Let me muddy this discussion a bit with a more personal case: healthcare. So the hospital wants to make more money and tells the physicians to speed up the patient throughput. It backs this with financial rewards and punishments for compliance acting in a consistent and clear business mode. How should a physician react? As an employee, you are arguing that he should just go along. But if you were the patient, would you agree with suboptimal care as long as the shareholders could make more money? Remember, in a less than perfect world like ours, you DON'T actually have all choices available to you.

Here's an extreme case: I have a plant extract that may help weight loss. Unfortunately, it causes severe side-effects in 1% of those who take it. By charging a lot, I can make legal settlements with those damaged, possibly help the other 99% and make a ton of money. Is this an acceptable business model? Clearly it is legal, but my choice would be not to be involved with this product. And I would not let my company proceed on such a path. Could/should my shareholders sue me for this cautious decision?

When talking about the “Greater Good”, we should remember that Plato's Republic and Phaedo pretty much cover all this ground. Republic covers what are ethics and Phaedo covers the results of leading an ethical life. Just remember when reading Republic that it is not an attempted formula for the perfect society but is rather allegory for how and why one should organize one's own mind.

Also remember that Phaedo is not primarily about what happens when one tells the truth to those not ready to hear it, although it does contain a cautionary tail about that. Phaedo is about the true rewards of leading an ethical life.

To begin to understand the nature of ethics you can start with the first Unruh question: "If you were the last person alive on earth, is there anything you could do that would be truly evil?" And, to understand the nature of true rewards, you can start with the second Unruh question: "When considering the rewards of a life of satisfying your desires as compared to a life of following the truth wherever it leads, first suppose that consciousness precedes material existence rather than follows from material existence." The last question to start with in this matter of “the Greater Good” is Plato’s question, “What is the Good?” and the answer is always, awareness of the Divine in human relations.

There you have it, except for the voluminous discussions that could follow about all this.

Bob, I'm 100% with your reasoning on this one.

However, people don't have to just give up in disgust. Businesses are constrained by the legal framework created by the laws of the country that they live in.

One common example is the minimum wage. Other countries have strict anti-monopoly laws that prevent companies from exploiting a dominant market position.

With laws like this in place, businesses will calculate the costs of compliance with the risks of non-compliance and adjust their behavior accordingly.

Here's the important bit: Most readers of your blog live in a democracy of some sort or another.

This means that *each* of them have the opportunity to elect people who reflect their desired ethical standards. It is the role of government to set the ethical boundaries of business behavior, not the people who run them.

(Interestingly, in the age of multinationals, settings minimum standards in other countries often has a flow-on effect.

For example, the strict car emission controls mandated by Europe make more fuel-efficient, less polluting cars available to *all* countries since the costs of multiple assembly lines to take advantage of more lax regulations exceeds the possible benefits of using cheaper components and so on.)

NeilS, it sounds like you positioned yourself in the extreme case example at a level that would allow you to 'not let my company proceed'. I doubt your shareholders would sue you however they would just replace you. So now the question becomes, knowing you'd be signing your own termination papers by not handling the product (and presuming you don't have a big parachute hanging around) would you still make the same decision? And of course you've been replaced by someone who will market the product. At least as an insider you might be able to move some $'s around to work on lowering that 1%. From the outside you'd have a lot less leverage and a lot less money.

One thing lacking in the discussion is, in my opinion, getting back to the real basics. Why does a business exist? It exists to offer a service or produce a product. Obviously, to be successful, that service or product must be needed by someone. Accounting - including value to the shareholder - is nothing more than the way to keep score. It is NOT the purpose of the orginization.

Over the past thirty or so years, we have turned things around to say that value to the shareholder - the bottom line - ALL that matters. Ergo, we have, in general, poor quality products and services. Why? in America, if it can't be measured, it doesn't count. However, thing about the whole concept. Everyone exposuses quality until a manager sees that it cost money. Then it stops. But we have several business models where accent on quality led to larger marketshare, greater profits, better value to shareholders. In a like manner, morale can lead to increased productivity and better value to shareholders. However, these are difficult to quantify and are therfore ignored.

