Business Ethics 9789350432501, 9788183189620

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BUSINESS ETHICS Dr. A.K. Gavai

Imt GJlimalaya GJ\JblishingGJIouse MUMBAI • DELHI. NAGPUR • BANGALORE • HYDERABAD • CHENNAI • PUNE • LUCKNOW

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ISBN

: 978-81-8318-962-0

REVISED EDITION: 2010

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CONTENTS 1.

Business Ethics - A Conceptual Framework

2.

Philosophical Foundation of Ethics-I

14 - 33

3.

Philosophical Foundation of Ethics-II

34-42

4.

Moral Duty, Rights and Justice

43 - 59

5.

Business and Society

60 - 87

6.

Values and Work

7.

Ethics at Work-Place - I

113 -1.51

8.

Ethics at Work-Place - II

152 - 172

9.

Institutionalising The Ethics

173 -193

Bibliography

194

,

1 -13

88 -112

"This page is Intentionally Left Blank"

BUSINESS ETHICS A CONCEPTUAL FRAMEWORK

--------------------------------CONTENT

(i) Introduction

(ii) Concept of Business Ethics

(iii) The Needfor Business Ethics (iv) Factors Affecting Business Ethics (v) Principles of Business Ethics (vi) Coverage ofBusiness Ethics

(vii) Attitude of Indian Managers Towards Business Ethics (viii) Business Ethics in Practice

INTRODUCTION One who looks to this term, Business Ethics, may feel confused in the first instance. Because most of the people think that business and ethics are virtually two different concepts and they can be very hardly inter-related. Business is a form of economic activity which is governed by the principle of input and output. Ethics, on the other hand is concerned with moral behaviour of an individual and clarifies what can be described as right or wrong behaviour. Therefore some people believe that business has nothing to do with ethics and vice versa. Though this view looks convenient and attractive it does not carry sound logic. Business is a part and parcel of human life and business organisations do not exist and function outside the society. Therefore business cannot alienate itself from the concept and norms of good and bad, developed by human society. Several times the terms, ethics and morals (or morality) are used interchangeably. However, there appears some

Business Ethics

2

difference between the two. Morality is perceived as personal whereas ethics is perceived as institutional. Morality is usually related with sexual matters and ethics is concerned with right and wrong behaviour. Alternatively sometimes ethics is treated as the scientific study of morality. Webster dictionary has given a more elaborate and comprehensive description of 'ethics.' It states that ethics is the discipline dealing with what is good or bad, right or wrong or moral duty or obligation. It is a group of moral principles or set of values. These principles govern the conduct of an individual or a profession. According to Paul W. Taylor, ethics may be defined as a philosophical enquiry into the nature and grounds of morality. Thomas Higgins believes that ethics is the art of human living and its result should be ease in being good men in every circumstances. Churchill defmed ethics as the application of moral values or codes to complex problems using a rational decision-making process. The outcome of this process is usually a behaviour or set of behaviours. These definitions provide, that, ethics is an inquiry or study of the concept of good and bad. It tries to decide what can be called as good and bad and provides a clarification for that. Ethics, in fact, studies morality and morality is concerned with conduct and character. Therefore it attempts to explaiJ? as to which type of behaviour is good behaviour or right kind of behaviour and which behaviour can be described as wrong behaviour or bad behaviour. In order to decide this, ethics provides a set of principles or values. These values act as criteria for deciding moral desirability of human behaviour. Ethics continuously makes a systematic enquiry to learn: (1) What are the standards of morality of people.

(2) Why those are the standards of morality. (3) How people practise these standards. Thus ethics is not simply an emotional expression such as be good and do good. It is a rational analysis and conclusions about the fundamental elements that decide good and bad or right and wrong behaviour. Therefore it initiates thinking from the defmition of right actions and wrongful doings and suggest a basis for such an analysis. Thomas M. Garret is of the opinion, that, law is generally concerned only with the minimum regulation necessary for public order while ethics examines both, the individual and the social good in all dimensions. Therefore what is lawful need not be necessarily ethical. In general, ethics deals more with ,good than with evil. An action is right or desirable or moral, in the view of a given school of thought, if it is consistent with a principle verified to the satisfaction of its adherents. Obviously immoral actions "are those which are inconsistent with these principles.

Concept of Business Ethics Most people believe that ethics arid morality are relevant only to individual. However, one must remember, that the norms of conduct which apply to common men, should also apply to businessmen.

Business Ethics -

AConceptual Framework

3

Business is a part of the society and as such ethics is also relevant in the context of business. The business ethics, however, should be given special attention due to the specific problems and opportunities faced by the businessmen. The society, in general, is unlikely to face such situations. Though the basic ethical standards are universal, the difference lies in the application of ethical principles in business situations. Therefore Baumhart says that, the objectives, intentions, circumstances and outcomes of the actions of businessmen and the right or wrong of it is the domain of business ethics. According to C.B. Mamoria, business ethics may be defined as the businessman's integrity so far as his conduct or behaviour is concerned in all fields of business as well as towards the society and other businesses. Business ethics deals with morality in the business' environment. It involves moral judgements based on the understanding of the society. Ethics extend beyond the legul questions and involves goodness and badness of an act. Business morality is the application of moral principles to business problems. A particular business practice therefore becomes moral and fair or immoral and unfair depending upon its consistency or inconsistency with a particular moral theory. And we know that morals refer to any generally accepted customs of conduct or norms of behaviour of right and good living in a society. According to William Shaw business ethics is the study of what constitutes right and wrong or good and bad, human conduct in business context. Suppose a supplier has promised his client to procure for him a particular inventory which is rather scarce. Now when he acquires that inventory item, he is approached by another buyer who offers him a higher price for the same. Should he then sell that inventory to this new buyer and conveniently forget his promise and the urgency of his old buyer? This involves ethics. After selling that inventory to this new buyer, even ifhe further attempts to procure the same again for his old buyer, is the act normally justifiable? A trader operating in a remote market learns about his monopoly position and starts charging extra-premium on the prices of his merchandise. Can we say that he is doing his business with moral instinct? Should we approve a director of a company using insider information, without the knowledge of others, for speculative transactions in 'stock-market~ What will be our moral stand in respect of an officer whose wife is an insurance-agent, and who simply advises his subordinates to take insurance through her. What should an honest employee do when his superiors try to cover up wrong-doings in the organisations? Should he remain silent or approach the public media to build alertness in the society about the same? Should we allow and indulge into business practices like gifts, kickbacks, secret commission, personal favour on selective basis, etc.? Should we sideline or override the law or the rules in a clever manner for the benefit of our corporation? Should we implant our people in our competitor's organisation or should we use some confidential information relating to him, which coincidentally and eventually we have obtained, for the sake of our benefit?

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4

How do we look to bribes, using political connections, deferring our obligations by adopting legal tactks? All these are moral issues relating to business. The list can go further in an unending manner. Thomas Garrett has defined ethics and business ethics in the following words: Ethics is the science ofjudging specifically human ends and the relationship of means of those ends. In some way it is also the art of controlling means so that they will serve specifically human needs. Business ethics is concerned primarily with the relationship of business goals and techniques to specific human needs. It studies the special obligations which a man and a citizen accepts when he become' a part of the \vorld of commerce. Business ethics examines the impact of actions and interactions ~t business poor.le and business organisations on individuals, institutions, business community and society as a whole. Busil1:ess Ethics questions about the morality of prevalent business practices and try to assess and evaluate as to how far they are good and right. It tries to investigate the basic purpose of a business and the fundamental duty of business towards the society. Business ethics attempts to develop a self-monitoring mechanism to see that the right kind of business practices will prevail and the business will be organised and conduc~ed in good spirit.

The Need for Business Ethics Business ethics forms a set of generally accepted standards in the context of business. In fact business ethics and organisational ethics is part of the broader study of ethics. In order to provide guidelines for moral decision-making in business, we have to explore the guidelines for making moral decisions in general context. Ethics in general and ethics in business are very intimate to one another. Therefore one's personal ethics cannot be completely separated from one's business or organisational ethics. If you are a man of principles, then you are more inclined to insist on high moral standards in your business and organisations. Ethics is not a skill which one can acquire and possess. Ethics is a perspective and discipline which one has to develop thoughtfully and practice continuously and relentlessly. A moral individual is ethical in all walks oflife. And the moral status is to be preserved vigilently. It cannot be presumed or taken for granted on the basis of past exercise. The strength of morality lies in its continuous practice. Ethics is not simply a matter of an intellectual debate or an academic analysis. It is always reflected in one's behaviour and ,action. It appears in real life situation. William H. Shaw is of the opinion that those who have thought and studied seriously about ethics in general and about their own values in particular have a better basis for marking moral decisions in an organisational setting than those who have not. According to Beverly T. Watkins, today's market place calls for a business executive who is bold enough to build hi-slher reputation on integrity and who has a keen sensitivity to the ethical ramifications of hislher decision making. Usually statutes, laws, rules and regulations are framed by governments and legislative authorities in critical areas of interpersonal conduct. The objective is to provide safety and personal welfare to people who can be vitally affected by the unethical practices. In order to enhance and further develop the ethical practices in business community and professionals, a professional code or code of conduct is developed. Such codes have assumed great importance. The need for business ethics can be highlighed with the help of following points:

Business Ethics -

AConceptual Framework

5

(1) The interest of all the stakeholders, suc~ as, shareholders, employees, dealers, suppliers, government, customers, creditors and local public, need to be safeguarded against unfair, unethical and dubious ways of dealing and exploitation. If this is not done, the result will be a total collapse of the entire system.

