Ethics

Introduction

Business ethics is a wider concept than corporate governance because it relates to the ethical dimension
of business, which is wider than corporations. It involves the question:
what is the right thing to do in business?

Profit-making is a legitimate form of human activity, however, one may make profit by exploiting the
environment, other people, do illicit activities ex: money laundering, so we need a good legal framework
that establishes what is permitted and prohibited. Legislation has increased over the years and it has
extended to areas like the environment and health and safety.

One of the main perceptions in business is the compliance model i.e. if a business complies with the legal
obligations and ethical principles (code of ethics). But ethics isn’t just about compliance with principles.

When talking about professions, we’re not only talking about doing things in a technical POV, but also
doing things to the benefit of those who request our services.

Business is continuing to change because the environment is always changing therefore, the business
has to reinvent its way to remain relevant. Restructuring can be by adaptation i.e. the business adapts
itself to business situations. It may also be in a responsible way i.e. responding.
Topic 1: The World of Business is the World of Human Relations

• The ethical dimension of business appears when business is seen primarily as a sphere of human
activity involving interpersonal and organisational relationships.

Dimensions of business
• Political dimension and economic aspect (economic growth in revenue, profits etc) because
government have an interest to ensure that the national economy would continue to grow. Also,
business presumes economic freedom.
• Social dimension because it is part of society. It generates jobs, which is important for everyone.
But it may also increase the divide between the rich and poor and provide bad conditions of work.
• Environmental dimension - we’re trying to reach an equilibrium between economic growth and
environmental concerns, hoping that the environmental concerns aren’t neglected.
• Ethical dimension - concerned with the integration of business into the fabric of social life. It is
thus concerned with the respect of human beings, including social integration i.e society being
more cohesive. So equality tries to evaluate the economic impact on society and how the country
is governed (ensuring business fulfils and satisfies its social responsibilities and encourages
businesses to thrive).

Business is generally regarded as the system through which suppliers aim to provide products or services
to customers in an efficient manner. But this is a limited view of business as it is solely concerned with
its private initiative, which aims to satisfy the needs of its entrepreneurs. In reality, a wider context needs
to be taken into consideration to also include the public initiative. This is pursued via politics which tackle
matters relating to the common good.

Politics (public initiative) is based on the obligations we have to and for each other - with obligations
which are articulated and regulation within laws (social or public, civil legislation etc).

Commercial activities (the private initiative) have the logic of exchange - one side exchanges a
product/service for money. There is also the informal sector constituted of families, voluntary groups
and non-profit making organisations.

The civil society is made up of 3 sectors:

1. Public sector
2. Private sector
3. Informal sector

Business involves people interacting with each other, like any other human activity. It involves a sphere
of human activity or a sector of social life. If we speak of business as a world of human relations, we can
understand better not only the deeper aspirations we nourish regarding business like how we ideally
want it to be, but the reason we expect it to comply with legal obligations and moral norms or standards
of behaviour.

The world sustains us and we sustain it by cultivating it and making it more habitable i.e. a place we can
live with dignity. To discuss nature and quality of human relations in social life, we refer to justice. This
is not the only ethical principle but it is the principle against the way which we relate with each other
has to be morally evaluated and judged.

The kind of relations generally established in and through business activity can be evaluated in terms of:

a) Justice as equality

Equality is a very basic definition of justice - the concept of treating all others as equal. It is an essential
principle guiding human relationships. A way to understand this phrase is to think about relations in a
manner of exchange:
- Employer exchanges money with employees in return for work - are firms paid a sum which
appropriately reflects the work done/the value provided for the firm?
- Firm exchanges money with suppliers in return for supplies - is the firm getting value for money?
Is the entity getting the quality it’s paying for?

In exchange relations, justice requires that money be equivalent to work/service/product/security.

