The Business Ethic

 

“Business ethics” is a phrase some might deem an oxymoron. They would say the only aim of business is to make profits – by any means necessary, fair or foul.

 

Yes, making money is a primary purpose of business. But having this particular purpose does not free a businessperson from any of the normal constraints upon human conduct, any more than does any activity or purpose render such constraints inapplicable. Not even war. Whatever one does, moral rules always apply. Businesspeople do violate them, but that’s no more true of business than any other class of human activity. There isn’t anything particular about business that makes its practitioners more prone to breach norms of conduct than is the case for any other types of activities.

 

If anything, there is reason to expect business conduct to exceed such norms. Because business is not just about making money – it’s about making money in a particular way. If money were the only object, regardless of moral consequences, then robbery might be better. And, yes, some “businesses” do operate by effectively robbing people. But those are not really businesses, they are scams. What defines a business is an enterprise that generates profit by supplying goods or services that make people better off, in relation to what they pay. (If you aren’t getting something which, to you, has value exceeding its price, you wouldn’t knowingly buy it).

 

What this means is that generating value for customers is just as much the purpose of business as is profit. Only that generation of value makes the profit legitimate; this is an essential feature, not a peripheral one. And the businessperson does this by way of filling a societal role, it’s the source of meaning in his or her life. Asked to identify himself, he will not say, “I’m a money-maker,” but, rather, “I’m an accountant” (i.e., one who provides accounting services, presumably valued by customers), or “I’m a baker” (ditto for providing baked goods), etc.

 

This is what may be called the business ethic; the ethic of business. It is the fundamental idea that one’s societal role is to provide something to others, which results in recompense to oneself. It’s the idea that profits are not something gathered or taken; rather, they are earned. And earning profits in that way is virtuous.

 

Providing value to customers may be self-serving to the extent that it’s calculated to gain repeat business and thus greater eventual profit. But a person possessing this genuine business ethic will strive to make sure his customers get value, even if he’ll never see them again. That is why a restauranteur, for example, will work to give good meals and service, even to strangers just passing through. That is the integrity of his societal role; by fulfilling it, he goes home at the end of the day feeling good about himself. And it is precisely this that has built our whole civilization. 

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7 Responses to “The Business Ethic”

  1. Bruce Says:

    Oh Frank, I’m not going to let you get away with this one.
    Corporations are not kind and caring and full of business ethics. They are treated with unfair bias in the legal system – they are “persons” in the eyes of the courts, when in fact they are groups of investors with lareg quantities of cash and labor available to use against real persons.
    This legal problem has allowed corporations to unfairly influence people to buy things that they do not want for prices that they can not afford and without any recourse if they catch-on.
    Ads are filled with sex and babies, the two things that most people can not ignore. Why do we need to see naked babies peeing to sell diapers? Why do we need ads for erection pills during family TV shows? Why do we need cartoon caracters to sell tobacco and alcohol? Business ethics? No way!
    Corporations openly offer bribes to politicians – under the name of corporate free speech. If corporations really had the “higher” level of ethics postulated by you, THEY would be leading the charge to clean up government and cut government waste.
    Business ethics is nothing more than a college course that nobody heeds after the final exam gets graded.
    Bruce

    FSR RESPONSE: Bruce’s response is understandable, but doesn’t actually address the points I was making. Perhaps I invited it by my deliberately provocative title, “Business Ethics.” That’s not the same as the “ethic of business” I was talking about. Businesses are comprised of human beings. Human beings do bad things. But, mostly, we act well toward each other. (Teaser: all this will be very well addressed in my next book, due out in June!)
    BTW, the “legal person” stuff has been made a big talking point by the cynical Left, but it is widely distorted and misunderstood.

  2. All the information in the world » The Business Ethic « The Rational Optimist Says:

    […] Original post:  The Business Ethic « The Rational Optimist […]

  3. Bruce Says:

    “(If you aren’t getting something which, to you, has value exceeding its price, you wouldn’t knowingly buy it).”
    It’s a nice theory, but 36+ economics credits and 30+ sociology credits later I know the fallacy. Corporations are allowed to use unfair and deceptive selling tactics which “fool” the buyer into making unnecessary and harmful purchases. If they had business ethics, they would not resort to this practice.
    Reality trumps theory…

    FSR COMMENT: Yes — businesses make efforts to persuade people to buy their products (duh). “Unfair,” “deceptive,” “fool” — sure, it happens. People — not just in business — sometimes do that.
    “Unnecessary and harmful purchases” — sometimes, too (duh).
    BUT — Look, that just is not the big picture of what we purchase from businesses. The vast bulk of our purchases are the things that give us the comfortable, pleasant, fulfilling — and healthy, and long — lives that we in modern society enjoy.
    Providing that is what I call “The ethic of business.”

  4. thegreatgatsby Says:

    Everything, including libertarianism and communism, sounds good when presented in its ideal form.

  5. Gregory Kipp Says:

    Right now, some of these supposedly ethical business people are changing the terms of loan contracts for existing balances on credit cards without the consent of both parties, even when the borrower has not defaulted in any way. All in the name of profit and because they can get away with it. I don’t call that ethical. I call that greed.

  6. Howard Bloom, The Genius of the Beast « The Rational Optimist Says:

    […] Howard Bloom, The Genius of the Beast By rationaloptimist “Capitalism,” “corporations,” “consumerism,” “profits,” “advertising,” etc. – what feelings do all such words evoke? Sneeringly negative. (Just look at the comments on my 4/09 post, “The Business Ethic.”) […]

  7. The Genius of the Beast (ie, capitalism) - Albany Times Union (blog) - Sebits Says:

    […] “Capitalism,” “corporations,” “consumerism,” “profits,” “advertising,” etc. – what feelings do all such words evoke? Sneeringly negative. (Just look at the comments on my 4/09 post, “The Business Ethic.”) […]

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