(2) Customers are the cause and purpose of every business. A business is supposed to serve them satisfactorily. However, most of the time the rights and privileges of customers are neglected. In order to save the rights of the customer and serve them well, there is a need for some moral binding on business community. This is what exactly business ethics does. The most important consumer rights which need to be protected through ethical practices are as follows: (a) Right of information. (b) Right of safety.

(c) Right of choice . . (d) Right to be heard. (3) The codes of conduct for business, popularly called as business codes; govern the inter relationships of members. In the present complexity, business cannot be carried on without trust in ethi,cal standards of suppliers, dealers, financiers and other related agencies. (4) In the present days the concept of nature and objectives of business has undergone a radical change. The social orientation of business is now well accepted. As a part and parcel of the society, the business has to accept and fulfill certain social obligations and responsibilities. Today business is confronted with important social issues such as ecology and environmental protection, consumerism, resources utilization and development, people-oriented management and human dignity, energy conservation and energy ~risis, etc. To tackle these social issues successfully and satisfactorily, the business must develop ethical perspectives and practices. (5) The business organisations should prepare and publish a code of ethics. This will boost up the confidence of customers, employees, dealers and suppliers in the quality of functions and dealings of the organisation. A belief which has prevailed for a very long time explain that good ethics is good business. The belief is supported by experts like -Edmond Learned, Arch Pooley and Robert Katz. They observed that the businessman's reasons for supporting this saying is due to the following facts:

(i) A business that behaves e1hically, induces others to behave ethically towards it. (ii) Ethical behaviour is a form of insurance against retaliatory acts. (iii) A good man who steadfastly tries to be ethical, somehow always overtakes his immoral or amoral counterpart. An unethical man who is preoccupied with deception cannot match the

pure creative zeal of the honest individual whose energies are free for maximum productivity and creativity.

6

Business Ethics

Walter Clarence is of the opinion that many b:us~nessmen try to be ethical in their behaviour in their'dealings with competitors, employees, society and others. In his book Corporate Social Responsibility he further states that in most cases and at most times, good ethics mean good business. The exceptions are when the competition is overwhelmingly influenced by unhealthy practices and there are threats of violence possibly putting the individual concerned out of business or out of job. Thomas Garett (Ethics in Business) observes that good ethics may be contributing factor to good business. Much of the dishonesty is lured by incompetence, cowardice and myopia. In the world of business one tends to give rise to the other since I!lany managers look for short-term results or immediate gains. If they focus on long-term advantages and employ their complete potential for the same; then, they need not have to resort to the unethical practices.

Factors Affecting Business Ethics A business executive has to build his reputation onintegrity. And for this he requires a keen and acute sensitivity to the ethical dimensions of his decisions. His decisions should be guided by moral standards. These moral standards are the basis of ethical conduct. The executive has to constantly decide and analyse what is ethical and unethical. A clear demarcation between the ethical and unethical conduct eliminates the mist of confusion and provides direction for ethical behaviour. However, many factors influence such decisions. In fact at several instancs, these factors decided what is ethical or unethical. The most prominent among these factors are as follows:

(a) The personal· code ofbehaviour of the individual: The personal ethics of an individual has an impact on his professional and organisational behaviour. The 'man' in the 'manager' is more powerful in setting out the directives and boundaries of behaviour. The personal value system and concept of morality develops a background for identifying and evaluating the ethicality of his business decisions. Further, a person's value system and definition of moral standards is the result of his own thought process, perception and learning as well as the complex environment which influences his life. The process of cognition which combines the internal meditation and analysis and the external activities of collection and compilation of information clues from the surrounding develops an individual's idea of morality. The up-bringing of the individual also has an effect on this process. This may, induce relativism in moral ideas and the criteria for the ethical decision-making in business setting. (b) The policies of the company: The company policy has an effect in determining the scope and dimensions of ethical behaviour of employees. A policy explicitly encouraging ethical behaviour and providing clear-cut guidelines for the same acts as a motivating and directing force for ethical conduct and decisions. The leaders of company management have decisive role in this regard. Thomas Garrett says, in this context, that the best protection is the example presented by the top management and the atmosphere it creates. When the leaders are scrupulous, employees know what is considered right. When example is supported by explicit policy, the followers have a clear idea of how to translate the example ofleaders into action. When policy is enforced and reinforced, the employees know that honesty is the best policy in this company.

Business Ethics -

AConceptual Framework

7

(c) The ethical standards imposed on a manager by his superiors: An honest superior can act as a role-model for his subordinates. The moral standards of the superior and his sensitivity towards moral issues influence the decisions and actions of his subordinates. For instance, if the superior condones unethical practices like padding the expense account, accepting expensive gifts from outsiders, eventually overriding the rules and norms for personal favours, etc., the subordinates assume such activities as acceptable practices. Your boss has an immediate impact on your ethical behaviour, because he is the first dictator of ethics in your work-behaviour.

(d) The ethical climate of a country: The general environment in the country and the insistence of the society on moral conduct and character has a wide and deep influence on business ethics. Business is a part and parcel of the society and business ethics is a part of general ethics, value-system, morality and culture of the society. The moral standards in business are the reflection of the moral standards of the society. If the society in general looks to bribes, lies, violations of promises and such other acts liberally and condone them from time to time, the businessmen cannot be expected to remain aloof from indulging into such unethical practices for personal benefits. In order to foster ethics in business, we have to strengthen ethics in personal as well as social life.

Principles of Business Ethics Principles of ethics are universal and they apply to business also. However, due to the very special nature of business, it requires certain basic specific principles. The late American President Woodrow Wilson has laid down four important principles for the proper conduct of business. They are as follows:

(a) The Rule of Publicity: This rules describes the n.ecessity and importance of maintaining transparency in business. The people should be adequately informed about the nature, purpose and consequences of business dealings. This principle states that let the people know what it is going to do. Usually misunderstandings, suspicion and false conjuncture arise out of secretiveness. Therefore people must be properly acknowledged about what the business is going to do. (hl The rule of equivalent price: This rule states that let the public receive gQods and services fully equivalent to the money paid. In other words the buyers should get the best return of their spendings. The business should see that it offers products having utility and quality equal to the price paid. There should be an element of mutual benefit when the business gets the price for what it renders as a reward, the consumer must get a satisfaction due to the fulfillment of hislher need for the sacrifice which he/she has made by way of spending.

(c) The rule of conscience in business: This principle emphasizes that the l;ules of business games must be of a higher order than those of an ordinary game, sustained by moral judgment of honourable men. Because business is very special type of activity. It uses the society'S resources as input and offers an output to the society for material satisfaction. It is responsible for employment generation wealth creation and economic development of the society. Therefore the decisions of businessmen should be governed by the concern for the society, rather than by selfish motives. A conscience in business will motivate the business to function in the best interest ofthe stakeholders and society at large.

8

BLisiness Ethics

(d) The rule of spirit of service: This principle suggests to see that the things you do for the public and get money for it is the best thing of that kind that ,can be done. It emphasizes on quality of • service and acceptance of the obligation to offer the best return of the price paid by the customers. The business must remember that service is the basic purpose of business and profit is the reward for working sincerely for accomplishment ofthis goal. Besides the above principles, the following basic principles are described as principles of business ethics: (1) Service first and profit next: Business has the primary goal and duty to serve the customers. Profit and profitability cannot be regarded as the objectives of business. They may be useful criteria and indicators of business efficiency. A business should earn profit through servke. The businessmen, according to Mahatma Gandhi, are the trustees and a business therefore has the moral responsibility to work for the benefits of those whom it wants to serve. In fact, the purpose of all economic activities is to meet the needs of people and contribute to the well-being of the society. Business is not an end in itself, but a mean to an end. The end is service to society. And business acts as a tool of human welfare. (2) Business must be just and human as well as efficient and dynamic: The business will have to attend to the human and social objectives while successfully fulfilling, the economic criteria. A business, no doubt, has to maintain...efficiency and dynamism for survival and success. For this purpose it has to cut down the cost and enhance productivity and quality. The society entrusts the valuable and scarce resources to the businessmen with an expectation of their fuller and appropriate utilization in the best interest ofthe people and society. Naturally efforts to increase productivity and efficiency should result into human degradation and increased social cost. The business, therefore, has to treat all the stakeholders in a fair and just way. While appreciating its economic worth, the business will have to simultaneously safeguard the reasonable interest and take care of the customers, employees, shareholders, society and the government. It has to reconcile and harmonise these separate and somewhat conflicting responsibilities. (3) With the growth in the size of business, attention must be paid to the growth of human values also: Human dignity and dignity of labour should be taken up as important primary considerations in managing any business. Quite obviously with the growth of business and increase in the size of organisation, the personal relations with employees and human considerations may be overlooked. The work environment may become more formal and mechanistic. The acute division oflabour and specialisation may result into work monotony, routinisation at).d regimentation. The increased size of labour force may develop a need to insist on compliance of standards, procedures, rules and regulation. Under such circumstances, t!le employees may be perceived, simply as economic resource or factor of production with specific utility. Therefore it becomes necessary to remind that every worker is first a human being and deserves a dignified treatment as individual. Moreover, the growth and success of any organisation is really due to the sincere and creative contribution of the people working

