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Application of utilitarianism to business ethics1

Employees and Employers

In act utilitarianism any action is permissible given that it increases pleasure for the
greatest number of people and a successful business does exactly this. Therefore,
there is no correct way to treat employees. It is completely fine to exploit workers. Rule
utilitarianism however differentiates between the material pleasures of the consumers
and shareholders and the the higher pleasures of taking care of employees. This
implies that there should exist a code of conduct on how to treat employees. Preference
utilitarians look at all the preferences and keeping workers happy is one of the
company’s preferences because it determines how motivated people are and hence the
productivity of the firm. For this reason it is important to treat employees properly.
Whistle-blowing is an acceptable activity for utilitarians because it produces pleasure for
consumers, employees and the market.

Business and Consumers

According to Bentham all of the pleasures of consumers should be met as they are the
biggest stakeholder and so a business should do everything they want e.g. lower price,
provide customer service etc. Mill would say, obviously consumer happiness is
important but this should not override the pleasures of employees who work for that
business. Preference utilitarianism suggests that a mid-point should be found between
this ‘trade-off’ of consumers material preference and employees welfare preferences.
The Ford Pinto case is where Ford realised that their batch of cars was faulty but still
decided to sell them on the grounds that compensation was a lot cheaper. However,
this raises questions about utilitarianism. In principle utilitarianism should agree what
Ford did. The consumers were happy because they found compensation and so was
the shareholders however this means that the faulty cars could have caused an
accident and this makes utilitarianism a lesser consumer friendly ethical theory.

Business and Globalisation

This section is mainly concerned with cheap labour used overseas in places like India
and China. Bentham as we can imagine would have no problem with this because the
pain of the group of employees is significantly less than the material happiness that
consumers find from the products. Mill would be in total disagreement and would forbid

"Application of Utilitarianism to Business Ethics - A2 ..." 2011. 6 Dec. 2015
child/slave labour as he said before the welfare pleasures of employees are much
higher than any financial and material pleasures. Singer’s belief in human intrinsic worth
would prevent humans from being utilized to make cheap products overseas.

Business and the Environment

This is similar to when we look at issues in environmental ethics. The environment for
Mill and Bentham has no intrinsic worth only instrumental. Therefore, Bentham would
suggest that businesses would have every right to exploit the environment as long as
consumer pleasure was being met. Mill again would disagree and say, no, businesses
are allowed to use the environment but in moderation and they should not exploit it
because caring for the environment is a higher pleasure than destroying it. Singer
believed that the environment has intrinsic worth and so he argues that businesses
should limit the amount of damage they do and care about the environment.


● Businessmen and women like Bentham’s version of utilitarianism because it

provides an easy to use cost-benefit way of working out what is right and what is
● The purpose of satisfying the greatest good for greatest number seems logical,
practical and realistic.
● It is an egalitarian theory - no one person is worth more. (Well consumers are in
act utilitarianism.)

● The greatest good for greatest number, seems to be focused around greatest
good for consumers which makes an unequal distribution of good arise.
● Not always possible to predict consequences or calculate utility particularly when
large amount of data are required (particularly if this theory were to be used in
● No common definition of good exists.
● It has some dangerous implications e.g. the subjection of workers
● There are mixed views which means it does not fit exactly in stakeholder or
shareholder theory and makes it confusing.