Case Study:
What Are Ethics? From Line-Cutting to Kant
The temptation is remarkable. The run is long. The body screams, “No more!” So, when some runners in the New York City Marathon hit the Queensboro Bridge temptation sets in and, rather than finishing the last 10 miles through Harlem and the Bronx, they hop a ride on the subway and head toward the finish line at Central Park. A total of 46 runners used the subway solution to finish the race in the 2008 New York City Marathon. We look at this conduct and react, “That is REALLY unfair.” Others, particularly the 46, respond, “So I skipped a few boroughs. I didn’t do anything illegal.” That’s where ethics come in; ethics apply where there are no laws but our universal reaction is, “It just doesn’t seem right.”
We all don’t run marathons (or run partial marathons), but we do see ethical issues and lapses each day. When the revelations about golf superstar Tiger Woods’s marital infidelity slowly and painfully dribbled out in the media, the result was not an arrest but our reaction of dismay for the unfairness of his conduct and the false impression his public/endorsement persona left that was inconsistent with his private behavior. We feel something’s not right, but there is not always a criminal wrong or even a punishment.
Phoebe Prince, an Irish immigrant attending South Hadley High School in Massachusetts, committed suicide on January 14, 2010, after a lengthy period of bullying by a clique of five popular students. The district attorney has cobbled together some criminal charges against the five taunters but the criminal case is much more difficult to make than the ethical case against the five for interpersonal abuse. We look at the tragedy and wonder why the five did not curb their own conduct? That idea of self-policing, of stopping ourselves when we are hurting others, even though our conduct does not violate a law, is the self-restraint that ethics brings.
We are probably unanimous in our conclusion that those in the examples cited all behaved unethically. We may not be able to zero in on what bothers us about their conduct, but we know an ethics violation, or an ethical breach, when we see one.
But what is ethics? What do we mean when we say that someone has acted unethically? Ethical standards are not the standards of the law. In fact, they are a higher standard. A great many philosophers have gone round and round trying to define ethics and debated the great ethical dilemmas of their time and ours. They have debated everything from the sources of authority on what is right and what is wrong to finding the answers to ethical dilemmas. An understanding of their language and views might help you to explain what exactly you are studying and can also provide you with insights as you study the cases about personal and business ethics. Ethical theories have been described and evolved as a means for applying logic and analysis to ethical dilemmas. The theories provide us with ways of looking at issues so that we are not limited to concluding, “I think. . . .” The theories provide the means for you to approach a dilemma to determine why you think as you do, whether you have missed some issues and facts in reaching your conclusion, and if there are others with different views who have points that require further analysis.
Normative Standards as Ethics
Sometimes referred to as normative standards in philosophy, ethical standards are the generally accepted rules of conduct that govern society. Ethical rules are both standards and expectations for behavior, and we have developed them for nearly all aspects of life. For example, no statute in any state makes it a crime for someone to cut in line in order to save the waiting time involved by going to the end of the line. But we all view those who “take cuts in line” with disdain. We sneer at those cars that sneak along the side of the road to get around a line of traffic as we sit and wait our turn. We resent those who tromp up to the cash register in front of us, ignoring the fact that we were there first and that our time is valuable too.
If you have ever resented a line-cutter, then you understand ethics and have applied ethical standards in life. Waiting your turn in line is an expectation society has. “Waiting your turn” is not an ordinance, a statute, or even a federal regulation. “Waiting your turn” is an age-old principle developed because it was fair to proceed with the first person in line being the first to be served. “Waiting your turn” exists because when there are large groups waiting for the same road, theater tickets, or fast food at noon in a busy downtown area, we found that lines ensured order and that waiting your turn was a just way of allocating the limited space and time allotted for the movie tickets, the traffic, or the food. “Waiting your turn” is an expected but unwritten behavior that plays a critical role in an orderly society.
So it is with ethics. Ethics consists of those unwritten rules we have developed for our interactions with each other. These unwritten rules govern us when we are sharing resources or honoring contracts. “Waiting your turn” is a higher standard than the laws that are passed to maintain order. Those laws apply when physical force or threats are used to push to the front of the line. Assault, battery, and threats are forms of criminal conduct for which the offender can be prosecuted. But these laws do not address the high school taunters who make life miserable for the less popular. In fact, trying to make a crime out of these too-cruel interactions in the teen years often finds the courts ruling that the statute is too vague. But ethical standards do come in to fill that gap. The stealthy line-cutter who simply sneaks to the front, perhaps using a friend and a conversation as a decoy for edging into the front, breaks no laws but does offend our notions of fairness and justice. One individual put him or herself above others and took advantage of their time and too-good natures.