Justice as equality doesn’t provide an exact measure to determine equivalence - as variations in wages
for different categories of workers confirm. The principle is meant to protect equality as a basic value in
human relationships in every sphere of life. One appeals to it in protest against discrimination and
repressive/oppressive relationships.

Its application to concrete circumstances is a matter of prudential judgments.

But judgment involves rights and obligations.

b) Justice as an ethical principle articulated in the terms of rights and duties

1. Sphere of work
Right to fair remuneration and decent conditions of work:
- Promotion of rights at work
- Creating a conducive environment for employment opportunities
- Social protection
 - Social dialogue

2. Marketing sphere
Right to free trading (value of free market) is an essential aspect of a democratic society (protection
against monopolies). There are also rights of consumers which involve duties on the part of business and
society. Societal duties may be of a civil nature (ex: consumer associations) or of a political nature (ex:
appropriate consumer legislations).

3. Social sphere
The theory of CSR affirms that corporations are accountable to shareholders as well as all stakeholders,
including in the community in which they’re operating, and society in general.

The business community has a right to expect a social environment that enables business to flourish
through an adequate infrastructure for economic growth, a healthy democratic system of government,
and other relevant measures.

4. Environmental sphere
While environmental legislation has recently increased, the environment cannot be adequately
protected without proactive measures by business corporations.

c) Justice as solidarity

Exercise of rights and fulfilment of obligations presupposes that we are living in an interdependent
world, hence an ethic of solidarity.

It is not living alongside but living together and depending on each other’s trust and loyalty. This relates
to interpersonal relationships and systems. Normal human relationships are based on the belief that the
other is trustworthy and loyal and that the systems on which we depend on our daily life necessities are
and will continue to be reliable.
Topic 2: Economic Restructuring as an Ethical Challenge

Responsibility is a kind of life and a way of doing things. Only humans may or may not be responsible.
When you apply responsibility to institutions, we speak of collective responsibility or corporate
responsibility. Responsibility isn’t about the way or place we’re going to start but also to the point we’d
like to arrive.

Types of economic restructuring

1. Defensive restructuring: management by crisis; letting the crisis arrive to react to it. a changing
environment is perceived as a “threat” to your security (security of doing things as you always
have) rather than as an opportunity
2. Positive restructuring: countries and firms change in response to a changing socio-economic
environment. Economic restructuring not as a “defensive mechanism” but as an “opportunity
for growth”.
- Regional level: Lisbon strategy for transition to a knowledge-based economy and society. The
EU has been going through extensive restructuring processes. The society is now more than
ever based on the skills of individuals rather than natural resources like rural (land) and
industrial (capital). The objectives of the Lisbon Strategy were to make Europe the most
competitive economy in the world, generate more and better jobs, and ensure social
cohesion.
- EU 2020 strategy: for smart, sustainable, inclusive growth. Targeted: employment, research
and development, energy (more energy from renewable sources and more efficient use of
energy), education (reducing school drop-out rates), and poverty.
- These are implemented by Member States through National Reform Programmes. Under the
2020 strategy, the NRP include measures for gradual reduction of poverty.

On the level of individual firms, restructuring is an ongoing process since they must react to changes in
the economic, social and cultural environment. But restructuring unfortunately involves downsizing and
loss of jobs.

Business in a globalized world

The global environment exhibits a highly dynamic character understood in terms of “globalization”.
Relations across the world have been understood on the basis of 2 models:

1. The separation model (applicable to earlier times): separation between internal and external,
national and international levels
 2. The interconnectedness model (applicable to more recent times) cross-border processes
though which fate of people and states are intertwined

Separation Model Interconnectedness Model

Economic Level Protects the local market Relates to open economies
Political Level Relates to state sovereignty Limits state sovereignty
Cultural Level Identity of local cultures Cultural differences in a globalized world
National governance Global governance

Issues relating to globalization

Globalization is the progressive eroding of the relevance of territorial bases for social, economic and
political activities, processes and relations.
Globalization’s significance is evident in:
i) Cultural issues: as businesses become less territorially fixed, they increasingly engage in
overseas markets, thus confront new and diverse and sometimes even contradictory ethical
demands ex: economic development levelling cultures
ii) Legal issues: the power of government has traditionally been confined to a certain territory.
But when a company leaves its home territory and moves part of its production chain, the
legal framework changes ex: money laundering.
iii) Accountability issues: globalization leads to a growing demand for corporate accountability.
The more accounting activities get territorialized, the less governments can control them.

