Is big business ethically bankrupt? a boom in business-ethics courses is likely in the wake of the Enron scandal, but critics say these classes need to focus on moral, rather than political, correctness

0 Comments | Insight on the News, March 18, 2002 | by John Berlau, | Brandon Spun

This pervasive view among faculty that successful businesses are by their very nature corrupt is itself corrupting to students in business-ethics classes, says Stephen Hicks, chairman of the philosophy department at Rockford College in Rockford, Ill. "It encourages a cynical attitude toward ethics," says Hicks, author of the forthcoming book, When Business Ethics Meets the Real World. "Either you say ethics is going to get in the way of meeting the bottom line, so to hell with ethics, or you take on some ethics as a matter of duty."

Hicks says business-ethics professors need to stress that business is a creative endeavor, like art or music, in which integrity must play a central role. "I think business, as when pursuing science, education or art as a profession, is inherently moral, with ethics an integral part of doing good business," he says. "Business and ethics should be taught as adjuncts to each other, not as enemies."

College classrooms aren't the only place where executives are schooled in business ethics. Seminars and discussion forums are important venues for showcasing what the business-ethics profession calls "socially responsible" businesses. The problem, critics say, is that "socially responsible" too often means politically correct rather than ethically correct. As a member of environmental organizations such as the Pew Center on Global Climate Change, the Business Council for Sustainable Energy and the World Business Council for Sustainable Development, Enron was praised for its social responsibility.

"Enron and its subsidiaries develop and invest in a number of renewable-energy resources," said the Pew Center's Policymakers Guide. "Enron Wind Corp. is one of the world's largest operators of wind-power generation." Ironically, wind power was one of the areas where Enron lost a ton of money after failing to get regulatory rules changed to accord with the Kyoto Protocol on global warming, which Enron regarded as potentially very profitable and for which it heavily lobbied. The U.S. Senate, in an advisory resolution, condemned the Clinton-backed treaty by a vote of 95-0. As a result President Bill Clinton never sent it to the Senate for approval. The Senate was fearful of the incomplete science and huge cost projections and that it would put the United States at a competitive disadvantage. "I think the Enron story tells us that the tendency to view the socially responsible corporation as being that corporation which most closely adheres to the conventional wisdom of the chattering class is a dangerous model," says Fred Smith, president of the free-market Competitive Enterprise Institute.

Francis Fukuyama, professor of international political economy at Johns Hopkins University's Nitze School in Washington, tells Insight that this appearance of social responsibility might have helped Enron cloak its ethical misdeeds to shareholders. "They were a really politically attuned company. They were spreading their money everywhere just to buy favorable publicity for themselves, and I think it probably helped shield them from a little bit of scrutiny that they probably should have had from regulators and other people," says Fukuyama, author of the book Trust, about the importance of integrity in commerce.