Student Exercise: Reading Aristotle

A basic rationale for Virtue Ethics may include the following:

1. The insufficiency of Kantian and Utilitarian theories. The inflexibility of Kant's dictum, "never lie," and the ambiguity of the utilitarian core concepts of interest, welfare, or happiness are usually cited as reasons for this insufficiency.

2. Kantian and Utilitarian theories are based on what may be called "extreme other-regard." That is, an over-emphasis on self-sacrifice and the welfare of others, perhaps to the detriment of the flourishing and welfare of one's self.

3. Kantian and Utilitarian theories do not provide motivations: "Principle-based ethics leaves us with an unbridgeable motivational gap between the applied principle and the action" (DesJardins 97). We need a context in which motivation toward personal moral goals can be justified. 

Suggested Exercise: 

1. Give students a quick sketch of Aristotle's Golden Mean idea and then have students read Aristotle's Nicomachean Ethics sections relating to the virtues suggested by Bragues as being most directly related to business: courage, self-control (temperance), liberality, magnificence, magnanimity (pride, in the Ross translation), sociability (Aristotle's unnamed virtue, similar to friendliness), and justice. (Justice might well be omitted, since it rather complicated in Aristotle's text and involves political and economic concerns.)

  

2. Ask students to provide a defense of how one virtue applies to contemporary business. Ask for examples of situations in which this virtue is called for and of persons who exemplify this virtue. Encourage students to be creative in their interpretations, while trying to stay true to the basic ideas behind Aristotle's examples and descriptions.

3. Consolidate the findings of the class through discussion. Create a picture of an Aristotelian Business model for our times. 

4. Compare the student-generated model to the way that Bragues interpreted Aristotle's text. I think Bragues's ideas may benefit his broader reading of the text, but it's a virtual certainty that students will provide many creative and useful interpretations of the virtues. This should be a fun, idea-generating exercise for students.

Works Cited 

Bragues, George. "Seek the Good Life, not Money: The Aristotelian Approach to Business Ethics." Journal of Business Ethics (2006): 67:341–357.

DesJardins, Joseph. "Virtues and Business Ethics." W. Michael Hoffman, Jennifer Mills Moore, and David A Fredo, eds. Corporate Governance and Institutionalizing Ethics. D. C. Heath and Company, 1984. William Shaw and Vincent Barry. Moral Issues in Business, 9th edition. Belmont, California: Wadsworth, 2004. 96-100. Print.

The Problem of Overextending Historical Foundations in Business Ethics

A Business Ethics course should not be a history of philosophy course, but it must make use of the historical foundations of moral philosophy. I think approximately one-quarter of a Business Ethics course should deal with the foundations of moral theory. For this reason, very strong preference should be given to having the course taught by a philosopher.

For the most part, students and instructors will need to accept the basic tenants of the greats (Aristotle, Kant, Smith, Bentham, Mill, Rawls, etc.) as "givens."

This acceptance can lead to a problem: overextension -- convenient reinterpretation -- of the fundamental principles of these philosophers so that they appear to fit conditions and practices in the business world today.

In a very astute article on Aristotle's Nicomachean Ethics, George Bragues draws attention to this problem by criticizing two important contemporary business ethicists:

Typical is Bowie (2002) who, after laying out the core principles underlying Kant’s categorical imperative, proceeds to apply the moral formula on his own to contemporary topics insisting, for example, that treating employees as persons with dignity and respect entails a stakeholder theory of the firm. Nowhere are Kant’s (trans. 1991/1798) applications of the categorical imperative explicitly cited... Satisfied with Kant’s general prescription, Bowie also never bothers to explore whether the stakeholder model squares with Kant’s analysis of property in The Metaphysics of Morals. Also illustrative of our point is Solomon (1992). In a 266 page book, Ethics and Excellence, dedicated to advancing an Aristotelian approach to business ethics, we find only one citation to Aristotle’s primary texts. Even then, it is not directly related to ethics, but to logic (p. 176 n.25). Not surprisingly, Solomon deduces a wide assortment of virtues from his treatment of Aristotle, including trust, integrity, loyalty, caring, and compassion, none of which the Greek philosopher actually mentioned. (Bragues 355)

Bragues provides a penetrating and useful analysis of what Aristotle may be authentically be taken to recommend in the contemporary business world if we stay very close to the text. This yields a surprising number of useful and pertinent recommendation that I will not touch on here.

