Do No Evil: Ethics with Applications to Economic Theory and Business

By Michael E. Berumen

"An effective integration of ethics, morality and business practices including extensive discussions of social justice, animal rights and the environment the author elucidates the many layers of the managerial and corporate environment, deftly analyzing the fiduciary, social and moral relationships between the players in a corporation. A fresh, convincing ethical examination."
-Kirkus Discoveries

Being good is not good enough to be moral. In Do No Evil, Michael Berumen debunks the notions that moral judgments are subjective preferences and that there are no universal standards of morality. He analyzes leading normative theories and gives biographical highlights on several important philosophers. Berumen then sets forth his own theory: the only basis for universal morality is the avoidance of death and suffering, in contrast to conventional conceptions of promoting good, which he shows cannot form a basis for universal rules of conduct.

Berumen then examines the concepts of property, exchange, competition, and inequality, and shows why capitalism occupies the default position of morality, and why socialism is problematic. With that said, he also explains why property rights are not unlimited, and how morality serves to constrain capitalist acts.

The last part of the book deals with business-related topics. Berumen demonstrates that a business is property and not primarily an instrument for delivering social justice, and he covers such areas as governance, fiduciary responsibility, marketing, globalism, the environment, duties to animals, and moral courage.

• Language: English
• Publisher: iUniverse
• Release date: Jul 14, 2003
• ISBN: 9781462095568

Michael E. Berumen

After a bout of youthful delinquency in the 1960s, Mr. Berumen joined the Army, where he served as a cryptographer, and he went on to earn a degree in philosophy and mathematics, and graduated summa cum laude from East Bay University. Later he attended Stanford's Graduate School of Business. He joined an insurance company in the seventies, and retired as a senior executive 26 years later, after which he became CEO of a California security business. In 1993, he testified before Congress as an expert in health insurance. Berumen's principal interests are in philosophy, physics, and the foundations of mathematics. Berumen has authored articles on various topics, in addition to his book, Do No Evil: Ethics with Applications to Economic Theory and Business. He has also served on various non-profit and for-profit boards. Berumen is the editor of the Bertrand Russell Society's periodical, The Bulletin and serves on the Society's board of directors. He and his wife, Carol are semi-retired and living in Colorado.

Book preview

PART I

1

Introduction: A Call to Ethics

Why study ethics? Because it helps us understand how we ought to behave towards others and how they ought to behave towards us; how and when ethical rules apply to various circumstances, even when they collide with our own interests; and, when, if ever, it is permissible to violate the ethical rules. Of particular interest to the philosophically minded, studying ethics helps us to understand the nature and meaning of ethical judgments, and the justification for ethical principles.

To be sure, understanding ethics is no guarantee of ethical behavior. One must also be motivated to be ethical. Most of us have knowingly fallen into ethical error at one time or another, and I am certainly no exception to this. I should like to think that a more thorough understanding of ethical reasoning and principles might strengthen our resolve to avoid such lapses.

Why should one be ethical? My intention is to answer that very question, eventually. Unfortunately, it is not a question that lends itself to a simple or pithy answer. In a way, this entire book is devoted to answering it. One might like to say, We should be ethical because it is our duty, but this simply begs the question, for one wants to know why is it our duty? Some believe it is our rational nature that requires us to be ethical, but, as we shall see, rationality allows for a great many things, including actions most of us believe to be quite immoral. Others think that being ethical is ultimately in our own best interest…and, of course, it often is. However, clearly there are times when acting ethically is not in our interest; when, in fact, our personal interests would be better served by acting immorally. If utility is the criterion, it stands to reason, indeed, the very same reason, that immorality might be justified whenever it is in our interest, which is to say, whenever it has utility.

Maybe it all boils down to how Thrasymachus defined justice in Plato’s Republic: Morality is simply what the folks in charge say that it is.¹ This is not all that different from what Karl Marx wrote several thousand years later, The ruling ideas of each age have ever been the ideas of its ruling class.² In other words, as the saying goes, might makes right.

Then there are those who would say morality comes from God, and that we simply should do what He tells us to do. But what do we do when religious doctrines conflict with one another, as they often do, and how can we objectively verify what God really wants? And why, in the first place, is what God says an ethical maxim? Is what God tells us to do an ethical duty only because He says it is, or does He tell us to do something because it is the right thing to do?

We shall address all of these issues in due course.

Are there special moral rules that apply only to business? There are no special moral rules for business, or, for that matter, any other social context in which we find ourselves, at least, not if we are speaking of the universal principles of morality. There are certainly specific obligations or duties that apply to business people and all of us in our various capacities, but these are different than universal requirements. There are also very specific sorts of problems that are more likely to occur in business. But, while one has specific duties and encounters different problems in various contexts, I will show that the most basic and important rules of morality, the universal rules, are the same for everyone, everywhere, at all times, and without regard to the context in which we find ourselves.

Why another book on ethics? Mine is substantially different from most other theories. I do not think universal morality is rooted in various conceptions of good or in ideas about promoting the welfare of others. I believe the most fundamental principles of morality are related to our rational prohibitions, which require us to avoid death and suffering, coupled with the independent principle of impartiality. In combination, these principles require us to avoid causing others harm, which results in rules that all moral agents can understand and act upon all of the time and everywhere, essential conditions of universal moral rules, and conditions with which theories based on conceptions of the good or that purport to provide for the welfare of others are simply unable to comply.

My theory shows that capitalism is not only ethically permissible, but also that socialism is much more difficult to justify on ethical grounds. This does not mean there is an absolute or sacrosanct right to property or free exchange, but that any attempt to expropriate one’s property, or to limit one’s use of it, must be justified in a particular way. We, therefore, give private property and free exchange the benefit of the doubt until proven otherwise. This is very different from socialist conceptions, which decry private property as an initial condition, and support what they suppose to be a fair and objectively ordered system of exchange.

