Agricultural And Industrial Revolutions Introduced New Ethical Issues.
 Information Technology Raises New Ethical Issues Related To Risk, Privacy, And
Property Rights.
 Nanotechnology And Biotechnology Raise New Ethical Issues Related To Risk And To
The Spread Of Dangerous Products.
20. Nanotechnology
A New Field That Encompasses The Development Of Tiny Artificial Structures Only
Nanometers (Billionths Of A Meter) In Size.
21. Genetic Engineering
A Large Variety Of New Techniques That Allows Change In The Genes Of The Cells Of
Humans, Animals, And Plants.
22. Multinational Corporation
A Company That Maintains Manufacturing, Marketing, Service, Or Administrative
Operations In Several “Host” Countries.
23. Globalization Is
 To A Large Extent Driven By Multinationals
 Beneficial In That It Has Brought Great Benefits To Developing Countries Including
Jobs, Skills, Income, Technology, A Decrease In Poverty, Specialization
 Blamed For Many Ills Including Rising Inequality, Cultural Losses, A “Race To The
Bottom,” Introduction Of Inappropriate Technologies Into Developing Countries.
24. Differences Among Nations
 Include Differences In Laws, Governments, Practices, Levels Of Development, Cultural
Understandings
 Raise The Question Whether Managers In Foreign Countries Should Follow Local
Standards Or Their Home Standards.
25. Ethical Or Moral Relativism
The Theory That There Are No Ethical Standards That Are Absolutely True And That Apply
Or Should Be Applied To The Companies And People Of All Societies.
26. Objections To Ethical Relativism
 Some Moral Standards Are Found In All Societies.
 Moral Differences Do Not Logically Imply Relativism.
 Relativism Has Incoherent Consequences.
 Relativism Privileges Whatever Moral Standards Are Widely Accepted In A Society.
27. Integrative Social Contracts Theory Indicates That
 Hypernorms Should Apply To People In All Societies.
 Microsocial Norms Apply Only In Specific Societies And Differ From One Society To
Another.
28. Kohlberg’s Three Levels Of Moral Development
 Preconventional: (Punishment And Obedience; Instrumental And Relative).
 Conventional: (Interpersonal Concordance; Law And Order).
  Postconventional: (Social Contract; Universal Principles).
29. Gilligan’s Theory Of “Female” Moral Development
 For Women Morality Is Primarily A Matter Of Caring And Responsibility.
 Moral Development For Women Is Progress Toward Better Ways Of Caring And Being
Responsible.
 Women Move From A Conventional Stage Of Caring Only For Oneself, To A
Conventional Stage Of Caring For Others To The Neglect Of Oneself, To A
Postconventional Stage Of Achieving A Balance Between Caring For Others And
Caring For Oneself.
30. Research On Moral Identity Suggests
 Morality Is Not An Important Part Of The Self Until Middle Adolescence.
 The More Morality Becomes Part Of The Self, The Stronger The Motivation To Be
Moral.
 Judgments Of Right And Wrong Depend In Part On The Kind Of Person We Think The
Self Is, I.E., On The Virtues We Think Are Part Of Our Self.
31. Psychological Research On Moral Reasoning
 Suggests That Emotions Are Necessary For Moral Reasoning.
32. Moral Reasoning
The Reasoning Process By Which Human Behaviors, Institutions, Or Policies Are Judged To
Be In Accordance With Or In Violation Of Moral Standards
33. Moral Reasoning Involves
 The Moral Standards By Which We Evaluate Things.
 Information About What Is Being Evaluated.
 A Moral Judgment About What Is Being Evaluated.
34. Moral Reasoning Should
 Be Logical.
 Rely On Evidence Or Information That Is Accurate, Relevant, And Complete.
 Be Consistent.
35. Four Steps Leading To Ethical Behavior
 Recognizing A Situation Is An Ethical Situation.
 Judging What The Ethical Course Of Action Is.
