Business Ethics: A Philosophical Introduction [1 ed.] 3031379314, 9783031379314, 9783031379345, 9783031379321

Table of contents :
Preface
Contents
Editors and Contributors
About the Editors
Contributors
Chapter 1: What Is Business Ethics?
1.1 Two Cases
1.2 What Is Philosophy?
1.3 What Is Business Ethics?
References
Chapter 2: Morality: When Does it Come into Play?
2.1 Two Cases
2.2 Problems of Action, Judgments and Assessment Frameworks
2.3 A Formal Definition of Morality
2.3.1 Two Paradoxes
2.4 Moral Issues Arising from Violation of Rights
2.4.1 Moral Rights
2.5 Moral Issues Arise Through an Orientation Toward Good
2.5.1 Doing Good
2.5.2 What Is Good?
2.5.3 How Far Should You Go?
2.6 Moral Questions Arising from Breaking Through Boundaries in Thinking
2.6.1 Wrong Thinking?
2.6.2 The Problem with Shkreli’s Thinking
2.7 Moral Issues Arising from Character
2.7.1 Virtues
2.8 What We Now Know About Morality
References
Chapter 3: The Grounding of Ethics and Business Ethics
3.1 Three Cases
3.2 From Normative Ethics to the Grounding of Morality
3.3 What Is Reflection on the Grounding of Morality About?
3.4 Morality to Enable Us to Live Together
3.4.1 A Free Society
3.4.2 Self-Evident Truths
3.5 Morality in Relation to Being a Person
3.5.1 The Value of Being a Person
3.5.2 The Person as a Creation of the Self
3.5.3 Self-Discipline
3.6 Grounds for Morality 1: Free Will
3.6.1 The Compatibilist Response
3.6.2 The Affirmative Response
3.7 Ground for Morality 2: The Specter of Relativism
3.7.1 Types of Relativists
3.7.2 Discretion
3.8 From Grounding to Normative Moral Reflection
References
Chapter 4: Moral Reasons
4.1 Moral Problems
4.1.1 Motivations and Reasons
4.1.2 Motivational Problems and Substantive Problems
4.1.3 Three Types of Moral Reasons
4.2 Consequences
4.2.1 Economic Value and Economic Harm
4.2.2 Non-economic Value
4.2.3 Equality and Inequality
4.3 Moral Principles
4.3.1 Human Rights
4.3.2 Respect
4.3.3 What If Everyone Did That?
4.4 Moral Virtues
References
Chapter 5: Corporate Responsibility and the Morality of the Market
5.1 Three Cases
5.2 Responsibility for Market Parties
5.2.1 Responsibility
5.3 Questions Regarding Responsibility
5.3.1 Limits to Market Participant Responsibility
5.4 Responsibility of Market Participants Under Discussion
5.4.1 Two Frequently Heard Arguments
5.5 Market Morality as a Specific Kind of Morality
5.5.1 Minimal Market Morality
5.6 Discussions on the Substance of Market Morality
5.6.1 Limits to the Business Mindset
References
Chapter 6: Different Views on the Social Responsibility of Corporations
6.1 Two Cases
6.2 What Is CSR?
6.3 The Homann-Friedman Doctrine on CSR
6.3.1 Democracy and the Division of Labor
6.3.2 Baumol: Political Duty Is Part of Minimum Morality
6.4 The CSR Doctrine
6.4.1 Limits to Differentiation
6.4.2 Working Rule of Law
6.4.3 Industrial Complexes
6.4.4 Neo-liberal Ideology
6.4.5 CSR and Democracy
6.5 Criteria for CSR and Their Application
6.6 Operational Ways of Looking at CSR
6.6.1 The Shareholder Theory
6.6.2 The Stakeholder Theory
6.6.2.1 The Weighing of Stakeholders
6.6.2.2 Pragmatic or Prudent Motivations
6.6.3 The Corporate Citizen Approach
6.6.3.1 Loopholes in the Law
6.6.3.2 Rights That Are Difficult to Protect by Law
6.6.3.3 Operating in Countries with Weak Governments
6.6.4 The Market Failure Approach
6.7 Conclusion
References
Chapter 7: “And What Do You Think, as a Professional?”: On Personal and Professional Responsibility in Business
7.1 Introduction
7.2 What Does it Mean to Be a Professional in a Company?
7.2.1 Profession and Business: Goal-Oriented, But Towards Which Goal?
7.2.2 What Is a Professional?
7.3 Professional and Personal Responsibility
7.4 Professional and Personal Responsibility in a Corporate Context
7.4.1 Free Space for Debate and Dialogue
7.4.2 Whistleblowers
7.4.3 The Problem of Many Hands
7.5 Conclusion: All Hands on Deck?
References
Chapter 8: Justice at Work
8.1 Inequality and Companies
8.2 Dividing Jobs2
8.2.1 Choosing Between the Three Principles
8.3 Determining Salaries
8.4 Conclusion
References
Chapter 9: Discrimination, Diversity and Inclusion
9.1 Two cases1
9.2 Discrimination
9.3 Diversity and Inclusion
9.4 Socio-historical Context
9.4.1 Feminism
9.4.2 Class Struggle and Socio-economic Inequality
9.4.3 The Civil Rights Movement and (De)colonization
9.5 Conclusion
References
Chapter 10: Privacy and Surveillance
10.1 Introduction
10.2 Consent and Asymmetry
10.3 Privacy
10.4 A Revenue Model Based on Attention
10.5 Surveillance Capitalism
10.6 Conclusion
References
Chapter 11: Sustainability and Environment
11.1 Introduction
11.2 What Is Sustainability?
11.2.1 The Three Legged Stool Model
11.3 A Critical Evaluation of the Common Interpretation
11.3.1 Sustainability and Justice
11.4 Questions Concerning Compensation for Damages
11.4.1 Strong and Weak Sustainability
11.5 The Precautionary Principle
11.6 Intergenerational Justice
11.7 Conclusion
References
Chapter 12: Corporate Responsibility for Human Rights
12.1 Introduction
12.2 Human Rights
12.3 A Business Ethics Framework– Complicity
12.4 Influence and Positive Duty
12.4.1 A Morally Meaningful Relationship
12.4.2 The Ability to Make a Difference
12.4.3 Low Costs
12.4.4 Significant Threat
12.5 Conclusion
References
Chapter 13: Advertising Ethics
13.1 Introduction
13.2 The Ethics of Advertising
13.2.1 Manipulation
13.3 Cognitive Manipulation in Advertising
13.3.1 Follow-up Case 13.1: Misleading Environmental Claim by Travel Company TUI
13.4 Affective Manipulation in Advertising
13.4.1 How Advertisers Create Desires
13.4.2 Stereotyping and Respect for the Person
13.5 Social Media Advertising
13.5.1 Uncertainty About Whether Something Involves Advertising
13.5.2 Ethical Aspects of Online Behavioral Advertising
13.6 Advertising, Health and the Limits to Growth
13.6.1 Advertising and the Limits to Growth
13.7 Conclusion
References
Chapter 14: Tax Avoidance as a Moral Issue
14.1 Two Cases
14.2 Tax Avoidance as a Moral Issue
14.3 Why Do We Pay Taxes and What Do We Pay Taxes On?
14.4 Tax Avoidance
14.5 Tax Avoidance Goes with a Global Networking Society
14.6 Tax Avoidance: Ethical Contra Arguments
14.7 Government, Businesses and Tax Industry Change
References
Chapter 15: Meaningful Work
15.1 Job Creation
15.2 Dignified Work
15.3 Autonomy and Democracy at Work
15.4 Conclusion
References
Chapter 16: Animal Business, a Blind Spot of Companies
16.1 Philosophical Foundation
16.1.1 Consequences
16.1.2 Principles
16.1.3 Virtues
16.2 Impact and Context
16.3 Biological Arguments
16.4 Interests of Animals
16.4.1 Animal Welfare
16.4.2 Right to Continue Living
16.4.3 Freedom and Captivity
16.5 Animals and CSR
16.5.1 Animal Rights, Animals as Stakeholders, and Externalities for Animals
16.5.2 Animals as Workers
16.5.3 Five Freedoms
16.5.4 Fourteen Requirements
16.6 Concrete Issues for Different Sectors
16.6.1 Livestock Industry
16.6.2 Fur, Leather, and Wool Industry
16.6.3 Fishing
16.6.4 Insect Culture
16.6.5 Entertainment Industry
16.6.6 Animal Experiments
16.6.7 Indirect Impact on Animals
References
Glossary

Citation preview

Wim Dubbink Willem van der Deijl   Editors

Business Ethics A Philosophical Introduction

Business Ethics

Wim Dubbink  •  Willem van der Deijl Editors

Business Ethics A Philosophical Introduction

Editors Wim Dubbink Department of Philosophy Tilburg University Tilburg, The Netherlands

Willem van der Deijl Department of Philosophy Tilburg University Tilburg, The Netherlands

ISBN 978-3-031-37931-4    ISBN 978-3-031-37932-1 (eBook) https://doi.org/10.1007/978-3-031-37932-1 Translation from the Dutch language edition: “Ethisch zakendoen” by Wim Dubbink and Willem van der Deijl, © The authors & Uitgeverij Lannoo nv, Tielt 2022. Published by LannooCampus. All Rights Reserved. © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface

Business Ethics: A Philosophical Introduction is not the first or the only textbook in business ethics. Yet it offers a unique introduction to the subject. Where other books gloss over the matter of what ethics is all about in a single paragraph, we devote a full chapter to exploring the essence of morality itself (Chap. 2). What experiences and practices does this term actually cover? We firmly believe that this provides a welcome and instructive focus for students: without it, the many misunderstandings in this area can all too easily prevail and put students at risk of giving up. This book is also exceptional in addressing the question of what morality actually is in terms of the modern experience: how morality can and should be understood in the context of a differentiated society. Another special feature is the considerable attention we pay to fundamental aspects (Chap. 3): the meaning of morality and its ground. It is essential to address these aspects given that the modern experience of morality is inevitably bound up with doubt and skepticism about these very issues. Many introductions to business ethics tend to skirt around these problems or bamboozle students with claims that “moral action is profitable.” Yet these are key issues to which students expect real answers, and any introduction to the field needs to deal with them in order to draw students into the subject matter. Our book takes a distinctive approach in dispensing with the customary distinction between consequentialism, Kantian ethics, and virtue ethics. Virtually all introductions and textbooks in applied ethics operate on the basis of this distinction, especially in relation to normative ethics and decision-making. In our view, this distinction is systematically unsustainable. After all, Kant had his own virtue ethics, and his normative ethics also gave due consideration to consequences. This distinction also implies an odd kind of relativism. It suggests that people can only make judgments once they have opted for one of these three theories, leaving everyone to make that fundamental choice for themselves as best they can. Instead of this hackneyed and rather naive distinction, in Chap. 4 we work with the “sources of reasons” that people need to consider when making all their decisions: consequences, principles, and virtues.

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Preface

Another special feature is the way in which we present and handle cases, especially in the first, theoretical section of the book. Every step of the way, we seek to illustrate or explain abstract issues by means of relevant case studies. In Part I, however, most of these cases are fictional or fictionalized. The advantage of this approach is that it removes any inclination to dispute the facts of the case and redoubles the intended focus on the case as a practical illustration of a theoretical issue. We follow up the in-depth exploration of the core theoretical chapters with ten thematic chapters that highlight contemporary issues within business ethics. Many of the themes from Part I resurface in these chapters, but contextualized within a range of contemporary themes, from sustainability to discrimination. For each of these chapters, the editors invited a contemporary expert to shine their light on the theme in question. There is one last special feature that should not go unmentioned. This work was written by Dutch and Flemish authors who drew from their own experience when selecting the cases. To enhance the book’s relevance in a global context, a number of international experts were asked to evaluate the book from their own German, Italian, Spanish, and American contexts. While they readily appreciated the relevance of the material, it could be said that the content has a European feel, which was highly appreciated. This book is based on years of teaching at Tilburg University, in addition to other institutions such as AOG School of Management and Wagner & Company. We have done our utmost to incorporate issues and questions that came up during discussions in the lecture hall or classroom. With this in mind, we offer a word of thanks to all of the students who contributed their views, ideas and opinions. They gave us the inspiration to write this book in its present form. In addition, the editors would like to thank all of the co-authors for their dedication and their willingness to incorporate our comments: Jelle, Huub, Yvette, Ronald, Thomas, Roos, Monique, Jos, and Bert. And of course our thanks go to Chris Wilby, our Springer publisher, for his support. Wim Dubbink would like to thank Taalcentrum-VU in Amsterdam for translating his chapters. Tilburg, The Netherlands  Wim Dubbink May   2023 Willem van der Deijl

Contents

1

 What Is Business Ethics?������������������������������������������������������������������������    1 Wim Dubbink

2

 Morality: When Does it Come into Play?����������������������������������������������    9 Wim Dubbink

3

 The Grounding of Ethics and Business Ethics��������������������������������������   39 Wim Dubbink

4

Moral Reasons������������������������������������������������������������������������������������������   67 Willem van der Deijl

5

 Corporate Responsibility and the Morality of the Market������������������   87 Wim Dubbink and Willem van der Deijl

6

 Different Views on the Social Responsibility of Corporations ������������  111 Willem van der Deijl and Wim Dubbink

7

“And What Do You Think, as a Professional?”: On Personal and Professional Responsibility in Business��������������������  135 Jos Kole

8

Justice at Work����������������������������������������������������������������������������������������  147 Huub Brouwer and Alexander Andersson

9

 Discrimination, Diversity and Inclusion������������������������������������������������  159 Yvette Drissen

10 Privacy and Surveillance ������������������������������������������������������������������������  177 Roos Slegers 11 Sustainability and Environment ������������������������������������������������������������  187 Thomas Decreus 12 Corporate  Responsibility for Human Rights����������������������������������������  197 Bert van de Ven vii

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Contents

13 Advertising Ethics������������������������������������������������������������������������������������  207 Ronald Jeurissen 14 Tax  Avoidance as a Moral Issue��������������������������������������������������������������  223 Jelle van Baardewijk 15 Meaningful Work ������������������������������������������������������������������������������������  235 Willem van der Deijl 16 Animal  Business, a Blind Spot of Companies����������������������������������������  245 Monique Janssens Glossary������������������������������������������������������������������������������������������������������������  261

Editors and Contributors

About the Editors Wim  Dubbink  is professor of Ethics of Business and Organization at Tilburg University. He studied history, philosophy and management. He is currently editorin-chief of the Journal of Ethics. Willem  van der Deijl  is assistant professor of (business) ethics at Tilburg University. He studied economics and philosophy and worked as a researcher at the Canadian Centre de Recherche en Ethique before coming to Tilburg University.

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Editors and Contributors

Contributors Alexander Andersson  University of Gothenburg, Gothenburg, Sweden Jelle van Baardewijk  Kenniscentrum Business Innovation, Rotterdam University of Applied Sciences, Rotterdam, The Netherlands Vrije Universiteit Amsterdam, Amsterdam, The Netherlands Huub  Brouwer  Department of Philosphy, Tilburg University, Tilburg, The Netherlands Bert  van de Ven  Department of Philosophy, Tilburg University, Tilburg, The Netherlands Thomas  Decreus  Department of Philosophy, Tilburg University, Tilburg, The Netherlands Willem van der Deijl  Department of Philosophy, Tilburg University, Tilburg, The Netherlands Yvette  Drissen  Department of Philosophy, Tilburg University, Tilburg, The Netherlands Wim  Dubbink  Department of Philosophy, Tilburg University, Tilburg, The Netherlands Monique  Janssens  Ethisch Bedrijf (Ethical Company), Rotterdam, The Netherlands Ronald Jeurissen  Nyenrode Business Universiteit, Breukelen, The Netherlands Jos Kole  IQ Healthcare-Ethics of Healthcare, Radboud University Medical Center, Nijmegen, The Netherlands Roos  Slegers  Department of Philosophy, Tilburg University, Tilburg, The Netherlands

Chapter 1

What Is Business Ethics? Wim Dubbink

Abstract  This chapter introduces business ethics as a subdiscipline of ethics. Ethics concerns human (inter)action insofar as it relates to what is desirable or required. Business ethics is the subdiscipline that deals with all issues of business that are directly or indirectly related to human actions, interactions or the consequences thereof. The chapter explains what business ethics is about by contextualizing it within the discipline philosophy. The latter is defined as thinking about thinking. Questions 1. What is philosophy? 2. What is business ethics? 3. How can philosophy be put into practice?

1.1 Two Cases Case 1.1 A company that sells over-the-counter medicines is being publicly criticized for the lack of female sales reps and managers in its ranks. In response, the company decides to actively recruit more women for all positions. This strategy is commonly referred to as affirmative action. An additional reason behind this decision is that many of the company’s customers are women. On the basis of empirical research proponents of affirmative action were able to (continued) W. Dubbink (*) Department of Philosophy, Tilburg University, Tilburg, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_1

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Case 1.1 (continued) convince management that female consumers are more likely to purchase a product and take advice from other women. John attempts to secure a traineeship with the company and does well in the company’s assessments. Two other candidates, Anne and Hannah, also do well in these tests. They are offered a traineeship, while John misses out. John is angry and vents his frustration in the media. This is the third time he has not been selected for a traineeship despite performing well in the assessments. He points out that the company recently adjusted its assessment criteria and insists that he would have scored better than Anne and Hannah based on the previous criteria. He finds an ally in a journalist who is writing an article on affirmative action. The journalist raises the question of whether affirmative action of any kind is outrageous and immoral: after all, it means that under the guise of “countering discrimination” young men are now being treated differently.

Case 1.2 Janet runs a successful engineering firm that supplies the auto industry with high tech parts. She has built the business herself but it looks like there are dark times ahead. Janet is seriously ill. She is in a great deal of pain and discomfort, and has very little energy to devote to work. She figures it would be better to hand the business over to her daughter Emma in a correct and orderly manner. She makes an appointment with a notary to make the necessary arrangements. He knows of cases where owners of SME’s have been pressurized by their own children into handing over control of their business and tells Janet, “I want to be sure you’re making this decision voluntarily.” “Yes, I am doing this voluntarily,” Janet assures him. “I am not being forced into it.” Janet’s husband Herman, who is present at the meeting, says nothing but thinks to himself: “How can they speak of this as a voluntary action? Janet is being forced to do this because she is in so much pain. There’s nothing voluntary about it, if you ask me.”

1.2 What Is Philosophy? This book is a philosophical introduction to business ethics. Business ethics is part of the wider field of ethics, which in turn is part of philosophy. Philosophy is a special academic discipline. The object of inquiry for philosophers is not something concrete. Philosophy examines how people reason and think (about the economy, the market, the world, themselves and what it is to be human). It also explores what we can learn from these aspects of our lives. Philosophy, then, means thinking about the human capacity to think and how that capacity determines our existence and our

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view of things. It is thinking about thinking, or reflecting on the ability to reflect. To the extent that thinking about thinking is concerned only with the structure of thinking itself, philosophy is a purely formal discipline. Logic is a good example of this. To the extent that this thinking goes beyond the structure of thinking itself (e.g. to take in the market, society, human existence), philosophy is not purely formal. Human beings are often described as rational or thinking animals. Given the fact that people tend to make structural errors in their thinking, philosophy is a vital academic discipline. For example, people often make unconscious assumptions. Without being aware of it, they take certain ideas for granted and let them influence their thinking to a large degree. Philosophy explores these assumptions, makes them explicit, and calls them into question. In doing so, it supports people in their thinking, for example by clarifying concepts or by making useful distinctions. For instance, this means that philosophers can help us get a grip on Case 1.1. In the current moral and political climate cases like these are highly controversial. It tends to prompt strong emotional responses, and some people, like the journalist of our example, seem less interested in the case as a moral problem, but instead see escalating the case as an opportunity to further their commercial and/or political goals. By clarifying the terms that people use, philosophers may be able to reduce polarization. For example, they can examine the concept of discrimination and ask what it can and should mean. By requiring an explanation of why discrimination is actually problematic, a philosopher can point out that making a distinction is not necessarily the same as discrimination, and that not every type of distinction is necessarily problematic. Philosophers can also point out that the principle of “equal treatment” does not necessarily mean that every group should benefit or suffer equally from every policy change or be equally exempt from these benefits or disadvantages. Which is not to say that, in this particular case, philosophers are necessarily for or against John. In real-life situations, affirmative action is sometimes justifiable and at other times it is indeed unfair because it discriminates (Dworkin, 1977). Some philosophers believe that their task is limited to this kind of conceptual clarification (a task that is already quite far-reaching in scope). However, most philosophers take a broader view of their role. They also play a part in identifying the conditions under which affirmative action is and is not justifiable, by weighing arguments for and against in terms of consistency, relevance, etc. They also help weigh the use of arguments in specific cases. A closer look at the description of Case 1.1 reveals something odd. The company claims that it wants to make a difference through affirmative action. But it also justifies the specific changes in its hiring policy from a business perspective. When thinking about affirmative action, the company realized that there were some very good business reasons for a change of policy. This leads us to ask whether the way John and the journalist have framed the case is actually correct. Both suggest that John’s missing out on a traineeship was due to affirmative action. But closer consideration of the case reveals that the attention paid to affirmative action actually provided a reason to reflect on business policy and implement a profit-driven optimization of the business process. Seen in this light, John has no case at all,

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unless he wants to claim that companies have to take more than their own business considerations into account when setting out their policy on hiring. But if he were to make that claim, John himself would be arguing in favor of affirmative action. Human thinking – especially when it engages in ethics – often runs into paradoxes. In everyday life, we use the term paradox to refer to an apparent contradiction: two statements which, at first glance, seem to contradict each other but which can both be true when viewed from a certain perspective. “Slow down to speed up” is one example. We know that both statements are true or describe existing aspects of reality, but we have difficulty understanding how this is possible (Ricoeur, 2013). When philosophers use the word paradox, several principles that are all operative – or must be considered operative – may interfere with each other in a curious way, at least where consequences for action are concerned. Sound ethical reflection means first identifying and understanding the many paradoxes and then determining how to strike the right balance in a specific case, given that a balance must be found. In other words, a moral paradox is never a reason to be dismissive of morality or a justification for allowing morality to be ignored. Morality is full of paradoxes and philosophy can contribute to understanding reality in such a way that we can identify and resolve them. When it comes to philosophical paradoxes, the question should never be “can the paradox be resolved?” but “how can we resolve the paradox, given that we must!” In Case 1.2, Janet’s husband Herman encounters a paradox in his thinking. Facing up to this paradox involves identifying and understanding its nature. One way to get to grips with the paradox in Case 1.2 is to distinguish between an unfree action and an involuntary action. Unfree is the opposite of free. It means that factors in a person’s social environment puts them in a position in which they can claim to no longer have freedom of choice. Involuntary is the opposite of voluntary. It means that a person no longer possesses free will. Where unfree has to do with coercion that comes from outside (external), involuntary has to do with coercion from within (internal). A good example of being unfree is being held at gunpoint. Having lost all control over your own life due to addiction is often given as a typical example of an involuntary situation. By making a distinction between an unfree act and involuntary act, philosophers can offer clarification in Case 1.2. It is logical that the notary would want Janet to make her decision freely: her children should not be allowed to force her into it. But it doesn’t help that – like many people – he actually uses the wrong word to express what he means. Herman is unable to recognize this paradox for what it is. Because the notary talks about Janet’s situation in terms of “voluntariness”, Herman objects on the grounds that Janet is being put under pressure, albeit pressure from within. Using the above distinction, however, we can say that – strictly speaking – the case has nothing to do with voluntariness. The notary simply wants to know if any outside pressure is being brought to bear, most specifically by Janet’s immediate social circle. It is good to be aware that philosophers frequently differ in their assessments. For example, two philosophers might have a different view on whether affirmative action is justifiable in a given context. Differences like these are part and parcel of

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philosophy. At the same time, it is important to emphasize that this does not make philosophy relativistic. In other words, it does not mean that everyone’s opinion is equally valid and that philosophical truths are only true for those who agree with them. On the contrary, most philosophers will emphasize that not all philosophical judgments are equally valid. Everyone is entitled to their opinion, but when it comes to arguments, views and judgments, some are good and others are bad. In this respect, there is little difference between philosophy and other academic disciplines such as economics, psychology and history. Just as in these fields, the similarities between philosophers far outweigh the differences. For example, in Case 1.1, most philosophers will agree that affirmative action is sometimes justifiable. At the same time, a peculiarity of morality is that in some issues (especially judgments about concrete cases) personal judgment is also seen as being of value. The value placed on personal judgment is not factual but represents an important moral principle in its own right (one on which there is broad agreement). In Case 1.1, for instance, people’s views may differ – and rightly so – as to the correct interpretation of the specific circumstances of the case. As a consequence of the value that all people attach to personal judgment, there is a tendency for judgments to vary a little more in morality, in comparison to say judgments in physics. Sometimes differences are a little more technical and more subject-specific in nature. In Case 1.2, for instance, there may be disagreement among philosophers, particularly about the relationship between freedom and voluntariness. Some philosophers will say that although Janet is making a free choice, it is one in which she has to choose between two evils. They will therefore be inclined to acknowledge that the involuntary nature of Janet’s decision does affect her freedom to some extent, albeit indirectly. In this light, they will want to refine the distinction made above or the way in which it is applied to this particular case. One argument for doing so is that while the pain Janet feels is an internal factor, from her perspective it also represents an external factor: people in great pain have a tendency to conceptualize the physical sensation of pain as something that is external to them, even though the source of the pain is within their own body. However, other philosophers will argue that freedom and voluntariness are two radically separate things and so freedom is not at stake at all. In fact, these philosophers will go further still and point out yet another paradox. They will say that the relationship between coercion and free action is very different from the relationship between coercion and voluntary action. Severe external coercion impairs freedom: someone being held at gunpoint is not in a position to act freely. Yet it is precisely in situations where human beings experience internal coercion that the idea of human beings having free will, a central tenet in so many cultures, becomes apparent: indeed, it requires this kind of coercion in order to become apparent at all. The addict who says “no” to their addiction can be regarded as the ultimate example of a person who acts voluntarily. So these philosophers will say that Janet’s action was completely free, simply because there was no external pressure. Perhaps surprisingly, they would also suggest that there is no reason why Janet’s act should not also be seen as voluntary. The stark reality of circumstances like these enable human beings to understand with

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greater clarity that they are creatures with free will. Janet has overcome the internal pressures of pain, illness, discomfort and is still insisting on arranging the transfer of her business in an orderly fashion. Freedom and voluntariness are crucial concepts for business ethics and will therefore feature throughout this book. The special position of personal judgment in philosophy makes it even more important that philosophers engage in dialogue with people in other walks of life. The philosopher Kant [1724–1804] (1798: 128) uses the term “logical egoism” to refer to a situation in which someone thinks they can rely entirely on their own power of reasoning in forming their opinions. In light of the limitations that all human beings have, he saw the conviction that you can rely solely on your own thinking as a crucial vice. As already mentioned, philosophy can be seen as the discipline that reflects on the human capacity to think. There is an important distinction to be made between theoretical philosophy and practical philosophy. Theoretical philosophy addresses all questions related to knowledge and science, and that includes asking what knowledge and science actually are. When can we say that something is “a fact”? What is good science? What things “really exist” and what does “really exist” actually mean? Questions like these are characteristic of theoretical philosophy. Practical philosophy considers all questions that relate to human action, at least what constitutes desirable action or what people should do. Questions typical of practical philosophy include: Is democracy a good form of government? Is the free market a just economic order? Should organizations take account of the fact that only women can have children when drawing up their career policies? Practical philosophy has several components, such as political philosophy (or political ethics) and ethics. Crudely put, political philosophy focuses on questions that concern the ordering of society (at the macro level). The type of questions a political philosopher might ask include: Is democracy the right system of government? Is it right to set up an economy as a market economy? Does a market system necessarily have to be a capitalist system? and Should the government make corporate social responsibility (CSR) mandatory? Individual human action plays an important role in the domain of political philosophy, of course, but this is mostly indirect: political philosophy asks questions about the context in which people have to act. As a result, the focus in political philosophy is on institutions. In ethics, there is a direct focus on individual human action: ethics focuses on issues of how one should behave. Because people in modern society mostly act within organizations and people acting individually can also influence institutions, institutional issues play an important role in ethics, but more from the point of view of how an actor should operate within them. The macro context is taken as a given in ethics. An example of a micro question might be whether a company should stop polluting if its competitors refuse to do so and the company may suffer a competitive disadvantage as a result. Moral dilemmas also tend to belong to the micro context. This book focuses on the individual person acting in the marketplace. In other words, the emphasis is on ethics.

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Another word for ethics is morality. Sometimes people use the word “ethics” to refer to the discipline and the word “morality” when looking at how people act in real-life situations. We will also take this approach but it should be noted that others sometimes apply this distinction differently. That said, it is a distinction that is not crucial to this book.

1.3 What Is Business Ethics? Ethics has several sub-disciplines, one of which is business ethics. Business ethics can be described as the discipline that deals with all issues of business that are directly or indirectly related to human actions, interactions or the consequences thereof. In German, a distinction is made between market ethics and business ethics. Market ethics can be seen as the counterpart of political philosophy and business ethics as the counterpart of ethics. We apply this useful distinction in this book. The particular focus of this business ethics book is on issues that consider people and organizations in their capacity as acting (and responsible) beings. Using the German distinction, the book focuses on business ethics proper. An important reason for this choice is that it reminds us that individual people and individual companies cannot and, more to the point, should not determine how society is structured and what laws are made: their primary concern should be to determine how they themselves act. At the same time, fundamental issues of business ethics are often linked to issues of market ethics. In a great many cases, for example, it is impossible to arrive at an adequate assessment of an issue without considering the role of government. In the context of a book on business ethics, therefore, it is essential to make some forays into market ethics or at least to observe the role of government in a market society. We will discuss these issues at greater length in Chap. 5. Within business ethics, it is possible to make a useful distinction between normative business ethics and fundamental business ethics. Normative business ethics is concerned with concrete moral questions: When does advertising become deception? Why is deception wrong? and Are the salaries and bonuses paid to the CEOs of certain leading companies morally justifiable? Fundamental business ethics interrogates the meaning of and grounds for morality in business life. What is the purpose of morality? What makes it useful or meaningful? Is morality an illusion (e.g. because it is human nature to act selfishly or because we are animals whose nature is predetermined) or does it really have grounds or a solid foundation? When examining the fundamentals, it is also essential to address a variety of skeptical questions and critiques of morality, such as the notion that moral judgments are ultimately built on quicksand because all moral judgments are subjective and therefore relative. Another central skeptical question is whether ethics even have a place in the market. After all, isn’t the market an amoral sphere?

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It is also worth noting that some people have defined a third category of business ethics: descriptive business ethics. Descriptive business ethics maps out how people think about moral issues and how ethical principles are expressed within companies. Its main concern is to provide an overview of existing positions. For this reason, we prefer to classify descriptive business ethics as an aspect of sociology. This book is primarily concerned with normative questions. At the same time, it also makes room for fundamental aspects. We believe this to be important in light of the many questions and doubts that people today have about moral principles. Many people do not fully grasp the point or the significance of morality. This finds expression in questions such as Aren’t all moral positions relative? Are people actually moral beings? and Who gets to decide all this stuff anyway? Most of these questions address the fundamental aspects of morality. Yet at the same time, they are relevant to normative business ethics: doubts and questions at the fundamental level seep through into normative business ethics, as it were. The above questions also wrongly come to the fore in discussions on business ethics and make it more difficult for people to understand normative reflection and take it seriously. In the current context, normative business ethics is therefore only possible if people know which questions are appropriate to which level of analysis and can identify the implications of and conditions for engaging in normative discussion. We will tackle these issues in Chap. 3. In other chapters, such as Chap. 2, fundamental matters are also sure to feature. The remaining chapters focus on normative issues. In Chaps. 2, 4, 5, and 6, we will discuss the background to and basic ideas that make up normative business ethics. In Chaps. 7, 8, 9, 10, 11, 12, 13, 14, 15, and 16, we will engage in a detailed discussion of themes that are relevant to contemporary business practices.

References Dworkin, R. (1977, November 24). Why Bakke has no case. The New York Review, pp. 11–15. https://www.nybooks.com/articles/1977/11/10/why-­bakke-­has-­no-­case/ Kant, I. (1798/1917). Anthropologie in pragmatischer Hinsicht. In Kant’s gesammelte Schriften. Band 7 (pp. 117–334). W. De Gruyter. Ricoeur, P. (2013). Hermeneutics. Polity Press.

Chapter 2

Morality: When Does it Come into Play? Wim Dubbink

Abstract  What is morality about? This chapter explores morality by distinguishing between its formal object and its material object. Formally speaking morality concerns (the evaluation of) human (inter)action insofar as it is desired or required. It is distinguished from other normative evaluations by its focus on things that are fundamentally desirable or required. In terms of contents or its material object four contexts are described in which moral issues arise: (i) when fundamental (human) rights come into play; (ii) when question about the good life arise; (iii) when our thinking goes astray; (iv) when our virtuousness and the development of our character can grow or be affected by our actions. Questions 1. How can morality be formally interpreted (as opposed to judging actions from a legal or economic perspective)? 2. How does the meaning of morality as “fundamental discourse” relate to the proposition that modern society is a differentiated society? 3. In which contexts do substantive moral questions arise? 4. How does morality make itself known in these contexts?

2.1 Two Cases Many people have some idea about the meaning of terms such as “moral”, “morality” and “the moral thing to do”. But they also find it difficult to pinpoint the kind of experiences and actions to which these terms might refer. In this chapter, we will explore the concept of morality. In doing so, we will interpret the concept of

W. Dubbink (*) Department of Philosophy, Tilburg University, Tilburg, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_2

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morality in two ways: by looking at the formal meaning of a moral statement and by determining the practical contexts in which moral questions arise. This chapter features seven cases, the first two of which are presented below. These cases are designed to illustrate the main contexts in which moral issues arise.

Case 2.1 Noah works as a sales rep for Compu-Sol, a company that makes computers and computer networks. His territory is home to a number of strict religious communities. Noah has been in his job for a while when the company hears of a rumor circulating in those communities that he is gay. Several Compu-Sol customers contact Noah’s manager Karin and urge her, in veiled terms, to have Noah replaced. Karin believes that the customers’ demands are unreasonable and inappropriate, but she also realizes that she may lose their custom. She thinks the easiest solution is to have Noah switch territories with a colleague. This angers Noah and he refuses to cooperate with this so-called solution. In his view, the demand made by the religious communities is unacceptable, pointing out to Karin that it has also been made on the sly. Karin wonders if she can still get Noah to switch territories, possibly by applying gentle pressure. She even considers offering him a larger territory, which would come with the prospect of a salary increase.

Case 2.2 Walter is a reasonably capable employee in a team of technicians at a plant that manufactures microchips. However, there is one big problem: he talks a lot – too much in the eyes of some – and he seldom lets others have their say. He also has a strong tendency to make negative comments, on the pretext that a critical attitude can only lead to improvement. He often has a point but his negativity has a stifling effect on his fellow workers. They are also irritated by Walter’s habit of seeming to support others only to twist their words to serve his own ends. The situation has now escalated to the point where it has become a concern for Yvette, the team manager. For Yvette, it is no longer a question of whether to intervene but when and how to intervene. She has dropped hints on several occasions but, as these have proved to be ineffective, she decides to take the bull by the horns. She confronts Walter in front of his colleagues at a team meeting. The next day, Walter calls in sick. Since he is in charge of several important projects, this is a major inconvenience to the organization. (continued)

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Case 2.2  (continued) Yvette is held accountable for this problem by her manager Marianne. She arranges a meeting with Yvette, which is also attended by Jesse, the HR manager. Jesse points out that Yvette has apparently failed to apply a basic principle of human resource management: reprimanding employees in public is counterproductive and ends up costing the company money. In addition, Jesse believes that Yvette failed to give enough consideration to Walter’s well-being and in doing so violated a core value of the organization. Marianne agrees that Yvette’s approach was wrong but she gives another reason for her position. As she sees it, what Yvette did was simply wrong, regardless of how it affected Walter’s well-being, regardless of the organization’s core values, and even regardless of whether it cost the organization money. She tells Yvette that, above all, employees are people and they should not be subjected to that kind of treatment.

2.2 Problems of Action, Judgments and Assessment Frameworks Cases 2.1 and 2.2 both involve issues of how someone should act and what the right course of action should be. Case 2.2 centers on the assessment of a decision that has already been taken. We refer to all of these issues as problems of action and will take a closer look at them in this section. We will show that morality is concerned with decisions, judgments, and other actions. It entails deciding, judging and acting in a certain way. All problems of action are alike in that they require a judgment or action to be taken in light of certain principles, norms and values. In other words, we can always look at problems of action in terms of good and bad or right and wrong. The decision in Case 2.1, for example, is whether or not it is appropriate to transfer Noah to a different territory based on the demands of a religious community. In Case 2.2, someone has to decide how to deal with an employee who shows insufficient respect toward others. When faced with a choice, people often do not think about it consciously or for very long. They make intuitive judgments or are guided by their instincts, emotions and default response patterns. In special cases, however, it is important to think carefully before making a decision (or looking back, we recognize that it would have been better to do so). There is a need for reflection: a judgment has to be made of the basis of reasons and those reasons need to be assessed (see Chap. 4). What all problems of action have in common is that those judgments and assessments are always normative: they involve determining how something should be, based on solid reasoning. In this context, the term “normative” is contrasted with the term “factual”: where a normative judgment indicates what should be, a factual judgment covers an existing state of affairs (Habermas, 1992).

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Normative considerations come in several varieties. We will take a look at two of them here. Many times in our lives, when confronted with a situation, we can ask the question: legally speaking, what is the good/bad or right/wrong thing to do? Alternatively, in many of the same situations, we can ask: does the decision have a negative economic effect (i.e. is it bad/wrong) or a positive economic effect (good/ right) for the company or organization? In other words, there are various kinds of normative considerations or criteria. When someone refers to legal rulings to explain why something is not permissible, they are making a legal judgment; when someone else refers to the potential for negative economic consequences, they are thinking from within an economic assessment framework. In many situations we encounter in daily life, we can also ask: is this good or bad morally speaking. For example, Cases 2.1 and 2.2 can also be interpreted as moral cases. In both situations, there are issues at play which need to be considered from the moral evaluation framework. In this book, we are looking specifically at this type of normative consideration. What does it mean to assess and evaluate decisions and actions within the context of a moral framework? What does it mean to judge on the basis of morality? How can we distinguish moral judgments from other kinds of normative judgments, such as legal or economic judgments? That is what we plan to investigate in this chapter. Defining the nature of morality is no easy task. Morality is complicated and paradoxical. With this in mind, we have opted for an explanation in two stages. At the first stage, we describe morality in terms of the intention or the formal meaning of a moral statement (Sect. 2.3). At the second stage, we offer a substantive explanation of morality. We do this by describing the contexts in which moral questions arise (Sects. 2.4, 2.5, 2.6, and 2.7).

2.3 A Formal Definition of Morality From a formal perspective, morality comes into play when people seek to make fundamental statements about what you should do (DeGeorge, 1982). When someone makes a moral statement, that person is speaking from the depths of their convictions. In other words, in making a moral statement, someone seeks to make claims about things having to be a certain way and no different. To make a moral statement is to say that something should absolutely be the case. From this perspective it is interesting to examine a dramatic event that took place in Amsterdam in November 2004. Journalist, film maker and opinion maker Theo van Gogh was attacked on a street by a Muslim extremist armed with a gun and sword. Bystanders heard him shout at his religiously motivated attacker. Van Gogh did not yell “Please don’t kill me!” Nor did he say: “If you kill me, you will go to jail.” Instead, he shouted “Don’t do it!” From a moral point of view, these words make perfect sense because they express that what the misguided zealot was about to do was absolutely wrong. By saying “don’t do it” Van Gogh was telling his attacker that killing him was not permissible under any circumstances. There was no circumstance or condition that would justify or lend approval to this act. Because moral statements reject

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any and all conditions, they are also formally referred to as unconditional. In other words, there is no condition under which a violation of the moral commandment or prohibition would be possible or conceivable. We see this reflected in Van Gogh’s statement and this makes it a perfect example of what moral statements are about, formally speaking. There is no condition added, such as “or else you will go to jail”. The statement is direct, simple and absolute: “Don’t do it”. All human societies have morality. This is not to say that all societies share the same understanding of what morality refers to in its formal sense. The nature of what is regarded as “fundamentally important” differs from culture to culture. Many societies are religious in nature. In such societies, religion is seen as the foundation of all normativity and there is usually an intimate relationship between the religious and the moral: both relate to that which is fundamental. Or rather, morality is shored up by religion because religion is seen as being fundamental to those societies. Western societies, for example, were Christian for many centuries and, in cultural terms, still are to a significant extent. In Christian thought, morality was understood as the word of God. God represented absolute and fundamental authority in such a society. The ten most important moral principles were presented as commandments that came directly from God and were carved into a stone tablet by the prophet Moses. Many people in today’s Western societies are still religious, but the public domain is secular. In a society that is organized in this way, morality can no longer be understood as the word of God. How then is morality to be understood in formal terms? Many philosophers, sociologists and historians (Jonsen & Toulmin, 1990; Habermas, 1981; Parsons, 1967; Weber, 1922) describe modern society as a differentiated society. A defining characteristic of a differentiated society is that people can look at the world from a range of different perspectives. This means that in differentiated societies the three sentences below can be meaningfully uttered and even make total sense: –– “Eating with your hands instead of a knife and fork may not be good manners, but there’s no law against it.” –– “Making money while violating environmental regulations is against the law, but it can be profitable.” –– “That politician’s statements don’t make much sense economically but politically they could prove very effective.” It may seem perfectly natural for human beings to be able to understand sentences like the above, regardless of culture or historical context. Yet academics studying the nature of a differentiated society would disagree. They see it as a feature of modern human beings, at least when it comes to the level of differentiation. So in order to analyze the formal meaning of morality in modern society, we need to gain a better understanding of differentiation. One defining characteristic of normative statements made in a differentiated society is that they only forbid something from a certain perspective. From another perspective, the same action might not be as bad or not bad at all. That is why – and also because  – the above normative statements come with conditions attached. People who live in a differentiated society are used to normative statements that are in some way conditional. Living in a differentiated society, they are accustomed to

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the idea that normative statements are only true or valid for someone who considers a particular perspective to be relevant. If a person does not consider a particular perspective to be relevant, people who live in a differentiated society are aware that such statements hold no validity for that person. Of course, this is not to say that someone can simply dismiss these statements as meaningless. People are also very much aware that the warnings implicit in the conditions are real. However, this perspective does give someone the freedom to say “I am not fazed by that condition. I accept it for what it is.” Someone who doesn’t care about manners, for instance, can happily shovel up their dinner with a spoon. This could potentially have consequences: exhibiting behavior that is widely regarded as socially unacceptable could mean that you miss out on an assignment, for example. But people know that as long as the person in question is prepared to accept those consequences, they have nothing to worry about. The above statements are therefore known as conditional. Of course, the ability to differentiate can be seen as characteristic of all human beings and human societies. Many philosophers, sociologists and historians therefore say that what sets contemporary society apart is its high degree of differentiation. The extent to which modern citizens approach all normative statements from a range of perspectives is unprecedented. This high degree of differentiation provides a point of reference for establishing the formal definition of morality. Although people in a differentiated society have the ability to think from various perspectives, and are therefore used to the idea that, by default, normative claims come with conditions attached, they are still able to conceive of something being valid or true beyond any perspective. When confronted with a situation that seems right from normative perspective A but wrong from normative perspective B, they can still ask themselves the question: what is true or valid beyond any perspective? The competition between perspective A and B naturally gives rise to this question and in that sense people living in a differentiated society can be said to long for a truth or a rightness beyond any perspective. In certain situations, they also experience a need to view life and the world in a way that is beyond any perspective. Or to phrase it more correctly and in terms that are less essentialist, people in a differentiated society have good reason to hold that there are times when everybody ought to look at a situations from a perspective that is beyond all perspectives. When people are in love, they tell each other “I will always love you”. This always is formally intended as an absolute claim. It makes perfect sense to regard Theo van Gogh’s cry of “Don’t do it!” as a claim that he saw as being true beyond any perspective. This is also how most people will understand it: murder is wrong – regardless of legal and economic laws, regardless of etiquette and whatever religious beliefs you might hold – it is quite simply wrong. Anyone who responds to Van Gogh’s killing by saying “What that Muslim extremist did was wrong, but only from a legal perspective” can expect to be greeted with moral indignation. This is the case precisely because people in a contemporary society – despite or perhaps even because of the pervasiveness of perspectivism  – sometimes experience the need to make claims that are beyond any perspective. People want to be able to refer

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to something which is or should be fundamentally and absolutely true. As in other societies, people in modern society experience the need to make moral statements. This brief formal description points to another important property of morality. Because, formally speaking, a moral statement is a fundamental statement without condition, it follows that (in the event of a conflict) such a statement takes precedence over conditional speech. Philosophers refer to this as the primacy of morality (see also Sect. 3.4). The notion that morality as a fundamental statement has to have primacy is readily apparent if you imagine yourself in the position of Theo van Gogh. “Don’t do it!” is meant as a command that applies without question. It therefore takes precedence over any other consideration that can be brought into play.1

2.3.1 Two Paradoxes This brief, formal description of morality immediately confronts us with two major paradoxes facing morality in a modern, differentiated society. The first is that morality has no real power with which to support the formal force of its commandments. The Muslim extremist was not struck down by lightning when he was on the verge of killing Theo van Gogh. Ultimately, the demands of morality depend on the moral self-­ discipline of the people involved (and this is not always something that people possess). This makes morality a rather elusive concept for people who can only think in terms of real power. Morality makes far-reaching demands, yet at the same time it does not really have any force with which to back them up (Kant, 1793, p.  49). Perhaps the most remarkable thing about morality is not this strange elusiveness but that, in spite of this, morality still holds such sway over us: most people treat others with respect and refrain from killing and stealing, even when the long arm of the law is nowhere in sight. A key and often-heard argument people use in this context is that they don’t want to “be that person”: someone who kills, steals or abuses others. They don’t want to identify themselves with that kind of behavior or see themselves in that light. In other words, people very often discipline themselves without recourse to an external power. The second paradox is that, especially in a differentiated society, it is very difficult to determine what might apply unconditionally. The formal view creates a major substantive headache for people living in a modern society: they have to go in search of the things that should apply unconditionally. How can we or should we go about thinking about, reflecting on and discussing issues from a perspective that is beyond any perspective? How (i.e. using what method) can people do justice to the formal meaning of their moral claims in a world that – in substantive terms – is a historical given? Differentiated society seems to play a game with modern human beings in this respect. As we will see, in practical terms, people are compelled to agree on some of these things in conjunction with others. You alone cannot

 A moral commandment or prohibition is also called a categorical imperative. An imperative is a command; the term categorical is another word for unconditional or unqualified. 1

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determine that principles such as “do not kill” and “do not steal” apply universally: such conclusions require the agreement of other people. After all, everyone then has to adhere to such a principle. This is known as public morality. Then there are other aspects of morality that you are free to decide on independently, such as whether you think divorce is morally permissible, how much you support your ailing parents and whether you avoid air travel in the interests of the environment. These come under the heading of private morality. The interesting thing about this distinction in a modern society is that many moral discussions in such a society revolve around the formal issue whether something belongs either to the sphere of public or private morality. This makes a lot of sense, of course. If something is part of public morality, we need to come to a public understanding about it; if something is a matter of private morality, others have no right to make a moral claim on your behalf and are seen as invading your private space if they do. Hence, one of the main arguments put forward by proponents of abortion is that it is a private matter for the woman concerned while the opponents argue that the life of the “unborn child” is a public matter. The discussion on the pros and cons of vaccination is another good example. A key argument made by people who oppose vaccination is that deciding whether or not to be vaccinated ought to be seen as a purely private matter with no public consequences, while proponents argue that vaccination involves many public issues and that measures such as excluding people who are not vaccinated from some areas of public life are therefore justified. In the context of the second paradox (i.e. assigning formal meaning in a given historical context), people need to reach agreement on such issues. The difficulties people encounter in making those attempts often elicit an exasperated sigh that in morality all things are relative and moral discussion is therefore fruitless. You take one view, I take another and never the twain shall meet. In this book, we will repeatedly emphasize that, while such exasperation is justified, it does not constitute a reason to show morality the door. Yes, there is a paradox but in the end a paradox is only an apparent contradiction. And so we will have to look for ways to give substance to morality despite all of the problems involved and the prominence that society gives to relativity. The issue is not whether morality can be made sense of but how morality can be made sense of, in a modern-day context. There are often urgent practical reasons for finding a way out of the paradox, as the Van Gogh case and the vaccination debate demonstrate. Ultimately, there are pressing and pragmatic reasons for a society to decide whether vaccination is a public or a private issue. If a society cannot achieve overall moral agreement on such issues, this can result in serious societal disruption. By the same token, there is a practical need for principles and rules that people in society understand as unconditional and absolute, such as “do not kill”, “do not steal”, “do not rape”, “treat others with respect” and so on. Some might be inclined to object to this position on the grounds that certain members of society maintain that their own religious views should hold unconditionally. However, this is not a valid argument against the practical need described above. We are in the process of explaining the formal meaning of morality. The point that some people have odd and sometimes objectionable ideas of what should

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be considered absolutely valid simply means that there is an even greater necessity to think and rethink the substantive aspects of morality in modern society. Yet, precisely because the experience of being confronted with an apparently insoluble paradox is so typical of the times in which we live, we will devote considerable attention to issues that are closely related to this paradox, such as moral relativism (most notably Chap. 3). This also leads us to focus specifically on the complex issues surrounding the grounds for morality and making moral judgments (see also Chap. 3). Ultimately, we hope to show that, far from being a weakness of morality, the second paradox is actually its strength (Box 2.1).

Box 2.1: Conditional vs Unconditional Statements A formal characteristic of morality is that moral judgments are fundamental in nature. In the context of a differentiated society, the idea of the fundamental can be described as a claim that is unconditional. As we have explained, in a differentiated this idea takes the form of a claim being “beyond any perspective”. We can further clarify the meaning of a “perspective beyond any perspective” by looking at the opposition between a conditional and an unconditional claim. A conditional claim is one that applies to a person only if they are invested in the condition. For example, “Keep off the grass or risk a fine” is a conditional claim. The requirement is only of significance to the person being addressed if the condition of having to pay a fine matters to them. Formally speaking, this means that when a claim is conditional someone has a way out. The requirement allows someone to say, “I am going to do it anyway because I don’t care about the fine.” An unconditional requirement is different: it denies you any way out. Paradoxically, it does this by not setting any conditions. This or that has to be done and that’s all there is to it! The unconditional form does not allow anyone to claim the right or possibility to deviate from the requirement, no matter the circumstances. The paradox is that, precisely because of its unconditionality, this form cannot be linked to punishment for transgression. Unconditional requirements are too important to allow this: introducing the possibility of punishment for transgression would make the morality conditional. Moral demands are unconditional in form and this is what makes morality fundamental. That form is therefore a defining characteristic of moral requirements. All other normative assessment frameworks operate conditionally. They attach negative consequences to ignoring their requirements: fines or imprisonment in the case of the legal framework; loss of money or even poverty in the economic framework; and social exclusion in the framework of social relations. You can therefore nullify economic dictates by stating that you attach no real importance to making or losing money. Such a position (continued)

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Box 2.1  (continued) makes economic dictates irrelevant to the person involved; for them, the spell has been broken. Conditional assertions can of course also be linked to positive consequences: “If you chop this firewood for me, I’ll give you a hundred dollars” is a conditional assertion. This explanation begs the following question: “I can see why we ought to consider ‘do not kill’ to be an unconditional principle in society. But in that case why can’t we say that – for example – the economic principle ‘always make a profit’ is also an unconditional principle and not just a conditional principle within the framework of economics?” The answer is that we can make the principle “always make a profit” an unconditional principle, but in doing so we transfer the principle from the normative level of economics to the normative level of morality. We move from a normative sphere in which we make conditional claims to the unique normative level of morality in which human beings aim to make unconditional claims. As a consequence, it becomes much harder to justify and make sense of the principle. While “always make a profit” makes sense within the confines of economics, it makes a lot less sense as a moral principle. If we interpret it as such, we need make sense of it in relation to the meaning of a person’s life, and this raises all kinds of issues. How does it fit in with other goals that people usually have or should have, such as friendship, love, caring for your children, happiness and so on? Before long, troubling situations start to rear their heads. If the “make a profit” principle is to be interpreted as an absolute and therefore a moral statement, it becomes hard – or at least a lot harder – to argue against the suggestion that a person should sell their children or their mother if they can make a profit by doing so.