Most books on ethics are long on abstract theory and woefully lacking in telling us how we ought to act. Many writers focus primarily on so-called meta-ethics, the language and structure of ethics, or, in the case of normative ethics, broad formulations, without specific rules of conduct. Philosophers who specialize in business can spend an inordinate amount of time on the recitation and dissection of cases, a kind of historical exegesis, without giving us sufficient guidance on the ethical principles themselves. This book does not ignore foundational issues, general ethical principles, or even interesting cases; however, its ultimate purpose is to delineate specific principles of conduct, rules for action, since, after all, ethics is mainly about action.

Most serious works on ethics are written for other philosophers, whereas ethics books written for a general audience consist mostly of assertions or conclusions rather than philosophical analysis. To put it another way, they are dumbed-down for the non-philosophically inclined. Some books even boldly state on their covers that they are intended for dummies or idiots. Presumably the publishers intend such titles to be clever and funny. In any case, this book is not intended for dummies or idiots. It is a serious philosophy book written for philosophers and non-philosophers alike, and, in particular, for those who want a full-blooded justification for moral principles, and who also want to know how these principles apply more specifically to economic theory and business.

Why is it important for us to understand how ethical principles relate to business practices and economic concepts? Businesses engage in a host of activities that can have significant ethical implications for others: employees, clients, stockholders, other members of the community, future generations…even other species. The influence of business is no longer limited to one’s relationship with a feudal lord, the village market, or the peripatetic peddler. Hardly a second passes during the course of a day without a for-profit enterprise affecting us in some way or another; from the food we eat, the pills we take, the shelters we inhabit, the diversions that amuse us, the impure air we breathe, to the utilities that keep us cool or warm. Commerce is omnipresent, from cradle to grave, from the most densely populated cities to the most remote rain forest. For better or worse, as the philosopher Alfred North Whitehead once observed, The behavior of the community is largely dominated by the business mind.³

For many millennia, beyond a person’s family and her natural environment, the greatest external influences on her life were religious institutions and government. In many parts of the world today, these influences pale before the enveloping presence of commercial interests. Indeed, even much of government’s role centers on business, either serving it or protecting us from it. Since business activity is such a dominant force, the importance of understanding how ethical principles apply to day-to-day business is fairly obvious. However, it is equally important to consider the relationship of ethics to the more fundamental conditions and behaviors that underlie business. In other words, we must examine the major tenets of capitalism from an ethical perspective.

The empirical evidence is rather compelling that capitalism, a system based on private property and relatively unfettered markets, is the most effective economic system in terms of delivering the most economic goods to the greatest number of people. To put it another way, capitalism has the greatest utility insofar as distributing economic goods go. It, therefore, would seem that the principal burden for its supporters is demonstrating that the social behaviors that are essential to capitalism are also ethically acceptable. To the extent that these behaviors comport with what is ethically required, there is little additional need to focus on socialist alternatives, for the evidence suggests one would be hard pressed to support such a system on purely economic grounds.

However, if capitalism were found to be as ethically deficient as some certainly believe it to be, then despite its superior efficiency, we would be forced to abandon it in favor of a more ethically acceptable system, assuming such a system could be devised. Even though capitalism bestrides the global economy like a Colossus, its success is insufficient to justify it ethically. Despite its growing dominance and its benefits, some people clearly suffer as a result of it. Consequently, there is ample reason to be suspicious and question capitalism’s ethical underpinnings.

Why should business leaders, managers, and others be concerned about ethics in business? Let’s face it, business leaders are likely to encounter more ethical problems than most people in other disciplines are likely to face, save, perhaps, government and military leaders, and certain medical professionals. The typical factory worker, clerk, skilled laborer, farmer, teacher, scientist, engineer, or, for that matter, the average philosopher, will not have nearly as many opportunities to act on matters of ethical significance as the average executive. The people who run businesses make decisions that can adversely affect many lives in various important ways. Therefore, it is clear that the businessperson has a greater responsibility than most to acquire the requisite intellectual tools and techniques to solve ethical problems. And those who are likely to be affected by their decisions have ample reasons to insist that they receive such an education.

What have philosophers had to say about the relationship of ethics and business? Philosophers and academics, historically, have shown a rather considerable amount of disdain for business pursuits. This contempt seems to stem from an admixture of intellectual elitism and the widely shared perception among academics that business is an unwholesome endeavor. Intellectuals especially seem to dislike the motivation of self-interest that underlies capitalism. They also tend to view competition, generally, and the resultant inequalities in wealth, in very negative terms. Intellectuals dislike the idea of people getting ahead by sheer luck rather than on the basis of merit or need. Not surprisingly, they usually see themselves as the principal exemplars of merit.

Perhaps as much as anything, intellectuals have an aversion for the unplanned and seemingly chaotic nature of capitalism. The undesigned order that arises from haphazard social intercourse, as encapsulated in Adam Smith’s simile of the invisible hand, is an affront to rationality. Order requires a design, a plan, and, of course, a planner, and who better than the intellectual to formulate the proper plan for others to follow?

Plato, the greatest philosopher in history, had a legendary contempt for the multitude, and a special disdain for commercial people, who, he said, could never be the very best of men. He resigned himself to the fact that they were required from a practical perspective; but he insisted that their numbers be kept as low as possible, in order to minimize the various malpractices they are apt to inflict on society. He would have thought the very idea of business ethics to be an oxymoron, a view shared by many of his intellectual progeny up to the present day.⁴

Even Adam Smith, the seldom read and oft-quoted patron saint of capitalism, was not an admirer of the business class. He believed business people were untrustworthy and corrupt, writing that people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.⁵ This is hardly a ringing endorsement of the moral standards of capitalists by the father of capitalist theory.

