Ethics 2

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Business EthicsESC Dijon

Marek HudonAcademic Year 2010-2011

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A few words of presentation..

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Sources

• Textbook: Velasquez, M. (2006), Business Ethics. Concepts and Cases (6th edition), Pearson: New Jersey.

• Slides related to the textbook: Paul L. Schumann

© 2004 by Paul L. Schumann. All rights reserved.

• Slides related to World Hunger: Lawrence Hinman

© Lawrence Hinman

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Objective of the course

• Introduce core business ethics issues• Present analytical frameworks used to adress

ethical dilemnas• Apply these frameworks to a few case studies• Discuss the relevance of ethical concerns in the

management of (for-profit and non-profit) companies

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Table of Content

1. Introduction to ethical issues

2. Moral principles: Five core theories

3. Examples and applications

4. Alternative management

5. Conclusion

Enron Video

Why did it happen?

Who is responsible?

A few questions

Three levels of ethical issues

Systemic Issues

Corporate IssuesIndividual Issues

Morality of capitalism or laws

Morality of corporate cultureManager put pressure on staff

For each level, ethical values suggest two main ideas (Pogge, 2002):

Character

• Good person• Admirable aims and

ambitions

Achievement

• Ethical quality of the person’s deeds

• Historical impact of the world

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Three levels of ethical issues

Systemic Issues

Corporate IssuesIndividual Issues

Morality of capitalism or laws

Morality of corporate cultureManager put pressure on staff

Character(rationality)

Achievement(consumption)

Character(social , green NGO)

Achievement(Nike suppliers)

Character

Achievement

How to make your point? Moral reasoning

.. from “Fair Game”

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Moral Reasoning.. from “Fair Game” (2)

Governments (administrations) should protect their (secret) workers who are at risk, in danger

Moral standards/ criteria

Former Bush administration gave her name (unclassified file)

Factual information

This administration was immoral

Moral judgement11

Moral responsibility: Guns (p. 49)

• Are gun manufacturers responsible for the deaths?

• When is a company morally responsible for deaths caused by a product?

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When Moral Responsibility?

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Did they cause/ helped it or fail to

prevent something avoilable?

1. Causality

Did they know what they were doing?

2. Knowledge/ ignorance

3. Deliberate

Did they act of their own free will

(no external abuse, internal

abuse)?

Example: Is Europe responsible for hunger in Africa?

Context:

Colonies

Independance in 60s

Debt (HIPC)

Multinationals14

© Lawrence Hinman

What do you think?

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1. Causality

Did they know what they were doing?

2. Knowledge/ ignorance

3. Deliberate

Did they act of their own free will

(no external abuse, internal

abuse)?

Is Europe responsible for hunger in Africa?

Intervention, relationship debt/ poverty, fail to put

Efficient institutions?

Natural resource owernship but global

trends (debt, AID) Deliberate ignorance?

Sure

Did they cause/ helped it or fail to

prevent something avoilable?

Who is responsible?

• Managers put some pressure on his employee• Profit objectives of his unit• …

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Moral ResponsibilityMoral Responsibility

• Implications for management: Employee complaining at Implications for management: Employee complaining at HR office for harrassment (frequent e-mails, phone calls at HR office for harrassment (frequent e-mails, phone calls at night, managers shouting etc.)night, managers shouting etc.)

• Is there an (ethical) problem? If yes, who is responsible for Is there an (ethical) problem? If yes, who is responsible for unethical conduct in business?unethical conduct in business?

• Depends on the factual information: More pressure than Depends on the factual information: More pressure than other department? Real pressure?) other department? Real pressure?)

• Depends on causality: Other reasons why employee is Depends on causality: Other reasons why employee is stressed? Stress because of office disposition?stressed? Stress because of office disposition?

• Depends on free-will: Was the manager forced to increase Depends on free-will: Was the manager forced to increase productivity? To double productivity in one month?productivity? To double productivity in one month?

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Moral ResponsibilityMoral Responsibility

• 3 Views:3 Views:– 1. The 1. The employeesemployees who made the unethical decision who made the unethical decision

• Corporations don’t make decisions, people doCorporations don’t make decisions, people do• Therefore, the people who made the unethical decision Therefore, the people who made the unethical decision

should be held responsibleshould be held responsible– 2. The 2. The corporationscorporations

• Employees’ decisions are made in the context of Employees’ decisions are made in the context of corporate policies, corporate norms, organizational corporate policies, corporate norms, organizational structure, and corporate culturestructure, and corporate culture

• Therefore, the corporation as a whole should be held Therefore, the corporation as a whole should be held responsibleresponsible

– 3. Both the corporation and the employees involved3. Both the corporation and the employees involved

Moral responsibility

• Limit can be very thin..• Should we take the corporate culture into

account? Whatever the corporate culture and the context?