Business Ethics -

AConceptual Framework

9

therein. The dignity of human labour and contribution, so, must be recognized and appreciated through positive actions showing concern for employees. An important aspect of business ethics is to make the human values grow consistently and significantly. (4) Every business has a basic obligation of making the best and fullest use of its inputs: The business has to use the material and human inputs supplied by the society wisely, judiciously and productively. Such input must be used to produce the output which is socially desirable and possess a utility value. The business should manufacture and supply the goods and services which will add to the material happiness and wellbeing ofthe society. It should never make products which will cause harm and distress to people. Product selectivity is an important issue here. Should we produce goods and services which are highly profitable but socially undesirable or the products which will add to the betterment of the society but the mar-gin of profit in such cases is very thin? This is a true ethical question in business. The best use of resources here does not simply mean the most profitable use, but, it means a profitable as well as socially desirable use. The economic parameters of deciding the best use should have a social concern. Moreover, the fullest utilization of inputs refer to the optimum utilization of the same. There should neither be an over utilization or underutilization of resources. Because the over utilisation may lead to exploitation and ultimately to the destruction of resources and underutilization may result into the increased cost of operation and a price rise. The business should work for the maximum output and not restricted output. This is possible only when inputs are fully used. Any strategy of restrictive production and supply in anticipation of higher prices and more profits is an unethical business practice. (5) The business should promote and support open and healthy competition: Concentration, monopoly, cornering and such other unfair practices should be watched and avoided. Healthy competition encourages efficiency, innovation, quality upgradation and a burning desire for continuous improvement. The businessmen should develop and accept the spirit of competition and watch and insist for a fair play: Coverage of Business Ethics Business ethics covers each and every aspect of business and applies to all business decisions and functions. However, while describing the coverage of business ethics Willis W. Hagen says in his essay 'Ethics in Business' (Advanced Management Journal, April 1965) that in order that the business system functions successfully, brings benefits to the people and the society and survives the economic and ideological conflict, it must do the following: (1) The business must produce vast quantities and services. But the gross product is not an end in itself. It is a mean to an end which is satisfaction of human needs. (2) Business leaders are allocators of scarce resources. They must realize their moral duties in the respect and must function,as wise and moral allocators. (3) Business has a responsibility for product selectivity. Businessmen have a moral duty to produce goods and services contributive to the well-being of man.

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Richard Eells (The Meaning of Modern of Business) has described the concept of product selectivity. According to him responsible product selectivity may mean the exclusion of the product lines that promise large returns but would require the use of capital for socially dut>ious purposes. A company may choose among alternatives, none of which will result in socially deleterious products and services, but some of which may contribute more substantially to the upbuilding of the kind of community the responsible executive wants to see. (4) The business must play a judicious role in balancing the claims of all groups and individuals for their contribution toward the product of the economy. Thus the business should make an quitable distribution to each individual contributor of the greatest quantity of material things exchanged for his contribution of services and property to the system. (5) The business must work willin the broad concept of moral ideals. According to Peter Drucker (Concept o/Corporation) the business must give status and function to the individual and it must give him justice of opportunities. This does not mean that the economic purpose of the corporation's efficient production is to be subordinated to its social function or that the fulfillment of society's basic belief is to be subordinated to the profits and survival interest of the individual business. The corporation can only function as the representative social institution of our society if it can fulfill its social function in a manner which strengthens it as an efficient producer and vice versa. But as the representative social institution of our society, the corporation in addition to being an economic tool, is a political and social body. Its social function as a community is as important as its economic function as an efficient producer. Thus the business organisations have to act as responsible corporate citizens. (6) The business corporations must be c~ncerted not only with its responsibilities to suppliers of capital, but to the suppliers of services, to the suppliers of trained manpower such as educational institutes, to the suppliers of police and fire protection and suppliers of sanitary facilities and in general the local environment in which the business can operate, i.e., the local community and to the suppliers of almost endless actors that merge into its product and enable its continued existence. The business, Hagen believes, has to do this in its own interest and to retain the area of decision-making in its management. Henri Ford II has once commented that if we are to preserve the good name of our respective companies, our corporate executives must keep their own house in order. If and when they fail to do so, the house-cleaning job will certainly be put in less friendly hands. We now run a serious risk of having codes '",ith sharp teeth imposed on business by the legislature. Because such codes would further restrict the areas of free business actions and decisions, we must in our various companies and industries, see to the establishment of our own fomled principles of ethical practice, plus the effective means of self-policing those principles. (7) Like a good citizen. the business is n~t only expected to making a living for itself, but also to contribute to the community and to society. A good citizen concerns himself with social and public matters and cannot live in isolation, so also the corporation calmot do less ifit hopes to retain an image of rcspo!lsibility in society.

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AConceptual Framework

11

(8) From the individual point of view, the finn should exist to supply income, power, prestige creative satisfaction or a combination of these to those who work for or with it. The manager is obliged to run the finn as efficiently as possible within the limits set by basic ethics, according to Thomas Garrett.

Attitude oflndian Managers Towards Business Ethics Prof. Aruo Mooappa conducted a survey of 115 business executives regarding attitude towards business ethics. They were belonging to different industries, ages, educational standards, religious affiliations and income groups. They were attending the middle and senior management programme of I.I.M. Ahmedabad. The fmdings are given in his work Ethical Attitudes of Indian managers, which are as follows: (1) A majority of business managers believe in good ethics. Various circumstances like unnatural competition, company policy and plethora of rules and regulations ofteJ;l prevent the managers from putting this belief into practice. (2) The problem that caused managers the greatest concern were those which involved 'buying business'; using gifts, bribes, personal favours, etc. (3) Most managers do take time in making a decision to consider the ethical implications. (4) Managers reiterated the importance of company policy in influencing ethical action. A man's personal code of conduct was given only a second place. (5) The influence of supervisors through whom the company policy is most often transmitted, was considered important in influencing ethical action. (6) Dishonest methods of competitors and unethical climate in the industry were often cited as deterrents to the honest transaction of business. (7) Corruption and greed of government officials red-tapism, nepotism and suffocating regulations were considered obstacles to ethical business behaviour. (8)

Ti.~

attitudes and reactions of the older business managers to situations demonstrated a greater ethical awareness than those of younger ones.

(9) The size of company had no discernible influence on ethical decision-making. (10) Managers were dissatisfied with the idea that profits should be the only guidelines for a businessman in decision-making. (11) Fonnal education and training did not seem to have stimulated the desire to act honestly. (12) The ethical attitudes of those who belonged to a religion which was more organized were no better than those in whose religion there is no much scope for guidance. (13) Certain areas like constmction, engineering research and development, banking, investment and insurance. Seemed more prone to encouraging unethical practices than others. (14) A majority ofthe managers welcomed the idea ofa code of conduct and felt it would help to improve th!! ethical climate ill the country. (15) Managers felt that the management of each company, i.e., self-regulation, would be the authority best suited to enforce the code.

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Business Ethics in Practice Now we know that business ethics deals with every aspect of business and with each business function. Here we make a brief discussion about ethical business practices in respect of certain aspects of business. (A) Ethics regarding buyers: The sellers rrlust recognize the buyers as human beings and not as 'sheeps to be shorn' for making a profit. The seller must respect, the rights of buyers. The seller must disclose latent material defects to the buyer. Sound ethics according to Manoria condemns not only the intent to deceive but also the risking or permitting of deception without a proportionate reason. The seller is unethical when he makes use of fraud or lying to get an advantage. (B) Ethics about business relations: The competition in business should be fair and governed by basic ethics. The business rivalry should not tum into a ruthless battle. An unethical competition involves following types of decisions and actions: (1) Producing harm to a competitor by interfering with his production and distribution. (2) Unreasonable price cutting of products. (3) Making disparaging statements about the quality and other related features of competitors' products. (4) Fomenting labour disputes and work stoppages in competitors' firms. (5) Hiring away key employees of competitors. (6) Campaigning and spreading rumours for boycotting the competitors' products. (7) Usuing the market power to comer the competitors and to throw their products out of market. (8) Exolting and bribing. (9) Making use of discriminatory or misleading advertising. (C) Ethics regarding employees: The dignity of workers should be preserved. In recruitment of employees, the ability of the candidate should be considered. For this purpose job specification should be prepared. It will describe the required qualities and qualifications of employees. If the recruitment is made on the basis of prejudice or caprice and discrimination, it is, then, unethical and irrational. In respect of termination of services for the employees, certain moral considerations are necessary to be made. They are as follows: (l) Firing and/or dismissal of employee must be done for a just cause. It should not be based on the whim of the employer. Ajust cause may be anyone of the following causes: Old age and incapacity due to old age, frequent illness and weak health to sustain job pressure, wilful negligence towards duty, unauthorized and prolonged absence from duty, violation ofdiscipline, a kind of conduct which is harmful to other employees and such other similar reasons in which case firing of the employee is indispensible.

