BUSINESS ETHICS SUMMARY

• CHAPTER 1 & 2 – INTRODUCTION TO BUSINESS ETHICS

• CHAPTER 3 & 4 – CRITICAL THINKING
• CHAPTER 5 – ECONOMIC SYSTEMS
• CHAPTER 6 – WHOSE INTEREST SHOULD THE BUSINESS ACT IN?
• CHAPTER 7 – PRODUCT LIABILITY AND SAFETY
• CHAPTER 8 – ADVERTISING
• CHAPTER 9 – MEANINGFUL WORK
• CHAPTER 10 – AFFIRMATIVE ACTION
• CHAPTER 11 – EMPLOYEE RIGHTS
• CHAPTER 13 – BUSINESS AND THE ENVIRONMENT
• CHAPTER 14 – GLOBAL BUSINESS ETHICS
• CHAPTER 15 – BEHAVIOURAL ETHICS
CHAPTER 1 & 2: INTRODUCTION INTO BUSINESS ETHICS

What is philosophy?

Philosophy is a systematized body of thought all about matters of right and wrong and is the
route to wisdom. (Experts in thinking).

Wisdom is defined as ‘experience and knowledge judiciously applied’. Ideas are wise if they
are sensibly and insightfully derived from our observations of how the world is, and from our
understanding of why it is that way.
- Ideas usually contain some piece of advice.

Academic philosophy, being one of the types, is a systematic, wide-ranging endeavor

involving a great many people applying their minds to problems.

Philosophy consists of several branches, including metaphysics (Is there God? What is a
person?) and epistemology (questions relating to knowledge – Can we every really know
anything?). Moral philosophy is another branch, which include questions about ethics.
- experts in their fields should think like philosophers to solve their problems.

Because moral philosophy is a sub-discipline within philosophy it enhances our critical

thinking skills.
The practice of philosophy involves being sceptical of the ideas we come across.

What is critical thinking?

1. An attitude of being disposed to consider in a thoughtful way the problems and

subjects that come within range of ones experience.
2. Knowledge of the methods of logical enquiry and reasoning.
3. Skills in applying those methods.
Its obvious why
- It involves using logic to support ones thinking, so it relies on reasoning critical thinking is
such a necessity,
and evidence, and considers the consequences of each line of thinking as thinking is
for our beliefs. always going to
- Critical thinkers are sceptical about ‘any beliefs or supposed form of be one of the
main effective
knowledge’. They subject all ideas to persistent scrutiny, even if those means of making
ideas are quite generally accepted by other people, and even if they are discoveries in
ethics.
intuitively appealing to the critical thinker herself.

How does philosophy help with critical thinking?

The discipline of philosophy has always involved paying direct attention to thinking itself.
Studying philosophy usually involves taking at least one course in reasoning – logic is
described as a branch of philosophy.
It is so vital to philosophy that it is known as ‘the grammar of philosophy’.
Distinguishes between beliefs that are true (results from sound deductive reasoning), beliefs
that are probably true (sound inductive reasoning) and beliefs that have no good reason to
hold.
Philosophy’s ambition is to give insightful and reliable answers to fundamental questions by
way of the most careful and precise thinking available to us. And logic is the most precise
thinking system we have.

What is the difference between ethics and morality?

1. The study of principles of right and wrong behaviour or character.
2. Codes of right or wrong behaviour or character applying to a certain group.
Common meanings: Principles of right and wrong behaviour or good and bad character.

What do ‘moral’, ‘immoral’ and ‘amoral’ mean?

Immoral: (unethical) – an act or a characteristic that falls short of the standard established by
some moral principle.
Example: The standard suggests: “All employees underperforming should not be dismissed unless they have
been informed of their underperformance and given reasonable time and training to help them improve”.
Employer fires an employee without previously informing her about her underperformance.

Amoral: (non-ethical) – no moral standard is applicable.

Example: Employer usually sends Christmas cards to employees. This year the business made a loss so he
now sends emails instead.

Moral: (ethical) – 1. Describes an act which meets a moral standard.

2. Describes the exceeding of a moral standard (supererogatory).

Immoral Amoral Moral Supererogatory

(meaning 1)
Synonym(s) Unethical, wrong Non-ethical, non- Ethical, right Moral, ethical, right
moral
Relation to the Fails to meet moral No relevant moral Meets the moral Exceeds moral
relevant moral standards standard standards standards
standards

Example Stealing from ones Smiling when Being honest with Saving colleagues
employer greeting colleagues ones employer from a fire
Moral permissibilityNot morally permissible Indifferent if acts are Not performing these Performing and not
status performed or not both acts is not morally are both morally
morally permissible permissible permissible

Moral obligation Are morally obligated Not morally obliged Are morally Not morally obligated
status or morally obliged obligated or obliged.

- ‘Should’ and ‘should not’ are morally used terms.

- ‘ought’ and ‘ought not’.

Distinguishing moral standards from amoral standards

For a standard of behaviour to be a moral standard, it should be derived from moral principles, for
example principles avoiding harm, improving freedom, promoting equality or achieving justice.
If someone does not meet your own standards of behaviour they are not acting immorally unless two
things are true:
- your standard is a moral standard
- it is correct
*We should not presume that a standard of behaviour is a moral standard simply because it is
commonly accepted within a group.

Descriptive VS Normative ethics

Descriptive: Describe a person’s or a group’s moral judgements (believe it is wrong to eat meat).
*These claims can be tested empirically – thus determine if they are true by studying the relevant
people.

Normative: Prescribe moral judgements (it is wrong to eat meat). *Cannot be tested and establish truth
on their own (more insight is needed) – but aims to help each of us know ‘what we should do’ and ‘how
we should be’.

Objective moral facts

A claim is a fact if it is true, and it is an objective fact if its truth is independent of what we or anyone
else thinks about it.

What is emotivism and why do most philosophers think that it is incorrect?

Emotivists believe that they can in fact explain moral claims without using the languages of ethics –
which contradicts what was said earlier. Emotivists say that moral claims are nothing more than
expressions of feelings.

- The ‘boo-hurrah’ theory of ethics states that when you say eg lying is wrong, you’re simply
expressing your disapproval of lying.
- Emotivists believe morality is about feelings and attitudes.
- More of an attractive way of explaining why people cannot agree about the ‘grey areas’ of
ethics, however in doing so it removes all reasons for believing that anything is true or false eg
racism, rape or genocide.

*Should be rejected and one should conclude that moral facts do exist.

What is moral relativism and why do most philosophers think it is incorrect?

Moral relativists accept that moral facts exist, but they believe that what makes these facts true are
people believing in them, to be true. Therefore, moral statements have a relative truth eg truth relative to
a community.
Violating a clearly discernible moral standard. Eg tribal mass murder. Relativists agree with
any belief because it is what the community/ tribe does.

*This does not mean believe what the majority does. It simply means that if the majority has a certain
moral belief, then this is what makes the moral belief true for them.

- They do not believe that objective moral facts exist.

 - Assumes people come neatly divided up into self-contained communities with their own value
systems.

Moral guidance is often needed when people

from different groups meet and disagree. (However, relativists don’t believe it is possible
for different groups to disagree in substance about ethics).

One cannot establish facts by simply identifying what people believe.

What happens when one groups belief’s come up against another groups? 1. Choose majority
over minority. 2. Stay true to relativism by saying what’s right for the one group is fine cause
of their beliefs, and what’s right for the other group is also right because of their beliefs.

Relativists encounter a paradox that can’t be resolved. By saying it is wrong to judge others about
groups’ beliefs to be wrong. However, it is ‘wrong to identify wrongness’.

What is the doctrine of divine command and why do most philosophers think that it is incorrect?

The ‘doctrine of divine command’ states that moral facts are only true by virtue of being in accordance
with God’s will. *Views are not determined by right or wrong but in fact determined by God.

What God wants is an objective fact, therefore making moral facts objective.
- God makes moral facts.
- However, a belief in God does not require us to believe that He could make murder right.
- Not the belief of God manufacturing the facts, but rather His directing us to act
morally and to display good character.

Will you be ethical in business if you simply obey God’s advice?

Even if religion is not the source of ethical truths, it gives us a great deal of moral guidance.
Religions may give moral advice (eg. Through scripture), but they do not cover all moral dilemmas that
might be faced in business.

Will you be ethical in business if you simply obey the law?

Being ethical without having to think critically – don’t do anything illegal. The reason being is that the
law is in fact the source of ethics. However many legal standards aim to enforce amoral standards (eg.
Driving on a certain side of the road). *These laws are only there to solve coordination problems and
other practical problems. Thus, showing that the law is not the source of ethics.
If being unlawful is what makes an act wrong, then arriving at the international departures
without your passport would be immoral. (Laws are designed to uphold both moral and amoral
standards and acting lawfully ensures acting ethically).
The above holds true if:
1. No legal standards violate any moral standards (otherwise we could act unethically by following
the law). Laws can be immoral, think apartheid, genocide etc.

2. That all moral standards are upheld by legal standards. Think wheelchair ramps – no
precise solution as to how many are legally necessary. This law would need to be
interpreted.
 3. Legal standards are relatively easy to discern. There are clearly moral issues which
fall outside of the law: Generally more proscriptive (mainly outlaws bad behaviour
eg theft) than prescriptive (seldom encourages good behaviour eg being charitable).

Will you be ethical if you simply rely on your gut?

- Believes in pure intuition – defined as immediate understanding, knowledge or awareness,

derived neither from perception nor reasoning.
- Although many intuitions turn out to be right, there are still a large number that are wrong.
- Intuitions are an important starting point for moral theorizing but can be influenced by
irrelevant factors: psychological factors distorting them. *Intuition is a good starting point.

Who are you to decide right from wrong?

There is no easy way to demonstrate that one’s moral beliefs are superior to others’. What can you do to
verify your view? Ensure all the following hold true:

1. You are aware of relevant issues.

2. You have considered the full range of ethical positions
3. You have not merely accepted the opinions of others as true.
4. You have not allowed your view to be corrupted by factors such as self-esteem.
5. You have good reasons supporting your view, leading to a sound argument.
6. You have considered the reasoning behind opposing views and have rejected them as they do
not lead to sound arguments.
 CHAPTER 3 & 4: CRITICAL THINKING – HOW TO REASON
LOGICALLY

What is logical reasoning?

English sentences use 3 moods: declarative (indicative), interrogative (used to ask questions) or
imperative (gives instructions).

Declarative sentences make statements or claims. When the claim is a general claim about some
important topic we call it a ‘position’ or ‘view’.
- Generally true or false (sometimes difficult to tell whether true or false).

‘Reasoning’ – defends claims that have been made.

- The reasons we give amount to an argument (preferably a logical argument).

What is the basic structure of an argument?

The claim whose truth we seek to test is the conclusion of the argument and the reasons given for
believing the conclusion are called the premises. *Thus we formalize an argument.

In a moral argument:
- One of the premises is normative – ‘what ought to be’.
- The other premises(s) are descriptive – ‘what is’.
- The conclusion is normative.

How should we determine moral facts? POLITICS AND

HABIT PERSONAL AMORAL ISSUES
INTERESTS

OUR
INTUITION LAW RELIGION GROUP’S
BELIEFS

MORAL FACT:
ANY PERSON WHO INTENTIONALLY AND UNDER HIS OWN
CONTROL KILLS ANOTHER PERSON, WITH NO ELEMENT OF
SELF-DEFENCE, SHOULD BE SEVELERY PUNISHED.

BENEFIT/HARM FREEDOM EQUALITY JUSTICE

What is a valid argument?

 Very important not to confuse validity with soundness.

The conclusion follows from the premises, therefore if we

assume the premises are true, then the conclusion would have The argument is only sound if it is valid
to be true. AND the premises are true.

We can insert a ‘missing’ or ‘hidden’ or ‘suppressed’ premise
to make an invalid argument valid. *Bridges the gap.
EXAMPLE: ‘She should be arrested because she committed a
murder last night’.
- P1: She murdered someone last night.
- P2: Murderers should be arrested.
- C: She should therefore be arrested.
The premise must be true (e.g. she must
have actually committed the murder) – a
moral standard must be consistent (does
not conflict with other moral standards
and is applicable to similar acts).

How does one show that an argument is unsound?

This can be done using a
counterexample, which, if
1. Show that the descriptive premise is false. successful, is said to ‘refute’ your
2. Show that the moral standard is inconsistent. opponent’s argument.
3. Show that the argument is not valid.
*IF POSSIBLE REFER TO THE
What are some typical examples of unsound RELEVANT FALLACY.
arguments?

Basic fallacies of unsound arguments:

• Affirming the consequent: ‘If Q then R’. Q = the antecedent; R = the consequent. If Q is true, R
is also true, however if R is true it does not automatically mean that Q is true.
• Equivocation: Uses the same word with different meanings (slides between two meanings), as
if the word has the same meaning.
Example: P1: A high school education is better then nothing.
P2: Nothing is better than a PHD.
C: Therefore, a high school education is better than a PHD.
• Straw man argument: misrepresents an opponent’s view or the argument for his view. These
fallacies are invalid for 2 reasons: First, to convince anyone that your opponents’ view is flawed,
you need to acknowledge their actual view, and show that their best arguments are unsound
(employing interpretative charity – which requires that if there is any ambiguity we do not
choose the weaker interpretation of the argument). Secondly, even if all your opponents’
arguments are unsound – it does not prove yours is sound.
• Appeal to ignorance: Any kind of justification for believing one view on the grounds that there
is a lack of certainty about the opposite view. *People believe that God exists because there is
no proof that he doesn’t.
-‘Better the devil you know than the devil you don’t’ – stick with familiarity.
• Appeal to authority: Argues for the grounds that some deeply respected person believes or
believed the conclusion. An ad populum argument urges us to believe something because the
majority believe it and an ad hominem argument steers us away from a certain view by pointing
out that some deeply disrespected person has had the same view.
• Hasty generalization: Draws a sweeping conclusion on the basis of too-little evidence. This
fallacy is responsible for most stereotypes.
 • False dichotomy: Involves a false premise, which involves only two possible options.
Example: P1: Children have either strict parents or loving parents.
P2: My parents were strict.
C: Therefore, my parents were not loving parents.
-These arguments are valid but not sound.
• Slippery slope: This fallacy also involves a false premise. Not all these arguments are unsound.
*Check each step in the chain reaction is necessarily implied by the step before it.
• Begging the question: (circular reasoning) – it bases its conclusion on a premise, which is a
rephrasing of that same conclusion.
Example: P1: Abortion is murder.
P2: Murder is wrong.
C: Therefore, abortion is wrong.

How are moral arguments special?

‘Moral arguments’ conclude with a normative moral judgment. Their argument must be valid and their
premises must be true. At least one premise of a moral argument must be normative – because one
cannot argue validity from purely descriptive premises.
Moral arguments must be consistent with a moral standard.
- It must not conflict with other moral standards.
- It must be applicable to all similar acts, by any other person, in all-similar circumstances.

What is an inductive argument?

Inductive arguments – even good ones – are not valid. Since soundness requires validity, inductive
arguments are never sound. *These arguments are all we have to go on – they’re better than nothing.

Inductive arguments can bring out ‘post-hoc’ fallacies. Event A caused event B.

What is an argument by analogy?

This argument seeks to point out that if we don’t accept the conclusion, then we are guilty of having
inconsistent moral standards since we do accept the equivalent claim in similar cases.

Although not deductively valid, they can be strong if:

1. The analogy is accurate in all respects relevant to the argument.
2. The premise which contains the statement about the analogous item is uncontroversially true.
What is a cognitive bias?
Confirmation bias: causes us to favour without
good logical reasons – views and arguments,
Mistakes in thinking, errors of perception. which confirm what we already believe.
Example: P1: All women are people. - Causes us to ignore evidence against
P2: Some people are unethical. our views and only select the
C: Therefore some women are unethical. evidence which supports our
position.
*Just one of the many cognitive biases.