• Who should analyse this issue in the company? HR department? CEO? Probably independant person but who is independant (ex of procedures of contact person at ULB)?

• Global implications for companies and countries

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Table of Content

1. Introduction to Ethical Issues– Levels of ethical issues– Moral reasoning– Moral responsibility

2. Moral principles

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Moral PrinciplesMoral Principles

• Main Issue:Main Issue:What moral principles should be used to make What moral principles should be used to make moral judgments in business?moral judgments in business?

• We’ll use 5 moral principlesWe’ll use 5 moral principles• Why these 5 specific moral principles?Why these 5 specific moral principles?

– ComplementaryComplementary– ComprehensiveComprehensive– Commonly studied & usedCommonly studied & used

Case study: Caltex (pp. 58-60) (1)

• Context: – South Africa– Since 1948: White-only National Party Apartheid– No vote, no union, nor right to freedom

• Caltex– Jointly hold by Texaco and Standard Oil– 80s: Started oil rafineries in South Africa (SA)– Taxes and part of profits to SA governments

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Case study: Caltex (2): Actors

Shareholders resolution

* Break relations with SA government or

* Leave the country

READ p . 58

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Managers

* Activities help Black workers

(income increase, other benefits)

* Withdraw would endanger them

What do you think? Should they leave?

Stop 1st day

Case study: Caltex (2): Actors

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Managers

* Activities help Black workers

(income increase, other benefits)

* Withdraw would endanger them

Utility

Ethics of care

If company leaves, Welfare of workers would decrease

Special care of theirworkers; cannotabandon them

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1. Utilitarianism1. Utilitarianism

• Utilitarian Principle: Utilitarian Principle: The morally correct action is The morally correct action is the one that maximizes net social benefits, the one that maximizes net social benefits, where net social benefits equals social benefits where net social benefits equals social benefits minus social costs.minus social costs.

• Focus: the ends (results) of an actionFocus: the ends (results) of an action– Maximize net social benefitsMaximize net social benefits

• Social benefits (good)Social benefits (good)• Social costs (harm)Social costs (harm)

Example of utilitarianism: Pinto Case

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UtilitarianismUtilitarianism

• Most good & least harm for everyoneMost good & least harm for everyone• Consider all good & all harmConsider all good & all harm

– Everyone who is affected (not private benefits & costs, Everyone who is affected (not private benefits & costs, rather social benefits & costs) rather social benefits & costs) Not only the one Not only the one performing the action performing the action

– Economic & non-economicEconomic & non-economic• Example: loss of income (economic)Example: loss of income (economic)• Example: pain & suffering (non-economic)Example: pain & suffering (non-economic)

– Present & futurePresent & future– Whether easily measured or notWhether easily measured or not

Inspired Cost-benefits analysesInspired Cost-benefits analyses

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Example related to utilitarianism

“A large group of people is stuck in a cave because a fat man (no put down intended) is stuck in the only exit of this cave. The only way to free themselves would to dynamite their way out, therefore sacrificing the fat man. Do they all free themselves at the cost of one life or do they not kill him and all die?“

(Grassian, 1992)

Kill the man in question and save all the others?

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Example related to utilitarianism (2)

• The problem, of course, is that you (almost) never know the future with certainty.

What if the group realized, after killing the fat man, that they could very well have lived because the high waters wouldn't have reached the top of the cave anyway.

