Course : BUSS6066 BUSINESS ETHICS

Effective Period : September 2019

THE NATURE OF BUSINESS ETHICS

Session 3 - 4
 Learning Objectives
• LO 1: Explain basic concept, principles, and issue
of business ethics both local and international
contexts.
• LO 2: Discuss moral dilemmas and problems that
arise in business from stakeholders perspective
and considers the defensible ways ethical
principles and standards ought to be applied to
business.
• LO 3: Apply ethical reasoning in the business at
the individual, group, organization, and
multinational level through real time - not
hypothetical - ethical dilemmas, stories, and
cases.
 Topics

• Utilitarian Approach
• Human Rights
• Justice
• Ethics of Care
• Moral Evaluation
• Moral Decisions
 Utilitarianism
• Utilitarianism is the moral view that in any situation the
right course of action is the one that will provide
people with the greatest amount of benefits while
minimizing harms.
• Ethic of care that emphasizes the value of human
relationships and of caring for the well-being of those
who are dependent upon us.
 Utilitarianism
• Utilitarianism is a general term for the view that
actions and policies should be evaluated on the basis
of the benefits and costs they produce for everyone in
society.
• Specifically, utilitarianism holds that the morally right
course of action in any situation is the one that, when
compared to all other possible actions, will produce
the greatest balance of benefits over costs for
everyone affected.
 Utilitarianism
• Utilitarianism is a general term for the view that
actions and policies should be evaluated on the basis
of the benefits and costs they produce for everyone in
society.
• Specifically, utilitarianism holds that the morally right
course of action in any situation is the one that, when
compared to all other possible actions, will produce
the greatest balance of benefits over costs for
everyone affected.
• The term utilitarianism is used for any theory that
advocates selection of that action or policy that
maximizes utility.
 Utilitarianism
Utilitarianism
• Advocates maximizing utility.
• Matches well with moral evaluations of public policies.
• Appears intuitive to many people.
• Helps explain why some actions are generally wrong
and others are generally right.
• Influenced economics.
 Utilitarianism
• Utilitarianism is also the basis of the techniques of
economic cost-benefit analysis.
• Investing money in a project (such as a dam, factory,
or public park) by figuring out whether its present and
future economic benefits outweigh its costs and
comparing this to the costs and benefits of other ways
of investing our money.
• to calculate these costs and benefits, discounted
monetary prices are estimated for all the effects the
project will have on the present and future
environment and on present and future populations.
 Utilitarianism
• Intangible benefits as the beauty of a forest (e.g., we
might ask how much people pay to see the beauty of
a similar privately owned park).
• If the monetary benefits of a certain public project
exceed the monetary costs and if the excess is
greater than the excess produced by any other
feasible project, then the project should be
undertaken.
• In this form of utilitarianism, the concept of utility is
restricted to monetarily measurable costs and
benefits.
 Utilitarianism
• Finally, we can note that utilitarianism fits nicely with a
value that many people prize: efficiency.
• Efficiency can mean different things to different
people, but for many it means operating in the manner
that produces the most from a given amount of
resources, or that produces a desired output with the
lowest resource input.
• If we read “desired output” in the place of “benefits”
and “resource input” in place of “cost,” utilitarianism
implies that the right course of action is always the
most.
 Utilitarianism
• Justice distributing benefits and burdens fairly among
people.
• Rights Individual entitlements to freedom of choice
and well-being. rule-utilitarianism
• The basic strategy of the rule-utilitarian is to limit
utilitarian analysis to the evaluations of moral rules.
• According to the rule-utilitarian, when trying to
determine whether a particular action is ethical, one is
never supposed to ask whether that particular action
will produce the greatest amount of utility.
 NonEconomic Goods
• Noneconomic goods :
– the enjoyment of love,
– freedom,
– health,
– Fatherhood
• we would not be willing to trade for any amount of the
enjoyment of economic goods because noneconomic
goods cannot be measured in economic terms.
• Critics of utilitarianism claim that the enjoyment of
some things just cannot be traded for our enjoyment
of other things; there are values that are
“incommensurable.”
 Criticisms of Utilitarianism
• Criticisms of Utilitarianism :
• not all values can be measured.
• Utilitarians respond that monetary or other common
sense measures can measure everything.
• utilitarianism fails with rights and justice
• Utilitarians respond that rule-utilitarianism can deal
with rights and justice
 Criticisms of Utilitarianism
• Criticisms of Utilitarianism :
• not all values can be measured.
• Utilitarians respond that monetary or other common
sense measures can measure everything.
• utilitarianism fails with rights and justice
• Utilitarians respond that rule-utilitarianism can deal
with rights and justice
 Rights
• a right is an individual’s entitlement to something.
• legal right An entitlement that derives from a legal
system that permits or empowers a person to act in a
specified way or that requires others to act in certain
ways toward that person.
• moral rights or human rights Rights that all human
beings everywhere possess to an equal extent simply
by virtue of being human being
 Rights
Characteristics of Rights :
• A right is an individual’s entitlement to something.
• Rights derived from a legal system confer entitlements
only on individuals who live where that legal system is
in force.
• Moral or human rights are entitlements that moral
norms confer on all people regardless of their legal
system.
 Rights
Moral Rights
• Can be violated even when “no one is hurt”
• Are correlated with duties others have toward the
person with the right.
• Provideindividualswith autonomy and equality in the
free pursuit of their interests.
• Provide a basis for justifying one’s actions and for
invoking the protection or aid of others.
• Focus on securing the interests of the individual unlike
utilitarian standards which focus on securing the
aggregate utility of everyone in society.
 Rights
Three Kinds of Moral Rights :
• Negative rights require others leave us alone.
• Positive rights require others help us.
• Contractual or special rights require people keep their
agreements.
 Justice
Types of Justice
• DistributiveJustice: just distribution of benefits and
burdens.
• RetributiveJustice: just imposition of punishments and
penalties.
• CompensatoryJustice: just compensation for wrongs
or injuries.
 Justice
• Distributive justice requires distributing society’s
benefits and burdens fairly.