Ethical impacts of globalization

i) Shareholders: potential for greater profitability/risk, lack of global markets regulation

ii) Employees: outsourcing to reduce costs, increase in employment but risk of exploitation
iii) Consumers: cheaper prices but risk of exploitation of vulnerable groups
iv) Suppliers and competitors: small scale suppliers competitors exposed to powerful global
players
v) Civil society: impact of multi-national corporations on local communities and emergence of
pressure groups to watch over their operation especially where government is weak
vi) Government and regulations: weakening of governments and greater corporate
responsibility for jobs, ethical standards
ADAPTING TO CHANGE
The Adaptation Model

Basic assumptions
Assumes there are forces behind market economy that operate on a global level, outside and beyond
human control. These forces include competition, technological innovation and price mechanisms.

Adapting can be:

i) Meso (country/firm) level: learning to compete in the open market, reorganization and
relocation of production, flexible workforce
ii) Micro (individual) level: exposure to risk on employee, consumer and investor. Risk
management and social protection (by regulators)

RESPONDING TO CHANGE
The Responsibility Model

We must look beyond and see what conditions of life we’re providing to future generations.
This model:
i) places economic performance in a wider human context of basic values.
ii) understands economic forces, even those operating on a global level, as realities which
people have created and can change.
iii) Requires proper social impact assessments on the meso level.
iv) Presupposes a more active role on the part of the individual (micro level ex: to remain
employable, to implement consumer rights, to follow responsible patterns of consumption,
to invest responsibly).

Responsibility as an attitude to change

We can react to change in a defensive manner, or we can see it as a way of growing given the
circumstances. Attitude refers to the way we look at change.
- One may resign from what he’s doing but this isn’t responsibility
- Aggressive self-assertion is also not responsibility ex: terrorism
- Includes more than protectionism given that local economies operate in a global economy – the
more we learn to operate in a global market, the more we learn how to act and be responsible
in it
- Includes “protest” within the limits of what is reasonable in a democratic society (problematic
aspects of anti-globalization)
- Involves re-construction of economies making them more responsive to their social and
environmental obligations
Promoting responsibility

i) On a global level:
• UN Global Compact (1999) called for commitment to 10 principles covering human rights, labour
standards, environment and anti-corruption.
• OECD Guidelines for Multinational Corporations: recommendations setting principles and
standards relating to employment, environment, consumer interests, competition, taxation and
bribery

ii) On a regional level:

• Both the Lisbon and the EU2020 Strategy regard economic growth and business profitability as
essential for a sustainable economic system, but not sufficient in and by itself to secure a truly
just system.
• The Lisbon Strategy’s outcome was not as hoped, but it still sought to link competitiveness and
economic growth with the creation of more and better jobs and the promotion of a more
cohesive society with less rather than more socio-economic inequalities.
• In view of the possibly negative impact of economic growth on poverty, the EU 2020 Strategy
places measures for gradual reduction of poverty in Member states within the National Reform
Programmes, while keeping poverty and social inclusion as one of the three streams of the
National Social Reports.

iii) On a national level:

• As an EU Member State, Malta is expected to develop its economy within the framework set by
the EU, placing economic growth, including competition, in the context of values like
employment and decent conditions of work, social inclusion and social cohesion.
• Much depends on how much a country is promoting individual and collective effort and initiative
to secure a human dimension to its economy
• Our Constitution includes civil and political rights as well as economic, social and cultural rights
which are meant to be implemented through appropriate legislation and other measures.