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UtilitarianismUtilitarianism

• Concerns:Concerns:– Some benefits & costs might be hard to measure in Some benefits & costs might be hard to measure in

precise, non-controversial waysprecise, non-controversial ways• Example: value of a human lifeExample: value of a human life• Response of utilitarianism: everything can be Response of utilitarianism: everything can be

monetarisedmonetarised– Utilitarianism might appear to justify unethical Utilitarianism might appear to justify unethical

conduct: the ends justify the meansconduct: the ends justify the means• Example: famillyExample: familly

– Choices, rankings can change with timeChoices, rankings can change with time

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Five Moral PrinciplesFive Moral Principles

1.1. UtilitarianismUtilitarianism– Maximize net social benefitsMaximize net social benefits– Concerns on unmeasurable and extreme casesConcerns on unmeasurable and extreme cases

Back to Caltex (3): Arguments

Shareholders resolution

* Break relations with SA government or

* Leave the country

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Unjust since burdens on Blacks not beard by Whites

Violates Blacks civil and political rights

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2. Rights2. Rights

• Rights Principle: Rights Principle: The morally correct action is The morally correct action is the one that you have a moral right to do, that the one that you have a moral right to do, that does not infringe on the moral rights of others, does not infringe on the moral rights of others, and that furthers the moral rights of others.and that furthers the moral rights of others.

• Focus: the means (methods); not the resultFocus: the means (methods); not the result

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RightsRights

• Definition: individual’s Definition: individual’s entitlemententitlement to something to something• Legal (juridiction) & Moral (as human)Legal (juridiction) & Moral (as human)• Positive & NegativePositive & Negative• Rights are entitlementsRights are entitlements

– Example: Right to free speechExample: Right to free speech– Example: Right to freedom of religionExample: Right to freedom of religion– Example: Right to an educationExample: Right to an education

Child labor: Is there a price for education?

• Should child work?• Should child work to pay their

education?• Can child work to pay their

education when low quality of education?

• Programme: work in morning; education in the afternoon

• Human right to education vs. More utility? 35

Conflicting rights: HIV

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Source: UN

Link to Article

25 million+ died of AIDS since 1981

30 million+ living withIt in 2008

http://www.youtube.com/watch?v=qSpTdO4FBZI&feature=related

By applying the patent system to the drug product and the process, "we create inherently unjust monopolies and block knowledge transfer" that could save so many lives around the world. It is time to rewrite the rules of intellectual property rights, a pillar of the world trade system, critics like Jabbar argue. "In the context of HIV and AIDS, we need a new concept of people's property rights instead of intellectual property rights.

Stiglitz suggests setting up a fund to pay fees to scientists who come up with cures for key diseases - after which the drugs would go into the public domain instead of being 'owned' by pharmaceutical companies. (Son, 2009)

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• Conflicting rights• Positive vs. Negative rights

What moral rights do people have?

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Rights, Duties, & InterestsRights, Duties, & Interests

• Function of rights: to Function of rights: to protect interests protect interests – AutonomyAutonomy– EqualityEquality– Example: Free speechExample: Free speech– Example: Freedom of Example: Freedom of

religionreligion– Example: EducationExample: Education

• Rights create dutiesRights create duties– Belief that is the right way Belief that is the right way

for all to behavefor all to behaveInterests

Kantian application to Caltex

• Reversability: Would Whites accept this situation for them?

How would you like in their place?

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• Universability: Would everyone act on ?

What if everybody did that?

1st formulation

Source: Shultz41

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Another example of Kantian application

• Five people waiting for organ transplant • Healthy person arrives at the hospital ; his

organs could save• Utilitarianism: ethical to kill him• Kant: killing the healthy patient would be using a

person as a means to an end

Something must be good in itself, without considering the consequences

2nd formulation

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What rights do individuals have?What rights do individuals have?

• Immanuel Kant (1724Immanuel Kant (1724–1804)–1804) Categorical Imperative:Categorical Imperative:– ReversibilityReversibility– Universalizability (everyone could act on)Universalizability (everyone could act on)Deontological (rules and duties) rather than Deontological (rules and duties) rather than

consequencesconsequencesStart from interior motivationStart from interior motivation

2dn formulation: treating humanity as an end? Not as a 2dn formulation: treating humanity as an end? Not as a meanmean

– Respect / Free Consent of stakeholdersRespect / Free Consent of stakeholders

Criticism on Kant

• Is reversibility always clear enough? All murders should be punished (What if I am a murderer?)

• What if rights of a same person conflict?

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Resolve Conflict Among RightsResolve Conflict Among Rights

But, when rights are in conflict, how But, when rights are in conflict, how should we resolve those conflicts should we resolve those conflicts among rights? Clear enough?among rights? Clear enough?