What sorts of factors might impair our critical thinking?

1. Our feelings: ‘affect heuristic’ – this causes us to form judgments, which correspond with our
feelings. (emotional decisions, rule of thumb).
 2. Our position in time: ‘hindsight bias’ – eg coming up with the wheel.
3. Our self-esteem needs: ‘self-serving bias’ – people deceive themselves in order to give a more
favourable impression of themselves.
4. Our personal experiences: ‘familiarity heuristic’ - *system justification. ‘Halo effect’ – the
tendency to like (or dislike) everything about a person – including things you have not
observed.

*The failure to acknowledge that biases affect him or her = bias blind spot.
 CHAPTER 5 – THE ETHICS OF ECONOMIC SYSTEMS

How might cognitive biases misguide our moral reasoning about economic systems?
• System justification – accept what is known and done
• Affect heuristic – wealthy people will be against socialist features

What is pure capitalism?

• ‘What’s yours is yours, what’s mine is mine’ is the only rule governing capitalism
• No taxes, no public projects, and no organized way in which the society takes care of people
unable or willing to take care of themselves

1. Involves the notion of private property, including the ability of an individual to acquire the
means of production (gives drive and ambition).
2. Capital
3. Entirely free markets (seek their own gain by selling goods and services to each other without
restrictions whatsoever).
- Individuals can trade whatever they please.
4. Individuals take personal responsibility for their well-being.
*Creates a large gap of inequality

What is the resource-allocation mechanism in a capitalist economy?

An economic system determines how scare resources are allocated to people with an infinity of wants.
Many capitalists argue that this is one of capitalism’s greatest strengths: no person or group of people is
required to make difficult economic decisions about what and how resources get consumed, what and
how goods and services are produced from those resources, and how those goods and services should be
distributed between people.

What is pure socialism?

• Purest form, involves no private property and no market responsibility for everyone’s welfare.
A socialist society may be ruled by a single benevolent dictator who is wise enough to know
what is best for everyone.
• Most key decisions in a socialist economy are made by a government (decision-making
authority) – central decision making

It is important to note that communism is just one form of socialism (the USSR never achieved pure
communism).
Socialists believe that the overwhelming majority of people in a capitalist society suffer at the expense
of the wealthy capitalists ‘bourgeoisie’.

William Morris describes pure socialism as: “a society in which there should be neither rich nor poor,
neither master nor master’s man, neither idle nor overworked, neither brain-sick brain workers, nor
heart-sick hand workers, in a word, in which all men would be living in equality of condition, and would
manage their affairs un-wastefully, and with the full consciousness that harm to one would mean harm
to all”.
A comparison of the key elements of purely socialist and purely capitalist economic systems

PURE SOCIALISM PURE CAPITALISM

WHO OWNS The people (via the state) own Private property rights exist
RESOURCES? everything collectively (no private (individuals and corporations
property rights). own resources, including means
of production).
HOW ARE THESE Central decision-making bodies Economic activity is determined
RESOURCES make all production and by ‘the market’ (by laisse-faire –
ALLOCATED? consumption decisions (a command voluntary and unregulated
economy). exchanged).

WHO TAKES The people (via the state) are Individuals are responsible for
RESPONSIBILITY FORcollectively responsible for each their own welfare.
PEOPLE’S WELFARE?other’s welfare e.g. Marx: “From
each according to his abilities, to
each according to his needs.”

KARL MARX OUTLINED THE FOLLOWING STEPS REQUIRED TO ACHIEVE A

SOCIALIST REVOLUTION:

1. Abolition of property in land and application of all rents of land to public purposes.
2. A heavily progressive or graduated income tax.
3. Abolition of all rights of inheritance.
4. Confiscation of the properly of all emigrants and rebels.
5. Centralisation of credit in the hands of the State, by means of a national bank with State capital
and an exclusive monopoly.
6. Centralisation of the means of communication and transport in the hands of the State.
7. Extension of factories and instruments of production owned by the State; the bringing into
cultivation of waste-lands, and the improvement of the soil generally in accordance with a
common plan.
8. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.
9. Combination of agriculture with manufacturing industries, gradual abolition of the distinction
between town and country, by a more equal distribution of the population over the country.
10. Free education for all children in public schools. Combination of education with industrial
production.

What is a mixed economy?

Countries which allow free market systems and private ownership, but with government intervention
(regulation made by the state). South Africa’s economy is a mixed economy.

South Africa’s economy

1. Entitled to own property, including the means of production.

 • 2 issues with respect to property rights:
o Nationalisation of mines and land redistribution to those who were
dispossessed of land under the apartheid regime.
o This would amount to something of a socialist revolution.
▪ However neither seem to be on the agenda.

2. The nature of South Africa’s resource-allocation mechanism, their prices mostly appear to be
determined by the interaction of consumers and producers, as in a laissez-fare market
economy.
• Government hasn’t instructed the manager of e.g. a supermarket to set his prices
at a certain level, instead he has set his price at something close to what
customers will be willing to pay to deplete his stock.
o However, the prices of 2 basic goods – petrol and electricity – are set by
government and these influence the price of just about everything else.
• Additionally, government also set the price of low-skilled labour (via minimum
wage legislation) and the repo rate, which heavily influences the interest rates
charged by private banks.

The government is also involved in the markets for most goods and services by regulating them as
well as influences resource-allocation by taking on the role of market participant.
Made significant investments in capital and owns a considerable number of large ‘parastatals’
e.g. SSA and Eskom.

It is important to note that neither central control of the prices of some basic goods, nor the tight
regulation of some markets, nor the existence of SOC’s (state owned companies), necessarily inhibits
the success of people pursuing private gains.

3. The degree to which people are taken care of collectively - the extent of public spending on
social welfare.
• The South African government provides public education, free health services
and housing for the poor. It even provides a public broadcaster, the SABC.
However, most countries provide this.
• Nearly half of South African households receive government assistance of some
sort (social safety net).

Therefore, SA has a mixed economy but significantly closer to the pure capitalist end of the spectrum.
(Regulated capitalism).

2 main moral arguments for pure capitalism

1. THE LIBERTARIAN ARGUMENT – argues for pure capitalism because it protects private property
rights.
 People have a moral right to private property (in terms of a wide variety of resources).

The libertarian argument for capitalism:

P1: People have a right to private property, which it is immoral for the economic system to
violate.
P2: Capitalism is the only economic system which we know of that protects private property
rights.
C: Therefore, all economic systems that we know of, other than capitalism, are immoral.

Libertarians argue: why shouldn’t you be free to do what you like if in doing so you do not restrict
someone else from doing what she likes?

PERSONAL LIBERTY implies both a right – to do as we please, and an obligation – not to

stop others form doing as they please. Thus, one should be free to do what one likes with
one’s property, and that one should not be allowed to interfere with someone else’s property.
The argument to support P1 in the libertarian argument above is the libertarian argument for private property
rights:

P1: People have a right to personal liberty: to pursue their own interests provided they do not infringe
upon the rights of others to do the same.
P2: The right to personal liberty implies a right to private property; a right to acquire goods and
services through voluntary exchanges and gifts, and a right not to have these goods and services
forcibly taken by others.
P3: It is immoral for the economic system to violate this right to private property.
C: Therefore, people have a right to private property, which it is immoral for the economic system to
violate.

What are the counterarguments to the libertarian argument for capitalism?

• First, we show P2 be false

Were people ever entitled to that property in the first place? ‘Justice in original acquisition’ –
libertarians should show why original acquisition is just: how individuals would ever be justified
to take something into private ownership when it was not previously owned by anyone.
Libertarians believe: OWNED BY X + UNOWNED = OWNED BY X, but this is not universally true.

The best-known defence of justice in original acquisition is referred to as the ‘labour-

mixing argument’ – John Locke.
Locke believed that when resources are in the common state (not privately owned) and an
individual mixes her labour with one of those resources, she joins something she owns to
something unowned. Thus, that thing becomes hers.
However, it is not possible for Locke’s point to be universally true. (E.g. Tomato juice and sea).
Additionally, Locke assumes that resources i.e. water and land, are unowned, we should
embrace a communal view of ownership, which sees uncollected water, etc to be owned by
everyone. Therefore the ‘labour-mixing argument’ would only hold true if:
OWNED BY X + OWNED BY ALL OF HUMANITY = OWNED BY X
 Thus, we cannot accept P2 of the libertarian argument for private property rights, since a right
to personal liberty doesn’t always imply a right to private property.

• We attack P3
Even if it were true that people have a right to personal liberty (P1), and that this implies they
have a right to private property (P2), it is not necessarily immoral for the economic system to
violate the latter right.

Rights and duties correspond to one another; therefore, critics cannot accept that one has a
right without also accepting a corresponding duty to others. (Rights and duties are on opposite
sides of the same coin).

However, one right can sometimes override another. Libertarianism: If what makes
you happy would restrict someone else’s happiness, your right to pursue happiness is
trumped by their right to do the same.

When rights are trumped in this way, the duty associated with the ‘trumped’ right is not
enforceable: If the right to life, shelter or a decent meal trumps the right to private property then
it is false to claim that an economic system is immoral for violating the latter right.

Libertarians have responded saying that property rights are ‘natural’ however this response
shows to be unconvincing:

1. It is not clear that we should accept property rights as originating in a natural state.
2. Many sorts of property are in fact social in origin (i.e. money deposited at a bank).
3. Bundle of rights conveyed by ownership differs between societies (i.e. noise when renting).

Thus, we can conclude that the libertarian argument for capitalism is weak and a deontological
argument.

2. THE INVISIBLE HAND ARGUMENT FOR CAPITALISM – most famous consequentialist argument
for capitalism (focuses on the consequences rather than just a specific right). An unseen hand
guiding the market to arrange the best outcome for everyone.

By pursing his own interest, he frequently promotes that of society more effectually.

Smith considered the 2 most important goals (for economic efficiency) of an economic system
to be:
1. Incurring the lowest possible cost in producing goods from the available resources
(productive efficiency).
2. Creating maximum possible satisfaction in allocating these goods to people (allocative
efficiency).

The invisible hand argument for capitalism:

P1: Capitalism is more economically efficient than any other economic system.
P2: The most economically efficient system creates the best outcome for society.
P3: The system that creates the best outcome
 is morally best.
C: Therefore, capitalism is the morally best economic system.

How does the invisible hand work?

• Producers want to compete at ‘equilibrium price’ – if they can’t, they will drop out of the
market, leaving only efficient producers, thus productive efficiency is achieved.
• Efficient producers will make an accounting profit (normal profit), which is only as much as
other efficient producers are willing to accept as a return on their investment.
• An efficient economy requires access to massive amounts of info and an ability to make a vast
number of production and distribution decisions.
• The best possible result for everyone is achieved by allowing everyone to act according to their
self-interest.
• To harness people’s self-interest, a market must involve people giving up something they have
for something they wish to have.
• For producers to efficiently minimize the costs of production, they must behave as consumers
in the markets for the means of production, looking to pay the minimum possible price for
them.
• Thus, the invisible hand argument requires the existence of a system of private
ownership, including the right to own capital. The market mechanism relies on self-
interest, so people ought to be responsible for their own welfare.

Criticisms of the invisible hand argument:

1. Market failures in capitalist economies render P1 false because free markets are not in fact
optimally efficient.

Major flaws in the idea that free markers result in economic efficiency in the real world.

• The vital role of competition, which restricts profits to a ‘normal’ level, keeps prices
down and ensures that resources are not wasted. However, most markets are now
dominated by one or a few giant players – competition is imperfect
• Humans are not self-interested, rational agents.
• Producers will externalize costs.
• Common resources will be depleted.
• Information is in fact asymmetrical.

2. Even if one of the outcomes of capitalism is economic efficiency, there are other consequences
and/or features of capitalist economies, which are so bad that capitalism cannot be the morally
best economic system. Thus, P2 and/or P3 false – efficiency alone should not determine what
economic system is morally best.

• P2 – exploitation, inequality and alienation.

Counter-counterarguments to the invisible hand argument based on market failure:

 • Competition Tribunal improves competition.
• National Credit Act forces people to be more rational.
• Fishing licenses and quotas reduces depletion of common resources.
• Insider trading regulations – reduces asymmetry of info.
• Accounting disclosure and audit requirements.
• Provision of public goods (roads, universities etc).

Counterarguments to the invisible hand argument based on exploitation: (Marx):

• Capitalism establishes two sources of income: selling one’s labour and owning the means of
production.
• Workers have no alternative but to sell their labour to the owners of capital (bourgeoisie).
• The bourgeoisie exploit the worker’s dependence by taking as profit the surplus value created
by the worker.
• Even if the economy is efficient, this is injustice – not being paid the true value of their work –
is a bad outcome.
• Capitalist defences:
(i) Many modern workers own the means of production through pension funds – there are
not just two sources of income.
(ii) The bourgeoisie deserve their profit in compensation for their knowledge, creativity,
initiative, invention, risk-taking etc.

Counterarguments to the invisible hand argument based on inequality:

• To an extent, capitalism rewards those with abilities and talents, and hard workers (whether
you think this is fair, this is the ‘engine’ of capitalism: providing the incentives for economic
efficiency, innovation, productivity, etc.
• However, capitalism has features which mean the rick stay rich, and the poor stay poor:
(i) Wealthy can generate earnings simply from their wealth, whereas the poor have only
their time to generate earnings, and are thus dependent on employment.
(ii) Strong inheritance laws.
(iii) No social safety net to reduce the wealth gap, so the poor are trapped in a cycle of
poverty, without access to capital, education, connections, etc.

How inequality challenges the IHA:

• Premise 1 (Capitalism → economic efficiency)

Wealthy elites can influence economic policy to protect and enhance their privileged
positions in ways that are inefficient.

• Premise 2 (Efficiency → best outcome)

 On a utilitarian view, large inequalities may promote less than the greatest
happiness, even when outcomes are efficient

The utilitarian view – the best consequences are those which contain the most
happiness. Thus, ‘the greatest happiness principle’, tells us how to determine whether
a system exhibits distributive justice.

Other views of distributive justice argue that very unequal outcomes are unfair and
therefore not best, even when total happiness is greatest

• Premise 3 (Best outcome → morally best system)

Perhaps we must consider more than just the outcomes, but also how unequal
outcomes arise: e.g. even if the outcomes are good, a lack of equality of opportunity
means the system is bad.

Distributive justice: Refers to the fairness of a certain distribution of resources.

What is the utilitarian view of distributive justice?

The utilitarian view – the best consequences are those which contain the most happiness.
Thus, ‘the greatest happiness principle’, tells us how to determine whether a system exhibits
distributive justice: if it results in more happiness than any other system, then it is just, even
if the resource distribution is unequal.

What is the ‘equal opportunities’ view of distributive justice?

To determine whether capitalism is unfair, we pay attention to what sorts of factors create
inequalities in capitalist society (rich, inheritance, no safety net).

What is the ‘difference principle’ view of distributive justice?

Rawlsian:

Would people in the original position choose utilitarian principles of justice?

No, because they may be forced to sacrifice their own happiness for the greater happiness
of others

• Rawls’ principles of justice are:

(i) Equal rights to maximum possible liberty

(ii) Inequalities are only permitted if: the roles, which earn a higher share of
resources, are open to all under equality of opportunity and they work to
the benefit of the least advantaged group in society (difference principle).

Rawls justified his principles of justice by using a thought experiment:

• The “original position”, behind a “veil of ignorance”.

 • Removes knowledge of our personal characteristics.
• The principles of justice are those that we would agree on, out of self-interest.
• Thus, the circumstances are genuinely fair and equal.
• As if we have just made up a game, and, before anyone knows how good he/she is at
the game, we all agree on the rules.

Views of distributive justice which argue efficient but unequal outcomes are unfair:

• Egalitarian: allocations should be equal. But what about problem of incentives?