iv) On a corporation level:

• Corporate social responsibility implies that corporations have more than legal obligations in their
internal (employees) and external (other stakeholders) relations
• CSR as voluntary commitment to a better society and a cleaner and healthier environment
• CSR developed in response to new concerns from citizens, consumers, public authorities,
investors; new concerns about environmental harm, exposure of business conduct, motivated
also by ‘economic value’ of CSR
• EU’s promotion of CSR: EU Green Paper “Promoting a European framework for corporate social
responsibility” (2001), EU Multi-Stakeholder Forum on CSR (2002) and European Alliance (2006)
Topic 3: What is Economic Life Like?

Competition needs to be conducted on a level playing field and there needs to be criteria of how
businesses can compete with each other. Besides fairness, there is cooperation.

Business should be considered in the wider context as a part of life. Life is aimed at the collective
achievement of multiple aspirations, dependent on the development and nourishment of mutual trust
and loyalty between humans.

Quality of life depends on the kind of world we’re living in. To assess the broader perspective of the
quality of life, we must begin to understand the different parts making up our lives. The quality of
economic life impacts the human life as a whole because the business world makes up a substantial
portion of the lives of many. It doesn’t just touch the ethics of business but also touches upon a
fundamental and crucial question about the quality of our own life like marriage, family life, political life
etc.
Our basic desire is to feel at home (respected, comfortable, secure) in every sphere of life. There is the
general distinction between being at home and being outside of it – the latter usually presents
opportunities and risks and threats.

The world gives opportunities for growth. We need to understand certain limitations and constraints and
the risks and threats that we’re exposed to. In light of this, we might define ethics as an enquiry into the
conditions for living in a hospitable world. Ethics and ethical principles govern the conditions that are
identified as necessary for humans to “feel at home” in society in general, and to overcome the perceived
element of risk to which one is exposed. Therefore, ethics is identified as the items we presume as
necessary for us to be able to live in a secure and safe life.

Ethics as enquiry into conditions for living in a hospitable world:

• For security, humans have devised regulations and sanctions outlining the expected standards of
behaviour ex: laws, ethical codes, ethical guidelines and standards.
• But even with the best set of regulations, scandals didn’t cease to crop up. Besides regulation,
humans need to recognize the need for capacity building to be able to live and work together. A
capacity building attitude focuses on creating and maintaining good relationships and a positive
kind of attitude. Although law is essential, we need to educate people to develop in the
capabilities and relate to each other in the world we live in.

Assessing the business world through the competitive image

One of the major images that have been used it that life resembles a race. General assumption is that
business involves people and organizations in competition with and against each other. This assumption
is based on a concept of man as a being, inclined to assert and promote his own individual interests.
Competitiveness isn’t generally bad – competitiveness may be identified as a desire which drives humans
and entities to grow and develop their potential. The competitive image might put forward a selfish
stance, but the love for oneself is a natural thing, and self-affirmation and self-seeking individuality aren’t
bad. This notion is supported by the Utilitarian and Deontological Theories.

Utilitarian Theory
Presupposes that ultimately the ethical principle for our life together (social life) is that the individual
should pursue his own individual interests subject to the maximum utility to the maximum number of
people (e.g. competition conducive to self-reliance and lowering of prices)
• Maximize the usefulness of something to the maximum amount of people
• Self-consideration is considered here
• This approach considers society in its wider context; it presupposes that people are living
together i.e. emphasizes the social aspect
• One may thus question if it is in the interests of society as a whole to have competition. The
logical answer is yes – competition encourages the development of individuals and efficiency in
production, and generally leads to lower prices. This is supported by the fact that various
economies have regulations prohibiting monopolies.

Deontological Theory
Presupposes that the basic ethical principle governing social life is that of enlightened self-interest: To
pursue one’s own individual interests in full respect of the legitimate rights of others.
• Base ethics not just on what gives the maximum utility, but what gives rights to people. We have
to realize that every individual has their own rights that need to be respected

Business and competition are desirable so long as it’s carried out within the limits of fair principle.