• Rights protect interests and create Rights protect interests and create dutiesduties

• When rights conflict:When rights conflict:– Examine competing interestsExamine competing interests– Decide which interest is more Decide which interest is more

importantimportant– Give priority to right that protectsGive priority to right that protects more important interestmore important interest

Interests

Access to water

• 30 September 2010: UN Human Rights Council has by consensus adopted a resolution affirming that water and sanitation are human rights.

justiciable and enforceable• More efficient when we pay?

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Fair wage

Exercice in groups: • Yes, it is fair!• No!!

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Fair Wage: Michael Jordan

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Challenges

• How to measure value added (total wealth, profits, marginal productivity)?

• Externalities (over-consumption/ environmental impact ?) included?

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From ‘my’ well-being to societal well-being

• From NEF report ‘A bit rich’: SROI (pp. 29)

• Six (use 2 here) jobs: City banker vs. hospital cleaner (pp. 15 & 21 – Methodo: pp. 30 & 32)

• Which one contributes most?

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• Nevertheless Difficult to calculate Transparency (open discussion but pressure to increase salary, inflation)

?

Stop 2nd day

Fair Wage: Michael Jordan

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• After our discussion M. Jordan, which criteria would you use?

• Is there any ethical issue related to them?

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Which criteria for wages in the company?

• Seniority,

• Competences,

• Age,

• Competition,

• Studies

• Social mission

• History of institution

• Former job

• Painfullness

• Place

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Choices

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Which criteria for wages in the company?

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Ethics of CareEthics of Care

• Until now, assumed that ethics should be impartial

• Nevertheless, special & close relationships (friends, relatives etc.)

• Basic argument: ethical behavior is more than Basic argument: ethical behavior is more than impersonal principlesimpersonal principles

Link to article

• In groups of 4 or 5• What is the right behavior and when?• Why?

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Ethics of CareEthics of Care

• Relationships matterRelationships matter– Should preserve nurture special relationshipsShould preserve nurture special relationships– Respond to their needs, values, desireRespond to their needs, values, desire– Particularly for the vulnerable who depend on meParticularly for the vulnerable who depend on me– Example: love toward son or daughter versus toward Example: love toward son or daughter versus toward

a strangera stranger

• Care Principle: Care Principle: The morally correct action is the The morally correct action is the one that appropriately cares for the people with one that appropriately cares for the people with whom you have valuable & close relationshipswhom you have valuable & close relationships

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Applications of ethics of care

• FeministsFeminists: C. Giligan: men and women : C. Giligan: men and women approach of moral issues – Indiv. of rights vs approach of moral issues – Indiv. of rights vs women on carewomen on care

• CommunitarianCommunitarian ethics: ethics: – concrete communities have a fundamental value that concrete communities have a fundamental value that

should be preserved and maintained should be preserved and maintained – Individual isolated is not importantIndividual isolated is not important

• But demand of care can conflict demands of justice (eg managers obligation of justice towards company vs. friend)

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Objections to care

What could we criticise?

• Could lead to favoritism

• Could lead to ‘burnout’: too many close relationships

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Five Moral PrinciplesFive Moral Principles

1.1. UtilitarianismUtilitarianism

2.2. RightsRights

3.3. Distributive JusticeDistributive Justice

4.4. Ethics of CareEthics of Care

5.5. Virtue EthicsVirtue Ethics

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Virtue EthicsVirtue Ethics

• Pp 108-109: Example of BoeskyPp 108-109: Example of Boesky• Virtue Principle: Virtue Principle: The morally correct action is the The morally correct action is the

one that displays good moral virtues, and that one that displays good moral virtues, and that does not display bad moral vices.does not display bad moral vices.

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Virtue EthicsVirtue Ethics

• Examples of virtues: compassion, Examples of virtues: compassion, conscientiousness, cooperativeness, courage, conscientiousness, cooperativeness, courage, fairness, generosity, honesty, industriousness, fairness, generosity, honesty, industriousness, loyalty, moderation, self-control, self-reliance, loyalty, moderation, self-control, self-reliance, tolerancetolerance

• Examples of vices: cowardice (weakness), Examples of vices: cowardice (weakness), treachery, dishonesty, laziness, neglect, treachery, dishonesty, laziness, neglect, selfishnessselfishness

Comparison

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Why do we care about business ethics?

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From ethics to Responsibility?

• Milton Friedman, “The Social Responsibility of Business Is to Increase its Profits,” New York Times Magazine

• First, corporate executives and directors are not qualified to do anything other than maximize profit. Business people are expert at making money, not at making social policy.