Box 2.2: Morality vs Religion How are morality and religion related? In many mono-theistic cultures this question is easy to answer. God is the ultimate source of authority in the world. God has laid down certain rules that human beings must obey. Exactly because these are God’s commandments, human beings must obey them unconditionally. Religion then provides a way to make sense of the strange idea that morality relates to the “unconditional”. As long as morality is grounded in religion this idea makes perfect sense. But in the modern Western world morality can no longer be grounded in religion. The reason is not (necessarily) that people are privately no longer religious, but rather because public morality can no longer be religion based. The cause of that can either be secularization or an heightened sense of religiosity in a situation where many, mutually intolerant and competing religions are present in one society. (continued)

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Box 2.2  (continued) In societies in which public moral reflection has (or must) become secular, there are different views on how the relation between morality and religion is to be understood. Some philosophers insist that morality and religion have nothing whatsoever to do with each other. They hold that morality can be given a rational ground (see Chap. 3) and they fear that the rational and cognitive dimension of morality will be affected by making the connection with religion too intimate. Usually, these thinkers perceive of religion as merely spiritual and faith-based, and they fear that moral sceptics will debunk morality if the relation between morality and religion is emphasized too much. A second camp of philosophers is more hesitant in this respect. They fear that too much emphasis on the cognitive and rational aspects of morality will affect the important realization that human beings are finite and limited creatures that cannot understand everything about their existence, at least not from a rational instrumental perspective. Can we really understand love, friendship, parental care, the courage of the suffering human being, the sacrifice of the soldier, a person finally refusing to lie once more, without somehow accepting the fact that there are aspects to (our) life that we simply cannot understand? Scientific explanations that reduce this behavior to “the genes at work” or “self-interest” are silly, offensive and overstepping the boundaries of what science is capable of (Kant, 1788; Marcel, 1956). Must we not somehow acknowledge a little bit of mystery to the experience of what it means to be human? If so, religion – or something analogous to it – may still have a role in our understanding of morality. Or so they argue. This is not to say that morality is necessarily grounded in religion but that there is at some points an analogy between morality and religion. (Note: in this box we focus on the relation between morality and religion. The question how morality can be given ground and meaning of a secular footing will be addressed in Chap. 3). The relation between morality and religion is too complex and too disputed to explain here in full. We will close off by pointing at a few philosophers who were particularly influential in the development of Western thinking on this relation. Nietzsche (1882) is a case in point. He famously argued that “god is dead”. He meant that the role Christian faith played in our common understanding of the world was no longer adequate, and bound to disappear. Nietzsche feared that morality had lost its hold on modern society as morality only makes sense if grounded in religion. Weber (1922) followed Nietzsche, and feared an ensuing dystopia where people would lack the possibility to find meaning in life, because all values have become groundless without religious faith. (continued)

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Box 2.2  (continued) Other philosophers took different stances. The Dutch philosopher Grotius (1738) did groundbreaking work as one of the first to realize that it is quite silly to say that as morality can no longer be grounded in religion, it therefore must be groundless. He realized that the issue is not if but how we can make sense of it. The core question must be asked differently: if morality has meaning and a function (see Chap. 3), how can we ground it and make sense of it, “even if we should concede that there is no God”? Note that Grotius was absolutely no atheist. He did however see the need to ground and makes sense of morality on a non-religious base, exactly because his world was in a constant state of civil war due to religious disputes (Schneewind, 1998). Kant (1788) followed the footsteps of older Christian thinking (e.g., of the Franciscan order) and went beyond it by arguing that Christians in particular have a religious reason (or a duty even) to develop a non-religious ground and meaning of morality. After all, the Christian God wants us to follow and obey Her out of love. If we only obey God because we fear Her, we are not really in a loving relationship. Hence, religious (i.e., Christian) people must find ways to make sense of and obey morality for non-religious reasons. By following the commands of morality voluntarily and for morality’s sake only, they show their love of God (who rejoices if human beings strive to follow Her rules – which happen to be the rules of morality also).

2.4 Moral Issues Arising from Violation of Rights In the four sections that follow, we will attempt to gain a better substantive grasp of the concept of morality. We will do so by outlining four different contexts in which morality gains relevance: 1. moral rights (Sect. 2.4); 2. orientation toward good (Sect. 2.5); 3. breaking through boundaries in thinking (Sect. 2.6); 4. character development and virtues (Sect. 2.7). Each of these contexts highlight a different face of morality. It is important to keep in mind that morality cannot be reduced to any one of these contexts. It encompasses each and every one of them. This is especially important because morality really does have different faces: it can be both stern and commanding and advising and inspiring, and can take in interpersonal relationships (public morality) or deal purely with personal and internal aspects such as virtues, character and ways of thinking (private morality).

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Case 2.3 Cathy is the owner of a successful transport business. Inspired to do something meaningful with a portion of the capital her business has accumulated, she decides to found a museum of modern art: the Cathy Museum.2  She recruits Beatrice, an enterprising director who has already made a name for herself in the art world. Cathy is very happy with Beatrice. Not only does she know how to make good purchases, but she also manages to persuade Thomas, a collector, to loan part of his collection to the Cathy Museum for years to come. It’s a move that is sure to bring in more visitors. One year later, the museum makes a number of purchases. The prices paid strike local journalist Dan as high and he decides to investigate. Dan digs a little deeper and discovers that Beatrice has purchased these expensive works from Thomas. He also finds out that the prices she paid are more than just high; they are in fact exorbitant. This suggests that Beatrice and Thomas have made some kind of secret agreement: Thomas has loaned certain works to the Cathy Museum for a time on the condition that the museum would later purchase a number of paintings from him at a predetermined price. Dan writes an article on the case, in which he describes the arrangement as fraud. A week after the article is published, Beatrice is fired. “I have been misled, deceived and harmed,” Cathy tells the newspaper. Beatrice also vents her anger about her dismissal in its pages: “From a legal perspective, no wrongdoing on my part has been established.” Cathy has no sympathy whatsoever for this position. “The financial damage is bad enough, but that is not the worst of it. I have been misled and in that sense my rights have been fundamentally violated.” In an interview with Dan, she tells his readership, “If the courts are not in a position to recognize this, then clearly the law on this point needs to be changed.”

2.4.1 Moral Rights A first context in which morality features is one in which a human being (or an animal or some other entity) is treated disrespectfully, harmed, or is otherwise impaired in their rights. Rights can be legal in nature but they can also be moral rights. In the case of moral rights, a fundamental claim is made. In other words, the rights apply – or are deemed to apply – unconditionally (see Box 2.2).

 This case is based on a series of events that played out in Amsterdam in 2016 (see van Lent & Ribbens, 2017). In the real case the person whol felt fooled by Beatrice was the Amsterdam Stedelijk Museum. 2

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Case 2.3 is a good example of a situation in which a person’s rights are impacted: as a result of a secret agreement, Cathy was misled by the director of her museum. The case may also involve the violation of legal rights but Cathy’s response also takes the case in a moral direction: she describes what has been done to her as harm in a fundamental sense. She therefore believes that her moral rights have been violated. This appears to be a valid claim: not being lied to and deceived is a key moral right. In other words, the case also concerns rights that Cathy can claim without question and without condition. Her rights have been impacted because she is a human being – or rather a moral person – and so without condition. Cathy has a sound understanding of what morality means and implies. After all, she calls for the law to be changed if the courts fail to protect her rights. If moral principles are fundamental principles, this does indeed imply that they are all-important rights which take priority or precedence over other rights. Even so, a judge in this case may not agree and decide to award Beatrice compensation for her dismissal. If that were to happen, then – in Cathy’s view – there would be a clash between law and morality. (Incidentally, in this case it could be argued that Cathy may have jumped the gun in thinking that she has morality on her side. From a moral perspective, the law is very important. At all times, respect for the law is an important moral principle. It would have been better for Cathy to say: if the law decides in Beatrice’s favor, I will accept that legal judgment but in that case I believe it is important that we, as a society, think about changing this article of law in the future. Given the moral duty to respect all laws – especially in a fair and well-ordered society – some would even say that Cathy’s all too hasty assertion (that the law is wrong if it does not conform to her view of the case) is in itself immoral.) This first context is probably the one most people are familiar with when it comes to morality. It is the context in which morality acts as a protective barrier. Morality demands that everyone should adhere to certain principles, so that everyone is protected by them. Such principles can also be expressed in terms of duties. A duty is something that a person is obliged to do, whether they want to or not. In formal terms, the idea of duty defines an action in terms of what is practically necessary but in order to understand this concept, it is essential to realize that the concept “pragmatic” goes beyond mere pragmatism and refers to what is necessary in the domain of action as opposed to the domain of logic. Duties include moral imperatives such as “do not kill”, “do not steal”, “do not harm”, “do not lie, deceive or cheat” and “always respect others” (Box 2.3). Box 2.3: Moral Versus Legal Rights A special characteristic of a differentiated society is that it provides a context in which principles, norms, values, rights and duties can be said to double or even multiply. For example, in a differentiated society, the “do not kill” principle needs to be taken into account from a social, legal and moral point of view. A killer not only breaks a moral rule, but also deserves legal punishment and faces social exclusion. (continued)

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Box 2.3  (continued) But rights and duties also double up. The duty “do not kill” is both a moral and a legal duty. However, the specific interpretation of a right or duty may vary from one perspective to another. “Do not harm” takes on a different shade of meaning when viewed morally or legally. Some rights and obligations are specifically tied to a domain. For example, the Dutch obligation to submit your tax return by 1 May each year is only a legal duty (though of course the duty to pay taxes is also a moral duty). Meanwhile, the duties of “respecting others” or “helping others” are only moral duties (though in some countries the duty to save another person’s life in an emergency also has legal status).

In Case 2.3, Cathy is in a position to claim her moral rights. In practice, this is often not the case. In real terms, people lack the power to claim what is theirs in a fundamental sense. For example, it is highly unlikely that an oppressed worker in a developing country will be able to claim the right to be treated with respect or to receive a fair wage. However, this does not diminish the fundamental nature of morality: that the moral should be given precedence. What is striking about morality in this context is that it reveals itself to be hard, uncompromising and demanding; it draws a line in the sand and simply says: “This or that is absolutely not permissible, under any circumstances.” The unconditional nature of morality is readily apparent in this regard. In conclusion: the first context introduces us to morality as something that sets unconditional requirements for action. This brings the hard side of morality strongly to the fore: morality is about duties and things that simply have to be done. The other side of this coin is that morality gives people rights and fundamentally protects them (Box 2.4).

Box 2.4: Exception to the Rule and Morality as Unconditional It is sometimes argued that moral duties cannot apply unconditionally, because there are always exceptions. It is true that there are always exceptions. Even a principle like “thou shalt not kill” has exceptions, not least in a situation where you have to defend yourself. Yet this is not an argument against the unconditionality of moral duties. To understand this, we need to distinguish between three ways in which we can use the concept of duty. (continued)

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Box 2.4  (continued) The first is in the sense that “A person should always do their duty”. This statement applies unconditionally and can be called a basic principle of morality. However, it is important to realize that this statement is formal. It has not yet been determined what the duty is in concrete terms. In fact, this assertion does little more than state that morality has priority over other judgments (see Sect. 2.2). In a second sense, “duty” refers to a general principle that applies in the vast majority of cases. “One person should not kill another” can be seen as a duty in this sense. In this sense, duties never apply unconditionally. There are always circumstances in which other duties can come into play (such as the duty to defend yourself). In other words, there is always room for exceptions. In the third sense, a duty refers to a concrete judgment about a concrete situation. For example, someone might say: in this situation you are faced with here and now, it would definitely not be right to kill someone. In this sense, however, the notion of “duty” once again applies unconditionally: morality acts as a protective barrier or prevents people from crossing a certain line. In that sense, morality has to apply unconditionally. The idea that morality cannot be unconditional because there are always exceptions is therefore invalid. “Duty” conceived of as a general principle has exceptions, but “duty” as a concrete judgment is always meant to be unconditionally valid. The same goes for “duty” as it refers to the basic principle of morality.

2.5 Moral Issues Arise Through an Orientation Toward Good

Case 2.4 Anna is the daughter of a family that has been in the butcher’s business for generations. She is proud of her heritage but realizes that there are tough times ahead for this age-old profession. Increasing numbers of people are starting to question whether meat should have a place in their diet. Anna’s father thinks all this criticism of meat consumption is nonsense. He remembers the days when people were too poor to afford meat and being able to eat meat on a daily basis was seen as a huge leap forward. Anna decides to take a closer look at the issues involved. She agrees with her father to the extent that she thinks the call to stop eating meat altogether is excessive. Her reasoning is that human beings have always been carnivores by nature. At the same time, she acknowledges that meat consumption has (continued)

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Case 2.4  (continued) changed tremendously in the last fifty to one hundred years. These developments seem to have turned the world upside down. Meat is no longer a luxury product at all; in fact, some sections of the population feel very strongly that two meatballs a day is one of the basic necessities of life. Anna acknowledges that this is taking things too far. She also recognizes the negative impact of industrialized meat production, both in terms of the climate crisis and in the areas of antibiotics and animal welfare. In 2017, Anna decides to include vegetarian products in her range. Two years later she introduces a range of organically produced meat. By 2020, Anna is considering making the transition to a fully organic operation. But based on a business analysis she feels compelled to put this off, at least for the time being. The commercial risks are too great. Anna is interviewed for a local newspaper and the journalist asks her to motivate her decision. She finds it difficult to provide a reasoned explanation of her motives, ideas and thoughts. She acknowledges that, in part, she is simply giving the customers what they want. And meanwhile she feels a duty to bring the butcher’s trade more in line with modern values. She says a good friend has also been a major influence by encouraging her to examine the relevant issues, a process that led her to consider taking a different approach. She adds, “Apart from anything else, I just want to be proud of my company and happy in my work. In recent years, I have seen how resisting the changing attitudes toward meat has embittered my father to some extent. And I also want to do my part to make the world a better place to live in: for my children, for the animals and also for the farmers. They deserve a decent income for the work they do.” In this section, we will also outline a second context in which morality makes itself felt. This is the context in which people feel that they can do something positive for others or for the common good. This second context reveals a vision of morality that is in many ways opposed to the one that emerged above. Whereas the first context emphasized the stringent, confrontational power of morality that sets limits on behavior, in this context the focus is on the enthusing power of morality: giving people the inspiration to live their lives as best they can.

2.5.1 Doing Good In our daily lives, we are regularly faced with situations in which we can make a positive contribution to someone else’s life and have the choice of whether or not to do so. We can choose to do voluntary work, support organizations like the Red Cross or donate money to charities.

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The potential positive impact we can have on the lives of others also plays a role in the bigger choices we make in life: do you want to work in healthcare or pursue a career in fossil fuels or the arms industry? And, depending on your choice, would you then work for a plastic surgeon who is willing to perform any operation a customer is willing to pay for,3 or make sure you opt for an oil company determined to abide by all the laws of a country even in difficult circumstances? And in the context of business ethics, what kind of products do you want to be the basis of your company’s success? Do you want to be involved in the development of electric cars, or do you want to sell cigarettes? A long-term study shows that, in today’s world, young people joining the workforce for the first time are setting greater store by making a positive contribution to the world, even if it means earning less as a result (see de Hauw and de Vos (2010); Hu and Hirsh (2017) among others). The extent to which you let your choices be guided by ideas of this kind is a moral consideration.

2.5.2 What Is Good? In this context morality confronts us with many important questions. One of the first questions to arise when you consider topics like this is what can be considered good. One way of understanding what is good is to start from the assertion that leading a happy life is good for every individual. In a general sense, this would mean that good is therefore the sum of everyone’s happiness. Through the ages, this has been an influential thought in the world of philosophy. Yet both components of this position are open to question: whether happiness is the only good for the individual and whether the greater good consists of the sum of the good of each individual. People often attach value to other things (freedom, recognition, fulfilling life goals) even if they do not directly lead to greater happiness. Research on happiness, for example, has found that having children does not usually make parents happier, yet this knowledge has not deterred huge numbers of prospective parents from having children. It is also worth asking whether maximizing happiness for everyone across the board is always equitable. In some countries, serious inequalities, the poor treatment of immigrants or the violation of human rights are justified on the grounds that this is ultimately what is best for everyone, in most cases the vast majority of citizens.

 “I would like to have my nose and my ears removed.” Plastic surgeons have been known to receive requests that are this extreme. Would you be prepared to honor such a request? And if so, would you do it for the money, because you refuse to discriminate or because you believe every individual has an inalienable right to choose? See Romanillos Hoendervanger (2021). 3

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Many present-day philosophers therefore argue that good cannot simply be defined as the sum of happiness (and suffering) of all individuals. Justice is at least one other important aspect. Lastly, Anna’s case raises the question of whether preventing suffering in animals is also part of doing good and if so, how we should rate the importance of animal suffering relative to human happiness. There is still a great deal of debate on this issue (see Chap. 16).

2.5.3 How Far Should You Go? A second important question that arises when you look at orientation toward good is how far you should go in your efforts to do good. The world is far from perfect and all kinds of things need improving: millions of people still die each year from disease, hunger and poor sanitation, all problems that can be solved with relatively little investment. In the early 1970s, when Bangladesh was suffering from a devastating famine, philosopher Peter Singer (1972) asked people to imagine walking past a shallow pond in which a small child is drowning. In that situation, it is clear to everyone that you are morally obliged to help, even if it means ruining the expensive shoes you are wearing. Singer’s point is that many people in affluent countries today are constantly in a financial position to help others whose lives are in danger. In other words, we are in a position comparable to the person walking past the pond: we are always in a position to make choices that allow us to save people’s lives, albeit at some cost to ourselves. According to some estimates, there are charities that can save the life of someone in a poor region with every 3000 euros they receive (Thompson, 2015). Critics of Singer contend that people who reason in this way will themselves suffer in an imperfect world. So where is the line between a reasonable and an unreasonable effort? In Case 2.4, Anna can stop selling meat. This will undoubtedly motivate some customers to switch to a more vegetarian diet but, by doing so, she runs the risk that her family’s business will not survive. Can morality demand such a sacrifice of someone? A third important question arises when you look at how orientation towards good relates to conflicts between various good causes, or situations where conflicts arise between doing good and defending human rights. In practice, people often have to make compromises in an effort to serve the common good. Once again, we are confronted with the imperfection of the world as it exists. Case 2.4 illustrates this: in her present circumstances, Anna is unable to make the transition to a fully organic butcher’s shop. The question of whether the compromise you choose is morally justifiable is therefore a vital one. Can Anna look at herself in the mirror and say “I have done everything I can to find a good balance?” That is a question of fairness, justice, equity and integrity. It makes the question of finding the right balance a moral one (Box 2.5).

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Box 2.5: Does Doing Good Conflict with Self-Interest? To understand the second context correctly, it is important to understand the relationship between morality and self-interest. Morality often appears to require a sacrifice from us. In turn, this leads us to assume that there is a clash between morality and self-interest. Is this actually the case? The answer depends on how we understand self-interest. We can take a narrow view of self-interest as the desire to pursue the things that we ourselves find pleasurable, appealing and fun to do. From this perspective, morality will often require us to temporarily put these things aside. Yet at the same time, most people would like to live in a good and just society. And this entails ensuring a good and just society for everyone (including themselves). Thus, in so far as a person has an interest in a just and good society, it is perfectly possible for someone to pursue a good and just society out of self-interest in the long term. This broad understanding of self-interest is called enlightened self-interest. The most serious problem that people with an enlightened understanding of their self-­interest face, is not the fact that their goals clash with self-interest. It’s that some other members of society take a narrow view of self-interest and refuse to do their fair share. This problem is aggravated by a group who stick to their narrow concept out of fear that some people do nothing or far too little. Above all else, these people do not want to be taken advantage of. Even more can be done to lower the tension between the idea of self-interest and morality. In line with the views of a philosopher like Bishop Butler (1692–1752), many philosophers, psychologists and economists have argued that, when you take a broader view, people with a narrow view of self-interest often go against their self-­interest. Taking a narrow focus on self-interest often does not serve people’s longing for happiness: angry, jealous and revengeful people often end up harming themselves in terms of their happiness. Indeed, there is every chance that it will make them unhappy. So, even if a person only cares about their own interest and has no immanent interest in a good and just society, they still have a good reason to opt for an enlightened concept of their self-interest. It is quite simply smarter in the sense of improving your chances of living a happy life. A third factor diminishing the tension between self-interest and morality is that it is a mistake to think that the substance of what it means to act in your own best interests is fixed for all time – as many in business seem to think. In this regard too, it is relevant to let Bishop Butler have his say. In 1726, he argued that an envious person who does someone a bad turn is acting in their own self-interest, but that someone with a sympathetic character who does voluntary work is doing the same. Both become happier as a result of their actions. The main difference between these people is not that one is acting in their own interest while the other is not. It is that they give different interpretations to the concept of self-interest. On this basis, Butler argues that as human beings – even if we want to act solely in our own self-­interest – we would be wise to reflect on the proper interpretation of what counts as our (continued)

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Box 2.5  (continued) self-interest. It is not so smart of us to take for granted the interpretation of self-­interest that stems from our own nature, upbringing and history. A sensible person works to interpret as adequately as possible what it means to act in one’s own interest. This is especially relevant because certain things that make people happy for a while can leave a hole that only makes them unhappier in the long run. Happiness as experienced by an envious, angry, mean and greedy person quickly converts into a negative hunger to do others another bad turn or an even worse turn. Those who give their vices free rein not only make life difficult for others. They also find themselves in a deep, dark hole (Seneca, 41 AD/2012). Sensible people would therefore do well to give their notion of self-love as “enlightened” an interpretation as they can.

In conclusion: the second context teaches us that morality is not simply about duty and imposing limitations on action. Morality is also about pursuing ideals and as such it is an enthusing force. Moral questions that arise in this context ask what the proper interpretation of the common good should be (and how we might go about finding it). In this context, we also need to consider questions about making a fair or reasonable contribution to realizing the common good as well as the compromises we have to make as human beings, given the constraints imposed by practicalities. In this second context, morality always seems to be opposed to self-interest. But here too, the situation is more nuanced: many would argue that a moral way of life is quite compatible with long-term self-interest, especially if people are sensible enough to think constructively about how self-interest should be defined.

2.6 Moral Questions Arising from Breaking Through Boundaries in Thinking Case 2.5 Frank runs his own contracting company. One day he takes on a job for a fixed all-­inclusive fee. He does so in the conviction that his calculations are accurate and that the customer has given him all the relevant information. Yet the job turns out to be much more work than anticipated, partly due to bad weather. Frank considers cutting his losses by using cheaper materials than he indicated in the quote. After all, he has to earn a living, he reasons. The customer doesn’t have the expertise to know the difference and, when the job is done, the materials will be hidden behind the walls for years. And even if problems do arise within a few years, he reckons it’s unlikely that anyone will think to look at the quote. But after sleeping on it, Frank abandons his plan. “That’s not the kind of guy I am. It’s not who I want to be, nor how I want to be known. I know how angry I get when I feel cheated. A deal is a deal.”

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Case 2.6 In 2015, Martin Shkreli, the young CEO of a pharmaceuticals company, raised the price of Daraprim, a drug used specifically to combat an infectious disease called toxoplasmosis. This disease poses a particular threat to AIDS patients. The price rose from 13.50 dollars a pill to 750 dollars. Shkreli’s decision was met with outrage. Not only did it make it much harder for people with no health insurance to obtain treatment. It also sent the cost to health insurance companies soaring, with a knock-on effect for society as a whole. Asked if he would do the same thing again, Shkreli said, “I would raise the price even higher. The demand curve for drugs is inelastic, which means I could have made even more profit for my shareholders.”

As we have seen, there are major differences between Context 1 and Context 2, but there are also similarities: in both cases, morality had to do with whether or not someone was permitted to perform concrete actions. In addition, there was a particular focus on the relationship between moral subjects and the world outside them (other people, animals, society). The third context is significantly different in this regard. In these instances, morality only concerns how a moral person thinks. One example is that it can be morally problematic to think about others in a certain way. For example, there is something morally problematic about sexist or racist thinking, even if it does not immediately lead to racist or sexist acts (though, of course, that is often the case). By the same token, typical moral traits, such as modesty and empathy, are not only demonstrated by how we act: they are also ways of thinking. It may strike some people as strange that even thinking a certain way can be seen as immoral. In this regard, two comments are relevant. First, this may seem strange because, in everyday life, morality has a strong focus on interpersonal relationships (and therefore public morality). It is true to say that wrong thinking is not a problem in this regard: public morality revolves around actions. But it is important not to make this the sole focus of morality. Morality also has a personal dimension. It concerns who you are, who you can be, and who should you be. In this regard, morality is closely related to your human identity, which in turn has everything to do with how you think. The second comment is that there are situations in which we suddenly become aware of the importance of wrong thinking. One partner in a relationship can easily take offence if the other spends all day thinking of someone else, even if it never goes further than that. In movies, too, the importance of wrong thinking is often emphasized. Jordan Belfort, the man on whom the protagonist in The Wolf of Wall Street is based, explained during a TV interview that his first corrupt thought was the beginning of all the corrupt choices he subsequently made.4 Morality is therefore not just about what you can do wrong, but is also concerned with how you think about your relationship to others.  https://www.youtube.com/watch?v=lssxyiCwh_8&t=227s

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2.6.1 Wrong Thinking? One major way in which people can think wrong thoughts is by “crossing a line” in their thinking about a moral principle. This often involves applying a principle outside its legitimate domain of application. For instance, people have the right to defend themselves. But people who invoke that right to justify attacking someone who poses no threat whatsoever are applying the principle of “right to self-defense” beyond its legitimate boundaries. Similarly, the principle of “I didn’t know” can be a valid excuse when something goes wrong as a result of your actions. But if a manager who should have been aware of the consequences of a given action uses this principle to excuse their actions, they are using it inappropriately. Case 2.5 provides an illustration of how morality becomes relevant in this context. Frank wrongly applies the principle “I have a right to earn a living”. That is, he initially seeks to use it beyond the boundaries of the domain where it can rightly be used. It is undeniable that Frank has a right to earn a living but that right does not override the legitimacy of a business agreement. After sleeping on his plan, Frank comes to the realization that he is in danger of crossing a line by applying that principle in this way. The earlier cases in this chapter also provide evidence of wrong thinking. Case 2.1, for example, raises a question about boundaries by asking whether Karin is going too far by pursuing a pragmatic solution that would involve Noah switching sales territories. In Case 2.6, many will argue that Martin Shkreli also crosses a line in his thinking by placing maximization of profit above all other considerations. While it is undeniable that entrepreneurs have a right to maximize their profits, that right is not absolute. Nor is it the only duty an executive is expected to take into account when doing business. Shkreli can therefore be said to cross a line by absolutizing his right to profit maximization (see also Chap. 3). Of course, it is also the case that wrong thinking can very easily lead to wrong action or wrongdoing. Frank’s considerations could easily have led him to commit fraud by working with substandard materials and many would argue that Martin Shkreli’s thinking was what led him to commit immoral acts. However, it is important to realize that in this third context morality is not about actions: morality is focused on the wrong thinking itself. People may argue that it does not make sense to state that thinking can be wrong, as in specific cases everyone will draw that line in a different place. So how can there be such a thing as “wrong thinking”? One person will say that Shkreli should not have raised the price at all, a second will say a maximum price rise of fifty dollars would have been acceptable, and a third that Shkreli was perfectly entitled to ask the price he did. But this argument does not counter the idea that a person can cross a line in their thinking. The matter of whether there should be a line is of a different order than the question of exactly where the line should be drawn in concrete cases. So far we have stated that morality comes into play when people cross a line in their thinking and we have presented Case 2.6 as an example in which – due to Shkreli’s absolutization – many people feel that a line has been crossed. What we

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have not done as yet, is say where that line should be drawn. This is a matter that needs to be resolved in a next step, using normative moral reflection: where exactly should that line be drawn in specific cases? This is the kind of normative reflection in which we will engage in Part II of the book.

2.6.2 The Problem with Shkreli’s Thinking To understand this context, we need to highlight a number of issues. It is important to realize that crossing lines is often an implicit process that occurs almost unnoticed. In other words, it is something we have to keep a close eye on. Case 2.6 is a prime example. When asked what he would do next time, Shkreli says he would put up the price even more. Conceived in purely economic terms, this statement is understandable and possibly even logical. But in the context of the interview, his statement is more than just an economic one. What claim did Shkreli actually make in the interview? By making the implicit aspect of the statement explicit, we arrive at two possibilities: • I don’t give a damn about morality and so I would have raised the price even more. The demand curve for drugs is inelastic, which means I could have made even more profit for my shareholders. • I have the moral right to make a profit and so I would have raised the price even more. The demand curve for drugs is inelastic, which means I could have made even more profit for my shareholders. For now, we will focus on the second claim. To the extent that the second statement reflects Shkreli’s position, we can see an implicit transformation taking place and with it the almost imperceptible crossing of a line. The statement appears to be an economic claim but it is in fact a moral claim. The problem with this moral claim is that it implicitly transforms the justifiable “right to pursue profit maximization” into the unjustified claim that there is an unlimited and unrestricted right to profit maximization. In glossing over that distinction, the second assertion crosses a line almost unnoticed. Another issue that needs to be highlighted is why “absolutizing the right to maximize profits” is actually wrong. Why shouldn’t that be allowed? To answer this, we need to take a more detailed look at the first version of Shkreli’s first statement as made explicit by us. What exactly was he saying? • I don’t give a damn about morality and so I would have raised the price even more. • I don’t give a damn about morality and I have a fundamental right not to give a damn about morality and so I would have raised the price even more. It is important to realize that the question “Why shouldn’t that be allowed?” is a normative question. In other words, the only meaningful interpretation of Shkreli’s words is the second variant because it is the only one making a moral claim that

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we can evaluate in terms of its normative validity. However, when we make that interpretation, it is immediately clear why his course of action should not be allowed: the statement contains an internal contradiction. The notion of a fundamental right to disregard morality makes no sense because morality itself is the fundamental normative level: it is the domain of the unconditional. However, there is no way in which morality can rule itself out by appealing to itself. That is an absurd thought. It follows that the moral right to profit maximization has to at least remain within the bounds of morality. Which in turn means that it cannot possibly be an absolute right. The third thing to highlight is that “crossing a line in thinking” does not only happen from an economic perspective. Some people absolutize the legal perspective, claiming they are not doing anything wrong because they are operating within the bounds of the law. We saw this claim being made in Case 2.3: Beatrice argued that her dismissal was unjustified because, in legal terms, she had done nothing wrong. The problem with such a statement is that it is perfectly possible to make moral errors while remaining within the bounds of the law. Respecting legal boundaries is a different thing from respecting moral boundaries (Box 2.6).

Box 2.6: Is it Possible for Morality Itself to Cross a Line? A person may ask themselves why morality has the right to tell other nonmoral normative frameworks that they are “going too far” in their thinking. What allows morality to call legal or economic thinking to order and not the other way around? Isn’t it possible for morality itself to cross a line? It may sound paradoxical but the answer is no: that is not possible. From a formal perspective, moral speech is fundamental speech. We have already determined why that is the case: moral speech is unconditional, while all other speech is conditional. All economic thinking states: given that economic thinking is important, you should do this or that because it is profitable. Morality simply says: you cannot do this or you must do that. The reason why morality cannot be called to order is that when morality points out that we have “gone too far” in our thinking, it is because we act as if non-­fundamental speech has the right to pretend to be fundamental speech. Or more precisely: in these cases we take a conditional claim (such as “I have a right to make profit”) and treat it as if it is an unconditional claim without actually putting it to the test at that level. From a moral point of view, any principle may pose as a moral principle as long as it is treated and investigated as such. When we do so, however, it is often easy to prove that the statement does not actually make sense as a moral principle. It cannot be stripped of its conditionality without running into great trouble or even a contradiction. Our analysis of Case 2.6 is an illustration of what happens under those circumstances.

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We can therefore say that a crucial context in which moral questions arise is that in which: 1. we realize we are crossing a line in our thinking and need to reflect on this, or; 2. we start asking ourselves whether we might be crossing that line, or; 3. others point out to us that we are crossing that line. All of these contexts lead us into a moral discussion.

2.7 Moral Issues Arising from Character

Case 2.7 In March 2021, the straight-laced world of Dutch notaries was shaken to its core. One of its leading figures and chair of the State Advocate’s office was found to have defrauded his company and his clients on a massive scale: over the years tens of millions of euros had gone up in smoke. Aspects of the case made the offences even more flagrant. For example, Frank Oranje, the notary in question, had organized a seminar on integrity to mark his 25th year in the profession, a seminar at which he himself gave a high-flown speech about his organization’s moral compass. The question on everyone’s lips was why. What possessed this man to commit fraud on such a scale? He was not around to provide the answer, having committed suicide when his deception came to light. Economically, it made little sense: he was already at the top of his profession and his illicit activities must have caused him all kinds of trouble and stress. He was also exposing his partner and children to enormous risks: financial, reputational and existential. For instance, his widow had to sell their house to compensate for the losses he brought upon his company.5 In all likelihood, his nearest and dearest were left wondering: what kind of man were we living with all this time? Will I ever be able to live down the shame of being associated with such an unbelievable hypocrite? Surely Oranje must have been aware that the shame of his father’s crimes drove Bernie Madoff’s son to commit suicide in 2010? Even that risk apparently left him indifferent, or he was not capable of reining himself in despite these very real dangers. Delving into his background in search of “the real Frank Oranje”, journalists concluded on the basis of interviews that Frank was not a normal person. They portrayed him as someone with a disturbed personality. People under his authority dubbed him “the little fascist” behind his back because of his vindictive and domineering manner. Even so, it remained unclear what had caused him to go off the rails in this way (see Kreling, 2021).

 https://www.accountancyvanmorgen.nl/2021/08/10/weduwe-oranje-verkoopt-vastgoedom-fraude-te-compenseren/ 5

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In moving on from Context 2 to Context 3, we have made a striking transition. Up to and including Context 2, the focus of morality lay primarily on the interpersonal intercourse between people: what was at issue were actions which at least had an empirical component. The discussion centered principles such as “do not kill”, “do not steal” and other principles that are expressed, at least in part, as external actions. In Context 3, morality focuses entirely on the person and how they think. This involves two transitions: from the interpersonal to the personal and from external action to thought. Because philosophers also regard thinking as an action, it is possible to speak of internal actions in this regard. In the fourth context, morality is about the development of character and virtues. In this sense, it ties in with the third context and could be seen as a more generalized version of it. Whereas the focus in the third context was the development of a particular way of thinking, in the fourth it is about the development of character more generally. This is why we chose the Frank Oranje case to introduce this section. In all the narratives built around this case, the character issues are emphasized. (Obviously, if we would look at the case from a little more distance, we would surely find institutional factors triggering or pushing his behavior. Something must be rotten in the State Advocate’s office as well. This is at least true of other famous cases in which “character of key figures” is given a lot of explanatory weight, such as the American Enron case6 or the Italian Parmalat case).7 A well-developed character expresses itself in virtues such as courage, moderation, justice and wisdom. A bad character shows itself in vices such as anger, jealousy, miserliness, greed and lust for power. In this regard, a virtue can be described as an ability or attitude to do what is right and good (Aristotle, [384–322  BC] 335–332 BC). A virtue is much more firmly internalized in human beings than a habit or a tendency. A person who truly possesses the virtue of justice cannot help but be just. They have the will to be righteous and will express this desire through their actions. In this sense, (the idea of) a virtue is similar to a profession, for example, as a doctor. A good doctor doesn’t just want to help sick people; he actually helps them. Of course, this does not rule out the possibility that even a very good doctor can make a wrong assessment. Human beings are not perfect. Opposite virtue is vice. A truly unvirtuous person not only does things that are morally wrong but also derives a certain satisfaction or pleasure from acting in this way (Aristotle, 335–332 BC). For example, a person with an irascible character may derive a certain satisfaction from taking out their anger on others, while a manager with a lust for power may enjoy lording it over the members of their team.

 https://en.wikipedia.org/wiki/Enron_scandal  https://nl.wikipedia.org/wiki/Parmalat-schandaal

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2.7.1 Virtues The link between morality and character goes back a long way. In ancient times, the nurturing of virtues was at the very heart of morality and developing a sound moral character was key to becoming a moral being. Virtues were also central to morality in the Middle Ages. Great philosophers at the beginning of modernity, such as Hume (1739) and Kant (1797) were also concerned with virtues and each developed their own variant of an approach known as virtue ethics. In the twentieth century, the focus on virtues dissipated somewhat but more recent work in philosophy provides evidence of a resurgence (Kole & Sanderse, 2019; Van Tongeren, 2003). Of course, the idea that people should develop good character is not restricted to philosophers. It can also be seen in a widespread call for integrity in the public domain, another concept that relates to character. The emphasis placed on trust and honesty throughout society is another indicator of the importance that people attach to character. Even so, it is worth asking why developing virtues is actually important: what purpose does it serve? The answers to this question reveal a difference between the philosophical approaches. Aristotle argues that developing virtues is important because it makes us good or better people. By “better” Aristotle not only means better in terms of morality, but also in terms of well-being and happiness. Quite simply, a virtuous person leads a better life than a non-virtuous person. According to Aristotle, therefore, the pursuit of virtue is both wise and moral. Kant lived at a time when Western society already had a much sharper sense of differentiation. For Kant, then, the distinction between what is sensible and the notion of moral obligation is important. Above all else, he argues, developing virtues is our human duty. Kant would not deny that possessing virtues can also have the effect of making a person happier and encouraging them to act more wisely. However, those effects should not be the reason for developing virtues. Or at least, if that is the reason, then a person has nothing to be proud of from a moral perspective. Kant’s position on this is closely aligned with our everyday thinking: businesses who claim that they have done something “morally good” need to back up that claim or risk facing a public backlash and accusations of window-dressing or greenwashing. People are always keen to sniff out the self-interest in any virtuous move made by a business and having found it their response is: “You see, they are not really acting virtuously at all. They are just a bunch of hypocrites.” In other words, public opinion – like Kant – makes a sharp distinction between what makes good business sense and what is moral. It should be added, however, that Kant (1788) strongly disapproved of constantly seeking to attribute bad intentions to others. In his view, that was most definitely an immoral thing to do! It is also worth asking what gets better as a result of virtues. The answer is that they lead to better human actions and judgments. A virtue such as courage helps us take better action, while being just is linked to the ability to judge better. But the importance of virtues goes beyond this. Some virtues, such as moral sensitivity, help us to obtain a better perception of reality and of ourselves. This is a surprising but

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important idea that comes from virtue ethics: a virtuous person sees reality differently and better than an unvirtuous person. An angry person at the wheel of a car sees someone deliberately cutting in front of them on a busy road; a virtuous person sees someone who has most probably got themselves into a tight spot and therefore needs some space.

2.8 What We Now Know About Morality In this chapter we have explored the nature of morality. We have examined what we are actually talking about when we talk about morality. We have found that morality involves problems of action. This makes the moral view a form of normative judgment. What distinguishes morality from non-moral normative judgments is that morality is concerned with fundamental judgments. In many cases, we don’t have to think very deeply about our moral response: it comes more or less naturally. But in some cases, moral action does require reflection. In this chapter, we started by looking at what the concept of “fundamental” means in our differentiated society. We noted that in terms of formal meaning, the fundamental is to do with judgments and actions that are (or are supposed to be) absolutely true. Or, to choose a formulation that is somewhat paradoxical, with judgments and actions interpreted from the perspective beyond any perspective. The moral is unconditional and therefore beyond any conditional perspective. We then outlined four contexts in which moral questions arise and, in doing so, gained a substantive grasp of morality. We established that: 1. the moral has to do with setting boundaries that protect the fundamental rights of people (and other creatures); 2. the moral is also an inspiring and driving force, and as such, it concerns an orientation toward good (the common good, what is good for others, but also what is good for yourself); 3. morality has to do with the ways in which we think and it requires people to think carefully; 4. morality also has a strong link with character development and virtues.

References Aristotle. (335 BC–322 BC/2005). Ethica nicomachea (C.  Hupperts & B.  B. Poortman, Trans.). Damon. Butler, J. (1726/2006). Sermon 1. In D. Whiter (Ed.), The works of Bishop Butler (pp. 47–54). Rochester University Press. De Hauw, S., & de Vos, A. (2010). Millennials’ career perspective and psychological contract expectations: Does the recession lead to lowered expectations? Journal of Business and Psychology, 25(2), 293–302. https://doi.org/10.1007/s10869-­010-­9162-­9

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DeGeorge, R. T. (1982/1999). Business ethics (5th ed.). Upper Saddle River. Grotius, H. (1738/2005). The rights of war and peace (edited by A. C. Campbell). Elibron Classics. Habermas, J. (1981). Theorie des kommunikativen handelns (Vol. 1–2). Suhrkamp. Habermas, J. (1992). Faktizität und Geltung. Beiträge zur Diskurstheorie des Rechts und des demokratischen Rechtsstaats. Suhrkamp. Hu, J., & Hirsh, J.  B. (2017). Accepting lower salaries for meaningful work. Frontiers in Psychology, 8(1649). https://doi.org/10.3389/fpsyg.2017.01649 Hume, D. (1739/2020). Traktaat over de menselijke natuur. Boom Uitgevers. Jonsen, A. R., & Toulmin, S. (1990). The abuse of casuistry. University of California Press. Kant, I. (1788/1913). Kritik der praktischen Vernunft. In Kant’s gesammelte Schriften Band 5 (pp. 1–164). W. De Gruyter. Kant, I. (1793/1910). Die Religion innerhalb der Grenzen der bloßen Vernunft. In Kant’s gesammelte Schriften Band 6 (pp. 1–202). W. De Gruyter. Kant, I. (1797/1914). Die Metaphysik der Sitten. In Kant’s gesammelte Schriften Band 6 (pp. 203–493). W. De Gruyter. Kole, J. J., & Sanderse, W. (2019). Karakter. Deugden voor professionals. ISVW Uitgevers. Kreling, T. (2021, March 3). Mr. Frank Oranje, de notaris die zijn gezin en zijn beroepsgroep in verbijstering achterliet. De Volkskrant. https://www.volkskrant.nl/mensen/mr-­frank-­oranje-­de-­ notaris-­die-­zijn-­gezin-­en-­zijn-­beroepsgroep-­inverbijstering-­achterliet~bbc704f4/ Marcel, G. (1956). De mens zichzelf een vraagstuk. Bijleveld. Nietzsche, F. (1882/2003). De vrolijke wetenschap. Arbeiderspers. Parsons, T. (1967). Sociological theory and modern society. The Free Press. Romanillos Hoendervanger, L. (2021, July 30). Afgehakte neus en oren, implantaten op zijn voorhoofd: je kunt Henry (33) zomaar tegenkomen in Oss. Brabants Dagblad. https://www.bd.nl/ oss-­e-­o/afgehakte-­neus-­en-­oren-­implantaten-­op-­zijn-­voorhoofd-­je-­kunt-­henry-­33-­zomaar-­ tegenkomen-­in-­oss~a082c8fe/?referrer=https%3A%2F%2Fwww.google.com%2F&cb=c3368 0b4492e5a3611e71ca596edcb1d&auth_rd=1 Schneewind, J. B. (1998). The invention of autonomy. Cambridge University Press. Seneca, L. A. (41 AD/2012). Anger, mercy, revenge (R. A. Kaster & M. C. Nussbaum, Trans.). University of Chicago Press. Singer, P. (1972). Famine, affluence, and morality. Philosophy and Public Affairs, 1(3), 229–243. https://www.jstor.org/stable/2265052 Thompson, D. (2015, June 15). The greatest good. The Atlantic. https://www.theatlantic.com/ business/archive/2015/06/what-­is-­the-­greatest-­good/395768/ Van Lent, D., & Ribbens, A. (2017, October 6). Gratis kunst die stiekem toch 1,5 miljoen kost. NRC. https://www.nrc.nl/nieuws/2017/10/06/gratis-­kunst-­die-­stiekem-­toch-­15-­miljoen-­ kost-­13365402-­a1576353 Van Tongeren, P. (2003). Een inleiding in de deugdethiek. Uitgeverij Boom. Weber, M. (1922/1972). Wirtschaft und Gesellschaft. Grundriss der Verstehenden Sociologie. J.C.B. Mohr.

Chapter 3

The Grounding of Ethics and Business Ethics Wim Dubbink

Abstract  Is morality not relativistic and without ground? A big difference between almost any other culture and our modern culture is that people often are confronted with skeptical questions about the grounding and the meaning of morality. Even people who affirm morality’s importance find it hard to reply to the moral skeptic’s questions. That is why an introduction into business ethics must devote attention to the ground and meaning of morality. In view of morality’s meaning, we discuss two ways in which morality must be given meaning: in terms of human personhood and the constitution of society. As regards to the ground of morality, we select two popular topics: “free will” and “relativism” and discuss if, how, and when the denial of free will and the affirmation of relativism affect the idea that morality has a ground.

Questions 1. What is at stake when we discuss “the grounds” for morality? 2. Why does an introduction to business ethics need to address abstract questions about the grounds for and the meaning of morality? 3. What meanings can be given to morality and what effect do these meanings have on the substance of normative ethics? 4. What does the distinction between thinking from an internal and an external perspective entail and why is this distinction relevant to discussions on the grounds for and meaning of morality?

W. Dubbink (*) Department of Philosophy, Tilburg University, Tilburg, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_3

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3.1 Three Cases Case 3.1 Koek BV is a Dutch company that makes cookies. One of its specialties is syrup waffles. After extensive market research, the company believes it has found an ideal market for its waffles: Iran. One thing leads to another and within a few years, Iran has become a growth market for Koek BV. The company sends Ellen to Iran to manage the operation. Ellen is not only a very capable manager but also a strong advocate of women’s rights. She has no intention of acting in accordance with the restrictions imposed on women in certain countries. Iran enforces a stringent dress code for women, although until recently – somewhat less strict than a country like Saudi Arabia. Within a few weeks, the inevitable happens: there is an uproar within the Iranian operation: Ellen has not been complying with the dress code. The general management of Koek BV resolves to have a morally normative discussion about whether Ellen is doing the right thing and whether the company should support her, or whether she is not doing the right thing and should therefore be held accountable. Eva argues that Ellen is going a step too far: she emphasizes the importance of respecting other cultures and believes that Ellen’s conduct goes against this principle. Richard believes that gender equality takes precedence over local customs and that the company should therefore support Ellen in her struggle. Monique voices the opinion that morality is relative and so it is pointless to attempt to hold a rational moral discussion on this issue: Iranians believe that the dress code is more important, Westerners that gender equality is more important, and that’s all there is to say on the matter.

Case 3.2 This case is a variation on Case 3.1, with a different ending. Barbara has taken Monique’s place in the discussion. Like Monique, Barbara argues that morality is relative but on that basis she concludes that Ellen should therefore conform to the norms and values of the country in which she is now working.

Case 3.3 The problems at Koek BV have become national news. One of the company’s employees has tipped off the media about the situation around Ellen in Iran (and the discussion it has sparked). Erica and David become involved in a normative moral debate on the issue. Erica cites human rights and defends the position that Western women should have the right to dress as they wish no matter where they are. Adam does not dispute that human rights are relevant, (continued)

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Case 3.3 (continued) nor does he reject the argument that all people – and therefore all women – have the right, in principle, to dress as they wish. However, he also believes that Erica is being too radical in her interpretation of this principle. We also need to respect other cultures. He asks Erica, “How would you feel if I turned up for your mother’s funeral in shorts and a sloppy T-shirt? You would find that disrespectful too, wouldn’t you? So there are at least some situations in which dress codes apply. Your general principle therefore needs to be formulated in a more nuanced way.”

3.2 From Normative Ethics to the Grounding of Morality The core of this book is a philosophical introduction to normative business ethics. Normative ethics reflects on substantive moral issues. Normative moral issues directly – or indirectly – make a judgment that has consequences for action. The discussion that the company employees attempt to have in Case 3.1 is an example of normative moral reflection: the discussion centers on whether Ellen has acted rightly or wrongly in the given situation and whether Koek BV should support Ellen or not. Case 3.3 is another example of this type of discussion. However, Case 3.3 centers on the validity of the general principle that people are always free to dress any way they choose. This principle applies in general but it also has indirect consequences for action because it says something about what we should do in every situation that involves a dress code. Normative moral debates take place frequently in the current cultural and social context. Companies and business people also have to deal with discussions of this kind. The case described is very much true to life. In fact, it incorporates aspects of various real case studies. The reasons why companies and business people become involved in normative discussions may vary. Such discussions are often fueled by a sincere moral ordeal or moral outrage (e.g. a conviction that this is not how people should be treated). Some moral discussions are driven by self-interest (e.g. I have been treated unjustly). And in some cases companies and business people are guided solely by concerns about damage to their reputation. As diverse as these situations are, companies and business people would do well to develop the ability to engage adequately in normative moral discussions. Admittedly, this type of reflection often seems doomed to fail: normative moral debates often get bogged down. Many a discussion appears to end with just as much agreement or disagreement as there was to start with. This often leads people to sigh “Well, everyone has their own opinion about moral issues” or “What’s the point? We’ll never get to the bottom of this.” Case 3.1 is a good illustration of this: the employees begin a normative moral discussion with the best of intentions but before long someone insists that moral norms are relative and that it’s pointless to even attempt a rational discussion of a moral issue. What else is there to say after that?

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This issue is relevant to companies, where faltering moral discussions are as frustrating as in any other context. It may even be extra relevant for companies to be aware not only of the problem that moral discussions can easily get bogged down but also of the standard reaction to this problem: using this as a moral excuse (note the irony!) for taking morality less seriously. In a business context, the risk that moral discussions are not given the attention they deserve is always considerable. In many instances, certain parties have a vested interest in downplaying the relevance of morality. Empirical research has also shown that managers are usually embarrassed to raise moral issues within their companies (Badaracco & Webb, 1995; Bird & Waters, 1989; Bowie, 1999). Hence, especially in a business context, there is a serious risk that the difficulty of having a moral discussion without it getting bogged down will be used as a convenient way to justify ignoring moral issues altogether. Yet, failing to deal properly with moral discussions can end up having repercussions for the reputation of a company or an individual, as there is always the chance that a change in the public mood can cause the government or society at large to take a particular issue more seriously.1 The mission of this chapter is therefore to show that the commonly felt frustration about normative moral debates is unjustified. This kind of debate can most certainly be useful and meaningful. However, the people taking part in the debate first have to comply with the conditions that make it possible. While this may sound logical, it is often the root of the problem: people frequently – or even by default – fail to observe the parameters of such a debate, often without wanting to or realizing what they are doing. The result is as predictable as it is frustrating. There is another way to describe this problem than by saying that people frequently violate the conditions of normative moral debate. Normative moral debates can be said to transform into  – or slide into  – reflections on the fundamental aspects of morality. This can be seen in Case 3.1: normative moral reflection (on what to decide or what to do) transforms into reflection on a fundamental level (i.e. whether or not it is possible to have a rational discussion about what to decide or do). The problem with this transformation can be highlighted by comparing it to other types of discussion. Let’s imagine a bunch of soccer fans discussing an actual match between Dutch team Ajax and Belgium team Anderlecht. A player was booked for a tackle and there is some debate about whether the tackle was good or not: in other words, did it constitute admissible behavior within the rules of the game? One fan shrugs and says soccer is just a game after all and a different set of rules could just as easily apply. While this might make an interesting topic for debate, it is entirely irrelevant to the discussion of whether or not this particular tackle was admissible: that discussion is based on the rules as they currently exist and how they were applied in that particular instance.  A well-known example of this involves the Ford Motor Company and its ambition to produce a competitively priced car in the 1970s. The new model they came up with, the Ford Pinto, turned out to have a defect that could cause the car to explode quickly if it was hit from behind. Rectifying this problem by recalling every car sold would have saved lives but it would also have cost the company 11 dollars per car. Ford concluded that the lives saved did not outweigh the cost of the repairs and decided not to recall its cars. When this story entered the public domain, it sparked widespread outrage. Ford’s hard-nosed approach to this moral issue was a public relations disaster. The case went down in history as the first time that a corporation was charged with homicide. 1

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The example of a physics lesson can also highlight the problematic nature of this transformation. While the teacher is explaining how to calculate the resistance a car encounters when travelling along a road, one student pipes up and asks whether “time” actually exists and if so, how did it begin? Intriguing questions but they have no place within the context of that lesson. The issues raised by the student concern the fundamentals of physics and have no place in a discussion about an aspect of applied physics. Bearing these examples in mind enables us to rephrase our mission. We need to insert a chapter on the fundamentals of ethics and business ethics. It is worth remembering that business ethics only partially has a foundation of its own. In this chapter, therefore, we will also devote considerable attention to the fundamentals of ethics in general (although we will draw examples from the business world). In short, the objectives of this chapter are: 1. to explain how and why we should distinguish between reflection on fundamental aspects and normative moral reflection; 2. to provide a brief introduction to key discussions at the fundamental level; in doing so, we will repeatedly show that insights into fundamental matters give us good reason to take normative moral discussions very seriously indeed. These objectives are not that easy to achieve. We need to keep our exploration brief, yet fundamental matters raise many questions, have a strong methodological slant and often require knowledge of the philosophical tradition in order to explore an issue in greater depth. The philosopher Boethius ([480–525] 528 [2019]: 142), writing 1500 years ago, had this to say about reflecting on the fundamentals: Such is its nature that, as fast as one doubt is cut away, innumerable others spring up like Hydra’s heads, nor could we set any limit to their renewal did we not apply the mind’s living fire to suppress them.