Only some egalitarians deny that some inequality is tolerable.
• Marxist: allocations should be based on needs. Problem of incentives?
• Rawlsian: allocations should be based on equality of opportunity and the difference principle.
Allows incentives for more talented and harder working people and maintains that justice is not
simply about overall welfare – justice is also about fairness and equality.

How regulation can alter the outcomes of efficient markets to make them better

• Alienation, exploitation and inequality are all concerned about bad outcomes even if
capitalism is the most efficient economic system
• While some government regulation is designed to make markets more efficient,
other regulation is designed to reduce these bad outcomes, e.g.

Basic Conditions of Employment Act; legalized unions; minimum wage; progressive

taxation; social welfare systems; public schooling (to promote equality of
opportunity).

Argument for pure socialism

• Deontological approach: Duty to help others

• Consequences for welfare
o Resources which are centrally allocated can be done in a way which is
efficient
o Workers may be productive if they have ownership of capital

Arguments against pure socialism

• Lack of incentives lead to unproductivity

• Complexity of central decision making
• Number of failed experiments of countries being socialist
o Inductive argument

The mixed economy: worst economic system, apart from all other others

• The justifications for pure capitalism fail:

 (i) Regulation is required for efficiency.
(ii) Regulation is required to make efficient outcomes best.

• Pure socialism is not efficient enough in practice.

• There are no other plausible alternatives, other than a mixed economy like:

(i) Regulated capitalism: a broadly markets-based system with regulation to

reduce market failures and improve the outcomes in other ways.
(ii) State capitalism: government regulates AND takes an active role as a major
market participant.

Why the mixed economy is imperfect

• By improving the outcomes of a system (like a good consequentialist) we often

increase the likelihood of rights being violated (like a bad deontologist), and vice-
versa
• Even if we dedicate ourselves to outcomes:
-Improving efficiency may worsen inequality & exploitation
-Improving inequality & exploitation will likely reduce efficiency
• Regulators in reality face several challenges:
• Insiders often know more than the regulators can know
• Insiders are often cleverer than the regulators
• Large corporations / wealthy individuals have political and economic power
to influence the regulators
• Trust between market participants is essential, and regulators cannot enforce trust.
 CHAPTER 6 – IN WHOSE INTERESTS SHOULD
BUSINESSES ACT?

Why can’t we simply say that businesses should act in everyone’s interests?

Businesses are more like individuals than like economic systems. Individuals, by definition,
are not there to serve society. Although some dedicate their lives to the service of others, it is
supererogatory. The ability to serve society is a necessary condition, but not a sufficient
condition to be morally required to do so.

Why don’t businesses have just the same set of moral obligations as individuals?

• Businesses do not possess the characteristics of life and consciousness.

• Businesses have characteristics, which individuals do not: e.g. businesses are
made up of multiple people, each with his own relationship to the business.
• Morality describes a system of principles that deals with the distinction
between right and wrong.
• Businesses are not moral agents
o A business is defined as a collection of individuals acting on behalf of a
“fictional” juristic person, who isn’t a moral agent but those
individuals will be

A business is the actions and A business is a “business in

decisions of individuals itself”
Does the business have Yes Yes / No
moral agency? The individuals are moral Can argue either way
agents and the business is no
more than the summation of
individuals
Do moral obligations pertain Yes Yes
to the business’s actions and The business is no more Individuals cannot escape
decisions? than a collection of moral their moral obligations by
agents acting on behalf of the
business

What is a corporation?

A corporation is a business which has been ‘incorporated’, or registered as a legal (juristic)

person all of its own.
• Natural persons – real flesh-blood people.
• Juristic persons – a corporation.
• Sending off some documentation and paying a fee to the company registration
authority cannot make one business morally responsible for the actions carried out
by its employees.

Businesses are juristic persons, meaning that they are inanimate entities that lack the moral
standard that human beings possess. Even though they do not have moral standards
themselves, they are comprised of human beings, all of which have moral grounds.
 • Sole traders and partnerships are unincorporated and the business depends on
owners
• Corporation is a juristic person (corporate) and the business is independent of the
owners

Who are the stakeholders?

▪ People whose existence is essential for the survival of a business.

Formal relationships: Employees, customers, lenders, suppliers, shareholders/ stockholders

of companies.
Less formal relationships: Community, society-at-large.

In whose interests should the business act?

Idea that businesses are
1. No one’s interests. not moral agents. Narrowest view.

2. Shareholders only, by maximizing profit. Shareholder Primacy.

3. Shareholders, but subject to meeting some other moral minimum with respect to
other stakeholders.

4. All stakeholders, by treating them equitably, and balancing their

interests. Stakeholder Model.

5. Some other stakeholder, considered above the interests of shareholders and other
stakeholders.
Some very radical view, which has not (yet) become popular.

1. THE NARROWEST VIEW:

o Business’s focus exclusively on maximizing shareholder profit
o The business should never behave in a way that benefits society if it is
detrimental to the shareholder
o Bottom line thinking
o Implies the fewest moral obligations
o Success is through ruthless pursuit of profitability

Problems: To claim that a business’s only moral obligation is to make profit is to say
that profitability alone determines whether the business has behaved ethically, this
is clearly false: one needs to consider how the business generates its money, not
simply how much is generated.

2. SHAREHOLDER PRIMACY:
 o Focuses on shareholder’s interest – where emphasis is based purely on
obtaining the greatest possible future returns along with sustainable business
growth – whilst only taking a moral minimum into concern.

o Moral minimum can be described as the minimum degree of ethical

behaviour that is expected of a business (business should maximise profits
and act legally)

▪ 3 views of moral minimum:

▪MILTON FRIEDMAN: Stays within the rules of the game – thus it

engages in open and free competition without deception or fraud.
▪ ELAINE STERNBERG: Businesses should observe distributive justice
and ordinary decency. Distributive justice compels rewards to be of
the same proportion as the contribution to the business and ordinary
decency refers to the inclusion of kindness and the exclusion of
violence, coercion and illegality.
▪ THEODORE LEVITT: Obey everyday face-to-face civility (honesty, good
faith and so on).
o Sees a fault in the narrowest view and sees the business should act in favour
of the shareholders (stakeholders are not shareholders)

Varieties of Shareholder Primacy (SP)

CLASSICAL VIEW
▪ The primary moral duty is to serve
shareholders’ interests.
▪ There is also a duty to avoid harming
other stakeholders’ interests, by
observing a moral minimum.
ENLIGHTENED SHAREHOLDER VIEW
▪ Not only is harming other stakeholders
morally wrong, it is an impractical
strategy for serving shareholders’
interests.
▪ The best way to serve shareholders’
interests is usually to act in other
stakeholders’ interests.

Argument 1 FOR Shareholder Primacy: Profit-seeking businesses benefit everyone:

P1: Ultimately, businesses should act to produce the best outcome for all of society.
P2: When businesses favour the interests of the shareholders, this is an example of market
participants acting in their self-interest.
P3: When market participants act in their self-interest (in context of regulated capitalism), this
produces the best outcome for all of society.
C: Therefore, businesses should favour the interests of their shareholders.

• Businesses are already benefitting society by making money for shareholders

• But this leads to monopolistic and oligopolistic pricing, externalities, exploitation,
etc.
• This is a weak argument
Argument 2 FOR Shareholder Primacy: Governments, not businesses, ought to benefit
society:
2A: Government, not business, is the only legitimate benefactor of society

P1: Governments are elected by society through a democratic process, whereas business managers are
not.
P2: Only those elected by society through a democratic process ought to be responsible for society’s
welfare.
C: Therefore, only governments, and not business managers, ought to be held responsible for society’s
welfare.

Challenges:
• P2: The fact that there is one legitimate benefactor (government), doesn’t prevent another
entity from helping. The word ‘only’ implies that no one else, besides government, should be
responsible for society’s welfare. Thus, this premise is false.
One could even go as far to say that the government could achieve its social objectives even
better if it worked with the help of businesses than it can on its own.

2B: If businesses, instead of governments, attempted to act in the interests of stakeholders other than
shareholders, the consequences would be bad

P1: Business’s values are ‘tightly materialistic’.

P2: If a business acts in the interests of stakeholders other than shareholders, it will impose its values on
them.
P3: If tightly materialistic values are imposed on people, the consequences will be bad.
C: Therefore, if a business acts in the interests of stakeholders other than shareholders, the consequences
will be bad.

Challenges:
• Is materialism really an effect? How would business’s donating to an orphanage, voluntarily
contributing towards its employees’ medical aid premiums, or minimizing its pollution well
below legally permissible levels cause society to be more materialistic?

Argument 3 FOR Shareholder Primacy: Businesses are incapable of benefiting other stakeholders:

3A: Businesses are incapable of benefiting other stakeholders because they do not have the necessary
skills and experience

P1: A business manager is ‘not an expert in inflation’ and therefore does not know how to curb it.
P2: Similarly, he is not able to achieve all other socially responsible goals.
P3: Being able to do something is a necessary condition for being morally obliged to do it.
C: Therefore, a business manager cannot be morally obliged to achieve socially responsible goals.

Challenges:
• Hasty generalization – yes there are many social ideals that are not attainable by any
business, but that does not mean that the business cannot contribute expertise to
the achievement of some other socially beneficial outcome. E.g. the HIV fight.
• One doesn’t need expertise to have a reasonably good idea of how to act in the
interests of stakeholders.
• Inflation was very carefully chosen as no one is an expert in inflation but business
managers can find something to help with
3B: Businesses are incapable of benefiting other stakeholders because they cannot afford to
do anything except maximize profits

P1: Businesses in a competitive environment will fail unless they minimize their prices.
P2: To minimize prices, businesses must minimize their profits.
P3: Businesses, which serve the interests of shareholders, do not minimize their profits.
C: Therefore businesses, which serve the interests of shareholders in a competitive environment, will fail.

Challenges:
• Straw man argument – it attacks a misrepresentation of the opposing position to
imply the superiority of one’s own position.
• It assumes markets always to be at the equilibrium point – earning ‘normal’ profits,
which is rarely the case.

Argument 4 FOR Shareholder Primacy: The purpose of business entails Shareholder

Primacy:

4A: Businesses should prioritise their purpose of profit-making because ‘purposes are
essential for evaluating goodness’ (Sternberg)

P1: ‘What counts as a good car depends … on whether the objective is inexpensive motoring or setting
speed records’.
P2: Therefore, ‘purposes are essential for evaluating goodness’.
P3: The purpose of business is to ‘maximize long-term shareholder value’.
C: Therefore, good businesses always pursue their purpose of maximizing long-term shareholder value.

Challenges:
• This argument is thought to be good, but in fact it is not – people generally think that ‘the
business of a business is business’, meaning businesses are defined only by being ‘profit-seeking
enterprises’.

• Preventing a goal from being accomplished is seen to be morally wrong (P2 explains the
evaluation of goodness depends on a purpose). Thus, by utilizing any of the business’s
resources other than for achieving its main objective, to make profit, is seen to be morally
incorrect.
• Fallacy of equivocation, renders this argument invalid – ‘good’ is used with different meanings
in each instance. P1 – ‘good’ describes sustainability; P2 and the conclusion – ‘good’ is used in a
moral sense.
• The argument contains no normative premise, thus it has no normative conclusion – we can
therefore only establish from this argument an amoral claim about how businesses are well
suited to maximize profits if they pursue their purpose of maximizing profits. We cannot draw
any moral conclusions to this argument, thus we can see it leads to no support for
Shareholder Primacy whatsoever.
• Invalid, unsound and has been refuted.

4B: Businesses should prioritise their objective of profit-making because ‘what counts as morally right
action … depends on objectives’

P1: ‘Cutting someone’s throat is normally wrong, but it can be the right thing to do – ethically as well as
 medically – in the course of a life-saving tracheotomy’.
P2: Therefore, ‘what counts as morally right action … depends on objectives’.
P3: The objective of business is to ‘maximize long-term shareholder value’.
C: Therefore, good businesses always pursue their objective of maximizing long-term shareholder value.

Challenges:
• Why should we accept that the only purpose of business is to maximize shareholder wealth?
Although profit-making is what uniquely differentiates businesses from other organizations, we
could just as well identify a different, broader business purpose, e.g. serving customers, taking
care of employees, increasing long-term shareholder wealth etc.

Argument 5 FOR Shareholder Primacy: Shareholders have rights of ownership:

P1: A company’s resources are essentially the shareholders’ property.

P2: Using someone else’s property in ways that conflict with their interests is theft/illegitimate taxation.
P3: Theft/illegitimate taxation is wrong.
C: Therefore, it is wrong to use a company’s resources in ways that conflict with the shareholders’
interests.

Challenges:
• There is overwhelming legal support for the notion that shareholders do not in fact own the
company.
• The shareholder’s relationship with the business is fundamentally different to the relationship
that owners have with their property
• Shareholders do not own the company but some shares which is entitlement to a bundle of
rights, which is not necessarily legal ownership of the company
o They have limited liability

3. THE STAKEHOLDER MODEL:

• All stakeholders’ interests should be balanced/ treated equitably, even if long-term
profitability is hampered.
• This view goes further to suggest that with a large extent of wealth at business’s hands, it is
immoral to acquire adequate resources and not allocate them efficiently to benefit society,
as required.
Arguments FOR the Stakeholder Model:

1. All the arguments for SP fail, so shareholders are not more important than other
stakeholders.

P1: The arguments for SP fail.

P2: We should accept the SM if the arguments for SP fail.
C: Therefore, we should accept the SM.

2. Businesses are citizens and thus have civic duties to society.

P1: Businesses are analogous to citizens.

P2: Citizens have civic duties to society.
P3: Those civic duties include being responsible for society’s welfare.
C: Therefore, by analogy, businesses are responsible for society’s welfare.

Challenges:
• Businesses seem by their nature ill-suited to be described as ‘citizens’, as the term has a strong
association with belonging to a physical plan and businesses aren’t the sorts of physical entities
that exist in one place.
• Duties of a citizen are relatively weak, so it is hard to understand how they might be used to
argue in favour of strong moral obligations for businesses.
• Citizens don’t generally go out of their way to benefit society therefore any argument which
essentially claims that we should treat businesses as we treat individuals is likely to be
counterproductive for the purposes of providing support to the Stakeholder Model.

3. Businesses have extraordinary social power, which implies extraordinary social

responsibility.

P1: Some businesses have extraordinary power to help resolve the problems of stakeholders other than
shareholders.
P2: Some of the problems facing stakeholders other than shareholders are severe.
P3: Anyone who has extraordinary power to help with severe problems, ought to do so.
C: Therefore, businesses with extraordinary social power ought to help resolve the severe problems of
stakeholders other than shareholders.

Challenges:
• When dealing with smaller companies – given their powers are more ordinary – can we hold
them to extraordinary moral standards?

4. The contributions that all stakeholders make to the business imply a duty to act in all their
interests.

P1: When a person contributes to a group enterprise, it is just to reward that person for the
contribution.
P2: A business’s various stakeholders make various contributions to the business.
P3: The contribution made by shareholders is not by default more significant than the contributions
made by other stakeholders.
C: Therefore, it is just for a business to reward all stakeholders for their contributions to the business
without by default favouring shareholders.
 • It cannot be argued that an employee who has worked 50 years and contributed to the
business, is less significant than the contribution of a shareholder who bought shares say a
week ago. This eliminates the hasty generalization fallacy – by showing that shareholders don’t
contribute more significantly to a business (as P3 states).
• The SM doesn’t argue that each stakeholder group should have their interests taken into
consideration as a proportion of their contributions to the business, but rather that businesses
need to balance the interest of all stakeholder groups and not constantly favour one group
over another.

Challenges:
• Shareholders have made such great contributions to the business such as financial
donations and those of entrepreneurship, knowledge, creativity, and inventiveness, which
in fact prove that shareholders are the risk-takers of the business and thus, their interests
deserve to be prioritized.
• It is logical to assume that because of their abundance of contributions, they effectively
would suffer the greatest if the business had to fail.