Business Ethics -

AConceptual Framework

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(2) The concerned employee should be given a reasonable and fair chance to explain his position and plead his case before a decision of dismissal is taken. (3) The harmful effects of dismissal should be mitigated as far as possible. In respect of transfers and promotion the principle of equality, justice and fairness should never be neglected. Also, while paying the wages the principle of equal work equal pay should be applied. The merit as well as seniority should be given suitable and due weightage. Safe work-environment and adequate job security should be offered to employees. Ethics relating to employees insist that employees should never be treated as a 'thing' or 'commodity' but as a human-being. Manoria and Mamoria further state, in this context, neither should the worker nor his family be exposed to physical, psychological or natural harm without a proportionate reason. To disregard safety in these areas is to disregard the good of a human being and even the simplest ethical principle safety is ethically important. New workers should be informed about the ethical pitfalls connected with their jobs and how to avoid them. (D) Ethics regarding information-secrecy: When some information relating to business becomes more vital, keeping it secret is an important obligation of employees and employers also. Certain decisions, resolutions, product processes, innovations and actions are required to be kept secret in the best interest of the firm. Any violation of this norm for a personal gain is unethical. The issue of information secrecy is a much broader issue and relate to a variety of personal and professional obligations. A secret information is described as the one which a person has a right or obligation to keep hidden from others. The obligatory secrets involve a situation in which revelation of the secret matter causes harnl to the concerned or violation of a contract. The secrets are classified as natural secrets, promised secrets and professional secrets. The natural secret is described as the one which involves knowledge of something which by its nature will cause harm if revealed. The promised secret involves an obligation to keep it as secret, which arises from the contract or promise by which one binds itself. Such promised secrets may be disclosed when silence or the preservation of secret will cause more harm than good. The professional secrets are those secret informations which by virtue of a particular profession a person has an access to. The doctors, lawyers, chartered accountants have a knowledge about the most personal and intimate information about their clients. Such information, the professionals have to keep secret to preserve the credibility and reputation of their profession. Only for a very serious reason such secrets can be revealed. In a work-organisation the employer has sufficient personal information about the employee, such as his health, psychological test, earnings and investments, credit and loans, etc. The employer should not disclose this information to a third party unless it is obligatory or for a good cause. (E) Ethics and honesty: Honesty is an important virtue in personal and work life of an individual. Honesty involves the truthfulness, integrity and transparency in all kinds of dealings. Double standards in business are unethical because they encourage dishonesty. Ethics demands that dishonesty should always be condemned and dishonest employees should be strictly dealt with.

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PHILOSOPHICAL FOUNDATION OF ETHICS-I

--------------------------------CONTENT

(i) Introduction

(iO Customary Morality and Reflective Morality (iii) Ethical Relativism

(iv) Normative Ethical System (v) Teleological Ethics (vi) Egoism (vii) Criticism on Egoism (viii) Utilitarianism (ix) Criticism on Utilitaricmism

(x) Utilitarianism in Organisational Context

INTRODUCTION The word ethics emerges from the Greek word ethos which means character or customs. According the Prof Robert C. Solomon (Morality and Good Life) today we use the word ethos to refer to the distinguishing disposition, character or attitude of specific people, culture or group. Solomon further says that ethics is concerned with: (1) individual character, including what it means to be a 'good person' and

(2) the social rules that govern and limit our conduct, especially the ultimate rules concerning right and wrong.

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Peter Singer has discussed at length the concept, characteristics and coverage of ethics in his famous book, Practical Ethics. His observations and inferences can be summarised as follows: (1) Ethics is not about :l set of prohibitions particularly concerned with sex. Sex raises no special moral issues. The moral issues can apply to other actions "also, e.g., honesty, concern for others, prudence, etc. (2) Ethics is not an ideal system, which is all very noble in theory but no good in practice. The whole point of ethical judgement is to guide practice. (3) Ethics is entirely independent of religion. It is neither relative nor subjective. (4) Ethics allows reason to play an important role in ethical decisions. (5) Almost all people live with some ethical standards, either with right ethical standards or with mistaken ethical standards. When people believe that, for any reason, it is right to do as they are doing; they defend their way ofliving; give reason for the same and justify the same also; they are, in fact, living by some ethical "tandard. (6) The deontologists think that ethics is a system of rules, such as do not lie or do not kill or do not steal. In unusual situations simple rules conflict. So the deontologists can rescue their position by finding more complicated or specific rules or by ranking the rules in hierarchical structure to resolve conflicts between them. (7) Teleological or consequentialists start not with moral rules but with goals. They assess actions by the extent to which they further these goals. The best known consequentialist theory is utilitarianism. The classical utilitarians regard an action as right if it produces more of an increase in the happiness of all affected by it than any alternative action and wrong if it does not. Peter Singer further tries to find out the replies for a more penetrating question that, why should we be moral. His arguments in support of ethical behaviour are as follows: (1) The question that, why should I act morally is logically improper and so should be rejected. Because our ethical principles are, by definition, the principles we take overridingly important. Thus a person once makes an ethical decision, no further practical questions arise. (2) To act ethically means to act rationally. Some element ofuniversalizability or impartiality is essential to ethics and reason is objectively and universally valid. (3) It is rational to act morally in our long-term interest, irrespective of what we happen to want at the present moment. (4) Ethics is a product of social life and has the function of promoting values common to the members ofthe society. Conscientiousness (that is acting for the sake of doing what is good) is a particularly useful motive, from the community's point of view. It has a value due to its consequences.

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(5) If we are looking for a purpose broader than our own interest, something which will allow us to see our lives as possessing significance beyond the narrow confines of our own conscientious state, then take up the ethical point of view. Paul Taylor says that the chief goal of ethics is to see if rational grounds can be given in support of any moral judgement, standards and rules. We know that morality deals with right and wrong conduct and also with good and bad character. Ethics clarifies the concept of right and wrong with rationality. It tries to provide reasons to defme and distinguish what is right and what is wrong. We judge the human behaviour in the light of the motive and actions. Either an action itself may be right or wrong or the motive behind the action is good or bad. The motive of an individual behind an action can be judged as bad when the individual is aiming to take an unfair advantage of others and the motive can be described as good when the individual is doing something out of genuine concern for the well-being of others. In other words, when the motives behind actions are unduly seiiish the action is bad and when an action evolves out of self-sacrifice or selflessness, it carries the greatest moral weight. In order to judge actions from the moral point of view, we have to apply moral norms. A moral norm according to Taylor may be either a rule of conduct or a standard of evaluation. Paul Taylor argues that we have two sorts of reasons why an action or conduct ought to be performed or ought not to be performed. They are as follows: (1) The action is of a kind that is required or prohibited by a moral rule and (2) In the given circumstances the action will have good or bad consequences as judges by a standard of evaluation. Thus the performance of an action is morally binding on us if such a performance is required as per a specific moral rule. Even some actions may be prohibited by a particular moral rule, e.g., Be truthful. Do not lie. Be honest. Do not steal. - Such rules require either particular kind of performance or prohibit certain actions for a moral conduct. The second criteria of evaluation of an action focuses on its consequences for judging it as good or bad. Thus an action which has good consequences is a right type of action and an action having bad consequences is a wrong action. These two approaches lead to two different schools of thoughts the former is called deontological ethics and the latter is called teleological ethics. The teleological ethics explains that an action is right ill so far as it has good consequences. On the other hand the deontological ethics argues that an action is right when it conforms to a rule of conduct which meets the requirement of a supreme principle of duty; this principle of duty not being itself a matter of production of good consequences. Customary Morality and Reflective Morality Every society has its moral code and everyone in that society or culture is brought up with that set of moral beliefs. When an individual blindly accepts the moral code of his society, his morality is customary or conventional. The word customary is derived from the term custom. Customs are described as the uniform ways of acting by which human beings meet their common needs. Customs are passed from one generation to the next. Customs are the result of the accumulated experience of