In line with utilitarian theory, the competitive image recognizes the values of competition as:
- Development of individual and group potential;
- Removal of protective measures as an opportunity for self-reliance.

As our motivations are generally tied to the way we perceive the other and the world, it is essential to
consider the kind of images we have of the business world. Ethical theories, especially the deontological
theory, can help sift through these images and determine their ethical implications.

In line with the deontological theory, the competitive image recognizes the need for fair competition or
for rules excluding what is not to be allowed between competing parties. This is necessary since, in the
absence of this concept, the image we have as business as a competitive activity may motivate the wrong
type of behaviour in business and the economy.
Perceptions of business
Solomon mentions the business world as a:
i) Jungle – taking advantage of the other side and having no respect for rules, corruption being
the way to move on; suggests one should take unfair advantage
ii) Battlefield – fighting to survive and win, adopting strategies and identifying opportunities for
growth, limitations and weaknesses; focus on technical side
iii) Great machine – assembling productive resources and marketing know-how into a smoothly
running and efficient system; focus on technical side
iv) Game – observing rules, seeking to excel and exposed to an element of risk and luck;
highlights rule-governed and excellence seeking aspects of competition

Assessing the business world through the co-operative image

It is not a question of either competition or co-operation, but a question of engaging in competition

within a tacit co-operative framework. This allows the individual to go a step forward from simply
observing the rules of the competitive game by considering business as part of a wider reality.

• Co-operation as a tacit (taken for granted) dimension of competition – production/exchange

relations are relations of trust
• Co-operation as tacit convention or agreement in all areas of social life, including business –
production/market relations are relations of loyalty. Relationships in business can be further
nourished if they are not simply directed to compliance with the available standards of behaviour,
but also based on the principles of co-operation and building trust
• Competition in the context of co-operation – to compete is to excel technically and ethically; we
need to remain technical in our fields and remain sensitive towards the needs of others,
promoting trust.

Co-operation and competition don’t remain foreign to one another, but become amalgamated to form
a business constructed out of healthy relationships based on trust and commitment. Competition
becomes considered in terms of co-operation.

Opting for the co-operative image implies:

i) Firm: not merely an economic enterprise but a community of people (idea of stakeholders);
not just profit-making but considering growth factors and community within it
ii) Marketing: not merely a transactional exercise but long-term commitment to maintain
relations of trust and loyalty; marketing success isn’t shown by just an increase in sales, but
the entity must establish and maintain sustainable relationships with clients (after-sales etc).
There has been a shift from transactional marketing to relationship marketing.
 iii) Consumer: patterns of behaviour based not on “having” but on “being”; need for capacity
building
iv) Business: opening business to social and environmental concerns; it is part of a much larger
web, affecting the environment etc

Topic 4: Good and Right Business

Basic ethical concepts

When talking about the concepts of good and evil, we must consider their relation to power. What is
good is determined by each individual’s own thoughts. If there’s one individual or a group that exercises
a dominant way of thinking, this may enable them to exercise enough power on others and ultimately
influence their decision, thus that which is good (business operated through employees’ way of thinking)
may become evil (where there is dominance). Power thus plays an important role.

It may be the case that companies don’t perform CSR solely for ethical purposes but to brand the entity
with a good reputation making it look good in the eyes of the stakeholder. This shows hidden intentions
which may not further other’s interests.

Ethics rests on one’s own will, and the will of others to do nor not do something. A proper reason should
be given for any action taken.