Note
Businesses acting in a way that benefits society, in the new era of business in many
ways, ensures a business continued survival and thus becomes a necessity for both
management and Shareholder value as it is becoming more and more necessary to ‘do
good’. This means that society is putting pressure on businesses to act in the better
interests of society by not contaminating societies resources (water / soil/ air/ etc.).
Further if society sees that certain business is helping society via causes like
education/ health/ etc. than they may feel more predisposed to the brand and thus
ensure that they support the product or service – a positive externality for the
business. Therefore, the Stakeholder Model will benefit shareholders.
 CHAPTER 7 – PRODUCT SAFETY AND LIABILITY

Product Safety

Defective products

A defective product is a product, which doesn’t function in the way it is meant to, when it is
used for the purposes it was designed for, or used in other reasonable and foreseeable ways.
Sometimes the defective nature of products (or services) means they expose consumers (and
the public) to a risk of harm.

It is important to differentiate a defective product and reckless behaviour.

There are two key ethical questions to consider:

1. The ethical question of risk imposition

• Is it morally permissible to impose risks on consumers through the sale of
harmful defective products?
2. The ethical question of product liability
• When consumers experience harm because of a defective product, who
should be liable for compensation, and when? (i.e. who should be held
responsible for the harm?)

There are two main views:

1. Restrictive
2. Permissive

1. THE MOST RESTRICTIVE VIEW about product safety: It is never morally permissible
for a business to put a product on sale, if there is any chance at all that the product
might be defective in a way which could cause harm.

• The “Anti-harm principle”: Except in very special circumstances, one should not
cause harm to another person.

• The “Linking principle”: If it is morally impermissible to harm a person in a certain

way, then it is also morally impermissible to carry out an action whereby one risks
harming a person in that way. One has a right not to be put at risk of being harmed
by other people in that way.

Arguments resisting this conclusion:

• It is not the harmfulness of actions, or the risk of harm bound up with them, which
makes some actions morally wrong – but rather it is the intent with which they are
carried out (malicious intent).
• If the clear majority is not defective (everybody makes mistakes). However, concepts
like risk, chance and probability tell us more about the limitations on our knowledge
in real-life choice situations than about the ultimate structure of reality.
• The ‘linking’ principle focuses on if there is or isn’t risk rather then how great the risk
is.
• The ‘anti-harm’ principle is contradicted if there is a voluntary transaction between
buyer and seller (consent is given) i.e. dentist.
• Rules out many normal everyday activities.
• Too demanding for producers
• It is not possible to absolutely rule out the likelihood of a product being defective
• Limits choice unnecessarily
• We accept risk as a part of life (e.g. we drive cars despite the high rate of motor
accidents).
• What really matters is the extent or magnitude of the risk, and not the existence of
risk itself.
• Not allowing us to consider the extent, probability and permanence of the harm
invites moral anxiety.
• Intention is what matters
• The morality of decisions/actions should be judged based on their intention and not
their consequences. Intent can be morally transformative (homicide vs cold-blooded
murder).
• Counter Example: You may not intend to harm, but if you know about the likelihood
of harm, our moral intuitions tell us not to sell the product. Therefore, simply
knowing about the likelihood of harm, generates obligations to prevent that harm
[by not selling]. So, sometimes our obligations transcend our intent. Sometimes we
may even want to punish ignorance as negligence.

2. THE MOST PERMISSIVE VIEW about product safety: The fact that a product risks
being defective in a way which could cause harm never makes it morally
impermissible for a business to put that product on sale.

Consequentialist defence:
• A free market in risk (i.e. burglar alarms etc) – different people value safety to
different degrees. Thus, a free market in risk allows people to choose a safer or a
more dangerous product, according to where safety is on their individual list of
priorities. Thus, a free market in risk would tend to generate both productive and
allocative efficiency.

If the government were to impose legal minimum safety requirements, individuals

who would’ve preferred lower levels of safety, now have to pay higher prices; thus
legal minimum safety requirements give rise to an inefficient allocation of risk.

Arguments resisting this conclusion: consent does not always have morally
transformative power.

• Objects to the free market in general: Unjust (if individuals purchase cheap,
dangerous products are those who cannot afford anything safer. But it may
be advantageous to those less well-off to be able to purchase cheap, even
though dangerous, if the alternate is outside ones budget.
• Objects to a market in risk:
 Market failure:
1. A market in risk exhibits a high degree of ‘information asymmetry’ –
producer knows much more then the consumer and uses that
knowledge to help make a sale (that the consumer would not have
made if they were fully informed).
2. Free markets only allocate goods efficiently as long individuals behave
in a self-interested and rational way. But there is doubt that
consumers are able to think rationally about how much they value
reducing the risk of various forms of harm.
3. A free market in risk will tend to create ‘negative externalities’ – e.g.
less costly production – leads to weaker breaks – neither the buyer
nor the seller will be harmed but the third party will.
4. Only efficient outcomes when several producers are competing to
offer consumers the cheapest, best-quality goods they can; but there
is often a ‘natural monopoly’. *E.G. a province can only have one
airport (as demand isn’t great enough), therefore, one has to accept
the level of safety offered by that one airport.

• If consent is given, what level is it morally permissible (e.g. cutting half your
brain out). “Consenting to a transaction is not the same thing as consenting
to the harm which risks ensuing because of it”. One cannot complain about
the harm caused if the level of risk they were exposed to was not
unreasonable. Thus there are limits to the ‘morally transformative power’ –
which consent doesn’t always have.

Deontological defence:
• Consumer’s consent makes risk imposition morally permissible.

The value of preventing a fatality

“Is the consumer exposed to risk?”

“Has the consumer given their consent?”
“Is the level of risk to which the consumer is exposed acceptable?”

Liability for harmful defects

What circumstances, if any, manufacturers should pay compensation for harm caused by
defects in products they have put on sale.
1. CAVEAT EMPTOR – “the buyer beware” – manufacturers are not liable to pay
compensation for harm caused by product defects (unless they have promised to do
so). They are free to do so as a ‘good-will gesture’.
o Free market principle – freedom of contract
o Rights and duties of buyer/ seller only on what they have agreed on
o Let the buyer examine the product and act on his own judgement

• Negligence objection: manufacturer can fail in its duty of care to consumers, even
when its products meet the prescribed minimum safety standard.
o Manufacture fail in their duty to care to consumers even when its product
meets the prescribed minimum standard
o Is buyer beware a fair distribution of responsibility?
o Challenge of information asymmetry

2. NEGLIGENCE STANDARD – manufacturers are liable to pay damages for injuries

caused by defective products when the defect, which caused the injury, exists due to
the manufacturer’s negligence.

• Objections:
o What is reasonable care?
o What are standard safety tests/ standard enhancing equipment?
o Hard to prove the company was negligent – need internal papers and
evidence
o Costly experience

3. STRICT LIABILITY STANDARD – manufacturers are liable to pay damages for injuries
whenever the injury is caused by a product defect.

• Consumer Protection Act declares that the producer or importer, distributor or

retailer of any goods is liable for any harm … caused wholly or partly as a
consequence of:
(i) Supplying any unsafe goods
(ii) A product failure, defect or hazard in any goods
(iii) Inadequate instructions or warnings provided to the consumer pertaining to any
hazard arising from or associated with the use of any goods, irrespective of
whether the harm resulted from any negligence on the part of the producer,
importer, distributor or retailer, as the case may be.

• Incentive to producers to make their products as safe as possible

• Fairer to consumer, compared to the negligence approach
• Manufactures most capable of absorbing and spreading the risk of damages by price
increases and insurance

Objections:
• Unfairness objection: It’s not the manufacturer’s fault.
• Non-exposure objection: It is unfair for one party to profit from exposing other
parties to risks to which the first party is not itself exposed. Argument for strict
liability standard.
 CHAPTER 8 – ETHICS OF MARKETING AND ADVERTISING

General critiques of advertising

• Methods of advertising – sometimes undesirable e.g. ‘puffery’, which is the practice by a seller
of making exaggerated, highly fanciful or suggestive claims about a product or service. Wrong,
and misleading.
• The effects of advertising – its influences on our desires and actions – advertising leads us to
acquire desires that are irrational, or not our own.

Galbraith’s Dependence Effect

In a society where people’s basic needs are satisfied, the production of new goods and services must be
accompanied by the production of a desire for them. Otherwise there would be no market for these
goods.
Producers generate these desires by turning to advertising.

Galbraith argues that producers shape what people want. Thus the advertising industry is pointless, as it
stimulates desires that are not urgent – not worth satisfying – precisely because they do not originate
with us.
• In response, Hayek suggests that very few desires originate in ourselves. Often it is education
that stimulates the desire within one e.g. literature, than some other feature of the society to
which we belong.

RECALL: “If the individual’s wants are to be urgent, they must be original with himself. They cannot
be urgent if they must be contrived for him.”
• My desire for X is urgent – i.e. worth satisfying – if and only if it:
(i) Originates in me (self-originating claim).
(ii) Does not result from someone else’s contrivance (non-contrivance claim).

The self-originating claim:

This refers to a desire that has been formed without any environmental influence (the desire would be
there in changing environments). How does one identify such desires? Thus, it seems that one way to
identify self-originating desires is to consider which desires people tend to have no matter what their
environments are.

This restricts Galbraith’s claim – far too narrow a range of desires as worth fulfilling.
Modifying the self-originating claim:

My desire for X is worth satisfying if and only if it either originates in me or falls under a more general
desire that originates in me (e.g. literature – well-told stories).
• This is less restrictive, however it may now be too permissive, since just about any desire could
fall under a highly general and universally held desire.
The non-contrivance claim:

Seems to prohibit all kinds of external influence, but only those, which are morally inappropriate. Thus,
my desire for X is worth satisfying if and only if it does not result from the morally inappropriate
influence of others.

• A plausible distinction between morally appropriate and inappropriate social influences needs
to be provided.
• His distinction would need to imply that advertising in general – not merely some advertising –
falls into the morally inappropriate category.

Galbraith cannot simply assume that advertising is a morally inappropriate influence – if he were to
assume that advertising is morally inappropriate, then his assumption might be so similar to his
conclusion and he would risk begging the question.

Thus we conclude that neither of Galbraith’s claims is acceptable.

Arrington on 4 potential objections

Arrington identifies 4 potentially tempting ways to object to the advertising industry in general. Each
objection holds that advertising is morally objectionable because it undermines some valuable ideal
about ourselves – that our desires be autonomous and rational, that our choices be free and that our
actions not be controlled by others.
Arrington is no supporter of these objections and aims to show how they fail.

1. Advertising produces desires in us that are not autonomous: A desire that is self-ruling, or
‘truly mine’.
• Distinguishing between a first order desire and a second order desire i.e. wanting X versus
wanting to want X.
• A person’s first order desire is autonomous when it conforms to her second order desires – her
wanting X is autonomous when she also wants to want X.
• Autonomy involves conformity to a higher-order desire, while non-autonomy involves non-
conformity.

Some desires acquired for advertising will be autonomous and some will not be – thus, it is false that
advertising in general produces desires in us that are not autonomous.

2. Advertising produces irrational desires in us: Normally a rational desire or choice is thought to
be one based upon relevant information, and information is relevant if it shows how other,
prior desires may be satisfied.
• My desire for X is rational if, in the knowledge of those features of X that I regard as relevant, I
desire X.

Some desires acquired from advertising will be rational, but some wont be. E.g. I want a bike that (a)
makes me look attractive and (b) has a boss engine. If I see an advert for the bike, and I’m over joyed at its
sleekness and capacity to make me look attractive, that I want it despite not knowing about the engine – then I
have acquired an irrational desire from advertising. BUT if I check the engine details before desiring the bike,
then my desire is rational. Thus, it is wrong to say that advertising in general produces irrational
desires.
 3. Choices that we make as a result of advertising are not free: What is it to choose freely? To
choose X freely, is being able to cite a reason for doing X – if no reason can be given, the person
is yielding to an impulse, rather than making a free choice.
• Some choices will be free and some will not.

4. Advertisers control us: What is it for one person to control another?

• A person C controls the behavior of another person P if and only if:
(i) C intends to P to act in a certain way A.
(ii) C’s intention is causally effective in bringing about A.
(iii) C intends to ensure that all of the necessary conditions of A are satisfied.

Evaluation of Arrington:

Arrington’s analyses have not settled whether the charges succeed because they have not explained what
the charges amount to. In each case, support for Arrington’s analyses of X will be undermined in 2
ways:
1. By considering a scenario designed to show that X can hold even if the conditions of Arrington’s
analysis are not fulfilled.
2. By considering a scenario to show that the conditions of Arrington’s analysis can be fulfilled
even if X does not hold.

• Autonomy:
(i) A first order desire that seems autonomous despite not conforming to a second order
desire: e.g. art/ lawyer example.
(ii) A first order desire that seems not to be autonomous despite conforming to a second
order desire.
The point is whether a first order desire is autonomous does not wholly depends on its relations to
second order desires. The question of autonomy seems to depend also on the strength and duration of the
desire, and the way in which the desire has been acquired.

• Rational desire:
(i) A desire that seems irrational despite being accompanied by the knowledge that
Arrington regards as appropriate: e.g. supplier (good looks).
(ii) A desire that seems rational despite a lack of the knowledge that Arrington regards as
appropriate.
If we establish that X fulfills one of our irrational criteria, this does not make our desire for X rational,
and if we want X without first checking whether it fulfills one of our irrational criteria, this does not
make our desire for X irrational.

• Free choice:
(i) A choice that seems free despite the inability of the actor to cite a reason.
(ii) A choice that seems unfree despite the actor’s ability to cite a reason.
Free choice shouldn’t be so tightly linked with the capacity to offer reasons for one’s choice.

• Control:
(i) An action that does not seem to have been controlled despite the fulfillment of all 3
conditions.
 (ii) An action that does seem to have been controlled despite the fact that not all the
conditions have been fulfilled.
Levitt on the value of advertising

Advertising should provide the plain facts about a product – no more or less – but fails to do so.

• Levitt agrees that people want description about what they buy, not distortion.
• He argues that embellishment and distortion are among advertising’s legitimate and socially
desirable purposes.
• In many spheres of life we embellish and distort objects in ways not required by their basic
function – to link the objects strongly with our identity or aspirations.

Marketing involves several of a business’s activities:

1. Marketing research
2. Marketing strategy
3. Marketing management:
• Product policy
• Pricing
• Distribution
• Marketing communication

Functions of marketing communication:

1. To inform.
2. To persuade.

Deceptive marketing communication:

• Causes consumers to have false beliefs about products or services.
• E.g. Advertisers sometimes make false statements about products.
• However, not all false statements are deceptive i.e. ironic statements or obvious exaggerations.

Marketing communication which deliberately aims to deceive consumers is morally objectionable

because:
1. It tends to create economic inefficiency by undermining consumer sovereignty.
2. It instrumentalizes consumers (uses them merely as means to make profit rather than
respecting their rational capacities.

Depth psychology:

Freudian psychoanalysis distinguishes between 3 parts:

1. Conscious – thoughts, attitudes and desires are ones, which we are fully aware of and which are
under our control to a high degree.
2. Preconscious – mental states are ones we are dimly aware of, which we tend not to control or
identify fully.
3. Unconscious – thoughts, attitudes and desires are ones we are not directly aware of at all, but
which are expressed indirectly in the symbolism of: dreams, ‘freudian slips’, jokes and
compulsive behavior.
Preconscious + Unconscious = Subconscious (instinctive urges, desires and anxieties are repressed –
i.e. relegated to the subconscious – during our upbringing.

Freudian theory sees repression as a good thing: a precondition of health and civilization.

Depth marketing:

The depth approach in marketing communication aims to appeal to the subconscious attitudes, which
influence our behavior e.g. subconscious desires, anxieties and associations.

Advertising based on the depth approach does not appeal to consumers’ conscious mind with info and
arguments, but speaks to the subconscious in its own language: symbols, word-plays, psychological
associations and subliminal messages.