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people in past. Customs act as the readymade programmes of action and adjustment. Customs provide a basic for developing and sustaining life of a person. Harold H. Titus (Ethics for Today) defines customary morality in the following words: The moral system under which moral standards are based on customs, which in tum are accepted without reflection, is called customary morality or group morality. This system was prevalent especially among kinship groups. The customary morality forbids certain act and also expects certain conduct. It is usually in the form of do this and don't do that type. The rules and regulations developed by customary morality operate through habit and not through conscious choice. Customary morality has the strength to develop a stable character which functions with little friction in a stable environment. It can hold the average man in line and condemns the traditional evils. In respect of some areas of social life it speaks clearly and accurately which conduct is best and desirable. Most of our moral judgements are influenced by customs and customary morality cannot entirely eliminated. Many customs are the outcome of past experience and wisdom. So they are relevant and realistic to certain extent. Titus says that too large a part of our present morality depends upon where we were born or reared and not upon principles which will stand critical examination patriotic allegiance, the attitude toward property towards other races as well as our standard of personal honour are all set for us largely by our social circles and by the class barriers of our time. However, customary morality makes an individual a child of his culture. And such people lack the ability to support their culture by rational arguments. They cannot explain why certain acts are treated right and good in their culture. They cannot substantiate relationally and logically the pemlissible and prohibitive acts or conduct in their culture. A moral code in order to be valid and satisfactory must provide for critical enquiry and revision under changing conditions. It is observed that several customs develop under all sorts of irrational influences such as chance elements, historical accidents, superstitions etc. and they do not provide opportunity for their scrutiny and analysis. Under customary morality the margin offreedom is comparatively small. Social conditions are never static; they are always dynamic. We are presently living in a time of rapid and continuous change. Peter Drucker has called this period' as age of discontinuity.' Under such circumstances customary morality is found to be blind to the newer forms of wrong doing. The inadequacies of customary morality have now become evident. Titus observes that customary morality tends to formalism and to literalness. With changing social conditions it may be so ill-adapted to the needs of life that hann may result. Paul Talylor feels that if a person having customary morality is confronted by others with moral beliefs contradictory to his own and is told about them with certainty, he will feel lost and bewildered. His confusion may tum into deep disillusionment about morality. Perhaps, he will not be able to understand the nature of morality. Ifhe finds that two exactly opposite moral standards exist and difrerent societies accept and support each of them with equal honesty and integrity, then he will completely go blank about the very concept of morality. Then he will not be able to decide, which moral standard should prevail and why. Because people believing in customary morality never have an attitude and habit of such type of rational analysis and evaluation. Taylor says that unable to give and objective, reasoned justification for one's own conviction, he may tum from dogmatic

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certainty to total skepticism. And from skepticism to amoral life. An amoral life is the life without any moral principles at all. An immoral person can be describcd as the one who behaves contrary to the moral standards accepted by the society. Such a person may have a different moral conviction or a tendency to revolt against the prevailing morality as he thinks it as absolutely irrelevant and excessively blinding. An immoral person, therefore, may be in a position to make a rational judgement of his behaviour and argue about his own standards. An amoral person, however, is completely empty about morality. He denies all morality completely. He repudiates all moral ideas. He becomes doubtful about the concept of morality itself. The disillusionment about customary morality makes him reject all moral ideas, principles and standards. Such a situation has a degrading and negative effect on life and it may extinguish the possibility of moral progress of human beings. The moral progress only can lead to a better society and an enlightened life. Under customary morality, thus, a person who has made a beginning by accepting moral principles and moral beliefs blindly may end up denying all morality and rejecting all moral ideas. Such blind faith may develop due to the family atmosphere or social environment. When intellectual certainty is destroyed, emotional insecurity breeds up and this too can become an important cause of blind faith. Therefore it is essential to develop moral maturity. According to Paul Taylor moral maturity is the condition in which an individual has the capacity to be open-minded about his moral beliefs, defending them by reasoned arguments when they are shown to be false or unjustified.

Reflective Morality: Harold l'itus describes reflective morality as follows: By reflective morality is meant that stage of moral development in which men fomlUlate moral judgements on the basis of a ref1ectivc evaluation of principles and careful examination of facts in their relation to human lite. As we know that changes are inevitable. The world is dynamic. It is not static. Naturally new situations and new problems emerge, which conventional morality cannot reply satisfactorily. Conflicts ,~rise inevitably as the law grows distinct from customs. This necessitates the growth of reflective criticism. M:1I1Y a time thc past is rigid and does not provide guidance for conduct in a new situation and therefore it becomes necessary to think about what are the present demands and not what was done in the past. People are then encouraged to reflect upon the principles underlying the customs and law. Thus reflection is added. Reflective morality induces for a critical evaluation of the standards of customary morality. J. Dewey and J.H. Tufts (Ethics) say that complete morality is reached only when the individual recognizes the right or chooses the good freely, devotes himself heartily to its fulfillment and seeks a progressive social development in which ewry member of society shall share.

Ethical Relativism: Ethical relativism in the simplest sense is the belief that what is right in one culture or society can be morally wrong in another society or culture. Thus morality is treated as a function of what a particular society happen to believe. What is right, therefore, is detennined by, what a culture or society assumes to be right. What is right in one society, then, may be wrong in another society. The moral system of a society is the sole criterion to judge the rightnes~ of an action and there is no other 1110ral standard, according to ethical relativism. For the ethical relativism there is no abso!ult.- r>lhicaJ standard which can be independent of any culture. Morality is relative to a society.

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The ethical relativists say that moral codes and views of men regarding what is right or wrong have varied from time to time and from place to place. Thus morality simply becomes a matter of opinion and there are no objectively valid moral standards. Values, according to them are entirely subjective and they argue that there is nothing either good or bad, but thinking makes it so. Harold Titus describes ethical relativism as the view that rightness of an act and goodness of a person depend upon the interpretation of some social group and hence may vary according to time, place and the opinions of men. The theory of ethical relativism concludes that morality is subjective and there is no universally acceptable moral standard to which people can appeal. Because moral standards are the outcome of thinking and feeling of people and there is tremCndOlI'; diversity among thoughts and feelings of different social groups. The moral relativist put forward two arguments in support oftheir rejection of a univers3lly valid moral standard. The first argument is based upon the diversity in moral standards and practices observed among different people during past and present times. The sociologists, anthropologists, historians and human culture provide a great volume of facts in SUppOlt of this argument. They prove moral ideas sometimes emerged from customs, folkways, emotions and feelings of approval and disapproval. Conditions oflife go on changing. So also changes human knowledge, social relationships and insights into the meaning of life. This results into a progress in respect of moral codes. The knowledge about the effect of certain forms of behaviour enhances overtime and this brings a change in moral ideas. Thus the actions once approved may be condemned as their harmful effects on life are discovered and the conduct once disapproved may be found morally compatible due to their suitability in the changed situation. The process of moral development is a continuous process and elimination of old and outdated moral ideas and emergence and acceptance of new moral ideas is a part and parcel of this process. A second argument is based on the views of positivists and logical empiricists. The positivists refer to the natural sciences and to the observed facts of sense experiences and their interrelations. The logical empiricist argues that a word docs not have genuine or cognitive meaning unless the thing to which it refers can be directly experienced. Thus we can experience what exists in fact or 'what is'- and not what does not exist or 'what ought to be.' The effect of ought sentence is emotional. Thus in order to make moral judgements valid and meaningful they should be translated into 'is' sentences from 'ought' sentences. Therefore moral judgements are hypothetical and not categorical demands. A hypothetical statement sets forth a condition that if a i,erson intends to reach to a particular end, he has to adopt such and such means. It always depends upon the circumstances. It never makes a demand regardless of circumstances. Moral judgegment always depend upon conditions ofpbce, time, human needs and desires. There is a lot of criticism on the theory of ethical relativism. British Philosopher Walter T. Stance comments critically on ethical relativism, that if we believe that anyone moral standard is as good as any other, we are likely to be more tolerant. We shall tolerate window-burning, human sacrifice, slavery, l:annibalism, the infliction of physical torture or any of the thousand and one abominations which are approved from time to time by one moral code or another. However, we do