• Retributive justice requires fairness when blaming or

punishing persons for doing wrong.

• Compensatory justice Requires restoring to a person

what the person lost when he or she was wronged by
someone.
 Contributive Principle
• The contributive principle of distributive justice is how
the “value of the contribution” of each individual is to
be measured.
• Puritan ethic The view that every individual has a
religious obligation to work hard at his or her calling
(the career to which god summons each individual).
work ethic The view that values individual effort and
believes that hard work does and should lead to
success.
• Work ethic is the view that values individual effort and
believes that hard work does and should lead to
success
• Productivity is the amount an individual produces or
that a group produces per person.
 Justice as Equality:
Egalitarianism
• Egalitarians hold that there are no relevant differences
among people that can justify unequal treatment.
• According to the egalitarian, all benefits and burdens
should be distributed according to the following
formula:
– Every person should be given exactly equal shares
of a society’s or a group’s benefits and burdens.
 Justice Based on Contribution:
Capitalist Justice
• Justice requires that the benefits people receive
should be proportional to the value of their
contribution.
• Simple statement: Benefits should be distributed
according to the value of the contribution the individual
makes to a society, a task, a group, or an exchange.
• The principle of contribution is perhaps the principle of
fairness.
 Justice Based on Needs and
Abilities: Socialism
Summary of Principles of Distributive Justice :
• Fundamental: distribute benefits and burdens equally
to equals and unequally to unequals.
• Egalitarian: distribute equally to everyone.
• Capitalist: distribute according to contribution.
• Socialist: distribute according to need and ability.
• Libertarian: distributeby free choices.
• Rawls: distributeby equal liberty, equal opportunity,
and needs of disadvantage.
 Justice as Freedom:
Libertarianism
• The libertarian holds that no particular way of
distributing goods can be said to be just or unjust
apart from the free choices individuals make.
• Any distribution of benefits and burdens is just if it is
the result of individuals freely choosing to exchange
with each other the goods each person already owns.
• The basic principle of distributive justice: From each
according to what he chooses to do, to each
according to what he makes for himself (perhaps with
the contracted aid of others) and what others choose
to do for him and choose to give him of what they’ve
been given previously (under this maxim) and haven’t
yet expended or transferred.
 Justice as Fairness:
John Rawls
• Rawls’s theory is based on the assumption that
conflicts involving justice should be settled by first
devising a fair method for choosing the principles by
which the con- flicts are resolved. Once a fair method
of choosing principles is devised, the principles we
choose by using that method should serve us as our
own principles of distributive justice.
 Justice as Fairness:
John Rawls
• The principles of distributive justice that Rawls
proposes can be paraphrased by saying that the
distribution of benefits and burdens in a society is just,
if and only if:
1. each person has an equal right to the most
extensive basic liberties com- patible with similar
liberties for all, and
2. social and economic inequalities are arranged so
that they are both a. to the greatest benefit of the
least advantaged persons, and b. attached to
offices and positions open to all under conditions
of fair equality of opportunity.
 Distributive Justice