While it is not sufficient to keep them from having an opinion, the fact remains that most philosophers and intellectuals are woefully ignorant about both business and business people. Given the influence business minds and business institutions have over society, it certainly would behoove them, especially those interested in such matters as ethics and social theory, to learn more about business and its practitioners. The majority of business people are not the self-centered, rapacious, and semi-literate people academics sometimes imagine them to be. And there is certainly no reason to believe that the average business person is less generous or less interested in doing the right thing than the average academic person is, or, for that matter, that they are incapable of learning and benefiting from philosophy.

What do business people think about ethics? As with nearly everyone else, people in business see ethics as a list of dos and don’ts that we learn from various authorities, beginning with our parents. The list might include a few religious precepts, such as the Ten Commandments, or general principles such as the Golden Rule. To no small degree, the man on the street sees ethics as a matter of common sense, and not something that requires justification. The idea that the principles of ethics are akin to common sense is surprisingly close to the mark, for, as we shall see, there is a very close relationship between morality and certain rational requirements. Of course, the man on the street usually simply assumes the rules he learned are justified, whereas the philosopher wants to know more about why they are justified.

Where people tend to get most confused is separating moral rules from other kinds of rules (e.g., from religious rules), knowing which ones apply to specific circumstances, and especially knowing when, if ever, we ought to violate a moral rule. This latter point is especially important, for, as I shall eventually make clear, a great many moral issues deal with making exceptions.

Many people in business might be rather suspicious about the merits of a philosophical exploration of ethics, thinking that it would be too ethereal or that it would lack practical value. But what could be more practical than an examination of the principles that tell us how we ought to behave in a social context? One of the greatest moral philosophers in history, Immanuel Kant, believed that we derive morality from what he called practical reason.⁶ The study of philosophy also serves to hone one’s faculty for critical reasoning, requiring one to sort out, synthesize, and then express ideas more precisely and clearly. These certainly are very practical skills.

What are we to make of all the talk about virtue and values in the public arena nowadays? Does this indicate a resurgent interest in ethics, generally,and how has it affected business? There is a new virtue industry afoot. However, much of it is concerned less with virtue and more with either the voyeuristic dissection of the frailties of others or the advancement of a particular political agenda. And, of course, a lot of it has to do with sex and religion. People often confuse society’s changing outlook towards sexual and religious conventions with a decline in moral standards. This simply serves to distract us from dealing with more substantive moral issues.

Older generations have since time immemorial complained about a decline in values amongst the young. Such a decline is seldom borne out by the evidence. It is just what the next generation inevitably says about the last. Who could seriously argue that there was more morality when we enslaved millions of our fellow human beings, deprived much of the population from enjoying fundamental liberties, or allowed large numbers of people to starve if they could not find work? There are very notable exceptions, but the preponderance of evidence suggests that people and nations are more moral today than they were before, not less. With this said, the world has a long way to go, and our need is especially acute when we consider the fact that our technological prowess makes us capable of wreaking more havoc on a wider scale than ever before.

To be sure, businesses are paying more attention to ethics. Whenever there is an extraordinary incident that affects a large number of people, involves a lot of money, or is especially sensational, e.g., a well-publicized sexual harassment or discrimination lawsuit, illegal political contributions, or fallout from financial shenanigans such as those associated with the savings & loan collapse of the 1980s, and the accounting scandals of today…there is generally more talk about ethical standards. Public outrage always causes politicians and assorted pundits to seek the moral high ground.

Sometimes the public outcry about corruption in business leads to legislative action. Even in the absence of legislation, public sentiment can lead to a heightened sensibility about ethics in business. Simply the threat of increased lawsuits or more regulation is sufficient to alter the way in which industries behave or police themselves. Today, businesses are much more sensitive to the potential costs of adverse publicity, tortious action, or even criminal liability than in any previous era, when these risks were much lower. Perhaps the best example in recent years is the extent to which businesses go to prevent lawsuits for sexual harassment and employment discrimination. It would not be difficult to show that the abuses in the workplace were once much greater than they are today, and that these deterrents have had a generally beneficial effect, though certainly not without related costs.

Just as consumer demand affects the products, services, and prices of a business, public pressure can also change the way a business operates because of moral concerns and changing values. For example, businesses have become increasingly sensitive to accusations about cruelty to animals, primarily as a result of growing public awareness, and businesses involved in financial services are much more careful about investing in companies or even other nations that are believed to engage in questionable ethical practice, lest they incur opprobrium from their customers.

The increasing awareness of ethical issues among businesses is evidenced by the fact that moral words and phrases are being used in business communications more than ever before. One frequently encounters words such as integrity, dignity, trust, values, openness, disclosure, caring, duty, and honesty in various corporate pronouncements. It is certain that the recent business scandals will produce even more proclamations of moral rectitude in business communications. We might doubt the sincerity of all this, and believe executives are more concerned about their companies’ public image than morality; however, over time, without regard to the original intentions, such outward behaviors are often internalized and made a part of the way we do business. This is not dissimilar to the way we acquire moral character as children. Our original intention might be to go along in order to get along or even because of fear of authority, but we eventually internalize these behaviors as a part of our makeup, as second nature.