To get a feel for the issues we will be dealing with in this chapter, let us start by analyzing Cases 3.1, 3.2, and 3.3. Our main intention in the rest of this section is to show how discussions are undermined by a transformation from one level to another and how, on closer inspection, that situation can be avoided. With this in mind, we can start by noting that the normative moral discussion in Case 3.1 is undermined by the considerations introduced by Monique. Perhaps unintentionally, Monique introduces a consideration and a conclusion into the normative discussion which question the very basis for morality: 1. all moral standards and principles are relative; 2. and because this is the case, it is not possible to say anything meaningful about morality. Both of Monique’s statements are not so much moral claims in themselves as they are claims about the possibility of rational moral discussion. In other words, they address the fundamentals of morality. If you accept those fundamental claims, then normative moral discussions make no sense and so bringing these assumptions into the discussion undermines the discussion as a whole. This effect is all the more powerful because Monique introduces the propositions as if she were simply participating in the normative discussion.

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Case 3.2 is another example of a transformative discussion. In this case, it is even clearer to outsiders that the participants did not realize that a transformation had taken place. This is due to the conclusion that follows Barbara’s initial statement: after making her observation at the fundamental level, Barbara immediately brings the discussion back to the level of normative moral discussion. Here is what happens: 1. Like Monique, Barbara says that all moral standards and principles are relative. 2. But she then goes on to draw the normative moral conclusion that Ellen therefore has to respect the culture of the country in which she is living! From a methodological point of view, this follow-up step is problematic. No normative conclusions can be drawn directly from considerations at the fundamental level. Even if you accept that all moral standards and principles are relative, that does not necessarily mean that you have to respect another culture. Barbara’s reasoning lacks an intermediate step which states the normative consequences of the fundamental proposition that “all norms and values are relative”. Once you realize this, it immediately becomes clear that Barbara’s leap is not a logical conclusion but a non sequitur: her second statement does not follow from her first. After all, if you maintain that all moral norms and principles are relative, this means that anything you say about morality does not apply to anyone else; in other words, you deprive yourself of the possibility of making generalizable statements about normative morality. To take this line is to leave yourself nothing to say where morality is concerned. You certainly cannot claim that we should respect other cultures, if for no other reason than the possibility that “respect other cultures” may not even exist as a moral rule in some cultures. If your reasoning is consistent, you have no choice but to recognize that your own moral rule of “respect other cultures” therefore does not apply to them. And if it does not apply to others, then why should it apply to you? It is important to note that our analysis, in this section at least, does not refute relativism as a fundamental position. All we have demonstrated is that, when dealing with morality, it is essential not to confuse various levels of analysis. As our analysis shows, this is always a methodological misstep. The substantive discussion of relativism (as a fundamental position) will follow in the final section of this chapter. We conclude this section by briefly addressing (Box 3.1) a possible misconception about our criticism of mixing levels of argument. Box 3.1: Are You Saying We Shouldn’t Respect Other Cultures? After our analysis in Sect. 3.2, some readers might reach the conclusion that the authors accept the view that people cannot or need not respect other cultures. That would be a serious misconception. The purpose of this box is to show that our criticism of sliding from one level to another in a discussion should not be mistaken for cultural arrogance. In our culture, cultural relativism is seen as having moral value: it is not right to simply assume that other people should accept what we think is (continued)

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Box 3.1 (continued) morally right, nor should we consider ourselves morally superior (unless we have good reasons to back up our position). Cultural relativism can be understood in two ways: as a position on fundamental aspects that essentially makes moral discussion impossible, and as a normative moral position that amounts to saying we have to respect the “otherness” of other cultures (the position expressed by Adam in Case 3.3). To avoid confusion, we will refer to this second type of cultural relativism as the respect for other cultures principle. To reject the respect for other cultures principle outright would be to open ourselves up to the charge of cultural arrogance. However, that is not what we are doing. To understand the difference between cultural relativism and the respect for other cultures principle, it is crucial to grasp the difference between the following three statements: (a) Morality is relative and so holding a rational discussion about acting morally is absurd (Monique’s view); (b) Morality is relative and so we should always respect other cultures (Barbara’s view); (c) It is arrogant to always assume that you or your culture knows the truth about everything and so it is an important normative moral principle to respect other cultures and other people (Adam’s view). Statements (a) and (b) are culturally relativistic. Statement (a) is concerned with a fundamental position while (b) leaps from the fundamental to a normative discussion without taking any intermediate steps. Neither statement has a place in a normative, moral discussion. Statement (c) expresses the respect for other cultures principle. This is a normative moral principle and, as such, it has a place in a normative moral discussion. If that principle had been introduced in Case 3.1, the discussion would not have faltered. Instead, it would have been picked up as a consideration to be taken into account as part of the moral discussion. This consideration enriches rather than undermines the discussion. If it had been introduced, it would have given the participants reason to make a new distinction, between the following positions: 1. We need to respect others and other cultures. 2. Some lines regarding how people are treated should never be crossed in any culture. It is clear that both normative principles are important and in most cases one will not cancel the other out. There are only a few situations where the consequences of these principles clash (and not the principles themselves). With respect to those specific situations, we need to provide a precise definition of the application domain of one principle as opposed to the other. (continued)

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Box 3.1 (continued) There are all sorts of ways to arrive at a reasonable evaluation and comparison in this respect. For example, it is possible to explore whether the principle “we go along with local customs unless they violate fundamental human rights” might offer a good compromise between these two positions. On that basis, it might be possible to tolerate a situation in some cultures that obliges a woman to wear a headscarf (or men to wear a hat). But this same formulation raises a barrier against cultural practices such as female circumcision or not permitting women to initiate divorce proceedings (while men are free to disown their wives without due cause). Such practices represent a much more serious attack on fundamental rights and are more difficult to defend by appealing to the principle of respecting other cultures. It should be noted that we are not claiming that our compromise principle should be seen as the only or best solution to the situation outlined in Cases 3.1, 3.2, and 3.3. People may dispute the reasonableness of the compromise principle and may disagree on how problematic an enforced dress code is in relation to the principle that human rights cannot be violated. Does it represent a minor violation or a clear expression of a fundamental disrespect for women, and therefore constitute a major violation? In the event that disagreement persists, more reflection is needed.

3.3 What Is Reflection on the Grounding of Morality About? This chapter is devoted to the grounding of morality. But what exactly does that involve? This section will address that very question. Reflection on the grounding of morality can be described as moral reflection on the basic notions on which morality (or the possibility of morality) is based. Reflecting on grounding does not lead directly to instructions for action; intermediate steps must be taken before such instructions can be formulated. When reflecting on grounding, it is possible to distinguish between two complexes of questions. The first concerns the possibility of morality (i.e. its existence or reality). The second question at the fundamental level concerns the meaning of morality. The first question can also be rephrased negatively by asking whether morality ultimately rests on an illusion. To ask this skeptical question is to argue that people may think that there are sound moral reasons for doing certain things in certain situations, but in reality they are fooling themselves. Moral reasons are never true (i.e. meaningful) because morality is an impossibility. People who say that morality has no ground are saying exactly that: moral reasons are impossible, in that they refer to nothing meaningful. As the issues at stake become more abstract, there is often a greater need for examples. That need is hard to meet in this case: issues of grounding only have meaning in people’s thinking. Any clarifying example can therefore only relate to

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thinking or a discussion. Which is why we have constructed the following example. Suppose someone says, “The Pope is an important person because he is God’s representative on Earth.” Someone else might counter, “No he isn’t: God doesn’t even exist. There is no difference between the Bible stories and Grimms’ fairy tales.” In that case, the responder is claiming that the Roman Catholic faith has no ground. Or if someone says, “I want to make a million bucks because then I’ll be somebody.” Someone else might reply, “No, you won’t. The idea that money gives meaning to your existence is an illusion.” The responder’s point is that making money is a meaningless illusion in relation to what really matters in life (even though there may be many people who chase it). Similarly, one can claim that morality has no ground: it is an illusion. As Karl Marx said of religion, it is “the opium of the people” (1844). There are many arguments in the current moral discussion that lead to the conclusion that morality is ultimately an illusion and therefore has no ground. Later in this chapter, we will look at two sources that might give rise to this conclusion. We have chosen these sources based on the extent to which we encountered these arguments. The first source argues that science has demonstrated that, as human beings, we do not have free will. Free will is an illusion and therefore morality is an illusion, because morality presupposes free will (Sect. 3.6). The second source argues that everything in morality is relative. This argument, too, removes the ground for morality. Morality also presupposes the possibility of rational discussion, and this falls away if relativity is all-encompassing (Sect. 3.7). The question of what morality means can also be described as the question of the reason for or interpretation of morality. When people search for the meaning of a phenomenon, they try to understand it from within: as something that has meaning in and of itself. In a while, we will discuss the meaning of morality in greater detail; for now, we will begin by refining our notion of interpretation. In doing so, we will contrast the idea of interpretation with the idea of explanation by taking an example from outside of morality: love. Love can be both interpreted and explained (on this difference, see: Ricoeur, 1991, 2004) What is the difference? Love is a general human experience. Many scientists have marveled at the phenomenon and attempted to explain it: they look for the why in terms of causes. One such an explanation is that love increases the chances of survival of the species. Without love, a father to be would be more likely to abandon a pregnant woman, leaving her in a more vulnerable position. We can also try to interpret or make sense of love as a crucial human experience. This involves asking the question: “What is the point of love?” or “What does love mean to us?” These are synonyms for the question: “How can we understand love, taking into account the value we assign to the concept?” Philosophers give different answers to this question. Those answers partly include a description of what the phenomenon entails and partly a value that is based on it. A key answer about the meaning of love  – echoed by thousands of Hollywood movies and a million pop songs – is that love consists of an intimate relationship between two people that gives meaning to their lives (Singer, 2009; Frankl, 1946 [1981]). This illustrates the central differences between interpretation and explanation. To explain is to look for causes; to interpret is to look for a description that assigns

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value based on reasons. More importantly, an explanation looks at a phenomenon from the outside and at a distance. In an interpretation, a phenomenon is taken seriously from within and is described and understood in its own terms. For example, one can interpret a focus on making a lot of money by pointing to the personal freedom it gives and explain it with reference to the ways in which people are shaped by a capitalist society in which money plays a central role (Marcuse, 1964). Explanation and interpretation clash most clearly when considerations from the explanation are introduced as reasons in the interpretation: “I love you because otherwise the survival of my genetic material is in jeopardy.” Evolutionary biology may provide a good explanation for love, but as a way to make sense of what love means to someone, it is absurd. It is important to keep in mind that in this chapter we are only seeking to interpret morality. In doing so, we will look explicitly at two interpretations. Morality has meaning in terms of how we live together (Sect. 3.4) and morality has meaning in terms of being a person (Sect. 3.5). These interpretations have not been selected accidentally: morality is something that has to do with the relationships between people. Crucial duties like “do not kill” and “do not steal” have everything to do with interpersonal relationships. This is bound up with the meaning of morality in terms of how we live together. We will see that freedom is a crucial concept in this regard. However, morality is also bound up with how we as individual human beings relate to ourselves: with virtue, a right way of thinking, and self-discipline born of willpower. The other meaning of morality is linked to this. We will see how voluntariness and being human become crucial terms in this context. In doing so, we need to guard against the idea that we have to choose between one interpretation of morality and another. In reality, morality has to do with both meanings: morality is about freedom and about voluntariness. We will have to learn to come to grips with any paradoxes that follow from the need to take both interpretations seriously (Box 3.2). Box 3.2: Internal vs External Perspective The distinction between interpretation and explanation is a specific version of a more general distinction. We call this the distinction between the internal perspective on a phenomenon, and the possibility of an external perspective on the same phenomenon. The general idea that people can look at reality in two ways has been set out by many philosophers: Buber (1923 [2016]), Husserl (1936 [2016]), Nagel (1989), Ricoeur (2013), and Strawson (1962). Here is a brief overview. As modern human beings, we are accustomed to looking at reality from different perspectives: economic, political, legal, scientific, religious and moral (Habermas, 1981). For each of these perspectives, a person can choose to look at reality, as it were, “from within” the perspective. This involves accepting the validity of the conditions and consequences of that “internal perspective” and taking them as a starting point for interpreting the world. (continued)

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Box 3.2 (continued) From the internal perspective of economics, for example, an economist can look at an entrepreneur and say that they make a profit because they are an economic actor, and the aim of economic actors is to maximize their profits. It is also possible to comment from an external perspective on how a phenomenon is understood from an internal perspective. When passing comment in this way, we are no longer identifying with the principles of that internal perspective. For example, a psychologist – looking from the external perspective of psychology – might listen to the interpretation of the economist and say that the latter has not understood what is really going on. Viewing a given situation from the internal perspective of psychology, the psychologist might say that the economist is missing the point by interpreting what is going on in terms of profit and financial insights. The psychologist might argue that we are not in fact dealing with an entrepreneur who is trying to make a profit; we are actually dealing with a daughter who is determined to earn the respect and attention of her parents by making a success of her business. Looking at a situation from the external perspective therefore involves taking a step back from the way reality is understood from the internal perspective. As a consequence, that internal perspective becomes “strange” or “foreign”, as it were: an interpretation that does not appear to be in step with reality. It is important to realize that when we look at a phenomenon from an external perspective, we are not looking at reality in a way that is removed from any perspective. Human beings are only able to interpret within a framework. So when we step outside of one internal perspective, we are necessarily looking at that phenomenon from another internal perspective. That is why things appear strange and somehow out of joint when we look at them from an outside perspective. As we necessarily identify with a different perspective, we do not have a neutral perspective and hence everything from the previous perspective will inevitably sound a little strange and will be hard to take completely seriously. We can look at morality, like everything else, from a range of external perspectives. We have already seen what effect taking an outside perspective has: morality is no longer taken seriously in its own right. It is placed in another framework and understood in those terms: the framework of evolutionary biology, economics or religion. In all these cases, therefore, morality is reduced to something instrumental: its own intrinsic value and purpose is set aside. In this chapter (and in the rest of the book) we will take morality seriously in its own right. In other words, we are not out to explain morality but to discuss it in terms of its own value and purpose. We are opting to take the internal perspective. Understanding the relationship between the internal and the external perspective is crucial to understanding modern reality. It allows us to understand (continued)

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Box 3.2 (continued) that many comments to the effect that morality is an illusion have been made far too easily. They involve looking from another internal perspective and declaring it absolute, without justifying that absoluteness in any way. What happens to morality in these instances is comparable to what happened to the economist of our example. Without any argument, their perspective is brushed away by a psychologist claiming to know what is really going on. This also allows us to understand that many comments to the effect that everything is a matter of perspective have also been made far too lightly. After all, determining what we should interpret as “what is really going on” is a matter of crucial importance. For truth, science and meaning itself to exist at all, human beings need the concept of “what is really going on”. In a modern society, finding answers to that question can only take the form of determining which perspective should be prioritized in a given situation. Determining that right of priority in a particular case is a crucial philosophical question for modern society.

3.4 Morality to Enable Us to Live Together The meaning of morality is about how we should understand morality as a phenomenon: meaning requires a value-laden description that connects morality to human life. One way to give meaning to morality is to point out its importance for the possibility of living together. Often when people take this approach to giving meaning, they accept – or assume – that people are rational beings who are driven to a significant degree by self-love. Based on this assumption, it is fairly easy to show that morality has meaning. The basic idea behind this approach to giving meaning is that beings of that kind (i.e. rational beings driven by self-interest) realize that living together is the best way for them to live. This is how their self-love can be satisfied to the greatest extent. After all, such beings need other people  – and therefore a way to live together – in order to thrive. Without others, they wouldn’t even be able to reach maturity. But adults also need others: not only friends and loved ones, but on a far wider scale they need people to do things for them, such as make products and obtain knowledge. Philosophers often characterize humans as “social beings” in this context (Aristotle, 350 BC [2005]; Hobbes, 1651; Mandeville, 1714). This does not necessarily mean that people are sympathetic or generously disposed toward others. The main point is that even if people were completely fixated on self-love, they would still need to live in a society in order to survive and have a good life. To express the idea that people are not entirely wholehearted social beings, some have spoken of humans as unsocial social beings (Kant, 1784). If it is a given that humans are social beings (or at least unsocial social beings) then the need for morality can be demonstrated. For coexistence to work effectively,

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certain basic rules and principles are essential. Basic moral rules such as “do not kill”, “do not steal” and “respect each other” regulate the interactions between people. According to this interpretation, morality provides those basic rules. Some say that without them there would be no society at all, while others maintain that we would not have a stable society or at any rate a good society. It is important to remember that this interpretation does not simply indicate why unsocial social rational beings need morality (objectively). It also shows why these beings themselves can understand why they have an interest in morality. As a result, the treatise not only gives meaning to morality but also shows that beings of this kind would “naturally” give morality a place in their society. This explication of the meaning of morality appears solid. One important reason for this is that it interprets morality in a way that can also be easily understood from an external perspective. This is because it provides an interpretation of morality that is functional, which means it also makes sense to someone who takes an economic or other non-moral perspective. However, from a moral perspective, the interpretation is less convincing than it seems. The moral value of morality does not emerge very clearly in an interpretation that leans heavily on values such as “survival” and “stability”. These values are not entirely sufficient if we are to make the meaning of morality explicit from the moral perspective. Take stability, for example: not all stable societies are valuable and good, yet good is the thing that morality is oriented toward. Slavery existed in many stable societies (and still does, despite legal prohibitions). Slavery is unjust and is therefore not good. Nor is it the case that all moral principles necessarily contribute to stability, far from it in fact. An equitable balance between men and women is an important moral principle in the work context, but this principle was not observed for centuries without leading to instability, though of course many millions of women were wronged in the process. By contrast, over the course of the last 150 years women have demanded their rights, including the right to work. This has caused major upheavals and therefore breaches of stability as human beings (in this case men) find it very hard to give up their prerogatives, even if they are undue. To achieve a deeper and more consistent understanding, therefore, we need to go the extra mile in our attempts at interpretation. We need to show that morality is important not so much for the constitution of society but for the good society; i.e. the society that we as humans should value. This of course gives rise to a myriad of questions, not least the question of which values can be seen as good.

3.4.1 A Free Society Today, a value often invoked to define what makes a society good is freedom. From this viewpoint, morality has meaning because it can lead to a society in which people are able to live together in freedom. Of course, it is then up to philosophers to indicate what freedom is meaningful for. Even in explicating the value of freedom, many philosophers limit themselves to the assumption that man is a rational being driven

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by self-love. That is, they seek to account for the value of freedom in terms that a rational being, driven by self-interest, can understand and recognize as valuable. This common assumption facilitates the search for the value of freedom by allowing freedom to be interpreted in functional terms that suits this type of person. A common functional argument for freedom is that it enables people to implement their own life plan. An additional argument assumes that human beings, driven by self-love, find meaning in life by pursuing happiness. The functional argument building upon this assumption is that a free society gives people the greatest chance of realizing happiness, not least because different things make different people happy. To pursue their own personal idea of happiness, it is therefore important that people are able to make their own free choices. Another point often made, is that humans have a “natural inclination” toward freedom. This makes freedom a necessity, like food and having a roof over your head. Whether or not that need is met is an important condition for the possibility of happiness. Once the value of freedom has been demonstrated in this way, it can then be shown that a free society can only exist by virtue of certain basic rules, such as “do not kill” and “do not steal”. A free society is therefore a moral society.

3.4.2 Self-Evident Truths For some people, the questioning stops here. The US Declaration of Independence speaks – in a political context – of self-evident truths. The moral sphere, however, refers to the absolute. It does not accept the idea of a self-evident truth. This means that we are entitled to challenge morality and question the assumptions we have made and the issues we have not yet put up for discussion. These questions about our assumptions include: 1. Are people really driven purely by self-love? 2. Are people really geared purely toward the pursuit of happiness? 3. And above all, do people become meaningful beings when, driven by self-love, they achieve happiness? That last question may sound a bit curious. That is because, in the previous argument, there was a gradual  – and tacit  – shift in the question. In order to explain morality’s meaning in simple terms, we shifted the question of the objective meaning of morality to the question how rational self-interested beings can be convinced of the importance of morality. This concerns the issue of the subjective meaning of morality. The objective and the subjective meanings of things do not have to be identical. It takes little effort to explain to a miser the meaning of saving up as much money as possible, even if it turns out to be harmful to one’s friendships. Explaining the objective meaning of excessive saving is much harder, if it is possible at all. The third question reminds us that we are actually interested in the objective meaning of morality and not just in making sense of morality in relation to a certain kind of person. It also points out that we have not said enough about morality’s

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objective meaning. As things stand, it is still unclear why the existence of free beings feeling happy is meaningful at all. Why shouldn’t the existence of such beings be as meaningless as the existence of a rock floating through space that will one day be swallowed by a black hole? What does it matter if these meaningless beings find subjective meaning in freedom? And what does it matter if these meaningless beings are happy or not? Does happiness have any meaning beyond a pleasant sensation for the person experiencing it at that moment? When we challenge morality by asking these kinds of questions and push it to say something about its objective meaning, we steadily reach the limits of meaning generated on the basis of our need to live together. It is time to start looking at the other strand of meaning: as expressed in terms of being a person. This is not to say that the search for meaning based on living together has ultimately failed. To the extent that we do not question the assumptions on which it is based, this approach to seeking meaning is perfectly satisfactory. But at times we are inclined to ask even more questions.

3.5 Morality in Relation to Being a Person The previous approach to giving meaning to morality involved searching for a meaning that could be understood by humans defined as rational beings driven by self-love. This restriction allowed for a functional interpretation of morality. An instrumental value was attributed to morality. The challenging questions posed above force us to move beyond the instrumental. We need to find a way to link morality to a value that has meaning in and of itself and then to show that this value is inseparable from morality. A commonly chosen value is “being a person”. Our first step in pursuing this link is to make explicit why – from the internal perspective of morality – “being a person” is considered inherently valuable; we can then proceed to explore the link with morality.2 Our examination of this issue will be very brief. Only the outlines will be touched upon.

3.5.1 The Value of Being a Person In Western thought (and indeed in other traditions) there is a strong emphasis on the significance and value of being a person. In this regard, we can define a person as a being which is not only alive (in the same way that an amoeba or a tapeworm is alive) but which is also entitled to claim a right to life because their life is valuable. The term “person” in this sense is not equivalent to the term “human being”. The person is a being that has worth.  It is important to keep emphasizing that this interpretation is from the internal perspective of morality. This rules out objections such as “this holds no interest for me” or “there is no objective need to see that as a value”. In this context, such arguments are irrelevant. 2

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The notion that all human beings are also persons will generally meet with little resistance in this day and age. Most people assume, at face value, that human beings have worth and are therefore persons. This thought is a self-evident truth for many. In any case, most human beings give themselves all kinds of basic moral rights, such as the right to exist, the right to end one’s own life, the right to express one’s opinion and so on. All these moral claims ultimately rest on the status as a person that human beings (implicitly) ascribe to themselves. Because morality is concerned with fundamentals, it is once again up to philosophers to question the obvious on the one hand and to make the reasoning behind the obvious explicit on the other. We will discuss one tradition which is propagated today by philosophers such as Barbara Herman (1993, 2007) and Christine Korsgaard (2009). Their thinking builds on the work of Kant (1788). At the heart of this thinking is the assertion that “being a person” is not something that you simply are. Fundamental worth as a person is something that is potentially due to all human beings. At the same time, it is something that people need to actualize or achieve in their own lives.3 To summarize briefly, we can understand this as follows. The status of person is something that gives a human being worth and rights. Those rights are not handed to you for free. You are only truly entitled to them if you also fulfill the corresponding duties. In addition, this tradition emphasizes that human beings should not perform these duties casually, as a kind of chore. Fulfilling a duty should not be a mindless or a slavish action. People need to recognize the importance of taking on those duties and genuinely have the will to perform them. A person is a being who accepts their moral duties of their own free will – and therefore voluntarily. This tradition therefore points out that we often speak too lightly and casually about human beings as “being persons”. Being a real person actually involves a process of becoming a person. In this process one becomes a human being who not only claims rights, but who also recognizes that they have duties to fulfill and should have a genuine desire to fulfill them. From the perspective of morality, the process of becoming a person is valuable: through a voluntary act something (a person) is created that accords with morality and demonstrates its reality.

3.5.2 The Person as a Creation of the Self Suppose we accept the idea that the value of a human being lies in their being (i.e. becoming) a person. Viewed from the internal perspective of morality, how does this tradition establish the link with morality? What does “becoming a person” have to do with upholding and attaching importance to morality? We provide the answer in a highly condensed two-step explanation below.  Do these rights even apply to those who fail to realize this potential  – Hitler being the prime example? Yes, all human beings deserve these rights because of their potential. Or rather, human beings who realize this potential understand that they have to grant these rights to all human beings based on their potential. 3

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The first step is that, according to this tradition, the process of becoming a person can also be described as a (radical) transformation process. A human being that actualizes its potential is transforming into something different: a person. The idea of human beings going through a process of transformation assumes that human beings have a special nature. While other biological living beings can be seen as “living naturally”, human beings have an “unnatural naturalness”. This concept refers to the unique human capacity to compare one’s own nature with that of other beings and, on that basis, to say, “I want to be like that too” or to say “I don’t want to be like that: I mean, we’re not animals, are we?” It also means that humans are the only beings which understand that they can say “no” to their own nature. Unlike other animals, we do not see ourselves as irrevocably condemned to our nature. We can opt to do things differently. As humans, we have a free will that enables us to make ourselves to do things a certain way. Gorillas live in groups in which a single male – a silverback – is in charge. They cannot reflect on the society they live in, nor can they change it. How gorillas live is determined by their nature. As humans, we see the way in which gorillas cohabit as a natural fact: that is simply the way of the natural world. At the same time, we would consider a human society run on the same lines to be unfair and would seek to change it. We would call for other gorillas to be given more rights in relation to the dominant male. This tradition then takes a second step in explaining the link between the transformation process and morality. The process of transformation from human being to person can be described as a process in which human beings move away from their nature and its basis in self-love. After all, at the beginning of this journey, a human being is defined solely by nature and as such is completely driven by self-love. Such a being is potentially a person but not by definition. Transformation into a person means being able to curb the urge to give in to self-love. This does not mean that a person should reject all connection to self-love. But a human being as a person is capable – voluntarily! – of keeping their self-love within limits. Those limits are precisely the limits of morality. The transformation into a person can therefore be described within this tradition as a process by which a human being learns to recognize morality as meaningful and seeks to act in accordance with it.

3.5.3 Self-Discipline Giving meaning to morality in this way links it to words such as “transformation”, “being a person” but also “self-discipline”. Recognizing duties as relevant and living by them means calling yourself to order and making yourself live and be a certain way. It may, for example, mean making yourself to be less jealous, angry or stingy. The relationship between morality and discipline can produce some surprises. In general use, “discipline” often has a negative connotation. In this context, however, self-discipline is intended positively. A human being only attains worth through discipline. In general conversation, free will is often linked to “doing what-

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ever you like” but here free will is actually bound up with the human ability to discipline oneself. This positive appreciation of discipline is not unique to morality. We come across it throughout our culture. For instance, we also see it reflected in the admiration for elite athletes and also in the admiration for the hard-working entrepreneur as a self-­ made person. A self-made person does more than simply create. Above all, they discipline themselves. They set aside many of life’s comforts and conveniences (and sometimes much more) in order to achieve their goals. Top athletes and self-made business people often talk about the sacrifices that they – and often their parents, partners and children – have had to make. In this respect too, the comparison with morality holds firm: it can also entail sacrifice. Looking at the other side of this coin, it is interesting to note our cultural view of an addict. A drug addict is often viewed with a mixture of pity and contempt. That contempt stems from the idea that an addict is completely ruled by instinct and appetite and has therefore lost all trace of self-discipline. To sum up: in morality, discipline is not an oppressive force but rather a force that gives life meaning – just as an elite athlete can find fulfilment in sport (Box 3.3).

Box 3.3: Shouldn’t I Be Looking Out for My Own Interests? The discussion on the objective meaning of morality gives us genuine reasons to take morality seriously, at least in so far as we consider ourselves to be (rational) creatures to whom objective reasons make sense and are persuasive. But how does this relate to the question of why I should act morally, as the being that I am here and now? In other words, what is or could be my own, subjective motive (as the human being that I am) for doing what is morally right? An intuitive answer to this question concerning the motives of actual subjects might simply be to say that morality has objective meaning and value for people and so this also makes it important to me subjectively, as an individual. Morality is a necessary condition for living in harmony, it creates a free and fair society, and it enables each of us to demonstrate that we can be a person as opposed to just a human being. For many people, this will suffice as an answer to the problem of moral motive. They do conceive of themselves as (rational) creatures that can be persuaded by arguments. However, in a differentiated society, this answer fails to cover all the bases. That’s because the intuitive response presupposes the internal perspective of morality. This is problematic because, in a differentiated society, people also look at morality from an external perspective. One can also ask the question “Why should I act morally?” from all kinds of non-moral perspectives: psychological, economic, legal and so on. These external perspectives necessarily make morality appear strange – just as any phenomenon appears strange when placed in a different framework – and it saps the intuitive response of its power. To be convincing in the face of all these differing perspectives, we can only provide a functional answer to demonstrate morality’s importance. (continued)

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Box 3.3 (continued) From an external perspective, it is possible to replicate the question “What interest do I have in acting morally?” in several ways. In this discussion, we will limit ourselves to the external perspective of economics. When we take up the gauntlet and view the importance of morality from the external perspective of economics, we see that many economists and philosophers argue that from an economic perspective there are solid arguments for acting morally. Choosing to pursue a policy in line with moral standards makes good sense from an economic perspective (Gauthier, 1986). A series of arguments can be made for this position: moral rules often overlap with legal rules (both current and imminent); a moral reputation is worth its weight in economic gold; job candidates with a choice usually opt to work for a moral company; and studies have shown that employees perform better in companies that work to high moral standards. In fact, there are so many economic reasons to act morally that most people in most situations rarely need to appeal to their moral willpower in order to do what is morally required of them. Doing what morality dictates is simply prudent, based on considerations derived from the economic perspective. Secondly, it is clear that a great many people in fact possess moral awareness and moral conscience. They feel good about themselves when they act morally and feel bad when they act immorally. Such feelings can be deep-­seated and persistent. A significantly moral or immoral act can empower someone for life or haunt them like a ghost. Economic actors have to engage with this mindset and this creates an incentive for them to act morally. (This is not an argument from the internal perspective but an argument that makes the effect of moral action on the human psyche relevant from an external perspective.) Ethical Egoism Such arguments may not wash with some people. They might say, “Whether or not I have a stake in acting morally doesn’t really interest me. What I want to know is why I shouldn’t always operate as an economic actor; that is, as a rational being pursuing only my own self-interest.” This position is often called ethical or rational egoism.4 In this line of thinking, you should always do what serves your self-interest. At first sight, ethical egoism appears to hold considerable appeal. We base many of our major choices on our own self-interest. So why wouldn’t (continued)

 These two positions differ slightly. Ethical egoism states that it is morally right to act purely in your own self-interest, while rational egoism states that it is rational to act in your own self-­ interest. However, both prescribe that ultimately you should only care about what matters to you. 4

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Box 3.3 (continued) optimizing our self-interest be the best thing to do? A hypothetical example can illustrate why this is a problematic position to take. The wonder drug A new drug has been approved but it is only available in very small amounts. The drug has two major effects: in very high doses it can cure a mild headache, while in much lower doses it can cure a common and painful tropical disease which can negatively impact the lives of many. You are on very good terms with your pharmacist and he is happy to give the first large doses of the new drug to you. You are currently suffering from a mild headache. You can take the drug now and solve your problem right away. Or you can make it available to the WHO, which can use it to cure twenty young people suffering from this painful tropical disease. You do not know these people, you will never meet them and no one will ever find out whether you have decided to give away the drug or keep it for yourself.

Such cases present a problem for ethical egoism. On the one hand, ethical egoism appears to point in favor of taking the drug to cure your headache; but on the other hand, it does not provide a satisfying explanation as to why it would be rational to do so. There are a number of reasons that would make such a choice irrational. For example, you wouldn’t want someone else to keep the drug for themselves if you were suffering from this painful tropical disease. It is also a hugely inefficient use of resources for one person to use the drug to alleviate a mild condition when it could save many more people from a life of misery. Your mild headache does not outweigh the suffering of twenty people with a painful tropical disease. But if these arguments are valid, then we are left to conclude that ethical egoism does not make sense after all. It is simply not true that pursuing your own self-interest is always the best (i.e. most rational) thing to do. There are other objections to ethical egoism: it is also a theory that you cannot rationally and consistently propagate. By insisting that everyone should act selfishly, you are also advising people to act against your own interests whenever it suits them to do so. Yet ethical egoism specifically states that you should never do anything that goes against your best interests. Picture the scene: I am an ethical egoist and want to buy an apple but there are only two left in the supermarket and someone has just got there before me. That person looks at me and asks “I want these two apples. Shall I take them?” As an egoist, I cannot tell them to be selfish and take both apples, because that would go against my own interest. So the notion that it is rational or ethically justifiable to simply maximize your own self-interest is problematic. It is also a strange idea: most people do things for the people around them all the time – we cook for friends and family, we take in parcels for our neighbors, we donate to good causes. In practice, the question of whether ethical egoism is correct is also seldom relevant. The main reason has already been given above: for most people, acting morally is the sensible thing to do from an external economic perspective. (continued)

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Box 3.3 (continued) We started this brief section on ethical egoism with the claim that ethical egoism “appears to hold a considerable appeal”. We close off by reflection on this statement. It should be noted that this supposed appeal depends on a person holding on to the view that human beings can best be described as rational egoists. If a person does not believe that, there is no appeal in ethical egoism. However, the idea that human beings can be best described in this way was only made popular by economic theory in the nineteenth century (Sen, 1977). Before that time people would generally hold that people were not fully egoistic, not (fully) rational  – or both. We already met with Butler (1726; see Chap. 2) for example who famously argued that people are very irrational. It is the irrational nature of the egoist that causes so much trouble to the world. He called upon human beings to be more rational. If so, their self-love would make them behave morally. Today, many people again convincingly challenge the idea that people can best be described as rational egoist. For example. Tom Hill (2002) demonstrates that there is no logical or practical relation between “rationality” and “self-interest”. There is no reason why a person who aims to act rational would therefore act in their self-interest. Others have pointed out that most people oftentimes demonstrate behavior that cannot be described as egoistic, provided one does not have a tautological interpretation of what it means to act in one’s self-interest (Hirschman, 1977). Even many economists nowadays moved away from the idea that human beings can best be described as rational egoists (e.g. Sen, 1977). The advent of economic psychology provides additional evidence for this claim.

3.6 Grounds for Morality 1: Free Will We now go on to examine matters relating to the ground for morality. In doing so, we will briefly address two questions that are often addressed in the current debate: 1. Can it be said that a person is a being with free will? 2. Is there a problem with the validity of moral statements because all such statements are relative? The first question concerns the matter of free will. As we have already seen, this concept is crucial to the second meaning of morality: a person is someone who disciplines themselves to be a moral being of their own free will. This makes it fairly uncontroversial to say that the idea of free will is a prerequisite for speaking about morality. Can it be said that a human being is a being with free will? From various external perspectives, this assumption is met with a good deal of skepticism: more specifically, the scientific fields of biology and neuropsychology. In a nutshell, they argue that free will does not exist; in other words, it is an empirically meaningless concept that cannot be scientifically proven in any way.

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Morality wants to position human beings as distinct from other animals. But scientists in these fields argue that human beings are exactly like other animals and as such have no free will. This position is sometimes supported with findings from empirical research. For example, there is the finding that convicted murderers are much more likely to have experienced psychological trauma and to score higher on scales for psychopathy (Fox & DeLisi, 2017). Past choices and experiences therefore appear to determine choices in the future. We will look at two responses to these criticisms from the internal perspective of morality.

3.6.1 The Compatibilist Response A first and common reaction from the internal perspective of morality is known as compatibilism. This view makes science and morality compatible by acknowledging that people do not have free will while at the same time arguing that free will need not be assumed at all when we make moral judgments. To understand compatibilism, we have to look at exactly what impact denying free will would have on the ground for morality. Arguments that deny free will are often made by scientists in the context of a plea for reviewing criminal law. In their eyes, criminal sentencing is unjust because we cannot and should not punish people for actions they did not voluntarily choose to take. Compatibilism counters this by arguing that the claims of these scientists are in fact contradictory. While arguing against morality they bring moral claims to the table: the imperative that we, as citizens, should review criminal law because there is no ground for the idea of free will. In other words, if you follow this line, the denial of free will need not involve the denial of morality at all. The resulting formulation is a moral reason: we should go easy on people who are caught in a cycle of cause and effect and who have acted immorally as a result. More generally, compatibilists point out that our approach to morality should more closely resemble other things we can get right or wrong. We would be far better off comparing morality with a field like mathematics. Imagine that someone is bad at math and fails a math exam. We know that dyscalculia may be at the root of this problem. On this basis, we might say that this person can’t help having done badly on the exam, so we shouldn’t see their failure as their “just deserts”. However, from a scientific point of view, this does not mean we should say that right and wrong in mathematics no longer exist. Compatibilists argue that morality is no different in this regard. The absence of free will may offer a reason to be more lenient about guilt and punishment when people make mistakes, but that doesn’t rule out the possibility of calling out an immoral act for what it is.

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3.6.2 The Affirmative Response A second, less common response to the idea that free will does not exist also stems from the internal perspective of morality but is more layered and complex. We will only touch on its main points in this account. The first of these is that we should not exaggerate morality’s dependence on free will. It is certainly true that, when giving meaning to morality, the concept of free will is bound to come into play sooner or later (Taylor, 1989). Yet we have also seen that the morality relevant to living together (first meaning) hardly depends on the concept of free will at all. To a large extent, meaning can be ascribed to morality by seeing human beings as animals with specific characteristics: a rational animal driven by self-love. It could be demonstrated that the interests of these animals are served by morality, which explains why they would want to make morality a key element of their social structures. In other words, insofar as morality can be interpreted functionally in terms of how society is constituted, it does not depend on the idea of free will. Since most normative moral issues involve interpersonal morality, the criticism leveled from an external perspective is somewhat overblown. In order to show that morality has no ground, it is not enough simply to show that free will does not exist. A second, related argument is that freedom and voluntariness are completely different concepts (see Chap. 1, Case 1.2). Freedom is a matter of whether a person can be held responsible for their actions. To establish this, we need to check whether their actions meet a number of empirical criteria, such as the absence of external coercion. Voluntariness is a matter of whether a human being can be natural in an unnatural way and in doing so transcend their nature. When we talk about free will as necessary for moral action, we are in fact talking about voluntariness. This means that studies which show that, on the whole, people do not act freely in fact say very little about free will. This component of the affirmative response shares a great similarity with the more common compatibilist response. The third component of the alternative answer is to argue that the idea of free will is a necessary presupposition in our everyday lives. In other words, there are good reasons to defend that assumption from the internal perspective of morality. All human life and all human social structures are built on that idea. We can shout from the rooftops that human beings are just like any other animal but everything about our everyday lives demonstrates that this is not what we really think. We take human wrongdoers to court; it would never occur to us to do the same to animals. We accord fundamental rights to human beings and are far less inclined to extend these rights to animals. Some scientists argue that this is mere prejudice but paradoxically that accusation is based on a recognition that free will is meaningful. After all, those same scientists would never tell gorillas that their social structures and treatment of other creatures are a matter of prejudice. The charge of prejudice is itself a recognition that humans are different from animals. The fourth component of the affirmative response is to point out that, in a differentiated society, each and every perspective ultimately relates to other perspectives as an external perspective and therefore stands in opposition to all other

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perspectives. This implies that any internal perspective can be seen as having absurd traits, as any perspective can be look upon from other perspectives and there is no such thing as a neutral perspective. In a differentiated society, the need to establish a ground for morality (or any other perspective) therefore takes on the character of a search for a procedure that will address the friction between competing external perspectives. Which perspective should be given priority and when? Scientific arguments claiming to “show that free will does not exist” therefore make a category error when they make that claim. If their research shows anything at all, it is that free will does not exist from the external perspective of scientific study. Demonstrating that free will has no reality is another matter altogether. That depends on how the external perspective of science should relate to the external perspective of morality with respect to this issue. This is not a foregone conclusion and morality has an important advantage in this regard: it corresponds to our everyday perspective.

3.7 Ground for Morality 2: The Specter of Relativism The importance of relativism cannot be overstated in a basic book on business ethics. It is no exaggeration to describe the statement “it’s all relative” as the Pavlov reaction of discussions on normative business ethics. It therefore makes sense to take a long, hard look at this ever-present specter. There are several ways to understand the statement “it’s all relative”. From the internal perspective of morality, it can constitute a moral cry for help. It’s like exclaiming “I would really love to make sound moral judgments but it’s so hard to take all the relevant factors into account and I’m afraid of getting it wrong.” This cry for help is actually justified: arriving at a sound moral judgment is a difficult undertaking. It requires practice and serious attention. Someone can also say “it’s all relative” as a way to dismiss morality. Morality is clearly nonsense because all things are relative. A dismissive statement of this kind can only be made from an external perspective. Otherwise morality would be making itself ridiculous. We will comment on this dismissal by addressing it from the internal perspective of morality. First, it is worth noting that a kind of objectivism often underlies this kind of disqualification. The argument goes that, from a strictly logical perspective, there are no compelling reasons why a moral judgment would be valid. In and of itself, that is a true statement but one that is based on a misplaced criterion: the objective or strictly logical proof of moral arguments. Morality concerns human existence and human existence is not strictly logical. The fact that humans exist and that they are a specific kind of being is a non-logical starting point for all thinking and judgments that concern human beings. Moreover, if the “strictly logical” argument were valid, then everything in every normatively and empirically laden field of study – from economics to psychology to biology – would also be relative. To the extent that

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the dismissal is based on this idea, therefore, it is not valid: the criterion on which it is based is misplaced.

3.7.1 Types of Relativists Secondly, it should be noted that the statement “morality is relative” can be embedded in different philosophical views. Non-cognitivist theory, for example, says that moral statements are similar to exclamations of a purely personal and irrational kind. Cultural relativists, meanwhile, will recognize that it is possible to make meaningful moral statements within a framework (e.g. of US or Dutch culture). For example, these relativists might say that “cleaning up after yourself” is a valid moral statement within these cultures (but not necessarily in other cultures). The central tenets and their consequences vary considerably. It therefore makes a big difference which kind of relativist is making the claims. Some relativists regard all normative moral discussions as fundamentally meaningless, while for others only discussions involving multiple, conflicting frameworks appear to be problematic (i.e. intercultural conflicts and dilemmas). Some versions of cultural relativism even permit statements in cases that involve intercultural differences, to some extent at least. After all, in many intercultural conflicts the crucial question from the point of view of morality is: how do we deal with something that is different in another culture? In essence, that question is intra-cultural. Thirdly, relativists often find themselves in a contradictory position. Let’s take cultural relativists as an example. They defend relativism yet this mostly leads to the normative moral conclusion that all views are equally valid. Yet at a normative level, relativists have denied themselves the possibility of drawing that very conclusion (see Sect. 3.2). Take the following exchange between a cultural relativist and someone who believes in universal human rights: –– Human rights advocate: “Female circumcision violates a universal fundamental right of women, and is therefore always morally problematic.” –– Cultural relativist: “You cannot simply make that claim. After all, female circumcision is acceptable within some cultures.” –– Human rights advocate: “But according to the moral rules of my culture, protection from mutilation is a universal right that applies to everyone.” –– Cultural relativist: “Fair enough: in that case you have the right to say that female circumcision is universally morally wrong.” The logical inconsistency of the two statements made by the cultural relativist is problematic. You cannot say that you are not allowed to pass judgment on female circumcision and then morally allow others to pass judgment on female circumcision. Last but not least, cultural relativism appears to assume that clear moral norms prevail within cultures. But even within cultures, people disagree with each other. Most people think it is morally permissible to eat meat, but some do not. You could

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accord priority to the views of the majority. This would mean that vegetarians are wrong: eating meat is not problematic at all, because the majority find it acceptable. But is the majority always right? In the early eighteenth century, large sections of the population in Europe had no moral problem with slavery. In a hundred years, that view has changed radically. If we are serious about the idea that the majority is right, this means that slavery was morally right until the majority of the population became convinced that it was not. That is an odd perspective to take. People changed their minds on slavery because it was morally problematic, not the other way around. It’s not as if slavery only became morally problematic when people changed their minds about it.

3.7.2 Discretion From the internal perspective of morality, it is important to make a sharp distinction between the statement “it’s all relative” and the proposition that people are entitled to a certain discretion when it comes to moral judgments. Discretion means scope for reasonable disagreement on certain details, thereby allowing room for personal choice. Making this distinction is important because the argument that there ought to be (personal) discretion in morality is certainly true. It is rational, wise and right. However, creating room for (personal) discretion is not the same as giving credit to moral relativism. This can be explained by making a few short comments on personal discretion in morality and elsewhere. First, it is important to note that giving discretion is not specific to morality. In everyday life, some people are more likely to call a certain shade of color “yellow”, while others might call it “orange”. Discretionary scope also exists in many other disciplines: economists differ about the extent to which the future should be factored into current decisions, and physicists differ on the proper description of electromagnetic forces. Logic and mathematics leave the least room for discretion and with good reason: these sciences are formal in nature. They have nothing to do with the “messy” contingencies of reality. (Yet even they disagree on some things, such as how to think about the concept of infinity.) Second, in normative morality, there are several sources of discretion. For instance, people understand normative principles slightly differently. Generally speaking, people tend to interpret important principles in much the same way. There is a fairly unshakeable consensus on what stealing and killing are. Even so, differences may arise on the margins of the explanation of a principle. Some people might not think a starving person is stealing when they snatch a loaf of bread from a shop, while others do. In addition, people give different weight to the facts of a case. Some are quick to excuse someone’s actions if they appear not to have been deliberate, while others may view those same actions as inexcusable no matter what.

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The third observation is that the presence of discretionary space is understood and appreciated differently in morality compared to other fields. In many cases, the existence of discretionary scope does not diminish the status of a discipline. For example, it is not a reason to appreciate physics and mathematics any less. Yet oddly enough, discretionary scope does appear to detract from the credibility of morality. People who insist “it’s all relative” see this scope as one more sign that there is something wrong with morality and confirmation of its lack of status as a discipline. There is a historical explanation for this difference in appraisal. The twentieth century saw the emergence of a view of science – now largely obsolete – which emphasized the objective aspects of the sciences (and academic disciplines such as economics and psychology) on the one hand and the subjective aspects of morality on the other hand. This resulted in the unnecessary magnification of the methodological differences between morality and all other forms of (normatively charged) science. Lastly, it is important to note another key difference between discretion in morality and in other areas. This has to do with the special place that discretion occupies within morality. In other disciplines, discretionary scope is regarded as something we simply have to learn to live with: it is inconvenient but unavoidable. Morality is an exception, in that it is a discipline in which discretion is celebrated to some extent. The existence of scope for discretion is accorded normative value. This is due to the important part that morality plays in being a person. Judging for yourself is not just something that tends to happen whether we like it or not, but something that should and must happen. Celebrating the importance of everyone making their own judgments obviously encourages disagreement and as a result discretion occupies a rather different position in morality. However, this is no reason to blame morality for discretion. “Thinking for yourself” is not a principle that is opposed to morality but a moral principle in its own right. Discretion is therefore inherent in morality and represents its strength rather than its weakness.

3.8 From Grounding to Normative Moral Reflection In this chapter, we addressed issues relating to the grounding of morality. We talked about its meaning and the ground of morality. This was needed because normative moral discussions often slide into a discussion at the fundamental level and grind to a halt as a result. Having made them the focus of this chapter, we can now leave the discussion of fundamental aspects behind us. Not because this discussion is not important, but because the focus of this book is on normative moral reflection. From now on, we will adopt the internal perspective of morality and accept the conditions that come with it.

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Chapter 4

Moral Reasons Willem van der Deijl

Abstract  Normative ethics is concerned with reflection on moral problems. It does so through the analysis of moral reasons. In this chapter we explain what a moral problem is, why some moral problems should be classified as problems of will, some as cognitive problems, and describe the difference between motivations and reasons. The chapter then provides an overview of three types of moral reasons: (1) reasons that derive from the consequences of our actions, (2) reasons that concern the acts themselves (principles), and (3) reasons that concern our own character (virtues). To arrive at a moral judgments, these reasons need to be weighed, which requires making an ethical judgment.

4.1 Moral Problems Case 4.1 Emma has not studied well for an exam, but Emma’s classmate, Mohammed, has. The day after the exam the teacher approaches Emma: there are two exams with a missing name. Emma immediately recognizes her own handwriting on one of the exams and that of Mohammed on the other. Emma does not know what the grades are yet, but she is sure that she did not do well on the exam, while Mohammed did do well. The teacher asks which of the two exams is hers. Does Emma say that the exam she did well on is Mohammed’s, or does she say that this is her exam? Mohammed has already left for his summer break, and it seems highly unlikely that he would investigate the matter if his grades were disappointing. Regardless of his performance on the exam, he has already passed the course.

W. van der Deijl (*) Department of Philosophy, Tilburg University, Tilburg, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_4

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Case 4.2 Brewbean is a small coffee producer with an ambitious social mission, in particular with respect to preventing abuses on coffee plantations. They import coffee paying a premium on the market price, but they only do so when they are sure the coffee comes from plantations that provide good working conditions to their workers. They have won several awards for the effectiveness of this policy in improving working conditions and preventing the worst types of poor working conditions on coffee plantations. A larger coffee company, Roasty, has expressed an interest in acquiring Brewbean. They are offering a good price for the shares. One important reason for Roasty’s interest in Brewbean is that the company has repeatedly been accused of neglecting abuses on the coffee plantations they buy their coffee from. A recent report has revealed instances of child labor, and slavery-like conditions on a plantation supplying to Roasty. Roasty hopes that by acquiring Brewbean they will gain the expertise needed to address this problem adequately. Henceforth, this book focuses on normative ethics. Normative ethics is concerned with reflection on moral problems. These problems are not merely theoretical issues, about which we can noncommittedly reflect. Normative ethics is concerned with action. The judgment that follows from a reflection is directly or indirectly relevant to how we should act in practice. Normative questions are questions about what we should and must do. Whenever a moral problem arises in our lives, we are confronted with a situation in which we must make a judgment in terms of right/wrong, correct/incorrect, or good/bad. Yet, this goes for all normative problems. They all ask us whether we should or should not do something (e.g., should you wear a suit to a professional networking event?). Moral problems are a subset of normative problems. What is special about moral problems is that they require us to make a moral judgment. As discussed in Chap. 2, what makes a problem and a judgment moral is that it refers (formally) to that which we fundamentally ought to do. We can divide practical moral problems in two types. The moral person may genuinely not know what to do. If so, the problem is at least in part a substantive moral problem. Sometimes moral problems are not like this, but arise from our difficulty accepting that which we know we morally ought to do. In that case there is a (potential) lack of willpower. To resolve a moral problem, reflection is needed. In Case 4.1, this reflection for Emma quite directly involved the question “What to do?” Our description of normative ethics also involves the term ‘reflection’. Reflection means consciously considering the reasons we have for making decisions. Reflection, in short, is weighing reasons. Typically, reflection involves asking questions. We can distinguish two levels of questions about any reason for action. A first level involves asking the general question whether the reason is a good reason at all.

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We can also reflect on the assumptions on which our reasons are built. Do we actually have good reasons to believe those assumptions? In Case 4.1: Emma can ask herself whether damaging a person “because they would not be bothered by it” is ever a good reason to justify any action. She can also ask herself whether this reason is sometimes good enough to justify a lie. At the second level we ask questions of applicability: if this reason sometimes is a good moral reason, is it a good reason in the particular case at hand. Does it justify damaging Mohammed and lying to the teacher?