 Deciding To Do The Ethical Course Of Action • Carrying Out The Decision.
36. Recognizing A Situation As Ethical
 Requires Framing It As One That Requires Ethical Reasoning.
 Situation Is Likely To Be Seen As Ethical When It Involves Serious Harm That Is
Concentrated, Likely, Proximate, Imminent, And Potentially Violates Our Moral
Standards.
 Obstacles To Recognizing A Situation Is Ethical Include:
 Euphemistic Labeling.
 Justifying Our Actions.
 Advantageous Comparisons.
 Displacement Of Responsibility.
 Diffusion Of Responsibility.
 Distorting The Harm.
 Dehumanization.
 Attribution Of Blame.
37. A Judgment About The Ethical Course Of Action
 Requires Moral Reasoning That Applies Our Moral Standards To The Information We
Have About A Situation
 Requires Realizing That Information About A Situation May Be Distorted By Biased
Theories About The World, About Others, And About Oneself.
38. Deciding To Do What Is Ethical Can Be Influenced By
 The Culture Of An Organization.
 Moral Seduction.
39. Carrying Out One’s Decision Can Be Influenced By
 One’s Strength Or Weakness Of Will.
 One’s Belief About The Locus Of Control Of One’s Actions.
40. A Person Is Morally Responsible For An Injury Only If
 Person Caused Or Helped Cause The Injury, Or Failed To Prevent It When He Or She
Could And Should Have.
 Person Did So Knowing What He Or She Was Doing.
 Person Did So Of His Or Her Own Free Will.
41. Depending On How Serious A Wrong Is, Moral Responsibility For It Can Be
Mitigated By
 Minimal Contribution.
 Uncertainty.
 Difficulty.
(End Chapter #01) Ethics And Business

Business Ethics Concepts And Cases Manuel G. Velasquez 7th Edition

 Chapter No #02
“Ethical Principles In Business”
Important Topics:
 What Is The Utilitarian Approach To Moral Decision-Making?
 How Do Human Rights Apply To Business Situations?
 What Is “Justice”?
 Why Are Personal Relationships Essential To An “Ethic Of Care”?
 How Can We Integrate The Various Approaches To Moral Evaluation?
 What Role Does Character Play In Morality?
 Why Do Many Of Our Moral Decisions Seem To Be Automatic And Unconscious?

Important Definitions:
1. Ethic Of Care
An Ethic That Emphasizes Caring For The Concrete Well Being Of Those Near To Us.
2.Ethic Of Virtue
An Ethic Based On Evaluations Of The Moral Character Of Persons Or Groups.
3. Utilitarianism
A General Term For Any View That Holds That Actions And Policies Should Be Evaluated
On The Basis Of The Benefits And Costs They Will Impose On Society.
4.Utility
The Inclusive Term Used To Refer To Any Net Benefits Produced By An Action.
5. Utilitarianism
 Advocates Maximizing Utility.
 Matches Well With Moral Evaluations Of Public Policies.
 Appears Intuitive To Many People.
 Helps Explain Why Some Actions Are Generally Wrong And Others Are Generally
Right.
 Influenced Economics.
6. Cost–Benefit Analysis
A Type Of Analysis Used To Determine The Desirability Of Investing In A Project By
Calculating Whether Its Present And Future Economic Benefits Outweigh Its Present And
Future Economic Costs.
7. Efficiency
Operating In Such A Way That One Produces A Desired Output With The Lowest Resource
Input.
8. Noneconomic Goods
Goods, Such As Life, Love, Freedom, Equality, Health, Beauty, Whose Value Is Such That
It Cannot Be Measured In Economic Terms.
9. Instrumental Goods
Things That Are Considered Valuable Because They Lead To Other Good Things.
10. Intrinsic Goods
Things That Are Desirable Independent Of Any Other Benefits They May Produce.
11. Justice
Distributing Benefits And Burdens Fairly Among People.