The aim of depth advertising is to get consumers’ subconscious attitudes to influence their purchasing
decisions in ways they are hardly aware of, or not aware of at all.

Three kinds of advertising:

1. Advertisements, which inform and persuade.

2. Advertisements, which deceive.
3. Advertisements, which appeal to our subconscious motivations.

• Generally depth advertisements aim to trigger a positive (subconscious) attitude to a product

rather than to trigger a false belief about a product.

Ethical problems with depth adverts:

• It weakens consumer sovereignty:

Consumer sovereignty depends on: Deceptive marketing

1. Consumer capability. communication can lead to
2. Consumer information. inadequate levels of consumer
information. Thus it weakens
3. Consumer choice. consumer sovereignty.

• It instrumentalizes people:

When we treat our fellow human beings merely as tools to get what we want, we fail
to give them the respect warranted by their intrinsic value.

A business, which deceives consumers through its marketing communication, may treat
consumers merely as instruments for its own business success, in which profit-making beliefs
can be induced.

1. Is it bad for advertisements to appeal to our emotions?

 It is healthy for many purchasing decisions to be influenced by our emotions, but some
decisions – e.g. positions of professional responsibility – can have harmful effects on others if
influenced by emotions.

2. Is it bad for advertisements to create new desires, which we wouldn’t have had otherwise?
Since humans don’t just act on instinct but acquire a culture, many valuable human desires
originate outside them and through the actions of other people.

3. Do depth advertisements control us?

• Arrington’s definition of control is not met (as stated above).

Depth advertising appeals to subconscious impulses, desires and anxieties which are already
there, and which are often overridden by our conscious thinking.

4. Does depth advertising bring out the worst in us?

Many of the subconscious desires depth adverts aim to appeal to are selfish, narcissistic,
aggressive and potentially destructive i.e. greed for power.

• Many say yes, but that this is a good thing, because it enables the dark parts of human nature
to be expressed in a contained and relatively harmless way—through consumption decisions;
the alternatives might be violence, anarchy or mental disorder.
• Others are more optimistic about human nature, and think it would be possible for
people to find identity and a sense of purpose in something less atomistic and selfish
than consumption decisions (what car to drive, what brands to wear); they think that
much depth advertising encourages a form of consumerism which is a sub-optimal
way for humans to live, not enabling them to realize their potential
• On the other hand, some depth advertising aims primarily to defuse anxieties which
may get in the way of our living our lives well, and that may well be a positive service
they perform

But some advertising does undoubtedly appeal to people’s more destructive and divisive
prejudices (e.g. ads for skin-lightening cream); this kind of advertising is wrong for the same
reasons as speech which encourages racial or religious hatred
Ultimately, though, what is being marketed is generally more significant than how it is being
marketed, and disapproval of the products marketed is often at the root of disapproval of the
way they are marketed; depth advertising can, for instance, market safe drinking just as well
as it can unsafe drinking

What is advertising?

For our purposes, we will take advertising to mean the sending of impersonal messages to
the public about a product, which are paid for by the sender, and are designed to inform,
persuade, or (inclusive “or”) otherwise influence their audience. Advertising is impersonal
insofar as its messages are not addressing members of the public individually. They are
crucially different from messages, which may influence a consumer to purchase products,
but are not paid for (such as independent reviews in print or online media). As a branch of
market communication, advertising has historically functioned predominantly as a means
to:

• Inform, by providing information

• Persuade, by providing reasons/arguments It is increasingly the case that
advertising influences or encourages consumers to purchase products
through other means. Deceptive Advertising Deceptive adverts aim to
engender false beliefs about the advertised products. They can do this by:
o Lying: deliberately using false statements with the
intention to deceive
o Misleading: intending to deceive without the use of
false statements, for example through the use of
ambiguity (phrases or words that can mean more than
one thing), or rely on the average consumer’s false
assumptions about the context of the statement. It
is important to recognise that the use of false
statements by individuals or advertisements is not
always lying, for example hyperbole and sarcasm.
Today, due to regulation and professionalization of the
advertising industry, outright lying is less prevalent
than misleading. This was not always the case,
th
however. Quackery, for example, was prevalent in 18
th
and 19 century English advertising. Here are some
common types of deceptive advertising we see today:

o Astroturf campaigns (astroturfing)

o Angel dusting
o Bait-and-switch
o Guarantee with no remedy offered (See lecture
videos for more specific examples)

We will consider three reasons why the use of deception in advertising could be morally
problematic:

. (1) Itcreateseconomicinefficiencyweakeningconsumersovereignty.Accordingto
neoclassical economics, and assuming perfect competition, a market will reach
productive and allocative efficiency when consumers’ needs and desires drive the
market. This is called consumer sovereignty. However, these needs and desires can
 only drive the market when consumers have adequate levels of (1) capability, (2)
information, and (3) choice. When advertisements successfully deceive consumers,
(2) is undermined.

. (2) It instrumentalizes us. According to Immanuel Kant, we have an absolute moral duty
to treat other human beings always as ends in themselves, and never merely as
means to an end. This is because human beings have the rational capacities to set
their own goals, investigate the world around us, and make informed decisions
about how to achieve our goals. This rational capacity gives us intrinsic, not merely
instrumental, value. When businesses use advertising to deceive consumers, they
treat them merely as means to an end, and thus instrumentalize them, we
undermine or subvert their ability to act in ways that enable them to achieve their
own goals, and thus fail to give them the respect warranted by their intrinsic value.

. (3) It undermines society’s communicative capacity. When we know someone who

engages frequently in deceptive acts, we are unlikely to trust that person again, even
when they are telling the truth. If it turns out that many businesses are often
deceptive in their advertising efforts, this may have the effect of undermining not
only the trust we have for those particular businesses, but other (honest) businesses
and even other institutions and individuals. Without trust, it becomes difficult to
communicate, since we do not feel like we can take others at face value. Even if it
seems farfetched to suggest that deceptive advertising would have such wide-
ranging consequences, it is easy to see that the largescale use of deceptive
advertising can undermine the ‘informative communication’ function of advertising.
Firms who wish to communicate accurate information about their products may be
regarded by consumers with undue skepticism, or simple disbelief.

Depth Advertising

Many advertisements (and other marketing communications) are not intended to inform or
persuade—or to deceive. These advertisements are not meant to appeal to the conscious
part of our mind which investigates the world, reflects critically and plans for the future.
Rather, they take the “depth” approach.
The field of public relations was pioneered by Edward Bernays, American war-time
propagandist and nephew of the Austrian psychoanalyst Sigmund Freud, on whose ideas he
drew substantially. Freud’s ideas remain a crucial influence on marketing communication
(advertising, public relations, etc.) which takes the “depth” approach.

Particularly influential are the following Freudian views: • Our actions and decisions are
influenced to a great degree by subconscious

beliefs and attitudes

• The conscious part of the mind comprises thoughts and attitudes of which we are
fully aware and which we can revise through critical reflection
• The subconscious (not a Freudian term) comprises the preconscious part of the mind
and unconscious part of the mind
• The preconscious part of the mind comprises thoughts and attitudes that come
unbidden or of which we are only dimly aware (e.g. thoughts that occur to us while
falling asleep)
• The unconscious part of the mind is only accessible to us indirectly, via the
symbolism of our dreams, “Freudian slips”, jokes we find funny, and, sometimes,
psychological disorders
• Many subconscious attitudes and desires would be destructive and antisocial if we
acted on them
• We are taught through our upbringing to repress these antisocial impulses—so
repression serves a vital social function.

Advertisers may draw on the (not undisputed) insights of depth psychology by, e.g.:

• Designing adverts which appeal to the repressed desires in our subconscious

• Designing adverts which seek to assuage our subconscious anxieties
• Designing adverts which speak to the subconscious part of the mind in its own
language: through word-plays, symbols, creating associations, exploiting existing
psychological associations, subliminal messages, etc. What is crucial to notice here, is
that depth adverts do not only appeal to emotions, attitudes, etc. that are in the
unconscious, but also ones that we are conscious of. In these cases the ‘depth
element’ is in that we are unaware of the way these emotions are being appealed to.

(α) Is it wrong for advertisements to appeal to our “irrational”/emotional side?

• Surely there is nothing wrong with appealing to people’s emotions per se, since it is
healthy to have an emotional life and for emotions to be involved in decisions (e.g.
where to live, who to be friends with, who to marry)
 • Also, though emotions are not as much under our control as beliefs and thoughts, in
many cases they are surely not “irrational” (e.g. you can have good reason to be
angry, or happy, or grateful, or offended)
• However, in some situations it can have very bad consequences for others if people
are guided by their emotions (e.g. doctor’s prescribing decisions), and in these
particular spheres (e.g. marketing campaigns by drug companies targeted at doctors)
it is plausible to think depth advertising is destructive and immoral
• Bad consequences may also arise from appealing to and reinforcing negative
emotions or attitudes

(β) Is advertising wrong when it creates the desires which the products it advertised are
designed to fulfil?

See § ‘Galbraith’s Dependence Effect’ in Chapter Eight of Business Ethics and Other
Paradoxes (pp. 161-163). (γ) Is depth advertising wrong because it controls us? See §
‘Advertisers control us’ in Chapter Eight of Business Ethics and Other Paradoxes (pp. 165-
166).

• Depth advertising does not usually meet Arrington’s third condition for control—‘C
intends to ensure that all of the necessary conditions of A are satisfied’—because it
does not usually create the subconscious motivations it appeals to and it does not
usually ensure that the conscious part of the mind will not override the subconscious
motivation. However this is not always the case. Consider, for example, how certain
advertisements have been accussed of engendering and maintaining body
dysmorophia in people, especially women and girls.
• In the case of more vulnerable consumers, such as children and mentally impaired
people, the advertisers could reasonably foresee that their conscious defences
against subconscious urges would not be so strong;

But with such consumers there ought to be a further check to their consumption in the
shape of a parent or guardian who doesn’t let them just spend money on a whim, and depth
advertisers cannot ensure that this guardian’s decisions enable the purchase, so even here it
seems we cannot speak of control. This is of course, again, not always the case. Consider for
example, the marketing of fast food to inner city children and teens in the United States.

Even if we cannot say that advertisements succesfully control us in these cases, their may be
something morally objectionable (from a deontological perspective) about them trying to
control us, in that here like deceptive adverts, there is a lack of respect shown to the
consumer as an end in themselves.
See also § ‘Control’ in Chapter Eight of Business Ethics and Other Paradoxes (pp. 168- 169).

(δ) Does depth advertising bring out the worst in us—our selfishness, prejudice,
narrowmindedness?

• Many 20th -century depth marketers thought the answer is yes, but that this is a
good thing, because it enables the dark parts of human nature to be expressed in a
contained and relatively harmless way—through consumption decisions; the
alternatives might be violence, anarchy or mental disorder.
• Others are more optimistic about human nature, and think it would be possible for
people to find identity and a sense of purpose in something less atomistic and selfish
than consumption decisions (what car to drive, what brands to wear); they think that
much depth advertising encourages a form of consumerism which is a sub-optimal
way for humans to live, not enabling them to realize their potential
• On the other hand, some depth advertising aims primarily to defuse anxieties which
may get in the way of our living our lives well, and that may well be a positive service
they perform
• But some advertising does undoubtedly appeal to people’s more destructive and
divisive prejudices (e.g. ads for skin-lightening cream); this kind of advertising is
wrong for the same reasons as speech which encourages racial or religious hatred.
• Ultimately, though, what is being marketed is generally more significant than how it
is being marketed, and disapproval of the products marketed is often at the root of
disapproval of the way they are marketed; depth advertising can, for instance,
market safe drinking just as well as it can unsafe drinking
 CHAPTER 9 – MEANINGFUL WORK

Work, meaning, value, happiness

Work: Cannot be defined as one precise meaning, as it is impossible to draw up a list of common
characteristics that all types of work share. We can safely use types of paid employment as our central
examples of work, since these are what first come to mind when most of us think about what work is.
Therefore, what makes human life meaningful in general?

Meaning: Meaning in human life can be contrasted with its absence – an activity lacks a point or
purpose is saying that there is nothing that makes the activity worthwhile – no added value to the
individual. Work can provide meaning in ones life in the sense of giving somebody’s life an intelligible
narrative arc.
• A chosen career supplies one with standards of behaviour and attainment, and a series
of goals to aim at, often accompanied by societal recognition in the form of
qualifications and promotions,
• Therefore, 2 ways in which people talk about ‘meaning’ in life include:

1. When somebody’s life, or the activities which make it up, have value or serve a
worthwhile purpose.
• Value is divided into: moral; aesthetic and prudential (attaches to whatever
improves or maintains an individual’s welfare).
• Two forms of value include instrumental and intrinsic value.

Something is valuable because it leads to other things, which are of value. It is a Something is valuable, not just because it leads to other
means to an end. E.g. with regard to work, the work itself is not meaningful, valuable things, but is valuable in itself. It’s an ‘end-in-
however the end product, the person’s salary, brings many valuable things such itself’. If an individual’s job has intrinsic value, their job will
as increased wealth, material goods and financial security. bring aesthetic experiences, knowledge, self-expression etc.

Thus, in order for work to be meaningful, it needs to withhold some sort of value.

2. When somebody’s life exhibits the kind of narrative intelligibility to which MacIntyre
has suggested. Karl Marx stated that the work we do should allow us to flourish as
human beings.
• In order for it to be meaningful and enable workers to express their
individualities, it needs to adhere to the following 3 characteristics:
rationality, sociality and productivity.
• Rationality allows workers to consider situations they are confronted with
and formulate plans, which guide their behaviour.
• Sociality allows workers to interact and cooperate with each other.
• Productivity is whereby humans add some of their own intelligence and
personality into each product leaving a noticeable mark in the world around
them.
• What we have seen is that a life can contain meaning without being truly meaningful; what’s
more, meaningfulness requires both the sorts of meaning discussed above.
How to identify work which delivers SELF –
intrinsic value: Maslow ACTUALIZATION
Pursue Inner Talent
Creativity Fulfillment

SELF-ESTEEM
Achievement Mastery
Recognition Respect

BELONGING – LOVE
Friends Family Spouse Lover

SAFETY
Security Stability Freedom from Fear

PHYSIOLOGICAL
Food Water Shelter Warmth

A hedonist objection

• Hedonists claim that happiness is the only thing with intrinsic value
• They deny that activities can have intrinsic value
• If this is true then: work is simply good if it makes you happy.

The primacy of happiness argument;

P1: Everything we do in life that has value is ultimately of value purely to achieving the one and only
goal of happiness

P2: If something we do is of value purely to achieving some different goal, then that activity has purely
instrumental value

P3: Happiness, the goal, is something different from all our activities

C: Everything we do in life that has value has purely instrumental value

Response to Hedonism:

Thought experiments show other things have intrinsic value:

• GE Moore’s ‘isolation test’.
• Some valuable things may reduce happiness, e.g. the right to equal treatment.
Robert Nozick’s “the experience machine”:
• P1 is false
An analysis of what happiness means:
• The sort of happiness, which could be the ultimate goal is a contented satisfaction with one’s
life and activities.
• Why is a happy person contented with her life and activities?
• Some activities have value for a reason other than that they ultimately make a person happy,
which is to say that happiness is not the only thing with intrinsic value.
• Or activities themselves are part of happiness, but then activities have intrinsic value.
• The activity of work cannot always be separated from happiness and so P3 is false

Aristotle/Marx on meaningful work

Another way to identify work which is meaningful is to determine what activities allow a person to
realize their potential/ to flourish / to achieve their telos.

• The Aristotle/Marx tradition agues that:

(i) Something flourishes when it engages in its characteristic activities e.g. an eagle with
clipped wings can’t flourish. (Rationality, productivity, sociality).
Alienation[4]

• Capitalism involves work, which does not exercise rationality, productivity and sociality.

