132243 Business & Social Responsibilities Ethical Principles in Business 1
Caltex Case Caltex should stop operating in South Africa because of 3 moral principles Justice: fair ways of distributing benefits and burdens among the members of society. Rights: the areas in which people’s rights to freedom and well-being must be respected. Ethic of virtue: an ethic based on evaluations of the moral character of persons or groups. 2
Caltex Case (cont.) Caltex should continue operating because of 2 moral principles Utilitarian standard: an action is morally right if it diminishes social costs and increases social benefits. Ethic of care: an ethic that emphasizes caring for the concrete well-being of those near to us. 3
Utilitarianism Any theory that advocates selection of that action or policy that maximizes benefits (minimizes costs). Example: Should Ford modify one of its designs, the Pinto? Costs = $11*12.5m autos = $137m Benefits = (180 deaths*$200,000) + (180 injuries*$67,000) + (2,100 burned vehicles*$700) = $49.15m 4
Traditional Utilitarianism Jeremy Bentham (1748-1832) is the founder. An action is ethically right if ad only if the sum total of utilities produced by that act is greater than the sum total of utilities produced by its alternatives. TU does not consider only the utility produced for the person performing the action but the utility produced for all persons affected by the action. 5
Pros of TU TU matches well with moral evaluations of public policy. The proper government policies are those that would have the greatest measurable utility for people. TU appears intuitive to many people Actions satisfied by TU are selfless. TU helps explain why some actions are generally wrong and others are generally right. 6
Pros of TU (cont.) TU is very influential in economics. E.g. TU is one of many assumptions that helps derive an equilibrium, and explains why perfect competition is desirable. TU fits nicely with efficiency. A right action is the one that produces the most benefits at the lowest costs. 7
Measurement Problems of TU How can the utilities different actions have for different people be measured and compared? Some benefits and costs are difficult to measure. E.g. health and life Some future benefits and costs are difficult to predict. E.g. some theory are not immediately usable, yet its implementation costs may be very high. 8
Measurement Problems (cont.) Sometimes, it is unclear what is to count as a benefit and what is to count as a cost. An extension of a loan to the manager of a local pornographic theater. TU implies that all goods can be traded for equivalents of each other but there are noneconomic goods such as life, health, freedom, beauty, equality that no quantity of any economic good is equal in value. Resolving these measurement problems may rely on one social group or another, and is thus biased. 9
Utilitarian’ Reply Commonsense can compare values. Cancer VS cold Intrinsic goods > instrumental goods Intrinsic goods: things that are considered valuable because they lead to other good things, e.g. a painful visit to the dentist. Intrinsic goods: things that are desirable independent of any other benefits they may produce, e.g. life and health. 10
Utilitarian’ Reply (cont.) Needs > wants Anything can be priced in auctions. The use of expectation in uncertain situations. We can actually deduce the price of noneconomic goods. E.g. pay $5 for reducing the probability of being killed by .00001 life is worth 5/.0001 11
Problems with Rights and Justice Some actions satisfy TU but are unjust and violate people’s rights. Killing a corrupted politician Consumers’ right to choose whether to accept the Pinto design Utilitarianism allows benefits and burdens to be distributed among the members of society in any way whatsoever, so long as the total amount of benefits is maximized. 12
Rule-Utilitarianism An action is ethically right if It is required by those moral rules that are correct; and A moral rule is correct if and only if the sum total of utilities produced if everyone were to follow that rule is greater than the sum total of utilities produced if everyone were to follow some alternative rules. 13
Cons of RU In RU which utility maximization is still the focal point, exceptions to the rule are permitted. E.g. people should not be killed except when doing so will produce more utility than not doing so. Rule utilitarians argues that if everyone take advantage of any allowable exceptions, ultimately society will be worse off. 14
The Concept of a Right A person has a right when that person is entitled to act in a certain way or is entitled to have others act in a certain way toward him or her. Legal rights: rights derived from a legal system, and are limited to the particular jurisdiction within which the legal system is in force. E.g. rights in contracts Moral rights: rights based on moral norms and are not limited by jurisdiction. E.g. rights not to be killed 15
The Concept of a Right (cont.) Right indicates Absence of prohibitions against pursuing some interest or activity Empowerment to do something either to secure the interests of others or to secure one’s interests Existence of prohibitions or requirements on others that enable the individual to pursue certain interests or activities 16
Moral Rights Moral rights are tightly correlated with duties. Duties that other people have toward that person, e.g. not to intervene with one’s actions, must provide standard of living. Moral rights provide individuals with autonomy and equality in the free pursuit of their interests. E.g. I don’t like Thai movies, even watching it will benefit the whole industry. 17
Moral Rights (cont.) Moral rights can justify one’s actions and can appeal the protection or aid of others. Moral rights justify actions based on individual basis, whilst utilitarianism justify actions based on society as a whole. If the utilitarian benefits become great enough, rights may be restricted. 18
Negative Rights VS Positive Rights Negative Rights require others leave us alone. E.g. property rights Positive rights require others help us. E.g. rights to acquire standard of livings 19
Contractual Rights and Duties Arise when one person enters an agreement with another person. If I contract to do something for you, then you acquire a contractual right to whatever I promise, and I have a contractual duty to perform as I promised. Attach to specific individuals. Arise out of a specific transaction between particular individual. Depend on a publicly accepted system of rules. Provide a basis for the special duties or obligations that people acquire when they accept a position or role within a legitimate social institution or an organization. 20
General Rules in Contracts Both parties in a contract must have full knowledge of the nature of the agreement. Neither must intentionally misrepresent the facts of the contractual situation to the other party. Neither must be forced to enter. The contract must not bind the parties to an immoral act. 21
Kantian Rights Developed by Immanuel Kent (1724- 1804), and called categorical imperative. Categorical imperative formulas: Never do something unless you are willing to have everyone do it. Universalizability: what if everyone did that? Reversibility: how would you like it if you were in her place? 22
Kantian Rights (cont.) Categorical imperative formulas (cont.) Never use people merely as means but always respect and develop their ability to choose for themselves E.g. wrong to deceive a person into making a contract that that person would not otherwise freely choose to make. E.g. by failing to lend help to another person, I limit what that person is free to choose to do. Both formulations come down to the same thing: people are to treat each other as free and equal in the pursuit of their interests. 23
Kantian Rights (cont.) Positive rights defended by Kant’s theory: Rights to work, food, clothing, housing, and medical care Negative rights defended by Kant’s theory: Rights to freedom from injury or fraud, freedom of thought, freedom of association, freedom of speech (unless conflicts with another human interest that can be shown to be of equal or greater importance), privacy Kant’s theory also defends contractual rights, and rights to be left free and fully informed when contracts are made. 24
Problems with Kant Kant’s theory is too unclear. E.g. a murderer and a public policy that all murderers should be punished, a choice to work under unacceptable conditions or work somewhere else Kant’s theory fails to suggest solutions when conflicts arise E.g. right to form a group of trombone players VS right to be left free from disturbance which right should be limited in favor of the other? The theory is sometimes wrong E.g. a person who really hates Blacks to a degree that he/she is willing to have other hate him/her if her skin turns black. 25
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