Companies are involved in any number of efforts to perform good works in their communities and across the globe. This is not new, of course; the robber barons of the 19t century established a number of charitable institutions and programs, some of which continue to this day. One major tobacco company, a firm whose core business is morally suspect to many of us, recently spent millions to advertise its famine relief efforts in a war-torn part of Eastern Europe. Oil companies often tell us about the things they do to protect the environment and endangered species in their advertisements. A number oflarge companies have set up foundations to disseminate money to various charitable causes such as feeding the poor, education, and medical research. It would be cynical and, I think, mistaken to suggest that executives making the decisions to do these things do so solely for business purposes. I have little doubt a business purpose is part of the motivation, perhaps even the major impetus, but to suggest there is no motive to do good overlooks the rather obvious fact that they choose their actions because they are good.

What are businesses doing to teach ethics to employees? There is an increasing number of industry classes and seminars devoted to business ethics. There is a growing demand for speakers to address virtue at company and industry conventions. A number ofcorporations require employees to attend classes on how to conduct themselves with fellow employees and customers. While these courses do attempt to heighten employee sensitivity and understanding towards others, they mostly focus on how to avoid violating the law, especially in such areas as employment discrimination, sexual harassment, disclosure, insider trading, privacy, and adherence to certain product or service standards. They serve the prudential purpose of keeping their companies out of court and guarding their reputations. While there are often overlapping concepts involved, the law and morality are not the same. The law tells us what we must do, whereas morality tells us what we ought to do. In philosophy, of course, we also must concern ourselves with why we ought to do something.

While such prudential concerns are certainly not inconsequential from a business perspective, indeed, some of them might even constitute a moral duty, instruction in the law is inadequate to ensure moral conduct. Laws do not apply to everyone, all of the time, and everywhere, whereas morality does. Indeed, the law is not even always morally right, and sometimes we must make a choice between obeying the law and obeying a moral principle.⁷

What is the difference between ethics and morals? I believe this is a distinction without an important difference. Some philosophers use ethics to denote something rather loftier and more cerebral than morals. They might say that ethics is the study of the most basic and general principles that inform morality, and that morality is a society’s code of conduct. Some philosophers are primarily interested in so-called meta-ethics, the formal structure by which moral arguments and are made and moral truth is assessed. Each ultimately overlaps with the other. Whether we are referring to our judgments about what people ought to do, the principles that inform them, or the means by which we express them and ascertain their truth, for our purposes here, I shall use the terms ethics and morals interchangeably, which is what the man on the street and a growing number of philosophers do.

Will being moral produce a good business result? Who hasn’t heard statements such as, Honesty always pays, and Doing the right thing is good for business? While oft said, these aphorisms also have the distinction of being perfectly false. An enterprise can suffer considerable and, sometimes, irreparable harm by acting morally, just as an individual can. If by, Honesty is the best policy we mean that honesty will produce the most successful outcome, we are living in a dream world. Being moral can result in the loss of a valuable client, a profitable product or service, or it can even cause a firm to go out of business. As for honesty paying in the long run, well, there might not be a long run for the honest business! An individual who loses his job because of a moral deed, which then leads to depression and his eventual suicide, cannot also be said to have benefited from it. The price of morality can sometimes be high, whether it is in business or in our private lives. The price is nevertheless one we ought to pay, and I hope to show why.

While not everyone in business will face choices entailing grave consequences, everyone in business almost certainly will have occasion to choose between doing what is morally right and what is best for business. It is when we face such decisions that the moral wheat is separated from the immoral chaff. It is easy to be virtuous when there are no difficult choices.

Does being moral in business at least benefit society at large, even though it might not give a specific enterprise any advantages? While one would like to think so, this is not always the case. If a company goes out of business as a result of doing the right thing, the moral thing, one can easily imagine the social costs of unemployment, loss of dignity, depression and anxiety, and the disruption to families, even suicides, are much more than what would have occurred from a moral infraction with relatively contained effects as far as society is concerned. It is even conceivable that doing something immoral would make society better off when we consider the average amount of happiness. For example, perhaps the average amount of happiness would be greater if there were but a small number of slaves serving the needs of the majority. Few would be willing to advance such an argument, today; but the fact remains, if the goal of morality is to make most people better off, this can lead to some rather unexpected conclusions. Much of the discussion in later chapters will deal with such issues.

Isn’t socialism more compatible with morality? Capitalism’s socialist critics believe that the self-interest that underlies it, the competition that accompanies it, and the resultant economic inequality, are so intrinsically unsavory, that, even if it were more efficient in purely economic terms, it ought to be cast aside in favor of a morally-principled system. Along with their spiritual confederates, the communitarians, socialists believe altruism and equality are themselves universal moral principles. Capitalism alienates workers from their rightful property, which is instantiated in objects by virtue of a person’s labor. Moreover, they see competition as being a kind of warlike, antisocial behavior.

Socialists believe that the capitalist extracts unearned profits from the laborers’ production, keeping the worker in perpetual dependency by paying him subsistence wages, all while maintaining a reserve of the unemployed, a Damoclesian sword that hangs over the heads of workers who are continually threatened with replacement by their employers. The only means of rectifying this unhappy state of affairs is to turn the factors of production over to the state, which, in turn, acts as a managing trustee over the property interests that properly belong to the workers.

Most capitalists defend capitalism on utilitarian grounds, pointing out the now obvious fact that the 19t century socialists were wrong about the lot of the average worker, and that at least the average person in a capitalist society is better off economically than the average person in a socialist society. If morality is a matter of providing the greatest good to the greatest number, they argue, then there can be no dispute that capitalism is morally superior to socialist alternatives. Moreover, capitalism’s supporters note the obvious correlation between a capitalist society and democratic institutions of government.

A smaller number of capitalism’s defenders do not appeal to how effective it is, however. They see private property as a moral right, and, since capitalism is the only economic system that permits it, it is the only system that is morally permissible. This, they contend, would be true even if socialism were a more effective means of attaining utilitarian ends. I myself shall advance a view similar to this one, though I will also show that there is no absolute or unlimited right to property as some theorists would contend, and that property is not ours because of our labor, but because of the moral rules that govern our behavior.