(i) Alienated from the process of work

• Indirect argument – product is summary of labour

• What is the experience of the worker when working? How do they experience of
their labour?
• Expeience of worker is involuntary, sacrifice, torture, acting from a compulsion
• Takes away from our rationality as does not develop us rationally and takes away
from our productivity

(ii) Alienated from the product of work

• You don’t own your labour, the capitalist does

• Experience loss
• Worker feels disconnected from his product
• Division of labour fragments your labour
• Not productive

(iii) Alienated from each other

• Marx analysis is classist

• Antagonistic relationship between classes
• We should be in solidarity of others, to the mutual satisfaction of our needs, but we
are alienated from other people
 • Within and between classes there is no solidarity as people are in competition with
one another – interests are not underlined
• Sociality is undermined
• Therefore, workers in capitalist systems do not flourish at work.
• Since work is so timeous and exhausts one to such a large degree, it prevents us from
flourishing through other activities.
• Thus, capitalism causes a fourth form of alienation: workers seek to flourish in activities that
are not characteristic of ourselves, therefore:

(iv) Alienated from the human essence/ species being

• Species being is a thing which is a part of you, but you separate and project your
species being onto the capitalist system, failing to realise your species being for
yourself
• Capitalism overall is rational, social and productive but isn’t on an individual level
• Contradictions
• Changes in technology – automation of production (don’t have to sell your labour)

Responses to the alienation argument

1. Capitalism as a system contains more ingenuity, productivity and co-operation than any other
system.
2. Isn’t alienation a problem with work in any system?
• In theory, capitalism is worse because the profit motive makes:
(i) Employers maximize the specialization and division of labour, and workers
accept mindless activities, compromising rationality and productivity.
(ii) Us more selfish, because we now look to exploit needy people rather than help
them (compromising sociality).

3. Some people in regulated capitalist economies do exercise rationality, productivity and sociality
at work.
4. It is possible to diminish these effects of pure capitalism by regulating (e.g. Conditions of
Employment Act).
5. Working hours are much shorter now then previously (now perhaps one can find fulfilment
outside of work).
6. Is it really capitalism that has made us selfish?
7. The concept of humans flourishing through exercising their rationality, productivity and
sociality may be flawed.
8. There have been improvements made to labour conditions;
• Trade unions
• Legal institutions to protect worker rights
9. Un-alienated labour is not as central a good as Marx makes it out to be. People also value
consumption
• Some people would happily undergo alienated labour as a means to other things they
find valuable (leisure, family)
• Un-alienated labour can conflict with family/friends
 10. Marx is sexist. He thinks production is more human than reproduction. Reproduction as an
animal function. Family life is surely as important to our humanity as production is

In agreeing that work can be meaningful, it is very rarely found upon the masses.

• In a capitalist economy, where the ultimate goal is profit, workers choose careers that are not
of value, unfulfilling and repetitive.
• This profit motive forces companies to reap the financial benefits of economies of scale – thus a
large scale production providing millions of jobs, however these are low skilled jobs and do not
allow for workers to flourish.

However, there are various ways firms can contribute to making work meaningful.

1. Small-scale factories can allow for more labour-intensive jobs requiring more human capital
and allowing for increased job satisfaction.
2. They can also assign group projects to allow for interaction and force employees to grow in this
regard. (This will also benefit the firms, as there will be increased productivity, as workers will
have higher work morale).
3. Trade Unions can also get involved by compromising with companies to provide more
satisfactory jobs.
4. Democratic decision making
5. Give workers shares in the company
6. Reduce job fragmentation/ repetitiveness
7. Training and job rotation
8. Legislative oversight
 CHAPTER 10 – AFFIRMATIVE ACTION (AA)

Affirmative action and equal opportunities

• Affirmative action: more than simply ending discrimination, preferential treatment for
members of certain disadvantaged groups (most often black people or women).
This preferential treatment can take a variety of forms:
1. Outreach: whereby steps are taken to encourage and incentivize applications from
members of disadvantaged groups. (creating awareness). Eg – some universities write
personally to high-performing black high school pupils encouraging them to apply etc
(preference is given eg financial incentives).
2. Tie-breaker: always favoring a member of a disadvantaged group over an equally qualified
member of another group, when both are applicants for the same position, place or
contract. *Favors those of a disadvantaged group not only by incentivizing and encouraging
them, but in the selection process itself.
3. Strong preference: goes further then the tie-breaker AA form – involves awarding positions
to applicants from disadvantaged groups ahead of applicants from other groups, even when
the applicants from the disadvantaged groups are less qualified.
4. Quota: more demanding than the goals or targets of strong-preference AA – adopts a quota
eg of 50 female new hires, then it commits to hiring a women for every man it hires. *May
require (but not always) set-asides – jobs for which only applicants from the relevant
disadvantaged groups are even considered. However quotas are adopted provision that
they will only be filled if sufficiently qualified applicants come forward, thus very similar to
strong-preference AA.

• Equality of opportunity: the idea whereby the jobs or positions people have should not be
determined by their birth or social circumstances – individuals should have equal opportunities
to attain the job they aspire. *Rules out nepotism – the practice of reserving jobs for family and
friends.
• It is unfair for an incident of birth to determine someone’s chances of having the career
they aspire to.
• Originally, equality of opportunity just meant that there should be no legal
barrier preventing any person from applying for the job or public office they
aspire to. This is known as formal equality of opportunity.

• Equal opportunity to apply for whatever job they aspire to goes further to say they should
have equal opportunity to become qualified for that job.
• The idea that no one should face any social barrier preventing them from becoming
qualified for whatever job they aspire is called substantial equality of opportunity.

Is AA guilty of precisely the unfairness which equality of opportunity condemns?

• What sex/race one is born with or if one’s parents happen to be rich are surely just
accidents of birth?

Therefore the ‘unequal opportunities’ argument is constructed:

 P1: It is morally wrong to give people unequal opportunities to hold a job or office.
P2: Affirmative action gives people unequal opportunities to hold a job or office.
C: Therefore, affirmative action is morally wrong.

2 ways to respond to this argument, both of which question its’ soundness (first questions the
truth of P2, whilst the second questions the truth of P1).

1. In societies where, in the past, there has been overt discrimination against a particular
group, negative stereotypes about that group often linger on long after overt discrimination
has come to an end. These stereotypes may influence the judgment of people interviewing
members of this group who apply for jobs etc.
o Note that this may happen without them even being aware of it, so they believe
they are being fully impartial.
o Such stereotypes may influence the thinking of members within the group eg. They
may think of a certain high status jobs as not real possibilities for ‘someone like me’.
*These negative stereotypes thus cause the members of these groups to stay low –
leading to a vicious cycle, which is hard for society to get out of. Gill Marcus “There
are assumptions before you even open your mouth”.
o Many argue that because stereotypes are so persuasive, it takes specific
outreach programs and preference in the recruiting process for members
of disadvantaged groups to become qualified for higher status positions.
o Also people from disadvantaged groups now in high status positions will
provide other members of the group with ‘role models’.

Therefore, this response challenges P2 in that, far from giving people unequal opportunities, AA
achieves substantial equality of opportunity for members of disadvantaged groups by breaking down
some of the social barriers still holding them back.

• Argues in favor of AA and is called the ‘breaking barriers’ argument.

• The ‘breaking barriers’ argument is a consequentialist argument (of unusual sort) – though
it advocates AA on the basis of the expected consequences of AA, it is not a utilitarian
argument (Eg like the invisible hand). This is because it does not defend AA on the grounds
that it will improve the overall welfare of society but just that based on the ‘breaking
barriers’ argument, society will become more just. *An ideal argument. There is suspicion
that they only got there because of ‘special favour’ – the burden of presumed inferiority.
• If AA were to advance only an already rather privileged class within a disadvantaged group,
there is no reason to suppose other members of the group would change their estimation
of their own prospects.
• We need to thus turn to empirical (evidence-based) social research to determine whether
AA breaks down barriers to equal opportunities, or simply erects new ones.
• The breaking barriers argument, even if right in everything it suggests, would not prove P2
false. Rather it would just append a clause on the end of it:

P2*: AA gives people unequal opportunities to hold a job or office, thereby increasing the
probability that in the future more people will have equal opportunities to hold jobs or offices.
• We need to recognize the distinction between equality as a policy and equality as
a right.
Equality as a policy: the goal of achieving, in the future, a society with substantial equal opportunities.
• Does using AA to achieve that goal in the future violate ‘equality as a right’? Eg
murdering a healthy man to prove organ transplants to several terminally ill patients.
• One can’t prove that AA is compatible with justice merely by showing that it
promotes a desirable goal.

The following formulation of the ‘breaking barriers’ argument preserves what is most plausible in it:
(still controversial).

P1: Anything which increases the probability that in the future more people will have equal
opportunities to hold jobs or offices serves a crucial social purpose (creating a more just society in the
future).
P2: AA increases the probability that in the future more people will have equal opportunities to hold
jobs or offices.
C: Therefore, AA serves a crucial social purpose (creating a more just society in the future).

- *It is a matter of empirical research whether P2 is true or false.

- *Those opposing AA can argue that although the ‘breaking barriers’ argument to substantial
equality of opportunity is a vitally important goal, but not a morally permissible means to
achieve this goal.
- Thus the ‘breaking barriers’ argument does not amount to a compelling case for AA.

2. P1 of the ‘unequal opportunities’ argument needs to be challenged.

- Even when individuals all receive the same training, some will inevitably turn out better at
certain activities than others. *Thus even in a society with formal and substantial equal
opportunities, we would expect individuals who were more naturally able than their peers to
have more opportunities to hold jobs.

**BUT people’s level of natural talent or ability is purely an accident of birth and therefore mustn’t it
count as unfair to allocate such important goods on such an arbitrary basis?

When racial and sexual injustice have been reduced, we shall still be left with the great injustice of the
smart and the dumb, who are so differently rewarded for comparable effort.

However, what these individuals holding those jobs do for the rest of us plays a vital role: It would be
bad for society as a whole if those who are not up to performing the tasks attached to their role are
taking on such responsibility – eg. Doctors.

This indicates that P1 of the ‘unequal opportunities’ argument must be replaced with:

P1*: It is morally right to give people unequal opportunities to hold a job or office, if doing so serves a
crucial social purpose.

Defenders of AA have noted that there are ways in which preference for disadvantaged groups can also
improve the welfare of all of society. It is said that increasing the diversity – with regard to sex and
ethnicity, eg employees – contributes to innovation and excellence. *This is due to experiences and
different backgrounds – because there is no mechanical method for devising hypotheses, diversity can
lead to progress in science. “Diversity is a powerful catalyst for idea generation and innovation”.
Additionally AA is said to improve service delivery to disadvantaged communities eg – if doctors who
came from poor black urban neighbourhoods are statistically more likely to set up their practice in those
neighbourhoods.
• Thus P1 of the ‘unequal opportunities’ argument against AA is challenged, as it shows that
sometimes it is morally justifiable to give people unequal opportunities to hold a job, since
giving preference to the most able or talented applicants is morally justifiable.
• It is further argued that AA can be justified on the same grounds as preference for the
talented, since they both serve the purpose of significantly increasing overall social welfare.

The response can be formulated in favour of AA with a similar structure to that of the ‘breaking
barriers’ argument:

The ‘increased welfare’ argument:

P1: Anything which promotes innovation which will benefit all society-members and improved delivery of essential services
to all society-members serves a crucial social purpose (significantly increasing overall social welfare).
P2: AA promotes innovation which will benefit all society-members and improved delivery of essential services to all society-
members.
C: Therefore, AA serves a crucial social purpose (significantly increasing overall social welfare).

Just like that of the ‘breaking barriers’ argument, the ‘increased welfare’ argument does not amount to
a compelling case for AA on its own and has a controversial second premise.
*A powerful objection is that AA actually runs the risk of decreasing overall social welfare by passing
over the most qualified applicants for positions, in favour of less qualified members of disadvantaged
groups.

This second argument also put forward that P1 of the ‘unequal opportunities’ argument was too extreme
and put forward:

P1*: It is morally right to give people unequal opportunities to hold a job or office, if doing so serves a crucial social
purpose.

**Thus P1 can no longer securely establish its conclusion: ‘AA is morally wrong’.

Combining both responses to the ‘unequal opportunities’ argument

A new argument in favour of AA is formed. This argument goes further then both the ‘breaking
barriers’ argument and the ‘increased welfare’ argument (that AA serves a crucial purpose) – by aiming
to establish that it is morally right to implement AA.

P1: It is morally right to give people unequal opportunities to hold a job or office, if doing so serves a crucial social purpose.
P2: AA gives people unequal opportunities to hold a job or office, thereby not just increasing the probability that in the
future more people will have equal opportunities to hold jobs or offices, but also promoting innovation which will benefit all
society-members and improved delivery of essential services to all society-members.
P3: Anything which increases the probability that in the future more people will have equal opportunities to hold jobs or
offices serves a crucial social purpose (creating a more just society in the future).
P4: Anything which promotes innovation which will benefit all society-members and improved delivery of essential services
to all society-members serves a crucial social purpose (significantly increasing overall social welfare).
P5: AA serves a crucial social purpose.
C: Therefore, AA is morally right.
Offenders of AA cannot reject the ‘combined’ argument’s crucial first premise (P1), without also
denying that it is morally right for jobs to be awarded according to talent.
However, defenders of AA have no cause for complacency.
- The satisfaction of individuals’ discriminatory preferences does not in fact contribute to social
welfare.

Proxies for disadvantage (not AA)

When an applicant from a disadvantaged group is selected for a university despite having formal
qualifications, it is not always the case of preferential treatment.

Eg. If a school pupil, who has to work 7 days a week, look after family members, manage his family’s
livestock, and scrape a pass in matric (despite having textbooks) – this might well be proof of
exceptional natural intelligence.

Such extensive tests are timeous for hiring firms, thus recruiting organizations must rely on easily
detectable characteristics of applicants, which have a strong statistical correlation with a disadvantaged
background and challenges faced during education.
- These ‘proxies’ can never be 100 reliable and mistakes are made.
- ‘sex and race’ could be viable proxies for educational disadvantage, as these create barriers to
opportunity – ‘compensating for disadvantage’: eg hunter and rifle – we can thus call it ‘belief
compensation’ – which seeks, on the basis of their level of educational disadvantage, to
determine what a candidate’s formal qualifications actually say about their talent, and does not
involve any preferential treatment.
- There are limits to how much it is justifiable to compensate for educational disadvantage in this
way.

Affirmative Action as redress

The 2 ways in which injustices suffered by disadvantaged groups in the past influence recruiting
decisions are as follows:
1. Unjust discrimination can create special barriers to opportunity for certain disadvantaged
groups. Communities do not have adequate access to services eg medical and legal services.
2. Prolonged discrimination can lead to various forms of disadvantage in a particular societal
group. Recruiters can thus use membership of that group as a proxy for educational
disadvantage when they are assessing formal qualifications and what they say about a person’s
ability.

Many believe that the fact of past discrimination provides a far more direct justification of AA. This is done
by making ‘redress’ to the victims of the past injustices – doing something to make up for bad treatment in
the past.

How can AA constitute redress for past injustices?

This is where ‘compensation for disadvantage’ takes on a different meaning from the ‘belief
compensation’. *Doing what is required to restore welfare back to where it was before damage was
done. This is called ‘redress compensation’.
 - It has been pointed out however that AA does not compensate individuals proportionately to
the harm that was caused by previous injustices.
- Those we benefit from redress are generally ‘the least disadvantaged of the disadvantaged’.
This suggests that AA, considered as a means of making redress, is vulnerable to the following
argumentative assault:

The ‘inadequate compensation’ argument:

P1: A policy is an inadequate method of providing compensation to victims of past injustice, if it does not benefit victims in
proportion to how much they were harmed by past injustice.
P2: AA policies generally do not benefit individuals in proportion to how much they were harmed by past injustice.
C: Therefore, AA policies are generally inadequate methods of providing compensation to victims of past injustice.