4.1.1 Motivations and Reasons A tool that may help us better understand ethical reflection is the distinction between motivations and reasons. People are intentionally acting beings. We typically assume that they have a motivation for their actions. Sometimes motivations are consciously held, such as when a person has consciously chosen to make a career switch. But sometimes motivations are not based on a conscious thought process, for instance, when they are based on habit or tradition. Sometimes people do things that are not properly described as actions, because it was not intentional at all. For example, knocking over a glass entirely by accident is not what we call an action (although it may be reprehensible to not pay sufficient care). Empirical scientists, such as economists and psychologists, are often concerned with the motivations that people have (had). They may investigate what actually prompts people to act in certain ways – they may for example investigate what actually prompts individuals to choose greener forms of transportation. Various things can be relevant motivations, including “the feeling that anything new is better” or “the inclination to make my neighbor jealous”. Reasons are different from motivations in this important sense: reasons do not concern what people actually prompted to act, but they are about what should prompt them to act. Reasons therefore play a crucial role in ethics. While there are moral reasons to act morally, there may also be reasons to act immorally. These can be selfish reasons: we can say that Emma has a reason to take credit for Mohammed’s work, namely that in that case, she will not have to retake the course, which she does not want. This is not a moral reason, but a self-interested reason. But, in many moral dilemmas, there are also moral reasons that pull in different directions. For instance, even if it would ultimately be immoral for Brewbean to sell the company to Roasty, there are still moral reasons that speak in favor of selling the company to Roasty. If we would say that it is immoral to do so, this implies that we think that the moral reasons against doing so outweigh the moral reasons in favor. Just as not all problems are moral, not all reasons are moral. For example, if you like cake, this is a good reason to eat cake (to some extent), but it is not a moral reason. Moral reasons are reasons that are based on moral considerations and, as we discussed before, these refer to fundamental considerations (see Chap. 2).

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Sometimes we are aware of reasons. If you have to make a choice between studying for a test for which you still have a lot to do, or meeting up with friends at the pub, then you are making a conscious choice between two reasons: you know you still have to study in order to do well on your exam, and that this is a good reason to do so, and you also know that it will be fun to be in the pub, which is a reason to be there. But you can also be unaware of important reasons. This happens for example, when you are offered a cake that unbeknownst to you is poisoned. In that case, you have a good reason not to eat this cake (because it will make you sick), even though you are unaware that this reason not to eat the cake exists in this case (because you do not know that it will make you sick). Ethical reflection on the one hand involves becoming aware of the moral reasons relevant to a situation, and on the other hand involves an attempt get our motivation in line with these moral reasons. After all, we can only reflect on our actions and decisions to the extent that we are aware of the reasons for them. We can also say that because reasons can motivate us, we can judge reasons in terms of good or bad. Reflection is the analysis of reasons. What makes ethical reflection difficult is that reasons are context sensitive. What makes a reason good in one context sometimes fails to do so in another. For example, we are all familiar with the principle “I can do this, because others do it too”. This is sometimes not a good moral reason. We are all familiar with the annoying question that our parents and teachers used to ask us: “If others jump off the bridge, will you do it too?” But in some contexts, the principle actually is a good reason. For example, if there’s a dirty job to be done, or money to be raised for a good cause, we can legitimately ask: “Others are doing it, so why not you?” When we are faced with a case in which we are considering applying the principle ‘others do it too’, the aim of reflection can be to find out whether it is appropriate in this case or not. One way to go about that is to examine whether the given situation is more similar to jumping of a bridge because others do it, or more similar to helping out, because everyone needs to chip in. Box 4.1 Are Moral Reasons Subjective? In moral discussions we regularly say things like, ‘That’s a bad reason.’ Sometimes you will then hear people reply, ‘For me personally, this is a reason, though.’ This can happen, for example, when someone appears to be argumentatively cornered: no other participant in the discussion acknowledges that something may be a (good) reason. Someone may then decide to appeal to the subjectivity of moral arguments: this is a reason for me. We often see this appeal to the subjective nature of morality recurring in moral discussions, and it is important to address it briefly. First, in doing so, we distinguish the appeal to subjectivity from an appeal to relativity. Those who claim that moral judgment is completely subjective claim that persons can weigh arguments completely solitarily. Those who claim that moral judgments are relative are saying that there is no solid ground (continued)

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Box 4.1­  (continued) for moral judgment. These claims are quite different. Thus, a subjectivist may very well be anti-relativist: after all, they can claim that their own judgment is infallible and absolutely correct. In fact, very many subjectivists are anti-­ relativist: one is firmly convinced of one’s own subjective right or of the idea that in the subjective, precisely, truth can be found (Augustine, 395 and 420 A.D./2010). Not all subjectivism is philosophically problematic. But it is when it appeals to the claim: “this is a reason for me personally”. This widely used argument is nothing but a fallacy that disrupts adequate moral discussion. A reason that can only be judged by a person is called a private reason. Appealing to such a reason is a fallacy since reasons always contain a general claim: if a reason is sound, it is sound for everyone (in a similar situation). For example, Ben may do something and say to Anne, “I think Z motivated me to do Q”. To the extent that Ben is merely reflecting his motivation, Anne can say ‘Okay, fine.’ However, to the extent that Ben says, ‘Z is a reason to do Q,’ he is (also) making a normative claim that he takes to be valid. Ben is then saying that Z is a good reason to do Z – otherwise it cannot be a reason for him. It would be very strange of Ben to say, ‘I did Z because I wanted to achieve Q, but I know that Z is a very bad reason to achieve Q.’ So when Ben talks about reasons, he is necessarily making a general claim that is up for review by all, and Anne can reflect on it. She can say that Z in general is a good reason, a bad reason, or no reason at all for doing Q. Anne can also confirm or deny that Z was a good reason to do Q in this case. When Ben refuses to acknowledge that Anne is saying things that he should care about, he is guilty of intellectual egoism: thinking that you are so special that you alone are capable of judging certain reasons, and thinking that you do not need others to arrive at a good judgment. Intellectual egoism, by the way, is not only immoral, it is also silly, because it involves ignoring good reasons for actions. Those who say that private reasons do not exist are obviously not saying that everyone should do the same thing in every situation. That would be quite a different claim. We should acknowledge that weighing reasons involves personal judgments. Some people dared to resist the Nazi regime in World War II. Not everyone dared to do so. But everyone can see that resistance to such a criminal regime is a good reason to act. Saying that private reasons do not exist is also not the same as saying that we should not take circumstances into account. Someone can say that they had children and therefore did not resist; someone can even give fear as a reason in such cases. Moreover, those who deny the existence of private reasons also do not claim that every person is always in a good (emotional, rational and sensitive) state to weigh a specific reason. It is indeed true that sometimes  – perhaps even often  – properly weighing reasons presupposes a certain development of one’s character. The issue here is merely whether there are moral reasons that are only valid for specific individuals. And to this the answer is a resounding “no”.

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4.1.2 Motivational Problems and Substantive Problems Some moral problems essentially have to do with (lack of) willpower. In these case, it is not difficult to understand what the ethically right thing to do is, but the actor finds it difficult to do the right thing, for example, because there are hefty costs involved. We can call these problems motivational problems. The curious thing about human beings is that things that one recognizes to be good moral reasons are not necessarily converted into a sufficient (or effective) willingness to do the action. Case 4.1 is an example of a moral problem related to lack of will: it is clear to everyone that it is morally wrong to appropriate someone else’s exam, yet we can imagine Emma would go for it. In many cases, motivational moral problems are the result of a clash between moral reasons and our self-interest. Self-interest is not always served by acting rightly. Nevertheless, immoral actions are often not only immoral but also harmful to our self-interest well-understood (see Chap. 3). Substantive moral problems present us with a different kind of challenge. When we face a substantive moral problem, it is not obvious what the right thing to do is. If you start thinking about what the morally right thing to do is, you quickly stumble upon difficult substantive considerations. Case 4.2 may serve as an example. A few important reasons that the owners of Brewbean must consider are the following: 1. If Brewbean joins forces with Roasty, this could push Roasty to a adopt more ethically ambitious purchasing policy. This could positively affect many workers on coffee plantations, many more than Brewbean could help on its own. 2. Roasty has arguably not done enough in the past to prevent plantation owners from exploiting their workers. When Brewbean goes into business with Roasty, it can be seen as reward for bad behavior. 3. If Roasty would buy Brewbean, the current owners of Brewbean would lose control. After the deal is made, there is no way for the current owners to affect the ethical ambitions of either company. Roasty may do more to prevent exploitation, but there is no way to be sure that they will make good on their promise. 4. When Brewbean was founded, the owners made a commitment that not a penny from the company would go to enabling human rights abuses. However, even if Roasty improves its policies, it will do so slowly. This means that there is a real chance that money earned from Brewbean operations will go to plantation owners who oppress their workers, even if some of it will also be spent in preventing those types of abuse. 5. If Brewbean allows itself to be bought, this will bring in a lot of money for the owners. Therefore, the owners may get carried away by greed when they sell Brewbean. This is problematic because the company was set up with an idealistic purpose. Can the owners even be sure that they can make this decision with the right motivation?

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Some of these considerations are reasons in favor of going into business with Roasty, such as consideration 1, but the others are reasons against it. This makes this case different from Case 4.1: it is now unclear what the morally right thing to do is for the owner of Brewbean. Thus, even for someone who is not struggling with moral will problems, this is a difficult choice. Substantive moral problems therefore force us to stop and ask ourselves: what on earth is the right thing to do here? Box 4.2 Motivational Problems or Substantive Problems? Conceptually, the distinction between motivational problems and substantive problems is clear. In practice, however, it is not always easy to determine which type of problem we are dealing with. The reason for this is that people tend to present their motivational problem as a substantive problem. This improper presentation is fallacious, but that is not always clear, not even to ourselves. Thus, the reflection that comes with motivational problems often involves exposing such fallacies. Once more, we can take Case 4.1 as an example. When Emma wants to justify lying for herself, she can pretend that the question of whether lying is allowed in this case is a substantive moral problem. She can then argue that lying is permissible because “lies are sometimes allowed” and that this is in fact such a case. This case thus demonstrates that reflection on motivational problems mostly amounts to examining whether the way we present a case to ourselves is correct. If it is correct, then we are dealing with a genuine substantive problem; if not, then we must admit to ourselves that we are actually suffering from a motivational problem. Assessing such justifications thus requires taking a sincere look at ourselves, our actions, and our reasons. The fact that people delude the nature of the problem they are struggling with shows that sincerity is of crucial importance both in ethics as a whole and in business ethics in particular. For example, companies are quite quick to say that a certain environmental or safety measure cannot be taken, “because doing so would put jobs at risk”. Companies must ask always ask themselves, however, whether employment is really the most important consideration, or whether we are using it as an excuse to avoid having to incur costs resulting in a reduction of profits. Because in the first case we are dealing with a genuine substantive moral problem, but in the second we are facing a motivational problem. Being sincere is not only important for moral reasons, but also for marketing purposes. There is nothing that people detest more than a hypocritical company. Presenting motivational problems as substantive problems is the most common way people (and companies) are hypocritical, and others will keenly criticize such hypocrisy.

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In the rest of this chapter, we focus on reflection on substantive moral problems. We identify the main types of moral reasons relevant to business ethics. Distinguishing between these types is important because, in particular cases, moral reasons can come into conflict with each other. In such situations you are faced with a moral dilemma and moral reasons must be weighed to arrive at the best judgment. Take the choice Brewbean’s management is facing, namely whether it should sell the company to Roasty. Looking purely at the consequences, Brewbean can say that probably more plantation workers will be helped by the sale of the company to Roasty, and this is a group whose interests should weigh heavily. However, there is a lot of uncertainty involved in this choice. There is no guarantee that the collaboration will be effective in improving living conditions for the plantation workers and the local population. Brewbean’s management may have good moral reason to feel uncomfortable with making such a gamble on behalf of the workers they aim to help. Brewbean’s approach can easily become overshadowed within Roasty, the larger company. If Brewbean does not go along with the sale to Roasty, the company can be sure that they will have a positive impact on the coffee plantations they already work with. But that is a smaller group! Besides consequences, principled considerations also play an important role in the case. Brewbean has so far taken a principled approach to human rights violations. Not a penny was to go to any plantation that did not respect worker’s rights. The company can therefore refuse to work with Roasty as a matter of principle, given the history of that company and the risk that Brewbean will be used as a means to legitimize their involvement in cacao production. Finally, Brewbean’s identity also plays a role: its position on human rights is part of Brewbean’s identity. Brewbean must therefore ask itself the question: is the sale compatible with who we are, or claim to be? If so, what conditions should we place on the sale? In the past, an organization like Ben and Jerry’s wrestled with this question when the much larger multinational Unilever presented them with an offer to purchase Ben & Jerry’s. In concrete cases, weighing moral reasons is a difficult process. You will find that different people weight different moral considerations differently. This is an important feature (rather than a bug) of moral reflection (see Box 4.1). A difference of perspectives should not be seen as an end point of reflection, but rather as its beginning. Differences of opinion can be immensely valuable, because they offer an opportunity to improve our reflection and its outcome. Through reflection and conversation with others we can come to the best possible decision. Ideally, we will find a position on which everyone agrees. Should that fail, however, the reflection has not necessarily failed. Moral action is also already greatly helped by finding a position that is acceptable to everyone; or at least a position that is explainable to everyone. If so, we can say that such a position is supported by good moral reasons.

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4.1.3 Three Types of Moral Reasons We distinguish between three types of moral reasons: reasons related to the consequences of actions, related to moral principles, or related to moral character (or, virtue). There are a number of reasons for distinguishing precisely these types of reasons. First, these categories align closely with the contexts in which moral problems arise (that we discussed in Chap. 2). Consequences are related to the orientation to the good, principles are related to moral rights, and virtue is related to character and the crossing of boundaries in thought. Second, each type describes a crucial morally relevant aspect of an action: the person acting (character), the act itself (principles), and its consequences. Third, these categories are widely recognized in the history of ethics. Finally, the most intractable dilemmas tend to occur at the interface between these three types of considerations. Determining what is right, then, often involves knowing and understanding which of the three types of reasons should take precedence in the case at hand. We see this clash reflected in Case 4.2. We discussed different considerations, which did not all point the same solution. Box 4.3 Moral Problems as Exceptional Cases People are especially aware of morality when they are consciously reflecting on a moral problem. This can lead to the misconception that morality is of little use. It only comes into play when there are problems and hassles. This, impression is wrong, however: morality is very useful and present in our behavior and interaction with others but usually in an inconspicuous way. People typically relate to morality like fish to water. Like fish that do not notice the water, we are not always aware of the moral considerations that play a role in our interactions with others. The reason for this is that in everyday life, people usually adhere to moral principles without thinking about it. Crucial moral rules like “don’t kill,” “don’t steal,” and “respect each other” are simply part of our everyday repertoire. People follow these rules out of habit or prudence. As societies develop, there is typically more overlap between economic, legal, and moral rules. The visibility of the moral nature of these norms and rules may then decrease. This means that – in well-organized societies – moral problems present themselves to people in exceptional situations only. What makes these situations exceptional is not that we suddenly have to act morally, we do that all the time, but that we suddenly have to make a conscious moral choice. Motivational and substantive moral problems differ in terms of when that exceptional situation occurs. Motivational problems occur when the temptation to ignore morality (briefly) presents itself. Case 4.1 is an (continued)

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Box 4.3­  (continued) example of such an exceptional situation. Emma realizes that she can possibly lie with impunity. The teacher apparently does not notice anything, and Mohammed is already on vacation. If Mohammed would have been present, would not have been on vacation, or if the teacher would have simply said ‘I will check this with Mohammed later’, the situation would have been very different. For substantive moral problems, the exceptional circumstance typically presents itself when something new, different, or unusual happens to us. In that situation we can no longer fall back on our standard mode of behavior. That is precisely why we must stop and ask the question: what now? This is why there are so many moral problems in the medical world today. As a result of rapid technological developments, we are constantly faced with problems for which we have no answer. These situations, after all, did not occur before. The same applies to the digitalization of the world, international business, and environmental problems. Again, these moral problems result from the fact that they are (relatively) new.

4.2 Consequences In normative ethics, the consequences of actions play a significant role. Consequences of your actions are changes in the world that result from your actions. Consequences can be positive or negative. Actions often involve both negative and positive consequences. The concept of a consequence is closely related to the concept of value, the desirability of an outcome. To weigh different consequences (positive and/or negative), a yardstick is needed. Values are that yardstick. We typically think about value in terms of concrete values. For example, the French Revolution was dominated by three values that still have a major impact in Western societies: liberty, equality, and fraternity. When we say that equality is an important value, we are saying that a world with more equality is a better world. Many moral reasons involve consequences of our actions, and are therefore related to value. If a company pollutes the environment around its factory, and people get ill from it, the business activity has negative consequences on the lives of others. These people would not have gotten ill would it not have been for the choices that company has made. Such negative consequences are an important moral reason to avoid pollution. But consequences can also generate a positive moral reason to do something. Some pharmaceutical companies offer their drugs at a lower price in developing countries because it can save lives and greatly improve the health of people living in developing countries. This is a good consequence, and a good reason to act. We can roughly distinguish the following types of ethically salient consequences.

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4.2.1 Economic Value and Economic Harm One of the most immediate consequences of successful business activity is the economic value it creates for shareholders, as well as employees, suppliers, financiers, and customers. If your business is successful, you will create economic value for all of these parties. But if you are not successful, the shareholders and financiers will lose their money, and your employees will lose their jobs. Economic value is usually expressed in monetary terms. A shareholder receives dividends, a financier receives interest, and an employee receives salary. Customers pay money, but they get something valuable to them in return, namely the good they have purchased. These are all examples of economic value. According to orthodox economic theory, free economic exchange between the company and these parties is necessarily a win-win situation: for the customer, the product is apparently worth more than the price they pay for it (otherwise they would not buy it). For the investors, the company is apparently an attractive investment, because otherwise they would do something else with their money. For employees, the same is basically true: if the company were not there, they would not have a job, and if they preferred not to have this job, they would leave the company voluntarily. The fact that employees do not quit their jobs is a clear indication that they would rather have their jobs (with the salary that comes with them) than not have this job. This line of reasoning has clear limits. For example, if consumers are not properly informed about the product, or if workers are not properly informed about the type of work they will be doing, then the voluntary economic exchange may be of no benefit at all to them. Nonetheless, properly functioning companies – the ones that do no lie or mislead their customers, investors, and employees – do generate economic value. What the above discussion of economic value leaves out is that business activities may also affect third parties, individuals who did not consent to any economic exchange with the company. Sometimes these consequences are positive, but they can also be negative. In situations where negative consequences have moral weight we call the negative consequences harm. This definition makes clear that not all negative consequences constitute harm. For example, negative effects can be trivial, so small that they do not (really) matter morally. But it can also be the case that, although they are not so small, they are simply not morally relevant. To illustrate this, imagine that Bart cannot stand the fact that other people in his neighborhood have more expensive cars than he does. Bart’s neighbor Mark also likes cars and has bought a particularly expensive one. Every time Bart sees that car, he experiences this as a stab in his heart. He cannot sleep because of it, that is how bad he feels about it. The discomfort Bart feels because of Mark’s purchase is certainly a negative consequence, but in all plausibility, it has (almost) no moral weight. It should not count as a moral reason for Mark to get rid of the car or to compensate Bart for the inconvenience.

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Harm can be economic, for example if your actions cause someone else to incur costs. If a company pollutes a lake, we can call the cost of cleaning up the pollution, as well as the lost revenue of nearby restaurants and hotels, economic harm. But there is some part of this harm that is difficult to express in monetary terms. Even if the lake has been cleaned up, and the restaurant owners have been compensated for their lost revenues, still not all the harm has been compensated: nature has been damaged, animals have died, and people have had to make other plans for their vacations. This brings us to the next category.

4.2.2 Non-economic Value Ultimately, money is not valuable in itself. It only has value because it is a medium of exchange; because you can buy things with it. In the end, what is really valuable is something else. Possible examples of things that are valuable in themselves are things like being happy, being healthy, having a good relationship with your family and your friends, having wonderful experiences, trying to be a moral person, building a business, etc. Money is useful for many of these things, but money cannot buy you friends or happiness, and money by itself will not even guarantee that you will be able to build a successful business. All the ways in which lives can get better or worse that cannot be straightforwardly expressed in monetary terms are referred to as non-economic value. Sometimes we need to make choices that involve economic as well as non-­ economic value. It is often difficult to weigh economic and non-economic value against each other. Take the example of Brewbean: imagine that the partnership with Roasty is expected to ensure that within 3 years one hundred fewer people will be working on coffee plantations under miserable conditions and without pay. The partnership has then clearly done something valuable. But how valuable is this exactly? Imagine that the partnership is also expected to reduce dividend payouts to Roasty’s shareholders by 0.5%. Has it then been worth it? One way to answer that question is to put a monetary value on the freedom of a plantation worker. This seems odd; perhaps even immoral. Nevertheless, many economists feel that the only way to make comparisons between economic and non-­ economic value is to express non-economic value into economic value. They sometimes go quite far in their attempts to do so. One way to do so, for instance, is by using the idea of a pseudo-market for non-economic goods. We can wonder how much a potential worker would be willing to pay to be free. But not only does it seem almost impossible to get at a reasonable estimate of that value, one might even wonder whether a person’s freedom is priceless, and that there is something wrong with putting a price on it. The same problem arises when comparing health benefits. Take the pharmaceutical example we discussed above: a pharmaceutical company is considering lowering the price of a drug in developing countries. This strategy may be risky from a business perspective, but it will help many people. Many lives may be saved. Clearly, this is valuable. But how exactly does that value compare to the lower profit the

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company ends up with in this way? Not only may reduced profits threaten the continuity of any company, but it may also make it more difficult to find investors for further research and development into treatments for patients. Weighing value is thus not as easy as it may seem. Over the past few decades, economists have worked hard on health and happiness scales that are intended to compare non-economic value and economic value. What proves complicated about this is that people differ greatly in terms of what is valuable to them in specific contexts. For many professional athletes, a broken leg is terrible, as this may mean that they are not being able to train for many months, and they may consequently lose their competitive edge. In some cases, a broken leg may mean missing the Olympics, an opportunity that only comes around a few times per athletic career. For a business ethics professor, a broken leg is not quite as bad. The same difficulty in comparing different consequences occurs with other forms of noneconomic harm. A key insight we need to take from this discussion is that noneconomic value is an important category of value and harm, but it is often very difficult to compare it with economic value. Comparisons between different types of non-economic value are not matter of simple arithmetic, and hence always need human judgment.

4.2.3 Equality and Inequality So far, we have looked at value and harm in individual cases: what are the valuable and harmful consequences of behavior? But ethically, it also matters to whom something is harmful, and to whom something is valuable. In other words, how is harm, and value, distributed among individuals? We know that economic value is very unevenly distributed. A 2023 Oxfam report revealed that the richest 1% hold almost half of all global wealth, whereas the poorest half own as little as 0.75% of the wealth. At the same time, much of the heavy manufacturing work is done by the poorest half of the world’s population; the poorer half has a significantly lower life expectancy than the richer half; and the poorest half lives in less secure areas. Many people would therefore agree that it does not only matter whether the consequences of your actions are positive or negative, but also for whom they are positive or negative. Increasing the income by one hundred dollars a month for someone living on the poverty line seems like a very good consequence, but increasing the income of Amazon boss Jeff Bezos by the same amount is probably not particularly morally desirable. On the other hand, harming people who are already struggling is especially problematic. Think, for example, of polluting the everyday environment of farmers in developing countries, or exploiting migrant workers. Doing so is not only bad, but arguably worse than doing the same to those who are less vulnerable. It is therefore not only important to ask what the consequences of our actions are, but also who is affected by them.

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4.3 Moral Principles Consequences are an important source of moral reasons, but not all moral reasons can be (fully) captured by consequences. Another important category of moral reasons are principles. Moral principles are moral rules that are important to follow, regardless of consequences. This does not mean that moral principles have nothing to do with consequences, but moral principles add something to a mere analysis of consequences. A well-known example of a moral principle is the golden rule: do not do to others what you do not want to be done to you. In Case 4.1, Emma could reason as follows: my classmate already has a good grade, and I am failing. If I get my classmate’s grade and he gets mine, we both pass, and that is, on the whole, a better outcome than if I get a failing grade and he gets a slightly higher one. But this leaves out something important: you should not take credit for someone else’s work for your own gain. After all, you would not want anyone to do that to you either, even if it leads to consequences that are generally better for everyone. This is an example of how principles can matter over and above consequences. Consequences are about what results from your action, but principles are about the action as such. Much of our shared sense of morality has to do with principled reasons. Take lying, for example: many people will agree that there is something wrong with lying. This may sometimes be because lying has bad consequences, but even if lying does not have bad consequences, there is still something wrong with lying itself. We can explain this through moral principles. We discuss three main sources of moral principles.

4.3.1 Human Rights Case 4.2 is, among other things, about slavery. There is something seriously wrong with that, but what exactly explains why it is so wrong? One of the things that seems wrong with it is that enslaved people are used as if they are not people: as if their existence and their interests do not matter at all. They are treated as a pure tool. A major source of moral principles is founded on this central insight: every human being matters, and therefore you should not use anyone as if they and their interests do not matter. We also encountered this idea in Chap. 2: human rights are the recognition that people have a duty to protect certain things in relation to others. For example, the right to life is a recognition that every human being matters. In doing so, human rights give me a duty not to do something: kill you. Many human rights are encoded by the United Nations in the Universal Declaration of Human Rights, adopted in 1948. This document enshrines human rights. But “the” human rights are not legal agreements, but moral claims. A human right to healthcare would be a human right, even if it was not in the Human Rights Declaration. Human rights are constantly under discussion – exactly because human

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rights are moral claims. Over time, rights have been added to the Human Rights lists and there have been pleas to add further rights, such as rights to leisure or love. The Human Rights Declaration is therefore best seen as a broadly supported statement about which human rights definitely should be accepted. However, the fact that a right is not in the Human Rights Declaration does not mean that it is not a human right. Human rights are a source of moral reasons. This means that we always have a reason to consider human rights, even if violating a human right brings positive consequences to ourselves or others. To provide one example, according to some studies, enslaved people in ancient times had better lives than non-enslaved poor people. If you think freedom from slavery is a human right (as The Universal Declaration of Human Rights states), that higher standard of living does not necessarily make slavery acceptable. When Martin Shkreli (Chap. 2) increased the price of the expensive drug Daraprim fifty-fold, he justified it in part by saying that research money could now go to developing new drugs. Developing drugs is, of course, a morally good consequence, but with this price increase, Shkreli seems to be violating the right to health care for vulnerable patients. While views may differ here, many people will find such a price increase problematic, even if it ultimately results in more drug research. The reason is that the human right to access health care is a matter of moral principle.

4.3.2 Respect Not all moral principles are related to human rights. Take the principle “do not lie”. This principle does not primarily protect a human right, but rather something else: respect for others. Respect for others means recognizing them as worthy, and if you recognize people as worthy, they also deserve to know the truth if they ask for it, especially if it is an important truth to them. Besides lying, there are many ways in which you can violate this respect for others. We can say you violate it, for instance, if you get unreasonably angry at someone who works for you, if you use people for your own gain, or if you fail to recognize someone as an individual, with specific values and preferences. One way to express that you should respect others is to say that you should not use others “as a tool”, or as a means to an end. However, this may be too strong, especially in the work context. After all, an employer hires people because a company has work that needs doing, and the employer is hiring someone to this end. Hence, people who are employed are always used ‘as a means’. The philosopher Immanuel Kant developed an important formulation of what it means to respect someone. According to this nuanced formulation, it is acceptable to use people as means; however, it is morally problematic to use other people merely as means. One must also treat every other human being as a person, and thus as an end in itself. This principle is called the principle of humanity. To treat someone as an end in itself means to treat someone as if that person, and what is important to that person, matters. According to this formulation, we can respect someone

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while we are ‘using’ them, but it also shows why it is wrong when employers see their employees exclusively as means, or as ‘human resources’. Whenever employers go too far in the instrumentalization of their workers, they have too little eye for the humanity of their employees. The philosopher and economist Karl Marx (1818–1883) described clear examples of this in his writings: factory workers in English factories functioned only as appendages of machines. Their employers had absolutely no regard for the workers as human beings, with needs, desires, and dignity. While this is an extreme case, employers in contemporary societies still frequently make the news for the bad working conditions they offer their employees.

4.3.3 What If Everyone Did That? A final source of important moral principles is concerned with collective behavior, such as collective action problems. In collective action problems, individuals make choices that have good consequences for each individual separately, but have harmful consequences in the aggregate. A common example to illustrate collective action problems is the tragedy of the commons. A group of farmers share a piece of land on which anyone can let their cows graze, but as soon as more cows graze there than the field can handle, the field becomes exhausted. Because everyone benefits from using the grass field, and because each individual cow only makes a very small difference, it is in the individual interest of each farmer to graze more cows on the field. The danger then is that every farmer will do this, and the field will soon be exhausted. This situation is analogous to climate change: while the greenhouse gas emissions of each car ride matter very little to the whole, the size of total human consumption creates serious problems for the planet. Examples like these show that there is another important source of moral principles. If every individual contributors would limit themselves  – e.g. letting only three cows graze on the collective field, or emitting less than three tons of CO2 per year per person – then the collective problem is solved: everyone benefits from the collective field and from the environment, without overburdening it. Thus, an important of principles arises from the question: What if everyone acted like this? If something would be harmful if everyone acted in a particular way, you have a good moral reason not to act in this way. This last category of principles may appear to be a question about the consequences of your actions, and, hence, fall within the first category of moral reasons. Consequences, after all, play an important role in answering the question “What if everyone acted this way?”. However, this question is emphatically not about the consequences of your individual actions. Sometimes, the consequences of your actions are very small, or even negligible, but would result in terrible consequences if everyone acted in this way. If you decide to fly to Paris instead of taking the train, because flying is a bit faster and just as expensive, the consequence for the climate is negligible. You will not make the collective problem worse by that one flight, at least not in a way that is truly noticeable by anyone. But if everyone thinks and

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makes decisions this way, planes will continue to fly short distances, and that does have a significant impact on the climate problem. That is why moral principles are so important here: not because the consequences of such a choice are so important, but because if everyone made a choice as easily as you did, the problem of climate change would get worse and worse.

4.4 Moral Virtues There is a third source of moral reasons. This category does not relate to the consequences to others, or to the act itself, but rather to the actor herself. An important reason for paying separate attention to the person herself as a source of moral reasons is that character development belongs to the core of morality (see Chap. 2). Wanting to be a moral person means working permanently to improve our character. To this end, we must develop the virtues and counteract the vices. This can be hard work. Although there are natural differences between people, everyone needs (lifelong) training to become virtuous and maintain the virtues. No human being is perfect. Virtues have been conceptualized by several traditions. We distinguished the tradition of Aristotle and that of Kant (see Chap. 2). The tradition of Aristotle emphasizes the development of moral virtues, such as justice, courage, prudence, and moderation. (Table 4.1 lists the most well-known virtues.) Kant’s tradition places more emphasis on combating vices. Well-known vices are vanity, envy, anger, and avarice. For Kant, a virtuous character also involves combating the passions. A passion is a desire so strong that it hijacks our ability to judge situations reasonably (see below). The four most familiar passions are: lordliness, greed, jealousy, and anger. Passions are not merely episodes (of anger, for example) but are dispositions that impose themselves on one’s entire character. A second reason for paying separate attention to virtues is that the development of character has great instrumental value for us as moral beings. A person of good moral character is a better moral judge, moral observer, and moral actor. The reason a virtuous person is a better moral actor will be obvious. A virtuous person will not run into the motivation problem we discussed at the beginning of the chapter. A morally courageous person will not be afraid of doing what morality requires. That the virtues are also important for making better judgments may come as a surprise, but according to many virtue ethicists, not just any person can be said to be good at moral judgments (although no one can be denied the right to make moral judgments). Some people are better judges than others. In part, this is a natural difference between people. Much more importantly, good judgment is something that can be learned. Not everyone has pushed themselves hard enough to engage in that learning process. It should be emphasized that good judgment is certainly not a matter of intellectual skills (alone). In order to be a good judge, one must, above all, teach oneself the proper feelings, emotions, and dispositions needed to judge. Important examples of such feelings, emotions, and dispositions are mildness, trust,

84 Table 4.1 Important moral virtues

W. van der Deijl Intellectual virtues Character virtues

Other virtuous

wisdom prudence courage temperance justice magnanimity kindness honesty curiosity truthfulness hope (optimism) love (benevolence) empathy self-control

The four italicized virtues are called the four “cardinal virtues” in the tradition of Aristotle. For Kant, truthfulness is a crucial virtue. Aristotle includes the virtues listed under the category of ‘other virtues’ also among the character virtues, but they are typically classified differently today, for example, as ‘epistemic virtues’ (virtues you need to be able to acquire knowledge). Self-control is not really a virtue for Aristotle. It is something that someone needs who is not yet truly virtuous. After all, someone who needs self-control is not yet living virtuously. For Kant, however, it is a virtue as for Kant the battle against the vices is never over

moderation, empathy, sympathy, justice, and prudence. For example, people lacking empathy cannot excel in moral judgment. Because they tend to fail to take other people’s concerns seriously, it is difficult for them to fully grasp moral judgments. Chapter 2 also raised the – perhaps surprising – idea that virtues also enable us to see reality more clearly, and that vices do the opposite. The Roman philosopher Seneca (41 /2012) gives the example of a man in whom anger has ingrained itself as a character trait. This angry person (such as the angry driver from Chap. 2) sees reality differently than a non-angry person. He perceives reality as a world in which other people are constantly working to thwart him. For him, these are the facts. This aspect is what makes vices so terribly problematic. People who are under the spell of a vice do not themselves know this. They think they are way of being is perfectly normal because the vice has become engrained in their personality. The jealous person, the angry person, and the avaricious person live in a world that constantly confirms them in their vice. People who point out to them the possibility of a different view of the world are dismissed as “naive” or “not yet as far along” as they are. A third reason for discussing virtues is that a person of moral character encounters fewer moral problems in practice. A virtuous person perceives the morally relevant aspects of the world better than a non-virtuous person, and makes better moral choices as a matter of habit. Having virtues has a great anticipatory effect. An honest person just wants to be honest. Someone who is honest is also more likely to grasp the relevant moral issues when confronted with a moral dilemma involving

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honesty. If Emma (from Case 4.1) possessed honesty as a virtue, she would not experience her situation as a moral dilemma: she would not even consider lying, or if she would, she would quickly abandon the idea. Because the development of character is itself a moral goal, and because it is instrumental to good moral action as well, there are many philosophers who insist that virtue is an important moral consideration. The development of our virtues is therefore also a moral reason. According to these philosophers, this is all the more true because virtues can only develop and take hold through exercise. If a decision or action has a positive effect on our virtue, then that is an independent reason for making that decision, or doing that action. It is also important to remember that people can lose virtues through neglect or (un)conscious sabotage of their moral character (if you are curious about this, there are various books about the psyche of concentration camp guards that illustrate this process well). No longer seeing people as people is a process you can slowly allow yourself to get used to. You can even force yourself to do it. This is an important reason some philosophers believe that actions that have a negative effect on our virtue should be avoided. Lying very often can turn someone into a pathological liar, who no longer even minds lying or can even enjoy lying (see for instance Harris, 2013). Morally speaking, therefore, it is important not to make decisions or actions that undermine your moral character. Box 4.4 Problems as Things That Need Attention The term “problem” has a negative association. We tend to think “the fewer problems, the better”. For example: manager 1 is implementing a project and runs into ten problems. As a result, the implementation of the project costs more time and money than expected. Manager 2 carries out the same project and does not run into any problems. As a result, his execution of the project costs significantly less money and effort. If we indeed think “the fewer problems, the better”, then we would be quick to think that manager 2 executed the project better and therefore may be a better manager. It is important to realize that in normative ethics the concept of a problem is understood differently. A problem is a situation that deserves attention. Within ethics, it is certainly not the case that we can say, “the fewer problems, the better”. Women who complain about sexual harassment at work cause a problem. Yet a company that says “We don’t want any hassle so stop talking about it” is precisely not a morally good company. From the fact that moral problems are issues that need attention, it also follows that people can fail morally by failing to (want to) see certain moral problems. In Case 2.3 this is what happened with manager Beatrice: she did not realize that you should not address Julia in the way she did, and Julia had to correct her. Unfortunately, this situation is quite common in practice. People fail because they fail to notice that their treatment of others is despicable, that they are actually lying, are being cruel, or are polluting the environment. (continued)

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Box 4.4­  (continued) The inability to see a moral problem can also be moral failure, especially when it appears that one has trained oneself to look away. Unfortunately, modern history offers many examples that show that people are very good at training themselves to do this. The fact that one can fail morally by not wanting to see moral problems or even by not being able to see them raises a variety of questions with respect to whether and how we can hold people accountable for their immoral behavior (see Chap. 5).

References Augustinus, A. (395 and 420/ 2010). Liegen en leugens (De mendacio & contra mendacium), (P. van Geest, Ed.; V. J. C. Hunink, Trans.). Damon. Harris, S. (2013). Lying. Four Elephants Press. Seneca, L. A. (41 AD/2012). Anger, mercy, revenge. (R. A. Kaster & M. C. Nussbaum, Trans.). University of Chicago Press.

Chapter 5

Corporate Responsibility and the Morality of the Market Wim Dubbink

and Willem van der Deijl

Abstract  This chapter deals with the question to what extent market participants can have moral responsibilities. It starts with a discussion on the nature of responsibility, and then raises the question whether organizations, such as companies can bear responsibility (at all). While some philosophers have been skeptical, we list some reasons to think that companies can be moral agents. Subsequently, we discuss whether companies actually should assume moral responsibilities. There are a number of commonly heard arguments about why companies should or may not be bothered with moral responsibilities: i. the market is an amoral sphere, and ii. the only responsibility that companies have is to increase their profits. We describe the problems with these arguments, and discuss the concept of minimal market morality. This concept describes the minimally required moral responsibilities that companies need to abide by. Questions 1. What dimensions of responsibility can we identify? 2. Why can’t the market be thought of as an amoral sphere? 3. Why can’t everyday morality apply in the market?

5.1 Three Cases Case 5.1 A company whose primary business is the construction and management of residential real estate decides to invest some of its assets on the stock market. The world of stocks, derivatives, shorts and longs is largely uncharted (continued) W. Dubbink (*) · W. van der Deijl Department of Philosophy, Tilburg University, Tilburg, The Netherlands e-mail: [email protected]; [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_5

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Case 5.1 (continued) territory for the company’s executives. The venture gets off to a promising start and generates significant profits. This leads to a larger portion of the company’s assets being invested in stocks and derivatives. Then disaster strikes: the stock market crashes and the company’s executives turn out to be less savvy about the derivatives game than they thought. In a desperate bid to keep the company afloat, they decide to cook the books. This averts the threat of immediate bankruptcy: based on the fraudulent accounts, external parties assume the company’s position is solid and provide it with a cash injection. Yet in the long run, even this desperate measure cannot turn the tide. The company fails and the damage to external parties is massive. The fallout is so dramatic that even some corporate investors are left in dire straits, while many private investors lose everything they put in. The impact on people’s lives is devastating, especially for those who had staked their pension on these investments.This case incorporates elements of wellknown cases that played out in the 1990s and the 2010s, involving companies such as Vestia (2012) and Enron (2001).1

Case 5.2 Fatima owns a business selling used cars. She is determined to run a clean operation and scrupulously avoids any suggestion of fraud and deception. At the same time, she has a keen head for business. In her view, anything agreed on the basis of voluntary contract discussions is valid. This means that she can make a considerable profit on a transaction if the customer misjudges the residual value of the car they are selling. Fatima does not feel obliged to share her knowledge of the car market with her customers. As she sees it, her revenue model is largely based on this knowledge asymmetry. One day, a friend comes to see her about selling her car. This friend is one of those clients who has no idea how much her car is worth. This puts Fatima in a tricky position. Should she treat her friend like any other customer or let friendship prevail and share her expert knowledge? There is a lot at stake: exploiting the knowledge asymmetry is good for business but problematic from a personal point of view. That’s no way to treat a friend!

 This case incorporates elements of well-known cases that played out in the 1990s and the 2010s, involving companies such as Vestia (https://nl.wikipedia.org/wiki/Vestia-affaire) and Enron (https://en.wikipedia.org/wiki/Enron-scandal). 1

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Case 5.3 Energetiq is a major energy company. The company has published a vacancy for a technician. Manon applies for the job and has two interviews: the first with department head Catherine and the second with HR manager John. After some toing and froing – which also involves the legal department – they come to an agreement. Manon gets the job. Dries, the head of the company, signs the employment contract on Energetiq’s behalf. Manon is delighted and tells her friends and family about her new job with Energetiq. On the whole, Manon performs well in her first year but unfortunately makes one mistake that leaves a family without heating for 2 weeks in the middle of winter. Her error was partly the result of unclear internal communication about a change in a software system. Energetiq apologizes to the family and offers them financial compensation.

5.2 Responsibility for Market Parties This book is an introduction to normative business ethics. Our main aim is to explore issues that relate to right and wrong, acceptable and unacceptable action. In Chap. 4, we focused on making choices and the hows and whys of providing reasons for those choices. Another important issue in normative ethics concerns the moral responsibility of people, organizations, and companies in the market. The next two chapters are devoted to responsibility in the market. In Chap. 6, we will discuss a number of substantive visions and in this chapter we will set out the basis for understanding morality and responsibility in the market context. 1. We will discuss the concept of responsibility and the issues that surround it (Sects. 5.2 and 5.3). 2. We will look at a number of widely held but philosophically untenable views of market responsibility (Sect. 5.4). 3. We will ask why everyday morality cannot simply be applied to the market without further ado (Sect. 5.5). A first question that arises in relation to the theme of responsibility and the market is: who can actually be held responsible in the market? In these chapters, we will limit ourselves to the moral responsibility of market participants. A market participant is an actor that enters into transactions in the market with full independence, in the sense that the actor is recognized by others as acting independently. In other words, a market participant is an actor to whom we attribute market transactions. In Case 5.1, the fraudulent company is the market participant; in Case 5.2, it is Fatima. In Case 5.3, the market participants are Energetiq and the family that is left in the cold. It is important to realize that “market participant” is not an all or nothing status. Manon in Case 5.3 was a market participant during her negotiations with Energetiq but as soon as she became a company employee, she was no longer a market participant – at least not in that capacity.

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It is also important to realize that actors who are not regarded as market participants still bear moral responsibility for their actions. In Case 5.3, John, Catherine and Dries are moral actors who bear responsibility. We can refer to their personal responsibility, their responsibility as employees (or managers) and their professional responsibility. In the coming chapters, however, we will limit ourselves to the responsibility of market participants. The responsibility of individual professionals will be dealt with in Chap. 7.

5.2.1 Responsibility Let’s begin by taking a closer look at responsibility. It’s a concept that everyone is familiar with yet it is more complex than it seems. The concept of responsibility has two interrelated interpretations. “Being morally responsible” can mean that you should be held accountable for a certain act. To put it another way, you are the owner of the act in question. We link an act to a person or a moral actor. If the act was wrong, then the blame lies with you. If Fatima has agreed to deliver a car and she fails to do so, she will be blamed for her failure. If an act is good, then it is appropriate that people give you credit for it. Suppose Fatima risks her own life to prevent an accident. Then it is only fitting that she receives praise: “That was a brave and wonderful thing you did!” When we use the term responsibility to talk about “holding someone accountable for an act” we are using the term retrospectively. Responsibility in this sense is about past actions that did or did not go well. We take stock of a person (or moral actor) as a result of something they did in the past. The word “responsibility” can also mean “assignment” or “duty”. Your responsibilities are the duties or assignments specifically given to you. In this sense, we link a moral actor with a duty or an assignment by means of the concept. Your “responsibilities” are the things you are required to do or to take very seriously. People will be in a position to hold you accountable for carrying out those responsibilities. If the house needs to be vacuumed and the garbage needs to be taken out, but the latter has been assigned to you as a responsibility, then you have a good reason to take out the garbage first. In this latter sense, moral responsibility is forward-looking. It is about things that have yet to be done, and about determining who should do these things. Moral responsibility is therefore a way of distinguishing matters of importance from less important matters. The important matters are assignments or duties. It is also a way of distinguishing between things that need to be done, and things that you should do or should have done. All kinds of things can go wrong in the world, but fortunately not all of it is your responsibility. Lastly, the concept is also a way of distinguishing between things that are worth doing because they are good, and the things you absolutely have to do. In ethics, the first category are sometimes called supererogatory acts. As a large corporation, you may be asked to lease a skybox at the local soccer club. A decision of that kind

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Box 5.1 Seeing Something as Your Responsibility Some people devote a lot of their time to volunteering for the local soccer club or to playing an active part in a church, a social organization or nature conservation. These volunteers often talk about these activities as a big responsibility. In other words, they experience these activities as a duty. There is something a little curious about this: after all, no one is obliging them to undertake these activities. This is a commitment they have imposed upon themselves, a self-obligation. There are also actions or activities where the responsibility comes with greater pressure attached. For example, when it comes to the responsibility to respect others, there is not only a self-obligation but also a duty imposed by others. How are we to understand the difference? We can make a distinction between the things others will hold you responsible for and the things that you see as your own responsibility while others cannot (or may not) hold you accountable for them. For example, in our society, others will hold you responsible if you fail to obey rules such as “do not steal” or “do not inflict unnecessary harm on others” but in the contemporary context things such as “being a vegetarian”, “being generous” and “preserving cultural traditions” can all be regarded as your personal responsibility. There is a slight paradox concerning the relationship between personal responsibility and responsibilities that a person is obliged to accept for interpersonal reasons. While the latter are objectively more important, the former are often perceived to be more important. The reason for this may be that the personal responsibilities are entirely dependent on self-obligation, which means that they are often closer to people’s hearts and seen as more central to their identity. As a result, people sometimes defend such responsibilities more fiercely than those duties they are required to accept for interpersonal reasons. On the one hand, this is understandable and also morally acceptable to some extent as, in many approaches to ethics, this notion of self-obligation is seen to be at the very heart of morality. On the other hand, there is also a dangerous side to obligations that rest entirely on personally acceptance. The strength of commitment this entails can sometimes lead people to act in ways that are morally wrong: for instance, they attach so much importance to their soccer club that they are willing to commit fraud to ensure its survival This problem is compounded if the fanatical soccer fan then justifies this immoral act by claiming that they were acting out of altruism and not out of self-interest thereby deceiving themselves that only self-interested actions are really immoral. In other words, a strongly held moral self-obligation is not always and not necessarily a good thing. From a moral perspective, it is important to reflect on the accuracy of one’s self-imposed obligations.

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is almost always supererogatory. You will please a lot of people by doing it but ultimately it is not morally problematic if you don’t. In contrast, not getting involved in fraud or human trafficking is your responsibility as a company. If you do end up becoming involved in such practices, others have the moral and legal right to take you to task for your actions.

5.3 Questions Regarding Responsibility In discussions about “responsibility” in business ethics, certain fundamental questions and doubts always resurface. We will discuss two of these in the text and one in Box 5.2. Can an organization, defined as a specific way of working together or organizing life, actually bear moral responsibility? Ever since the emergence of business ethics, a debate has raged over this question. Given that this chapter is about the moral responsibility of companies, the position that organizations can be actors from a moral perspective serves as a starting point. But is this actually a valid assumption? Let’s look at some of the reasons why people cast doubt on this assumption and what we can say to dispel those doubts. One of the main arguments against the idea that organizations can be moral actors is that only beings with free will can bear moral responsibility. The organization has no free will and therefore cannot bear moral responsibility. Another argument is that an organization as such never really acts: people act on behalf of an organization. In Case 5.3, Manon becomes an employee of Energetiq by virtue of the signature that Dries puts on the contract. Literally speaking, the company itself signs nothing and because the organization itself does not act in any literal sense, it cannot bear moral responsibility – or so the argument goes. We can counter this position by presenting four arguments which make the case that organizations can be conceived of as moral actors. First, this idea is entirely consistent with everyday life in which we treat organizations as meaningful units of action. • Sport: If the national soccer team wins a game, we have no problem saying that the team did well: not the individuals who make up the team, but the team as a whole. A resounding victory for the team is often the result of some outstanding individual performances. But, it is also possible for a team full of talented players to play poorly as a whole. Stated simply, the individuals are good but the team is bad. • Law: When it comes to the law, a company becomes a legal person. This concept allows a company to be held accountable under the law for the decisions it makes (as a collective). We can debate this and ask complex philosophical questions about the nature of legal responsibility all we want; the fact is that companies have borne legal responsibility from the moment that the concept of a legal person was enshrined in law. Second, if you can be held legally responsible as a business, then why shouldn’t you be held morally responsible as a business? People sometimes object to this point by

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arguing that companies are not really people, but that is just as true of the legal context. The law does make the distinction between a natural legal person (a human being) and the legal person as a “legal fiction” (the organization as a legal person). In law, therefore, the organization is regarded as an actor, analogous to a human being. It is therefore possible to hold organizations morally accountable in ways that are analogous to humans in exactly the same way. The third point is that it is overstating the case to argue that morality presupposes free will. As we saw in Chap. 3, there are a number of different positions when it comes to free will as a necessary condition for morality. According to compatibilism, there is no need whatsoever to involve free will in such arguments. For others, this problem only arises in discussions about morality in relation to being a person. This means that, insofar as we speak of corporate moral responsibility solely within the context of interpersonal morality, the notion of free will poses no problem. However, it is clear that companies cannot be moral actors in the full sense of the word: there are some rights that they do not have and should not have, such as the right to moral autonomy and the right to vote. This idea is consistent with everyday reasoning in which we do hold Shell responsible for environmental pollution, for example, but are not concerned about the organization’s lack of voting rights. Fourthly, the claim by opponents of treating organizations as moral agents that it is actually Dries who signed Manon’s contract and not the company is open to challenge. The suggestion that this is the correct description of the situation is debatable to say the least. When Dries signs the contract, he is doing so in his capacity as a company executive. So it is the company that is signing, using Dries as its instrument. To insist that final responsibility for signing the contract lies with Dries as a person is a failure to understand that adequate descriptions need to take account of the roles that people occupy. We describe a situation by saying “the prime minister made a speech” although a “prime minister” as such does not “really” exist either. It is always a role embodied by a person, such as Justin Trudeau or Boris Johnson, acting as prime minister.

5.3.1 Limits to Market Participant Responsibility The second issue to be discussed in this section is how to divide responsibility between the organization and the people working on its behalf, once it has been agreed upon that the organization can be a moral agent. To say that corporations (i.e. organizations) can be moral actors is also to say that we should attribute the actions people take on behalf of a corporation or as instruments of a corporation to the corporation (i.e. the organization) itself. In Case 5.3, for example, we saw that Manon’s mistakes, both legal and moral, were attributed to Energetiq. While many people will agree with this, there is still room for doubt and nuance. Is this always the case? Does it exempt Manon of all personal responsibility? In the literature, a lot has been written on this issue. Let’s address some of these doubts and seek a more nuanced position by commenting on the  – in itself correct  – idea that the organization is responsible for Manon’s mistakes.

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In our modern, differentiated and liberal societies, the transfer of responsibility from employee to organization is never complete and absolute. This, of course, has everything to do with the fact that, in this type of society, an employee is not seen as a child, an animal or a thing: employees are still moral actors in their own right. It would therefore be unreasonable to make the organization responsible for everything in every set of circumstances. There comes a point where you have to say: here is where the responsibility of the company ends and the responsibility of the employee as a person takes over. What if the mistake Manon made was caused by her showing up for work under the influence of drugs and/or alcohol? That might be one reason to say: in that case, it is no longer the company that is morally responsible but Manon herself. Current discussions of employee responsibility versus corporate moral responsibility have led to agreement on three principles: 1. All actions (right or wrong) taken by a normally functioning employee and that fall within that employee’s job description must be attributed to the organization. 2. Members of senior management, due to their special position within the company, are more likely to bear a greater personal moral responsibility for the company’s actions. 3. In cases of exceptional behavior by an employee, a company may not be held responsible and the employee will have to be held personally morally responsible. Examples might include addiction at work, aggressive behavior and serious dereliction of duty. A legal case that played out in the Dutch town of Rhenen in 2017 illustrates the third type of example. A court held the attendants at a swimming pool personally responsible for the drowning of a nine-year-old Syrian girl. The judges ruled that the attendants had acted too routinely and had not communicated effectively enough that the girl needed extra attention because she was a very inexperienced swimmer for her age (NOS, 2017). It is also important to note that attributing responsibility is not a case of “either­or”. In situations where we attribute moral responsibility to the organization, it is still possible to attribute some moral responsibility to individuals within the organization (see above). Someone who works for a company that acts irresponsibly may well bear a measure of personal responsibility for their part in these actions (see Chap. 7). This statement can be applied to many examples from recent history. Take the diesel scandal at Volkswagen, a supposedly respectable company that was plunged into disrepute when it lied to lawmakers and customers about the sustainability of its cars.2 Employees who participated in this deception also bear personal responsibility for the part they played. It is not enough to simply appeal to loyalty to your employer or the terms of your job description. Loyalty is a highly valued

2

 See https://en.wikipedia.org/wiki/Volkswagen_emissions_scandal

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principle but it also has limits. Otherwise it would be all too easy to insist “they made me do it; I had no choice”. There is always something you can do to address the moral issues at stake. And from a moral perspective, resigning is always an option.

