Historical ethical dilemmas in capitalism and modern business

One of the most interesting ethical dilemmas that continues to plague ethicists and policymakers is the struggle to reconcile the need for free enterprise with the need for social justice. Another ongoing ethical issue is related to organizational culture, shifting social norms, and whether individual actors in organizations define the tenor of the organization as a whole. Neither of these genuine ethical dilemmas can be resolved simply. The first bears itself out in what often appear to be glaring violations of every ethical principle and logical construct. Free enterprise has helped to bolster economic growth and development, as well as to empower individuals to innovate and contribute to society. Yet free enterprise has not been truly free, with access to power and resources constrained by factors like race (Kerr & Walsh, 2014), gender (Tufarolo, 2015), and class (Shin, 2014). Of these variables, race and gender remain salient barriers to achieving the full benefits of a genuinely free market economy. Whether a free market economy can ever reflect the ethical norms embedded in an idealized democracy remain to be seen. When governments constrain businesses on ethical grounds, as through legislation requiring equal pay, they risk short-term economic losses. In the long run, though, the profit-driven motives of capitalist organizations can be aligned with social justice objectives because the more people in the society are empowered to drive business and innovation forward, the more the economy will grow. The most extreme example of how this ethical dilemma has played itself out in the past was with slavery: which was first an economic institution that epitomized in the most exaggerated, gross way the injustices of exploitation and dehumanization of labor (Guterl, 2015).
Regarding the second ethical dilemma, organizations continue to grapple with issues like fraud and corruption, which are ultimately individual behaviors. However, company culture and even organizational policies may be designed to enable unethical behavior or at least to facilitate thee tendency to abnegate personal responsibility and accountability. The conflict between personal ethics and organizational behavior is borne out in the research by Cojuhuarenco, Shteynberg, Gelfland, et al. (2012). Cojuhuarenco, Shteynberg, Gelfland, et al. (2012) also show how gender and self concept impact ethical decision making as much as the normative ethical culture in the organization. An abundance of research reveals the detrimental effects of unethical behavior in organizations (Askew, Beisler & Keel, 2015). Given the deleterious effects of unethical behavior at the micro-level within organizations, as well as at the macro-level in the economy, it seems senseless to condone or ignore these types of behaviors.
Adam Smith justifies the ethics of capitalism because his view of capitalism is idealistic. Smith’s concept of “enlightened self-interest” epitomizes his idealistic view of human nature, as the philosopher denies the prevailing role of greed and corruption within a capitalist system. Furthermore, Smith would have supported Reaganomics and other “trickle down” type economic policies that enable the already wealthy to grow richer, while exacerbating wealth disparity over time. Capitalism does have the potential to benefit society but only when it is tempered with ethics; when the means to achieving the ends are also ethical.
Capitalism is the essence of modern business life, but contemporary firms are responding to the cry for social justice through corporate social responsibility. Firms that practice social responsibility gain a competitive advantage over those organizations that do not because they can attract and retain top talent and compete better in the global marketplace. The organizations that continue to engage in exploitative practices, or that have organizational cultures that are hierarchical and alienating to workers are becoming less relevant and less viable. Empowering employees through collaboration is becoming the new model for ethics-driven capitalist enterprise.






References

Askew, O.A., Beisler, J.M. & Keel, J. (2015). Current trends of unethical behavior within organizations. International Journal of Management and Information Systems 19(3): 107-114.
Cojuharenco, I., Shteynberg, G., Gelfland, M., et al. (2012). Self-construal and unethical behavior. Journal of Business Ethics 2013(109): 447-461.
Guterl, M.P. (2015). Slavery and capitalism. The Journal of Southern History 81(2).
Kerr, C. & Walsh, R. (2014). Racial wage disparity in U.S. cities. Race and Social Problems 2014(6): 305-327.
Shin, T. (2014). Explaining pay disparities between top executives and nonexecutive employees. Social Forces 92(4): 1339-1372.
Tufarolo, M.A. (2015). You haven’t come a long way baby. Journal of Gender, Social Policy & The Law 24(2)