12. Rights
Individual Entitlements To Freedom Of Choice And Well-Being.
13. Rule-Utilitarianism
A Form Of Utilitarianism That Limits Utilitarian Analysis To Evaluations Of Moral Rules.
14. Criticisms Of Utilitarianism
 Critics Say Not All Values Can Be Measured.
 Utilitarians Respond That Monetary Or Other Commonsense Measures Can Measure
Everything.
 Critics Say Utilitarianism Fails With Rights And Justice.
 Utilitarians Respond That Rule-Utilitarianism Can Deal With Rights And Justice.
15. Right
An Individual’s Entitlement To Something.
16. Legal Right
An Entitlement That Derives From A Legal System That Permits Or Empowers A Person To
Act In A Specified Way Or That Requires Others To Act In Certain Ways Toward That
Person.
17. Moral Rights Or Human Rights
Rights That All Human Beings Everywhere Possess To An Equal Extent Simply By Virtue
Of Being Human Beings.
18. Characteristics Of Rights
 A Right Is An Individual’s Entitlement To Something.
 Rights Derived From A Legal System Confer Entitlements Only On Individuals Who
Live Where That Legal System Is In Force.
 Moral Or Human Rights Are Entitlements That Moral Norms Confer On All People
Regardless Of Their Legal System.
19. Moral Rights
 Can Be Violated Even When “No One Is Hurt”.
 Are Correlated With Duties Others Have Toward The Person With The Right.
 Provide Individuals With Autonomy And Equality In The Free Pursuit Of Their
Interests.
 Provide A Basis For Justifying One’s Actions And For Invoking The Protection Or
Aid Of Others.
 Focus On Securing The Interests Of The Individual Unlike Utilitarian Standards
Which Focus On Securing The Aggregate Utility Of Everyone In Society.
20. Positive Rights
Duties Of Other Agents (It Is Not Always Clear Who) To Provide The Holder Of The Right
With Whatever He Or She Needs To Freely Pursue His Or Her Interests.
21. Negative Rights
Duties Others Have To Not Interfere In Certain Activities Of The Person Who Holds The
Right.
22. Three Kinds Of Moral Rights
 Negative Rights Require Others Leave Us Alone.
 Positive Rights Require Others Help Us.
 Contractual Or Special Rights Require People Keep Their Agreements.
23. Contractual Rights And Duties
 Are Created By Specific Agreements And Conferred Only On The Parties Involved.
 Require Publicly Accepted Rules On What Constitutes Agreements And What
Obligations Agreements Impose.
 Underlie The Special Rights And Duties Imposed By Accepting A Position Or Role In
An Institution Or Organization.
24. Categorical Imperative
In Kant A Moral Principle That Obligates Everyone Regardless Of Their Desires And That
Is Based On The Idea That Everyone Should Be Treated As A Free Person Equal To
Everyone Else.
25. Maxim
The Reason A Person In A Certain Situation Has For Doing Something He Or She Plans To
Do.
26. Kant’s First Version Of The Categorical Imperative
 We Must Act Only On Reasons We Would Be Willing To Have Anyone In A Similar
Situation Act On.
 Requires Universalizability And Reversibility.
  Universalizability: The Person’s Reasons For Acting Must Be Reasons That
Everyone Could Act On At Least In Principle.
 Reversibility: The Person’s Reasons For Acting Must Be Reasons That That Person
Would Be Willing To Have All Others Use, Even As A Basis Of How They Treat
Him Or Her.
27. Kant’s Second Version Of The Categorical Imperative
 Never Use People Only As A Means To Your Ends, But Always Treat Them As They
Freely And Rationally Consent To Be Treated And Help Them Pursue Their Freely
And Rationally Chosen Ends.
 Based On The Idea That Humans Have A Dignity That Makes Them Different From
Mere Objects.
 It Is, According To Kant, Equivalent To The First Formulation.
