We've had enough business ethics - Editorial

Business Horizons, May-June, 1993 by Art Wolfe

"You can't teach business ethics!" "What we need is more ethics!" These are everyday statements that have been cluttering public discussions of business ethics for the past 15 years. The statements reveal a gross misunderstanding of the causes of the social tensions that create interest in business ethics.

What, after all, is causing such interest today? If we look at many of the cases we find in business ethics textbooks, we see that the protagonists are non-malevolent, ordinary people in middle or upper management who usually act within a corporate hierarchy. The act itself the one identified as being the cause of a death or of some grave social harm--is the result of managers doing essentially what they were taught to do! The engineers at Ford intended to design the Pinto gas tank just the way it was designed; the doctors and management of A.H. Robbins Company continued to sell the Dalkon shield when they knew of the harm it was causing; the president of Lockheed knowingly paid the Japanese government millions in bribes so they would buy the TriStar wide-bodied passenger plane.

To understand and respond to the public clamor for business ethics today, one must realize that most of the undesirable social situations we find as the focal point of business ethics cases today have resulted from people acting in accord with principles they have learned. Usually, these principles are perceived as promoting "the good."

Many believe business ethics is a relatively new area of study. Writers and public commentators do not discuss the crucial point that business ethics cases involve actions that are consistent with our true American business ethic---one that has been taught with a vengeance for generations. We must face this fact: Capitalism is our business ethic. The major ideas of this moral system are first articulated in beginning economics courses in almost all colleges and universities, and even in most high schools. Recent figures show that we graduate close to 600,000 undergraduate business ethics majors every year, and an additional 100,000 of our top students earn advanced degrees in concentrated forms of business ethics: the MBA and the law degree.

The moral principles of capitalism are well known to all: put private property at risk in our free markets.

* Profit is a just return to individuals who put private property at risk in our free markets.

* A fair allocation of what we produce is maintained if we keep our markets competitive.

* If the government will only keep its hands off businesses as they vie in the competitive wilderness, those who deserve to survive will survive.

A more subtle moral notion at the heart of capitalism lies in the economists' litany: "If all are left free to pursue their own self-interest, they will be led as if by an invisible hand to promote the welfare of all." Thus, our moral obligations to community are met by maximizing our own welfare. However, these general moral objectives of what is just, fair, and proper in a business sense quickly fade in our business schools.

The next course in business ethics is accounting, where students learn how to calculate the "bottom line." More courses follow: intermediate accounting and economics, marketing, management, business law, finance. By the time a student completes intermediate economics, fundamental moral ideas have been buried by scientific-sounding abstractions. Theorems now read like this: Consumer satisfaction is maximized at the point where the negative of the marginal rate of substitution between two goods equals the slope of the consumer budget constraint. (Huh? What?)

The system of knowledge that is presented in our business colleges is that of a unified, rational, objective structure of understanding the world. Gone from public and intellectual discourse is the word "capitalism," since it would reveal an ideological and moral orientation to a world view now legitimately portrayed only through calculus or the operation of some new software program.

The shape and content of this new, objective, moral knowledge renders the bloody bloodless. We accept such announcements as "GM will lay off 3,000 managers today" as an unemotional fact of life. Why? Because both those who make this decision and those who suffer the impact of it have been trained to believe that this results from the "natural" working of the free market--a force as inevitable as gravity.

Such training is intensifying and becoming more popular. Most of our best students are now maximizing their own self-interest. For example, business graduates far outnumber other majors at large state universities. At Michigan State University (total enrollment over 40,000, with 7,000 students in the college of business), where I teach, we graduated about 220 marketing majors, 250 finance majors, 320 accounting majors, and 320 advertising majors last year. Buried by these large numbers are others: 7 philosophy majors, 18 sociology majors, and 78 history majors. Even a significant percentage of these liberal arts and humanities graduates will go on to a career in capitalism after training as an MBA or a JD.