In the course of explaining my theory of property and the justification of capitalist acts, we shall have occasion to examine several of the leading alternative theories, both of the socialist bent along with several versions of libertarianism. While I am generally more sympathetic with the libertarian outlook, this is not without some significant qualification.

What are the differences between moral rules and the other rules of behavior? Contrary to what some believe, morality is not mere convention or custom, or something that can be legislated, bargained for, or decreed. In contrast to other kinds of rules of conduct, the most fundamental requirements of morality are universal, meaning that they apply everywhere, at all times, and to everyone, and without reference to who stands to gain or lose by them. Since everyone is required to abide by the rules of morality, it makes sense that everyone should also be able to understand them, making them quite distinct from codes of etiquette, laws, professional codes, or societal customs, conventions that vary from place to place, and rules that cannot be understood or acted on by everyone. Moreover, since everyone ought to abide by moral rules, the rules must be such that everyone can abide by them. It would not make any sense to require everyone to follow a rule that some cannot follow.

To be sure, other types of social rules are similar to moral rules to the extent that they all deal with human behavior. Some of these rules are even informed by morality and embody moral principles, as in the case of many laws and rules of etiquette. Obviously, laws against murder and theft are rooted in moral conceptions. Our desire to be polite and not hurt another’s feelings is related to moral strictures against causing gratuitous harm. However, laws and systems of etiquette can differ markedly by society and circumstance. In contrast, the most fundamental moral rules are universal principles, they apply to everyone all of the time. What is more, they have priority over other kinds of rules, including the law or social convention.

Does morality come from God? Many people believe that which is good is whatever God tell us to do, and that which is evil is whatever God condemns. Religious people often take this for granted as an obvious truth. Upon a little reflection, though, it will be seen that this cannot be true. For example, if God wants us to enslave others or sacrifice others, is his order thereby made moral? While it is true that some people think so, in fact, such heinous acts, whether ordered by God or His interpreters, are contrary to morality.

Plato dealt with these issues handily several thousand years ago in his Euthy-phro, showing that the gods love what is good because it is good, and that which is good is not good simply because it is loved.⁸ In a similar vein, centuries later, Immanuel Kant wrote, Even the Holy One of the Gospel must be first compared with our ideal of moral perfection before he is cognized as such. In other words, that which is perfect, the object of perfection, does not itself define perfection, for it is an attribute that the object possesses.⁹

Are religious rules also moral rules? Many believe that religious doctrine and morality amount to the same thing. Some religious rules clearly do overlap with moral rules. Religious rules that prohibit deception, murder, stealing, and the like, correspond with moral injunctions. However, a great many religious precepts have little or nothing to do with morality. Rules about what we should eat, how we should worship, what we should believe about God, or when we should work are not moral rules. Among other reasons, these rules are not universal, understandable, or actionable by everyone, so they could not qualify as moral requirements for everyone.

Some religious doctrines, in fact, have contributed to the suffering and death of many people over the centuries, and are obviously immoral. The Old Testament supports slavery in a number of places, and it even commands us when to give our slaves a day off from work. The Good Book also requires us to kill witches and it says that we ought to acquiesce to unjust government. The Koran enjoins one to do violence against non-believers. These are not the interpretations of wild-eyed fanatics; they are clearly stated commands in sacred texts that are revered by billions of people.

Of course, apologists characterize these ancient doctrines as metaphors or reflections of the prevailing customs of the time. They tell us we should not take such commands literally. It is never quite clear, though, exactly how we can know when we ought to take something literally or when we ought to ignore it or view it as a metaphor. There are no formulae in the texts themselves for making such distinctions. If the apologist said certain passages were metaphorical in certain parts of the world or in another time, he might well be stoned to death. Of course, the truth is that the distinctions about what ought to be taken literally are arbitrary, and they are mostly designed to suit contemporary sensibilities. They have no authoritative basis in the sacred texts. Those fanatics and fundamentalists who believe every word is a literal command ofGod, misguided as they might be, seem much less disingenuous than those who, cafeteria-style, select only the things they like.

At bottom, isn’t morality simply based on our emotions? Many philosophers certainly have said as much. They believe moral terms and statements are neither true nor false and, as a consequence, that it is impossible to carry on any sort of cogent discussion about morality. Indeed, some philosophers have even maintained moral terms are essentially meaningless. This view, which is called emotivism, dominated much of 20t century philosophy. It is not as fashionable as it once was, but it continues to influence attitudes towards ethics, even in the non-philosophical world. Even philosophers who have rejected these ideas are sometimes hesitant to discuss how we ought to act. They are more comfortable with very abstract considerations or the linguistic structure of ethical propositions, so-called meta-ethics.

Even if moral ideas do have some meaning, isn’t their truth simply a function of non-demonstrable standards? In a famous Harvard Business Review article, Albert Carr suggested that business is not dissimilar to a poker game, one in which bluffing, a form of deception, is permitted.¹⁰ An international businessman recently told me that his only moral obligation is to obey the law of the country in which he is operating; otherwise, as far as he is concerned, anything goes. Such ideas bear directly on the issue of moral relativism, which is the view that the standards of ethical truth vary by one’s frame of reference, e.g., the society, occupation, or context in which we find ourselves.

Moral relativism is a widely held view among the educated public. Even though most people do not think about moral relativism in strictly philosophical terms, its principal thrust, the idea that there are no universal standards, has infused modern thinking in many different areas, including business, as implied by Carr’s statement. Whereas emotivism makes ethics a subject for psychology, relativism puts it within the province of anthropology and sociology. Relativism is a more difficult theory than emotivism to disprove; consequently, I believe it is more dangerous. But disprove it we shall.

