L ECTURE (4-5) # S YNOPSIS Theories and Tools of Business Ethics

Theories of ethics are also applicable in business. Even it helps to identify the real ethical matters for either individual or organizations or both. Ethics theories attempt to systematize ordinary moral judgements of the general ethics. Traditionally ethical theories have three basic principles: First, general rules are frequently sufficient. There may be two or more general moral systems seem to be conflicting. Second, Moral systems help to make moral decisions and justify them to others. That means one must present reasons or arguments in defence of ones decision. Third, Conventional morality may not always correct. However the search for a completely satisfactory ethical theory is never ending one. The traditional ethics was known as egoism and talked about self interest. The basis of consequences makes Utilitarianism approach. On the other side Deontological approach tells about the duties and universality. What / How it is ethical? Earlier we learned that when we make a particular decision we refer to a certain moral standard and then make the judgment. (Refer to moral reasoning). But it is very difficult to produce an universal right and wrong judgment. Because people make decision based on different ethical theories and viewpoints. So, whenever we make a particular decision it could be backed up by such theory of ethics which might be acceptable to me or not. Normative theories of Ethics Normative theories can proposes some principles or principle for distinguishing right action from wrong action. These are divided into two parts: a) Consequential b) Non-consequential Consequential Theories: Here the moral rightness of an action is determined solely by its result. If its consequences are good, then the act is right; if they are bad, the act is wrong. Moral theorist who adopt this approach are call consequntialists.

The right actions are those which produce at least equal good as compared to the amount of evil. Non-Consequential (Deontological) Theories: Here the right and wrong are determined by more than the likely consequences of an action. In this theory the moral significance of consequences are not ignored; other factors are also considered while going for the moral assessment of an action. Normative theories of Ethics Consequential theories: a) Egoism b) Utilitarianism Non-consequntial theories: a) Kants Ethics (Universalism) b) Virtue Ethics Egoism The view that identifies morality with self interest is referred as Egoism. Egoism contends that an act is morally right if and only if it best promotes an agents long-term interests. If any action produces or will probably produce for the agent a greater ratio of good to evil in the long run that any other alternative, then the action is the right one to perform, and an agent should take that course to be moral. Egoism doesnt preach that we should never assist others but rather that we have no moral duty to do so. There are two kinds of egoism: a) Personal b) Impersonal Personal: Personal egoists claim that they should pursue their own best long term interest, but they dont say what others should do. Impersonal: They claim that everyone should follow his or her best long term interest. Human beings are by nature selfish creature and psychological egoism flows from this thought. People are as a matter of fact so constructed that they must behave selfishly. Psychological egoism asserts that all actions are selfishly motivated and therefore truly unselfish actions are therefore impossible.

Example: 1. A father intended to sacrifice his life to save his childrens life. According to psychological Egoism the parent may seek to perpetuate the family line or to avoid guilt. Example: 2. An employee has blown a whistle (Whistle-blowing) to disclose the fraud and misdeed of the organization or an individual; even if the employee knows that he / she has to pay for this to a great extent. According to psychological Egoism the employee wants to take revenge or he / she is after fame. Problems with Egoism (criticisms) 1. Psychological egoism is not a sound theory. Although self-interest motivates us to some extent and there are also some situation in where we pretend to act morally; but in all situations we are not only motivated by self interests. Anything that you do is the result of your desire; but this doesnt mean that your desire always follows self-interest. Example: While driving, a driver saw a crashed car at the roadside which was burning. A little girl was inside the car suffocating from severe smoke. The driver stopped the car and saved the life of that little girl risking his own life. Here the psychological egoists may argue that the heroic deed was done so that the hero might get praise from other or to get his self esteem up!!! Example: Consider a vice versa case where the driver saw the car and fled away; just to save himself from the dangerous job. Isnt he a coward? Now we can question the logical / scientific comprehensive of this theory; because here both the coward and the hero turned out to be equally self-interested and egoistic.