28. Kant And Moral Rights
 Kant’s Theory Implies That Individuals Generally Must Be Left Equally Free (Or
Helped) To Pursue Their Interests While Moral Rights Identify The Specific Interests
Individuals Should Be Entitled To Freely Pursue (Or Be Helped To Pursue).
 An Interest Is Important Enough To Become A Right If (1) We Would Not Be Willing
To Have Everyone Deprived Of The Freedom To Pursue That Interest, And (2) The
Freedom To Pursue That Interest Is Needed To Live As Free And Rational Beings.
29. Criticisms Of Kant
 Both Versions Of The Categorical Imperative Are Unclear.
 Rights Can Conflict And Kant’s Theory Cannot Resolve Such Conflicts.
 Kant’s Theory Implies Moral Judgments That Are Mistaken.
30. Libertarian Philosophers
Believe That Freedom From Human Constraint Is Necessarily Good And That All
Constraints Imposed By Others Are Necessarily Evil Except When Needed To Prevent The
Imposition Of Greater Human Constraints.
31. Types Of Justice
 Distributive Justice: Just Distribution Of Benefits And Burdens.
 Retributive Justice: Just Imposition Of Punishments And Penalties.
 Compensatory Justice: Just Compensation For Wrongs Or Injuries.
32. Distributive Justice
Distributive Justice Requires Distributing Society’s Benefits And Burdens Fairly.
33. Retributive Justice
Retributive Justice Requires Fairness When Blaming Or Punishing Persons For Doing
Wrong.
34. Compensatory Justice
Compensatory Justice Requires Restoring To A Person What The Person Lost When He Or
She Was Wronged By Someone.
35. Political Equality
Equal Participation In, And Treatment By, The Political System.
36. Economic Equality
Equality Of Income, Wealth, And Opportunity.
37. Puritan Ethic
The View That Every Individual Has A Religious Obligation To Work Hard At His Or Her
Calling (The Career To Which God Summons Each Individual).
38. Work Ethic
The View That Values Individual Effort And Believes That Hard Work Does And Should
Lead To Success.
39. Productivity
The Amount An Individual Produces Or That A Group Produces Per Person.
40. Principle Of Equal Liberty
The Claim That Each Citizen’s Liberties Must Be Protected From Invasion By Others And
Must Be Equal To Those Of Others.
41. Difference Principle
The Claim That A Productive Society Will Incorporate Inequalities, But Takes Steps To
Improve The Position Of The Neediest Members Of Society.
42. Principle Of Fair Equality Of Opportunity
The Claim That Everyone Should Be Given An Equal Opportunity To Qualify For The More
Privileged Positions In Society’s Institutions.
43. Original Position
An Imaginary Meeting Of Rational Self-Interested Persons Who Must Choose The
Principles Of Justice By Which Their Society Will Be Governed.
44. Veil Of Ignorance
The Requirement That Persons In The Original Position Must Not Know Particulars About
Themselves Which Might Bias Their Choices Such As Their Sex, Race, Religion, Income,
Social Status, Etc.
45. Summary Of Principles Of Distributive Justice
 Fundamental: Distribute Benefits And Burdens Equally To Equals And Unequally
To Unequal.
 Egalitarian: Distribute Equally To Everyone.
 Capitalist: Distribute According To Contribution.
 Socialist: Distribute According To Need And Ability.
 Libertarian: Distribute By Free Choices.
 Rawls: Distribute By Equal Liberty, Equal Opportunity, And Needs Of
Disadvantaged.
46. Retributive Justice
Fairness When Blaming Or Punishing Persons For Doing Wrong.
47. Compensatory Justice
Fairness When Restoring To A Person What The Person Lost When He Or She Was
Wronged By Someone Else.
48. An Ethic Of Care
 Claims Ethics Need Not Be Impartial, Unlike Traditional Ethical Theories Which
Assume Ethics Has To Be Impartial.
