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Business Ethics

Concepts & Cases


Manuel G. Velasquez

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Chapter Two
Ethical Principles in Business

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Utilitarianism
Actions and policies should be evaluated on the basis of the benefits
and costs they will impose on society.
The only morally right action in any situation is that whose utility is
greatest by comparison to the utility of all the other alternatives .
Leading utilitarian theorists:
Jeremy Bentham (traditional utilitarianism)
an action is right from an ethical point of view if and only if the sum
total of utilities produced by that act is greater than the sum total
of utilities produced by any other act the agent could have
performed in its place.
John Stuart Mill
Mill defines utilitarianism as a theory based on the principle that
"actions are right in proportion as they tend to promote happiness,
wrong as they tend to produce the reverse of happiness." Mill
defines happiness as pleasure and the absence of pain.

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How to Apply Utilitarian


Principles
First, determine what alternative actions or
policies are available to me in that situation.
Second, for each alternative action, estimate
the direct and indirect benefits and costs that
the action will probably produce for all persons
affected.
Third, for each action, subtract the costs from
the benefits to determine the net utility of each
action.
Fourth, the action that produces the greatest
sum total of utility must be chosen as the
ethically appropriate course of action.
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Criticisms of Utilitarianism
1- Critics say not all values can be measured.
Utilitarian's respond that monetary or other commonsense measures can measure everything.
Some benefits and costs are impossible to measure.
Utilitarian measurement implies that all goods can be
traded for equivalents of each other. However, not
everything has a monetary equivalent, How much is a
human life worth, for example?
It is unclear exactly what counts as a benefit or a cost.
People see these things in different ways.
2- Critics say utilitarianism fails with rights and justice.
Utilitarians respond that rule-utilitarianism can deal with
rights and justice.
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Cont Criticisms of
Utilitarianism
Rule utilitarianism Is that instead of looking
at individual acts to see whether they
produce more pleasure than the alternatives,
one looks only at moral rules at actions of a
particular type. If a kind of actions tends to
produce more pleasure or have lower costs,
then they are the moral types of actions.

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The Concept of a Right


Right = an individuals entitlement to something.
Legal right = An entitlement that derives from a legal
system that permits or empowers a person to act in a
specified way or that requires others to act in certain
ways toward that person. legal rights derive from the

laws of the society.


Moral (or human) rights = rights that all human beings
everywhere possess to an equal extent simply by virtue
of being human beings.

Legal rights confer entitlements only where the


particular legal system is in force.
Moral rights confer entitlements to all persons
regardless of their legal system.
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Moral Rights
Can be violated even when no one is hurt.
Are correlated with duties others have
toward the person with the right.
Provide individuals with autonomy and
equality in the free pursuit of their interests.
Provide a basis for justifying ones actions
and for invoking the protection or aid of
others.
Focus on securing the interests of the
individual unlike utilitarian standards which
focus on securing the aggregate utility of
everyone in society.
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Three Kinds of Moral Rights


Negative rights require others leave
us alone.
(Sleep ,study or silent )
Positive rights require others help us.
(sinking , extinguish fire)
Contractual or special rights require
others keep their agreements.

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Contractual Rights and Duties social rights social


obligation
Created by specific agreements and conferred only on the
parties involved.
Require publicly accepted rules on what constitutes
agreements and what obligations agreements impose.
Underline the special rights and duties imposed by
accepting a position or role in an institution or
organization.
Require
(1) the parties know what they are agreeing to,
(2) no misrepresentation, (Representative deliver good
image)
(3) no duress or coercion , force ,
(4) no agreement to an immoral act. (Contract to steal
bank)
Any contract violate these requirements consider void
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Kant and Moral Rights


Immanuel kant : argues in his theory (the categorical
imperative) which based of the moral principle ,
that there are certain moral rights and duties that all
human possess regardless of any utilitarian benefit for
other.
Individuals generally must be left equally free to
pursue their interests.
Moral rights identify the specific interests individuals
should be entitled to freely pursue.
An interest is important enough to raise to be a right if:
we would not be willing to have everyone deprived
of the freedom to pursue that interest
the freedom to pursue that interest is needed to live
as free and rational beings.