• Second, and more fundamentally, corporate officers have no right to do anything other than maximize profit ; otherwise “tax” on the company’s owners, employees and customers in order to accomplish a social purpose

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2. Ethical Relativism2. Ethical Relativism

• Theory of Ethical Relativism:Theory of Ethical Relativism: There are no There are no universal moral principlesuniversal moral principles– Different societies have different moral beliefsDifferent societies have different moral beliefs– No way to judge a society’s moral principles as being No way to judge a society’s moral principles as being

right or wrongright or wrong– Only possible judgment: Does a society live up to its Only possible judgment: Does a society live up to its

ownown moral principles? moral principles?

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Objections to ethics in business

1. Pursuit of profits ensure maximum social benefits

2. Managers’ main obligation is to the company

3. Business ethics is limited to the law

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Flaws of Ethical Relativism (or Insufficient?)Flaws of Ethical Relativism (or Insufficient?)

• Some moral principles are required if the society Some moral principles are required if the society is to surviveis to survive

Ethics apply to all human activitiesEthics apply to all human activities

Business cannot survive without ethicsBusiness cannot survive without ethics• What appear to be differences in moral What appear to be differences in moral

principles may only be surface differencesprinciples may only be surface differences• Just because two people have different moral Just because two people have different moral

beliefs doesn’t mean they’re both rightbeliefs doesn’t mean they’re both right

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Flaws of Ethical Relativism (or Insufficiencies?)Flaws of Ethical Relativism (or Insufficiencies?)

• The theory produces unacceptable conclusions.The theory produces unacceptable conclusions.Examples:Examples:– Slavery in the United StatesSlavery in the United States– Treatment of Jews in Nazi GermanyTreatment of Jews in Nazi Germany

• Velasquez argues that “…ethical behavior is the best long-term business strategy for a company…” (p. 5).

Do you agree or disagree?

Stop 3rd day

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Five Moral PrinciplesFive Moral Principles

1.1. UtilitarianismUtilitarianism

2.2. RightsRights

3.3. Ethics of CareEthics of Care

4.4. Virtue EthicsVirtue Ethics

Microfinance in a snapshot

• Institutions with double bottom line:– Reach financial excluded– Be financially sustainable to remain

• Around 150 million clients of MFIs (e.g. Microcredit Summit)

• Over 750 million savings and loan accounts in “alternative financial institutions” (AFIs) in developing and transition countries (CGAP, 2005)

• Around 10,000 MFIs+ but overinvestment in top MFIs• Unevenly developed (South Asia >< Africa)• Commercial funding to Latin America

Microfinance in a snapshot (2)

• Major institutions in Bangladesh (GB 8m)

• Around $1 bn per year by donors

• Around EUR 5 bn EUR of MIV

• Interest rates: average of 30% p.a., between 20 and …

Some questions to discuss for the case

• Donor funds (or NGO public money) given before 2000 found their way into private pockets. Normal? To which extent?

• It is unethical to see the poor pay for private profits? • Is microfinance an industry or is it an economic justice

movement?

Compartamos capital structure

• Compartamos AC (the NGO): 39.2 percent,• ACCION Gateway fund: 18.1 percent• IFC: 10.6 percent• Directors and managers: 23.7 percent• Other private Mexican investors: 8.5 percent

• Mission: Provide capital to women micro-entrepreneurs. Support to establish family microenterprises in marginalized communities.

Compartamos Subsidies

Source: CGAP $800 000 Investment

$1 000 000 Loan as Subordinated Debt

$200 000 TA

Interest rates: Compartamos

• Yield of Gross Loan Porfolio in MBB (2007):– Nominal: 30%– Real: 22%

• Compartamos:– 85% excluding. VAT – Taxes: 15 % added tax (VAT) to the Government of

Mexico

• A controlling majority—2/3 of the shares—was held by shareholders committed to development objectives, not profits (Rosenberg, 2007)

Basics of IR: Conflicting issues

• Higher IR but often much cheaper than second-best informal funds (Morduch, 1999)

• Interest rate charged by the institution is one of the two main selection criteria (Wright and Rippey, 2003) but Institutions’ sustainability matters for the poor in non-competitive environments.

• Inequality of pricing but “markets function as mirrors” (Kanbur, 2003)

• High repayment but is it a sufficient condition to assume that an interest rate policy is fair? Low wages accepted by workers mean fair wages?