 Emphasizes Preserving And Nurturing Concrete Valuable Relationships.
 Says We Should Care For Those Dependent On And Related To Us.
 Argues That Since The Self Requires Caring Relationships With Others, Those
Relationships Are Valuable And Should Be Nurtured.
49. In An Ethic Of Care
 Caring Is Not Detached But An Engrossed “Caring For” A Person.
 Relationships Are Not Valuable When Characterized By Domination, Oppression,
Harm, Hatred, Violence, Disrespect, Viciousness; Injustice, Or Exploitation.
 The Demands Of Caring And Of Justice Can Conflict And Such Conflicts Should Be
Resolved In Ways That Do Not Betray Our Voluntary Commitments To Others And
Relationships With Them.
50. Ethic Of Care
An Ethic That Requires Caring For The Concrete Well Being Of Those Particular Persons
With Whom We Have Valuable Close Relationships, Particularly Those Dependent On Us.
51. Communitarian Ethic
An Ethic That Sees Concrete Communities And Communal Relationships As Having A
Fundamental Value That Should Be Preserved And Maintained.
52. Objections To Care Approach To Ethics
 Objection: An Ethic Of Care Can Degenerate Into Favoritism.
  Response: Conflicting Moral Demands Are An Inherent Characteristic Of Moral
Choices.
 Objection: An Ethic Of Care Can Lead To “Burnout”.
 Response: Adequate Understanding Of Ethic Of Care Will Acknowledge The Need Of
The Caregiver To Care For Him Or Herself.
53. Moral Judgments Should Be Based On
 Maximizing The Net Utility Of Our Actions.
 Respecting The Moral Rights Of Individuals.
 Ensuring A Just Distribution Of Benefits And Burdens.
 Caring For Those In Concrete Relationships.
54. Moral Virtue
An Acquired Disposition That Is Valued As Part Of The Character Of A Morally Good
Human Being And That Is Exhibited In The Person’s Habitual Behavior.
55. Theories Of Moral Virtue
 Aristotle: Virtues Are Habits That Enable A Person To Live According To Reason By
Habitually Choosing The Mean Between Extremes In Actions And Emotions.
 Aquinas: Virtues Are Habits That Enable A Person To Live Reasonably In This
World And Be United With God In The Next.
 Macintyre: Virtues Are Dispositions That Enable A Person To Achieve The Good At
Which Human “Practices” Aim
 Pincoffs: Virtues Are Dispositions We Use When Choosing Between Persons Or
Potential Future Selves.
56. Virtue Theory
The Theory That The Aim Of The Moral Life Is To Develop Those General Dispositions
Called Moral Virtues, And To Exercise And Exhibit Them In The Many Situations That
Human Life Sets Before Us.
57. Virtue Theory Claims
 We Should Exercise, Exhibit, And Develop The Virtues.
 We Should Avoid Exercising, Exhibiting, And Developing Vices.
 Institutions Should Instill Virtues Not Vices.
58. Objections To Virtue Theory
 It Is Inconsistent With Psychology Which Showed In The Milgram And Princeton
Studies That Behavior Is Determined By The External Situation, Not Moral Character.
 Defenders Of Virtue Say Moral Character Determines Behavior In A Person’s
Familiar Environment And Recent Psychology Shows Behavior Is Determined By
One’s Moral Identity Which Includes One’s Virtues And Vices.
59. Unconscious Moral Decisions
 Comprise Most Of Our Moral Decisions.
 Made, According To Psychologists, By The Brain’s “X-System” Using Stored
Prototypes To Automatically And Unconsciously Identify What It Perceives And
What It Should Do.
60. Prototypes And Rationality
 The Brain’s Use Of Prototypes Is Similar To Using Paradigms In Casuistry Or
Precedents In Common Law Which Are Both Rational Processes.
 This Similarity Implies The Use Of Prototypes Is Also A Rational Process.
