Globalization as the logical conclusion of profit-oriented business ethics

Ethical Egoism in Business

Is ethical egoism the only credible ethical project for individuals and businesses in contemporary times? Answer: Yes.

The rise of anti-globalization movements and the appeal of socialism in Latin American countries show that laissez-faire capitalism has recently come under serious criticism. Some of the criticisms are legitimate since capitalism has not solved such pressing problems as global poverty or the gap between the rich and the poor. To the contrary, the gap in the last several decades has widened, both within developed countries and in the global arena between the rich countries and the poor countries. Moreover, some multi-national business companies have come under heavy criticism because of their inability to treat their employees and workers in the developing countries with the kind of sensitivity expected from them. Because of these recent developments, words like "corporation" or "economic globalization" have become dirty words and terms such as "business ethics" and "business morality" are viewed as oxymoronic in some circles. Under these conditions, the only way to conduct a credible business project for individuals and organizations in contemporary times is ethical egoism.

The purpose of this paper is to argue that ethical egoism is a legitimate and morally justifiable theory and those who do business by following the tenets and principles of ethical egoism are ethical human beings whose behavior is morally justifiable. In order to make this point, this paper discusses the meaning of ethical egoism as a concept, both from philosophical and business standpoints. After that, the paper discusses business ethics and its importance as well as the role of ethical egoism in formulating business ethics. The importance of business ethics as a different kind of ethics, operating within the context of business rather than being subjugated to the morals of philosophy, religion, or law, is also discussed. The last part of the paper synthesizes major points and argues for the validity of ethical egoism.

Any dictionary of egoism refers to it as selfishness, exclusive concern with satisfying one's own desires and wants, and placing one's own interests above everybody else's. Some people, looking at it from a psychological perspective, argue that we are all selfish and that it is natural. So, there is nothing morally objectionable in egoism. Building upon this view, as well as upon the principle of "invisible hand," propagated by Adam Smith, American economist Milton Friedman (1976) has argued that "every individual serves his own private interest . . . . The great Saints of history have served their 'private interest' just as the most money grubbing miser has served his interest. The private interest is whatever it is that drives an individual" (p. 11, emphasis original). For example, while there is enormous difference between St. Francis who advocated distributing one's wealth among the poor and John D. Rockefeller who based his business ethics upon the principle that profit maximization is the ultimate goal, there is a crucial similarity between the two: both pursued their private interests. St. Francis' private interest was to satisfy his religious moral consciousness, while Rockefeller's was to accumulate material wealth and all the benefits emanating from it. Moreover, one may argue that people like St. Francis today virtually do not exist, so in today's world of competition, the need for survival through pursuit of selfish interests is morally justified -- especially in business where the principle upon which St. Francis acted does not work.

The rules and regulations in the world are not defined by the philosophy of business alone, and many in the field of metaphysics -- that is, philosophers -- have described egoism as antithetical to ethics. These philosophers argue that "ethical egoism" is an oxymoron, since it suggests that "each and every man ought to look out for himself alone" (Emmons, 1969, p. 311; Rachels, 1974, p. 297). Ethical egoism is, however, more complex than that and does not necessarily ignore moral dimensions of human behavior (Rand, 1964; Regis, 1979; Regis, 1980; Machan, 1979; Chong, 1992). While it is true that ethical egoism maintains that "basic principles of human conduct must always be related . . . To some benefit for the agent," one's private interests can be pursued with the aid of a moral outlook. The prime virtue of ethical egoism is the Aristotelian understanding of rationality. This view suggests that self-love can motivate a good human being who pursues his or her interests in a rational way, as a moral human being (Machan, 1979, pp. 1 and 4). "A narrowly self-centered egoist" without a sense of moral outlook, as Regis (1979) argues, "would, for example, be prohibited from experiencing the valuable pleasures of love, friendship, fellow feeling, and community." In this sense, an ethical egoist can live "a more fulfilling and enjoyable life by engaging in such sympathetic relationships, they are wholly justified and supported from an egoistic point-of-view" (pp. 51 and 53).