Is morality a rational requirement? This is the Holy Grail of philosophy. Many philosophers have attempted to show that morality is a rational requirement, but they have been unsuccessful. As we shall learn, rationality is something that is very difficult to define. Rationality allows for a great many things, including immoral acts, even mistakes. About all that it obviously does not allow is irrational behavior. And, therein, as we shall see, lies an important and useful truth. I intend to show that there is a strong connection between what morality requires and our rational prohibitions, the objects of irrational desire. I owe this largely to the insights of Bernard Gert.

Gert also has also opened my eyes about the nature of impartiality and the critical role it plays in moral reasoning. Rationality, by itself, does not require us to behave morally towards others; however, impartial rationality does. Gert’s insight, along with several principles from Immanuel Kant and R. M. Hare, provide the theoretical basis for universal rules of conduct.

The maxims embodied in the rules themselves will not surprise anyone. In fact, I will show that they are the very essence of what we take for common sense. The more difficult problem is determining when it is morally appropriate to make an exception to them. Philosophers have long sought invariant, absolute maxims of conduct. Alas, there are none, for with any general moral rule, including those derived from impartial rationality, one is able to imagine a circumstance where there ought to be an exception, or where following it would actually produce an immoral result. What can we do to ensure that the exception is itself morally justifiable? Hare’s work on universal prescriptivity will prove especially useful to us in dealing with this problem.

Can moral principles be demonstrated by formal reason? Reason, considered as a system of understanding, can help us to make moral arguments; however, as David Hume suggested, there is nothing in reason itself that requires us to accept morality. Hume said our decision not to harm others is ultimately based on our emotions, our compassion or sympathy for them.¹¹ He is famous for saying that reason ought to be subordinate to our passions, meaning that reason is a merely the tool to procure the ends or ideals determined by our passions. While we might conclude along with Hume that we ultimately choose to be moral because of our emotions or sentiments, the fundamental principles of morality, the rules of behavior that apply to specific situations, must be based on something more reliable than emotions alone.

Karl Popper said the hallmark feature that distinguishes science from non-science is that the former establishes hypotheses and then attempts to falsify them through experiment. Hare suggested that a similar approach seems useful for philosophy, and, specifically, for ethical reasoning.¹² We search for fundamental principles and then test them against particular cases to see whether or not they comport with both logic and empirical knowledge. I doubt we will ever be able to show that morality is in and of itself something reason requires. However, we can certainly show that particular principles or conclusions do not proceed logically from others, that the empirical facts to which we apply them are misunderstood, or that the ends of our passions are logically inconsistent with one another. Moreover, reason can help us to understand our own nature, and, in context with the ends we choose as a species, how best to manage that nature.

Is there an ethical formula or unified theory capable of handling all ethical problems? Philosophers long for a so-called Theory of Everything, a consistent, self-contained system based on indubitable principles, from which every other ethical maxim and precept can be derived. If showing that morality is rationally required is the Holy Grail of philosophy, perhaps the unified theory is its Golden Fleece. Alas, inevitably, all theories seem to have some deficiency or inconsistency, some unanswerable anomaly, or a point at which the system relies on a joining of unconnected, independent principles. A Theory of Everything in ethics appears no more likely to be discovered than its counterpart in physics, another long, sought-after prize. However, we at least can be excused for desiring ultimate explanations of things. What, after all, could be more important than discovering the final and complete answer to the question Socrates posed long ago: How ought we to live?¹³

What is the relationship of ethics to philosophy? The relationship was pretty shaky during much of the 20th century. Many philosophers even denied that ethics was a legitimate part of philosophy. This was but one aspect of an increasingly narrow conception of philosophy, one that focused more on form or structure, rather than on content. If something could not be deductively or scientifically verified, it was cast aside as nonsense. And philosophy had little or nothing to add to our knowledge about the world. Indeed, the proper function of philosophy was one of clarification, rather than getting the facts about the world right. It was more important to understand the form of ethical argument rather than understanding how we should act.

This distilled and narrow conception of philosophy stands in marked contrast to its historical role as the most imperialistic of intellectual pursuits, recognizing no boundaries other than that implied by the literal meaning of philosophy, the Greek word for the love of knowledge. I am happy to report that, in recent years, philosophy seems to have recovered some of its old zest for knowing and saying things about the world. It has begun to move away from the form over substance structuralism that characterized it for so many years. As a consequence, many philosophers have welcomed ethics back into the fold.

There is even a growing interest in so-called applied ethics, which focuses less on abstract matters and places emphasis on how we ought to deal with specific real world problems. Bernard Gert began doing this back in the 1960s, long before it became fashionable (again), at a time when philosophy in the English-speaking world was beguiled by form over content. In centuries past, particularly prior to the Enlightenment, much of ethics consisted of resolving specific moral dilemmas, or what is called casuistry. Thus, today’s applied ethics is but a revival of an ancient discipline.

How much background in philosophy does one require to understand ethics? Some might have us believe that only a few can ever hope to scale the rarified heights of philosophical understanding. That was certainly Plato’s view. Of course, this is nonsense. Most everything that is worthwhile in philosophy is accessible to someone who is willing to take the time to study it. There are branches of philosophy that do require specialized training, such as mathematical logic or the philosophy of science. Outside of these specialties, however, a reasonably literate and patient inquirer should be able to make his way through most philosophical works.

An unfortunate tendency evident in many works of philosophy is the inclusion of a certain amount of gratuitous, technical pyrotechnics. I suspect this practice is partly the result of a desire to impress peers with one’s intellectual virtuosity. Some of it is an outgrowth of the narrow conception of philosophy that I referred to before. In any case, much of it is mere pedantry. Formal, technical expressions are sometimes required, especially in the philosophy of logic, mathematics, or science. But, outside of these areas, overpopulating the page with symbols is largely unnecessary, and does not add a scintilla of philosophical knowledge to the proceedings.