 Conscious Reasoning Can Also Correct And Shape Our Prototypes.
61. Moral Intuitions
 Prototypes Can Be Shaped By “Hardwired” Moral Intuitions, As Well As By
Conscious Moral Reasoning And Cultural Influences.
 Hardwired Intuitions Seem To Include: Incest Is Wrong; Harming By Action Is Worse
Than Harming By Omission; Harming As A Means To A Goal Is Worse Than
Harming As A Foreseen Side Effect; Harming By Physical Contact Is Worse Than
Harming Without Physical Contact.
62. Conscious Moral Reasoning
 Is Used In New, Strange, Or Unusual Situations For Which The Brain Has No
Matching Prototypes.
 Consists Of The Conscious, Logical But Slow Processes Of The Brain’s “C-System”.
 Evaluates How Reasonable Or Unreasonable Are Our Intuitions, Our Cultural Beliefs,
And The Norms Stored In Our Prototypes.
64. The Action Principle
Harm Caused By Action Is Morally Worse Than Equivalent Harm Caused By An Omission.
65. The Intention Principle
Harm Intended As The Means To A Goal Is Morally Worse Than Equivalent Harm Foreseen
As The Side Effect Of A Goal.
66. The Contact Principle
Using Physical Contact To Cause Harm To A Victim Is Morally Worse Than Causing
Equivalent Harm To A Victim Without Using Physical Contact.

(End Chapter #02) Ethical Principles In Business

Business Ethics Concepts And Cases Manuel G. Velasquez 7th Edition

 Chapter No#03
“The Business System: Government, Markets, And
International Trade”
Important Topics:
 Why Did John Locke Say Government Has No Right To Take Anyone’s Private
Property?
 Why Did Adam Smith Claim That Government Should Not Interfere With The Free
Market?
 What Benefits Did David Ricardo Attribute To Free Trade?
 What Injustices Did Karl Marx Say Were Inherent In Free Market Capitalism?

Important Definitions:
1.Globalization
The Process By Which The Economic And Social Systems Of Nations Are Connected
Together So That Goods, Services, Capital, And Knowledge Move Freely Between Nations.
2. Economic System
The System A Society Uses To Provide The Goods And Services It Needs To Survive And
Flourish.
3. Tradition-Based Societies
Societies That Rely On Traditional Communal Roles And Customs To Carry Out Basic
Economic Tasks.
4. Command Economy
An Economic System Based Primarily On A Government Authority (A Person Or A Group)
Making The Economic Decisions About What Is To Be Produced, Who Will Produce It,
And Who Will Get It.
5.Market Economy
An Economic System Based Primarily On Private Individuals Making The Main Decisions
About What They Will Produce And Who Will Get It.
6. Free Markets
Markets In Which Each Individual Is Able To Voluntarily Exchange Goods With Others
And To Decide What Will Be Done With What He Or She Owns Without Interference From
Government.
7. Ideology
A System Of Normative Beliefs Shared By Members Of Some Social Group.
8. In Locke’s State Of Nature
 All Persons Are Free And Equal.
 Each Person Owns His Body And Labor, And Whatever He Mixes His Own Labor
Into.
 People’s Enjoyment Of Life, Liberty, And Property Are Unsafe And Insecure.
 People Agree To Form A Government To Protect And Preserve Their Right To Life,
Liberty, And Property.
9. Lockean Rights
The Right To Life, Liberty, And Property.
10. Weaknesses Of Locke’s Views On Rights
 Locke Does Not Demonstrate That Individuals Have “Natural” Rights To Life,
Liberty, And Property.
 Locke’s Natural Rights Are Negative Rights And He Does Not Show These Override
Conflicting Positive Rights.
 Locke’s Rights Imply That Markets Should Be Free, But Free Markets Can Be Unjust
And Can Lead To Inequalities.
 Locke Wrongly Assumes Human Beings Are Atomistic Individuals.