Although the above is a strong argument against AA, there are many responses to it:
1. Even if C is true, it might be that AA along with other means of compensation would provide
fully adequate compensation to victims of injustice.
2. It may be impossible, presently, for a state to provide fully adequate compensation. *Thus
surely AA would be better then no compensation at all?
3. P2 might not be so problematic if it could be shown that many older people, who were most
severely disadvantaged, benefit indirectly from the preference in recruiting decisions given to
their younger family-members.

Many critics of AA still agree that compensation must be provided and have tried to establish a much
more wide-ranging conclusion:

The ‘inadequate redress’ argument:

P1: A policy is an inadequate method of providing compensation to victims of past injustice, if it does not benefit victims in
proportion to how much they were harmed by past injustice.
P2: AA policies generally do not benefit individuals in proportion to how much they were harmed by past injustice.
C: Therefore, AA policies are generally inadequate methods of making redress to victims of past injustice.

While P1 makes reference to compensation, the conclusion refers to redress. Thus there is an unstated premise. Thus to be
valid an additional premise is needed:

P3: Compensation form harm suffered due to past injustice is the only form of redress owed to victims of past injustice.

Good reason for P3 being false is that another form of redress does exist – ‘rectificatory redress’ –
attempts to make up, not for the harmful consequences of an unjust act, but for the unjust act itself.
*There is no way to go back in time and literally ‘undo’ the unjust act itself, therefore ‘rectificatory
redress’ (do something for them to make amends) has a somewhat symbolic character.

While AA may provide redress to Cannot compensate/cancel the harm caused, all it can do is symbolically
disadvantaged groups, it is said, it does cancel an unjust act by means of an ‘opposite’ act – which expresses
remorse and their wish to ‘undo’ what was done.
this by unjustly disadvantaging other
groups.
- Before considering how to allocate goods and opportunities fairly, a state must first pay its
debts. Eg dying dad with 4 sons but owes the one R10 000.

‘Rectificatory redress’ symbolically benefits (cancels out) all those discriminated against by unjust laws,
regardless of how much (or how little) harm they suffered, whereas ‘compensatory redress’ aims to
cancel a specific quantity of harm.
- Thus if ‘rectificatory redress’ is owed to make amends for the unjust act itself, P3 is false and AA
can be justifiable as a means of redress even if it does not constitute an adequate method of
making ‘compensatory redress’.
 CHAPTER 11 – EMPLOYEE RIGHTS

The ‘contract view’ of employee rights

Employees are morally entitled to the working conditions stipulated in their contract of
employment, whatever those may be – nothing more, nothing less.

Does signing a contract of employment always change an employee’s rights and obligations
in the way that they contract view assumes? Consider the strongest arguments for the contract
view:

The argument from agreement:

P1: When one competent, informed party voluntarily enters into an agreement with another, both parties are
morally obliged to abide by the terms of that agreement.
P2: Competent, informed persons who sign a contract of employment with an employer voluntarily enter into an
agreement with the employer to work for that employer under the conditions stipulated in the contract.
C: Therefore, competent, informed persons who sign a contract of employment with an employer are
Morally obliged to work for that employer under the conditions stipulated in the contract.

P1
• P1 only applies to competent people and voluntary agreements
• ‘Competent’ refers to people who have reached the age of maturity and are in a
rational frame of mind when they enter into the agreement.
• Could add a ‘cooling-off period’ during which they could change their mind with no
penalty
• By signing a contract saying you’ll do something, doesn’t make one morally obliged
to do something immoral.
• One must be informed with sufficient info (e.g. doctor and cancer patient).

P2
• Sometimes accepting the offer is the last resort and thus not considered
voluntary, however if the terms of the agreement are ‘fair’ it morally binding nonetheless.
Thus, P2 is not generally true.
• What are fair terms of employment and working conditions?
• By being restricted to only 2 options, although your choice is not voluntary, is still
contractually binding. (If you have no choice but to agree to something – or all the
other options are so dire that no reasonable person could find them acceptable –
then you are not obliged to abide by the terms of the agreement you enter?)

Workplace privacy

Has to do with:
• People’s access to information about us (including sensory access to us).

Violations of privacy involves:

 • Somebody who discloses private information against the individual’s will,
undermines the individual’s ’informational self-determination’ – only over
personal information (over which that individual ought to have control).

Which information about themselves should individuals be able to control?

• Personal information: stranger, acquaintance, colleague, friend, lover, family-

member, old friend, best friend, intimate life-partner.
Is information, which is normally shared only between people whose
relationship is one of at least friendship.
• Informational self-determination enables individuals to retain control over
the status of their relationships with others.

Infringements on privacy:

• To infringe on somebody’s privacy is to access or disclose personal

information about them against their will.
(i) Disregard the boundary between different types of social relationship.
• For example, disrespectful questions asked during a job interview

(ii) Undermine an individual’s autonomy about personal information

about them.
• Controlling certain information is a central way in which one can retain
control over the status of their relationship with others
• Infringing on privacy, especially when it becomes widespread, is a type of
action which tends to weaken institutions

(iii) Tend to make the repertoire of types of social relationship between

equals unavailable to society-members in general.
• Defaces the currency of social relations

(iv) Causes negative emotions (shame, embarrassment, vulnerability) in

the victim of the infringement.

Sometimes an important interest can override privacy:

• E.g. HIV or mental illness.

• Interest of the employer:
o Interest in each employee’s doing their job effectively (e.g. monitor
phone calls/ drug tests).
o Not all employer interests are relevant here. Example of a relevant
interest is performance related. Is the worker performing their job
effectively?
o The kind of infringements will also matter. Its not clear that very
intrusive infringements will be justified (e.g. drug tests)

• Interest of the employee:

 o Interest in not being harmed in the workplace (safety - ‘duty of care’).

• Interest of the customers and other third parties:

o Interest in not being harmed by business operations.

When overriding interests justify infringing on an employee’s privacy:

• Only the necessary information should be accessed.
• Information should be accessed by as few people as possible.

Collective bargaining

TRADE UNIONS: A trade union (TU) is a membership organization, whose members either
all work for the same business, or else all do the same type of job, though they may be
employed by different businesses.

COLLECTIVE BARGAINING: The terms of employment and working conditions agreed

to by an employer in negotiations with union representatives apply to all its employees who
are members of that union.

What are trade unions?

• Fee-paying membership organizations.

• Members elect representatives.
• Representatives negotiate employment and working conditions with management
on members’ behalf.

Strikes:

• Union-members withdraw their labour.

• Draw on ‘strike-fund’.
• ‘Picket’ their employer.

Why do we need trade unions?

Why collective bargaining?

• Way of defending workers’ rights speedily and effectively

• Employers have bargaining advantages over individual employees:

(i) Collective bargaining aims to reduce the bargaining advantage which an
employer has relative to individual employees
(ii) The employee usually needs a worker, not that worker
(iii) Supply of labour outstrips demand.
(iv) Employers can generally hold out for longer in a stand-off.
(v) Unions have a strike fund
 • Objections to collective bargaining:
(i) Amounts to a labour cartel, unfairly advantaging workers in negotiations (but
consumers and investors use collective bargaining as well).
(ii) Reduces productivity, holds back growth (may not be a problem if it increases justice
and evidence suggests trade unionism may benefit economic growth overall).

• Government can protect collective bargaining by:

(i) Legalizing trade unions, compelling employers to recognize trade unions,
affirming unions’ rights to peaceful picketing, passing laws granting them
immunity from prosecution for damages over productivity lost through
strikes.
(ii) Making it illegal for businesses to fire workers for taking part in ‘protected’
strikes.

Anti-union Defences

Why not government regulation?

• Too slow: Can take extremely long for issues to come to govt attention.
• Too general: Leaves room for interpretation.
• Too expensive: Has to employ an army of inspectors.

• Strong-arm tactics are unfair because they tilt power too far in favour of workers.
o Is this really true?
o Collective bargaining far more common that we think (e.g. supermarkets
pooling together bargaining power of many shoppers to ‘strong-arm’
producers to cut costs so that their prices are low.
• Leave the task of ensuring fair working conditions to the government/central regulator
o Problematic because of the distance between government and workers.
Bureaucracy prevents speedy resolution.
o Main government capability would be legislative. Again this could take a
while and complicate matters because of interpretation.
• Scale of this task is costly, and ultimately its unclear that it will be enforced/policed
efficiently
• This doesn’t meant there is no role for the government in the protection of worker’s
rights
o Ensuring climate in which unions can operate effectively.
o Legislation.
• Trade unions hamper productivity and economic growth.
o Happy worker is a productive worker?
o Unions essential for the smooth running of the company. (conveying
information to management and vice versa)
o The role of trade union isn’t about promoting economic growth. It is about
protecting workers rights. Their remit is one of justice, not economic growth.
Why should economic growth come at the cost of a more just society?
Controversial union practices:

1. Secondary strikes or ‘sympathetic strikes’ – are strikes by workers

who do not have a grievance in their own workplace, but withdraw
their labour in order to put pressure on the employer of workers from
a different workplace who do have a grievance (illegal in many countries).
2. Disruptive/coercive strikes – usually undermine trade unionism by
giving them a bad name. This is due to damaged property, assault to
employers and generally an unpeaceful ‘picket’.
3. The closed shop – when once a majority of employees of a business
have chosen to be represented by one particular trade union,
everybody who wishes to work for that employer has to join that
trade union (restricts workers’ freedom of choice). Agency shop –
compromises, in that workers are not obliged to join any trade union
in particular, however they have to pay the monthly subscription,
which goes to a fund that the trade union can draw from.
4. Political affiliations of trade unions – many trade unions make large
financial donations to, and campaign on behalf of, political parties,
which they believe have workers’ interests at heart.
However, there a 2 main concerns in this regard:
(i) In a democracy, it ought to be up to each individual citizen
which political party they support. Consequently, individuals
should not be put in a position where, if their interest as
employees are to be represented in collective bargaining by a
trade union, some of their subscription money, and their
implicit support as a union member, will go to whichever
political party the trade union as a whole decides to back.
(ii) Particularly when a union-backed party is in government, a
political party’s dependence on union support (including
financial support) can give trade unions a degree of influence,
which is capable of subverting the democratic process.
 CHAPTER 13 – BUSINESS AND THE ENVIRONMENT

What is the environment?

The environment excludes the built environment (roads, buildings, etc.) and excludes human
beings. It includes atmospheric grasses, rocks, minerals, soils, water and living organisms.

How do businesses damage the environment?

• Deforestation
• Air/water pollution
• Overfishing (tragedy of the commons)
• Monoculture
• Intensive animal agriculture
o Cumulative effect of human influence on the environment and changing the
earth (biodiversity, climate, geomorphology)

Why is damaging the earth wrong?

If an act is wrong, then someone is wronged by it. Moral standing is a person/ something/
thing which has the capacity to be wronged, and this is different to moral agents
• Moral patients: Entities with moral standings (have the capacity to be wronged)
• Moral agents: Entities with moral responsibility

Who (or what) has moral standing?

Various commercial activities can have significant consequences for the environment,
including plans, animals and other entities. If an act that has consequences for the
environment is morally wrong, then presumably someone (or something) is being wronged.

What entities have moral standing?

1. Human beings:
• Have moral standing
• Any human being can be wronged

2. Conscious beings:
We need to establish why killing e.g. chickens - for food - is unproblematic, while
killing e.g. whales – which is done to acquire various products – is so bad that it
amounts to moral suicide:
• Hunting whales is extremely cruel, but the way animals are treated in factory
farms is as cruel.
• There are a limited number of whales, but there is no reason to expect the
disappearance of chickens. Chickens are unlimited whereas whales may
become extinct, however killing whales is wrong no matter how many of
them there are.
• Whales are intelligent, but chickens are intelligent too?
 • Aesthetic differences.
• Whales are found in the wild, whilst chickens are found on farms – both
wrong.
• Bentham proposed that when we consider whether any beings have moral
standing, the question is not, “can they reason or talk,” but “can they
suffer?”
o By its suffering, it can be wrong
o If the suffering can be avoided, then the creature is being wronged
o How do we know animals can suffer?
▪ Their response to stimuli and neural structure is like ours
which gives evidence that they can feel pain too
▪ But, there is no relationship between cognitive ability and the
ability to suffer
o If the capacity to suffer is the criteria for moral standing, then what
about a mentally impaired human who cannot suffer because she is
unconscious? Is it then impossible to wrong such a person?
▪ There are other criterion for moral standing

Thus, if animals have moral standing then humans are continually committing
a great wrong in the treatment of factory farmed animals – in terms of the
number of creatures being wronged and the extent to which they are wronged.

3. Organisms:
• Can’t be wronged, don’t have moral standing.
• “The last man scenario” – would it be wrong for the last sentient being on
Earth to obliterate the biosphere?
If so, what does this show?
(i) That vegetable life-forms also have moral standing?
Perhaps it is possible to do wrong without wronging some being in particular? We can
distinguish between:
(i) Moral standing (can be wronged).
(ii) Moral significance (has value in a way we should take into account
in our actions).

So harming the environment might not just be wrong because it:

• Wrongs existing humans

• Wrongs future generations
• Wrongs non-human organisms

Our “pleasurable experiences” of nature might be better described as attitudes which

present parts of nature as having an intrinsic value— e.g. for its beautiful or awe-inspiring
nature— which we should consider in our actions.

The anthropocentric view of nature

Says that the significance of nature is to be understood solely in terms of human interests:
e.g. human interests in enjoying, appreciating, using nature. But often our attitudes of
appreciation of nature (e.g. awe at thunder and lightning, craggy mountain ranges and
canyons, high waves, river rapids, or finding landscapes beautiful), just like our attitudes of
appreciation of works of art or of other people, attribute an intrinsic value to parts of
nature.

Something can be considered wrong only insofar as it wrongs human beings. The
significance of nature is to be understood solely in terms of human interest (enjoying and
appreciating nature)

Environment: Our physical planetary surroundings, excluding humans and the built
environment.

Talking about “nature” or the “natural environment” can be misleading since some organic
parts of the environment (e.g. urban forests) are human initiatives, and anyway humans and
their buildings are also parts of nature.

There are at least three well-known reasons for thinking that an unregulated market will not
protect the environment sufficiently:

1. The costs of damage to the environment are borne by parties external to the
relevant economic exchanges i.e. neither the producer/seller, nor the
consumer/buyer. In fact, neoclassical economics predicts production of negative
externalities will be higher than socially optimal.

2. Many environmental goods are common resources, not privately owned and traded,
without an established exchange value. It would also, at least as things are, be
difficult for many of them to become privately owned and traded e.g. breathable air,
ocean fisheries. There is no potential for a market to meet consumer demand in a
good if it is not owned and traded, as it then falls outside the domain of the market.

3. The theory of rational choice tells us that the outcome, which is best for a group, can
become rationally inaccessible when each member is acting individually and self-
interestedly. Co-operating to reduce environmental pollution can easily become
irrational for a self-interested individual, when the risk of being a “sucker”—i.e.
being the only one who acts to reduce pollution, which is ineffective and means one
misses out on benefits—is high. In prisoner’s dilemma situations, what is best for a
society will not be realized through individuals choosing individually what serves
their interests best.

Thus, corporations are now urged to engage in sustainable business.

 • DeJardin’s guidelines for companies:

(i) Don’t use renewable resources faster than the earth can replenish them.
(ii) Don’t use non-renewable resources at a rate faster than the development
of alternatives.
(iii) Don’t generate waste faster than the environment can assimilate it.

What is morally objectionable about harming the environment?

1. It wrongs other human beings e.g. by increasing their risk of illness and death.
2. It wrongs future generations of people, who may suffer from floods and famines as a
result of chemical and gas emissions by industry now. Is it possible to wrong
someone that is not even born?
3. It wrongs organisms other than humans (the last man scenario).
4. It disregards the intrinsic value (parts of) nature have.