• Fair IR for borrower but unfair to workers and un-served poor? Intrinsically, interest rates of MF are an ethical issue

What would be a fair interest rate?

Elements you could consider include:

• Clientele (poverty status) • Macro-economic environment• Mission of the MFI• Competition

• Cost of funds + operating costs + profit margin? No cheap source of funds? Well-paid staff / international consultants? Profit to serve new clients? What is a reasonable profit margin?

• Fairness to whom?

It “overcharged” existing clients for the sake of outreach to potential future clients, and all profits accumulated in the NGO would remain at the service of poor Mexicans—some as microfinance clients and others as beneficiaries (Rosenberg, 2007)

How did Compartamos finance its growth?

• over 80 percent of this profit has been retained within the company to fund growth in the number and size of its loans, rather than being paid out in dividends to shareholders

Another perspective

• “The most powerful approach to the question of whether interest charges are too high is to look at the individual cost items that those charges cover (cost of funds, loan losses, and administrative costs) and the profit that's left over after paying the costs. “ (Rosenberg, 2008)

• Surplus repartition Distributive justice

• Interest rates: – Systemic issue: transaction costs

(Rosenberg, 2007)– Corporate issue: trade-off social and financial

performance (Mosley and Hulme, 1996; Lensink et al., forthcoming) ?

What would be a fair interest rate?

If we have to relate it to global questions

• Clientele (poverty status) Needs or equality• Mission of the MFI Virtues• Competition Free choice

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3. Distributive Justice3. Distributive Justice

• Distributive Justice Principle: Distributive Justice Principle: The morally correct The morally correct action is the one that produces a fair distribution action is the one that produces a fair distribution of benefits and costs, good and harm.of benefits and costs, good and harm.

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Distributive Justice (Fairness)Distributive Justice (Fairness)

• General Fairness Principles:General Fairness Principles:– People who are similar in relevant respects should be People who are similar in relevant respects should be

treated similarlytreated similarly– People who differ in relevant respects should be People who differ in relevant respects should be

treated differentlytreated differently

• But what characteristics are relevant in deciding But what characteristics are relevant in deciding if people are similar? For Compartamos case, all if people are similar? For Compartamos case, all citizens equal? All financially excluded? All citizens equal? All financially excluded? All people from same region?people from same region?

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How Define Justice (Fairness)?How Define Justice (Fairness)?

• Egalitarianism:Egalitarianism: – Standard: equal benefits and burdens; sStandard: equal benefits and burdens; same level of ame level of

material goods and servicesmaterial goods and services – Elaborations: political equality or economic equalityElaborations: political equality or economic equality– Criticism: needs, ability differ; unequal in many Criticism: needs, ability differ; unequal in many

respectsrespects

• Capitalism:Capitalism: – Standard: Contributions (money, work)Standard: Contributions (money, work)– Criticism: measureCriticism: measure

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• Socialism:Socialism: – Standard: Abilities & needsStandard: Abilities & needs– Criticism: link to effort, obliterate individual liberty Criticism: link to effort, obliterate individual liberty

• Libertarianism:Libertarianism: – Standard: Free choiceStandard: Free choice– All constraints imposed by others are evilAll constraints imposed by others are evil– ““From each as they choose, each as they are chosen”From each as they choose, each as they are chosen”– Criticisms: related to disadvantagesCriticisms: related to disadvantages

Ex: Object redistributive taxation since “immoral taking Object redistributive taxation since “immoral taking of just holdings”of just holdings”

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Justice as Fairness: Rawls

• Original positionOriginal position– Veil of ignoranceVeil of ignorance– Relevant for today?Relevant for today?

• John Rawls’s Principles:John Rawls’s Principles:1.1. Equal Liberty PrincipleEqual Liberty Principle

2.2. A. Equal Opportunity Principle (each able to qualify A. Equal Opportunity Principle (each able to qualify for privileged positions)for privileged positions)

B. Difference Principle (most needy)B. Difference Principle (most needy)

Priority

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Apply All 5 Moral PrinciplesApply All 5 Moral Principles

• If all 5 principles reach the same conclusion, If all 5 principles reach the same conclusion, then that’s the moral judgmentthen that’s the moral judgment

• But if there appears to be conflict among the But if there appears to be conflict among the principles:principles:– Examine the nature of the apparent conflict: can you Examine the nature of the apparent conflict: can you

think of a different course of action that would satisfy think of a different course of action that would satisfy all 5 principles?all 5 principles?