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not want this kind of toleration. Its cultivation will not prove advantageous to morality. Stance expresses his anxiety in this regard that if men come really to believe that one moral standard is as good as another, they will conclude that their own moral standard has nothing special to recommend it. They will then slip down to some lower and easier standards. Ethical obsolutism holds that morally right behaviour is cross-cultural and holds good across all cultures and all kinds of society. According to Harold Titus the notion of an objectively right or wrong act is a distinction that moral philosophers have made for centuries. This notion is our conception of duty - to find and do the act which in the light of all the evidence would be the most beneficial for long-run human welfare. C. I. Lewis says that the enterprise for human living can prosper only if there are value judgements which are true. The supporters of ethical absolutism argue that the moral differences among societies are smaller and less significant than they appear. They clarify that variations in moral standards do not actually reflect fundamental difference in values. They are due to differing factual beliefs and differing circumstances. Again the words of C. I. Lewis (An Analysis of Knowledge and Valuation) call for our attelltion in this regard. He says that believing would hl!ve no point if it were not better to be right than wrong in what one believes. Our experience tells us that one belief or one value judgement is not as good as another. Allan Broom (The Closing of the American Mind) critically evaluates the theory of ethical relativism and says that the fact that there have been different opinions about .good and bad in different times and places in no way proves that none is true or superior to others. To say that it does so prove is as absurd as to say that the diversity of points of view expressed in· a college bull session proves there is no truth. William Shaw (Business Ethics) explains that disagreement in ethical matters does not imply that all opinions are equally correct. Ethical relativism is found to have some unpleasant implications. Firstly, it undennines any moral criticism on the practices of other societies as long as their actions confonn to their own standards. Thus a particular practice in the society is moral so long as the society has given a consent to the same. Perhaps in another society the same practice is not pennissible and therefore becomes immoral. After a span of time if the same practice in the same society remained pennitted or is not pennitted now; then the moral status of the same conduct is changed accordingly. For the ethical relativists, there is no such thing as ethical progress. For them, at some time, something is accepted by a society as good or right conduct and therefore it becomes a moral standard. This may change from time to time or from one culture to another, but this revision of moral principles may not be necessarily in the upward direction. Thus the idea of morality will not be better Ii ving. In this way moral relativists rejects the possibility of moral progress and the necessary improvement in moral standards through the process of revision. Morality then becomes a temporal phenomenon and moral standards possess only the contextual relevance. No civilization is then expected to travel towards better morality. We cannot claim that our present moral standards are much better and more enlightened than those of the previous generations of long past. Thirdly, the relativists can argue that there is no sense in criticizing the moral principles or practices accepted by a particular society. The people can be condemned for violation of moral

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standards set by a society. But those moral standards or moral codes cannot be questioned or criticized. Because those are taken as right by that society and they are really right for it. The society honestly presumes and believes in the moral worth of such codes. An attempt to reform these codes and to question about their validity ~nd sanctity may then be treated as a rebellion or immoral act. Departing from such moral code as they may be making injustice will them becomes immoral conduct on the contrary. Unless majority supports these reforms, those will be treated as harmful destruction of existing moral code, causing immorality to develop. Social reformists will then be looked as social culprits until majority agrees upon such reforms. This develops another logical fallacy that minority can never be right in moral maters, to be right it must become majority. Albert Carr has described a typical kind of relativism in respect of business ethics. In his influential essay, Is Business Bluffing Ethical published in Harvard Business Review (JanuaryFebruary 1968), Carr makes an argument that business has the impersonal character of a game. It is a game that demands both, special strategy and an understanding of its special ethical standards. Business has its own norms and rules which are different from the norms and rules of the rest of the society. Carr further points out that a number of things that we nonnally think as wrong are really pennissible in a business context. In support ofthis argument Carr gives the example of the game of Poker. He says that a Poker's own brand of ethics is different from the ethical ideas of civilized human relationships. The game calls for distrust of other fellow. It ignores the claim of friendship. Cunning deception and com;ealment of one's strength and intentions not kindness and openheartedness are vital in poker. No one thinks any the worse of poker on that account. And no one should think any the worse ofthe game of business because its standards of right and wrong differ from the prevailing traditions of morality in our society. This kind of relativism states that business has its own moral standards which are distinctive and independent from the moral standards of a common man. And the business actions should be evaluated on the basis of these special moral standards. However, such a notion may develop certain questionable business practices and may lead to lot of abuse and controversy. Is it suitable, realistic and reasonable to accept special moral status of business? Because business is an integral part of the society. Nobody can imagine of any business or business institution having an existence outside any society. For all its inputs and outputs the business depends upon the society. Business cannot be separate and independent of any society. And therefore how far is it appropriate to exempt business from ordinary moral standards? Even when we accept the special position of business higher than other aspects of life and recommend a special morality for the same, then also we are giving birth to a new logical fallacy. All special activities should then be governed by special morality. Thus every section ofthe society and every activity will demand for special moral standards. Thus bodyline will become cthical in cricket, cheating and deception will be pennissiblc in certain types of card games, using and publicizing personal information and private dialogues with celebrities even without their consent will not become morally objectionable injournalism, quitting, splitting and changing political parties at the time of election will be treated as political morality. In fact, looked from a different point of view every kind of activity and every aspect of human life is special. Once we accept and forward this view, the idea of universal ethical standards is to be abandoned. This provides that rightness or

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wrongness and goodness or badness of a conduct is simply a matter of arguments and interpretations and moral judgements are subjective, relative and situational. However, this is not a valid argument. Business decisions and actions have an influence on the society. William Shaw says that business is the economic basis of our society and we all have interest in the goals of business and in the rules business follows. Why should these be exempt from public evaluation and assessment? Shaw is absolutely right in pinpointing the position of business in the society. Productivity, consumer satisfaction, wealth maximization, employment generation and active participation in economic growth and progress of the country are some ofthe important business goals and the society, too, has a lot of concern for them as well as for the ways and means followed to accomplish them. William Shaw is sure that a business which permits, encourages or tolerates deception will be less efficient than one in which the participants have fuller knowledge of the goods and services being exchanged. Normative Ethical System: Ethical relativism raises seriolls doubts about normative ethics. It straightway denies the possibility of normative ethics. A normati ve ethical system is an ordered set of moral standards and rules of conduct by reference to which, with the addition of factual knowledge, one can determine in any situation of choice what a person ought or ought not to do. Paul Taylor giving such a comprehensive definition of normative ethics says that the purpose of normative ethics is to construct and defend a universal system of principles. The two important nonnative ethical systems are: (1) Utilitarianism and (2) Ethical formalism. Utilitarianism is propounded by Jeremy Bentham (1748-1832) and John Stuart Mill (1806-1873). Ethical formalism is propounded by German philosopher Immanuel Kant (1724-1804). Utilitarianism is a teleological ethical system and ethical formalism is a deontological ethical system. Nonnative ethical systems provide us sound moral principles to defend our moral judgements. However, the use of these principles is not a simple mechanical process. In fact moral principles provide us a conceptual framework as a guide for moral decision-making. They give us a direction to solve moral dilemmas. These moral principles are not themselves the solutions on the moral problems. They supply as reasonable criteria to trace, evaluate and assess the morality in our decisions and judgements. According to William Shaw careful thought and open-minded reflections are always necessary to work from one's moral principles to a considered moral judgement. Nornlative ethical theories propose principles for distinguishing right action from wrong action. We find that different theories exist proposing a variety of moral standards directing right and wrong actions. So it becomes rather difficult to decide as to which principle one should rely upon. A consensus among these different views about moral standards is very scarcely observed. In the opinion of Prof. Bernard \Villiams (Ethics and the Limits of Philosophy), we are heirs to a rich and complex ethical tradition in which a variety of different moral principles and :!thical considerations intertwine and sometimes compete. However, a study of these different moral principles is most essential to develop our insight into morality and moral maturity. Teleological Ethics: It is also know as consequentiality ethics. It starts with goals of an action. Teleologists assess an action by the extent to which it furthers these goals. Teleological ethics states that an action is right in so far as it has good consequences. Thus a right action is the one which has good consequences and a wrong action is the one which has bad consequences. Teleologists decide

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the rightness of an action solely by its results. According to William Shaw the teleologists detennine what is right by weighing the ratio of good to bad that an action is likely to produce. The right act is the one that produces, will probably produce or is intended to produce at least as great a ratio of good to evil as any other course of action. This may probably look logical and objective that focusing on the results of an action will help to decide its moral fitness. However, this perspective raises certain basic questions. Which consequences we should consider? Consequences to whom will become the criterion for evaluation of an action? Are the consequences related to self more considerable or those affecting others be given more weightage? When we talk about good and bad results, we, first, must precisely define what is meant by good or bad. In fact this is the primary objective of ethics. A. S. Dewings (Ethics) writes that ethics is concemed with deciding the general principles on which ethical tenns, i.e., good, bad, duty, etc. are to be applied to anything and second, with deciding precisely what these tenns mean. Socrates, the great philosopher has rightly said that the first and main function of ethics is to define ethical tenns. Because how can we be really virtuous without knowing the definitions of the virtues. From these questions emerge a more profound question that should we become selfish or selfless? And thereafter arises another fundamental question, that why one should sacrifice self-interest for others? Why we should not act to increase good consequences for ourselves? - The two important and well-known consequentialist theories are egoism and utilitarianism. Egoism: It advocates individual self-interest as its guiding principle. It states that an action is good if it produces results to maximise a person's self-interest. It associates morality with selfinterest. According to William Shaw egoism contends that an act is morally right if and only if it best promotes an agent's long-tenn interest. Here an agent can be a single person or a particular group or organisation. In the opinion of Paul Taylor ethical egoism states that a person's only duty is to promote his own good as much as possible. This follows that being moral never requires a sacrifice of one's own long-tenn interst - Egoists thus use long-tenn interest or advantage as a standard to judge the rightness of an action. If in the long run, an action will produce a greater ratio of good to evil; than any other altemative action, then such an action is right one to perfonn and such a conduct will be treated as moral. Paul Taylor has classified egoism as personal egoism, individual igoism and universal egoism. Personal egoism says that I ought to do what will most hlliher my self interest. Individual egoism statcs that cvery person ought to do what will most further his self interest. Universal egoism says that every person ought to do what will most fUlther his own interest. A Greek Philosopher of 4th centUlY B.C., Epicurus has described univcrsal egoism in a beautiful mamlCr. According to him the sole standard of right action is the avoidance of painful or unpleasant experiences to the agent. Egoism carries the elements of the philosophy of hedonism. Hedonism talks about pleasure as the important goal of life. It says that pleasure is the only good. As far as possible one should always act in a manner as to increase pleasure and reduce pain. Therefore egoistic hedonism states that we cannot be under an obligation to pursue anything but our own greatest happiness and our duties towards others are to be commanded solely as efficient means of attaining this happiness. This does not mean that egoism asserts that we should never help or assist others. It only argues that we have no basic moral duty to do so.