Business schools should get back to the basics. Hwy is there a business? and then maybe we could move towards a better business world all the way around.

If I were the last person on earth I would perform the evil act I have always dreamed of -- tear that tag of my mattress... :)

Two cases that might be considered (I'm sure there are more): Paul Newman's foods and Credo phone service -- both state on their products/adverts that they donate money to charities. That appeals to some customers and helps increase their sales -- it also gives them free advertising as I've just done here :) That sounds like a solid business reason to give out charitable contributions.

As for companies that let employees volunteer -- those employees most likely enjoy their paid time off to volunteer. And that could be a major factor in retaining employees. Again, sounds like a solid business reason to give PTO for volunteering.

There are ways to inject ethics into business, but consumers don't often bother holding companies to it.

Trying to make a case for ethics in economics is the same as trying to make a case for it in physics. We baffle ourselves with extraneous measures of GDP and shareholder value and diamonds, but at the bottom, all costs of production will eventually get paid, either now or in the future (pollution). Our entire economy is built upon photosynthesis. When there's plenty of food, there is plenty of everything, including moral stances. But like philosophy, morality is only for the well-fed. When the food runs out, there will be no talk of morals, only survival. Because of this _fact_, any claims of 'correct' morality are just so much pointless posturing by the well-fed. (And for those who think they aren't well-fed because they are peons instead of multi-million dollar CEOs, they are wrong. If they weren't well-fed, they wouldn't be talking, they would be getting guns).

"so long as doing so doesn't cause shareholders financial harm" - this is the siren song that gets people in big trouble. If you ship a faulty product and hide that information from customers so that this quarters earnings are better, does that avoid financial harm to shareholders?

A corporation is legally described as a living entity with freedoms and responsibilities. A corporation has life and cannot be singularly focused on a single simple objective. Its more complicated than that. Justifying all behavior even if legal on the simple basis of avoiding financial harm to shareholders completely misses the complexity and nuances of a corporation in western society. Reductionism does not work here.

I usually think that these discussions hinge more on agreements about vocabulary than they do on agreements about assertions. I'm reading and re-reading all the comments, but along the way here are the distinctions that I hold regardless of them:

Accountability identifies who was affective (not effective) in a course of events.

Responsibility identifies not who is to be "held accountable" but instead who is to be charged with ensuring that requirements are met.

So the big issue is to lay the requirements face up on the table and to have the guts to say that some requirements outrank others.

Normally, the difference between ethics and morals is that ethics are about being responsible or irresponsible, while morals are about living up to one's convictions. In practice, situationally, ethics may be coincident with morals, but they are still neither synonyms nor identical. (People don't like to have "ethics" reduced to something unglamourous, but that's not a good enough reason to distort it.)

Let's take an example that cannot be an exception to the rules. If the shareholders of a business decide to harm non-shareholders for personal gain, it really is different from whether the shareholders decide to harm some non-shareholders in order to beneficially serve more other non-shareholders. The issue is one of by what authority the shareholders are allowed to choose who to harm and who to reward. Presumably, the authority is drawn from a moral position; thereafter the business's conduct is ethical within the constructs of prescribed business operations. But operations change all the time within unchanging authority. Business law is concerned with that conduct. Social law is concerned with the authority.

That said, Wall Street constantly allows shareholders to abdicate responsibility while perversely fostering the cult of management accountability as a replacement. Under those conditions, it isn't surprising that amoral businesses are readily tolerated so long as they don't generate practical ethical faults that make society intolerant of mere accountability.

It is said so well about cheaters, that cheaters don't regret having cheated, they regret having been caught. Similarly, businesses never regret what they do; they regret being punished for it.

I want to go back to the hair-loss medication that helps 99% but can have adverse consequences for 1%. To me it is ethical to sell this product (and to be involved in the process) as long as the risks are fully disclosed. Remember "The Fugitive?" The problem wasn't that the drug caused liver problems, but that this was lied about. Most of the drugs sold on TV seem to warn about rare liver problems.