Bragues approach has much to recommend it, if BE students could be expected to make such exhaustive analyses of the texts themselves. Usually, they cannot.

And to be fair to Bowie, I think it is clear that what he is offering is a Kantian perspective on business ethics. In other words, he is using Kant as a jumping off place to develop his own ideas.

It is an obvious point perhaps, but I think it is good to remind instructors and students that there is a big difference between Kant's philosophy and a Kantian Business Ethics, Aristotle's philosophy and an Aristotelian Business Ethics. To stay true to philosophy and academic standards, we need to look for textual support for our ideas, but lack of specific textual support should not invalidate a philosophical perspective created in the spirit of the Masters.

When we are judging whether or not our interpretation of a philosopher is proper and not an overextension, it might be simpler to ask "would the philosopher smile?"

Works Cited

Bragues, George (2006). "Seek the Good Life, not Money: The Aristotelian Approach to Business Ethics." Journal of Business Ethics 67:341–357

Global Business Ethics: Why the EU is Struggling

I wrote the paragraph below some years ago, based on my reading of Drache's article (cited below). It seems to me quite an appropriate description of the current status of the European Union. (This is still part of my online course on Globalization, available at Mindtools.net.) Suggested classroom exercise: have students discuss what systems, markets, economic measures or political measures might mitigate the forces of separation.

You may find it useful to think of the fundamental conflicts involved in trade associations as follows. Two sets of forces are at play in trade blocs: forces of INTEGRATION, such as economic self interest, that bring nations together, and forces of SEPARATION, that tend to pull nations apart. Among the forces of separation are concerns about sovereignty, social welfare, power asymmetries, and the series of global financial crises. Trade associations tend to be in a constant state of tension, responding to these opposing forces. Think of countries in a trade bloc (symbolized by the ovals in the diagram below) as being simultaneously pushed together and forced apart.

References

* Daniel Drache, Trade Blocs: The Beauty or the Beast in the Theory? in Political Economy and the Changing Global Order, edited by Richard Stubbs and Geoffrey Underhill, Oxford University Press, Canada, 2000. Drache's description of problems facing trade associations was the inspiration for the diagram above.

Discussing The False Cause Error in Business Ethics Classes

As discussed in my previous post (about Warren Buffett), I think that students of Business Ethics should learn to be on the lookout for errors in Critical Thinking. You don't want to turn a BE course into a CT course, but I think Instructors can use news items and current political debates as examples for student practice.

Remind students of an example frequently found in Intro Phil books:

Everyday, Smith gets up before dawn. He goes to his back yard, faces East, and makes lifting motions with his arms until the sun comes up. Since he has never failed in his efforts, Smith concludes that he causes the sun to rise each day.


Smith's error is in thinking that since event A (arm raising) is always followed by event B (sun rising), event A causes event B. Smith has failed to test his causal claims by finding out what happens when he fails to raise his arms. Furthermore, Smith has provided no plausible causal mechanism by which event A can cause B.

Similar errors in thinking are committed by (or promoted by) businessmen, politicians, and media outlets. Ezra Klein's article on politicians' claims about job creation would be a good example for class discussion. See http://www.bloomberg.com/news/2012-01-12/economists-scoff-at-obama-romney-job-creation-commentary-by-ezra-klein.html

Have students discuss similar cases of False Cause. Have students cite news items about business practices, products, or services that seem to rest on dubious causal thinking. Possible examples:
1. A CEOs "attitude" may be blamed for a drop of in sales but  the normal business cycle is more likely the cause.
2. Customers start to complain of illness after the use of some product, but these are mere cases of  coincidental connection (Dow Corning breast implant a classic here).
3. CEO hailed as "genius," but technology, product, or service is actually copied or stolen from others.

The main point of such an exercise would not be so much the specifics of the cases, as getting students to see alternative ways of looking at these cases based on alternative causal chains and to identify plausible causal chains.

Why Warren Buffett is Wrong: False Generalization

A false generalization occurs when a small sample or an individual sample is thought to represent all examples of the same type. If one energy company (Enron) is found to be corrupt, it is a false to conclude that all energy companies are corrupt. False generalizations are primary mistakes in critical thinking. All students in Business Ethics should be taught to avoid them.