– If not, set priorities among the principles.If not, set priorities among the principles.• Example: the ends never justify the means Example: the ends never justify the means

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Will the act lead to a fair distribution of

benefits and burdens? If it will cause

inequality, will it improve the situation of

the least advantaged persons?

JUSTICE

Does the act respect the moral rights of everyone concerned? Does it treateveryone as persons and

not merely as things?

RIGHTS

Does the act show proper care to people

we have special relationships with?

Will it earn the trust of people we value?

CARE

Will the act help me develop my character? Will it make me a better

person?

VIRTUE

Business Ethics by Manuel Velasquez

Who benefits from the act? Who are

burdened? Does the act maximize the

total net benefit to everyone concerned

(stakeholders)?

GENERAL WELFAREUtilitarianism

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Five Moral PrinciplesFive Moral Principles

1.1. UtilitarianismUtilitarianism

2.2. RightsRights

3.3. Distributive JusticeDistributive Justice

4.4. Ethics of CareEthics of Care

5.5. Virtue EthicsVirtue Ethics

Back to Pogge (2002):

• Which one related to character?

• Which one related to achievements?

Example A: Climate Change

• Emissions from North, first countries affected are in Africa and Asia

• Huge investments needed• Change of behaviors

Questions (30 minutes preparation):• Do we have a responsibility towards the future

generations? • Is there a duty compensate the South? How

much? (Who should pay the costs of climate change?)

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Responsibility towards Future generations

• Some argue they have equal rights than us:– Leave the world no worse than we found it– Care: Leave our children a world no worse– Attfield/ Utilitarianist: Output left is no less

than from previous generations (but not the same)

• When we calculate, what is the discount rate?• Same nature or same level of welfare?

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• Others object:– Do not exist yet, therefore no duty related to rights, no

way to punish them– If they would have rights, could sacrifize our civilisation

for their sake?– Rights exist only if their holders have an interest to

protect. Do not know what rights future people might have; will they care about environment?Maybe prefer more consumption, less the environment?

– With technology, we could get back or leave same world

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Duty to compensate the South?

• We did not create it!• Free transfer,

• Welfare (market for our companies, cost of adaptation > budget)?

• We created it!

• Do I have a special relationship with inhabitants from the South?

Libertarian

Utilitarian

Moral right (universal, revere)

Care

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More emphasis on Decreasing here rather than paying for decrease in South?

• Polluter – payer principle• But externalities, how to internalise?• Efficiency argument (L. Summer thinking that

cheaper thus more efficient to outsource our trash)

• More efficient than paying for energy efficient solution, should increase general welfare, what leads to environmental behavior

• More population in South More total utility to work in the South

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Examples: B. Case Study: Unocal in Burma

1. Did Unocal do the right thing in deciding to invest in the pipeline and then in conducting the project as it did?

Assume there is no way to change the outcome of this case and that the outcome was foreseen, was Unocal then justified in deciding to invest in the pipeline? 

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2. In your view, is Unocal morally responsible for the injuries inflicted on some of the Karen people?  

3. Do you agree or disagree with Unocal's view that "engagement" rather than "isolation" is "the proper course to achieve social and political change in developing countries with repressive governments." Explain. 

Some cases: Which framework/ debate?

• Right

• Utility

• Virtue

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• Right

• Utility

• Distributive justice

Bank bailout

• Virtue (dishonest)

• Utility (society)

• Distributive justice

102Source: Fortune

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Before conclusion..

• “Simply stated, ethics refers to standards of behavior that tell us how human beings ought to act in the many situations in which they find themselves as friends, parents, children, citizens, businesspeople, teachers, professionals, and so on” Velasquez

Conclusion

• Framework:– Which level (systemic, corporate, indiv.)?– Who is responsible for what?

• How to analyse this issue?– Are there some legal or moral rights (Kant)?– Net benefits (to which; me, relatives, all)?– Special obligations?– Will this lead to just distribution (needs,

contribution)? 104

• Business ethics is about trade-offs • Self-regulation• If insufficient, regulation• Limits to regulation• Ethics can pay

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Evaluation

• 20% participation• 20% paper• 60% exam

Exam• Chapter 1, 2 and 7 of textbook• Theory• Case studies

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Thank you!

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