2. Egoism is not really a moral theory it all. Egoism misunderstood the nature and point of morality. Morality serves to restrain our purely self interested so we can all together live in harmony. In a society of egoists, the social system would fall apart in pieces and there would be no means to resolve conflicts / disputes. Because, all people would behave in their own interest and think that they can get away with this. 3. Ethical egoism ignores blatant wrongs. Egoism takes no stand against seemingly outrageous acts like stealing, murder, racial and sexual discrimination, deliberately false advertising and environment pollution. All such test are morally neutral until the test of self interest is applied.

Comparison between Psychological Egoism with Ethical Egoism:

Human beings ought to act in their own self interest. Egoism may be different types. They are: I. Psychological Egoism: It is a scientific and descriptive approach People always do what they want to do People will not being unselfish by nature. II. Ethical Egoism: It is not equated with selfishness. Does not dealt with Ego It has universal concern which tells that everyone should act in his own interest regarding others interest. It has Individual concern that tells everyone ought to act in his self-interest It has personal concern that tells I ought to act in my own self-interest and I dont claim about everyones work. It has Egoism as well as Altruism concept. First one wants to maximum personal benefits (Salary, power, prestige). Second one wants to maximize social benefits(greatest happiness for all)

Utilitarianism:
Always act so as to bring about the greatest net good for all of those affected by your actions. We may on some occasions be forced to choose between alternatives that have

both good or bad consequences. In such a case utilitarian says, we must choose the course of conduct that produces the greatest amount of good or the least amount of bad. It is the moral doctrine that we should always act to produce the greatest possible balance of good over bad for everyone affected by our action. Here good equals to happiness or pleasure. Bentham and Mill both believed that we must seek to maximize good and minimize bad. The theory explains the good in terms of pleasure and the bad in terms of pain is called hedonism. Hedonism is a school of thought which argues that pleasure is the only intrinsic good. This is often used as a justification for evaluating actions in terms of how much pleasure and how little pain (i.e. suffering) they produce. In very simple terms, a hedonist strives to maximize this net pleasure (pleasure minus pain). Imagine few things: Why you want university degree-To get a good job Why do you want that-Make more money Why do you want more money-To buy such things that give me pleasure Why so you want more pleasure-??? Balance of Value

Intrinsic Value

Factors of Utilitarianism

Measurement

Not all utilitarians are hedonists. Pleasure may comes from donating money, writing a novel, listening music People must be able to measure pleasurable and painful states to compare one persons pleasure with another persons. Which one is greater? There are Act and Rule utilitarian. Act utilitarian tells each individual actions should be subjected to utilitarian test. Keep your promises while setting standards valid in all situations. Such rules will make most goods in the long run is called rule utilitarianism.

Suppose your friend requires a book from you on immediate basis. You promised to give him that but when you are on the way you see a injured person on the way to his house. You keep him into the hospital and failed to keep your promise. In this situation greater good comes from the rescue than the delivery of that book By this way you have to calculate the cost/benefit analysis. You have to consider your financial benefits as well. A B C D E F G H I J Total

10 10 10 10 10 10 10 10 10 10 100 Example: Suppose there are ten members in a society, and they have the following happiness score.

A road is made to improve the communication facility. So, the whole society would enjoy the benefit of a better communication infrastructure and the happiness would normally go up. But, the people who had to sacrifice their land to get the road done would possess a lower pleasure then the other people. Happiness score after the road construction: A 15 B 15 C 15 D 5 E 5 F 5 G 5 H 15 I 15 J 15 Total 110

Thus, whenever equal amounts of pleasure are involved, throwing dirt is as good as writing poetry. Example: Mr. X threw a dirt and wrote a poem on the same day. Variables Intensity Duration Total Dirt throwing 10 5 15 Writing Poem 5 10 15

Here, According to Bentham, Both the work holds the same goodness!!