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Kants Categorical
Imperative (First Version)
We must act only on reasons we would be willing to have
anyone in a similar situation act on.
The first version of this theory made formulation that Requires
two criteria for determining moral right and wrong :

universalizability

and

reversibility.
Similar to questions:
What if everyone did that?
How would you like it if someone did that to you?
Unlike the utilitarianism theory ,which focused on the
consequences, kantian theory focuses on interior
motivation.
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Kants Categorical
Imperative (Second Version)
Never use people only as a means to your
ends, but always treat them as they freely
and rationally consent to be treated and help
them pursue their freely and rationally
chosen ends.(dont use people to get what
you want)
Based on the idea that humans have a dignity
that makes them different from mere objects.
It is, according to Kant, equivalent to the first
formulation.
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Criticisms of Kant
Both versions of the categorical imperative are unclear.
Or it is not precise enough to always be useful. ( didnt
tell us what the moral rights the human have)
Rights can conflict and Kants theory cannot resolve
such conflicts. (Didnt tell us what is the limits of each
right or how they be balanced). I want to listen to music
and my neighbor wants to sleep which one has the
moral rights)
Kants theory implies moral judgments that are
mistaken. Against the universalizablitiy and reversibility

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Libertarian Philosophy
Freedom from human constraint is necessarily good
and that all constraints imposed by others are
necessarily evil except when needed to prevent the
imposition of greater human constraints.
Robert Nozicks Libertarian Philosophy:
the only moral right is the negative right to freedom
the right to freedom requires free use of private
property, freedom of contract, free markets, and
the elimination of taxes to pay for social welfare
programs.
A free market contrasts with a controlled market or regulated
market, in which government policy intervenes in the
setting of prices.
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Types of Justice
Distributive Justice
requires the just distribution of benefits
and burdens. (cotton mills and coal mine)

Retributive Justice
requires the just imposition of
punishments and penalties.

Compensatory Justice
requires just compensation for wrongs or
injuries.

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Principles of Distributive Justice

Fundamental
distribute benefits and burdens equally to equals and unequally to
unequal's ( 2 employees have the same certificate and other to have
deferent certificates)
Egalitarian
distribute equally to everyone (workers in the same work and workers
doing deferent work)
Capitalist
distribute according to contribution how we measure the contribution?
People are same in their efforts?
Socialist
distribute according to need and ability (distribute the burden depend
on the ability and distribute the benefit depends on the need )
Libertarian
distribute by free choices What about freedom from ignorance and
freedom from hunger .
Rawls
1-distribute by equal liberty, 2-equal opportunity, and 3-needs of
disadvantaged.
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Retributive and Compensatory


Justice
Retributive Justice = fairness when
blaming or punishing persons for doing
wrong.
Compensatory Justice = fairness when
restoring to a person what the person
lost when he or she was wronged by
someone else.
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Ethic of Care
Ethics need not be impartial.
Emphasizes preserving and nurturing(care)
concrete valuable relationships.
We should care for those dependent on
and related to us.
Because the self requires caring
relationships with others, those
relationships are valuable and should be
nurtured.
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Objections to Care Approach in


Ethics
An ethic of care can degenerate into
favoritism.
Response: conflicting moral demands are
an inherent characteristic of moral choices

An ethic of care can lead to burnout


(tired).
Response: adequate understanding of ethic
of care will acknowledge the need of the
caregiver to care for him or herself.
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Theories of Moral Virtue


Aristotle
virtues are habits that enable a person to live
according to reason by habitually choosing the mean
between extremes in actions and emotions

Aquinas
virtues are habits that enable a person to live
reasonably in this world and be united with God in the
next

MacIntyre
virtues are dispositions(behavior) that enable a person
to achieve the good at which human practices aim

Pincoffs
virtues are dispositions we use when choosing
between persons or potential future selves

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Objections to Virtue
Theories
It is inconsistent with psychology which
showed that behavior is determined by
the external situation, not moral
character.
Response: moral character determines
behavior in a persons familiar environment.
Response: recent psychology shows
behavior is determined by ones moral
identity which includes ones virtues and
vices.
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Unconscious vs. Conscious


Moral Decisions
Unconscious Moral Decisions
Comprise most of our moral decisions.
Made by the brains X-system using stored
prototypes to automatically and unconsciously
identify what it perceives and what it should do.

Conscious Moral Decisions


Is used in new, strange, or unusual situations for
which the brain has no matching prototypes.
Consists of the conscious, logical but slow
processes of the brains C-system.
Evaluates reasonableness of our intuitions,
cultural beliefs, and the norms stored in our
prototypes.
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