Because line-cutters violate the basic procedures and unwritten rules for line formation and order, they have committed an ethical breach. Ethics consists of standards and norms for behavior that are beyond laws and legal rights. We don’t put line-cutters in jail, but we do refer to them as unethical. There are other examples of unethical behavior that carry no legal penalty. If a married person commits adultery, no one has committed a crime, but the adulterer has broken a trust with his or her spouse. We do not put adulterers in jail, but we do label their conduct with adjectives such as unfaithful and even use a lay term to describe adultery: cheating.
Speaking of cheating, looking at someone else’s paper during an exam is not a criminal violation. You may be sanctioned by your professor and there may be penalties imposed by your college, but you will not be prosecuted by the county attorney for cheating. Your conduct was unethical because you did not earn your standing and grade under the same set of rules applied to the other students. Just like the line-cutter, your conduct is not fair to those who spent their time studying. Your cheating is unjust because
you are getting ahead using someone else’s work.
In these examples of line-cutters, adulterers, and exam cheaters, there are certain common adjectives that come to our minds: “That’s unfair!” “That was dishonest!” and “That was unjust!” You have just defined ethics for yourself. Ethics is more than just common, or normative, standards of behavior. Ethics is honesty, fairness, and justice. The principles of ethics, when honored, ensure that the playing field is level, that we win by using our own work and ideas, and that we are honest and fair in our interactions with each other, whether personally or in business. However, there are other ways of defining ethical standards beyond just the normative tests of what most people “feel” is the right thing to do.
Divine Command Theory
The Divine Command Theory is one in which the resolution of dilemmas is based upon religious beliefs. Ethical dilemmas are resolved according to tenets of a faith, such as the Ten Commandments for the Jewish and Christian faiths. Central to this theory is that decisions in ethical dilemmas are made on the basis of guidance from a divine being. In some countries the Divine Command Theory has influenced the law, as in some Muslim nations in which adultery is not only unethical but also illegal and sometimes punishable by death. In other countries, the concept of natural law runs in parallel with the Divine Command Theory. Natural law proposes that there are certain rights and conduct controlled by God, and that no matter what a society does, it should not drift from those tenets. For example, in the United States, the Declaration of Independence relied on the notion of natural law, stating that we had rights because they were given to us by our Creator.
Ethical Egoism Theory: Ayn Rand and Atlas
Ethical Egoism holds that we all act in our own self-interest and that all of us should limit our judgment to our own ethical egos and not interfere with the exercise of ethical egoism by others. This view holds that everything is determined by self-interest. We act as we do and decide to behave as we do because we have determined that it is in our own self-interest.
One philosopher who believed in ethical egoism was the novelist Ayn Rand, who wrote books about business and business leaders’ decisions in ethical dilemmas, such as The Fountainhead and Atlas Shrugged. These two famous books made Ms. Rand’s point about ethical dilemmas: the world would be better if we did not feel so guilty about the choices we make in ethical dilemmas and just acknowledged that it is all self-interest. Ms. Rand, as an ethical egoist, would maintain order by putting in place the necessary legal protections so that we did not harm each other.
“Hobbesian” Self-Interest and Government
Ms. Rand subscribed to the school of thought of philosopher Thomas Hobbes, who also believed that ethical egoism was the central factor in human decisions. Hobbes also warned that there would be chaos because of ethical egoism if we did not have laws in place to control that terrible drive of self-interest. Hobbes felt we needed great power in government to control ethical egoism.
Adam Smith, Self-Interest, and Moral Sentiments
Although he too believed that humans act in their own self-interest, and so was a bit of an ethical egoist, Adam Smith, a philosopher and an economist, also maintained that humans define self-interest differently from the selfishness theory that Hobbes and Rand feared would consume the world if not checked by legal safeguards. Adam Smith wrote, in The Theory of the Moral Sentiments, that humans are rational and understand that, for example, fraud is in no one’s self-interest—not even that of the perpetrator, who does benefit temporarily until, as in the case of so many executives today, federal and state officials come calling with subpoenas and indictments. (For an excerpt from Adam Smith’s Moral Sentiments, see Reading 8.4.) That is, many believe that they can lie in business transactions and get ahead. Adam Smith argues that although many can and do lie to close a deal or get ahead, they cannot continue that pattern of selfish behavior because just one or two times of treating others this way results in a business community spreading the word: don’t do business with them because they cannot be trusted. The result is that they are shunned from doing business at least for a time, if not forever. In other words, Smith believed that there was some force of long-term self-interest that keeps businesses running ethically and that chaos only results in limited markets for limited periods as one or two rotten apples use their Ethical Egoism in a selfish, rather than self-interest, sense to their own temporary advantage.