• The terminology good and bad may be regarded as focusing on the purpose or internal values of
practices engaged in to achieve our goals. Ex: education → actions of all teachers working
together to achieve the goal of providing students with the proper education. One teacher can’t
solely think about one’s objective, but their actions should be in line with the actions of the whole
teaching body so that the objective of the educational institutional can be achieved.
• The terminology right and wrong refer to actions that can or cannot realize a truly meaningful
and valuable way of life. We are referring to the rules of the game i.e. those rules that would
enable the business to act together with others to achieve desired purposes. If the wrong actions
are exercised by individuals within a business, such actions may corrupt the very nature of the
business and it wouldn’t assist it in achieving its goals. Ex of right action: provision of decent wage
to workers considering their position, skills and hours worked. Ex of wrong action: exploitation
of child labour. Thus right business needs to stick to the parameters to achieve goals.
o What is right and wrong is determined by the individual themselves through their own
capability and skill to identify right and wrong actions. We need to develop a character
strength or virtue (prudence or moral reasonableness) to find out the right thing to do in
given circumstances. Due diligence should be exercised, which should reflect the
sensibility and integrity of the person carrying out the action.
Reasoning about good business

Reasoning about good business is important since we’re concerned about a kind of business that meets
our needs. One way of reasoning is more meaningful than the other.

Ways of reasoning:

i) Shareholder model: which needs? Issue of priority; is this model broad and deep enough to capture
those values that we associate with business? This model is based on the right of owners over their
property, and that the company belongs to them, and BoD and management are agents and
promoters of shareholders and their interests. This perspective isn’t to be dismissed given the risk
that shareholders (especially smaller and less experienced ones) face in today’s global financial
markets (like the financial crisis has shown). Ultimately, the aim of company is to maximize its profits
and, in turn, shareholders’ wealth.

Under this model, the basic ethical issues in business relate to the meaning and value attached to 2 types
of goods:

a) Foundational goods: profits, capital, technology – should we place this as a priority, or should we
take up other goods that give value? There are goods which have their own value within business
and the shareholder model assigns priority to them. But, are they the only set of goods relevant
in respect to good business? there are other goods which business should serve.
b) Excellent goods: goods include but go beyond the foundational ones, having human development
as their focus. Economic growth is important, but is this growth translatable to a better
environment or safer place of work? If we want to set this model within an ethical context, we
have to bring in these set of goals.

The ethical problem with the shareholder perspective is that emphasis is places on foundational goods
and diminish or even ignore the importance of excellent goods. business involves people interacting with
each other and so it has a more inclusive purpose than making profit. Sternberg: the business’s ethical
concern is just business (business which is just). Business is ethical when it pursues its purpose of
maximizing long-term owner value, subject to respecting the distributive justice and ordinary decency.
• Distributive justice: most widely used interpretation of the justice model. Justice should be
described as equality ex: individuals having the same skills and positions in a firm should be
rewarded equally. Thus, shareholders should be provided with an equal return.
• Fairness and natural duty principle: rights and duties of organizations or shareholders should be
considered as well as their interests.
ii) Stakeholder model: whose needs? Issue of distribution; widening the circle as clients, suppliers,
workers and the community in general also have a stake in the business. based on the right of
individuals and groups/categories of people to safeguard and promote their legitimate interests.
This is ethically a more enlightening model, as it broadens the circle of those whose legitimate
concerns should be adequately protected. It is argued that good business is business that reaches
out to the need of the various stakeholders and should be one of the most dominant models
adopted in businesses.

Stakeholders include:
1. Shareholders
2. Employees
3. Customers
4. Suppliers
5. Communities and societies in which business is operating
6. Present and future generations who may not be able to satisfy their legitimate aspirations and
needs because business may be ignoring its responsibility for the environment

Seen in a stakeholder perspective, the basic ethical issue of business concerns the importance of
distinguishing between:
(i) Private/individual/particular goods; and
(ii) Public or common goods

Business has an obligation to employ people under decent conditions of work (ethical and legal
obligation relating to a particular group).
But ethically, it is also expected to collaborate with other social partners (government and employee
representatives) so society could promote the rights of people at work by updating legislation, providing
more and better education and training facilities etc (ethical obligation relating to a public group).