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Moral philosopher many times distinguish ethical egoism from psychological egoism. Paul Taylor describes psychological egoism as a factual theory about human motivation and behaviour. It offers an explanation of the way people act, of why they do, what they do. It says that everyone always and necessarily act selfishly. Every person acts so as to promote his own self-interest. The sole end of every act is the agent's own good. All acts are basically selfish even though some of them appear to be unselfish or selfless.. When someone makes sacrifice, it is also motivated by the intention of happiness. Through sacrifice, the joy or pleasure or happiness which one derives dictates the person to act unselfishly. Thus unselfish act has a motive of self-interest. Paul Taylor says that everyone always does, what he most wants to do or what he least dislikes doing. Concern for one's own welfare always outweighs in motivational strength, concern for anyone else's welfare. Each perso!1's actions can only be motivated by what he believes will promote his self-interest. William Shaw clarifies psychological egoism by explaining its basic assumptions. He says that human beings are so constructed that they must behave selfishly and psychological egoism asserts that all actions are selfishly motivated and therefore Indy unselfish actions are impossible. Obviously human beings do everything naturally and ought to do everything morally to preserve and perpetuate self-interest. It does not mean that we should not help others. But we are not morally obliged to do so. The only moral obligation we have is towards ourselves. If helping others is going to serve our self-interest, then we should do that, otherwise we need not have to do it. Criticism on egoism: Egoism as a moral theory faces several objections and strong criticism. Egoism directly and indirectly supports selfishness and selfishness cannot be regarded as a virtue in our life. Selfislmess has always been regarded as a vice and an immoral conduct. Paul Taylor comments that an ethical system must give an account of moral reasons for actions and that a moral reason for action cannot be merely a personal policy adopted by one individual as a guide to his own conduct alone. Egoism is a form of hedonism. Hedonism describes that pleasure is the only good. Egoistic hedonism thus states that we are not under obligation to pursue anything but our own greatest happiness. However, we must remember that our happiness is dependent very largely on our relations with other men. ll1ese people will be alienated if we are thoroughly unscrupulous and selfish. If, then we become lonely, how we can become happy. Moreover happiness, A. S. Dewing says, depends very largely on our minds also. Any vicious conduct has a strong tendency to destroy that internal peace. People who havc lost their peace of mind can't be happy. The guilt emerging from selfishness, fragments our peace of mind. When an argument is made to support selfishness as a device of good consequences, we make a mistake in prescribing the concept of good. 'Good' is not like a limited store of something which is not capable of increase. Goodness is unlimited. It is not like that something where if others have more, I must have inevitably less. A. S. Dewing observes that one of the chief source of happiness is the consciousness that we are performing a useful function in life and contributing to the welfare of others. We have unselfish desires also. Furthermore we observe a contradiction about egoism. If our only duty is to pursue our own greatest pleasure, why should we be rewarded for sacrificing our

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pleasure? But we find that selfless conduct is always honoured and appreciated in every society. To the individual also, selfless behaviour offers satisfaction and peace of mind. We are rendered unhappy by pangs of conscience if we do not sacrifice ourselves for the greater good of others. Psychological egoism, which states that everyone is motivated by self-interest is not a sound theory. We have found that many of our heroic acts are motivated by the concern and welfare of others, than by self-interest. When psychological egoism is weak in providing justification of our diverse conduct, automatically ethical egoism becomes less attractive. Because psychological egoism talks about the nature of human beings and ethical egoism on that basis describes the right and reasonable conduct. The former describes what human beings are and the latter tells what they, therefore ought to do. Now if the evidences of human conduct does not strongly and consistently substantiate the premise that by nature human beings are selfish, the argument that they should act to preserve and perpetuate self-interest automatically loses its validity. Many critics of egoism state that ethical egoism is not a moral theory at all. Ifwe accept egoism as a moral theory then we are misunderstanding the nature and point of morality. William Shaw explains that morality serves to restrain our purely self-interested desires so we can allli ve together. If our interest never comes into conflict, then we would have no need of morality. Actually we face exactly the opposite situation. Many times we find that it is advantageous for one person to deceive another to further his own self-interest and therefore we need moral standards and rules to prescribe what one ought to do or ought not to do irrespective of advantages. We observe that moral principles provide the necessary guidelines and directives for a peaceful and cooperative social existence. Morality helps to resolve the conflicts arising out of opposite self·interest by offering us shared principles ofjustification and egoism advocates exactly an opposite theory. Egoism suggests people to promote their self-interest as efficiently and effectively as possible. So in a society of egoists conflict will not only be inevitable but \videspread and rising also. Perhaps such a society will develop an attitude of maintaining double standards where people will publicly agree to cooperate with one another and privately will try most to nurture their scIf-interest. And the saddest part of this will be that nobody will feel bad about it and treat it as a wrong conduct. Moral theorists insist that moral principles should apply to the conduct of all persons equally. They should be applied with impartiality and objectivity. In the simplest words what is good for oneself should be good for others also. What can be described as the right conduct of the self: should be treated as the right action if performed by someone else. Moral principles must possess the universality and generality. On this ground also ethical egoism carry very little \Yeightage. While describing the nature of a morality \Villiam Shaw comments that moral agents are seen as those \vllo, despite their own invol vement in an issue, can be reasonably disinterested and objective, those who try ta see all sides of an issue without being committed to the interest of a pmticular individual or group including themselves. The conclusion we can draw is that moral standards are not set for the benefit of a selected few. A moral agent can detern1ine a particular conduct as moral simply because it is advantageous to him or to his group. Ifhe so decides, then he is not playing precisely and rightly the role of a moral agent. He has to develop and accept an attitude of detachment and impartiality to take a moral point of view and to test the morality of an action or to evaluate any moral principle for

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its validity. Egoism guides people to act for their own best interest. It suggests to further one's self-interest irrespective of issues and circumstances. An egoist therefore never affords to be objective and impartial. If anyhow sometime impartiality is going to serve and strengthen his self-interest, he would accept it as a policy and not as a principle. For him objectivity and impartiality will be the tools which he can conveniently use to protect and strengthen his self-interest and not as ends to which the moral standards are linked up for their evaluation. One of the serious objection against egoism is that it ignores the blatant wrongs. Egoism does not take a stand against outrageous acts like murder, theft and robbery, fraudulent practices, falsification etc. These acts are obviously and explicitly wrong doings. But egoism remains neutral until the test of self-interest is applied. As an ethical doctrine egoism has reduced everything to the standard of best long-term self-interest. Therefore a logical fallacy may prevail, that what seems to be a blatant wrong, can be a moral action to an egoist if that is serving his long-term self-interest. How can we accept fraudulent practices as moral behaviour even if they are preserving the self-interest of the agents, i.e., the maker of such actions. Utilitarianism: Utilitarianism as an ethical system is propounded by Jereme Bentham (1748-1832) and John Stuart Mill (1806-1873). Utilitarianism is based on the concept of utility. Utility means usefulness. Utility is described as the degree of preference for a particular commodity in relation to its price. Thus utility of a product helps us to measure the costs and benefits. It directs us to look to the net result to decide our preferences. When the idea of utility is applied to actions and conduct to decide their moral worth, the following rule is formed. An act is right when it is useful in bringing about a desirable or good end. An end, according to Paul Taylor is good, if it has an intrinsic value. Intrinsic value is described as the value something has as an end in itself and not as a means to further some end. Many times we have in our life certain experiences or conditions of life which we desire to have for their own sake. These have intrinsic value. Happiness, peace, fulfillment are the conditions of life having an intrinsic value. We always wish to have these experiences of life, forever, for their own sake. They are not the conditions which are instrumental or which we want to achieve something different. We want happiness to remain happy; or we desire peace to have a peaceful life. Such conditions are not the means, they are the ends in themselves. On the contrary a thing like success has an instrumental value. We want to be successful to become happy. We believe that success will bring happiness to our life. It is not an end but a mean and therefore it does not have any intrinsic value. The ends which have intrinsic value are thus the ends which are intrinsically good. According to William Shaw utilitarianism is the moral doctrine that we should always act to produce the greatest possible balance of good over bad for everyone affected by our action. Shaw says that according to utilitarians good means happiness or pleasure. Utilitarianism thus states that an act is right if it produces greatest good for greatest number of people. This principle will provide the necessary atlli adequate direction and guidance to set public policies and legislations. The decisions and actions which produce the greatest net benefit for the whole society, according to utilitarians should be preferred and should prevail. In other words, the greatest good for the greatest number should precede over the greatest good for a smaller and/or more elite members. Utilitarianisms, in one way makes a cost-benefit analysis. It suggests to evaluate the possible good and bad