Critics of ethical egoism charge that ethical egoism sanctions self-interested conduct. The charge is a weak one since there is no universal doctrine which does not sanction self-interested conduct, and absolute altruism does not exist. In fact, self-interested conduct is every person's fundamental right, affirming our right to private autonomy and independence. Critics also assert that ethical egoism is logically impossible. For example, critics say, according to ethical egoism, every person wants to be on top (in business, sports, lifestyles), and this is logically impossible since only one person can be on top and that entails denying others the same right one claims for him/herself. But the essence of ethical egoism is not that everyone must be on top; rather every person attempts "to do so" (Regis, 1979, p. 57). If applied in business, this is actually good for the society, and thus ethically justifiable. For example, if we take Yahoo, Hotmail, and Gmail e-mail services, each of them want to be on top of e-mail servicing. In their attempt to do so, they try to be innovative, provide better services to consumers, and behave in a more ethical manner because they care for their public reputation. Though each e-mailing service acts in a self-centered manner, they end up serving the consumers and the society at large more responsibly and ethically. If serving the society better cannot be justified on moral grounds, what can be?

"An important point to consider here," as Chong (1992) argues, "is that the ethical egoist can accept that morality, as ordinarily conceived, is something he cannot do without" (p. 29). Morality, as classically defined by Frankena (1963), is a "social enterprise," and is "an instrument of society as a whole for the guidance of individuals and smaller groups." "Like one's language, state, or church," Frankena further states, "it exists before the individual, who is inducted into it and becomes more or less of a participant in it, and it goes on existing after him" (pp. 5-7). Defined as such, morality is fully compatible with the actions of Yahoo, Hotmail, and Google, who follow the guidance shaped by the society; they have become participants in extending the benefits of a social enterprise, i.e. morality, to a larger society. And an important fact is that these providers of e-mail servicing act based on self-interested and self-centered concerns, but their self-interestedness and self-centeredness lead to an outcome that is morally justifiable since it benefits the society.

Ethical egoism is not the only theory that is criticized as inconsistent and self-contradictory. Many people argue that business as an enterprise is antithetical to ethics. These critics argue "that business is a 'game,' and hence the ordinary constraints of morality do not apply, and that one cannot survive in business if one is too 'ethical'" (Beverslius, 1987, p. 81). In market society, therefore, where rules involve competition (like in boxing or basketball) and profit maximization, ordinary ethical rules are not applicable. But just like any game (boxing, basketball, etc.), business operates within a set of rules and regulations set out by the society. But there is a crucial difference between a sports gaming and business, since the former is a voluntary enterprise, while every person, for the purpose of survival, has to participate in business, and the ethical question becomes more important in shaping the rules and regulations of business. For these reasons, critics of the concept of business ethics who argue that business cannot work if one is too "ethical," propose the following set of arguments:

(1) We all have a right to economic survival, i.e., a right to survive in business.

(2) This right implies that we have no obligation to do anything that is incompatible with surviving in business.

(3) One cannot survive in business if one is ethical, i.e., if one takes everyday senses of honesty, law-abidingness, fair-play, etc. into one's business dealings; one has to "play the game."

(4) Therefore if by "business ethics" we mean taking everyday sense of honesty, law-abidingness, fair-play, etc., into business dealing, we have no obligation to do so, and hence there is "no such thing as business ethics." (Beverluis, 1987, p. 83).

Let us go through these arguments. The first argument does not suggest that a person involved in business should disregard any ethical obligations. One can economically survive in business without violating the norms of morality. Moreover, as Beverluis argues, "we are in a real sense 'doing' business ethics. For what is a 'right'? If one puts forward the claim to have certain moral rights (as opposed to legal rights), one is willy-nilly engaged in the activity of business ethics . . . (ibid).

The second and the third arguments again are hypothetical and do not necessarily prove that one needs to disregard moral considerations. As Beverluis states, "[o]ne can (normally) survive economically without selling one's soul. One may not become rich but the argument turns on survival, not riches" (ibid). As for the fourth argument, it is again a hypothetical assumption. One can in the same way say that a person without honesty, law-abidingness, and fair-play cannot survive in a business environment, as the key to success is to follow these regulations in order to build one's reputation and avoid punishment (either in the form of government punishment or by losing customers because of the company's unethical activities). In fact, the latter argument is closer to reality in today's business environments. The examples of U.S. energy company Enron and the British oil company BP are testament to that. Furthermore, the fourth assumption may be contrasted with the views of business professionals who have a different opinion on this issue. Valentine and Rittenberg (2004) explored global differences in ethical evaluations, using a sample of 222 American and Spanish business professionals. "It would appear from the results that American executives prefer to support ethical actions resulting in fairness and are highly concerned about the moral outcomes of questionable business practices," they conclude. "The results support the idea proposed by some ethics scholars that the United States is a benchmark for business ethics" (p. 8). These results are especially significant since American businessmen are highly successful and a positive correlation between their successes and their support of ethical behavior emphasizes the importance of following honesty, law-abidingness, and fair-play rather than ignoring them.