The problem with the stakeholder perspective is that it argues that a business will be ethical if a right
kind of balance is found between the particular interests of a variety of stakeholders. In practice, one
must go beyond the issue of balance.

iii) Common good model: what kind of needs? We are living and working together so we have a
common purpose. Based on the obligation that society, acting through social partners (government,
employers/employees, and civil society representatives) should provide adequate conditions for
everyone to develop in a holistic way.

The concept of development in this model is inclusive in 2 ways:

(i) It includes everyone
 (ii) It includes all dimensions of the human personality

Reasoning from a common good perspective requires that business operations be considered and
ethically evaluated in the context of its responsibility, in so far as is reasonable, to protect and promote
the well-being of all. Thus, go beyond considering individual consequences and consider the common
good.

Ex: responsibility of business for people at work involves protection and promotion of the right of work
(termination should be the last resort) and derivative rights (reviewing continuously the meaning of
decent conditions of work).

The business should make its contribution to the efforts of society to create conditions enabling
everyone to develop in an integral way.

Given the ethically wide commitment of business, it is important for people and organizations engaged
in business to keep a wide range of values in view and distinguish between real and apparent goods and
act accordingly.

In determining if an action is right or wrong, we must consider the different needs of the stakeholders
affected and identify which needs should be prioritized and pursued.

Right business

• The concept of right implies boundary or limit (good implies end or purpose). It’s not merely an
instrument to make profit but a community of human business (not a means to an end but the
end itself, where one is productive and co-operation is achieved between different
individuals/employees in an organization).

Business can realize its purpose and enable people engaged in it or depending on it to fulfil their human
potential, if it operates within certain boundaries and respecting certain limits. The problem is what
limits are reasonable ex: why is bribery wrong? (taking unfair advantage; going against equality principle)
Why is drug trafficking wrong? (illegal and immoral because shouldn’t be marketable).

The limits to be set should be reasonable if we want to live in a life which respects our equality to live in
peace and co-operate with each other.

As an exercise in moral reasoning, ethics seeks to show why certain actions or practices are incompatible
with a life that people are trying to share with each other, promoting freedom, equality and peace among
themselves.
Reasoning about right business

What is reasoning concerned about?

a) Evaluating our preferences – it implies capability to distinguish between foundational and higher
goods. Norm is to reason with the right kind of priorities in mind.

b) Reasoning about right business involves acknowledging and ordering of legitimate interests for
the promotion of the common good. Norm is to reason according to fair criteria of distribution.
Fairness can be described in 3 ways:
1. Fairness as freedom: when we need to ensure that people are free to acquire and exchange
property. But this freedom may also result in individuals taking advantage of others
2. Fairness as equality: all individuals should be treated on equal footing where they hold the
same position and skills
3. Fairness as participation: all participants should enjoy from the rewards and fruits of the
business i.e. it is all stakeholders which should benefit collectively and not selective groups.
Distributive justice respects freedom, equality and participation. Ex: a just wage presupposes:
- consent (employee/employer contractual relationship)
- equality (equal pay for equal wage)
- participation (in the profits being made)

c) Reasoning about right business involves ability and willingness to distinguish between apparent
and real goods. Norm is not to be misguided by goods (like profit making through unlawful
means) that may look like a good thing in the short-term but aren’t really good in themselves and
in the long-turn (acting unjustly would turn one into an unjust person)

The shareholder model isn’t wrong in itself, but it may fail to distinguish between profit-oriented goals
and the wider horizons of business.

Moral/legal constraints meaningful and necessary:

a) To establish and maintain priorities
b) To ensure fair distribution
c) To guide individual and collective decisions (avoid mistaking the apparent for the real)

Constraints articulated in terms of rights and obligations in so far as rights presuppose obligations. Social
relations, articulated in terms of rights and obligations, are relations where everyone counts and where
we can claim each other’s trust and loyalty.