11. Invisible Hand
According To Adam Smith, The Market Competition That Drives Self-Interested Individuals
To Act In Ways That Serve Society.
12. Free Markets And Utility
Adam Smith According To “Adam Smith”
 Market Competition Ensures The Pursuit Of Self-Interest In Markets Advances The
Public’s Welfare Which Is A Utilitarian Argument.
 Government Interference In Markets Lowers The Public’s Welfare By Creating
Shortages Or Surpluses.
 Hayek And Von Mises Argued Governments Should Not Interfere In Markets Because
They Cannot Have Enough Information To Allocate Resources As Efficiently As Free
Markets.
 Smith Assumes A System Of Private Property Like Aquinas Defends With The
Utilitarian Argument That Private Ownership Leads To Better Care And Use Of
Resources Than Common Ownership.
13. Criticisms Of Smith’s Argument
 Rests On Unrealistic Assumption That There Are No Monopoly Companies.
 Falsely Assumes That All The Costs Of Manufacturing Something Are Paid By
Manufacturer, Which Ignores The Costs Of Pollution.
  Falsely Assumes Human Beings Are Motivated Only By A Self-Interested Desire For
Profit.
 Unlike What Hayek And Von Mises Said In Support Of Smith, Some Government
Planning And Regulation Of Markets Is Possible And Desirable.
14. Say’s Law
In An Economy, All Available Resources Are Used And Demand Always Expands To
Absorb The Supply Of Commodities Made From Them.
15. Aggregate Demand
According To John Maynard Keynes, The Sum Of The Demand Of Three Sectors Of The
Economy: Households, Businesses, And Government.
16.Keynesian Economics
The Theory Of John Maynard Keynes That Free Markets Alone Are Not Necessarily The
Most Efficient Means For Coordinating The Use Of Society’s Resources.
17. Post-Keynesian School
Economists Who Have Sought To Challenge And Modify Keynesian Economics.
19. Social Darwinism
Belief That Economic Competition Produces Human Progress.
20. Survival Of The Fittest
Charles Darwin’s Term For The Process Of Natural Selection.
21. Naturalistic Fallacy
The Assumption That What Happens Naturally Is Always What Is Good.
22. Views Of Herbert Spencer
 Evolution Operates In Society When Economic Competition Ensures The Fittest
Survive And The Unfit Do Not, Which Improves The Human Race.
 If Government Intervenes In The Economy To Shield People From Competition, The
Unfit Survive And The Human Race Declines, So Government Should Not Do So.
 Spencer Assumes Those Who Survive In Business Are “Better” People Than Those
Who Do Not.
23. Absolute Advantage
A Situation Where The Production Costs (Costs In Terms Of The Resources Consumed In
Producing The Good) Of Making A Commodity Are Lower For One Country Than For
Another.
24. Comparative Advantage
A Situation Where The Opportunity Costs (Costs In Terms Of Other Goods Given Up) Of
Making A Commodity Are Lower For One Country Than For Another.
25. Free Trade
 Advocated By Smith Who Showed Everyone Prospers If Nations Specialize In
Making And Exporting Goods Whose Production Costs For Them Are Lower Than
For Other Nations.
 Advocated By Ricardo Who Showed Everyone Prospers If Nations Specialize In
Making And Exporting Goods Whose Opportunity Costs To Them Are Lower Than
The Opportunity Costs Other Nations Incur To Make The Same Goods.
 The Arguments Of Smith And Ricardo Provide Support For Globalization.
26. Objections To Ricardo’s Theory
 His Argument Ignores The Easy Movement Of Capital By Companies.
 He Falsely Assumed That A Country’s Production Costs Are Constant.
 He Ignored The Influence Of International Rule Setters.
27. Means Of Production
The Buildings, Machinery, Land, And Raw Materials Used In The Production Of Goods
And Services.
28. Alienation
In Marx’s View, The Condition Of Being Separated Or Estranged From One’s True Nature
Or True Human Self.