Box 5.2 Acting Responsibly, Exceptions and Being Excused When we judge someone’s actions in a specific case, there are basically two judgments possible: all things considered, the action was in line with the person’s duties and therefore responsible, or it went against the person’s duties and was not responsible. But in specific cases, this distinction is not always an easy one to make. All aspects have to be weighed and there may be complicating factors at play. We will discuss two types of complicating factor here. First, something that appears to be immoral in a given situation may on closer examination turn out to be the right thing to do. When all is said and done, the action taken can still be considered right or good. This can also occur the other way around: an action that appears to be moral may turn out to be immoral on closer inspection. Most cases where appearances are deceptive involve a situation in which a principle that is almost always valid is overruled by another moral principle in a specific set of circumstances. When a stabbing is reported, the person wielding the knife is assumed to have acted immorally and can be considered a murderer. Yet there are exceptions in which we are forced to conclude that the killer was not acting immorally because in that specific case another principle overruled the moral obligation not to kill. For instance, in a specific set of circumstances, the right to self-defense may take primacy. Similarly, it is a moral imperative to obey all laws but there may be situations in which it is nevertheless right to disregard that imperative, for example, because the rule of law has been instituted by an authoritarian regime that grossly violates human rights. In other words, it is always important to examine specific cases to see if exceptional circumstances apply to the extent that the standard principle is overruled by another principle. This first type of complicating factor can therefore be described as an action that appears to be irresponsible on the basis of a significant and generally applicable principle but is nevertheless justified in a particular case due to the special circumstances involved. The circumstances create a situation in which the significant and commonly held principle is overruled by another – possibly lesser known yet still valid – principle that applies to the case. People have a strong tendency to invoke exceptions to justify their actions, including their immoral deeds. That is to say, the argument “this is an exceptional situation” is often used as excuse. The people who stormed the US Capitol on January 6, 2021 referred to themselves as “freedom fighters”. (continued)

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Box 5.2  (continued) A group of conspiracy theorists in the Netherlands claimed the right to incite violence because of a baseless accusation that a number of children buried in the sleepy town of Bodegraven had been victims of a satanic pedophile network (Akinci, 2021). Morality, therefore, needs to impose strict conditions on people’s right to claim that their specific situation is an exception to a commonly held interpretation of what duty implies: 1. The burden of proof should always be on the person invoking the possibility of an exception. 2. The validity of the alternative principle must be well argued with regard to the circumstances of the case in question. 3. A careful and truthful investigation of the facts and the relationships that are made between them is required. 4. On no account should rules be applied that make exceptions a matter of routine (e.g. “if other people lie, that means I am allowed to lie too”). An exception of this kind is too general. To give it validity would be to undermine all principles, meaning that it would no longer be an exception. The excuse situation A second type of exception worth discussing briefly at this point is the situation where someone has acted immorally but we still do not want to judge them too harshly for what they have done. Although the act is immoral, we do not want to put the full weight of blame on the person concerned. We refer to such cases as an excuse situation. If a hairdresser steals from her customers but is forced to do so by an abusive partner, we might say, “What she did was wrong, but she is not entirely to blame.” It is important to emphasize that an excuse does not justify the act. In the case of an excuse, we weaken or even disregard the relationship between the act and the person committing the act. We take the conditions of the act into account when attributing it to the person (see above). In doing so, we do not hold the person accountable – or we hold them less accountable – for their irresponsible act. The reason that excuses have a place in our modern take on morality is that morality strives to be fair at all times. Holding a person fully accountable for an act may be unfair if the conditions under which a person can be held accountable are not met. In most cases, this is because a person can make it clear that they were not completely free in carrying out the act. Coercion is a common reason to excuse someone. Lack of knowledge is another frequent excuse. The option of making an exception on the basis of an excuse is necessary from the standpoint of morality. At the same time, it is problematic. People tend to appeal all too easily and readily to the room for maneuver that excuses offer (Bandura et al., 2000; Goodpaster, 2007; Kant, 1785). As a result, such appeals can quickly get out of hand. (continued)

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Box 5.2  (continued) 1. People come up with all sorts of lame excuses: “Walking on the grass is not allowed but I can do it now because there’s no one else around”; “Being aggressive to others is not allowed but this has made me so angry that I have every right to vent my feelings”; “Lying is not allowed but in this case I’ll do it anyway because in politics the end justifies the means.” 2. People tend to stretch all manner of good excuses beyond their limits (see Sect. 2.6). “I had no choice in the matter” is basically a good excuse, which may be valid in certain circumstances. But it’s also an excuse that people resort to when faced with even the slightest suggestion of resistance. It’s worth remembering that “taking responsibility” always comes at a price or there would be nothing to it. 3. People use excuses as if it were justifications. They behave as if an act was right because it can be excused. Unfortunately, this specious argument is often used in both business and government. People insist that they have done nothing wrong because their actions have been excused. In the Netherlands, this was the tactic employed by the managers of housing association Vestia when they were hauled up before a parliamentary committee. When Vestia’s director Erik Staal had to account for his actions after being convicted for embezzling funds intended to finance housing for the poorest of the poor in South Africa, instead of acknowledging his wrongdoing he said: “The bad news kept on coming. I was mentally exhausted. That had a serious and very negative impact on my actions. I was in a very dark place.” (Van Mersbergen, 2020).From a moral point of view, there are two problems with Staal’s statement. His excuse is very weak and he seems to use it as a justification. Due to the fact that people tend to make excessive – and misplaced – appeals to excuses, morality is forced to set some ground rules in this regard. Unjustified appeals to the fairness clause have to be countered. In light of the above, we will specify the following three: 1. It is imperative that people should acknowledge their own wrongdoing. An appeal to an excuse is always preceded by an acknowledgment that the act was unacceptable. 2. It is essential that people should demonstrate their intention to act differently in future. An excuse requires a change in behavior. An appeal to the excuse “I didn’t know I was doing wrong” brings with it the obligation to be properly informed in future. 3. The principle to which someone appeals should only be applied within reasonable limits. A person cannot claim “coercion” when confronted with the mildest of objections. A person cannot say “I didn’t know” with regard to things they were supposed to know.

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5.4 Responsibility of Market Participants Under Discussion Case 5.4 On July 14, 2014, Malaysia Airlines flight MH17 (which also had the flight number KLM 4103) was shot out of the sky by a Buk surface-to-air missile fired from the eastern fringes of Ukraine, an area under the control of a Russian-backed (i.e. Russian-driven) separatist militia. Everyone on board, many of them Dutch citizens, were killed. The aftermath was disturbing and raised many questions. One question was: why did the plane take this route in the first place? Wasn’t it irresponsible of Malaysia Airlines and KLM not to take the proactive decision to steer well clear of what was essentially a warzone? Other airlines, such as Air France, were already avoiding Ukrainian airspace with a view to minimizing the risk to their passengers.

In today’s market context, there is much debate about the moral responsibility of market participants. Such discussions are usually prompted by a specific set of circumstances in which an organization did or did not take sufficient responsibility: Case 5.4 is one such example. Discussions about a specific case are never held in isolation. They always take place in the context of views about the responsibilities of market participants in general. Generally speaking, there are various versions of market participant responsibility in circulation. Civil society organizations, some consumers, some investors and in some cases the government call on market participants to take a broad view of their responsibilities: these should go far beyond an obligation not to steal, harm or commit fraud. They are also called upon to pursue goals in terms of sustainability, social justice and other ethical areas. Many companies go along with these expectations but some insist that their responsibilities are limited. A frequently heard argument is that a company’s primary responsibility is to make a profit. There are also market participants who are perfectly willing to take a broader view of their responsibilities yet refuse to see this as their duty: whether or not they act on this notion is surplus to requirements (supererogatory). In this chapter and the next, we will discuss a range of views on the responsibility of market participants in general. These discussions on views in general will be helpful when it comes to judging specific cases later on. This chapter takes a negative line of approach: we will focus on a number of views that, although popular, are also philosophically untenable.

5.4.1 Two Frequently Heard Arguments In the general debate about the responsibility of market participants, two arguments are often used to deny that companies can or should bear any moral responsibility at all. The frequency with which these arguments are used has nothing to do with their

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philosophical quality. Their appeal is primarily populist and therefore difficult to eliminate. In this section, we discuss two of these arguments about the responsibility of market participants. It will soon become clear that both views are not tenable. (i) The market as an amoral sphere The first of these arguments states that market participants do not have to or need to take any responsibility at all. This school of thought presents the market as an amoral sphere, often described using metaphors such as “warfare” or “the law of the jungle” (see Solomon, 1992). An amoral sphere is a sphere that lies beyond moral control. It is a place where moral arguments hold no relevance whatsoever: the notions of moral and immoral actions simply do not apply. Accordingly, the actors in an amoral sphere, in this case market participants, have no moral responsibilities. If the market is an amoral sphere, then market participants have no moral responsibility. There are a number of insurmountable problems with this argument. The first is that war should not be seen as an amoral sphere either. Even in war, certain rules apply: prisoners must not be tortured, chemical weapons must not be used, and children must be spared. This invites the objection that soldiers sometimes or often fail to comply with these rules, but that objection is irrelevant. Normative ethics are always concerned with how things should be; the fact that people do not obey rules does not mean that rules should not be obeyed. This often leads to the criticism that these moral obligations are therefore unrealistic. While it is true that morality stands in opposition to “reality” or to things as they are, the criticism is misdirected. The whole point of morality is to insist that things can be done differently. In this sense, morality is always “non- realistic”. It states – for example – that women should not be raped or otherwise mistreated by men despite the fact that sexual abuse and violence against women has been prevalent throughout human history. Moreover, morality does not equate to naivety. It does not necessarily demand pacifism in the face of an aggressive warmonger. Historically it has argued for the idea of just warfare. By analogy, business ethicists do not argue that companies should give away all their revenue or that they should forego making a profit, only that other parties should be treated properly. The second crucial argument against the market as an amoral sphere is that the market is clearly a product of human culture and civilization (far more than warfare). Markets can only exist by the grace of a host of moral rules that most people routinely follow. For instance, the market presupposes the idea of private property and individuals who are in a position to make independent and free decisions. The market also assumes peace and stability. In other words, the market is most definitely a moral sphere that can only exist if people adhere to obligations such as treat each other with respect, do not kill, do not steal and do not resort to violence. In other words, the market is the antithesis of war (see Hirschman, 1977; Solomon, 1992). Actors who feel no obligation to act morally, members of the Mafia for example, may make a fortune in some cases but they are not regarded as the best businessmen. Instead, they distort market forces and make their money through parasitic behavior. All of which leads us to conclude that the market cannot be a sphere in which market participants bear no responsibility.

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Of course, one might object that the nature of the market means that market participants quite often struggle to abide by the moral rules associated with the market. While there is certainly some truth to that claim, it still does not make the market an amoral sphere. All it does is make the market morally problematic, as the motivation to act morally would appear to be more readily compromised than in other areas of society. (ii) The duty to make a profit The other view argues that market participants have only one duty, and that is to make a profit. Making a profit is their only and absolute duty. It is important to note that this view is radically different from the previous one. Where the previous view places market participants outside the sphere of morality, this view places them inside the sphere of morality but gives them only one duty: the duty to make a profit. This claim gives market participants an extremely one-sided package of duties, one that can be interpreted in a number of different ways. We will start by examining the following interpretation: (a) A market participant (as an independent actor) has the right to absolutize profit maximization as a duty. There is no other way to put it: the idea that a moral actor has the right to absolutize a duty is extremely odd.3 As we have seen in previous chapters, an important function of morality is to build a protective barrier around people by means of moral rights. This includes duties such as do not kill, do not steal, do not lie and so on. Why would people give up all those rights and give  a single party an absolute right to make a profit? To illustrate why absolutizing a rule is so problematic, we can cite a few examples from the world of cinema. In the movie Extreme Measures, a doctor absolutizes his duty to develop new drugs to the point where it justifies the murder of the homeless people he needs for his experiments. In Serial Mom, a mother claims the absolute right to protect her children. This eventually leads her to kill other children to increase her own children’s chances of social success.4 The fact that Serial Mom is a black comedy is indication enough that such absolutes are not to be taken seriously. The argument that the market allows only one absolute duty – that of making a profit – also crops up in another guise. In this version, it is the duty of market participants who are not independent. The position reads: (b) A manager (as a servant of an organization) has only one moral duty and that is to ensure profit maximization for shareholders. The argument often given for the absolute duty to make a profit is that shareholders are the owners of the company, and that the only applicable duties are to them. This is an unlikely line of reasoning. Business ownership in the legal sense is obviously a

3  Of course, this applies only to substantive duties. Another set of arguments applies to strictly formal duties such as: “Do your duty!” 4  See Walters (1994). Serial Mom.

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morally relevant factor: legal rights also necessitate a right in the moral sense. But it is totally unclear why that right should be so important that it allows someone to cast aside all the basic rights of others. Customers, employees and suppliers also have rights; they too are important. Rights that always override other rights do not exist and, even if they did, the right of ownership would certainly not be first in line for that status. The thinking behind this second version is sometimes part of what is known as principal-agent theory. According to this economic theory, someone with a sizeable economic interest who lacks the time to manage that interest (the principal) will pay someone to do it for them (the agent). The principal (in this case, the shareholder) is expected to trust the manager with their capital. But the agent (i.e. the manager) not only has interests of their own but also far more knowledge of the ins and outs of the business. This may lead the agent to behave in ways that the principal is unhappy with or even strongly disapproves of. After all, the interests of agent and principal are not perfectly aligned. For example, the CEO may start acting in ways that highlight their role as an executive but end up being bad for the company. Pfeffer and Salancik (1978) use this mismatch to explain why there are so many mergers (the CEO wants to head a bigger company) even though so many mergers fail (the merger is often ill-­conceived from an economic perspective). There is an incentive for the agent to pursue their own advantage even though they have been appointed to represent the interests of the principal.5 According to the second variation on this argument, this is why managers as agents have an absolute duty to maximize profits for the principal. Managers are appointed by shareholders for this purpose. Yet here too, the arguments above continue to apply. Shareholders – as principals – certainly have moral rights in relation to managers – as agents – but those rights cannot and should not lead them to disregard the other duties of agents, or else we will end up in a Serial Mom-type situation. Shareholders therefore have moral rights but only within the bounds of morality. Morality also imposes other duties on managers, in their role as agents. In the aftermath of the Second World War, German war criminals justified their actions with reference to an absolute duty of obedience: an order is an order. Their absolutization of obedience and loyalty did not hold up in court. There is no absolute duty that gives a person the right to set aside all other duties. It is worth noting that the judges at Nuremberg  – and all judges at international courts thereafter – did not even accept an appeal to absolute obedience as a satisfactory excuse. Even in the direst moral circumstances, there is always something a person can do. If that is true of a wartime soldier under threat

5  This is what economic literature refers to as the moral hazard problem. Some authors also describe it as “moral risk”. The moral risk or hazard is that the manager can claim to represent shareholder interests and yet fail to do so because the manager’s self-interest is not entirely in line with the interests of the shareholders. As a term, it is somewhat confusing: after all, in cases like these, morality should be the very thing that solves the problem of trust. So it strange to speak of a moral hazard or risk.

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of severe punishment for insubordination, it is certainly true of well-paid company executives. Considering these examples, we might even say that this view is not only odd but also morally reprehensible, insofar as people sometimes use the absolutization of one duty as a cover for shirking other moral duties. This discussion leads us to conclude that, normatively speaking, the market should be represented as a moral sphere of action. Within that sphere, all participants have certain responsibilities. These responsibilities cannot coexist with the absolutization of a single duty. Of course, this is not to say that market participants do not have the right to pursue profit. Nor does it imply that society breaks down when market participants attach great importance to maximizing profit. The only assertion being made is that profit maximization should not be claimed as an absolute duty and certainly not as an objective that grants the right to ignore all other duties.

Box 5.3 But Shareholders Are Owners, Aren’t They? Advocates of the absolute duty to make a profit appear to be well served by the current neoliberal climate, thanks to an extra argument we have yet to touch upon. The shareholders can be looked upon as the owners of a company and right of ownership – especially in a culture dominated by a business culture that looks to the US – is a very important legal and moral right. With this in mind, any rejection of the claim that there is an absolute duty to maximize profit also needs to reflect on the right of ownership. It need not question that right as such but it can interrogate its alleged absoluteness and the implications thereof. There are two ways to approach this. First, one can directly criticize the excessive importance placed on the right of ownership by arguing that other rights, such as “freedom” and “freedom from harm”, are even more important. This creates a bandwidth within which the rights of others can also be legitimized. Especially when it comes to key parties such as customers, employees and those who may be directly harmed by a company’s activities, this nuance suffices to counter the argument of “yes, but they are the owners”. For example, one can argue that “harm inflicted” outweighs the right of ownership. But if the rights of a broader group are to be considered in relation to a company, additional arguments may need to be marshalled in order to refute the claim that the right of ownership is absolute (i.e. that it overrides other duties in all circumstances). To this end, we can question whether ownership of large-scale means of production can be compared to owning a bicycle or another item of personal property. Does it make sense for a society that is primarily founded on principles of freedom, equality and justice – and not on ownership – to equate these various types of property? In other words, to treat them as if they were the same kind of thing? Doesn’t such a society require a multi-facetted concept of what it means to have ownership (Keynes, 1926)? (continued)

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Box 5.3  (continued) We can also point to historical and systematic reasons that might steer us toward a multi-facetted concept of ownership. Systematically, we can understand the concept of ownership as referring to a “bundle of rights” that a person can claim in relation to others with respect to an object (Bromley, 1991). That bundle includes rights such as the right of usufruct, the right to dispose of the object, to use it and even to destroy it. In today’s market society, it is common to think that all these rights necessarily form part of a single bundle that belongs to one legal entity. We think of the bundle of rights in terms of all or nothing. When you buy a teapot you have the right to make tea in it (which then belongs to you), to decide who gets to use it, and if you feel the urge to break it, no one can stop you. A person has all of the rights over an object or no rights at all. From a systematic point of view, however, there does not have to be an “either/or” choice between these two extremes. In fact, historically, most societies tended not to opt for such a rigid model. Instead, they chose to split the bundle. On a piece of land, for example, one person would be given the right to graze ten cows, a second person to gather wood, a third to keep 25 pigs under the oak trees, and so it went on. Moreover, complex constructions like these are still a feature of today’s market society. In housing for example, (the distinction between owner and tenant) or matters of inheritance (a house being registered in the name of the surviving spouse). Sites of natural beauty can be managed by a conservation group but owned by the state. In the music industry, a consumer purchases the right to download and play a particular song, but not to copy it. Seeing property in this way enables us to take a more differentiated view of the bundle of rights that shareholders have as the owners of a company. This opens up the possibility of giving shareholders certain rights but not a fixed and absolute right. Their “right of ownership” could be thought of in terms of a right of usufruct. Interestingly, this is also how shareholders used to be seen many decades ago. In a famous study, Berle and Means (1932) argue that modern capitalism has led to a renewed differentiation in the rights associated with ownership: the distinction between shareholders and directors. It was this distinction, they believed, that made corporate social responsibility (CSR) possible (see also Keynes, 1926). This thinking has yet to become reality. After the Second World War, the conflicts and discussions about the concept of ownership remained a constant. In recent decades, the neoliberal view gained ground, at least legally. In this either/or view, all of the rights in the bundle necessarily belong together.

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5.5 Market Morality as a Specific Kind of Morality We have argued that the market can only be meaningfully imagined as a sphere in which all parties bear certain moral responsibilities. We have yet to discuss the exact nature of market morality: what specific responsibilities do market participants have? One might ask why this is such a complicated issue. Why can’t we simply apply the same morality that we apply to one another as people in everyday life? The answer is that today’s differentiated society is comprised of separate spheres, such as the market, politics and the sphere of personal relations. A characteristic of all these spheres is that, to a certain extent, they develop their own morality. In light of these distinctions, we cannot simply apply everyday morality to the workings of the market. Different moral duties apply between friends than between business partners. Very occasionally, situations occur which highlight the differentiated nature of modern life: there is interference between the spheres. Case 5.2 is a good example: Fatima’s friend becoming a customer makes her aware that the morality she applies in her personal relations differs from the morality of the market. She has to make a conscious decision about whether to think of her friend as a personal relation or as a customer. It is important to note that this differentiation is not just a given, but also a desirable phenomenon. Modern society is supposed to be differentiated; the fact that we treat each other in a specific businesslike manner in the market brings us all the advantages of the market as a separate sphere of action. So in a modern society, it makes sense that people need to ask what form the morality of the market should take, in substantive terms. What responsibilities do market participants have? At the same time, it makes sense that everyday morality cannot simply be invoked.

5.5.1 Minimal Market Morality Moral discussions often focus on disagreement and, as a result, we sometimes overlook the significant role played by consensus and similarity. Yet, there is a lot of consensus about moral principles, The following principles of (business) ethics are recognized as ground rules of market interaction. They are based on a variety of ethical reasons (see Chap. 4): 1. do not break contracts; 2. do not lie (or mislead); 3. do not steal; 4. do not kill; 5. respect other people and market participants; 6. preserve the integrity of people and other market participants; 7. pay your taxes; 8. do not destabilize the political order; 9. consider yourself to be bound by all legal rules as they apply.

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The complete set of moral rules that people agree should apply in the domain of the market is also known as minimal market morality. The nine principles listed above account for part of minimal market morality but do not represent the complete set. In justifying these rules, it can be argued that failing to comply with them often leads to a violation of moral rights and goes against more general ideas of virtue. Another justification that is systematically more important in the context of business ethics states that, without these responsibilities, the market would not be able to function adequately. Unless its participants respect property, obey contracts, act fairly, and respect others and the rule of law, a market cannot even begin to function. When such principles are violated in the extreme, the market turns into a Mafia operation. That is the opposite of market order: people are unable to trust each other and trade becomes impossible. This means that we can say without question that the actions of the fraudulent company in Case 5.1 are morally problematic. They are not just problematic from a general moral point of view but also in the more limited context of the possibility of a market. By continuing to borrow money under false pretenses, not only did the company harm people’s interests but it also acted in a way that disrupted trust in the market, and trust is crucial if a market is to function effectively.

5.6 Discussions on the Substance of Market Morality The concept “minimum market morality” highlights the difference between common, daily morality and the morality of the market. It has been construed with the idea in mind that on the market the room for making profit ought to be maximized. The restrictions imposed by morality therefore ought to be as minimal as possible. By now, we already have some insight into its substance. That said, some issues are unresolved. Two philosophical questions spring to mind:  1. What exactly does minimal market morality entail  (in terms of substantive duties)? 2. Is a market that merely sticks to the minimal market morality a good market, both morally and in terms of its economic efficacy? Does minimal market morality provide enough safeguards for markets to function both morally and effectively? These two questions are closely related yet quite different. While the first presupposes the idea of a minimal market morality and asks about its substance, the second asks whether this idea makes sense at all. As we shall see, the differences between various views of responsibilities in the marketplace center on these very questions. In the next chapter, we will address the first question in detail by examining the theme of corporate social responsibility. The second question has also generated a good deal of debate. One argument against the idea that markets should merely adhere to the idea of a minimal market morality is that this idea is rooted in the notion of the market as a collection of medieval traders setting up stall on the town square. Should our current thinking on the morality of markets really continue

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to be based on such an old-fashioned template? Can we and should we be guided by the traditional idea of a market as it took place in a square in a medieval town? Or is the market of the twenty-first century, where vast corporations and hot money determine the order of things, so far removed from traditional notions of the market as to make that comparison futile? Is it therefore misguided to derive contemporary market morality from such a traditional image? If so, is there a case for insisting that corporations should take on more duties and other kinds of duties (e.g. political)? Another relevance issue about which opinions diverge – in relation to the second question – concerns the extent to which the market should be set up as a sphere of businesslike action according to the arm’s length principle. Of course, the market operates on the assumption that “business is business”. However, it is still worth asking how radically the principles of business should be implemented. Case 5.5 outlines this problem, based on the story of a brewery manager as told at a workshop.

Case 5.5 I came to work 1 day to find a crowd gathered at the entrance to the office. In the middle of the night, someone had left a baby at the office entrance. Does the business focus of the market mean that I should just step over the basket with the baby and get to work? One might say that this would be taking things a bit too far. At the same time, I was faced with a problem. This baby was our third foundling of the year. The fact that we had taken good care of the first two had led another desperate mother to leave her baby at our front door. Later that day, we discussed the issue in the management team. I was struck by how entirely businesslike some people were in their approach: that they did not see “the problem” as a human tragedy but only as a problem for the company’s reputation. It made me wonder if there wasn’t a clash between taking a moral standpoint and a purely businesslike view of the situation. The idea of the market as a “businesslike” sphere highlights the difference between everyday morality and businesslike market morality. Many people see kindness, helping one another (duty to help), and helping someone in need (rescue-­ in-­need duty) as self-evident duties in everyday life. The businesslike nature of the market means that these duties cannot be present in the same way in a market context. But does this mean that these duties play absolutely no part in market morality? Or should we be looking for another way to fulfil them? Some say the market functions optimally when a businesslike approach is radically implemented. That is when the market is at its most efficient. One argument in favor of this view is that business acumen leads you to judge products on the same criteria as others in the market. In other words, you focus strongly on price and quality, but you are unlikely to choose a product because it was made by your best friend. If you did, you might end up with poorer quality for a higher price because you allowed friendship to get in the way of the transaction. If lots of people did this, the market would no longer function – that is to say, it would no longer be geared towards delivering the best quality at the best price.

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5.6.1 Limits to the Business Mindset However, it can also be argued that a businesslike attitude should have its limits. First, it is worth asking whether adopting an uncompromising business mindset actually leads to optimal market efficiency. An absolute focus on business may also detract from the trust needed for a market to function optimally. When you know people, there is a relationship of trust, and trade based on trust also reduces the risk of buying something that seems better than it actually is or even being ripped off. Trust is therefore important in the market and an absolute reliance on a business mindset is not always the best way to create and nurture trust. Trust reduces transaction costs (Coase, 1960). It is also important to remember that, in practice, the market is not completely separate from other spheres, such as the sphere of intimacy and everyday life. An uncompromising business mindset can have a negative – and undesirable – effect on those other spheres, and for this reason the businesslike nature of the market should be contained. If Fatima (Case 5.2) were to treat her friend like she treats her regular customers and give her a lesser deal in the process, it could well damage her friendship, and friendship is one of life’s key values. The third argument is more moral and psychological in nature: an undiluted business mindset creates a certain distance between people, whereas morality often requires us to empathize and feel involved with others. A business mindset can be internalized: if you get used to taking that approach, it can become deeply ingrained in your character. This can result in an inability to abandon that business mindset even outside of a market context. Box 5.4 Market and Government in a Differentiated Society The discussion about the responsibilities of market participants takes place against the background of the discussion about the relationship between the market, the state and society (Dubbink, 2003). As we discuss various perspectives on the responsibilities of market participants in general, it is also important to consider the relationship between these three institutional pillars of the social order. An important question in this context is whether the market is a natural order or a constructed order. Do people without a state live in a natural market or is it the other way round: is the market created by rules that grow out of a culture and then need to be ratified by the state, through law? In this context, we will restrict ourselves to a number of propositions about the relationship between market and state on which there is a widespread agreement. • In modern society, differentiation is a sociological fact and a normatively desirable development. Differentiation gives rise to the market as a distinct sphere of action. (continued)

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Box 5.4  (continued) • In a modern, differentiated society, there is a division of labor between market and state. The mission of the market is to bring about economic production. In addition, it has the right to exist as a sphere in which free people give shape to their lives, but only in part: people also shape their lives in civil society, where they relate to each other as friends, family, volunteers, teammates, etc. On the one hand, the state’s mission is to enable the market (through law) by protecting contracts and property, for example. On the other hand, the state performs several functions that support the operations of the market. One such function is the government’s guarantee of consumer bank deposits. Before governments gave such guarantees (until deep into the twentieth century), bank runs (a panic-­induced rush to withdraw money from the bank) were a regular occurrence and often led banks to fail, triggering financial crises. • The division of labor is not entirely fair. In the market, people can and do follow their self-interest entirely, while the state has to contend with political issues (e.g. tax collection, public expenditure, imposing and enforcing legal rules) in which citizens’ interests can be diametrically opposed and people are expected to do more than act in accordance with their own selfinterest. This makes it much easier for the market to present itself as successful, while the state faces ongoing resistance in carrying out its tasks. In addition, the really complicated issues are collective, public problems, all of which are firmly on the government’s plate. In addition, the state has the general and largely thankless task of acting as a trouble shooter. As soon as an acute problem arises, people look to the government to solve it. This skewed division of labor quickly leads to populist but misplaced complaints about the functioning of government in a modern society. • In a modern society, the state finds itself faced with a whole series of problems. These include implementation problems caused by political wrangling, the need to operate within the confines of the rule of law but also issues such as corruption, incompetence and rigid regulations. This is why there is such a strong focus on and so much discussion about “the failure of the state”. In the Dutch context, this discontent has focused on tax fraud and the nitrogen crisis in recent years. Environmental licensing policy concerning PFAS emissions at the Port of Antwerp is a strong example in Belgium. But it is worth thinking twice before we blame every unresolved problem on the failings of the state. Many of these problems have to do with the skewed division of labor described above. • In a modern, differentiated society, it is hard to objectively distinguish between a private and a public issue. Indeed, that very distinction is often the focus of heated debate. Proponents of the right to abortion, for example, see it as a private matter, while opponents see it as a public issue. However, it can be assumed that if something is a public issue, the state has a role to play in regulating it. (continued)

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Box 5.4  (continued) • While government is able to address some negative impacts, inefficiencies and ethical problems in the market, it does not have the power or the position to perfectly regulate the workings of the market. Here are three of the main reasons for this: I. Government intervention can lead to inefficiencies. For example, government regulations can curtail harmful aspects of business activities, such as pollution, but an intervention of this kind can also land government agencies and businesses with a huge administrative burden. II. Some moral problems have no clear jurisdiction. In other words, there is no government agency with the legitimacy and sufficient powers to address the problems effectively. This is especially true of cross-border problems, such as international tax avoidance and climate change. The Dutch government can tax greenhouse gas emissions, for example, but if this results in companies relocating to other countries where the rules are not as strict, this policy intervention will do very little in real terms to reduce greenhouse gas emissions. III. In some cases, governments may simply be unwilling to intervene effectively. Particularly under pressure from neoliberal thinking in Europe and the Americas, governments have become very cautious about intervening in the market, even in situations where there are good reasons to do so – sometimes very good economic reasons.

References Akinci, O. (2021, February 26). Een satanistisch pedonetwerk in Bodegraven? Waarom mensen zo gevoelig zijn voor dubieuze theorieën. Trouw. https://www.trouw.nl/cs-­b1048ba5 Bandura, A., Caprara, G., & Zsolnai, L. (2000). Corporate transgressions through moral disengagement. Journal of Human Values, 6(1), 57–64. Berle, A. A., & Means, G. C. (1932). The modern corporation and private property. Macmillan. Bromley, D.  W. (1991). Environment and economy: Property rights and public policy. Basil Blackwell. Coase, R. H. (1960). The problem of social costs. The Journal of Law and Economics, 3, 1–41. https://www.jstor.org/stable/724810 Dubbink, W. (2003). Assisting the invisible hand. Contested relations between market, state and civil society. Springer. Frankl, V. E. (1946/1981). De zin van het bestaan. Een psycholoog beleeft het concentratiekamp & een inleiding tot de logotherapie. Ad. Donker. Goodpaster, K. E. (2007). Conscience and corporate culture. Blackwell Publishers. Hirschman, A. O. (1977). The passions and the interests. Political arguments for capitalism before its triumph. Princeton University Press. Kant, I. (1785/1914). Grundlegung zur Metaphysik der Sitten. Kant’s gesammelte Schriften 4 (pp. 385–463). W. De Gruyter. Keynes, J. M. (1926). The end of laissez-faire. Leonard and Virginia Woolf.

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NOS. (2017, June 22). Taakstraf voor badmeesters verdrinking Syrisch meisje Rhenen. NOS. Retrieved May 9, 2022, from https://nos.nl/artikel/2179455-­taakstraf-­voor-­ badmeestersom-­verdrinking-­syrisch-­meisje-­rhenen Pfeffer, J., & Salancik, G.  R. (1978/2003). The external control of organizations: A resource dependence perspective. Stanford University Press. Solomon, R.  C. (1992). Ethics and excellence. Cooperation and integrity in business. Oxford University Press. Van Mersbergen, S. (2020, February 20). Oud-topman Vestia Erik Staal heeft het allemaal fout gedaan: ‘Ik heb spijt tot in al mijn vezels’. PZC. Retrieved May 9, 2022, from https:// www.pzc.nl/rotterdam/oud-­topman-­vestia-­erik-­staal-­heeft-­het-­allemaal-­fout-­gedaanik-­heb-­ spijt-­tot-­in-­al-­mijn-­vezels~a42554123/#:~:text=Opnieuw%20voert%20Staal%20een%20 gebeurtenis,zat%20ik%20er%20helemaal%20doorheen Walters, J. (Director). (1994). Serial Mom [Film]. HBO Films; Savoy Pictures.

Chapter 6

Different Views on the Social Responsibility of Corporations Willem van der Deijl

and Wim Dubbink

Abstract This chapter describes the concept Corporate Social Responsibility (CSR) in detail. We define CSR as the moral responsibility that companies have that goes beyond the bare minimum (abiding by minimal market morality), but that is nevertheless morally required. Because CSR is required, and not optional, it is different from philanthropy. The first part of this chapter presents the position of the proponents of CSR but also a view that denies that corporations are morally required to do more than the bare minimum: the Friedman-Homann doctrine. The chapter describes the debate between these two positions. In the second part, we discuss four operationalized approaches that companies can use to make moral choices in practice: the shareholder approach, the stakeholder approach, the corporate citizen approach, and the market failures approach. Questions 1. What is the Homann-Friedman doctrine? 2. What arguments does the CSR doctrine provide for corporate social responsibility? 3. Which parties does stakeholder thinking distinguish as the most important to take into account for corporations?

6.1 Two Cases Case 6.1 Energetiq is an energy company that uses fossil fuels as well as green energy sources. Manon works there as a technician. She works in a team that (continued) W. van der Deijl (*) · W. Dubbink Department of Philosophy, Tilburg University, Tilburg, The Netherlands e-mail: [email protected]; [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_6

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Case 6.1  (continued) develops turbines that can generate energy more efficiently and more sustainably. The team is currently working on a method that aims to produce electricity from fossil fuels more efficiently and in that sense more sustainably. Manon knows that this technology also affects the way the emissions are measured: on paper, this way of measuring will reduce emissions. In reality, the measurement method does not fully measure all emissions: it “games” the available testing procedures. In practice, the new technique will actually result in emission rates that are at least as high as older techniques.

Case 6.2 Child labor is morally condemned everywhere. All countries in the world have signed the International Labor Organization (ILO) Convention against Child Labor (ILO, 1989). In the 1950s, the consensus (in the western world) was that any work done by children under the age of sixteen was necessarily morally problematic. Nowadays, a distinction is made between child labor and child work. Child labor is hard work that harms children’s development. Child work describes acceptable ways in which children (from, say, 14 years of age) can work. For example, child work could involve a child of very poor parents who works 4  hours a day under good conditions and also receives 4 hours of schooling, organized and paid for by the company. The distinction has become increasingly important in the course of the last decades after NGOs were forced to acknowledge that their old vision of “child labor” did not take into account local conditions at all, often increased poverty, and on top of that was rather colonial, as it dismissed local insights. Brand A, B, and C are three clothing corporations. All three do business with clothing producers in India, and all three do so because of low production costs. In India, some groups (in some regions) still live in great poverty. Both child labor and child work are common. Brand A is utterly fixated on profit maximization and takes advantage of the complexity of the clothing production chain to still source clothing from companies that engage in child labor. Brand B has specially built hermetically sealed factories where children have absolutely no access. In this way the company prevents child labor on the one hand and limits public relations risks on the other. Brand B assumes (possibly rightly) that many consumers will not understand the subtle distinction between child labor and child work and – for reputational reasons – absolutely wants to avoid the company being associated with working children. Brand C believes that its opportunity to take advantage of the situation in India has another side to it. The company must do its part in the fight against poverty and child labor. This is reflected in a policy that allows child work (continued)

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Case 6.2  (continued) within its production chain: this is the best long-term solution against child labor because it addresses poverty, which is the root of the problem. It is also reflected in the financial support given to local inspectors charged with enforcing laws against child labor. Finally, the company also participates in a training project that works for the empowerment of girls and women in India, since “child labor” is often “girl labor”. In this sense, the problem also has a cultural dimension related to gender inequality.

In this chapter we discuss one of the most important concepts in business ethics: the concept of corporate social responsibility (CSR). We first discuss what it is and then discuss an opposing view. In the second part of the chapter, we discuss four operational approaches to corporate responsibility. The chapter introduces several examples. It is important to note that these examples are not our concern per se, but are intended to illustrate the views on CSR in general (see Chap. 5).

6.2 What Is CSR? Since the 1970s, the debate about CSR has been an important entry point for discussing market morality. Naturally, the concept of CSR is controversial. In this book, we distinguish CSR from philanthropy. Philanthropy concerns activities that a company has no moral or legally obligation to undertake. Philanthropy – as defined by us – is supererogatory. Whether one undertakes these activities, to what extent and for how long, is morally optional. CSR, instead, stands for the entirety of activities undertaken by a company to meet its moral responsibilities beyond the minimum moral morality (see Chap. 5). In doing so, CSR is (of course) not legally required. CSR shares with philanthropy that in both cases market participants have a certain degree of freedom in filling or shaping those responsibilities. It is radically different from philanthropy in that CSR involves actual moral duties, and is thus not supererogatory, or morally optional. It is important to point out that our definition of CSR is formal. It states that CSR involves duties that go beyond minimum market morality; this does not yet tell us which duties this involves. It goes without saying that a company that is engaged in CSR, also adheres to the minimum moral standards. CSR concerns additional duties. We will see that there are various views on what exactly these additional obligations are. If we look at Case 6.2 from CSR perspective, we can say that ‘brand A’ does not even adhere to the minimum morality, while ‘Brand B’ does (because child labor is prohibited in all countries of the world). Brand C takes responsibility for child labor

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and poverty as social problems. It invests in social institutions to combat child labor and attempts to sensibly incorporate child work in their business, despite the PR risk it may involve, when journalists gloss over the crucial distinction between child work and child labor. Seen in this way, Brand C’s policy falls under CSR.

6.3 The Homann-Friedman Doctrine on CSR In this chapter, we distinguish two perspectives on CSR. The first, critical view is called the Homann-Friedman (HF) doctrine, after two well-known economists who defended this doctrine: Karl Homann (1994, 2008) and Milton Friedman (1970). According to the HF doctrine, the responsibilities of organizations on the market should be limited to the rules and principles necessary to constitute the market. Hence, the moral responsibility of corporations is limited to the minimum market morality. Consequently, the morality of the market is limited to a stripped down version of everyday morality. Stripped down, because not all everyday moral duties are part of the minimum market morality. Duties such as kindness, beneficence, and the duty to help are part of everyday morality, but according to these authors they do not belong in the market. This implies that the HF doctrine opposes CSR, as there is nothing that companies morally should do, besides what’s required by the minimum market morality. Indeed, companies that do so are acting immorally, according to this view. Defenders of the HF doctrine have put forward various arguments in support of the view. One argument is that managers who practice CSR are generously spending other people’s money (i.e. the shareholders). This argument is not strong. It misunderstands the nature of CSR: CSR concerns the corporation’s moral obligations towards others, it is not matter of unnecessary generosity, such as philanthropy.

6.3.1 Democracy and the Division of Labor The strongest argument for the HF doctrine is that modern differentiated society has chosen a model in which there is functional division of labor between state and market. The state is responsible for social matters, and in the market, people can legitimately pursue their own self-interest. In this way, modern society – through the market – realizes the greatest possible freedom for all and produces its goods in the most efficient way possible. At the same time, social problems are best addressed by the state, as only the state has appropriate tools to tackle them effectively. The idea that markets are efficient in coordination self-interested behavior is based on a well-known idea from economics, the idea of the invisible hand of the market, formalized under the first theorem of welfare economics. This theorem shows that precisely when everyone is assumed to be focused on her own self-­ interest, a specific form of efficiency occurs in the market, namely a situation in

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which no one’s situation can be improved without making someone else’s situation worse. Economists call this Pareto efficiency. This result is only realized under several strict conditions – for example, that there are no externalities, or damage caused to third parties. Less formally, the idea of the invisible hand represents the idea that when individuals act self-interestedly in the market, this promotes the overall good. Proponents of the HF doctrine also point out that the state is democratically organized, while the market is not. When social problems are addressed by the state, the solutions are arrived at through democratic means (see Box 5.4). When political and collective issues are addressed by market actors, the private actors get to determine how a problem is addressed, which is not particularly democratic, according to the HF doctrine. If we leave the tackling of social and societal problems to private companies, it is the choices of company managers that determine which social problems are given priority and how we tackle them. A company may think additional schooling for children is more important than addressing the housing shortage, but is that for a company to determine? A company may think that in the search for adequate sustainable sources of energy we are better off using biomass than solar energy, but is that a choice a company should make? There is also a good chance that as companies become more involved, sooner or later their profit motive will come into play. Is that really how social issues should be addressed? According to the HF doctrine, the answer is “no”.

6.3.2 Baumol: Political Duty Is Part of Minimum Morality There are a couple of important points we need to consider with respect to the HF doctrine. The first is that it does not prohibit any specific activity or behavior. It may be perfectly fine for corporations to participate in actions against child labor, or to work towards sustainability goals, as long as these activities can be legitimized purely on the basis of corporate interest (for instance, as a concern for reputation of the corporation). CSR is not just about the morality of specific market activities, but also about the reasons for conducting those activities. The second observation is that important proponents of the HF doctrine such as William Baumol (1975) extend minimum market morality on a crucial point. According to Baumol, a corporation has important political duties, including the duty to provide accurate and complete information to the government, the duty to serve democracy, and the duty to keep corporate lobby activities within bounds. On Baumol’s view, these political duties follow from the division of labor between state and market. Market participants have the right to focus on their own private interests provided they do not hinder the state to do its job. Otherwise, the division of labor, on which the differentiated system runs, gets undermined. “Do not hinder” should be interpreted broadly in this regard. It includes positive actions such as informing the state about abuses in one’s field of business. This does not mean that Baumol allows for “a small amount” of CSR: he categorizes the political duties of corporations under the minimum responsibilities of corporations.

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The third observation is that the opposition to CSR by the advocates of the HF doctrine is partly rooted in a “healthy distrust” of market actors. They warn against the smokescreen that companies sometimes put up by talking about CSR. This can involve pretty pictures of sustainability that corporations put on their websites, while they spend a pittance on solar panels, all under the guise of CSR. Meanwhile, they pollute the environment on a large scale and try to use their power to prevent good legislation. Similarly, 3M, a company that in Belgium polluted the surroundings of Antwerp on a large scale with PFAS and PFOS, has a wonderful website about sustainability goals, as well as the importance of water (3M (a), n.d.; see also Chap. 11). The (cynical) idea behind this view is that if companies will use CSR only for their reputation anyway, without actually fulfilling their corresponding duties, it is better to abolish CSR altogether.

6.4 The CSR Doctrine The HF doctrine stands in direct opposition to the CSR doctrine. According to the CSR doctrine, corporations do have moral responsibilities that go beyond the minimum market morality. In particular, the CSR doctrine points to the responsibility that corporations have in contributing to the solution of collective and public problems. We called this the civic and political duties of corporations earlier. Prominent proponents of this doctrine include: Carroll (1999), Löhr and Steinmann (1994) and Verstraeten and van Liedekerke (2008). The main arguments for the CSR doctrine are (like the arguments of the opponents) related to the differentiation of modern society. The first argument is that societal differentiation can go too far; the second is that the ideal of differentiation is unrealizable in practice.

6.4.1 Limits to Differentiation As we saw above, social differentiation creates the market as a sphere of economic production in which people should, in principle, behave towards each other in ways that are different from other social interactions. We typically use the term “professional”, or “businesslike” behavior to denote the type of behavior that is expected of us in the market sphere. Acting professionally in a business context involves treating each other with a certain distance, and accepting self-interested behavior more than in other spheres of life. The fact that we treat each other differently in the market can be legitimized with the idea that it ultimately benefits everyone: a well-functioning market leads to efficient production. However, at some point the businesslike nature of the market may threaten people’s personal and moral development. Differentiation then becomes excessive, because people become morally numb. According to the advocates of CSR, differentiation in the market has indeed become excessive, and

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CSR is needed to correct for this state of affairs. Case 5.5 is illustrative of this. In Chap. 5, we already discussed various reasons to think that there are  – or should be – limits to this businesslike behavior. The second main argument ties in with the central idea of the HF doctrine, namely that (in a differentiated society) there is – and should be – a division of labor between state and market. The state takes care of addressing public and collective problems and this allows people to focus on their own interests in the market. Proponents of CSR emphasize that there are problems with this ideal. For starters: the ideal is unrealistic. The division of labor does not work now, and will never work because the ideal is unrealizable in practice. Market parties violate the political duties that according to Baumol are necessary for the model to work; the state encounters difficulties regulating the market. There is therefore something structurally wrong with any attempt to realize that ideal. Trying to realize an impossible ideal can even be harmful (as many critics of communism have pointed out in the past). Besides, there is also something wrong with the ideal itself. The idea that a society in which there is a radical division of labor between market and state is desirable is misplaced. Before we go into the arguments for this, it is important to note that the advocates of CSR are thus not necessarily arguing for radical de-differentiation. They argue that there should be limits to differentiation. This means that collective and public issues cannot be left purely to the state and that market parties must therefore also take on some collective and public tasks. The proponents of CSR provide many arguments for the desirability and necessity of limiting differentiation at some point. Many of them mirror the familiar arguments that authors such as Hayek (1945, 1948) gave for preferring the market order to a centrally managed economy. According to Hayek, a country could choose to try to operate without a market, letting a government centrally determine what to make (and where). But a country that makes that choice faces an immensely complicated puzzle that is actually impossible to solve: how much of everything should be produced, and where should it go? It requires an incredible amount of information that is only available decentrally. Without a market in which people can make decentralized decisions, you cannot solve this problem, Hayek argued. But, if a market order is better than a centrally run economy because of the information and implementation problems that a centrally run economy faces, then – for exactly the same reasons – a radically differentiated society is worse than a non-­ radically differentiated order. In a radically differentiated economy, the state simply cannot handle the work that markets would require if all business only did the bare minimum. After all, the state must regulate the market everywhere, and solve every collective and public problem that the market generates. The market itself solves nothing. This would lead to serious problems. We list a couple that modern society in fact experiences. 1. There is an overload of tasks (Tjeenk Willink, 1989): the state is simply given too many tasks, from child care to the exact height of hygiene tiles on walls in factories, and so on.

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2. There are implementation problems (Mayntz et al., 1978): very often a centrally devised solution does not work locally because certain assumptions do not apply locally. 3. One runs into the limits of law (Stone, 1975; Yeager, 1991): for a government to be effective it must be able to make effective threats, but organizations cannot be imprisoned. As a consequence, the main instrument of the state, the law, becomes a much less effective tool (Bovens, 1998). 4. The complexity of problems becomes too great, so there is too much information and at the same time there is always an information deficit (Pressman & Wildavsky, 1973; Teubner & Willke, 1984). 5. The state suffers from a great lack of effective power due to the power of corporations. Especially locally, firms can block good legislation by threatening to leave or through conflicts of interest between entrepreneurs and politics (e.g., because entrepreneurs sit on a city council; Mayntz et al., 1978). 6. In addition, the state suffers from a major legitimacy problem. Citizens have become enormously disappointed in recent decades with the degree to which the government organizes society and life (partly due to the high expectations created by the government itself). People’s faith in democracy has diminished significantly as a result (Bovens, 1998; Held, 1987; Offe, 1979). In these circumstances, even the introduction of something as simple and sensible as a safety belt in cars turns out to be a project that takes years to complete. The U.S. government was opposed every step of the way by powerful lobbies of automobile manufacturers; the same automobile manufacturers that are now patting themselves on the back for their efforts in car safety (see Ford, n.d.). Similarly, we see that in many countries where there is legislation against slavery, slavery still sometimes occurs (on a relatively large scale). For example, slavery has been discovered in recent years at coffee plantations in Brazil that supplied Starbucks (Fair World Project, 2019). Case 6.1 also illustrates some of these problems: the state is looking for a way to optimize the use of fossil fuels but that strategy only works if there is a large amount of information available. The only way to get that information is through the corporations who, invoking their limited responsibility, immediately start “gaming” the system.

6.4.2 Working Rule of Law Four arguments for CSR deserve extra mention. First, defenders of CSR, typically emphasize that CSR is also important in well-functioning constitutional states; not just in poorly organized states. Some problems, such as information overload and limits of law, are actually more prevalent in well-functioning constitutional states. So, we cannot claim that we do not need CSR when the rule of law functions well. The rule of law also creates problems to which CSR can be the answer.

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Second, CSR is not just crucial in constitutional states; corporations active in emerging states, deteriorating states and failed states are not exempted. CSR is important here exactly because the state does not function well in these societies. Some problems, such as corruption, may be even more pronounced in such states. In these states we often see that the legislation is in order, but that enforcement fails. In Bangladesh, a garment factory that supplied to popular western brands such as Primark, Gucci, Versace, and Benetton collapsed in 2013 partly as a result of a lack of effective law enforcement. Corporations can and should help build the rule of law in those countries. Corporation C in Case 6.2 provides an example of how this can take shape in practice. Deteriorating states are states in which the rule of law is in decline to a greater or lesser degree. These states show the error of believing in the long-prevailing, naive idea that the rule of law is some kind of final end-station. In many countries the rule of law is in decline, or is being challenged by authoritative leaders. The U.S. is an example of a country in which the rule of law is under severe pressure (Rule of Law Index, n.d.). An example from the US is the Purdue case, a pharma company owned by the Sackler family. This company misled people into purchasing and using highly addictive sleep aids. The company also committed fraud and then tried to escape punishment and compensation through corruption and political influence. It was also quite successful in achieving these aims (See for example: Keefe (2017)). In a failed state, such as Syria, the state even fails at its most basic tasks. In these countries, the need for CSR is undeniably clear.