Six Points: 1. We must consider unhappiness as well as happiness when we want to give the greatest happiness for the greatest number. 2. Utilitarian evaluate actions according to their consequences, so it can be morally right in some circumstances 3. Action affects people in different degrees. Example: Play radio loudly. 4. Utilitarians wish to maximize happiness in the long run 5. Utilitarians acknowledge that we often do not know about our future circumstances that come from our action. 6. It suggests to calculate our pleasure and pain with others. Criticism: Utilitarianism is ungodly-it proposes only utility rather than moral judgement. Ambiguous Increase possible immoral actions Lengthy Difficult to calculation weights Wrong actions may produce goods.

Universalism:
Kants theory is based on a moral principle that is called Categorical Imperative. It requires that everyone should be treated as free person equal to everyone else. Everyone has a moral right to such treatment; and everyone has the correlative duty to treat others in this way. Example: A sales representative hands his boss an envelope containing sensitive information belonging to a competitor. He argued to disregard all confidential things and use classified information. Boss agrees with him and he told that its his duty to respect others work. In this exchange the boss articulates some of the main ideas underlying an approach of moral thinking which is called deontology. The word deontology comes from the Greek root which meant to bind and suggest what we meant to duty. According to deontologists the fact is it was right decision to make. According to them the exist moral rules or standards that are universally valid are applicable to all human being. The

universal or common moral code was referred as moral law or natural law. Immanuel Kant(1724-1804) in his version of deontology tries to reconstruct this traditional way of thinking about morality. Kant theory has been enormously influential. Pleasure is not Kant claimed of intrinsic or inherent value nor does the moral value of action lies in effects or results it produces. Suppose the boss might afraid of the negative publicity and he send back to his competitor. It might seem that the boss has done a good deed. But according to Kant the bosss action need no praise; he did not act for moral reason. Consider another example: A person sees a child in trouble in the shallow water and he rescued that child. It seems a very good deed but he might do this for remuneration. Kant assumed that whenever any of us does something deliberately, we are endorsing a private rule that we are choosing to follow. Kant called all such private rules maxims and he believed those who take morality seriously would never follow maxim that did not comfort to the moral principles. This term is called categorical imperative. Kant believed that moral principles cannot command us in the hypothetical ways. According to Kant, we are required to perform some duties to other to enable them enjoy their rights. Correspondingly, others need to perform their duties in order to enable us enjoy our rights. This formulation is known as The formula of universal law. No one can force us to be rational, no one can force us to be normal.According to this view we act morally when we knowingly choose to act in that way reason demands. The rule have to be universally acceptable Each human being is a unique and ends in itself. Criticism: Formalism: Purely formal and identifies no principles of duty. Example: Suppose I am a murderer. In this situation should I want everyone to follow the policy that murderer should be punished? If I do hold that belief, then two things might happen 1. I would be protected cause other murderers would be punished. 2. I would also be punished, caused other murderers are being punished at the same time.

 Rigorism: leads to rigidly not sensitive rules. We know that people should not be used as means like machines rather should they should be treated as ends. Example: One employer pays the employee below the subsistence level payment and dont provide the employees with a safe working environment. Here the employer argues that he is not violating the humanitys basic grounds, because he is letting them work elsewhere if they want to dos so; they have the freedom to switch among jobs if they want to.In both the previous cases Kants theory fails to identify a crystal clear distinction between morally right and wrong activities. Abstraction: Too abstract to guide action. Conflicting: Identifying a set of rules which may be conflicting No accountability of wrong doing. However, he gave no rule for what we should do when our liking and duties are the same.

Relativism Relativism is the idea that some elements or aspects of experience or culture are relative. Moral Relativism is the position that moral or ethical propositions do not reflect universal moral truths (neither objective nor subjective). Native Relativism: Most widespread Ethical decisions are personal, important and complex Only the decision makers option is relevant Excuse

Cultural Relativism: Morality depends on culture, societies and communities The best anyone can hope or do is to understand the moral codes of particular culture or given society.