29. Marx On Alienation
 In Capitalism, Workers Become Alienated When They Lose Control Of Their Own
Life Activities And The Ability To Fulfill Their True Human Needs.
 Capitalism Alienates Workers From Their Own Productive Work, The Products Of
Their Work, Their Relationships With Each Other, And From Themselves.
 Alienation Also Occurs When The Value Of Everything Is Seen In Terms Of Its
Market Price.
30. Marx And Private Property
 Private Ownership Of The Means Of Production Is The Source Of The Worker’s Loss
Of Control Over Work, Products, Relationships, And Self.
 Productive Property Should Serve The Needs Of All And Should Not Be Privately
Owned, But Owned By Everyone.
31. Economic Substructure
The Materials And Social Controls That Society Uses To Produce Its Economic Goods.
32.Forces Of Production
The Materials (Land, Labor, Natural Resources, Machinery, Energy, Technology) Used In
Production.
33.Relations Of Production
The Social Controls Used In Producing Goods (I.E., The Social Controls By Which Society
Organizes And Controls Its Workers).
34.Social Superstructure
A Society’s Government And Its Popular Ideologies.
35. Historical Materialism
The Marxist View Of History As Determined By Changes In The Economic Methods By
Which Humanity Produces The Materials On Which It Must Live.
36. Marx’s Historical Materialism
 The Methods A Society Uses To Produce Its Goods Determines How That Society
Organizes Its Workers.
 The Way A Society Organizes Its Workers Determines Its Social Classes.
 A Society’s Ruling Social Class Controls Society’s Government And Ideologies And
Uses These To Advance Its Own Interests And Control The Working Classes.
37. Immiseration Of Workers
The Combined Effects Of Increased Concentration, Cyclic Crises, Rising Unemployment,
And Declining Relative Compensation.
38. Immiseration Of Workers
 Marx Claimed Capitalism Concentrates Industrial Power In The Hands Of A Few
Who Organize Workers For Mass Production.
 Mass Production In The Hands Of A Few Leads To Surplus Which Causes Economic
Depression.
 Factory Owners Replace Workers With Machines Which Creates Unemployment;
They Keep Wages Low To Increase Profits.
 The Combined Effects Of The Above Causes Immiseration Of Workers.
 The Only Solution Is A Revolution That Establishes A Classless Society Where
Everyone Owns The Means Of Production.
39. Criticism Of Marx
 Marx’s Claims That Capitalism Is Unjust Are Unprovable.
 Justice Requires Free Markets.
 The Benefits Of Private Property And Free Markets Are More Important Than
Equality.
 Free Markets Can Encourage Community Instead Of Causing Alienation.
  Immiseration Of Workers Has Not Occurred; Instead Their Condition Has Improved.
40. Mixed Economy
An Economy That Retains A Market And Private Property System But Relies Heavily On
Government Policies To Remedy Their Deficiencies.
41. Intellectual Property
Nonphysical Property That Consists Of Knowledge Or Information Such As Formulas,
Plans, Music, Stories, Texts, Software, Etc.
42. Copyright
A Grant That Indicates That A Particular Expression Of An Idea Is The Private Property Of
An Individual Or A Company.
43. Keynes’ Criticism Of Smith
 Keynes Said Smith Wrongly Assumes Demand Is Always Enough To Absorb The
Supply Of Goods.
 But If Households Forego Spending, Demand Can Be Less Than Supply, Leading To
Cutbacks, Unemployment, And Economic Depression.
 Government Spending Can Make Up For Such Shortfalls In Household Spending, So
Government Should Intervene In Markets.
 But Keynes’ Views Were Challenged When Government Spending Did Not Cure
High Unemployment But Created Inflation.

(End Chapter #02) The Business System: Government, Markets, And International Trade

Business Ethics Concepts And Cases Manuel G. Velasquez 7th Edition