Warren Buffett has complained on numerous occasions that the tax rates for the wealthy are not fair. Here is an account of one such incident, as reported by The Times, on June 28, 2007:


Speaking at a $4,600-a-seat fundraiser in New York for Senator Hillary Clinton, Mr Buffett, who is worth an estimated $52 billion (£26 billion), said: “The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”


Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent.

This may be an accurate account of his individual circumstances, but it is a gross misrepresentation of reality.  Buffett’s salary is $100,000 per year. It is reasonable to assume that his effective tax rate on this part of his income is near the median, approximately 25%. The rest of his income is from the sale of stocks, much of which may be taxed at a rate as low as 15%. The weighted average to salary tax and tax on other income makes his personal effective tax rate between and 17% and 18%.

As for his secretary’s rate, it is impossible under current law that anyone earning $60,000 per year is taxed at an effective rate of  30 per cent. If she is taxed near the average rates for similar incomes the effective rate of her taxes is 17-18%, essentially the same rate as her employer.

Buffett’s case does not demonstrate anything about the overall effective rates of top income earners in the United States. In fact, the top 1% have always been taxed at the highest effective rates. Since 1980, there has never been a year when the top 1% paid lower rates than any other group. Students can check this by researching CBO data.

Buffett’s kind of disinformation based on false generalization inclines us to make judgments and form opinions that have no basis in reality. These are the kinds of errors Business Ethics students should be on the look out for as they develop a critical stance toward the media.

Assignment: Find Examples of Kantian Thinking

Students should be encouraged to find examples of how Kantian principles are interwoven into news stories and current problems in business and international affairs.

Two recent examples:

1. Corzine's denials before congress in the MF Global case.
By stating that he did not "intend" to use customer funds, Corzine tries to appeal to our Christian/Kantian sensibilities that one's intent -- rather than what one actually actually does -- is the measure of morality. It sounds like he is admitting the he did it, but did not "intend" it.

2. The current negotiations in Europe regarding sovereign debt issues.
In Perpetual Peace, Kant warns against nations incurring debts: "Thus, forbidding foreign debt must be a preliminary article for perpetual peace, for eventual yet unavoidable national bankruptcy must entangle many innocent nations, and that would clearly injure them. Consequently, other nations are justified in allying themselves against such a nation and its pretensions." Currently, nations are forming a pact to follow the spirit of Kant's suggestion. This is also a good example of how Kant's Categorical Imperative, "willing that your maxim should be a universal law," has political implications. One country cannot will that it's monetary and fiscal policies should be an exception to sound policies that should be adopted universally.

Too often, students are given examples or case studies in textbooks and told to analyze them from a Kantian perspective. I have been guilty of this practice. Although this practice has some merit, in that some cases clearly work better for analysis along certain lines, students should be given the opportunity to find their own examples and cases. 

The Importance of Confidence and Certainty

"Why has this [failure to recover economically] happened? Simply because of the fear of American enterprise and the rules upon which it is to be conducted. ...Confidence must be reestablished on a firm foundation by demonstrated fact and understanding as to the objectives and methods before American business can go forward with confidence."

"At present, Mr. Dupont notes, there is uncertainty about the future burden of taxation, the cost of labor, the spending policies of the Government, the legal restrictions applicable to industry -- all matters affecting computations of profit and loss. It is this uncertainty rather than any deep-seated antagonism to government policies that explains the momentary paralysis of industry."

When were the above quotes written? Yesterday, perhaps? No. 1938. The first is by Alfred P. Sloan, Jr., then Chairman of GM. The second from an article in the Washington Post by Anna P. Youngmanis based on remarks by Lamont DuPont, then president of DuPont Chemicals.

Akerlof and Shiller reproduce both quotes on pages 71-72 of their excellent book Animal Sprits (Princeton UP, 2009).

These two quotes call for clarity in "the rules of the game." They do not call for fixing the outcome of the game. There is a big difference. Government's job is to establish the rules, not pick the winners.

For student discussion: Are confidence and certainty important in your own lives? Think about the course syllabus, for example! Is the syllabus clear? Are you confident that you can achieve your objectives in the course? How does the simple case of taking a course compare to the way businesses should deal with  government regulations?

As game theory is becoming more important in business ethics, I suspect that getting students to appreciate the importance of questions such as "what game are we playing and why?" will be helpful in teaching business ethics.