6.4.3 Industrial Complexes Third, some point out that the division of labor between the government, as a regulator, and companies, as operators on a free market, is an ideological fiction. In reality, relations between the state and the market are a lot closer. The opposition against CSR is therefore more ideological than based on facts. With respect to this argument, the proponents of CSR point out that in practice that faith in the power of market to generate wealth and freedom is ideologically driven. In practice, market forces may not always work so well. There are (bad forms of) corporatism, or of blurring lines, and too much cooperation, between government and private companies. This conflicts with the idea of differentiation advanced in liberal societies. Now, corporatism need not necessarily be a bad form of social organization, but when corporatism is not recognized as such, because one continues to preach differentiation in name, a social organization of the economy can emerge that combines the worst of market forces and direct government control: a government that uses its political and administrative power to protect and push through certain (private) interests. This problem is especially prevalent in the context of industrial complexes. When these come into being, the state, other governments and market parties form an alliance to achieve an aim that the government deems necessary (e.g. military

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industry, agro-industry). These parties may develop a strong sense of a shared interest in something that is also considered to be in the ‘common interest’ or “the national interest”. Situations may arise in which people (or at least some people) start something with the best of intentions, but gradually a blindness develops to the ways in which the policy that was initiated is going awry or leads to new problems. An ‘end justifies the means’ ideology quickly develops, that people employ to cover each other and close themselves off from the outside world ‘for the greater good’. Private interests also attach themselves to the issue and people start defending private interests ever more vigorously (under the guise of public interests, of course). An infamous example is the Tennessee Valley Authority (TVA) (Selznick, 1949, 1994). This originated as a progressive New Deal operation in the US in the 1930s. With a lot of federal money, rivers in seven Southern States would be channeled and farming practices improved. After a few decades, TVA was known in the U.S. as a program that was utterly fixated on canalization and electricity generation and brushed aside any criticism of environmental degradation. Government, business, and local officials worked together and bulldozed over any opposition. The agricultural program had evolved so that only wealthy white farmers  – who had strong local political representation  – enjoyed enormous benefits, while poor white, but especially black, farmers were left out in the cold. Again, the complex was a closed front. The TVA thus went from being a progressive New Deal operation to a stronghold that only defended vested interests. Often, these complexes are also a breeding ground for fraud, deception, and immoral behavior. These strongholds can fester for a long time as the state often becomes a “partner in crime”, using its power to mislead the public, frustrate free news gathering and keep things secret. All the problems associated with corporatism and market forces converge here. A well-known example here is the “military-­ industrial complex”. An appealing but relatively innocent consequence of this was that at one point the government in the US purchased ashtrays for $600 each (Bunting, 1985). The wide-spread presence of corporate structures in modern society is important for proponents of CSR in that it shows to them that in reality differentiation and minimum market morality are to a large extent mere ideology. In reality the state and corporations act differently. Hence, CSR is not as impossible and far-fetched as opponents sometimes claim. (It should be noted that authors such as Baumol agree that corporatism is very alove in modern society and exactly because they oppose it, they also oppose CSR).

6.4.4 Neo-liberal Ideology Fourthly, the proponents of CSR point to the fact that much of the opposition against CSR is grounded in neoliberal ideology that has gripped the (Western) world since the 1980s. This grip now seems to be slowly loosening in parts of the western world because the problems of this thinking about organizing the economy and society

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become manifest. A key aspect of neoliberal ideology is that governments should have as small a role as possible, and that almost all social problems would benefit from more market forces. This view is detrimental to CSR. Yet neoliberal practices of the last decades have proven that diminishing the role of governments combined with the view that businesses have no responsibilities beyond the bare minimum, inevitably leads to responsibility gaps. Some problems will neither be solved by governments, nor by companies. Governments say that the market must solve them, companies look to consumers, but consumers often have too little knowledge and power, and as individuals have a very small influence on the whole. Case 6.3 is a good example. Case 6.3 Current livestock production is strongly associated with animal welfare concerns. Many farmers maintain that they would like to implement more welfare-­enhancing measures, but also maintain that doing so comes at a high cost. The problem is that the meat market is competitive, and few consumers are willing to pay a premium on meat that has evidently been produced in ways that involve less animal suffering. Consumers, in turn, typically claim that the production chain is opaque to them and it is therefore unclear how their choice affects the animals. How can they be sure that the extra money will truly be spent on animal welfare? Moreover, even if they have an impact, the impact will be small. In many western markets, there are now so many ethical quality marks for animal welfare that one can no longer see the wood for the trees. Many labels are not really reliable. Free-range chickens still appear to be packed tightly together. The government could act, but government regulation is facing steep resistance from the industry. It appears there is a deadlock, where the parties involved all point at the others to solve this problem.

6.4.5 CSR and Democracy We saw that the opponents of CSR pointed out the possible undemocratic effects of CSR. Advocates of CSR dismiss this argument. They argue that CSR involves only a limited de-differentiation. Corporations must take some responsibility for public and collective problems, but the government should continue to do the bulk of the work and set the framework conditions, at least in countries where the government works democratically. Defenders of CSR also maintain that in a liberal democratic society, people should have the freedom to shape their lives and society. If we take the democracy argument of the opponents seriously, it would also mean that people would first have to ask permission from the state before volunteering in the local soccer club. After all, society may have a greater interest in someone using their energy to encourage baseball. This is obviously absurd. Finally, the advocates of

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CSR point out that market participants become problematically powerful precisely when societies pretend to have a radical division of labor between market and state when in practice there is none.

6.5 Criteria for CSR and Their Application The most important question in debates around CSR is: what should companies do? The simplest answer to that question is: they must do their part. Many entrepreneurs are nervous about such an answer. They want to know exactly what they should and should not do. Therefore, over time, more and more theories have emerged that attempt to make these responsibilities explicit. We discuss several of them in the next section. We will identify a number of general obligations that are often linked to CSR, as well as a number of principles that indicate, in abstract terms, how to deal with these obligations. Proponents of CSR sometimes state that these obligations cannot be further specified. The believe we should view CSR duties as analogous to parental duties. Every parent has a duty to care for his or her children. But in fulfilling that duty, the parent has a great deal of discretion. Some parents place more emphasis on their parental duty to let a child be free; others place more emphasis on their duty to educate their child. Those who then ask why such discretion exists, do not fully understand what parenting is all about. Three main types of duties commonly associated with CSR are: 1. Political duties. Companies should defer to citizens and politicians in a way that encourages good legislation. According to some, this duty is sufficiently important to warrant a place within minimum morality. 2. The duty to rescue. When companies face situations in which people are in acute distress that they can resolve, they should take responsibility. For example, companies often jump into the breach when a major forest fire breaks out in their locality. 3. The duty to help. Companies should do their part to solve the social problems they face. An example might be a company helping local underprivileged people to find work. This duty to help is also sometimes called the organization’s civic duty. Some principles that indicate how responsible companies can subsequently fulfill these duties are: 1. From a moral perspective, corporations will rarely do too much to fulfil their duties. Of course, corporations are constrained by competitive considerations and fairness. Nevertheless, generally, morality will call for generosity. 2. A corporation’s moral responsibility will be elevated when this corporation is part of an industry that causes harm as a collective. Of course, corporations sometimes have their hands tied, such as when flawed legislation prevents companies from taking action on their own. Each individual company may claim that

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it is unable to implement expensive solutions due to competitive considerations. However, the criterion then points to the collective responsibility to take initiatives that can contribute to solving this problem. This can be done, for example, by lobbying for good legislation and contributing to the creation of good legislation by providing adequate information to state and society. This criterion is relevant, for example, for corporations that produce or trade in environmentally polluting goods. 3. The more (market) power a corporation has, the more responsibility it has to contribute in ways that other corporations may not be able to. Traditionally this principle is formulated as noblesse oblige. Today, the principle is sometimes called the spiderman principle after Spiderman’s famous slogun: “With great power comes great responsibility”. Corporations are often in a unique position to solve a problem, or to contribute to a solution of a moral problem. This position gives companies a certain responsibility to handle it well. Take a company like Energetiq (see Case 6.1). As a large energy company, it can make significant strides in the energy transition that other groups, or individuals, cannot. Because Energetiq’s efforts to transition are important to many people, they have a moral responsibility to do so. 4. A final principle is the principle of communal reciprocity. When companies do well, it is usually a joint effort of several parties. Shareholders invest capital, employees invest their time and labor, and consumers place their trust in a company by buying a product. Without all those and more parties, the company cannot become successful. This collectivity creates a mutual commitment and a mutual dependence, a community: a connected network of individuals relying on each other. This community involves specific responsibilities for the parties who are part of it. This may mean doing more for one’s community members than one would do for any other party. It may also mean looking at the needs of these parties with extra care. Take an employee who has always done her job well, but now has a sick partner, and therefore needs additional flexibility, and may not be as productive as she otherwise would be. Because a corporation is a community, a good corporation would consider this employee’s needs with patience and care.

6.6 Operational Ways of Looking at CSR So far, we have discussed CSR in the abstract. In practice, businesses typically like a more concrete and precise interpretation of the responsibilities they must assume. To meet this need, more concrete approaches to CSR have been developed. We discuss four of them. The first fits well with the HF doctrine; the other three are all ways of operationalizing the CSR doctrine.

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These theories are applied theories, but they are still moral theories; that is, theories that say something about how companies should behave morally. Highlighting this is important because these theories are sometimes also presented as descriptive theories or as pragmatic theories. In a descriptive sense, these theories say something about how reality works. In a pragmatic sense, they say something about what is sensible from a business perspective.

6.6.1 The Shareholder Theory The shareholder theory largely mirrors the HF doctrine: corporations have a moral responsibility to make profits for their shareholders within the bounds of the law and minimum market morality. It is the essentially the same theory but articulated within a different framework. Is shareholder theory really a theory of corporate moral responsibilities? It certainly is because it does not absolutize the duty to make profits. Employees and managers must also respect the law and minimum market morality. As such, it is certainly not a trivial moral theory. Some philosophers say they would rather live in a country where everyone obeys the law but no one does anything more than that, than in a country where some do much more than is required by law but others break the law. In other words, abiding by the law and minimum market morality is morally significant. Shareholder theory recognizes this emphatically. The law and minimum market morality protect the rights of people and other rights holders. A democratically elected law also has moral weight because it represents the political will of people (at least in a well-functioning democratic system). For businesses, this can sometimes – or even often – mean missing opportunities. After all, breaking a law can be profitable. Very often, the fines are low, as well as the chances of being caught, and the benefits are high. This is often especially true of laws designed to regulate contemporary public and collective problems, such as environmental problems as these laws have no directly affected victims who can cry out. Shareholder theory gives extra weight to the responsibility to make profit for shareholders. To justify this, defenders of the theory typically argue that profit-­ seeking ensures competition, and competition leads to economic prosperity for everyone. Moreover, prosperity is not only valuable to a society for materialistic reasons. Prosperity correlates strongly with things of non-economic value, such as health, life expectancy, safety, and, to some extent, happiness, or subjective well-being. Profit-making also receives additional moral weight in shareholder theory because business leaders have an important fiduciary duty to shareholders. Shareholders are portrayed as “owners” of the company; in the same way that someone can be the owner of a bicycle. In this view of what shareholders are, a morally salient “principal-agent” problem arises (see Sect. 5.4). To counter this principal-­ agent problem, a very heavy duty of trust is needed.

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To appreciate this argument from shareholder theory, we must remember that a shareholder is not always a (super)rich person. Much capital in the shareholder market comes from pension funds. When Enron fraudulently went bankrupt in 2001, many of those affected were elderly people who lost their pensions. It is therefore perfectly sensible to maintain that shareholders have a right to management that represent them, and takes their interests seriously. In addition, it is important to realize that shareholder theory does not say that the interests of other parties must necessarily be ignored. These interests can be taken into account, but only to the extent that it serves the long-term interests of shareholders. Other interests are thus instrumentalized. A company, according to shareholder theory, only needs to take good care of employees to the extent that it is good for the company’s profitability. If there is scarcity in the market, profit-­maximization will require good working conditions for workers. If there is an abundance of workers, providing good working conditions may not be in the shareholders’ interest. So, the shareholder theory is certainly a theory of corporate responsibility; but it strictly limits the responsibilities of companies. The company must comply with the law and with minimum morality, but in addition to that, it must make profit its top priority. Some things we would normally classify as CSR  – such as setting up a social program in the developing country where we have a manufactory plant – can be seen as morally impermissible on the shareholder view. Or imagine a loyal employee who is a little less productive for a while, because of a difficult home situation. If keeping the employee would not be in the shareholders’ interest, shareholder theory would say that it is not only morally permissible to fire her, but even morally required. The same goes for emitting greenhouse gases: according to the shareholder theory, if it is profit-maximizing, legally permissible and does not violate minimum morality, it is your moral duty to continue doing so. The shareholder theory is subject to much criticism, for the same reasons that the HF doctrine faces much criticism. No one disputes that managers must serve the interests of shareholders, but it is difficult to morally justify the exclusive focus on this. The interests of other parties suffer too much as a result. Above, we already discussed that the differentiation argument against CSR faces many problems.

6.6.2 The Stakeholder Theory One of the alternatives to the shareholder theory is the stakeholder theory. The stakeholder approach identifies multiple parties whose interests must be served by the company. Shareholders are one of the relevant parties in this thinking, but employees, consumers, and suppliers are also stakeholders. Stakeholder theory: a company has moral responsibilities to all stakeholders, in particular, it has the responsibility to serve the interests of all stakeholders. Stakeholder: a party that benefits, suffers disadvantages, or whose rights may be violated by the company.

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Stakeholder theory stems from the criticism of shareholder theory. According to its critics, shareholder theory takes moral responsibility toward one party too seriously, and in doing so ignores the interests of other parties, at least insofar as they are not relevant for instrumental reasons. The stakeholder approach sees this as a major shortcoming of shareholder theory: all stakeholders count morally. Microeconomics provides a lens through which to understand stakeholder theory. An entrepreneur brings together various factors of production: primarily capital and labor. Moreover, she brings together supply and demand: production and consumption. At the initiative of the entrepreneur, a value chain is created: the consumer, worker, and capitalist all contribute something, and all benefit. It is therefore indefensibly narrow-minded for corporations to only take into account the interests of one party, the capitalist. All parties are crucial to the value chain. Therefore, the stakeholder theory maintains that a company also has a moral responsibility to all these parties. An important question within stakeholder theory is which parties are all stakeholders. Not all contributors to the theory agree. Some limit stakeholders to the familiar parties: customer, employees, and shareholders. However, most stakeholder approaches include other stakeholders as well. The general criterion used as a measure for determining whether a party is a stakeholder is usually whether a stakeholder benefits from a business or whether moral rights are violated or otherwise harmed (damaged) by the business activity. Based on that criterion, we can list the following stakeholders in addition to the known stakeholders: 1. The environment as well as nature (both mostly represented by a number of NGOs such as the World Wildlife Fund (WWF) 2. The suppliers. An important question with regard to this stakeholder is to what extent a company is responsible for the activities of other companies in the supply chain and for how many tiers into the supply chain a company remains morally responsible? Take, for example, the people working in poor conditions on cocoa plantations for a European chocolate company. They are often employed by companies that are four or five links away from the company manufacturing the consumer chocolate. 3. The investors (other than the shareholders). 4. The employees of the business-to-business suppliers, especially if they work in poor working conditions. Here the same issues arise that arise with suppliers in general. 5. Society as a whole. A company can create more jobs, and more economic activity in general. But it can also pollute cities and living spaces. 6. Government. The government, at least when functioning properly, is the advocate of society, but it also has specific interests that shape its relationship with businesses. For instance, the government has specific interests in virtue of the fact that it collects taxes.

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6.6.2.1 The Weighing of Stakeholders In addition to asking which parties are stakeholders, we need to establish how to weigh the interests of the various stakeholders. If a company can increase its profits by laying off a small percentage of employees, is it best to do so or not? The stakeholder approach does not provide unequivocal answers to these and many other concrete questions. At the same time, however, consensus is emerging on the idea that a balance must be struck, in which the following principles  – in the order listed – are crucial: 1. It is not permissible to violate crucial stakeholder rights. 2. The survival of the company is crucial. 3. Urgent stakeholder interests should be given priority. 6.6.2.2 Pragmatic or Prudent Motivations The stakeholder approach is a broad approach, within which we can find a wide variety of different views. This confusing amount of disagreement reduces considerably if we consider that there are three different types of normative perspectives within the approach. 1. The stakeholder theory as exclusively a moral theory. In this case, people tend to adopt a broad interpretation of parties covered by the term stakeholder and strongly emphasize that moral rights of stakeholders should not be violated. 2. The stakeholder theory as a prudent or pragmatic theory, exclusively. On this account, the theory argues that as a company, you must look after the interests of your stakeholders because this is ultimately best for the survival, and long-term profit of the company. Here, the number of stakeholders is mostly limited to the classic set: customers, employees and investors. 3. A hybrid between pragmatism and morality. Here it is usually assumed that a company has a long-term interest in acting appropriately morally. In this case, stakeholders are usually added that are considered important for the future, that can influence customers and that the company needs to maintain legitimacy in the long run. The government usually becomes an important stakeholder in this view. Those who take this view typically focus on the license to operate any corporation needs. This means that companies can only continue their activities if governments (or, societies) allow them to do so. Not only can governments prohibit certain business activities (think of the trade in hard drugs), but they can also restrict them (think of cigarettes).

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6.6.3 The Corporate Citizen Approach A third approach hooks into the idea that in modern societies, regulating public and collective problems is a burden that government cannot bear alone. Corporations will have to take on some of the responsibilities. This idea forms the basis of the corporate citizen approach. The corporate citizen approach assumes that citizens can and need to play an active role in society. This is required to make society run smoothly. Citizens not only pay taxes, but they are also active in civic life, in social life, they clean up the street trash around their homes, etc. Corporations may not be people, but still active members of society, and like citizens, their cooperation is required to make society possible. Because corporations are much larger and more powerful than ordinary citizens, the corporate citizen approach maintains that the responsibilities of corporations are also much greater than those of ordinary, active citizens. In doing so, the approach emphasizes that a corporation (as a corporate citizen) has a role in protecting the rights of citizens. The rights of citizens that are particularly relevant are the following: 1. civil rights: such as freedom of speech, voting, right to fair treatment; 2. social rights: such as right of access to education, shelter, necessities of life, and medical care; 3. economic rights: right to property, right to fair distribution of available resources. Corporate citizen approach: corporations have a responsibility to do their part in protecting important rights. The corporate citizen approach seems to blur the distinction between government and corporations, and appears to favor a strong de-differentiation. If we look at concrete cases, we see that things are not as black and white as they seem. The approach mainly requires a cooperative and supportive attitude from cooperations in the governmental and societal efforts to protect citizen’s rights. Consider the questions how companies should deal with the right to equal treatment during job interviews. In most developed countries, the right to equal treatment is a protected, constitutional right. However, in practice, it turns out that it is not always easy to enforce. Job interview committees have a great deal of discretion in practice. According to the corporate citizen approach, companies have a responsibility here as citizens. It may be required of companies to have a progressive and effective anti-­ discrimination policy, even if there is no law that prohibits not having one. More generally, there are three contexts in which companies have a particular moral responsibility, according to the corporate citizen approach. 6.6.3.1 Loopholes in the Law In many developed societies, the scope of things that are regulated by law is expanding. This is partly because on the one hand the rules have to be very concrete and precise, and on the other hand they have to describe many different situations. A stacking of rules can achieve this, but can also make regulation increasingly

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convoluted. Government attempts to be as accommodating as possible to as many different people as possible also contribute to this. As a consequence of all these good intentions many loopholes arise in legislation. Here, the corporate citizen approach prescribes that companies must act in the spirit of the law, and not just the letter. As an example, when the corona pandemic broke out in 2020, governments had to quickly design aid programs. This created opportunities for companies to acquire money that was not intended for them. For example, during the first lockdown, a number of large U.S. corporations received money intended to support small businesses in bridging their ongoing costs. Tax law also always provides opportunities to set up structures that, while not illegal, were not intended to allow corporations to siphon off money so that a corporation barely pays taxes (see Chap. 14). A good corporate citizen, the approach suggests, pays taxes fairly. 6.6.3.2 Rights That Are Difficult to Protect by Law Loopholes are one problem for regulation, but some problems are difficult to regulate at all. This is especially true of problems with an international element. Take climate change. No matter in which country you live, no individual government can guarantee your right to a livable environment. Our livable environment is threatened by the emissions of all companies and consumers around the globe. Governments can only implement national laws while climate change is a global issue. Solving environmental problems is therefore an important global problem. International cooperation, however, is still difficult: it is difficult to find agreement among global governments, and governments do not always comply with the agreements made. Moreover, governments cannot really solve these problems without the help of companies. Therefore, (large) companies have an important role to play as global citizens, according to the corporate citizen approach. Taxes are also a good example of this, once more. The fair distribution of resources and burdens is an important justice issue (Walzer, 1983). But national governments are under great pressure not to overtax international companies that are located within their borders. This pressure often results in lower effective tax rates for large international companies compared to medium-sized national firms. The low taxes that large multinational companies pay is often reported on in the media. Examples include Starbucks and Shell. In 2019, the latter admitted that it actually paid (almost) no corporate tax in the Netherlands, one of its main countries of operation. This contrasts sharply with the 25% profit tax that medium-sized Dutch companies must pay (see also Chap. 14). 6.6.3.3 Operating in Countries with Weak Governments A final context that the corporate citizenship approach places emphasis on is the participation in business activities in countries where governments are unable to protect rights, for example due to lack of resources or corruption. An example of this is slavery on coffee and cocoa plantations in Western Africa, a case we

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discussed above. Even though all countries in the world have banned slavery, not all countries are able to combat slavery effectively. Inspections of coffee and cocoa plantations still regularly encounter slavery, or working conditions bordering on slavery. According to the corporate citizen approach, multinational companies operating in or trading with these countries have an important role to play. By thoroughly checking the plantations multinational companies source from, these companies can play an important role in combatting the problem.

6.6.4 The Market Failure Approach Over the past 15 years, a “market failure approach” (Heath, 2014) has been developed that derives the criteria and implications of corporate responsibility from how a free market is supposed to function according to economic theory. Where the actual operation of the market deviates from how it should operate according to theory, organizational responsibilities come into play. The main developer of the approach, Joseph Heath, specifies this in the idea that firms should take responsibility where the market fails to realize a benefit for market participants without negatively impacting others. More technically, firms have a moral responsibility whenever their business activities do not result in Pareto optimality. Three commonly cited types of situations in which this occurs are those involving: 1. monopolies; 2. (negative) externalities; 3. and information asymmetries. We go over them in turn. 1. Economic theory teaches us that monopolies are typically inefficient: they distort competitive pressures, and allow a company to make excessive profits. This creates social loss, or a deadweight loss. In reality, true monopolies are rare, but firms can amass a large degree of market power in some markets. A firm has market power to a greater or lesser degree if it can set the prices of its products to increase profits. The less competition there is in a market, the more influence a firm has on price. Thus, seeking more market power may already lead to a pareto inefficient social loss. 2. A negative externality is a negative effect of an economic transaction on a third party who is not part of the transaction, and thus did not approve of (the consequences of) the transaction (see Chap. 5). The environmental impact that your transaction with the seller of gas has on the rest of the world (the third party) is an obvious example of a negative externality. 3. An information asymmetry exists when one of the two parties has important information (e.g., “the product is defective”) that another party does not have. Problematic information asymmetries can occur when someone is selling their secondhand car but can also occur when individuals face a large organization. When a consumer is misled, by overly positive advertisement, this also constitutes a type of information asymmetry.

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What is interesting about the market failure approach is that it has much affinity with the work of Baumol (1975, see Sect. 6.3). However, Baumol argues that in certain situations companies have a political duty to make the public and the state attentive of collective problems while it is the state’s duty to restore or establish the reign of market forces. By contrast, Heath (2014) argues that in these cases, companies must take responsibility themselves. As a result, Baumol fits with the opponents of CSR and Heath with the proponents of CSR.1 According to the market failure approach, firms have many duties to bring about market efficiency. Key principles are: 1. Minimize negative externalities. 2. Compete only through price and quality. 3. Reduce information asymmetries between firm and customers. 4. Do not exploit diffusion of ownership. 5. Avoid erecting barriers to entry. 6. Do not use cross-subsidization to eliminate competitors. 7. Do not oppose regulation aimed at correcting market imperfections. 8. Do not seek tariffs or other protectionist measures. 9. Treat price levels as exogenously determined. 10. Do not engage in opportunistic behavior toward customers or other firms. (Heath, 2014, pp. 37)

6.7 Conclusion In this chapter we have surveyed the contemporary debate on corporate responsibilities. There is a fierce debate about whether corporations should be engaged with corporate social responsibility at all. We then looked at four approaches that concretely operationalize corporate moral responsibility. In all approaches, companies are thought of as actors with moral duties. But, some approaches limit moral duties to minimum market morality, whereas other approaches see the moral responsibility of business as more encompassing. A variety of considerations that play a role in this debate. Some of these pertain to the nature of human beings, the market and modern society. For example, if you believe that markets typically do not at all operate as well as they ideally should according to economic theory, you are much more likely to think that companies have a more substantive moral role to play, or at least argue for heavy political duties of corporations, as Baumol does. Similarly, people who believe that market forces have a negative impact on our moral character are more likely to argue for (limited) de-differentiation, and for CSR.

 Heath’s theory is based on a orthodox understanding of market failures. Some heterodox schools, like the Austrian school are less prone to argue that the problems that Heath highlights are actually market failures. This goes in particular of information asymmetries but also for the other problems. 1

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References Albert, L., & Steinmann, H. (1994). Unternehmensethik – Ein republikanisches Programm in der Kritik. In S. Blasche, W. R. Köhler, & P. Rohs (Eds.), Markt und Moral. Die Diskussion um die Unternehmensethik (pp. 145–180). Haupt. Baumol, W. (1975). Business responsibility and economic behavior. In M. Anshen (Ed.), Managing the socially responsible corporation (pp. 59–74). Macmillan. Bovens, M. A. P. (1998). Verantwoordelijkheid en organisatie: Beschouwingen over aansprakelijkheid, institutioneel burgerschap en ambtelijke ongehoorzaamheid. Tjeenk Willink. Bunting, G. F. (1985, September 15). ‘You can’t fit three congressmen in an ashtray, even a $600 ashtray’: Politicians scramble for the limelight in navy supply scandal. Los Angeles Times. https://www.latimes.com/archives/la-­xpm-­1985-­09-­15-­me-­23173-­story.html Canning, A. (2019, June 17). Starbucks has a slave labor problem. Fair World Project. Retrieved May 6, 2022, from https://fairworldproject.org/starbucks-­has-­a-­slave-­labor-­problem/ Carroll, A.  B. (1999). Corporate social responsibility. Evolution of a definitional construct. Business and Society, 38(3), 268–295. https://www.researchgate.net/publication/282441223_ Corporate_social_responsibility_Evolution_of_a_definitional_construct Ford. (n.d.). Ford Pioneers auto safety. Retrieved May 6, 2022, from https://corporate.ford.com/ articles/history/ford-­pioneers-­auto-­safety.html Friedman, M. (1970, September 13). The social responsibility of business is to increase its profits. The New York Times Magazine, section SM, pp. 17. Hayek, F. A. (1945). The use of knowledge in society. The American Economic Review, 35(4), 519–530. https://www.jstor.org/stable/1809376 Hayek, F.  A. (1948/1980). Individualism and economic order. The University of Chicago Press/Midway. Heath, J. (2014). Morality, competition, and the firm: The market failures approach to business ethics. Oxford University Press. Held, D. (1987). Models of democracy. Polity Press. Homann, K. (1994). Marktwirtschaft und Unternehmensethik. In S. Blasche, W. Köhler, & P. Rohs (Eds.), Markt und Moral. Die Diskussion um die Unternehmensethik (pp. 109–130). Haupt. Homann, K. (2008). Das Ethische Programm der Marktwirtschaft. Norbertus-Verlag. International Labour Organization. (1989). ILO conventions on child labour. https://www.ilo.org/ ipec/facts/ILOconventionsonchildlabour/lang%2D%2Den/index.htm Keefe, P. R. (2017, October 23). The family that built on empire on pain. The New Yorker. Retrieved August 23, 2005. https://www.newyorker.com/magazine/2017/10/30/ the-family-that-built-an-empire-of-pain Mayntz, R., et  al. (1978). Vollzugsprobleme der Umweltpolitik. Empirische Untersuchung der Implementation von Gesetzen im Bereich der Luftinhaltung und des Gewässerschutzes. Kohlhammer. Offe, C. (1979). Unregierbarkeit. In Habermas J. (Ed.), Stichworte zur‚ geistigen Situation der Zeit (Vol. 1, pp. 294–318). Suhrkamp. Pressman, J. L., & Wildavsky, A. B. (1973). Implementation. How great expectations in Washington are dashed in Oakland. University of California Press. Rule of Law Index. (n.d.) United States. Retrieved May 6, 2022, from https://worldjusticeproject. org/rule-­of-­law-­index/country/United%20States Selznick, P. (1949). TVA and the grass roots. University of California Press. Selznick, P. (1994). The moral commonwealth. Social theory and the promise of community. University of California Press. Stone, C.  D. (1975). Where the law ends. The social control of corporate behaviour. Harper and Row. Teubner, G., & Willke, H. (1984). Kontext und Autonomie: Gesellschaftliche Selbststeuerung durch reflexives Recht. Zeitschrift für Rechtssoziologie, 6(1), 4–35. https://doi.org/10.1515/ zfrs-­1984-­0102

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Tjeenk Willink, H.  D. (1989). De kwaliteit van de overheid. Een bijdrage aan het hernieuwde politieke debat. DOP. Verstraeten, J., & van Liedekerke, L. (2008). Business en ethiek. Spelregels voor ethisch ondernemen. LannooCampus. Walzer, M. (1983). Spheres of justice. A defense of pluralism and equality. Basic Books. Wikipedia (b) Purdue Pharma. (2022, April 28). In Wikipedia. Retrieved May 6, 2022, from https:// en.wikipedia.org/w/index.php?title=Purdue_Pharma&oldid=1085060186 Yeager, P. (1991). The limits of law. The public regulation of private pollution. Cambridge University Press.

Chapter 7

“And What Do You Think, as a Professional?”: On Personal and Professional Responsibility in Business Jos Kole

Abstract  Apart from their responsibility to serve the goals of their organization, employees also have a personal and professional responsibility to work ethically. Ideally, these responsibilities of employee, professional and person coexist in harmony, but in practice they can also be at odds with one another. As members of a profession with a collective professional morality, professionals are expected to follow their own moral judgement about how to work. They have professional moral autonomy. This independent capacity to judge should be considered as their moral capital. If companies create free space for internal ethical debate and dialogue, this professional moral capital can improve the corporate moral climate and lead to business-ethical gains. In companies that create such space, the voice of potential whistle-blowers will be taken seriously, and the risk that problems of many hands occur might diminish. Business ethics should, thus, acknowledge the importance of the personal and professional moral responsibility of employees in business. Questions 1. Why do the goals of organizations and the goals of professionals not always match? 2. Which moral sources do professionals tap into when they make moral judgements? 3. Why should companies accommodate the independent voice of professionals in their organization?

J. Kole (*) IQ Healthcare-Ethics of Healthcare, Radboud University Medical Center, Nijmegen, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_7

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7.1 Introduction Case 7.1 An ambitious company is embarking on a major project that is expected to generate a lot of revenue and prestige. If successful, it will finally put the company on the international map. But this can only be achieved if every single employee puts in the maximum effort; a matter of “all hands on deck”. The company’s management succeeds in boosting commitment and creating a positive atmosphere in the workplace. The employees are dedicated and this is reflected in their productivity. But there’s a catch. In recent months, the rate of sick leave at the company has been above average for the sector. The staff welfare officer (a social worker by profession) and company physician (a medical practitioner), both part of the human resources department (HR), find themselves dealing with more employees than usual. Employees are complaining of a disrupted work-­ life-­balance and the attendant health problems. The incidence of burnout among the workforce has increased. The rise in absenteeism and health problems has become a source of concern to the company physician and the staff welfare officer. They come together to share their observations. Are the company’s ambitious goals being pursued at the expense of its employees’ health and wellbeing? At this point, HR receives an email from the CEO: an appeal to the department to slash absenteeism and do everything it can to get everyone back to work. The company’s ambitious project can only succeed if everyone gives their all. At the HR department’s Monday morning meeting, the CEO’s request is discussed. The head of HR turns to the company physician and staff welfare officer. What can they do to make this happen? Put yourself in the shoes of the company physician or staff welfare officer. How would you respond? What action would you take? And what action do you think you should take? If the company physician and the staff welfare officer are good professionals, they should at least experience this situation as a moral dilemma. One that may affect them personally as well as professionally.

In this chapter we discuss the role and the relevance of professional ethics in the context of business ethics.1 In doing so, we take the view that, in many cases, the employees of a company are not only employees, but also professionals and individuals with their own thoughts, feelings and values. This implies that, from an ethical perspective, employees not only bear ethical responsibility as employees,  Davis (1988: 51) wrote: “The literature of business ethics contains remarkably little about professions (though many business ethics problems involve professionals).” This is still the case today. The editors of this book hope that this chapter will go some way to redressing the balance. 1

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but also as professionals and persons. Ideally, the responsibilities of employee, professional and person should coexist in harmony, but in practice they can also be at odds with one another. And if that is the case, which responsibility should outweigh the others? In exploring the tensions between role responsibilities, we begin with an explanation of what it means to be a professional or a professional practitioner in a business context. In doing so, we address the role of professional ethics (Sect. 7.2). We then turn to the relationship between professional and personal responsibility (Sect. 7.3). Finally, we examine the question of how professional and personal responsibility relate to the context of a business organization (Sect. 7.4). Two concrete and widely discussed phenomena that occur at the interface between employee, professional, and personal responsibility are also briefly discussed (Sect. 7.4): whistleblowing and the problem of many hands. The purpose of this chapter is to make you aware that professionals in a corporate setting are more than simply company employees and that business ethics is incomplete if it fails to take professional ethics into account. Indeed, the input of ethically responsible professionals and employees who remain true to their conscience improves the nature of a company (Davis, 1988).

7.2 What Does it Mean to Be a Professional in a Company? Let’s start by exploring what it means to be a professional or professional practitioner. What does it take to fulfil this role, while also working in a business. As we will soon see, professional ethics is an intrinsic part of professional practice.

7.2.1 Profession and Business: Goal-Oriented, But Towards Which Goal? There are many ways to define a business, but one of the most common is as a goal-­ oriented organization. A business exists to achieve certain objectives. At the most general level, these can be summarized in two words: values and profit. A business aims to make a profit and/or to realize values. These values can be defined as anything with the potential to improve people’s lives (often formulated as the lives of others). The survival of a company, the services it provides and the products it manufactures all represent values. For example, the medical equipment produced by a company such as Philips is used in hospitals to ventilate patients who would not survive without that support. At the same time, of course, Philips aims to make money by selling this equipment. Yet even this is not simply an end in itself, as the revenue generated is also needed for R&D, product innovation and to reward

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shareholders for the risk they have taken by investing in the company. And then, of course, there’s the matter of paying its employees a decent wage. Anyone who is employed by a company performs a function at that company: they fulfil a role defined by their employer to help the organization achieve its goals. Because the organization as an employer defines the roles of its employees (i.e. what work is carried out by someone in a particular job and who works in which capacity), the descriptions of these roles usually take the form of a vertical hierarchical structure. They are a structured division of labor, organized from the top down. The CEO performs a function at Philips and so does the receptionist. Many employees in a company also practice a profession. In this professional capacity, they provide the knowledge, skills and attitudes that the company needs to pursue its goals. For example, Philips employs engineers who develop new ventilators, but it also employs social workers as staff welfare officers and medical practitioners as company physicians, like the company in the example at the start of the chapter.2 Professions are also goal-oriented but the goals an individual pursues in practicing their profession are not determined by the company that employs them but by the standards of the profession itself. Professions therefore take the form of a horizontal organizational structure. This gives people who work for a company in a professional capacity a degree of independence, often referred to as professional autonomy. This concept is essential to understanding both the relationship between business ethics and professional ethics, and the relationship between people’s responsibility as an employee and as a professional.3 The physician’s stated goal, as a professional, is to promote people’s health (in accordance with the horizontal structure of the medical profession). If the ambitious company in our example were a weapons manufacturer, it is clear that the company’s purpose (as expressed through its vertical structure) stands for a rather different set of values.

7.2.2 What Is a Professional? An expert on the sociology of work and employment, Albert Mok (2011: 65–67) describes an occupation as “the coherent set of work tasks and operations, characterized by practitioner knowledge and skills, occupational culture and the ethics required for its exercise.” He goes on to add that the main characteristic of an occupation or profession is that it connects people. This coherence between people

 There is some debate in professional ethics about whether being a manager should be understood as an occupation or a profession. See, among others, Donaldson (2000). 3  See Chap. 3 by work and employment sociologist Mok (2011), which describes what an occupation is and how an occupation and a firm relate to each other from a sociology of work perspective. Mok argues that occupations have to do with “sharing work” while firms are involved in “division of labor”: sharing work connects people (of the same profession) with each other, while division of labor separates people (2011: 64). A job exists within a company or organization, a profession in the wider context of society. 2

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within a particular occupation or profession is what we call an occupational or professional community. The staff welfare officer and the company physician from our case study are not only employees of their company. As a medical practitioner and a social worker they also practice a profession, and this makes them part of a horizontally organized structure in which they are connected with and equal to their fellow practitioners. Across the boundaries of the companies and organizations where they work, professionals act in accordance with the shared values, customs, and habits of the professional culture to which they belong. Ideally, they feel a sense of professional pride and if another member of the profession turns out to be a bungler who does poor work, this has an impact on their sense of professional honor. They also share ethical standards, values, virtues and ideals as regards working in an ethically responsible and commendable way as a professional social worker or medical practitioner in a corporate setting. These sets of normative premises form undercurrents in professional practices (Kole, 2009: 27). People are not always aware of their normative efficacy. However, these normative undercurrents are made explicit, at least partially and temporarily, when articulated in professional and behavioral codes.4 The practice of critical-ethical reflection also gives explicit expression to implicit professional morality. Practitioners are initiated into the moral aspects of their profession through their education, training and practical experience. Ideally, they identify with these aspects, to the point where they internalize the ethical premises of their profession. Mok calls this internalized professional morality the “moral capital” of professional practitioners. It provides them with an orientation and motivation from a collective, independent source. In deciding on the right thing to do in a workplace situation, professionals can fall back on that shared ethical orientation. Even without the external incentives of control and supervision, professionals should ideally be inspired and motivated by a shared commitment to do their work ethically.5 Shared professional morality gives practitioners professional autonomy on ethical matters.6 Commitment to their own collective professional morality and their own collective professional code creates a double loyalty for professionals who work in a corporate context. As employees, professionals in medical and social care are expected to show commitment and dedication to the company’s mission and to demonstrate  This means that a professional code differs substantially from a company’s code of conduct. The rules, norms and values of a professional code are often the result of a democratic decision-making process within the profession. With a company code of conduct, this is not necessarily the case. See Von Weltzien Høivik, (2002: 8–9) for an insightful comparison of the two types of code and the differences in the implicit message they contain. 5  We have chosen to gloss over the distinction between occupations and professions here. Although this distinction is often made in the literature, it is less relevant to this chapter. Professions are characterized by greater professional autonomy: more freedom but also the responsibility of judging for themselves what a high standard of work is and an intrinsic motivation to perform their work to that standard. 6  Professional autonomy has an individual as well as a collective dimension. See Kole (2007: 6) and earlier also Davis (1996). 4

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compliance with its rules and code of conduct. But as responsible professionals, they will also use their professional morality as a yardstick. In our case study, the company’s ambition may be in line with its corporate code of conduct, but from their own professional ethical viewpoint, the staff welfare officer (as a social worker) and the company physician (as a medical practitioner) may well feel conflicted as a result of the CEO’s urgent request that everyone needs to get back to work as soon as possible, if this is done at the expense of the health and wellbeing of the company’s employees. Even so, it is clear that by employing professional practitioners, a company or organization not only imports their professional morality and an ethical perspective that may potentially be critical, but also a degree of professional commitment (to do good by doing good work). It is important that companies and organizations realize that this presents both challenges and opportunities (Von Weltzien Høivik, 2002). Business leaders who employ professionals have to deal with a professional sense of purpose that is both horizontally organized and ethically inspired, and this does not always chime with the more vertically organized purposefulness that a company expects from its employees. Through their professional sense of purpose, professionals provide critical and independent input for the moral climate within a company. With this in mind, business ethics has no choice but to take into account the role of professional ethics within an organization.

7.3 Professional and Personal Responsibility Professionals are part of a collective. They derive their ethical orientation and motivation (professional morality) from the profession to which they belong. However, this does not mean that all professionals from the same group agree with each other on all occasions. As a member of their profession, professionals also take individual responsibility for their own actions and attitudes. They are expected to use their own individual judgement to decide how to progress and be a credit to their profession. Returning to our opening case study, the company physician may agree with the staff welfare officer but may disagree with another physician working for the same company. Even though they belong to the same profession, they may interpret their professional responsibilities differently. Professional morality can encompass a range of norms, values, and ideals. Any professional who remains true to the collective morality of their profession will largely endorse its norms, values, and ideals. Nevertheless, in the face of complex ethical dilemmas, the weight given to those norms and values may differ from one fellow professional to another.7

 See also Chap. 3 on the role of discretion.

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It is also worth noting that professional morality is not the only source from which professionals draw orientation and motivation (Kole, 2009). Every professional is also a member of society and a citizen of the country where they live or whose nationality they hold. Public morality, the collective norms, and values shared by the members of a society, also has an influence on the judgement of professionals when they consider how to act. For example, doctors in the Netherlands may, broadly speaking, think differently about an ethical issue such as euthanasia than doctors in Germany or Italy. Last but not least, a professional employed by a company is also an individual. Regardless of the role they play within an organization, a profession or a society, they are uniquely themselves. Every human being has their own upbringing and background, their own talents, abilities and flaws. Each person’s character develops over the course of a lifetime, with its own mix of virtues and vices. We make our own personal choices and bear ethical responsibility for how we act and live our lives. In making these choices, individuals tend to fall back on the norms and values instilled in them through their upbringing, socialization, professional training and so on. The “sources of the self” lie outside the self: people derive their norms and values from the “moral space” they share with others (Taylor, 1992). However, from the perspective of Western culture, with its emphasis on and appreciation of individuality, each person has the freedom and the concomitant personal responsibility to make their own decisions and determine how they will act, and they will be held personally accountable by others for their words and deeds. The fact that a person has the individual freedom and responsibility to make their own judgements and choices does not mean that all moral judgements and choices are relative and subjective. Justifying one’s judgements and choices in a meaningful way always necessitates an appeal to norms and values that are also accepted and endorsed by others.8 The inescapable personal responsibility of each person as an individual has implications for both business ethics and professional ethics.

7.4 Professional and Personal Responsibility in a Corporate Context In business ethics, companies, managers and executives are not the only ethically responsible actors. Employees bear their own responsibility, especially if they are also professionals. What implications does this moral responsibility have for business ethics? We discuss some of these implications here but, given the introductory nature of this chapter, our discussion will be brief.

 See also Chap. 3 on the relationship between freedom and morality.

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7.4.1 Free Space for Debate and Dialogue Professionals contribute more to a company than their knowledge and skills alone (Davis, 1988). Ideally, their independent ethical orientation and motivation (i.e. their professional ethical autonomy) constitutes an additional source of moral power within the organization and an additional incentive to deliver good work. They move the company forward. This power source can strengthen the moral climate within the company. If that climate is already healthy, positive, and ethical, it will be reinforced by the ethical input of professionals. If the climate is unhealthy, or in danger of becoming so, then professional ethics can be an independent source of ethical criticism and reflection that may help keep the company on its toes and steer it back to the right path. Professionals do not have a monopoly on moral wisdom. They do, however, have a collective ethical orientation that focuses on “good causes and ideals”. This orientation is independent of and may sometimes even be at odds with the company’s goals, and by virtue of this position, it can keep the company ethically awake and alert. In pursuing its goals, a company may make decisions that are wrong or ethically questionable. It may focus unilaterally on profits at the expense of values or prioritize the wrong values. If there is room for debate and dialogue within the company, and critical dissenting voices are given a chance to be heard, the “moral capital” of professionals can also resonate. An open and critical internal debate about where the moral emphasis should lie does not make a company worse; quite the contrary. It should be the job of executives and managers to create free space within their organization to allow such debate and dialogue to take place.9

7.4.2 Whistleblowers Whistleblowers are prime examples of individuals, employees and professionals who strongly believe that they were not given enough free space to voice their moral criticisms. They wanted to highlight areas of concern but nobody appeared to listen to what they had to say and insufficient action was taken. Driven by their professional and/or personal responsibility, they then felt the need to call attention to these issues beyond the confines of the company. When a business organization is confronted with a whistleblower, it may be a sign that something is wrong, even profoundly wrong, with the company and with its moral climate. On the whole, employees and professionals tend to be loyal to  “[B]usiness managers … have, as part of their job, the maintenance of sufficient moral free space for other professionals to achieve their professional ends” “Professional managers need to protect professional values in order to promote a healthy corporate culture.” (Donaldson, 2000: 91). Compare also “The ultimate goal is to foster an organizational culture that not only guarantees individuals greater respect for professional ethical values, but provides them with space, freedom and power to act morally” (Von Weltzien Høivik, 2002: 3). 9

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their employer and those who take the difficult decision to air the company’s dirty laundry in public in spite of this loyalty are often highly respected employees and professionals. In many cases, they pay a painful price for staying true to their professional morals and personal conscience, yet they see no other way; they believe they have a moral responsibility to “blow the whistle”. If employees seek to expose problems outside their organization, it may be a sign that the moral climate within the company is lacking, and that independent and critical voices are not being heard sufficiently. However, this is not to say that whistleblowers are by definition always right in their convictions. It is to a company’s credit if it can prove that there is genuine scope for debate and dialogue within its organization. Companies should always be able to show that they take the critical ethical voice of employees and professionals seriously.

7.4.3 The Problem of Many Hands Whether the issue is moral or practical, when something goes wrong in a complex organization and a large number of people are involved in the process, it can often be extremely difficult to pinpoint who was responsible (Van de Poel, 2015). This is known as “the problem of many hands”. Imagine that an employee of the ambitious company from our case study makes a speedy return to the workplace, with the backing of the company physician and staff welfare officer, even though his recovery is not complete. Only weeks later he suffers a breakdown. The physician explains that she was pressurized into making her decision by her immediate supervisor. The staff welfare officer also argues that his orders came from above and that he had little choice in the matter. However, both supervisors absolve themselves from blame, stating that they were simply implementing policy that had come from senior management. Yet senior management argues that this was clearly never the intention of their policy, and that individuals who are unfit to return to work should never be pressurized into doing so. It is up to the relevant professionals to determine who is and who is not capable of resuming their duties in the workplace. In the “problem of many hands”, various employees play a part in the process that leads to the error, but no single individual can be held responsible for the entire outcome. The complexity of the process and the large numbers of people involved cause individual responsibility to evaporate until only collective responsibility remains. This often proves unsatisfactory. We want to hold an ambitious company – as a collective entity that expects too much of its workforce – responsible for the harm that has been done to a vulnerable employee. Yet we also attach importance to identifying the individuals responsible and finding them guilty if necessary. Responsibility, guilt, and shame  – essential building blocks of our moral life  – appear to have an interpersonal dimension. And this interpersonal dimension is insufficiently recognized when it can only be attached to collectives.

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How then does this widely recognized ethical problem of evaporating individual responsibility in a business or organizational context relate to the professional and personal aspects of responsibility that are the focus of this chapter? When professionals are given the freedom to take professional and personal responsibility for their actions, this responsibility can grow. As a result, the number of employees and professionals who show moral character will increase.10 By moral character, we mean a balanced and coherent collection of positive personal attributes that help someone play their role optimally within a company, as a member of their profession and as a member of society. Professionals who show character when faced with serious moral problems demonstrate a voluntary and active attitude to taking responsibility, even in cases where others are not in a position to hold them responsible (Fahlquist, 2015: 199). Individuals who are virtuous and who embrace personal responsibility as a positive personal attribute (virtue) are concerned about making serious mistakes (care). They are able to imagine the consequences for other people (moral imagination) and to take a critical look at their own role and ask themselves how they should act in such a situation in order to do the right thing and pursue the “good goals” to which they aspire as persons, employees and professionals (practical wisdom) (Fahlquist, 2015). The whistleblowers we discussed earlier can be seen as people who take responsibility for exposing serious wrongdoing and who make themselves vulnerable in the process. After all, the price whistleblowers pay for their actions is usually high: they often lose their job and find it difficult to return to work. Strictly speaking, a whistleblower cannot be held personally responsible for a company’s wrongdoing, but they nevertheless feel a sense of responsibility and believe that something should be done. It is reasonable to assume that business organizations which employ people who are virtuous and willing to take personal and professional responsibility when called for will, in some cases at least, be less susceptible to the problem of many hands. In these organizations, a potential whistleblower will have a voice within the organization.

7.5 Conclusion: All Hands on Deck? In this chapter, we have outlined what can be achieved by looking at personal and professional responsibility in business organizations, and the advantages to be gained from viewing professional ethics as part of business ethics. By way of conclusion, let’s return to the case at the start of the chapter. By employing professionals in the shape of a company physician and a staff welfare officer, the ambitious company has brought in people who, ideally, will be  For example, in their recruitment policy, companies can choose to select people not only on the basis of their knowledge and skills but also their (ethical) personal qualities, including virtues. Companies whose selection policies look for people of integrity who are willing to take personal responsibility will build “moral capital” within their own organization (Fahlquist, 2015: 206). 10

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loyal not only to the company’s goals but also to the values they derive from the professional morality that applies within the fields of medicine and staff welfare officer. As professionals, they are aware that they are not only company employees but also members of a profession with its own ethical orientation and motivation. They not only ask themselves whether their actions and attitudes conform to the company’s code of conduct but also measure themselves against the professional code that articulates the normative undercurrent of their professional practice. This gives both employees a kind of professional autonomy that, from a moral perspective, can be considered moral capital. What would you do if you were in the shoes of the company physician or the staff welfare officer? Imagine that, acting on the principles of your professional morality, you felt obliged to say that you could not simply comply with the CEO’s request to get everyone back to work as quickly as possible, as communicated to you by the head of HR. This would present the department head with a challenge. From a business perspective, they would like to count on your cooperation in order to speed up the return to work of as many employees on sick leave as possible. But the department head could also provide scope for conversation, not only with you and your fellow professional but also with the CEO. As a virtuous professional who takes their responsibility seriously, you would be happy to engage in that conversation, even though it may require you to stick your neck out. Your independent critical-ethical note could also create an opportunity to jointly rethink the proposed company policy in terms of moral responsibility. When free space for debate and dialogue opens up, and employees are given license to express their personal and professional conscience, it can improve the moral climate of the company. And, in turn, this may improve the ethical quality of the company. Such an approach enables the “moral capital” of employees and professionals like you to be transformed into business-ethical gains. If the company succeeds in creating these conditions, it lowers the risk that you, as a medical practitioner or staff welfare officer will ever feel the moral imperative to go public to expose wrongdoing (e.g. of an ambitious project to be realized at the expense of the health and wellbeing of the workforce). Not only that, but employees, professionals and managers will feel equally responsible for the health and wellbeing of everyone in the company, and the company’s other goals. Too good to be true? What do you think? Acknowledgements  Translated with help of Roosmarijn Minnema and Taalcentrum-VU.

References Davis, M. (1988). The special role of professionals in business ethics. Business and Professional Ethics Journal, 7(2), 51–62. https://doi.org/10.5840/bpej1988726 Davis, M. (1996). Professional autonomy: A framework for empirical research. Business Ethics Quarterly, 6(4), 441–460. https://doi.org/10.2307/3857498 Donaldson, T. (2000). Are business managers ‘professionals’? Business Ethics Quarterly, 10(1), 83–94. https://doi.org/10.2307/3857697

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Fahlquist, J.  N. (2015). Responsibility as a virtue and the problem of many hands. In Moral responsibility and the problem of many hands (pp. 187–208). Routledge. Kole, J.  J. (2007). Professionele idealen vanuit ethisch perspectief. Inleiding. In J.  J. Kole & D. de Ruyter (Eds.), Werkzame idealen. Ethische reflecties op professionaliteit (pp.  1–10). Van Gorcum. Kole, J. (2009). Bronnen en bouwstenen van interprofessionele beroepsethiek. In J.  Kole & D. de Ruyter (Eds.), Code en karakter. Beroepsethiek in jeugdzorg, onderwijs en recht (pp. 21–34). SWP. Mok, A. L. (2011). Arbeid, bedrijf en maatschappij (5e herziene druk). Noordhoff. Taylor, C. (1992). Sources of the self: The making of the modern identity. Harvard University Press. van de Poel, I. (2015). The problem of many hands. In Moral responsibility and the problem of many hands (pp. 50–92). Routledge. von Weltzien Høivik, H. (2002). Professional ethics – A managerial opportunity in emerging organizations. Journal of Business Ethics, 39(1), 3–11. https://doi.org/10.1023/A:1016363429915

Chapter 8

Justice at Work Huub Brouwer

and Alexander Andersson

Abstract  Companies continuously make choices about who gets hired and who does not, who gets a raise and who does not, and who gets a promotion and who does not. Those decisions have significant implications for the division of income in society—and consequently for economic inequality. That is why ethical questions about inequality and fairness are important to business ethics. In this chapter, we elaborate, explain, and compare three important ethical principles that can be used to guide decisions about hiring, remuneration, and promotion: the utilitarian, libertarian, and desertist principles. Questions  1. What are important ethical considerations in deciding which applicant should be hired? 2. What are the advantages and disadvantages of making hiring decisions based on libertarian, utilitarian, and desertist considerations? 3. What are important ethical considerations in determining the salary of employees? 4. What are the advantages and disadvantages of determining salaries on the basis of libertarian, utilitarian, and desertist considerations? 5. Can very high salaries ever be ethically justified?