Why is this book entitled Do No Evil?. Good has always had the lion’s share of attention in ethics. This should not be surprising since most philosophers believe the principal purpose of morality is to promote a particular conception of the good. (Get used to this expression!) Along with Gert, however, I believe that the concept of evil is much more important to the universal requirements of morality.¹⁴ There are several ways to understand evil, as there are different definitions of good. I take evil to mean death or suffering. I intend to show that avoiding death or suffering, or the things that cause death or suffering, is the only principle that can be satisfactorily understood and acted upon by all rational people, and from which we are able to derive universal rules of conduct.

This does not mean that conceptions of good are unimportant. It simply acknowledges that our various ideas about what constitutes good cannot suffice as the basis for universal moral rules. Not only do people have very different understandings of what the good is, but also not everyone is capable of promoting good all of the time and everywhere, which, by definition, means that it cannot be the basis of universal requirements.

What is the plan of this book? The first part of the book deals primarily with the foundations and justification of ethical principles, rather than applications to economic theory or business, though we shall have many occasions to employ examples from economics and business to elucidate these concepts. Here I shall deal with the major ethical theories propounded over the centuries, along with the vitally important concepts of rationality, impartiality, and evil. I then will demonstrate the general requirements of morality, the universal maxims of conduct, and I will explain what I believe to be the only acceptable method for justifying exceptions to them. These universal rules, in turn, suggest various moral ideals, which, though they are not universal, are related to many of our conceptions of the good. Moreover, these ideals also often constitute the basis for making exceptions to the moral rules. Also, we shall discuss the very important matter of who is a moral agent and to whom the moral rules apply.

The second part of the book examines the moral implications of the essential conditions underlying capitalism, namely, private property and free exchange. We will also discuss the necessary result of capitalism, namely, inequality and competition. If we find that the essential conditions and necessary consequences of capitalism are compatible with the requirements of morality, then, given the preponderance of evidence showing its economic failure, we might reasonably conclude that its principal alternative, socialism, ought to be relegated to the dustbin of history. If, however, these conditions and outcomes are shown to be incompatible with fundamental morality, we must abandon capitalism for an alternative, even if capitalism is more economically effective, for morality trumps efficiency.

The third and last part of the book is where ethical rubber meets the road in the real world. Here we shall see how the general principles of ethics apply to central business practices and typical business issues. Moreover, we will examine several specific moral duties that arise in a business setting. I will not belabor historical cases or current events, for, while interesting and useful for discussion, I am primarily interested in the general principles and duties that ought to guide our conduct rather than historical exegesis. We certainly will have occasion to deal with real world issues, but I do not intend to reprocess what one can easily find in newspapers or business texts. Too many books on business ethics dwell on reciting obvious examples of malfeasance without an adequate adumbration of the principles that ought to inform our judgment and behavior.

Why not just get to the bottom line and spare us from all the abstract stuff leading up to it? In philosophy, we not only want to know what is so, but why it is so. We are interested in the argument that leads up to a conclusion as well as the conclusion itself. I believe that our understanding and conviction will be strengthened if we are familiar with the theory underlying the moral rules, along with its frailties and alternative points of view. Granted, some will lack the patience necessary for this approach, in which case, they might want to consider skimming through the earlier chapters.

Of course, I do hope readers will weather through the first part of the book, for it is here that I deal with moral relativism. I am especially concerned to disabuse people of the notion there is no universal standard for making ethical judgments. A more thorough understanding about why this is not true will enable thoughtful people to be more confident in handling ethical complexity, especially those who must deal with different social norms in our increasingly globalized economy.

What does the author hope to accomplish? My main goal is to provide readers with a better understanding ofmorality, with the hope that they will be in a better position to appreciate the moral dimension ofeconomic theory, and deal more confidently with the problems that arise in business practice. I hope, also, that the reader innocent ofphilosophy might come to appreciate it more, perhaps even enjoy it.

Of course, I do not for a moment believe I have made it easy to solve all ethical problems. I do believe that I have at least made solving many of them easier. To be sure, difficult problems remain. But, as difficult as some moral problems are, most of them are not, and, understanding what to do is seldom the most difficult aspect of morality, anyway. The most difficult thing is to do what is right.

2

Foundations

What do the foundations of ethics mean? By foundations, one usually means the answers to questions such as: what are the underlying conditions of ethical thought? Is there such a thing as an ethical fact? Are ethical judgments subject to truth conditions? How do we come to know ethical facts? What is the structure of an ethical judgment? By what standard do we judge them? Can there be different standards of truth for judging the same act? Do ethical terms and statements have any meaning?

Why is it important to discuss the foundations of ethics? The very possibility of having a cogent moral system has come into question because of the sorts of considerations raised by the foregoing kinds of questions. Before embarking on a discussion of what we ought to do, the rules of conduct, we need to understand whether such assertions have any basis in fact or reason, or if they even have any meaning or cognitive content. If they do not, ethics is a subject for psychology or anthropology, not for philosophy, and any further discussion from a philosophical perspective would be pointless. I hope to show that this is not the case.

There are two major divisions of thought concerning the foundation of ethics, namely, moral objectivism and moral subjectivism, each of which has important variations. We shall consider these in some detail in this chapter.