The Utilitarian Theory: Bentham and Mill
Philosophers Jeremy Bentham and John Stuart Mill moved to the opposite end of ethical egoism and argued that resolution of ethical dilemmas requires a balancing effort in which we minimize the harms that result from a decision even as we maximize the benefits. Mill is known for his greatest happiness principle, which provides that we should resolve ethical dilemmas by bringing the greatest good to the greatest number of people. There will always be a few disgruntled souls in every ethical dilemma solution, so we just do the most good that we can.
Some of the issues to which we have applied utilitarianism include those that involve some form of rationing of resources in order to provide for all, such as with providing universal health care even though some individuals may not be able to obtain advanced treatments in the interest of providing some health care for all. There is a constant balancing of the interests of the most good for the greatest number when the interests of protecting the environment are weighed against the need for electricity, cars, and factories.
Utilitarianism is a theory of balancing that requires us to look at the impact of our proposed solutions to ethical dilemmas from the viewpoints of all those who are affected and try to do the greatest good for the greatest number.
The Categorical Imperative and Immanuel Kant
Philosopher Immanuel Kant’s theories are complex, but he is a respecter of persons. That is, Kant does not allow any resolution of an ethical dilemma in which human beings are used as a means by which others obtain benefits. That might sound confusing, so Kant’s theory reduced to simplest terms is that you cannot use others in a way that gives you a one-sided benefit. Everyone must operate under the same usage rules. In Kant’s words, “One ought only to act such that the principle of one’s act could become a universal law of human action in a world in which one would hope to live.” Ask yourself this question: If you hit a car in a parking lot and damaged it but you could be guaranteed that no one saw you do it, would you leave a note on the other car with contact information? If you answered, “No, because that’s happened to me 12 times before and no one left me a note,” then you are unhappy with universal behaviors but are unwilling to commit to universal standards of honesty and disclosure to remedy those behaviors.
Philosophers are not the easiest folks to reason along with, so an illustration will help us grasp their deep thoughts. For example, there are those who find it unethical to have workers in developing nations labor in garment sweatshops for pennies per hour. The pennies-per-hour wage seems unjust to them. However, suppose the company was operating under one of its universal principles: Always pay a fair wage to those who work for it. A “fair wage” in that country might be pennies, and the company owner could argue, “I would work for that wage if I lived in that country.” The company owner could also argue, “But, if I lived in the United States, I would not work for that wage, would require a much higher wage, and would want benefits, and we do provide that to all of our U.S. workers.” The employer applies the same standard, but the wages are different. The company has developed its own ethical standard that is universally applicable, and those who own the company could live with it if it were applied to them, but context is everything under the categorical imperative. The basic question is, are you comfortable living in a world operating under the standards you have established, or would you deem them unfair or unjust?
There is one more part to Kant’s theory: you not only have to be fair but also have to want to do it for all the right reasons. Self-interest was not a big seller with Kant, and he wants universal principles adopted with all goodwill and pureness of heart. So, to not engage in fraud in business because you don’t want to get caught is not a sufficient basis for a rule against fraud. Kant wants you to adopt and accept these ethical standards because you don’t want to use other people as a means to your enrichment at their expense.
The Contractarians and Justice
Blame philosophers John Locke and John Rawls for this theory, sometimes called the theory of justice and sometimes referred to as the social contract. Kant’s flaw, according to this one modern and one not-so-modern philosopher (Rawls is from the twentieth century, and Locke from the seventeenth), is that he assumed we could all have a meeting of the minds on what were the good rules for society. Locke and Rawls preferred just putting the rules into place via a social contract that is created under circumstances in which we reflect and imagine what it would be like if we had no rules or law at all. If we started with a blank slate, or tabula rasa as these philosophers would say, rational people would agree—perhaps in their own self-interest, or perhaps to be fair—that certain universal rules must apply. Rational people, thinking through the results and consequences if there were not rules, would develop rules such as “Don’t take my property without my permission” and “I would like the same type of court proceeding that rich people have even if I am not so rich.”
Locke and Rawls have their grounding in other schools of thought, such as natural law and utilitarianism, but their solution is provided by having those in the midst of a dilemma work to imagine not only that there are no existing rules but also that they don’t know how they will be affected by the outcome of the decision, that is, which side they are on in the dilemma. With those constraints, Locke and Rawls argue, we would always choose the fairest and most equitable resolution of the dilemma. The idea of Locke and Rawls is to have us step back from the emotion of the moment and make universal principles that will survive the test of time.