H. Brouwer (*) Department of Philosphy, Tilburg University, Tilburg, The Netherlands e-mail: [email protected] A. Andersson University of Gothenburg, Gothenburg, Sweden e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_8

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8.1 Inequality and Companies Economic inequality is a major concern for most of us – for the average Joe trying to make ends meet, for the activists in the Occupy Wall Street movement, and also for many world leaders. Former United States President Barack Obama (2013), for instance, said that ‘economic inequality is the defining challenge of our time’. Pope Francis (2014) tweeted that ‘inequality is the root of all social evil’. And the American Minister of Economic Affairs Janet Yellen said about growing economic inequality that ‘it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity’ (Federal Reserve, 2014). A largescale study of the PEW Research Center (2014) shows that Americans and Europeans think economic inequality is the greatest threat to the world—greater than climate change, nuclear armament, and illnesses such as HIV/Aids.1 Why are people so concerned about inequality? One reason is that growing economic inequality can, as Janet Yellen notes, threaten equality of opportunity: if the gap between rich and poor becomes larger, the family you are born into becomes an increasingly important predictor of success later in life—and that, most agree, is unfair. Another reason is that economic inequality can undermine the functioning of democracy: The rich can use their wealth to buy political influence and get politicians to cater to their interests. A third reason is that economic inequality can contribute to harmful social stratification: the division of society in different groups that barely interact with each other anymore. But these are certainly not all the reasons why people are concerned about inequality. Psychological research with babies and young children seems to suggest that people have an inborn preference for equality. A well-known example is Shaw and Olson’s (2013) eraser experiment. They asked six- to eight-year-olds the following question: ‘Two boys have cleaned up their room. You have nine erasers that you can divide between them as a reward. How do you divide the erasers?’ Children insisted that the researcher would throw away the ninth eraser. Just like children, empirical studies show that adults also have a strong preference for equality in similar circumstances. They are even prepared to pay to punish people who divide unequally (Rabin, 1993; also see: Konow, 2003, section 4)! In many studies into people’s preferences about inequality, the equal outcome is also what people take to be the fair outcome. But people do not think that equality is always fair. Shaw and Olson (2013) posed the six- to eight-year-olds in their experiment a second question: ‘Two boys have cleaned up their room. The first boy has worked much harder than the second. You have nine erasers to divide between them as a reward. How do you divide the erasers?’ Now, a large majority of the  A possible explanation for this particular worry is that reducing economic inequality can be viewed as instrumental to enhancing some of the latter issues (e.g. climate change, illnesses and diseases among the worst-off). Some also argue that large economic inequalities affect economic growth negatively (see Kenworthy, 1995; Marrero & Rodríguez, 2013). Others claim that economic inequalities increase the risk of financial crises (Kumhof et al., 2012, 2015). 1

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children in the experiment thought the erasers need to be divided unequally. Adults also chose fairness over equality in similar experiments (Konow, 2003, section 4). This raises the question: When is it permissible to deviate from equality? An important place in our society where deviations from equality occur is the labor market. In that market, decisions are made every day about who gets hired and who does not; who gets a raise and who does not; and who gets a promotion and who does not. Those decisions have significant implications for the division of income in society and consequently for economic inequality. This is why ethical questions about inequality and fairness are important to business ethics: Which applicant should be hired? What salary should someone be paid based on their performance? Can very high salaries ever be deserved? In this chapter, we elaborate, explain, and compare three important ethical principles that can be used to guide decisions about hiring, remuneration, and promotion: the utilitarian, libertarian, and desertist principle.

8.2 Dividing Jobs2 It is likely that, at some point in your life, you will sit at the other side of the table in a job interview: rather than being one of the candidates, you are a member of the hiring committee. Your committee has received 150 applications for one position. How should it decide which of the 150 applicants gets offered the job? In discussions about the application, the committee members will put forth many different considerations. Companies increasingly have targets for the percentage of women within organizations, which hiring committees are often asked to help meet. It could also be that the hiring committee predominantly consists of former Ivy League students who would like to hire an Ivy League student out of a sense of community. Or the hiring committee knows that one of the candidates needs the job very badly and is therefore more likely to be committed to the job than someone who can choose (more) freely between different job offers. Business ethicists have come up with various, mutually inconsistent principles that can help in deciding which considerations are and are not permissible in deciding who should be hired. Let’s consider three of these principles in greater detail, because they are influential in business ethics and in business itself: 1. The libertarian principle: in hiring procedures, it is permissible to appoint the candidate the committee prefers for any reason whatsoever, as long as the hiring process satisfies two conditions for fair procedures.  This section builds on Thomas Mulligan’s defense (2018, chapter 5) of merit in hiring processes. He also discusses three principles (libertarian, utilitarian, and desertist), but defines them slightly differently than we  do in  this chapter. Mulligan also uses a  few central examples to  illustrate the differences between the principles, but the details of the examples differ from the examples used here. We  strongly recommend people who are interested in  merit and  desert to  read Mulligan’s book. 2

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2. The utilitarian principle: in hiring procedures, the candidate who is expected to create the greatest utility for the organization should be hired. 3. The desertist principle: in hiring procedures, the candidate who deserves the job the most needs to be hired. The libertarian’s concern is not about who gets hired for a position, but in how it came to be that someone was appointed for the job (see Moriarty, 2005). It is grounded in the ideal of negative freedom. Negative freedom is freedom from the interferences of others. An application process that is set-up according to the libertarian principle aims to give the members of the hiring committee the freedom to appoint whomever they want, if the hiring procedure fulfills two conditions for fair procedures. The hiring process needs to be done such that all parties – prospective employee and employer – are (i) sufficiently informed and (ii) are sufficiently independent from each other.3 To put it in a slogan: hiring decisions need to be preceded by a process that has the right kind of history. Supporters of the utilitarian principle think that the candidate who generates the most utility for the organization has to be appointed. We define ‘utility’ in this chapter as ‘contributing to the profitability of a company’. According to the utility principle, then, the hiring committee should appoint the candidate who will help to maximize the profits of a company (e.g. ‘most bang for the company’s buck’). Of course, different definitions of ‘utility’ are possible: it would, for example, be possible to define it as ‘contributing to the survival of a company’ or ‘contributing to the welfare of society’. The exact definition of utility does not matter for the underlying difference between the principles that are being discussed in this chapter. The takeaway here is that, unlike the libertarian approach, which is focused on the hiring process, the utilitarian approach is focused on the hiring outcomes. Supporters of the desertist principle think that the hiring committee should consider which candidate is the most deserving of the job. We define ‘deservingness’ in this chapter as composed of three elements: (i) having talent, (ii) making a productive contribution, and (iii) working hard. These three elements of deservingness will often overlap, but there are cases, as we will see later on in this chapter, in which they can come apart. There is a great deal of discussion amongst supporters of desert about how to define and measure ‘productive contribution’ (see, for instance, Olsaretti, 2004, pp. 62–85). We define productive contribution as ‘contributing to the profitability of a company’. It may seem, at this point, that the desertist principle is quite similar to the utilitarian principle. However, in contrast to the utilitarian principle, desert theorists argue that the person who deserves the job the most should get hired even if this

 One example of a failure to live up to the former requirement is an information asymmetry. This occurs when one party is able to gain an unfair advantage in a negotiation by withholding relevant information to the other party. The second requirement can be violated in cases where the negotiating parties are the same party or individual. This is perhaps best exemplified by CEO duality, which is a company structure where one individual is both the CEO and the chair of the company board. 3

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does not bring about the best outcomes. For example, the most deserving candidate tends to be the most meritorious, which makes it likely that they will be the most expensive candidate, because their talents are in high demand. A utilitarian might in these cases settle for a ‘lesser’ candidate if it is more cost-efficient. Another difference between the utilitarian and desert-based approach is that, on the desert theorist’s account, jobs and income have to be linked to responsibility: if someone makes a great productive contribution completely by accident, then they do not deserve to be rewarded for it. The utilitarian is not concerned about responsibility in this way. It is possible for desert theorists to define ‘productive contribution’ differently than ‘contributing to profitability’. Other possible definitions include ‘contributing to the survival of a company’ and ‘contributing to the wellbeing of society’. The exact definition of productive contribution chosen does not matter for the underlying difference between the principles that are being discussed in this chapter. To see the difference between the libertarian, utilitarian, and desertist principle, it is helpful to consider a case in which they reach different conclusions about who should be hired. Case 8.1 Trinity College of Cambridge University is one of the wealthiest colleges in the United Kingdom. It had an endowment of 1,5 billion pounds in 2021. The college also has an excellent academic reputation. Thirty Nobel laureates studied there. Academics from all over the world would like to work at Trinity College. And every year, thousands of high school students apply for admission to the college. Trinity College has a Master, who is responsible for governing the college. The Master plays an important role in fundraising. Trinity College needs to find a new Master. The hiring committee has, after a long and careful process, selected two candidates. Candidate A is a better administrator. Her academic career is promising, but she has not published a great deal yet. Candidate B is in many ways past his prime. He has become lazy after a long period of working hard and publishing a great deal. Based on his academic work, however, he is much better known than candidate A. With candidate B as figurehead, the college will be able to raise more funds than with candidate A, even though candidate B would not actively contribute a lot to the fundraising himself. Who should the hiring committee appoint?

The libertarian principle gives the hiring committee free reign. They can use whatever consideration they would like – as long as it satisfies the two conditions for a fair procedure. Supporters of the utilitarian principle disagree. They think that the hiring committee should look at which candidate would generate the greatest profit for the college, which clearly is candidate B. It is important to note here that candidate B would be appointed not so much because of what he would do, but because of what

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he symbolizes to others. When he becomes Master, the college would be receiving a stream of donations. That is enough reason for supporters of the utility principle to appoint candidate B, however lazy he may be. Supporters of the desertist principle disagree. They think that the committee should consider (i) which candidate has the greatest talent, (ii) would make the largest productive contribution, and (iii) works the hardest. Candidate A scores higher than candidate B on all these criteria. Of course, candidate B undeniably has a great deal of talent: he is an excellent academic – but that does not mean that he also has the talent to be a good administrator. Candidate A has a greater talent for that. At first, it may seem as if candidate B would make a larger productive contribution than candidate A. This is false, however, according to supporters of the desertist principle. That is because desert is connected to responsibility. Candidate B would barely contribute actively to successful fundraising: he would lend his name to the college and the donations would flood in. The people who actually do the fundraising would make the productive contribution – not candidate B. That’s why candidate B cannot be held responsible for the successful fundraising. Finally, candidate A works harder than candidate B. The supporter of the desertist principle will hence argue that candidate A should be appointed.

8.2.1 Choosing Between the Three Principles The libertarian, utilitarian, and desertist principles come to very different judgments about which considerations are permissible within application procedures. There is something to be said for each of them, and each of them comes with disadvantages. To bring out the advantages and disadvantages of each principle more clearly, it is useful to consider another case. This case is about a situation in which fairness in application procedures may be compromised by racism. Case 8.2 Butcher McMurphy is a prominent law firm in New York, with 1400 employees. The firm is very hierarchically organized. There are 43 partners who run the firm and who do not tolerate input and criticism from their subordinates. The partners shout when they do not get their way; employees sometimes start crying at their desks because of the pressure they are under. There is one partner, Louis Cristobal, who continuously uses homophobic and racist slurs and often utters prejudices about minorities (for instance, that they are lazy). The partner in question has, in his ten years as partner, not once been called out about his behavior. Neither by his colleagues, nor by his clients. The firm is looking for a paralegal, who will work in Louis’ team. The hiring committee has, after a long process, ended up with two candidates. Both will be interviewed by Louis, who will make the decision about whom to hire. (continued)

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Case 8.2 (continued) Candidate A, a black woman who grew up in the Bronx, is more suited for the job in many ways. She is more intelligent, works harder, and is a better listener. Candidate B, a white man, is less suited for the job. He is less intelligent, can be lazy from time to time, and is a bad listener. Who should Louis choose? According to the libertarian principle, Louis is free to choose whomever he wants, for whatever reason, if the parties are (i) sufficiently informed and (ii) sufficiently independent from each other. If he wants to hire candidate B as a result of his racist prejudices, then he is free to do so. This is a terrible implication. Libertarians sometimes try to alleviate this critique of their principle by saying that in the longer term, the market will create an impulse not to be racist. If all the Louis Cristobals of this world decide to categorically not hire blacks and other minorities because of their racist preferences, then employers who only hire white people will disadvantage themselves, by restricting their hiring pool.4 That makes it costly to exercise racist preferences. This does not mean, however, that it becomes impermissible for the libertarian to discriminate based on skin color in hiring processes. The utilitarian principle disagrees with this reasoning. Supporters of this principle hold that utility is the only permissible consideration in hiring procedures. This means that the color of someone’s skin cannot be a reason not to hire them. Still, the utilitarian principle could leave room for racism in hiring decisions indirectly: it could well be that Louis is such a racist that he finds it difficult to collaborate with black people, such as candidate A. It is also possible that the customers of the law firm have racist preferences and prefer not to interact with a black paralegal. If that is the case, the profits of the firm would be compromised if candidate A were to be appointed, and that is a relevant consideration for supporters of the utilitarian principle. The utilitarian might object that, while the racist structure of the firm maximizes short-term profits, in the long run the firm will be competitively disadvantaged compared to non-racist firms. For example, by refusing to hire black people, the firm has a smaller pool of available candidates to choose from than a non-racist firm, which reduces their chances of getting a candidate that grants them ‘the most bang for the buck’. Whether or not the utilitarian principle would recommend candidate A or candidate B then hinges upon which of these perspectives we choose to embrace.

 This is an argument often made by Milton Friedman. During a lecture about equal pay for equal work, Friedman says about this: ‘The women who go around today arguing equal pay for equal work are being anti-feminist. They don’t intend to be, but that is the effect of their policy … the only weapon the less productive sex has, is to offer to work for less. And if you deny them that opportunity, you’re assuring yourself that you’re going to have all male jobs and all female jobs, and all white jobs and all black jobs.’ The remainder of the clip is certainly worth watching, and can be found here: https://www.youtube.com/watch?v=hsIpQ7YguGE&ab_channel=LibertyPen/ 4

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Supporters of the desertist principle find it objectionable that the libertarian principle and the utilitarian principle permit racist preferences to play a role in hiring decisions. The desertist principle stipulates that companies should hire the candidate who (i) has the most talent, (ii) makes the greatest productive contribution, and (iii) works the hardest. There is no doubt about who that is: candidate A. What matters to the desertist is whether the person who is most suited for the job itself, performs it. Candidate A is a good paralegal, much better than candidate B. This is a clear advantage of the desertist principle: the supporter of desert is prepared to sacrifice profit for fitness.5 The fact that the libertarian and utilitarian principle do not preclude racist considerations from playing a role in hiring decisions is a strong objection against these principles. This does not necessarily mean, however, that these principles should be consigned to the scrap heap of failed principles. There are situations in which it may be permissible to let utilitarian considerations trump desertist considerations. However unfair it may be, it is a fact that donors will swarm towards Trinity College like flies to syrup if lazy candidate B gets appointed. Because the issue here is fame, not race, it may be less morally problematic if candidate B gets appointed. An additional reason for this is that Trinity College can do a lot of good with the extra donations it will receive: funding more research and providing more financial support to deserving students, for instance.

8.3 Determining Salaries The editorial board of journalistic platform The Correspondent did a salary experiment once. Instead of letting the editor-in-chief determine the salaries of employees, the editorial board tried to decide collectively what everyone should earn. Although the experiment started in good spirits, the atmosphere in the room quickly worsened. There were discussions about questions such as: (i) Should people whose articles are read more also be paid more? (ii) Should someone who does more research for their articles also be paid more for them? After getting into a fight about these and related questions, the editorial board decided to abandon its ambition to decide on salaries collectively. From then on, the editor-in-chief would determine the salaries again, with a renewed appreciation for the difficulty of making such remuneration decisions. The principles that are influential in determining who should get a job, are also influential in the determination of how high salaries should be:

 It should however be noted that conditions (i), (ii), and (iii) are all examples of qualities that will most likely generate the most profit. In other words, the profit motive provides a reason for the choice of desert bases. 5

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1.  The libertarian principle: salaries may be determined on whatever ground, for whatever reason—as long as the remuneration decision satisfies two conditions of fair procedures. 2.  The utilitarian principle: salaries should be set such that they contribute to the maximization of profit in an organization. 3.  The desertist principle: salaries should be set in accordance with what individual employees deserve. To bring out the difference between the three principles, it is again useful to consider two cases in which they reach different conclusions. Because the difference between the three principles has already been elaborately discussed in the previous section, this section is considerably shorter. Case 8.3 Economists Sofia Izquierdo Sanchez and Maria Paniagua (2017) did a largescale study into the salary gap between male and female top actors in Hollywood. They found that male actors earned 1.1 million dollars more than their female counterparts in the same movie: a gap of 26%. This salary gap cannot be explained by differences in experience, number of prices won, and renown – as measured by the number of followers on social media. Moreover, the salary gap that the researchers found was approximately the same in 2015 as it was in 1980. Is such a large salary gap between men and women morally justified? The libertarian principle answers ‘yes’: movie studies should be free in determining the salaries of actors in whatever way they want. If they want to pay women less than men, so be it! The utilitarian principle disagrees with this reasoning: salaries should be set in a way that contributes to the maximization of the profits of a company. It could, however, be very attractive to leave the salary gap in place for utilitarian reasons – as long as women accept, or simply do not know that they get paid less than men, profits will be higher if the salary gap persists. This changes, of course, if the salary gap makes the news and harms the reputation of the studio. A salary gap of this kind is much more difficult to justify for those who are sympathetic to the desertist principle. Izquierdo Sanchez and Paniagua (2017) mention repeatedly in their article that they controlled for the influence of all kinds of factors that could explain why women are paid less than men, such as differences in experience, number of prices won, and renown. Even when controlling for all these factors, there still is a salary gap of 26%. That gap clashes with the desertist principle, because it holds that people who have the same talent, make the same productive contribution, and work equally hard, should be paid the same. In the desert literature, this is called the proportionality principle.

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Case 8.46 In the time that you have been studying this chapter, one of the richest men on earth, Jeff Bezos, founder and major shareholder of Amazon, has earned 60 million dollars.7 Is it morally justified that people earn so much? Granted that Bezos earned his wealth through fair procedures (e.g. not fraud or embezzlement), libertarians think it is. Who are we to concern ourselves with the reward that private firms pay their employees? Supporters of the utilitarian principle and the desertist principle disagree. According to the first, super salaries are only morally justified if they contribute to the maximization of the total utility of a company. This is not plausible. People do not need an extremely high salary to remain motivated. The British economist John Maynard Keynes (1936, p. 374) already noted this: There are valuable human activities which require the motive of money-making and the environment of private wealth-ownership for their full fruition. […] But it is not necessary for the stimulation of these activities […] that the game should be played for such high stakes as at present. Much lower stakes will serve the purpose equally well, as soon as the players are accustomed to them.

The point Keynes makes here is important: people are used to greater salary differences, but they can get used to smaller differences without influencing, at least in the medium to long term, their performance. The observation that companies do not need to pay their employees exorbitant salaries to perform well is supported by empirical research by, among others, the French economist Thomas Piketty into CEO incomes in the United States (Piketty et al., 2014). If it is the case that high salaries would incentivize people to perform better, then you would expect companies that pay their leaders higher salaries also perform better. This is not the case. The salaries of CEOs do not follow the relative success of their company compared to other companies in the same sector, but the average value of shares in that sector.8 The desertist principle does not seem capable of justifying extremely high salaries either. Take the salary of former Unilever-CEO Paul Polman. In 2018, the year before he resigned, he earned 283 times more than the average Unilever employee: a total remuneration package of 11.7 million euro. If that is Paul Polman’s desert, then he would have to have 283 times more talent, make a 283 times higher

 This builds on Brouwer and Timmer (2019).  Bezos earns one million per eight minutes. Teaching guidelines stipulate that students take about an hour for studying five pages of six hundred words. This chapter is about 4800 words long. This means that you will take about eight hours to study this chapter. The income of Jeff Bezos per eight minutes comes from a CBS-item about Ingrid Robeyns’ limitarianism: https://www.cbsnews.com/ video/the-top-one-percent-should-wealth-have-its-limits/ 8  It should be noted that this is an often cited, but also contested claim. For studies that indicate that CEO pay does in general follow firm performance, see Smirnova and Zavartiaeva (2017), Banker et al. (2013), Hall and Liebman (1998), and Murphy (1985). 6 7

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productive contribution, or work 283 times harder than the average Unilever employee. While it might be the case that Polman is essentially a superhuman deserving a super salary, desertists are more inclined to say that his pay is undeserved (see Moriarty, 2005). The proportionality principle limits how high the salary gap can be within companies: someone can only deserve to get paid more than others if this can be justified based on their talent, productive contribution, and hard work. Although the libertarian and utilitarian principles permit that women get paid less than men for the same work, they can play a useful role in discussions about just pay. It is, however, important that the hiring committees, managers, and HR staff who avail themselves of these principles are aware of their downsides. Moreover, it is possible that the injustice that arises in the use of libertarian and utilitarian principles in hiring processes can be compensated somewhat through salaries. Suppose that Trinity College (from Case 8.1) would choose to appoint lazy candidate B based on utilitarian considerations, then the college could choose to mitigate the injustice somewhat by giving this candidate a lower salary than hard-working candidate A would have received  – a suggestion that would be supported by desert considerations.

8.4 Conclusion Psychological research suggests that people prefer equality. At the same time, many people think that it is permissible to divide jobs and money unequally, if doing so is fair. The labor market is an important place in our society in which deviations are made from the inborn preference people seem to have for equality. The decisions companies make about who will be hired and what salaries employees receive have significant implications for the economic inequality in a country. In this chapter, three principles have been discussed that companies can use in determining who they should hire and what salaries their employees should get. These principles can be helpful in structuring discussions about just hiring and just pay within companies and other organizations.

References Banker, R. D., Darrough, M. N., Huang, R., & Plehn-Dujowich, J. M. (2013). The relation between CEO compensation and past performance. The Accounting Review, 88(1), 1–30. https://www. jstor.org/stable/41721933 Brouwer, H. & Timmer, D. (2019, April 4). Waarom de baas van ING geen #supersalaris verdient. En jij ook niet. De Correspondent. https://decorrespondent.nl/9349/ waarom-­d e-­b aas-­van-­i ng-­g een-­s upersalaris-­verdient-­e n-­j ij-­o ok-­n iet/4829557512285-­ 8ef30184 Hall, B. J., & Liebman, J. B. (1998). Are CEOs really paid like bureaucrats? The Quarterly Journal of Economics, 113(3), 653–691. https://www.jstor.org/stable/2586870

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Izquierdo Sanchez, S., & Navarro Paniagua, M. (2017). Hollywood’s wage structure and discrimination (Lancaster University Economics Working Paper Series). Retrieved March 28, 2022, from https://eprints.lancs.ac.uk/id/eprint/84548/1/LancasterWP2017_005.pdf Kenworthy, L. (1995). Equality and efficiency: The illusory tradeoff. European Journal of Political Research, 27(2), 225–254. https://doi.org/10.1111/j.1475-­6765.1995.tb00637.x Keynes, J. M. (1936). The general theory of employment, interest, and money. Macmillan. Konow, J. (2003). Which is the fairest of all? A positive analysis of justice theories. Journal of Economic Literature, 41(4), 1188–1239. https://doi.org/10.1257/002205103771800013 Kumhof, M., Lebarz, C., Rancière, R., Richter, A. W., & Throckmorton, N. A. (2012). Income inequality and current account imbalances. IMF Working Paper, 12(8), 1. https://doi. org/10.5089/9781463930578.001 Kumhof, M., Rancière, R., & Winant, P. (2015). Inequality, leverage, and crises. American Economic Review, 105(3), 1217–1245. https://doi.org/10.1257/aer.20110683 Marrero, G.  A., & Rodríguez, J.  G. (2013). Inequality of opportunity and growth. Journal of Development Economics, 104(C), 107–122. https://doi.org/10.1016/j.jdeveco.2013.05.004 Moriarty, J. (2005). Do CEOs get paid too much? Business Ethics Quarterly, 15(2), 257–281. https://www.jstor.org/stable/3857680 Mulligan, T. (2018). Justice and the meritocratic state. Routledge. Murphy, K.  J. (1985). Corporate performance and managerial remuneration: An empirical analysis. Journal of Accounting and Economics, 7(1–3), 11–42. https://doi. org/10.1016/0165-­4101(85)90026-­6 Obama, B. (2013, December 4). Remarks by the President on economic mobility. The White House. Retrieved March 28, 2022, from https://obamawhitehouse.archives.gov/ the-­press-­office/2013/12/04/remarks-­president-­economic-­mobility Olsaretti, S. (2004). Liberty, desert, and the market. Cambridge University Press. PEW Research Center. (2014, October 16). Middle Easterners see religious and ethnic hatred as top global threat. Retrieved March 28, 2022, from https://www.pewresearch.org/ global/2014/10/16/middle-­easterners-­see-­religious-­and-­ethnic-­hatred-­as-­top-­global-­threat/ Piketty, T., Saez, E., & Stantcheva, S. (2014). Optimal taxation of top labor incomes: A tale of three elasticities. American Economic Journal: Economic Policy, 6(1), 230–271. https://doi. org/10.1257/pol.6.1.230 Pope Francis [@Pontifex]. (2014, April 28). Inequality is the Root of All Social Evil [Tweet]. Twitter. Retrieved on March 28, 2022, from https://twitter.com/pontifex/status/460697074585980928 Rabin, M. (1993). Incorporating fairness into game theory and economics. American Economic Review, 83(5), 1281–1302. https://www.jstor.org/stable/2117561 Shaw, A., & Olson, K. R. (2013). All inequality is not equal: Children correct inequalities using resource value. Frontiers in Psychology, 4, 393. https://doi.org/10.3389/fpsyg.2013.00393 Smirnova, A. S., & Zavertiaeva, M. A. (2017). Which came first, CEO compensation or firm performance? The causality dilemma in European companies. Research in International Business and Finance, 42(C), 658–673. https://doi.org/10.1016/j.ribaf.2017.07.009 Yellen, J.  L. (2014, October 17). Perspectives on inequality and opportunity from the survey of consumer finances. The Federal Reserve. Retrieved March 28, 2022, from https://www. federalreserve.gov/newsevents/speech/yellen20141017a.htm#

Chapter 9

Discrimination, Diversity and Inclusion Yvette Drissen

Abstract  The chapter reflects systematically on matters of discrimination, diversity and inclusion in the context of businesses. Ethical questions about discrimination, diversity and inclusion typically come up in the context of hiring practices and workplace management. Discrimination against people based on irrelevant factors (e.g. skin color) is not only morally wrong, but also illegal. Nevertheless, it is up for debate how far companies should go in the active promotion of diversity and inclusion. The chapter provides a socio-historical context to this question and presents three typical arguments in favor of more diversity and inclusion. Questions 1. What is discrimination and which types of discrimination are distinguished in this chapter? 2. What are important arguments for a more diverse and inclusive company? 3. What is intersectionality? 4. Which worries about the right formulation and implementation of diversity statements and policy can we distinguish?

Y. Drissen (*) Department of Philosophy, Tilburg University, Tilburg, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_9

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9.1 Two cases1 Case 9.1 Insurance company WECARE is setting out a vacancy for the position of IT-auditor. The ad describes which qualities applicants need to have. Most importantly, the position requires a master’s degree in IT-auditing, but being solution and result-oriented, being a team player and being passionate about the job are important assets as well. The employer is aware that unconscious biases can play a role in the selection procedure, and to minimize that, applicants are requested to leave out their name, age, gender and photo from their resume and letter. The candidates who score the highest on the criteria for the vacancy are invited for an interview.

Case 9.2 Insurance company WECARE is setting out a vacancy for the position of IT-auditor. The job description is identical to the one from Case 9.1. WECARE values diversity and inclusion but has noted that its employees are mostly cis2 men. To equalize the gender ratio, the company strives towards a workforce that consist of at least 40% of women (and other underrepresented genders). In order to achieve this, these latter groups are particularly encouraged to apply and when the qualities of a female candidate are in a relevant sense similar to those of a male competitor, the woman will be chosen. Applicants are requested to mention their gender on their resume.

Both cases – and their differences – raise several moral questions. What is fair: a blind application procedure or one in which you give preference to people from underrepresented and/or marginalized groups? Is it enough to refrain from discrimination or are employers also morally obliged to give extra opportunities to structurally underprivileged groups? And why should a diverse and inclusive organization be considered desirable in the first place?  See also Case 1.1. John, Anne and  Hannah apply for  the  same traineeship and  all three pass the test with flying colors. According to John (and the journalist), the two women were only hired because of a ‘positive action’ policy. This raised questions such as, is every form of making a difference between people morally problematic? What is the  difference between equal chances and equal outcomes? By means of similar Cases 9.1 and 9.2, this chapter will explore possible answers to these and other questions. 2  Being a cis man or cis woman means that one’s gender identity corresponds to one’s biological sex, that is, a person born with male genitals also feels a man and a person born with female genitals also feels a woman. For those whose sex assigned at birth and gender identity do not overlap, there are terms such as transgender and trans spectrum. Cisgender, transgender and trans spectrum thus say something about one’s gender identity in relation to the sex one is born with; it does not say anything about ones sexual or romantic attractions (that is, whether one is straight, gay, lesbian, bisexual, asexual or something else). 1

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This chapter offers philosophical reflections (Sects. 9.2 and 9.3) and socio-­ historical context (Sect. 9.4) that encourage readers to think systematically through matters of discrimination, diversity and inclusion in the context of businesses and organizations.

9.2 Discrimination Philosophers reflect on morally-laden terms like ‘discrimination’, ‘diversity’ and ‘inclusion’ to clarify them and assess their implications. What is the most precise definition of concept X? While this chapter cannot do justice to the rich literature on these topics, we will build on standard definitions to get the reflection going. Starting off with discrimination; it is widely recognized that discrimination is morally wrong and that it should be illegal as a result of the harm that it can result in. Article 21 of the EU Charter of Fundamental Rights states, for instance, that Any discrimination based on any ground such as sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation shall be prohibited. (European Union Agency for Fundamental Rights, 2022)

Statements such as these make it clear that discrimination requires a ground of discrimination: a characteristic that is irrelevant in a given situation. If someone is rejected for a job as IT-auditor because they do not have an IT-diploma, this does not constitute discrimination. If, however, this person does not get the job because they are queer, they were discriminated against. The characteristic on which someone is discriminated against is called the ‘ground of discrimination’. Some grounds of discrimination are age, sexual orientation, religion, race, sex, nationality, handicap or chronical disease, political convictions, and civic state. We can further refine the concept of discrimination. In the philosophical and legal literature for instance, a distinction is made between direct, indirect and institutional discrimination. We can speak of direct discrimination when someone is explicitly treated unequally because of an irrelevant feature, such as gender or race. Think for instance of a bar owner who puts up a sign that explicitly states ‘Forbidden for Roma to enter’ with the intention of keeping Roma qua Roma out. Or consider an employer who holds on to specific criteria in the application procedure that disadvantages women. Take, say, a selection procedure where female candidates, and only female candidates, are still asked to this day whether they have a desire to become a parent in the near future (Altman, 2020). We can speak of indirect discrimination, in turn, when a rule, practice or policy (issued by a government or company) seems ‘neutral’ in the sense that it equally applies to everyone, but in its effects disproportionately disadvantages one specific group due to specific circumstances. So here, someone is not explicitly treated unequally because of an irrelevant feature, as was the case for direct discrimination. Instead, the rules apply to everyone equally, but they disproportionately impact one specific group negatively (Altman, 2020).

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To illustrate, consider Griggs v. Duke Power, a court case that was treated in the U.S. Supreme Court in 1971. A company from North Carolina used a written test to determine who could get a promotion. As a result, hardly any Black person qualified for the promotion. Not only were these tests biased; Black employees were much less experienced than other colleagues at making tests. The state of North Carolina has a long history of implementing policies that disproportionally affected Black citizen negatively. While this is not a case of direct discrimination – it did not explicitly treat a group unequally on the basis of an irrelevant feature – it was a case of indirect discrimination, as it disproportionately disadvantaged one particular group in their chances of a promotion. This was also the verdict of the Supreme Court (Altman, 2020), because the exam did not test the knowledge and skills relevant for the jobs in question. Finally, the concept of institutional or structural discrimination refers to the ways in which rules and practices that constitute and regulate whole life domains – such as the family, education, the labor market, the housing market – are discriminatory. Crucial here, is that the discrimination is deeply embedded in societal institutions; they disadvantage some groups in disproportionate and unjust ways (Altman, 2020). Specific instances of direct and indirect discrimination are often part of a bigger societal structure where institutional discrimination takes place. Regulations formulated and imposed by governments and other organizations usually play an important role in institutional discrimination. Until recently, the Dutch government had the policy to scrutinize citizens with an immigrant background more vigorously than other citizens. And 90% of the rental agencies are willing to accommodate landlords who do not want to rent out their houses to people with particular migrant backgrounds (Mulder & Bol, 2020). Recent studies in the UK show moreover, that someone named Mohamed is still less likely to be invited for a job interview than someone named Adam, even though their applications are identical (Adesina & Marocico, 2017). This shows that at least some governmental bodies, rental agencies and workplaces have discriminatory practices. Perhaps this is due to the fact that the individuals within these institutions have particularly negative attitudes towards certain groups. However, in order to explain why particular groups face more discrimination than others, we cannot appeal to the individuals only, but we need to look at why so many individuals hold the same bias. In order to do so, we need to understand how ideas about Muslims, immigrants, children of immigrants are perpetuated in the media, in the ‘funny’ jokes that are told about them, and with whom the individuals on hiring committees tend to hang out. The term ‘institutional discrimination’ is mostly used to identify those injustices that keep specific groups – through a multitude of subtle and less subtle rules and practices – in a disadvantaged position in society. Often, rules were intentionally and explicitly imposed to disadvantage certain people at some point in history. These rules might have disappeared, but the targeted groups still experience the (indirect) consequences (Altman, 2020). The lack of gender equality on the Irish labor market, for instance, should be understood against the background of policies such as the Marriage Bar, which was only abolished in the 1970s. Up until then, women were legally required to resign their jobs once they were married (Mosca & Wright, 2019).

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Structural discrimination typically results in inequality. While the term strictly speaking only applies to discriminating attitudes, rules, procedures and practices, there are scholars who argue that unequal outcomes are sufficient evidence that structural discrimination takes place, at least to some degree (Altman, 2020). One way to limit, and possibly correct for, structural injustices is to ensure diverse and inclusive organizations and companies.

9.3 Diversity and Inclusion The following quote comes from a diversity and inclusion statement of a renowned publishing house: [W]e hold a collective belief that diverse voices need to be elevated and heard. And we can and must do better. We must give a platform to an even broader range of voices, especially more authors, illustrators, and creators of color. For us, more diverse publishing is not just a moral imperative. Establishing more inclusive business practices is a necessity for us to help build an inclusive society.3

Nowadays, many companies and other organizations make use of such statements. But what do they actually say? The words ‘diversity’ and ‘inclusion’ have become catch-all terms and may signify a wide variety of things. It is healthy to eat a diverse diet. The online clothing offer is very diverse. We stay at an all-inclusive hotel. This is not what this chapter is about, of course. According to Diversity, Inclusion & Equity Trainer Vernā Myers, the concepts ‘diversity’ and ‘inclusion’ mean the following in the context of companies and organizations: Diversity is about who is represented in the organization, whereas inclusion speaks more to who is respected, expected and integrated into an institution.’ [Put differently:] ‘Diversity is being invited to the party. Inclusion is being asked to dance.’ (The Vernā Myers Company, n.d.)4

Note, however, that this is not a neutral definition. The concepts are described in morally-laden terms. In other words, they are defined such that it difficult to deny that they are (morally) desirable. To trace whether a team is diverse, people often think in categories that refer to groups who historically have been discriminated against, unjustly excluded from power, and oppressed, such as women, workers, migrants, people of color, disabled people, LGBTQIA+ people, people with a specific religion, or an intersection of the above (see Text Box 9.1 below). What does it mean to be oppressed? An influential

 The reference to this quote is left out on purpose. The goal here is not to put the publisher in question on the spot, but to give an example of how a typical diversity and inclusion statement looks like. 4  Another, more socialist formulation could be ‘… inclusion is being given the shoes to dance’, where every group member gets mostly the material tools that are needed to participate in the dance. 3

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account of oppression states that all people who are oppressed “suffer some inhibition of their ability to develop and exercise their capacities and express their needs.” (Young, 1988). Oppression can happen violently and explicitly (for instance, when an authoritarian government shoots and clubs protesters down) or subtly and implicitly (for instance, due to indirect discrimination). Importantly, oppression may not happen deliberately, when certain widely accepted norms inhibit the ability of some individuals to develop themselves. For instance, the norm that women are the primary caregivers of children has inhibited their ability to develop themselves professionally. Many types of oppression are described as ‘isms’: racism, sexism, ableism, et cetera. Box 9.1: Intersectionality Our experiences of the social world and how we are treated by others are never neutral, but are always mediated by things like our ethnicity, skin color, class and gender identity, and only get meaning in a specific social context. A white German woman experiences the world different and gets treated differently than a German man with Asian roots. Some of these characteristics and (perceived) identities generally provide privileges (such as being perceived as having a white skin color) while others are accompanied by oppression (such as being working class). These characteristics and identities do not act independently from one another, but interact with each other in systems of privilege and oppression. This interaction is called ‘intersectionality’, a term coined by Kimberlé Crenshaw in 1989, but the phenomenon was already described by Angela Davis, bell hooks, Audre Lorde and Elizabeth Spelman, amongst others. Intersectionality helps us understand that every social movement that only focuses on the aspect that all members of that group have in common (such being a women, being Black, being a worker) only benefits the least oppressed of that group, at the expense of the most oppressed, that is, at the expense of those who fall at the intersection of different (oppressive) forces (Srinivasan, 2021, pp. 17–18). For an extensive explanation of ‘intersectionality’, see also Ruíz (2017). A business example that illustrates the importance of an intersectional approach is the U.S. court case of DeGraffenreid v General Motors that took place in 1976. When, in 1970, the company experienced financial difficulties and fired people based on seniority, mostly Black women were fired. In the past, women were working in the secretary pool, but they were all white. And Black people were working on the factory floor, but they were all men. This meant that, before 1964, practically no Black women were hired. The plaintiffs argued that the Black women were discriminated against as Black women, because it’s precisely this group that got disadvantaged disproportionately by the seniority measure. However, the court dismissed this claim and argued that it did not want to employ a separate category. “Under this view, [Crenshaw notes,] Black women are protected only to the extent that their experiences coincide with those of either of the two groups [women or Black people]. Where their experiences are distinct, Black women can expect little protection” (Crenshaw, 1989, p. 143).

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There are, however, concerns about the correct formulation and implementation of diversity statements and policies. Badly formulated statements and policies can impede actual change from happening. Sara Ahmed argues (2012, pp. 58–59), for instance, that organizations and companies’ diversity statements often do not reflect how a company actually functions, but rather function as a statement of courtesy. Ahmed adds (2012, p. 65) that the terms ‘diversity’ and ‘inclusion’ have a positive, collaborative and happy feel to it, as if they’re something sweet to be consumed in all kinds of colors and flavors. As long as an organization consists of people who ‘look different’, the job is done, or so one might think. However, diversity and inclusion talk runs the risk of overshadowing serious, structural and ‘bitter’ issues of injustice and unequal opportunities that form the background against which some (groups of) people don’t feel included in the first place. Of course, it is easier for a company to speak of ‘welcoming all kinds of different people’ than to speak about racism, sexism and ableism, especially if these injustices are also still prevalent in the company itself, in one way or the other. An additional problem could be that more inclusive application procedures do not translate to a more inclusive workplace. One reason for this is that workplace culture may still result in a division of benefits and burdens that favors some over others. For instance, which employees take most care of the ‘unpaid tasks’, such as organizing team outings and making sure staff members gets a postcard their birthday? To what extent do these tasks fall on the shoulders of a few? What does it mean to be a ‘good leader’ and how inclusive is this notion of leadership? How can working hours become more flexible, so that they are more easily combined with parenting and other care responsibilities? How to do it right? Apart from carefully formulated diversity and inclusion statements, there are also arguments in favor of promoting diversity and inclusion within organizations and companies on more substantial grounds. Here we discuss three prominent arguments, plus some practical examples and suggestions. The first two are moral in nature and the third argument concerns our ability to know. First, the fair equality of opportunity argument builds on the idea that opportunities should be equal to everyone. The argument typically takes the unrepresentative composition of many boards of companies as evidence that opportunities are not equal (Jongen et al., 2019). According to this argument, it is unfair that people of certain groups need to surpass additional hurdles to get, say, a board position. Consequently, these obstacles should be eliminated (Sect. 9.4 goes deeper into the topic of equal opportunities). The fair equality of opportunity argument requires minimally that social positions, such as jobs, are formally open and meritocratically allocated. Companies can do more to minimize biases in the selection procedure, for example by asking applicants to not mention their name nor add any photos of themselves on their resume. They can further remove hurdles to equal employment opportunities by, for example: –– employing gender neutral language in job vacancies; –– setting out vacancies in various (online and offline) spaces where people from different backgrounds meet and look for jobs; –– ensuring that the interview panel is diverse;

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–– covering the employee’s transportation costs from and to work; –– allowing for flexible working hours and teleworking, such that work can more easily be combined with care responsibilities; –– equalizing maternity and paternity leave; –– providing on-site child care; –– organizing internal training courses (e.g. for employees who have been out of the running to get up to speed); –– introducing traineeship programs for people from disadvantaged backgrounds; and –– setting up internal mentoring programs between a senior and a junior staff member (from marginalized groups). A company that ticks many of the above boxes, and more, is Tesla. The company’s hiring policy includes gender-neutral job descriptions, a broadening of recruitment channels, updating interviewing guidelines, building partnerships with local communities and unconscious bias trainings. They publicly state that a college degree is not required to work at Tesla. With their Manufacturing Development Program, they offer a 2-year program where high-school graduates in the U.S. can embark on a career at Tesla as a production associate while continuing their education in robotics and automation in a local community college. Since the program’s launch in 2017, 168 graduates have been hired, especially in Nevada, New York, Texas and Fremont. With its Tool & Die Apprenticeships, Tesla partners up with local community colleges where classroom learning is blended with on-the-job training in, amongst other things, machining, welding and blueprint reading. Tesla also organizes the Introduce a Girl to Engineering Day to promote STEM careers to girls. In 2022 for instance, 1200 middle school students from 140 schools across Nevada, Texas, New York and California participated in virtual events showcasing a variety of engineering careers at Tesla. Finally, with their Social Safeguarding Programs, they give temporary support to employees in changing circumstances, such as sudden loss of housing, natural disasters or the loss of a family member. Their program includes provision of 5 days of back-up child or elder care for employees, infertility benefits and transgender benefits that align with the clinical protocol by the World Professional Association for Transgender Health (Duxfield & Allen, 2023; Tesla, 2021, pp. 26–32). The result: Tesla has “a large representation of employees from communities that have long struggled to break through the historic roadblocks to equal opportunity in the U.S. As of December 31, 2020, 34% of the [Tesla’s] directors and vice presidents [at Tesla] were non-white,” which exceeds that of peer companies and the industry average (Tesla, 2021, p. 36). Second, the reparation of injustice argument builds from the view that we should strive to compensate or correct for (past) injustices. People who belong to groups who have suffered disadvantages (throughout history) deserve to be compensated for this by receiving some benefits. For example, employers do their best to recruit people from marginalized groups. Or companies who have been complicit in atrocities in the past now invest money in local communities who still

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suffer from the effects of those atrocities. A case in point is the Dutch bank ABN AMRO. Historical research shows that the bank’s predecessors Hope & Co. and Mees & Zoonen benefitted enormously from slavery in the eighteenth century. Not only did they make profits on slavery-related activities, Hope & Co. was also involved in the forced displacement of enslaved persons between plantations which teared many families apart. It is unclear how much profit ABN AMRO’s predecessors exactly made on slavery-related activities due to the various merges that happened in the meantime. However, the bank is clearly built on the business successes of its forerunners, while slavery caused long-lasting suffering on the descendants (De Kok & Brandon, 2022). In April 2022, the bank apologized officially for its past involvement in slavery. Apart from apologies and acknowledgement of the harms though, communities of descendants also call for more concrete steps to address the structural disadvantages they suffered and still suffer (ABN AMOR, 2022; NOS Nieuws, 2022). The bank expresses its commitment to repair past injustices and is actively involved in initiatives to improve social inequality conditions and increase diversity and inclusion, within their own institution and beyond. Concretely, the bank signed the Social Impact Covenant – which includes arrangements about internships and traineeships at the bank, debt relief programs and the procurement of goods and services from Amsterdam South-East  – and collaborates with the ABN AMRO Foundation to create greater equity for children and youth (ABN AMOR, 2022). Third, the knowledge argument, or the epistemic argument, suggests that a wider variety of experiences and perspectives in an organization leads to more knowledge. ‘Two know more than one’, especially if they both have a different background, or so the reasoning goes. For instance, a wheelchair user will probably have certain experiences and know certain things about how to navigate in a world that is mostly designed for non-wheelchair users that others lack. When a diverse group of people genuinely listen to each other, there is much they can learn.5 This is important, because there are ample examples of products and services that miss the mark because a homogeneous group of people designed them. Think of soap dispensers that only work if you put a white person’s hand (or a white napkin, for that matter) underneath (Futureism, 2017). Think of the room temperature in buildings. The formula to determine the temperature is based on a metabolic test from the 1960s, where a 40-year-old man of 70 kilo’s is taken as ‘the norm’. Women’s metabolisms are typically slower, which explains why they are often cold in offices. Their ‘deviant’ bodies require a room temperature that is five  Note, however, that the inclusion of people with different experiences and characteristics does not necessarily lead to more ideas, insights and knowledge within a team (see also Intemann, (2010). Groups who have historically been oppressed and marginalized can still take over and internalize the dominant culture. To illustrate, also women can perpetuate sexist and misogynist thought and behavior (Manne, 2019), for instance, by criticizing other women who are deemed not to take their role as a (potential) mother seriously enough. They therefore do not necessarily offer feminist or ‘typically feminine’ insights, to the extent we can even speak of ‘typical feminine’ anyway. 5

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degrees higher than the ‘standard’ to function comfortably (Criado-Perez, 2019). Or think of cash machines that are typically designed with people in mind who have two legs and can walk. But how about wheelchair users who would have been able to take out cash by themselves, if only the machine would have been adapted. Many design problems could have been avoided if a more diverse team would have been involved in the process from the start.

9.4 Socio-historical Context The terms ‘diversity’ and ‘inclusion’ are especially popular nowadays, so they seem to refer to new developments. However, societal critiques around matters of discrimination, fair equality of opportunity, justice, exclusion and representation are not new. Historically, they have occurred in different forms, with different jargon and driven by different societal groups (sometimes with contradictory interests and opinions). The aim of this final section is to further emphasize the ethical importance of terms discussed. For many people, ‘discrimination’, ‘diversity’ and ‘inclusion’ are not just terms, but a daily reality, a daily struggle for the recognition of their rights, needs and interests. Thanks to the courage and sacrifices of participants in the Women’s Movements, women can nowadays take part in the labor force and gain financial independence, even though there is still work to be done when it comes to equal pay (amongst other things). Tanks to Workers Movements and Unions, we have gained workers’ rights, including a minimum salary and shorter work weeks. And thanks to Civil Rights Movements, racist policies were dismantled and racial segregation was abolished, but also here, work remains to be done. Those who take an intersectional approach, in turn, remind us that only focusing what all members of one movement have in common (being a women, being a worker, being Black) runs the risk of oppressing those who fall at the intersection. Given the social embeddedness of businesses, they too need to relate to these issues somehow, where ‘not doing anything’ can still mean that certain inequalities are being perpetuated. In this introductory chapter, it is impossible to do justice to the complexity of historical developments, but we will nevertheless point out some events that have played an important role in the Western European context in the nineteenth and twentieth century. We focus on feminism, class struggles and socio-­economic inequality, and the Civil Rights Movement and (de)colonization for illustrative purposes, but there are many more movements that fought and fight for equal rights and demand that their needs and interests should also be taken into account, such as LGBTQIA+ communities and disability rights activists.

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9.4.1 Feminism The feminist social movement is typically said to have come in waves.6 During the first wave (from around 1850 till 1940), feminists mostly strove for equal rights for men and women, most notably regarding voting rights. In most Western countries, women obtained the right to vote in the first half of the twentieth century, though in certain cantons in Switzerland, women did not have the right to vote in local election until 1990. The second and third feminist waves (from the end of the 60s up and until the 00s) focused mainly on paid work, sexual freedom, and full participation in society. In the Netherlands for instance, the Legal Incapacity Law was only abolished in 1956. Until then, married women were not allowed to work for governmental bodies, travel independently and open a bank account (Nationaal Historisch Museum, 2021). Even after laws assured the formal equality of men and women for the law in most areas, there was (and is) still lots of work to be done to achieve women’s emancipation. A classic feminist work is Simone de Beauvoir’s revolutionary book The Second Sex (1949). De Beauvoir argues that while one is born with a particular sex, what it means to be a women – that is, which traits, behaviors and other characteristics are associated with being born with a female sexual organ – is socially determined. She coined the now famous phrase: “On ne naît pas femme: on le devient” (one is not born a woman, but becomes one). For example, it is socially determined whether or not women are being judged if they choose not to have children. The fourth wave refers mostly to the MeToo-movement that came up at the end of 2017, addressing issues of sexually transgressive behavior (again) by publicly denouncing it on social media under the title #MeToo. Famous men were the main culprits. Other important debates concern the role and the position of transwomen within feminism (Nduwanje, 2020). These discussions usually revolve around the question what it means to ‘be a woman’. Some insist that biological sex characteristics are of crucial importance, while others contest this. Feminists also continue to

 Displaying the history of feminism in different waves is useful, because it shows how in different periods of time insights and protests from many societal domains came together and accelerated the emancipation of (mostly white) women in the West. Some remarks are appropriate though. First, speaking in terms of ‘waves’ runs the risk of rendering the constant (sometimes lonely) battle of women that fall outside of these waves invisible. Moreover, it is important to note that the waves, especially the first two, mostly improved the situation of white Western women, often from the middle class. Nowadays, intersectional aspects of oppression have finally entered ‘white’ feminist thought (see Text Box 9.1). Finally, there is discussion about whether we should speak of a third or even a fourth wave or whether we still bounce on the ripples of the second wave (Rosa, n.d.). For this chapter, it is decided to distinguish four waves. 6

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fight for the elimination of the persisting gender pay gap (Van den Brakel, 2020; Van den Breemer & Frijters, 2019) and pay more attention to the intersectional aspects of disadvantage.