Summary of Principles of Distributive Justice :

• Fundamental: distribute benefits and burdens equally
to equals and unequally to unequals.
• Egalitarian: distribute equally to everyone.
• Capitalist: distribute according to contribution.
• Socialist: distribute according to need and ability.
• Libertarian: distributeby free choices.
• Rawls: distributeby equal liberty, equal opportunity,
and needs of disadvantage.
 Ethics of Care

An ethic that requires caring for the concrete well being

of those particular persons with whom we have valuable
close relationships, particularly those dependent on us.
 Ethics of Care

Ethical Principles In Business:

• Claims ethics need not be impartial, unlike traditional
ethical theories which assume ethics has to be
impartial.
• Emphasizes preserving and nurturing concrete
valuable relationships.
• We should care for those dependent on and related to
us
• Argues that since the self requires caring relationships
with others, those relationships are valuable and
should be nurtured.
 Ethics of Care

• Caring is not detached but an engrossed “caring for” a

person.
• Relationships are not valuable when characterized by
domination, oppression, harm, hatred, violence,
disrespect, viciousness; injustice, or exploitation.
• The demands of caring and of justice can conflict and
such conflicts should be resolved in ways that do not
betray our voluntary commitments to others and
relationships with them.
 Ethics of Care

• Objections to Care Approach to Ethics.

• An ethic of care can degenerate into favoritism.
• Response: conflicting moral demands are an inherent
characteristic of moral choices.
• Objection: an ethic of care can lead to “burnout”.
• Response: adequate understanding of ethic of care
will acknowledge the need of the caregiver to care for
him or herself.
 Moral Judgments

Moral Judgments Should be Based on:

• Maximizing the net utility of our actions
• Respectingthemoral rights of individuals
• Ensuring a just distribution of benefits and burdens
• Caring for those in concrete relationships.
Moral Judgments
 Moral Virtue
• An acquired disposition that is valued as part of the
character of a morally good human being and that
is exhibited in the person’s habitual behavior.
• The basic issues, from the perspective of virtue
ethics, are the questions:
– What are the traits of character that make a
person a morally good human being?
– Which traits of character are moral virtues?
• The Greek philosopher Aristotle proposed what is
still the most influential theory of virtue.
Moral Virtue
 Review and Discussion
• A student incorrectly defined utilitarianism this way:
“Utilitarianism is the view that so long as an action provides
me with more measurable economic benefits than costs, the
action is morally right.” Identify all of the mistakes contained
in this definition of utilitarianism.
• In your view, does utilitarianism provide a more objective
standard for determining right and wrong than moral rights
do? Explain your answer fully. Does utilitarianism provide a
more objective standard than principles of justice? Explain
 Reference

Manuel G. Velasquez (2017). Business Ethics:

Concepts and Cases. Pearson Education Limited.
England. ISBN: 9781292022819

Chapter 2
Ethical Principles in Business