Rights Theory
The Rights Theory is also known as an Entitlement Theory and is one of the more modern theories of ethics, as philosophical theories go. Robert Nozick is the key modern-day philosopher on this theory, which has two big elements: (1) everyone has a set of rights, and (2) it’s up to the governments to protect those rights. Under this big umbrella of ethical theory, we have the protection of human rights that covers issues such as sweatshops, abortion, slavery, property ownership and use, justice (as in court processes), animal rights, privacy, and euthanasia. Nozick’s school of thought faces head-on all the controversial and emotional issues of ethics including everything from human dignity in suffering to third-trimester abortions. Nozick hits the issues head-on, but not always with resolutions because governments protecting those rights are put into place by Egoists, Kantians, and Divine Command Theory followers.
A utilitarian would resolve an ethical dilemma differently from a Nozick follower. Think about the following example. The FBI has just arrested a terrorist who is clearly a leader in a movement that plans to plant bombs in the nation’s trains, subways, and airports. This individual has significant information about upcoming planned attacks but refuses to speak. A utilitarian would want the greatest good for the greatest number and would feel that harsh interrogation methods would be justified to save thousands of lives. However, Nozick might balk at such a proposal because the captured terrorist’s human rights are violated. These ideological differences enhance our ability to see issues from a 360-degree perspective as we analyze them.
Moral Relativists
Moral relativists believe in time-and-place ethics. Arson is not always wrong in their book. If you live in a neighborhood in which drug dealers are operating a crystal meth lab or crack house, committing arson to drive away the drug dealers is ethically justified. If you are a parent and your child is starving, stealing a loaf of bread is ethically correct.
The proper resolution to ethical dilemmas is based upon weighing the competing factors at the moment and then making a determination to take the lesser of the evils as the resolution. Moral Relativists do not believe in absolute rules, virtue ethics, or even the social contract. Their beliefs center on the pressure of the moment and whether the pressure justifies the action taken. Former Enron Chief Financial Officer Andrew Fastow, in his testimony against his former bosses at their criminal trial for fraud, said, “I thought I
was being a hero for Enron. At the time, I thought I was helping myself and helping Enron to make its numbers” (Andrew Fastow, trial testimony, March 7, 2006). In classic moral relativist mode, a little fraud to help the company survive was not ethically problematic at the time for Mr. Fastow. In hindsight, Mr. Fastow would also comment, “I lost my moral compass.”
Back to Plato and Aristotle: Virtue Ethics
Although it seems odd that Aristotle and Plato are last in the list of theorists, there is reason to this ethical madness. Aristotle and Plato taught that solving ethical dilemmas requires training, that individuals solve ethical dilemmas when they develop and nurture a set of virtues. Aristotle cultivated virtue in his students and encouraged them to solve ethical dilemmas using those virtues that he had integrated into their thoughts. One of the purposes of this book is to help you develop a set of virtues that can serve as a guide in making both personal and business decisions. Think of your credo as the foundation for those virtues.
Solomon’s Virtues
Some modern philosophers have embraced this notion of virtue ethics and have developed lists of what constitutes a virtuous businessperson. The following list of virtue ethics was developed by the late Professor Robert Solomon:
Virtue Standard Definition
Ability Being dependable and competent
Acceptance Making the best of a bad situation
Amiability Fostering agreeable social contexts
Articulateness Ability to make and defend one’s case
Attentiveness Listening and understanding
Autonomy Having a personal identity
Caring Worrying about the well-being of others despite power
Charisma Inspiring others
Compassion Sympathetic
Coolheadedness Retaining control and reasonableness in heated situations
Courage Doing the right thing despite the cost
Determination Seeing a task through to completion
Fairness Giving others their due; creating harmony
Generosity Sharing; enhancing others’ well-being
Graciousness Establishing a congenial environment
Gratitude Giving proper credit
Heroism Doing the right thing despite the consequences
Honesty Telling the truth; not lying
Humility Giving proper credit
Humor Bringing relief; making the world better
Independence Getting things done despite bureaucracy
Integrity Being a model of trustworthiness
Justice Treating others fairly
Loyalty Working for the well-being of an organization
Pride Being admired by others
Prudence Minimizing company and personal losses
Responsibility Doing what it takes to do the right thing
Saintliness Approaching the ideal in behavior
Shame (capable of) Regaining acceptance after wrong behavior
Spirit Appreciating a larger picture in situations
Toughness Maintaining one’s position
Trust Dependable
Trustworthiness Fulfilling one’s responsibilities
Wittiness Lightening the conversation when warranted
Zeal Getting the job done right; enthusiasm
The list offers a tall order because these are difficult traits to develop and keep. But, as you study the companies, issues, and cases, you will begin to understand the mighty role that these virtues play in seeing the ethical issues, discussing them from all viewpoints, and finding a resolution that enable businesses to survive over the long term.
Q. Could businesses use moral relativism to justify false financial reports? For example, suppose that the CFO says, “I did fudge on some of the numbers in our financial reports, but that kept 6,000 employees from losing their jobs.” What problems do you see with moral relativism in this situation?
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.