Philosophical Foundation of Ethics -I

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consequences ofan action to decide the right kind ofan action. Aright kind of an action, thus, will be the one which offers, the most blessings over the greatest range, i.e., the maximwn'good for maximwn people. Jereme Bentham who is credited with developing the first systematic utilitarianism, focused on the institutions. Both Bentham and John Stuart Mill were the philosopher who were more interested in legal and social reforms. Both are credited for developing an explicit theory of utilitarianism. They used utilitarian standards to critically evaluate the political and social institutions of their time. Mill developed the utilitarian standards further to resolve the issues of personal conduct. He considered pleasure and pain as the important parameters of an action. He says that some kind of pleasures are more desirable and more valuable than others. What can be called as the right conduct is not simply the one which produces the agent's own happiness but which produces happiness for all concerned. An agent is and has to be the impartial, disinterested and benevolent spectator. We observe three types of utilitarianism. They are categorised according to the three views of the end to which morally right conduct is a mean. They are as follows: (1) Hedonistic Utilitarianism: It takes the view that pleasure has intrinsic goodness.

(2) Eudaimonistic Utilitarianism: This views happiness or well-being as intrinsic goodness. (3) Agathistic Utilitarianism: The advocate of this view GE. Moore describes it in the following words. Goodness cannot be defined in terms of either pleasure or happiness, but it is a unique and identifiable property of things.

Henry Sidgwick (1806-1873) further developed the utilitarianism developed by mill. He introduced three axioms of practical reason - prudence, benevolence and justice. These widely used three principles are as follows: (1) Care based thinking: This kind ofthinking suggests, that, do what you want others to do to

you. (2) Rule based thinking: It says that follow your highest sense of principles. (3) Ends based thinking: This axiom tells us to do what is best for the greatest. number of people. Sidgwick's principles are a familiar part of human thought. They grow out of everyday life experience. These three principles are different from one another and help us to resolve even the tough dilemmas. Bentham viewed community as similar to individuals and he felt that interests of the community are simply the sum of the interest (' f its members. So according ~o him, an action augments the happiness of a community only insofar as it increases the total amount of individual happiness. Thus Bentham argued that, according to utilitarianism actions are right if they promote the greatest human welfare - and wrong if they do not.

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Moral philosophers state that utilitarianism has two forms, such as act-utilitarianism and rule-utilitarianism. Act-utilitarianism is the basic version of utilitarianism. It says, that, we must find out what are the consequences of a particular act in order to know whether it is right or wrong. Under act-utilitarianism the principle of utility is applied directly to each alternative act in a situation of choice. The right act is the one which has greater utility than any other alternative act. Act-utilitarians suggest that we should ask ourselves what the consequences of a particular act in a particular situation will be for those people who will be affected by that act. If this action will bring more total good for people than any other alternative action, then, the action is right and should be performed. Rule-utilitarianism is another form of utilitarianism which states that an act is right if it conforms to a valid rule of conduct - and wrong if it violates such a rule. The validity of these rules of conduct will be determined by the principle of utility. Thus a rule that provides direction to procure the maximum good for maximum people or a rule which prevents people or abstains actions which produces pain, is a valid rule of conduct. Thus the rule should guide to produce happiness or avoid pain to become a valid rule of conduct. And an action confonning to such a valid rule of conduct is a right action and the action not confornling to such a rule is a wrong action according to rule-utilitarianism. There are Two Kinds of Rules:

(1) Positive Rules and (2) Negative Rules. A Positive Rule is a requirement. It specifies the properties of a type 0 faction which is required of everyone. A positive rule thus states that every person is required to do a certain kind of action in circumstances, where he can either do it or refrain from doing such an action. Now if the person does the action which is required to be performed by a positive rule, then, he is doing a morally right conduct. And if he does not make that performance or refrains himself from doing that action, then he has committed a moral wrong doing. Positive rules are usually in the form of assertive commands, e.g., keep your promises, be honest with others, always speak the truth, etc. A Negative Rule, on the other hand, is a kind of prohibition. A negative rule forbids everyone to do a certain kind of act. It requires that a person should refrain from a certain kind ofbehaviour when he has a choice of doing or not doing it. Negative rules are rejections or avoidance of certain kinds of behaviours which evelY person should make, e.g., you should not steal, you should not kill anybody, you should not lie, etc. Positive and negative rules describe the dos and don'ts of moral behaviour. They guide for execution and elimination of certain actions to make the conduct of a person morally fit. Acting according to a positive rule means, doing what is required to be done by the positive rule and acting according to a negative rule means refraining from doing what is prohibited by the negative rule. It is wrong to omit what is required by a positive rule and it is wrong to perfornl an act prohibited by negative rule. In this way rule-utilitarianism defines an action as right or wrong when it conforms to or violates a rule of conduct which is binding upon us. A question is immediately raised -which rules are binding on us. Rule-utilitarians reply that those rules arc binding on us; which when complied bring about more happiness or pleasure for everyone.

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Utilitarianism suffers from many confusions and misapplications. Those should be clarified first before its evaluation. When Bentham advocates maximum happiness for maximum numbers, we have to consider happiness and unhappiness as well. We have to measure the net result of alternative actions, i.e., how much pleasure and pain or happiness and unhappiness, each action produces and then select the one which produces maximum happiness and minimum unhappiness and thus has a greater positive net result than any other alternative action. If in a particular situation, all alternative actions are going to produce pain or unhappiness and we have to choose anyone action from these alternatives only, then we must choose that action which produces minimum pain or causes least unhappiness. In utilitarianism in order to select an action we do not expect each person to mention about his pain or pleasure, but we can consider the greatest net amount of happiness which an action brings for maximum people. Further utilitarianism wish to maximise not simply the immediate happiness but the long-tenn happiness also. Therefore, if a particular action has an immediate pleasure but in the long-term it results into pain, utilitarianism cannot favour or advocate such actions. Deceptions, frauds and manipulative actions may have an immediate benefits but in the long they produce severe undesirable consequences and therefore utilitarianism can never favour such actions. Utilitarians acknowledge that we often do not know with certainty about the future consequences of our actions and therefore we must so act that the expected happiness or the likely happiness is as great as possible. We should never risk to make such actions which are likely to produce undesirable consequences or unhappiness. Though it is difficult to determine the likely results of alternative actions and we cannot assign precise units of happiness and unhappiness, we have to follow the opinion of John Stuart Mill. Mill says that we really do have a lot of experience as to what typically makes people happy or unhappy. As a utilitarian, our duty is to maximize the total happiness. Utilitarianism does not disregard the pleasure and pain of the agent. In evaluating actions this should also be taken into account. However, utilitarians do not advocate an action simply because it brings pleasure or happiness to the maker of the action only. Utilitarianism considers maximum happiness for maximum people as the criterion for deciding the rightness of an action, and not the ma.ximum happiness for the agent only. Criticism on Utilitarianism: Critics of utilitarianism express the following views: (1) Utilitarianism is not really workable. A utilitarian tries to maximize the happiness by evaluating the likely results of an action. In actual practice we are uncertain about the likely results of alternative actions and it is very difficult to make such calculations. Further, comparing the happiness or unhappiness of different people is not only complicated but almost impossible. Even if we presume that such can be possibly made, then also it is unrealistic to expect people to spend lot of time to make such calculations accurately, prior to any action. Accurate application of utilitarianism is very difficult. (2) Some actions are wrong even if they produce good results. This criticism is basically on the teleological ethics itself. Teleological ethics focus on the consequences of an action to decide its moral worth. According to Plato, a great Greek philosopher, an action is wrong though its consequences are good. Utilitarianism, on the other hand, looks to the result of an action and not to the character of an action. To a utilitarian, no action is objcctionable in itself. An action

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Business Ethics becomes objectionable according to utilitarianism, only when it fails to produce happiness or it produces less happiness than other alternative courses of action. However, some actions are basically wrong and immoral though they can maximise happiness. Lying, cheating or breaking a promise, though produce maximum happiness for maximum people cannot be recommended as moral actions. Mass-copying may result in making many students successful in a tough examination, it is basically immoral and so should never be advocated. We must remember that the means along with the ends are equally important. Many times bad me