John Kaler (2000), without specifically discussing ethical egoism, also provides arguments that justify ethical egoism. According to Kaler, the major reason for being "ethical" in business is self-interest and that there are "different sorts of prudential reasons for behaving ethically" (p. 161). As some people put in everyday business conversations, "good ethics is good business" and "ethics pays." Kaler argues that there is no ground for withholding the adjective "ethical" in describing behavior motivated by self-interestedness as it is in describing altruism. "Apart from anything else, there is the apparently undeniable fact that behavior is invariably a mixture of prudential and altruistic reasons," he argues. "So to insist on altruism alone is to leave very little that counts as 'moral," and since "it is defined by a notion of the 'common good,' the prudential would seem to be an essential component of the moral" (p. 162).

Kaler further argues that a relationship between businesses and the public (which includes the government, campaigning organizations, and consumers) positively influences the development of business ethics among people engaged in business, particularly managers. Because the government represents the people in liberal democratic societies such as the UK and the U.S., it is in the interest of businesses to cooperate with the government and obey the laws. The businesses today, Kaler argues, are also trying to cooperate with campaigning groups and labor unions because in this way they improve their reputations. By cooperating with these groups, businesses surely have to behave more ethically toward their employees and consumers. And finally the relationship between businesses and consumers is a direct one, and as such businesses have a vested interest in being ethical towards consumers lest they lose their consumer base. In this business environment, Kaler concludes, "we may be witnessing a 'virtuous spiral' whereby rising public expectations of morality in business lead to ever increasing moral commitments by business that then cause those expectations to rise still further" (p. 161). Ethical egoism is obviously at play here, as these businesses are pursuing their self-centered goals without disregarding business ethics and society's moral considerations.

In discussing business ethics, a common error, as pointed out by Primeaux (1997), is that business ethics are normally defined not by objectives, assumptions, and principles of business itself, but by "superimposing the tenets of religion, philosophy, or law" (p. 315). No one evaluates the morality of philosophical, religious, or judicial tenets by applying the principles and objectives of business; it is the other way around. While philosophy, religion, and law are important in formulating business ethics, Primeaux argues, we can "identify the basic assumptions, principles, and objectives of business itself as a valid, sui generis enterprise; and, from that perspective, identify the ethics of business" (p. 315). Philosophy, religion, and law here serve as analytical tools that provide criteria for self-criticism in business ethics. Business ethics needs to be defined "as originating in business theory and practice" and be expressed "for business in the language of business" (p. 316).

One of the defining characteristics of business ethics is the importance of profit, Primeaux proposes. Profit is more important in defining business ethics than the basic tenets of morality in philosophy, religion, or law. Profit, however, should not be understood in a narrow sense, referring only to "numerically-correct accounting procedures" (p. 316). Profits are not the end means in business, Primeaux argues, but they reflect and symbolize what people want, what people are willing to pay for what they want, and reflect consumers' rankings of goods and services they want. In Primeaux's words, "profit represents human achievement and social good. It symbolizes the contribution of business to communal and personal well-being" (p. 316). Therefore, profit is an essential component of business ethics. In that sense, pursuing profit does not simply represent businesses' self-interest, but also the ethical dimensions of individual and organizational behavior. In societies where ethics is highly valued, individuals and organizations engaged in business are likely to generate more profit if they behave ethically. Thus, in its broader sense, profit represents ethical behavior. "At one and the same time, it enriches human life by providing what people want and rewarding those who provide it," Primeaux states. "It also reflects efficient use of scarce resources, and a respect for all of the factors of production: raw natural resources, personal well-being, invested capital, and human potential" (p. 318).