Shaw and Barry on Government regulation

Government regulation is crucial for limiting commercial environmental damage. In the Bill
of Rights, it states;

Everyone has the right to have the environment protected for the benefit of present and future
generations through reasonable legislative and other measures that
I. Prevent pollution and ecological degradation
II. Promote conservation and
III. Secure ecologically sustainable development and the use of natural resources
while promoting justifiable economic and social development
Shaw and Barry discuss 3 methods which the government could employ;

1. The regulatory approach

• This includes making regulations which are then enforced by the government
agencies and the courts
• Advantage:
o It is fair in the sense that environmental regulations apply to
businesses equally
• Disadvantages;
o Lack of nuance
▪ Universal standards which apply to businesses do not take
into consideration contextual matters
o Lack of incentive
▪ Regulation can take away an industry’s incentive to do more
than the minimum required by law

2. The incentives approach

• Tax breaks and subsidies are used to reward companies for developing
environmentally sound practices and equipment
 • Advantage:
o Encourages businesses to act voluntarily in protecting the
environment rather than coercing them to meet environmental laws
• Disadvantages:
o Slowness
▪ May not adequately address environmental problems that
require immediate attention
o Rewards for reducing bad practices
▪ Rewards for business doing things which they are morally
expected to do (e.g. not polluting)

3. The pricing approach

• Defines a cost or charge for a specific kind of pollution in a specific area at a
specific time
• Charges are tied to the amount of damages caused
• The policy allows for businesses to buy permits to pollute a limited amount
and can sell these permits to each other (carbon credits)
o Advantage:
▪ Companies pay for acting inappropriately
▪ The cost of pollution is placed on the polluters themselves
o Disadvantages:
▪ Difficulty of pricing
• It is hard to set a price tag on pollution permits as the
damage is unknown
▪ Removes moral stigma of pollution
 CHAPTER 14 – GLOBAL BUSINESS ETHICS

Globalisation

Globalization is the process by which businesses or other organizations develop

international influence or start operating on an international scale.

Features of globalization;

1. Transnational identities
• People have identities which transcend past their national boundaries

2. International law and regulation

• Law and regulation comes from above the level of the nation state
• Supranational bodies such as the EU, ETO, UN etc.

3. Rise of non-governmental organisations

• NGOs are campaigning groups, often international which raise public
awareness about specific issues and put pressure on the government to make
changes

4. Privatisation
• Large public service monopolies tend to be inflexible and overly bureaucratic
and deliver mediocre services at a higher cost

5. The rise of multinational corporations

• How can MNCs put pressure on the state?
I. Corporate power of transnational withdrawal
o If a government does not enact laws and regulations which are
favourable to them, they can withdraw operations from that country
and set up shop elsewhere
o This generates a race to the bottom

II. MNCs can exert pressure and influence the state through lobbying
o Representatives of the MNC persuade government officials through
select/ bias information, to persuade the state to act in the MNC’s
interest
o Lobbying is often combined with lavish hospitality for politicians and
officials

III. MNCs can donate money to political parties/ politicians to finance their
campaigns
o In return for special favours
o Politicians need campaign funds
 IV. Revolving doors
o The same person will be in the MNC and have a government positon
o It is easy for the actions and interests of the one to guide the other

V. MNCs can influence government through bribing/ corruption

Standards in less economically developed countries

E.g. Nike sweatshops in Asia which have low wages and abusive working conditions

Sweatshops is a term which refers to poor working conditions usually in old buildings with
poor ventilation, unsafe, unhealthy and crowded working conditions. They receive no
benefits and are often subject to harassment.

Is it morally permissible for MNCs to operate with different product safety standards when
selling to consumers in richer countries from those it operates with when selling in LEDs?

• Double standards
o People in richer countries are subject to better working conditions /
different levels of risk than those in poorer countries
o Poorer people will trade risk at a different price than richer
consumers
o Value of preventing a fatality (VPF) is higher in richer countries than
in poorer ones
o What country you are born into is arbitrary from a moral point of
view (Rawlsian phrase)
o MNCs can make products/ working conditions safer but this will
impose an additional cost on the buyer
o Minimum safety requirements but sometimes there are non
o Businesses have a general duty to care (Deontological view)
o MNCs must avoid negligent omissions to introduce improvements

• Workplace abuse
o Abuse is likely to leave employees demoralised, sick, unenthusiastic
and relatively unproductive
o It is disrespectful to the workers
o Sexual components are serious infringements on privacy within the
workplace and of the worker

• Child labour
o Child labour is not always bad; consider children doing chores, jobs or
even having careers. Sometimes the family’s wellbeing relies on the
work of the child (e.g. farms)
o What kind of child labour is morally problematic?
• When the children’s work deters them away from an
education
• Violates equal opportunities
 •
Dangerous working conditions for adults are not
always OK for children
• Children are more susceptible to illness than adults
• Trade unions won’t usually represent children
o MNCs to provide training, employ children part time, include house
training among benefits to child employees

• Suppliers standards
o MNCs often are not the ones who put workers through questionable
working conditions, but these have been contracted or subcontracted
by the MNC
o They do not have the same moral responsibility as the abusive
supplier, but nonetheless, must intervene
o Sometimes MNCs are unaware of the abuse
• This absolves the moral responsibility of MNCs
• If it is non-culpabale ignorance (ignorance which does
not result from the MNC’s omission to do something),
it ought to have done
• Sometimes ignorance is culpable and the MNC’s moral
responsibility is not absolved (Failure to discharge a
“duty of care”)

The duty of rescue

What sorts of situations does an MNC have a duty to give aid?

Bernard Williams formulated the “moral principle of rescue”

I. If X is in peril and
II. Y is saliently related to X’s peril and
III. Y can hope to offer effective aid to X
IV. At a cost to Y, which is not unreasonable high, Y ought to help X

The moral principle of rescue and MNCs;

I. If X is in peril
o Natural disasters, epidemic, state repression, effects of poverty

II. Y is saliently related to X’s peril and

o Proximity (When the MNC operates in the LEDC)
o When the MNC’s actions is partially causing the plight of the people
o The local community of the business is regarded as a stakeholder in that
business
o If the MNC has a unique ability to help

III. Y can hope to offer effective aid to X

• Help the poor through aid and initiatives
 IV. At a cost to Y, which is not unreasonable high, Y ought to help X
• Money and skills

Legitimacy
Are the actions of a body (business or state) legitimate? Does a body have the right to be
talking and implementing decisions about the range of matters in the first place? If so, it has
the legitimacy

MNCs now have powers which they did not have before and which were only given to the
states. For example, providing public services, like water and electricity.

When asking about the legitimacy, one can ask;

• What was the content of the decisions?
o Were the decisions correct, prudent, fair or, morally right?
o Does the body have the right to be taking and implementing
decisions about the range of matters in question?
▪ If it has the right then it has the authority to do so,
▪ But if not, it is illegitimate and does not have the
authority
MNCs can gain legitimacy indirectly or directly.
Indirectly: External oversight by a body which itself directly democratically accountable,
then the MNC is indirectly accountable for those lives.
 CHAPTER 15 – BEHAVIOURAL ETHICS

What is behavioural ethics?

A field of psychology – not concerned with answering the normative questions ‘what is the
right way to behave?’

Concerned with answering descriptive ethical questions e.g. why do people behave
unethically?

Why be ethical?

• A morally mature answer – because it’s the right thing to do.

• Religion – damnation punishment.
• Unethical behavior in business prevents effective career advancement.
• Kohlberg’s six stages of moral development:
1. Right = not punishable
2. Right = what benefits me
3. Right = meeting expectations
4. Right = legal and social norms (many get stuck at this stage).
5. Right = consensus view
6. Right = conforms to logically sound, universal and consistent principles
But most of us require prudential reasons to be ethical…(self-interest).

Prudential reasons to be ethical

1. Costs of unethical behavior:

• The risk of being severely punished.
• The risk of being caught but without exposure – businesses quietly go out of
business (not everyone that gets caught is exposed).
• The weight on our consciences.
2. Rewards of ethical behavior:
• Trust of others.
• The happiness associated with being virtuous (eudaimonia – the sort of
happiness which is considered to be the ultimate goal of human life).
• Should one be in it for the reward?

How do we go wrong?

1. Choosing wrongly in a right-right dilemma:

• Confronted with 2 or more options where both are right for different
reasons.
2. Choosing wrongly in a right-wrong dilemma:
• When there is a clearly ethical option but we are influenced somehow to
choose the unethical option.
3. Being unaware that there is a dilemma (ethical fading):
 • Not thinking about others – just not thinking about the consequences of a
specific act.
• Not actively choosing at all, just being unaware (habitual behavior).

But my brain doesn’t make mistakes? It is almost inevitable that we will make errors in the
tricky cases, as we as humans suffer from a limited capacity for critical thinking. What was I
really thinking? I should’ve known better!
• Selective attention
• Cognitive reflection

Some cognitive biases that effect our ethical judgements

• Bias blindspot
• Confirmation bias
• Hindsight bias
• Effect heuristic
• Self-serving bias
• Framing effects
• Overconfidence bias – do you think you are more ethical than others?
• Availability heuristic – personal contribution to keeping the place tidy?
• Incrementalism

What are the steps to acting ethically? Any of these steps are subject to our:
• Nature
(i) We are capable of consciously
1. Be aware that there is a moral issue.
choosing to do wrong.
2. Think carefully to identify the right option. (ii) Cognitive biases decrease
3. Choose the morally correct option. awareness and impair thinking.
• Circumstances (personal/
organizational).
THE INFLUENCE OF PERSONAL INCENTIVES

There is often conflict between our immediate (usually financial) interests and our ethical
responsibilities in the workplace - conflict of interest.
• Should be carefully managed, if not avoided, because the impulse to do the wrong
thing is too powerful to be resisted.
• Because employees often experience a conflict between their personal financial
interests and the interests of their employer, businesses tend to structure their
remuneration in such a way that incentivizes the employees to work towards the
benefit of the business – through pay-for-performance schemes.
• ’Incentive gaming’ refers to the ways that works manipulate pay-for-performance
schemes in order to benefit themselves rather than the employer.
• Pay-for-performance schemes will incentivize employees for reasons:
(i) Such schemes can only pay for observational performance (not all can be
observed).
(ii) Measurement of observable performance is imperfect.
(iii) The alignment of observable performance with good organizational
outcomes is imperfect – e.g. to boost the sales figures, an insurance salesman might
offer discounts, which are not in the best interest of the business.
 (iv) The question of what constitutes a good organization outcome is
contentious.
• When people are under external pressure, they will be more likely to cross ethical
boundaries.
• Loss aversion – value losses more than gains.
• Prospect theory – people are willing to risk a great deal more in order to avoid a loss
than to secure a gain.

THE INFLUENCE OF EMOTIONAL FACTORS

• Emotions can play havoc with our rationality.

• We use defence mechanisms for self-esteem in order to fool ourselves into thinking
that we are good people, even though we have done what we should not.
• Defence mechanisms are clearly fallacious and often convince others that we are
more virtuous than we are.
There are a wide range of such defence mechanisms:
• Euphemisms: nice ways of referring to something, which are often used to mask
morally suspect behaviour
• Favourable comparisons: if we are doing something wrong, we will feel better about
it if someone else is doing something worse.
• Rationalisations: trying to give sufficient reasoning to justify why you did something
wrong, to try make it sound right. “Example: I cheated on that test only because it
didn’t count for much”
• Denial of responsibility: It’s what I’m paid for.
• Denial of harm: No one was hurt, it could’ve been worse.
• Appeal to convention: Everybody else does it.
• Appeal to higher loyalties: The ends justify the means.
• License claiming: The firm owes me.

• Moral compensation seems to occur in certain cases. However it can occur in both
ways – if people feel that they have been particularly good, they often engage in a
process known as moral licensing – whereby they allow themselves some
indiscretions (as if their ethical bank account is in credit) – I’ve earned the right, the
firm owes me.
• Good moods stimulate creativity and make us more intuitive, but less vigilant and
more prone to logical errors. Thus, when feeling ‘cheery’ be extra careful.

A BOSS’S INFLUENCE

What extent are people willing to cause harm simply because they are told to do so by an
authority figure?

• Employee’s eagerness to please their bosses.

THE INFLUENCE OF COLLEAGUES

• Peer pressure – often, people are pressured by their peers without any awareness
that their peers intend to change their behaviour.
• Groupthink – effects of peer pressure (conformity bias)
• Shared responsibility – bystander effect, people are much less likely to act against a
moral wrong when other people are witnesses to it.
o Shared responsibility leads to less responsibility being shown.
• Moral muteness – not speaking up about ethics because of:
(i) Threat to harmony – allocating blame, seen as a personal insult.
(ii) Threat to efficiency – Raising ethical issues gets in the way of making efficient
work decisions
(iii) Threat to image of power – businesses are perceived to be “cutthroat” and
ethical issues may be seen as soft and sensitive
(iv) Threat to image of effectiveness – may be incorrect, this may reflect badly on
the image that others have of their effectiveness.
• Moral exclusion – we tend to ignore or downplay harms to ‘out-groups’ who are
distant from us e.g. uniformed clients, shareholders, competitors, immigrants,
employees etc. They are ‘outside the boundary in which moral values, rules, and
considerations of fairness apply’.

THE INFLUENCE OF ONE’S ORGANISATIONAL ROLE

• Mental models: our perception of the appropriate character and behaviour of a

person occupying a certain role. E.g. what mental models do we carry of men in suits, women
in domestic workers’ uniforms, investment bankers, factory foremen, nursery school teachers etc.
• Having power, or feeling powerful, can increase our susceptibility to cognitive biases.
• The factors which describe the business culture have an enormous influence on what
the members of that organisation view as acceptable
• We are open to suggestion

THE INFLUENCE OF ORGANIZATIONAL CULTURE: PRIMING EFFECTS

• Prime: a stimulus that unconsciously effects behavior e.g. the ‘being watched’ prime.
• Primes are persuasive, constantly influencing our behavior in various ways that are
so subtle that many would ne reluctant to believe them. E.g. we walk slower when we
have been asked to complete sentences using words that are associated with old age.
• Money-prime: these people are more selfish and individualistic (less willing to help
or sit close to others).

How can organizations promote more ethical behavior?

Introduce policies and procedures, which diminish the effects of influences which encourage
unethical behavior; while at the same time harnessing those influences, which can be used to
breed a culture that positively influences people to make the right choice.
• Corporate governance:
 (i) Screen job candidates for qualities with a demonstrated impact on ethical
decision-making, such as strong critical thinking skills
(ii) Get the incentives right – reduce the incentive gaming possibilities to a
minimum
(iii) Promote confidence in job security and take measures to reduce employee’s
financial stress – this will eliminate the effects associated with external
pressure, loss aversion and the prospect theory
(iv) Avoid the rationality-dulling effects of hunger, fatigue and cognitive busy-
ness.
(v) Avoid rigid hierarchies – to allow for the boss’s orders to be questioned
(vi) Allocate clear responsibility for decisions to appropriate individuals.
(vii) Create an ongoing, open dialogue about ethics within the organization –
encourage creative and independent thinking of the conventional opinion
and current business practices
(viii) Use training to educate people about the challenges revealed by behavioural
ethics – if people are aware of cognitive biases they will be more equipped to
overcome them
(ix) Introduce primes that encourage ethical behaviour – code of conduct, value
statements, ethical messages,

How can individuals make better ethical decisions in business?

(i) Identify who will be affected by your decision.

(ii) Determine relevant facts.
(iii) Evaluate assumptions you are making about uncertain facts.
(iv) Determine others’ perspectives.
(v) Think honestly about your own motives and biases.
(vi) Identify all possible options.
(vii) Try predict all consequences.
(viii) Where feasible, include the decision-making process.
(ix) Test your favourite options.
(x) Determine which course of action rests easiest on your conscience.
(xi) After making the decision, evaluate the success.