Moral Objectivism

What is moral objectivism? This is the common sense view that there is such a thing as moral knowledge and there are moral facts. There are several forms of moral objectivism: naturalism, intuitionism, moral sense theory, and rational-objectivism. A common denominator among the first three species of objectivism is the idea that the truth conditions of the facts ethical statements purport to describe ultimately determine the meaning of moral statements and moral terms. The great 20th century ethicist, R. M. Hare, refers to these theories as descriptivist theories. In contrast to these theories, rational-objectivism does not depend solely on the truth conditions of the descriptive properties of moral judgments, but on the objective and universal rules that govern our assertions, namely, the rules of formal reasoning. Let us begin our analysis by examining the descriptivist theories.

What is moral naturalism? Naturalism is the view that ethical sentences describe empirical facts of nature, facts that actually obtain in the world. Thus, the naturalist assumes that our ethical knowledge relies on our experience, either directly or indirectly. Perhaps the most common forms of naturalism are those that equate good with non-moral properties found in nature. For example, many philosophers equate good with natural phenomena such as happiness, well-being, or pleasure. We can verify the existence of natural phenomena by comparing the facts that obtain to certain standards of truth, just as we do with other natural phenomena. We can demonstrate that pleasure occurs in a particular situation. Philosophers who say that pleasure is good are likely to say that such a pleasurable situation is also good.

What is moral intuitionism? Intuitionism also assumes there are moral facts; however, these facts do not consist of natural, non-moral properties that can be measured against various standards of evidence. Our minds apprehend moral facts or truths directly through our intuitive powers, not by some external reference. We understand them in much the same way as we understand other kinds of self-evident truths; for example, the concept of identity (A=A). We cannot reduce moral facts to natural phenomena such as happiness or pleasure, as the naturalists believes. They are separate and self-sufficient, and wholly defined by their moral properties.

What is moral sense theory? Moral sense theory is similar to intuitionism, but subtly different. The idea here is that we possess an inner sense, an innate capability that enables us to detect moral objects. When we see that an object is yellow, we do not know that it is yellow through intuition or ratiocination. We simply see that something is yellow because our sensory organs and brains work that way. The moral-sense theorist believes that we apprehend moral objects in a similar way. We see that an act or person, a natural object, is right or wrong in much the way that we see that a stop sign, another natural object, is red. Sensing that something is so with our moral sense, therefore, is to satisfy a truth condition.

What is the common denominator among these theories? We mentioned one: each of these theories assumes there are objective, moral facts. They also assume something else. Each of these theories deals with an even more fundamental concept, namely, the concept of the good, which many, perhaps most philosophers, believe to be the ground of right or virtuous action. Though moral facts are determined differently in these theories, each posits the existence of something that is good, and each also promotes the view that promoting or attaining it constitutes the chief objective of morality.

Few subjects have received as much attention in philosophy as the nature of good, especially the quest to discover the supreme principle of morality, the greatest good, or summum bonum. While I would be the last to dispute the importance of good, I shall eventually demonstrate that gaining an understanding entails considerable philosophical difficulty and, aside from this, good is not even the most important concept, especially as it pertains to understanding what constitutes right action. However, before considering this, let us first examine what has been said about the nature of good more carefully.

What have some of the great philosophers said about the good? Plato (429—347 B.C.) is all over the map about good, as he was on many other subjects. No doubt, this inconsistency results, at least in part, from the sheer range of his thought, the diminishing influence of his master, Socrates, over time, and the concomitant maturation of his own ideas. I cannot help believe, though, that just the pleasure of rhetorical excellence sometimes got the better of Plato, even at the occasional and perhaps conscious expense of consistency. As anyone who has read his dialogues will attest, we are not the worse for these inconsistencies, for his originality and elegance are unsurpassed in the whole of Western philosophy. One could easily profit from a lifetime of studying him.

In any case, in the Protagoras, Plato says that the good is pleasure, and that pleasure comes in various degrees, with the greatest among them being those pleasures that endure over time. Here Plato subscribes to a sort of hedonistic utilitarianism, much as Jeremy Bentham and John Stuart Mill did centuries later. At other times, though, he seems to subscribe to a more general sort of utilitarianism, believing that the good is whatever is most advantageous or useful to fulfilling our ends.¹⁵

In contrast, in the Gorgias and Republic, Plato is positively anti-hedonistic, arguing that some of the things that please men can be quite evil, while in other cases what is beneficial can be quite unpleasant, making it evident that pleasure and good are different things.¹⁶ In the Charmides, he says that the good is a matter of temperance and self-control, and, along with evil, that it originates in the soul.¹⁷ In the Lysis, Plato equates the good with the beautiful, and in the Philebus, he says that it consists of an admixture of beauty, proportion and truth.¹⁸

In the Phaedo, Plato’s good is a transcendent idea, or what Plato called a form, and what his followers often call a Platonic ideal, a universal template of perfection in which the imperfect objects of the world can only participate, but never fully share or represent.¹⁹ For example, everyday objects and concepts such as largeness, likeness, triangles, and cats, are the imperfect representations of these universal forms. We observe this or that large or red object, or this or that triangle or cat, but the form itself, the ideal red or cat, is not something we can apprehend. These forms are not mere fictions or words to Plato, or to many other philosophers, they are the most real things there are, in fact, and more real than anything perceived through the corrupting influence of the senses.

Good, according to Plato, is the only form that is completely self-sufficient. It relies on no other relation or principle. For example, the universal idea of a cat incorporates the universal idea of an animal, and a triangle incorporates the universal ideas of lines and angles, whereas, good incorporates only the idea of itself. Because it is self-sufficient, according to Plato, the good is necessarily the most pure and perfect of all the forms.²⁰

Plato, of course, stands at the beginning of a long line of philosophers openly contemptuous of empirical knowledge, the things that we know through our senses. The senses can never apprehend the forms directly because of the limitations of the body and its interference with the mind. This sentiment probably served to set back empirical science for centuries. On the other hand, it