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The Morality of Profit-Motive


 People go into business to make profit.

 Business as an activity is unthinkable without profit as motive.
 Businessmen consider profit as a form of anticipated reward or a
compensation for the efforts they spend, skills they apply and returns for
the capital they invested in putting up and organizing the business.
 According to Milton Friedman an economist, “ only responsibility of
business is to make profit so long as one stays within the rules of the
game and engages in open and free competition without deception of
 According to Peter Drucker, “ the primary responsibility of business is to
look for customers and satisfy their needs and wants.
The assumption of Profit-motive

 Profit-motive in business is an ethical issue. Since business is

an integral part of society, its activities, including profit-
making, must be examined from the perspective of morality.
 Profit-motive as an ethical issue operates within the two
important aspects of our human conduct- freedom and the
structure of business. The element of freedom implies that
businessmen have the right to decide on the amount of profit
they want to earn in the process of selling goods and services to
customers. The structure of business, on the other hand, is a
tacit guideline that governs business activities including profit-
The Good and the Bad Sides of Profit-
 Profit-motive motivates people to do something
meaningful, e.g., it gives human life a goal to pursue and
something to live for.
 Profit-motive promotes ingenuity and cleverness in
running a business, e.g., business leaders and
entrepreneurs have to struggle hard to overcome
obstacles in order to achieve success.
 Profit-motive makes people productive. Because of their
desire for money, businessmen have become productive
and some of their products have been useful and have
enhanced the quality of human life.
 Profit-motive generates potential capital for the business.
Profit is potential capital, something that can be invested
to established new businesses. In this way, profit also
results in more jobs and more goods and services for the
public. The society as a whole thus benefits from the
profits gained by a profit-oriented capitalist.
The Bad Side of Profit-Motive

 Profit-motive promotes rivalry among competitors.

Sometimes the competition becomes so stiff that it results
into a “dog-eat-dog” world of business where success is
achieved by competing with others and pushing them
down in order that one’s own business might succeed.
This certainly dehumanize business as an important
human activity.
 Profit-motive makes people focus only on making money,
that is, to sell as many goods as possible without
considering whether or not these products satisfy the
needs and wants of consumers and end-users.
 Profit-motive turns the businessman from being a
reflective and a questioning person because he focuses his
attention only the practical activity of making money.
Thus, a life centered on profit only results into a narrow
view of existence, deficient in many important dimensions
of human life.
 Profit-motive promotes self-interest rather than the
common good. It has, to some extent, benefited some
businessmen but it has also created some social costs that
many people, if not the majority, have to bear.
Ethical Considerations of Profit-Motive in
 Earning profit is a good and valid activity in business.
Commercial activities will be absurd without the profit-
motive. However, in the process of generating profit, an
ethical discernment is required for the businessman: Is
my profit fair enough for me and my customers?
 Making excessive profits is totally wrong. It leads to
greed, avarice and manipulation of the customers.
 Profit is not the “be-all and the end-all” of doing
business. Certainly, there are other factors to be
considered in business such as, customers’ satisfaction,
respect for the environment, enhancement of the quality
of life and the preservation of the society.
 The teachings of the Catholic Church do not totally
condemn profit as part of business activity. Pope Pius XI,
in Quadragesimo Anno, does not prohibit the producer
from enriching himself provided “one respects the laws of
God, does not prejudice the rights of others, and works
according to faith and reason.
The Morality of Profit-Motive

 Man is by nature a being and a creature who is supposed

to be responsible and accountable for his actions.
 The reason for this twofold:
 Man is a rational being. This means that man is a thinking
being, thus, he is aware of his intentions as well as the
consequences of his actions.
 Man is a free being. This means that he has the capacity to
exercise his choices. This assumes that man is capable of
choosing what is a good and a bad action for him.
Three meanings of moral responsibility

 Moral Responsibility refers to holding to people morally

accountable for some past actions or actions. This simply
means assigning to people blame or praise for particular
actions that they have performed.
 Moral Responsibility also means care, welfare or
treatment of others as derived from the specific social
role that one plays in the society.
 Moral responsibility likewise refers to one’s capacity for
making moral or rational decisions on his own.
Business Ethics Defined

 Business Ethics is the study of what is the right and wrong

human behavior and conduct in business.
 Business Ethics is a study of the perceptions of people about
morality, moral norms, moral rules and ethical principles as
they apply to people and institutions in business.
 Business Ethics is the study, evaluation, analysis and questioning
of ethical standards, policies, moral norms and ethical theories
that managers and decision makers use in resolving moral issues
and ethical dilemmas affecting business.