9.4.2 Class Struggle and Socio-economic Inequality From the nineteenth century onwards, another (partially overlapping) battle was fought by workers movements. The Industrial Revolution that arose halfway through the eighteenth century in England and spread out to continental Europe around 1850–1900, was accompanied with an enormous increase in production capacity and economic growth. The growth resulted in an incredibly unequal society. Factory workers toiled under piteous conditions for low salaries, with working days of up to 16 h. Child labor was common. Out of protest, labor unions and socialist and communist political parties were founded, often inspired by Karl Marx (1818–1884) and Friedrich Engels (1820–1895). Think, for instance, of Marx and Engels’ famous call: “Proletarians of all countries, unite,” which appeared in 1848 on the cover of their Communist Manifesto. Due to, amongst other things, the Industrial Revolution as well as the French Revolution(s), European societies gradually moved from an aristocratic society to a class society. Someone’s status and position in society was no longer determined by family name and tradition, but by socioeconomic factors. This also meant that society went from a static hierarchy to a dynamic hierarchy, that is, it became possible to rise (and fall) on the socioeconomic ladder. In practice, however, someone’s socioeconomic background still largely determines one’s status and position in society. This is why efforts to reduce inequalities of opportunities have continued in Western countries. Contrary to the adherents of the communist ideal however, proponents of equality of opportunity are not against every type of hierarchical differences of status and positions in society. In fact, the underlying assumption of fair equality of opportunity, is that society consists of higher, desirable social positions and lower, less desirable social positions. In order to obtain such positions, only one’s merit should count. Here, the question arises whether formal equality of opportunity is sufficient – where positions (such as jobs) are formally open to everyone and candidates are purely judged on their merits – or that one should strive for substantial equality of opportunity – where the playing field is leveled as much as possible, for example, by intervening in people’s early, formative years (Arneson, 2015). Special programs that provide children from disadvantaged backgrounds with supplementary support at school does not treat everyone equally, but may ultimately lead to a more equality

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of opportunity. Since private tutoring is only available to rich(er) parents, giving their children a competitive edge in their (school) career, some have argued we should ban them to promote equality of opportunity.7

9.4.3 The Civil Rights Movement and (De)colonization A final influential historical development is the North American civil rights movement from the 1950s and 1960s, as well as the large-scale decolonizing that has been taking place in that same century. During this period, many former colonies became independent states after long periods of colonization by western states – such as the Netherlands, Belgium and France. This often only happened after violent conflict. The American civil rights movement began with non-violent mass protests against racial segregation and discrimination. These protests have their origins in the centuries long battle of enslaved African people. Slavery was abolished in the United States in 1865, but even though Black and white Americans were treated more equally during the Reconstruction of 1865–1877 (Black men were given the right to vote for instance), most of these measures were reversed in the following decades (voting rights for Black Americans were severely restricted again). When the protests reemerged in the 1950s, this resulted in the end of racial segregation in schools, at work and public places (1964), and an effective suffrage for Black Americans (1965). In 1963, Martin Luther King Junior gave his speech where he said the famous words ‘I have a dream’ (BBC, n.d.). In 1964 he received the Nobel Peace Prize. In 1968 he was assassinated, showing that the fight of the civil rights movement was definitely not over yet. The second half of twentieth century was also the time where dozens of countries in Africa and Asia became independent from their European colonial rulers, most notably France, Belgium, the Netherlands, England and Italy. (Many countries in South America, such as Brazil, Colombia Argentina, Ecuador and Venezuela, achieved independence from Portuguese or Spanish rule during the first half of the  However, some scholars voice the critique that equal outcomes, rather than equal opportunities, are most important. For more philosophical background on equality of opportunity, see Roemer (1998, 2003), Rawls (1999) and Fishkin (2016). The ideals of fair equality of opportunity are often blindly incorporated in the meritocratic myth. The ideal of fair and equal chances nicely fits within an individualist and (neo)liberal discourse that justifies inequalities based on merits. In an alleged meritocracy, occupying a ‘low’ socioeconomic position in society is then not a matter of ‘bad luck’ anymore, but your own responsibility, lack of hard work and lack of talent (Littler, 2017, pp. 27–40). See also Sandel (2020). 7

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nineteenth century.) Sometimes, the process of independence went orderly and peacefully, but most of the time, it was accompanied by violent revolutions. Take one of the major colonial powers, France, who had colonies in North America, South America, Africa, Asia and even a couple of islands in Oceania. While each place has its own complex history of occupation and struggle, the exploitation of the colonies generally led to huge financial gains for the metropole. Yet, apart from economic justifications, France also used its Enlightenment ideals to justify its ‘mission civilisatrice’ overseas. Jules Ferry – who was the prime minister of France twice (1880–1881 and 1883–1885) and who is known for promoting the vast expansion of French’s colonial empire – said in an 1884 speech: “We must say openly that indeed the higher races have a right over the lower races. […] I repeat, that the superior races have a right because they have a duty. They have the duty to civilize the inferior” (Halsall, 1998). The island of Saint-Domingue, present day Haiti, for instance, became the most lucrative colony because of the work of enslaved Africans on sugar plantations. During the Haitian revolution of 1791–1804, self-liberated formerly enslaved people successfully insurrected against French colonial rule and its leaders demanded that the principles of the French Revolution also applied to its colonized subjects. After its independence in 1804, the newly found country was obliged to pay reparations to France, which served as a compensation for former slave owners. This ‘debt’ was only paid off in 1947 (Al Jazeera, 2021; BBC, 2021). Another part of France’s colonial past that is extremely controversial, sensitive, and violent, is its occupation of Algeria. It became a colony in 1830 and a department of France in 1948. Then, between 1954 and 1962, the War of Independence happened (yet France only recognized that it was an actual war in 1999). The Front de Liberation Nationale (FLN) played a leading role in this conflict against the Metropole, while the so called ‘pieds-noirs’ (those of French and other European descent who were born in Algeria during the French occupation) largely supported the French rule. After independence, the pieds-noirs largely moved to France (Brown & Zaimeche, n.d.). Then there is also the issue of the harkis – the term for native Muslim Algerians who fought for the French army during the War of Independence – that remains unresolved. Big numbers of harkis were killed in the aftermath of the war in 1962 and those who escaped to France tended to remain an unassimilated refugee community. The current Algerian government is still not willing to accept the return of harkis and their descendants to Algeria (Gençoğlu, 2021). The fight for more diversity, inclusion and justice often goes hand in hand with the demand for recognition of century-long imperial oppression and discrimination against people of color and the traces this oppression still leaves in nowadays society (see also Debeuckelaere, 2019). The worldwide Black Lives Matter protests (that followed George Floyd’s murder on the 25th of May 2020 in the United States) show that racism and police brutality are still a daily reality, also in Europe, such as in the Netherlands (Controle Alt Delete, n.d.; Soudagar, 2021) and France (Jeannerod & Sunderland, 2021; France 24, 2021).

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Moreover, in Western European countries, most notably in France, ideals from the eighteenth-century regarding universality and neutrality are being questioned. The pro-universalism camp argues that universalism is fundamentally anti-racist; Enlightenment values such as liberty and equality apply to all, regardless of skin color. The critics, however, point out that it was exactly in the name of these ‘Enlightenment values’ that France and other European countries justified colonialism. Moreover, they voice the critique that alleged neutrality renders the specific struggles of people of color invisible. Denying the importance of race can therefore be self-defeating: for instance, not registering one’s skin color in official stats about, say, police violence under the guise of ‘universality’ makes it difficult to understand the magnitude and complexity of the problem of racism at the police. At the same time, however, the registration of skin color (and other personal characteristics) is a sensitive issue that provokes strong responses; it is even deemed inherently racist.

9.5 Conclusion This chapter discussed the nature and ethics of discrimination, diversity, and inclusion, and the historical contexts that give rise to the ethical significance of these notions. These provide tools to help us answer important ethical questions. For instance, is it fair to have a blind application procedure that is formally equal (Case 9.1)? Or is it fair to give preference to applicants from underrepresented and/or marginalized groups (Case 9.2)? It is morally forbidden (and illegal) to discriminate against people based on an irrelevant characteristic, but to what extent do companies have the (positive) responsibility to actively create a diverse and inclusive workplace? Companies were often not complicit in cruelties that happened in the past and if the company was involved in past injustices (such as slavery), to what extent do companies still have a (shared) responsibility to correct and/or compensate for injustices from the past? Finally, how far can and should companies go to eradicate institutional discrimination? In Case 9.2, the insurance company actively strives towards a workforce that consists of at least 40% of women and other underrepresented genders. Is this a good way to go about it? While we cannot give a straightforward answer to such questions, the concepts and arguments from this chapter are crucial to understand their ethical significance and complexity.

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Ahmed, S. (2012). On being included: Racism and diversity in institutional life. Duke University Press. Al Jazeera [AJ+]. (2021, March 31). How France’s Colonial Past Explains Its Racism Today [Video]. YouTube. https://www.youtube.com/watch?v=fI696dEof-­g Altman, A. (2020). Discrimination. In E. N. Zalta (Ed.), The Stanford Encyclopedia of Philosophy (Winter 2020 edition). Stanford University. Retrieved December 21, 2021, from https://plato. stanford.edu/archives/spr2021/entries/feminism-­argumentation/ Arneson, R. (2015). Equality of opportunity. In E.  N. Zalta (Ed.), The Stanford Encyclopaedia of Philosophy (Summer 2015 edition). Stanford University. Retrieved March 12, 2022, from https://plato.stanford.edu/entries/equal-­opportunity/#SocMobEquOpp Brown, L. C., & Zaimeche, S. (n.d.). Algeria. Britannica. Retrieved August 8, 2022, from https:// www.britannica.com/place/Algeria/Bouteflikas-­fourth-­term-­though-­he-­had-­suffered-­a-­stroke Crenshaw, K. (1989). Demarginalizing the intersection of race and sex: A black feminist critique of antidiscrimination doctrine. Feminist Theory and Antiracist Politics, 1(8), 139–167. http://chicagounbound.uchicago.edu/uclf/vol1989/iss1/8 Criado-Perez, C. (2019). Invisible women: Exposing data bias in a world designed for men. Chatto & Windus. De Beauvoir, S. (1949). Le deuxième sexe. Gallimard. De Kok, G., & Brandon, P. (2022). Het slavernijverleden van historische voorlopers van ABN AMRO: Een onderzoek naar Hope & Co en R.  Mees & Zoonen. Internationaal Instituut voor Sociale Geschiedenis (IISG). https://assets.ctfassets.net/ 1u811bvgvthc/7sf5jwvpQRHnJ4MD2BtyGO/32a8f9f5e1403e463167f888e6dd35a7/ IISG_Het_slavernijverleden_van_historische_voorlopers_van_ABN_AMRO_NL.pdf Debeuckelaere, H. (2019, October 14). Kolonialisme leeft door in het heden. Daarom is dekoloniseren belangrijk. De Correspondent. Retrieved December 21, 2021, from https:// decorrespondent.nl/10618/kolonialisme-­leeft-­door-­in-­het-­heden-­daarom-­is-­dekoloniseren-­ belangrijk/696921635806-­daf65efa Diversity and Inclusion. (n.d.). The Vernā Myers Company. Retrieved December 21, 2021, from https://www.vernamyers.com/diversity-­training/ Dossier: etnisch profileren. (n.d.). Controle Alt Delete. Retrieved March 12, 2022, from https:// controlealtdelete.nl/dossier-­etnisch-­profileren Duxfield, I., & Allen, H. (2023). Working women in transport: A toolkit for change (License: Creative Commons Attribution CC BY 3.0 IGO). Washington, DC. ISBN: 979-8-9882420-1-7. European Union Agency for Fundamental Rights. (2022, July 7). Article 21  – Non-­ discrimination. Retrieved August 6, 2022, from https://fra.europa.eu/en/eu-­charter/ article/21-­non-­discrimination Feminisme. (n.d.). RoSa-vzw. Retrieved March 12, 2022, from https://rosavzw.be/nl/themas/ feminisme Fishkin, J. (2016). Bottlenecks: A new theory of equal opportunity. Oxford University Press. Futureism. (2017, August 18). This ‘Racist soap dispenser’ at Facebook office does not work for black people [Video]. YouTube. https://www.youtube.com/watch?v=YJjv_OeiHmo Gençoğlu, H. (2021, December 10). French colonial legacy in Algeria. United World. Retrieved August 8, 2022, from https://uwidata.com/21460-­french-­colonial-­legacy-­in-­algeria/ Haiti country profile. (2021, July 7). BBC. Retrieved August 8, 2021, from https://www.bbc.com/ news/world-­latin-­america-­19548810 Halsall, P. (1998). Modern history sourcebook: Jules Ferry (1832–1893): On French Colonial Expansion. Internet History Sourcebooks Project. Retrieved August 8, 2022, from https:// sourcebooks.fordham.edu/mod/1884ferry.asp Intemann, K. (2010). 25 years of feminist empiricism and standpoint theory: Where are we now? Hypatia, 25(4), 778–796. https://doi.org/10.1111/j.1527-­2001.2010.01138.x Jeannerod, B., & Sunderland, J. (2021, January 28). Time to stop ethnic profiling in France: Organizations initiate procedures to push for reforms to end widespread abuse. Human Rights Watch. Retrieved August 8, 2022, from https://www.hrw.org/news/2021/01/28/ time-­stop-­ethnic-­profiling-­france

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Jongen, E., Merens, A., Ebregt, J., & Lanser, D. (2019). Vrouwen aan de top. Centraal Cultureel Planbureau. Retrieved March 12, 2022, from https://www.cpb.nl/sites/default/files/ omnidownload/cpb-­notitie-­vrouwen-­aan-­de-­top.pdf Littler, J. (2017). Against Meritocracy: Culture, power and myths of mobility. Routledge. Manne, K. (2019). Down girl: The logic of Misogyny. Oxford University Press. Mosca, I., & Wright, R.  E. (2019). The long-term consequences of the Irish Marriage Bar (No. 12301). IZA Institute of Labor Economics. Retrieved August 8, 2022, from https://www. econstor.eu/bitstream/10419/196799/1/dp12301.pdf Mulder, V., & Bol, R. (2020, June 10). Institutioneel racisme in Nederland: wat het is, waar het zit, en wat jij eraan kunt doen. De Correspondent. Retrieved March 12, 2022, from https://decorrespondent.nl/11317/institutioneel-­racisme-­in-­nederland-­wat-­het-­is-­waar-­het-­zit-­ en-­wat-­jij-­eraan-­kunt-­doen/464087536-­47232adb Nationaal Historisch Museum. (2021, March 15). Vrouwen tot 1956 handelingsonbekwaam: ‘Wet handelingsonbekwaamheid’. Historiek. Retrieved December 21, 2021, from https://historiek. net/vrouwen-­tot-­1956-­handelingsonbekwaam/15127/ Nduwanje, O. (2020, Januari 29). Wie bepaalt wie zich vrouw mag noemen? One World. Retrieved December 21, 2021, from https://www.oneworld.nl/lezen/opinie/ wie-­bepaalt-­wie-­zich-­vrouw-­mag-­noemen/ NOS Nieuws. (2022, April 23). ABN Amro maakt excuses voor slavernijverleden. NOS. https://nos.nl/artikel/2425008-­abn-­amro-­maakt-­excuses-­voor-­slavernijverleden Rawls, J. (1999). A theory of justice (Rev. ed.). Harvard University Press. Rights groups take police racial profiling case to top French court. (2021, July 22). France 24. Retrieved August 8, 2022, from https://www.france24.com/en/ france/20210722-­rights-­groups-­take-­police-­racial-­profiling-­case-­to-­top-­french-­court Roemer, J. E. (1998). Equality of opportunity. Cambridge University Press. Roemer, J.  E. (2003). Defending equality of opportunity. The Monist, 86(2), 261–282. https://www.jstor.org/stable/27903820 Ruíz, E. (2017). Framing intersectionality. In L.  Alcoff, L.  Anderson, & P.  Taylor (Eds.), The Routledge companion to the philosophy of race (pp. 335–348). Routledge. Sandel, M. J. (2020). The Tyranny of merit: What’s become of the common good? Farrar, Straus and Giroux. Soudagar, R. (2021, May 25). Dit zijn de George Floyds van Nederland. One World. Retrieved March 12, 2022, from https://www.oneworld.nl/lezen/discriminatie/racisme/ dit-­zijn-­de-­george-­floyds-­van-­nederland/ Srinivasan, A. (2021). The right to sex. Feminism in the twenty-first century. Bloomsburry Publishing. Tesla. (2021). Impact Report 2021. https://www.tesla.com/ns_videos/2021-­tesla-­impact-­report.pdf The Civil Rights Movement in America. (n.d.). BBC. Retrieved December 21, 2021, from https://www.bbc.co.uk/bitesize/guides/zcpcwmn/revision/1 Van den Brakel, M. (2020, December 10). Neemt het loonverschil tussen mannen en vrouwen af? Emancipatiemonitor 2020. Retrieved December 21, 2021, from https://digitaal.scp.nl/ emancipatiemonitor2020/neemt-­het-­loonverschil-­tussen-­mannen-­en-­vrouwen-­af Van den Breemer, A., & Frijters, S. (2019, November 19). De loonkloof: waarom vrouwen nog steeds minder verdienen dan mannen. De Volkskrant. Retrieved December 21, 2021, from https://www.volkskrant.nl/kijkverder/v/2019/de-­loonkloof-­waarom-­vrouwen-­nog-­steeds-­ minder-­verdienen-­dan-­mannen/ Young, I. M. (1988). Five faces of oppression. Philosophical Forum, 19(4), 270–290.

Chapter 10

Privacy and Surveillance Roos Slegers

Abstract  Living in the digital world, we have little choice but to share our personal data with big tech companies. These companies use our data to direct our attention so that they can make money from advertising. In a so-called surveillance society, we stand in an asymmetrical power relationship to these companies (and sometimes governments) and have little to no control over what happens to our data. Our dependence on these asymmetrical relationships is increasing as “big tech” uses the information it gathers about us to cater to our personal habits and desires. Questions 1 . Why is privacy an issue in the context of business ethics? 2. What is surveillance capitalism? 3. Why does the asymmetry between companies (especially tech companies) and their customers give rise to moral issues?

10.1 Introduction Case 10.1 In 2019, Google announced that its Street View service had amassed a visual database that covered more than 16 million kilometers. Meanwhile Google Earth, a platform that enables users to view satellite images, achieved coverage of 93 million square kilometers (Nieva, 2019). The information from Street View and Google Earth combined means that by 2019, Google had compiled images of 98% of the places where people live. (continued) R. Slegers (*) Department of Philosophy, Tilburg University, Tilburg, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_10

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Case 10.1 (continued) Launched in 2007, Street View is one of Google’s older services and tends not to feature in current discussions about privacy, which focus primarily on social media. Because it is embedded in Google Maps, Street View mainly appears to be an extension of a useful and traditional analog resource: the map. After all, it provides answers to very practical questions such as is the route I plan to take suitable for walking or cycling? Or where is the exact location of the entrance to the parking garage on that busy street? But Street View also enables you to take a look at the house where you grew up and where other people now live. Or to check out your ex’s apartment, where Street View shows the same car still parked outside the door. The license plate is rendered unreadable by Google’s “cutting-edge face and license plate blurring technology” (Google, no date) but you can still recognize the model and the color. Take a look at your own home and you can just make out a human form through the window – could that be you? No… looking at the neighbor’s garden across the street, you conclude it can’t be you: the lawn shown in Street View had been replaced by gravel by the time you moved in. In other words, Street View is both extremely useful and sometimes unexpectedly personal. Soon after Street View was introduced in 2007, Google came under fire. It turned out that Google’s camera cars had snapped unsuspecting members of the public sunbathing, coming out of sex shops, protesting outside abortion clinics and in many other potentially compromising situations (MacDonald, 2007). The plot thickened when, in 2010, it was revealed that Google’s cars not only captured photo and video images, but also picked up data from Wi-Fi networks (EPIC, n.d.). As they drove around, these vehicles were collecting everything from email addresses and passwords to documents and websites that people were looking at (BBC, 2013; Palmer & Barber, 2010).

Today, Google has ceased these activities and its website details everything the company is doing to respect and protect privacy, not least the face-blurring technology mentioned above. Following numerous lawsuits, Google has introduced changes that make it easier for users to protect their privacy: for instance, now you can let Google know that you want the image of your own house and driveway to be blurry. Having the image removed altogether is not an option. If Google approves your request, then someone typing in your address will no longer be able to see what kind of vehicle was parked outside your front door when the Street View car passed by, or if there were plants in the windows. The devil, of course, is in the detail – or in this case, the phrase “if Google approves your request”. Why should it be up to Google to decide whether an image of your home, your car or even you personally (albeit with your facial features obscured) is on public view? The themes addressed in Case 10.1 not only concern Google Street View, but also other products and services offered by big tech companies, most notably

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Google, Apple, Facebook, Amazon and Microsoft. But precisely because most people have long since stopped bothering about Street View, this service offers an interesting way into the debate about the influence that big tech companies have on our lives. In this chapter, we will first discuss the themes of consent and asymmetry (Sect. 10.2). Wherever you go online, you are constantly being asked to click whether you agree or disagree with certain conditions. But in many cases it is far from clear what exactly you are consenting to. That’s because, as users, we are in an asymmetrical relationship with the major internet companies. Not only do those companies have far more resources – most notably financial resources – than individual users, but they also have far more information. Some of this information stems from the data that is available to these companies (and sometimes governments): data about our behavior, online and offline (insofar as that distinction can still be made). A further consequence of this asymmetrical relationship is that we are becoming increasingly dependent on the products and services offered by these big companies in order to live our lives: to attend college online, you have to install Zoom; to attract customers as a business, you have to use social media. But the more we use these products and services, the more information big companies (and governments) have about our personal lives. And that means we have less and less privacy. In Sect. 10.3, we will explore what privacy is and why we care or should care about it. We will then turn to the big tech companies’ revenue model, which is based on holding and focusing our attention (Sect. 10.4). We conclude the chapter with a brief discussion of the surveillance society (Sect. 10.5).

10.2 Consent and Asymmetry It is important to consider the strategy employed by Google when it set up Street View. Google did not ask anyone for permission but simply started capturing and compiling images of public space. This strategy appears to be typical of Silicon Valley startups: ask for forgiveness, not permission (Sherman, 2010). Just go ahead and do it, and then see if and where any resistance appears. Google had used this method before: in 2002 it began scanning books with a view to making them available digitally, without asking permission from authors and publishers. Google has a database of 25 million scanned books, but a protracted series of lawsuits has meant that they cannot (or cannot yet) be read by the public online (Howard, 2017). In the court cases about Street View, however, Google’s opponents met with less success: no copyright laws apply to the meadows on either side of a deserted road in Bulgaria, for example, or to the front of your house. This touches on one of the central problems that all attempts to regulate the tech industry encounter: existing laws are often insufficiently applicable to new technological developments (Zuboff, 2019). New legislation tends to lag behind the pace of change. Google Street View was already online before the question arose: is it actually permissible to

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photograph everything from the street and display it to anyone with an internet connection? Apparently so: Google has had to make some adjustments here and there and pay the odd hefty fine, but Street View remains available and these days it is more comprehensive and detailed than ever. In addition, habituation clearly plays a role: the fuss that surrounded Google’s camera cars stealing data back in 2010 or thereabouts has long since been overshadowed by more recent social media scandals. Street View now strikes us as being relatively harmless, though it is still worth asking whether that view is justified. Economist Shoshana Zuboff argues that Google’s strategy, summarized above as “ask for forgiveness, not permission”, is analogous to the modus operandi of colonial powers in the past. Zuboff observes that Columbus simply proclaimed that the Caribbean islands on which he landed belonged to the Spanish monarchy and the Pope, completely bypassing the rights of anyone already living there – to say nothing of the question of whether you can (or should want to) “own” land in the first place (Naughton, 2019). She points out that Google has appropriated the internet in similar ways: first by making all websites the domain of its search engines, and then by collecting and selling users’ data (Zuboff, 2019). Against this backdrop, it becomes clear that the contracts we enter into every day by clicking our consent to user agreements, cookies and tracking statements etc. are in fact little more than window-dressing. We are already largely dependent on technologies that can only exist because they have already taken possession of much of our human experience. You could ask whether this is necessarily a bad thing. After all, isn’t it the fact that big tech companies have collected so much information about us that enables them to offer services that make our lives so much easier? By making an analogy with the colonial past, however, Zuboff wants to make it clear that our relationship with the big tech companies is far from symmetrical and reciprocal. The fact that we have not (or have not yet) sufficiently adapted legislation to prohibit data collection does not mean that data collection is unproblematic. We will discuss this further in Sect. 10.3. Under pressure from a host of lawsuits, Google has since made it easier to request a blurry view of your own home on Street View. This, of course, benefits our privacy. But it is important to note the power dynamics at play here: you don’t get to decide whether your request is granted, Google does. And it remains an opt-out system: unless you actively object, Google will simply go ahead and display your house on Street View anyway. It is likely that Google will grant anonymization requests in the vast majority of cases, but that’s not the point. The point is that Google has appropriated something without first asking permission. It’s only because we are now so used to this state of affairs that Google appears to be doing us a favor by removing images that have been made publicly available without permission. At this stage, it is worth expanding on the term “asymmetry”, which has featured a number of times in our discussion so far. We have already noted that our relationship with Google (and all other major tech companies) is asymmetrical in at least two respects: Google has far greater financial resources (making it unrealistic, for example, for an individual to file a lawsuit against Google); and Google has far more information at its disposal than any user of its services. This amounts to an

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asymmetry in the balance of power between Google and its users. In theory, both Google and an individual user have the status of a “legal person”, making their relationship symmetrical. But in practice the resources available to companies such as Google, Facebook, Amazon, Microsoft and Apple give them the upper hand. In itself, this asymmetry is nothing new. Long before the internet existed, there were asymmetrical relationships between major companies and organizations on the one hand and individuals on the other. But the current asymmetry between big tech and individual internet users goes further still: not only do these companies have far more resources and more information about you than you have about them, but you don’t even know exactly what they know about you and what they can do with this information. Authors such as Shoshana Zuboff (2019) and Carissa Veliz (2021) remind us that it is naive to think that profit-oriented companies would not violate our privacy. After all, they obtained this information without asking permission in the first place (think back to the analogy with the colonial powers). But what form does this threat to our privacy take?

10.3 Privacy The term privacy as we know it today originated in the United States in the late nineteenth century. It was then described as the right to be let alone (Warren & Brandeis, 1890). The United Nations later built on this principle. Article 17 of the UN International Covenant on Civil and Political Rights (1966) states: 1. No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honor and reputation; 2. Everyone has the right to the protection of the law against such interference or attacks. Privacy has to do with a person’s private life as well as their personal data and the shielding of both from surveillance and influence. You have probably already grasped what makes it so difficult to enforce privacy laws in this day and age: most of us don’t know (or at least are not sure) who has our personal data, let alone how it is being used and for what purposes. In addition, terms such as “interference”, “surveillance” and “influence” have partly taken on new meaning with the advent of social media and other technological developments. As you swipe on TikTok, you communicate whether or not you like something and this enables TikTok to quickly amass a sizeable store of information about your preferences and interests. Precisely because the videos the platform shows you are so well matched to your preferences, you are more likely to believe any disinformation presented to you in this context: you are less critical when you feel at ease. In other words, we are very vulnerable and easily influenced, especially in those online contexts where we feel understood and acknowledged. Combined with the insight that the primary source of income

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for online companies is selling advertising (see Sect. 10.4), this clearly makes terms such as “interference” and “influence” highly relevant – even if it is not always clear where a line has been crossed from a legal perspective. In a section headed “The Importance of Privacy” on the Dutch Data Protection Authority’s website, privacy is also described as a precondition for being free in who you are and what you do. Privacy is about people retaining control of their data. It gives the example that one embarrassing photo taken of you as a drunk teenager should not be allowed to determine your future (Dutch Data Protection Authority, n.d.). The DPA is responsible for enforcing the General Data Protection Regulation in the Netherlands. The GDPR is a comprehensive data protection law implemented in the European Union. The primary goal of the GDPR is to protect the personal data of individuals residing in the EU by imposing certain obligations on organizations that collect, process, and store personal data. The GDPR is the toughest privacy and security law in the world (General Data Protection Regulation, 2018). In this chapter, we will limit our discussion of privacy to personal data, although the UN definition above is considerably broader. But the connection with freedom is clear: if you cannot shield yourself from surveillance and/or have no control over who knows what about you, then this has an impact on your freedom. This is not simply about your future career (which might be unduly affected by a photo like the one in the DPA example above) but also about your personal relationships and your autonomy as a citizen of a democratic state. In your closest relationships and most intimate friendships, you show yourself as you are, and this has nothing to do with the outside world. The freedom you experience with the people closest to you requires that you feel safe and are not exposed to the scrutiny of outsiders. And when you vote in an election, you do so in a booth where others cannot see or influence you. Being shielded from the outside world in this way is a prerequisite for making choices that are really and truly your own. A common response to the narrative about big tech and privacy outlined above goes something like: “Why should I care? I have nothing to hide.” This is also the defense that Eric Schmidt initially used during his time as Google CEO to counter objections made by privacy activists: If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place, but if you really need that kind of privacy, the reality is that search engines including Google do retain this information for some time … It is possible that that information could be made available to the authorities. (Schmidt, as cited in Newman, 2009).

But of course, whether or not you have something to hide depends on all sorts of societal, social and personal factors. And your situation can easily and quickly change as a result of developments beyond your control. Recent legislative changes in the United States provide a good example of this: in many parts of the country, abortion is now against the law, whereas before it was perfectly legal. Something that used to be legally possible is now a punishable offense. You used to be able to speak openly about abortion but for any number of reasons  – both personal and legal – many people may now want to shield their views from outside interference.

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Another example can be seen in Case 10.1, which describes a situation in which your ex can view your home or workplace online. Why would that matter to you? Perhaps you’ve had problems with a stalker before, and the idea that a more recent photo of your driveway could be put online at any moment might make you feel unsafe. But even if you have never been stalked and do not have a vindictive ex, you may still have good reasons to shield information that is personal to you: perhaps you are just someone who is fond of their privacy. For the same reason, you may not want images of you to appear online, regardless of the good intentions with which they were posted. However, in today’s internet culture – brought about in part by Google – you are forced to defend your need for privacy because so many of us have become so used to sharing very personal information. As a result, privacy is increasingly being regarded as a kind of luxury rather than a fundamental right (Veliz, 2021).

10.4 A Revenue Model Based on Attention Issues of consent and privacy arise with almost all internet services and products which are seen as being freely available. That is because these services are not actually free at all. Long before the internet as we know it today existed, there was the saying: if you are not paying for a product, then you probably are the product (Serra, 1980). While this may be an oversimplification, the message is clear: these are for-­profit organizations and so they must be making money from something other than the ostensibly free service they offer their users. In most cases, the true customers are the advertisers: they pay Google, Facebook and other tech companies to bring their ads to our attention, as the users of free services. And because, for example, Meta (Facebook’s parent company) has so much information on you (based on your likes, the number of seconds you spend looking at a particular Instagram post, the time of day you open WhatsApp, etc.), it is very good at estimating which ads will strike a chord with you. This is worth a lot of money to advertisers and in turn makes Meta extra motivated to obtain more information about you, something it can only succeed in doing by keeping your attention focused on one of its sites or apps for as long as possible (Wu, 2017). This revenue model means it is more important for Meta to generate profit by holding your attention than by presenting you with nuanced views and enlightening analysis, for example. Research clearly shows that “clickbait” and sensational reports (no matter how inaccurate or unsubstantiated) attract far more attention than reporting that applies the journalistic principle of presenting both sides of an argument (Dizikes, 2018; Veliz, 2021). Google is about generating clicks, not about pursuit of the truth (O’Neil, 2016). Is the situation really as bad as Zuboff and other researchers claim? We all have a tendency to see ourselves as an exception and like to believe that we can use Google Search and other internet services the same way we use other instruments: while maintaining a measure of independence and objectivity. One of the main things about using an instrument is that you, the user, are in control and free to put

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the instrument aside, exchange it for another instrument and so on. However, the smart technologies behind the Google search engine, TikTok and Instagram feeds are anything but neutral. As you use them, they get to know you. If you and a close friend  – someone with whom you have a lot in common  – enter the exact same query on Google Search, you will get partially different hits based on your IP address and all the data Google has come to associate with your profile through time. This means that the service you get is personalized: the search results are tailored to your needs and habits, something we experience as convenient, easy and familiar (Zuboff, 2015). But compare this scenario to a Wikipedia search: every user who searches using the same string will get the same results, and the individual pages look exactly the same, no matter who opens them (Orlowski, 2020). The comparison between for-profits such as Meta, Amazon and Google and not-­ for-­profits such as Wikipedia once again exposes the asymmetrical relationship between the user and big tech companies. As we use their services, these companies are particularly adept at holding our attention and are also becoming increasingly able to steer our attention in a particular direction. Someone sensitive to conspiracy theories is presented with more of the same on YouTube, for example, and will be confirmed in their assumptions again and again. Facebook whistleblower Frances Haugen has shown that young women in particular are presented with posts on Instagram which negatively impact their body image and can lead to anorexia and mental health issues. Many people use social media as their primary source of news but the content of their news feed is driven by their preferences and not by the standards of objective journalism (Orlowski, 2020). This shapes the nature and tone of public debate and fuels polarization (Zuboff, 2019; see also: Veliz, 2021). The revenue model that the big tech companies use to hold and focus our attention has consequences for both users themselves and society as a whole. We will conclude this chapter by returning briefly to some of the themes already discussed and examining them in a new framework: that of the surveillance society and surveillance capitalism.

10.5 Surveillance Capitalism Our society is sometimes referred to as a surveillance society, emphasizing the increasing levels of control that apply to our daily lives. This debate often highlights the situation in China, where the government has installed millions of cameras to monitor the comings and goings of people on the streets and in public places. This allows the authorities to monitor compliance with traffic regulations, but because the system is equipped with facial recognition technology, it can also be used to pinpoint an individual’s location at any given time. Chinese citizens do not know (or do not know exactly) what data the government has at its disposal and what happens to that data. This puts each citizen in an asymmetrical relationship with the government, in terms of both information and power.

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The increasingly urgent calls for the regulation of major tech companies also have everything to do with this power asymmetry. Google and the Chinese government are hardly comparable as organizations, yet there are parallels in the relationships between these organizations and the individual. Who has access to the information gathered by surveillance and who determines what happens to that information? The situation of a Google user in Europe is not the same as that of a Chinese citizen, but the similarities between the two can help us see how the moral problems caused by surveillance can take very different forms. The term surveillance capitalism is sometimes used to describe the economic system that is driven by the collection and commercial exchange of an individual’s data, related data and metadata (Zuboff, 2015, 2019). Defenders of this shift toward a big-data economy often use language which suggests that the technological developments underlying the shift are inevitable (Zuboff, 2019). In a metaphor borrowed from the old story, once the genie is out of the bottle it can never be put back in (see Orlowski, 2020). The suggestion is that technological advancement is simply a natural progression and while the ways in which technology is deployed may be regulated, the advance itself cannot be substantially changed. This perspective puts us at the mercy of the tools we have developed and insists that we have already lost control – a bit like in the movie The Matrix. It is important to note that some individuals and companies clearly stand to benefit from this narrative: if movement toward increasing surveillance is inevitable, then we can only resign ourselves to the fact that our privacy is slowly disappearing. But is it true that these developments are inevitable, with all the asymmetrical power relations that they entail? The critics of the genie-out-of-the-bottle rhetoric – who include many former big tech developers – argue otherwise (Zuboff, 2019; see also: Veliz, 2021). However, due to the vast sums of money involved in big tech (which dwarf any fines that might be imposed as a result of lawsuits), it is worth asking whether the major players are sufficiently motivated to deploy their tools in ways that protect user privacy and rectify power imbalances.

10.6 Conclusion In this chapter, we have discussed how living in the digital world means that we are more or less forced to share our personal data with major tech companies. These companies use our data to grab and hold our attention so that they can make money from advertising. In a surveillance society, we are in an asymmetrical power relationship with these companies (and sometimes governments) and this gives us little to no control over what happens to our data. Our dependence on these asymmetrical relationships is increasing as “big tech” uses the information it gathers about us to cater to our personal – sometimes very personal – habits and desires.

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References Dizikes, P. (2018, March 8). On Twitter, false news travels faster than true stories. MIT News. Retrieved April 8, 2022, from https://news.mit.edu/2018/study-­twitter-­false-­news-­ travels-­faster-­true-­stories-­0308 General Data Protection Regulation. (2018). Retrieved May 11, 2023, from https://gdpr.eu/ tag/gdpr/ Google faces Streetview wi-fi snooping action. (2013, September 13). BBC. Retrieved April 8, 2022, from https://www.bbc.com/news/technology-­24047235 Howard, J. (2017, August 10). What happened to Google’s effort to scan millions of university library books? EdSurge. Retrieved April 8, 2022, from https://www.edsurge.com/news/2017-­08-­10-­ what-­happened-­to-­google-­s-­effort-­to-­scan-­millions-­of-­university-­library-­books International Covenant on Civil and Political Rights, New York, 16-12-1966. (1966). Overheid.nl. RetrievedApril 8, 2022, from https://wetten.overheid.nl/BWBV0001017/1979-­03-­11#Verdrag_2 Investigations of Google Street View. (n.d.). EPIC. Retrieved April 8, 2022, from https://epic.org/ documents/investigations-­of-­google-­street-­view/ MacDonald, C. (2007, June 4). Google’s Street View site raises alarm over privacy. The Herald. Retrieved April 8, 2022, from https://www.heraldscotland.com/default_content/12778601. googles-­street-­view-­site-­raises-­alarm-­privacy/ Naughton, J. (2019, January 20). ‘The goal is to automate us’: Welcome to the age of surveillance capitalism. The Guardian. Retrieved April 8, 2022, from https://www.theguardian.com/ technology/2019/jan/20/shoshana-­zuboff-­age-­of-­surveillance-­capitalism-­google-­facebook Newman, J. (2009, December 11). Google’s Schmidt Roasted for Privacy Comments. PCWorld. Retrieved April 8, 2022, from http://www.pcworld.com/article/184446/googles_schmidt_ roasted_for_privacy_comments.html Nieva, R. (2019, December 13). Google Maps has now photographed 10 million miles in Street View. CNet. Retrieved April 8, 2022, from https://www.cnet.com/tech/tech-­industry/google-­maps-­ has-­now-­photographed-­10-­million-­miles-­in-­street-­view/#:~:text=On%20Friday%2C%20 Google%20revealed%20how,Earth%20more%20than%20400%20times.&text=Since%20 2007%2C%20Google%20has%20expanded%20its%20Street%20View%20coverage O’Neil, C. (2016). Weapons of math destruction: How big data increases inequality and threatens democracy. Crown Publishing Group. Orlowski, J. (Director). (2020). The social dilemma [Film]. Exposure Labs, Argent Pictures, Agent Pictures, The Space Program. Palmer, M., & Barber, L. (2010, June 4). Google to hand over intercepted data. Financial Times. Retrieved April 8, 2022, from https://www.ft.com/content/db664044-­6f43-­11df-­9f43-­ 00144feabdc0 Serra, R. (1980). Richard Serra: Interviews 1970–1980. Archer Fields Press. Sherman, E. (2010, March 12). Google struggles with its ‘Do first, ask for forgiveness later’ strategy. CBS News. Retrieved April 8, 2022, from https://www.cbsnews.com/news/ google-­struggles-­with-­its-­do-­first-­ask-­forgiveness-­later-­strategy/ Veliz, C. (2021). Privacy is power. Why and how you should take Back control of your data. Transworld Publishers Ltd. Waarom is privacy belangrijk? (n.d.). Dutch Data Protection Authority. Retrieved April 8, 2022, from https://autoriteitpersoonsgegevens.nl/nl/over-­privacy/waarom-­is-­privacy-­belangrijk Warren, S. D., & Brandeis, L. D. (1890). The right to privacy. Harvard Law Review, 4(5), 193–220. https://doi.org/10.2307/1321160 Wu, T. (2017). The attention merchants: The epic scramble to get inside our heads. Vintage. Zuboff, S. (2015). Big other: Surveillance capitalism and the prospects of an information civilization. Journal of Information Technology, 30(1), 75–89. https://doi.org/10.1057/jit.2015.5 Zuboff, S. (2019). The age of surveillance capitalism: The fight for a human future at the new frontier of power. Profile Books.

Chapter 11

Sustainability and Environment Thomas Decreus

Abstract Today, no (premium brand) business-to-consumer company dares to claim that it is not sustainable. However, this has caused the term “sustainability” to become somewhat eroded. Therefore, it is relevant to re-examine what sustainability exactly means and what it implies. In this article, we will begin by defining sustainability, after which we will examine its ethical and philosophical implications. We will explore the importance of the intrinsic value of nature and the relationship between justice and sustainability. We will claim that sustainability presupposes a unique type of justice, which includes an obligation to future generations. Additionally, a more comprehensive definition of sustainability must consider how ecological costs and benefits distributed. Questions 1 . What is sustainability? 2. What is lacking in the common view of sustainability? 3. What specific ethical challenges does sustainability confront us with?

11.1 Introduction

Case 11.1 Barely a few kilometers from the center of Antwerp is a site of the American chemical company 3M. Until recently, the plant manufactured semi-finished products such as adhesives and rubbers. During many years, the company (continued) T. Decreus (*) Department of Philosophy, Tilburg University, Tilburg, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_11

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Case 11.1 (continued) released the chemical substances PFOS and PFAS that resulted from their production processes into the Scheldt River. PFOS and PFAS are groups of chemicals known as “forever chemicals”: they do not break down and therefore remain present in the environment. As a result, they inevitably end up in the bodies of animals and humans. Studies show that fish in the Scheldt and residents around the plant have excessively high concentrations of PFAS and PFOS in their blood. Despite longstanding scientific evidence of the detrimental health effects of PFAS and PFOS, 3M continued production in Antwerp for as long as possible. Only after a series of international scandals did the company halt the production of PFOS at the Antwerp site in 2000. Under pressure from activist groups and after intervention by the Flemish government, 3M decided to also terminate PFAS production in 2021. 3M itself, however, continues to claim there is no conclusive scientific evidence for negative health effects of both PFAS and PFOS and is working to reverse the government’s decision (Lefevere, 2021) Unfortunately, the behavior of a company like 3M is not a rarity. When companies are confronted with scientific evidence of harmful effects of their production process or their products by individual citizens, environmental organizations or governments, they often cast doubt on the claimed harmfulness. Tobacco companies, for example, spent decades trying to show that tobacco products were by no means as unhealthy as scientists claimed or that more research was needed to prove effective harmfulness. A similar story can be told about the fossil fuel industry. As early as the 1970s, there was solid evidence that emissions of substances such as carbon dioxide were contributing to global warming and climate change. But those indications were minimized, doubt was cast on the research findings, and further research projects were no longer funded (Bell, 2021). Not only do companies try to sow doubt about the ecological harmfulness of their activities, they also often deliberately project a greener image of themselves than they can actually live up to. This practice is called greenwashing: companies continue their unhealthy and polluting activities while trying to project a green image by presenting themselves as sustainable. For example, anyone consulting 3M’s official website sees a picture of a bright green frog on a leaf with the slogan next to it: “Investing in a more sustainable world”. A little further on, we read that 3M invests in “initiatives that promote sustainable communities. This includes projects that protect threatened ecosystems, support local economies, improve livelihoods and promote science-based environmental education” (3M (b), s.d.). Anyone who opens the websites of major oil companies will find similar messages. On Shell’s website, for instance, we read that the company is committed to moving to zero CO2 emissions by 2050, thereby respecting the 2015 Paris International Climate Agreement. But at the same time, the company is keeping the doors open to continue increasing fossil fuel sales at least until 2030 (ClientEarth, 2022). In the short term, this will change little to nothing in terms of emissions, while climate scientists emphasize the fact that the next 10 years are crucial for reducing emissions (Watts, 2018).

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Today, no Western business-to-consumer company dares to openly claim that they are not sustainable. All large companies are investing, with or without sincere intentions, in sustainability. There is a growing focus on ecology and sustainability at all levels of society and in all institutions. But at the same time, we see that ecological crises continue to grow in severity and magnitude. For instance, despite the great attention to the climate problem, greenhouse gas emissions have continued to rise dramatically in recent years. The year 2021 was an all-time record in terms of emissions (IEA, 2021). But the continuing increase in emissions is not the only problem. Other, perhaps less visible ecological crises are also taking place: chemical pollution  – such as with forever chemicals  – continues to increase, as does deforestation, dramatic loss of biodiversity, loss of wilderness, and ocean acidification. When virtually all companies are branding themselves as sustainable and ecological crises continue to pile up, something seems to be wrong with the very definition of sustainability. Accordingly, we need to properly define the concept of sustainability. The question that arises is what we can or should mean by sustainability and how we can distinguish sustainability from greenwashing. What does it really mean today to be sustainable as a company? To this end, in the remainder of this chapter, we examine the concept of sustainability in more detail. We will consider the historical origins of the concept of sustainability and its common, dominant interpretation. We will then focus on what may be lacking in the prevailing interpretation of sustainability and what philosophical and ethical questions the concept of sustainability raises further. The concept of sustainability has an important ethical dimension. Neglecting that ethical dimension can lead to forms of intended or unintended greenwashing.

11.2 What Is Sustainability? To understand a concept, it can be helpful to explore its origins. The term “sustainability” was first used in the early eighteenth century when there was a high demand for wood for shipbuilding in Europe. Scholars at the time feared that the demand for wood exceeded the available supply. Hans Carl Von Carlowitz argued in his book Sylvicultura Oeconomica (1713) that what was needed was a “nachhaltende Nutzung” – a sustainable use of wood. Sustainability, in this context, means that no more of a renewable resource should be used than can be replenished in the long run. It refers to a concern for the conditions that allow an economic activity to be sustained, which involves a broader view beyond the present moment. This perspective shifts from a short-term outlook to a long term one in which profit maximization must be balanced against other factors. The original meaning of sustainability still resonates in contemporary interpretations of the concept. One of the most commonly cited definitions of sustainability today is from Our Common Future, the 1987 report of the World Commission on Environment and Development. It defines sustainability as “development that meets

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the needs of the present without compromising the ability of future generations to meet their own needs.” This definition highlights a tension between two poles. On one hand, it emphasizes economic development, while on the other, it stresses the need to control, organize, or even slow down economic development to continue meeting the needs of present and future generations. Therefore, sustainability always involves trade-offs between different ethical and economic considerations. As we will see, the economic considerations involved cannot be isolated from broader ethical concerns.

11.2.1 The Three Legged Stool Model The mix of ethical, economic, and environmental concerns tied together in the concept of sustainability is often linked to the normative idea of a triple bottom line within a business ethics context. The triple bottom line implies that companies cannot only focus on profit maximization but also account for their social and environmental impact. This is sometimes summarized by the slogan ‘people, planet, profit’. In sustainability studies, scholars also propose to talk about a three-legged stool model of sustainability. From this conception, sustainability is about balancing three “legs,” namely, an ecological, social, and economic leg. For example, a sustainable company can be expected to develop a production and distribution process that causes as little ecological damage as possible, be mindful of aspects of social justice, and develop some form of economic stability.

11.3 A Critical Evaluation of the Common Interpretation Although widely accepted, the triple bottom line interpretation of sustainability is subject to criticism (Dawe & Kenneth, 2003: 1458–1460). Critics claim that assigning ecological sustainability the same weight as social and economic sustainability actually disregards the importance of ecological sustainability. Ecological sustainability should not be considered merely a leg of the chair, they claim, but the floor on which the chair stands. Ecology is not an area that exists outside of humans, something we may or may not care about, but the basis of human existence. Serious ecological disruption makes social well-being and economics impossible. Another recurring criticism of the standard interpretation of sustainability is that it is anthropocentric  – it puts the interests of humans at the center  – and instrumentalist – it limits the value of nature to what nature yields. It conceptualizes ecosystems, species, and resources as mere resources for human use. They are respected only to the extent that humans need them to continue their activities. This view therefore cannot do justice to the idea that nature itself may have intrinsic value.

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In this regard, philosopher Arne Naess distinguishes between shallow ecology and deep ecology (Naess, 2005: 7–12). Shallow ecology is an ecological approach in which ecology is merely put at the service of maintaining a human activity. A more conscious management of resources, ecosystems and species is then merely a tool to maintain a status quo. Naess advocates instead for a deep ecology; an approach that assumes that nature has a value in itself, independent of its usefulness to humans. Naess is part of a tradition in environmental philosophy and ethics that favors a distinctly holistic approach. Such approaches see humans as part of a larger ecological whole. While more holistic approaches help broaden ethical engagement to the nonhuman, they can also entail a narrowing of that ethical engagement. Excessive holism and ecocentrism can result in a view that discounts the value of individuals, and sacrifice individuals for the benefit of the whole. Nevertheless, it is clear that a more ambitious, contemporary interpretation of sustainability will have to move away from an overly one-sided anthropocentrism and a purely instrumentalist view of nature. An effective form of sustainability can only be achieved when we value nature appropriately.

11.3.1 Sustainability and Justice Another criticism of the common definition of sustainability is that its vague wording provides insufficient guidance for an important ethical issue: justice between generations. The most current and influential definition of sustainability, quoted above, clearly states that sustainability is concerned with meeting the needs of both current and future generations. Determining what those needs are and how they can be met is a social and ethical question. Unfortunately, the common definition does not provide a clear answer. The inextricable link between sustainability (or lack thereof) and justice is demonstrated by the example of 3M. It was clear that 3Mplaced little or no value on the intrinsic worth of nature and the environment surrounding its site. This resulted in outcomes that were clearly unjust. First, there is the harm that 3M causes to its employees and neighbors. Home values decline due to contaminated gardens, local farmers can no longer sell their products, and both 3M employees and residents face serious health risks. What is unjust is that people suffer unintended harm in the form of financial costs and exposure to health risks. Furthermore, these risks were denied or minimized for years by 3M. Secondly, 3M’s behavior also puts future generations at risk. The chemicals that have entered the environment will remain there for centuries, threatening to spread further due to their non-biodegradable character. In this way, the needs of future generations, such as the need for a good and healthy life, are seriously undermined. This is also a form of injustice since future generations are burdened with damage for which they cannot be held responsible.

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The pursuit of sustainability is intrinsically linked to ethical questions of justice. This applies not only to the specific issue of chemical pollution, but also to broader issues such as climate change and greenhouse gas emissions. Also in these cases, ethical questions arise about how the burdens and benefits should be shared. For instance, according to some estimates, two-thirds of global greenhouse gas emissions are attributable to just 100 companies (Griffin, 2017), which means they bear significant responsibility for the unevenly distributed damages that current and future generations will experience. The question, therefore, is not only how to decrease emissions, but also how to distribute and compensate the burdens and benefits of both past and present emissions.

11.4 Questions Concerning Compensation for Damages Sustainability is inextricably linked to the question of responsibility; in particular responsibility for the damages incurred. Who should pay for what? What can be considered fair? Evidently, the polluters bear some responsibility. This also aligns with the widely accepted principle that the polluter should pay for the cost of the pollution. This is called the Polluter Pays Principle. However, it would be too simplistic to shift all (financial) responsibility onto the producer. The consumer also bears a responsibility. For example, I, as a consumer, contribute to the spread of forever chemicals in the environment by purchasing products from 3M.  The responsibility of the consumer is, of course, less and different in nature than that of the polluting producer; nevertheless, it is still a responsibility. This leads us to another important principle, namely the principle which states that those who benefit from polluting activities should also contribute to compensating for those activities. This is called the Benficiary Pays Principle. While reasonable, a fundamental difficulty immediately arises: how do you determine who exactly the beneficiary is? Does it apply to everyone who consumes products containing raw materials from 3M, for example? What about people who are not aware – or cannot be aware – that they are using such products? Or what do we do, for example, with the use of fossil fuels? Fossil fuels are used by everyone directly or indirectly, often beyond the control of those involved. In short, who the beneficiary is and who bears what responsibility depends on the criteria we use to determine what it means to enjoy benefits. It is not possible to reach full and final conclusions here, rather the lesson should be that considerations are complex and must be thoroughly thought through. Finally, we must consider the extent to which both polluter and beneficiary have the ability to actually compensate for the polluting activities. This we can call the Ability to Pay Principle. The Ability To Pay Principle starts from the assumption that the actor who can compensate the most should do so. This is not necessarily the actor who bears the greatest responsibility for the pollution. A fair distribution of burdens and benefits cannot be based purely on an ability-to-pay principle, but it is a principle that can play a corrective role in a global discussion on the distribution

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of burdens and lusts, for example when it comes to the contributions of rich and poor countries.

11.4.1 Strong and Weak Sustainability An important, additional question that arises regarding (financial) responsibility and compensation for environmental damage is whether and in what way the damage can be compensated by companies at all. In a regular case of material damage – think of causing a traffic accident resulting in purely material damage – compensation can be provided by a financial amount that covers the necessary repairs. This is essentially a purely material and financial exchange. However, the situation is different when it comes to ecological damage. Ecological damage does not equal mere material damage (see the discussion on immaterial consequences in Chap. 4). When areas become uninhabitable due to drought, specific collective lifestyles, cultures and histories are erased. This cannot be resolved through financial compensation. What is lost is unique and therefore very difficult to actually compensate for. This is particularly true when we move away from an anthropocentric view and also acknowledge the intrinsic value of nature. For instance, a loss of biodiversity cannot be monetarily compensated: nature cannot be bought back. In short, the question is whether adequate compensation for ecological (and cultural) damage is possible. More theoretically, can one good simply be substituted for another? We already saw in Chap. 4 that non-economic damage does not always have a clear economic equivalent. With regard to sustainability, a distinction is often made between weak sustainability and strong sustainability. Defenders of weak sustainability assume that compensation is possible for ecological damage suffered, while defenders of strong sustainability defend the thesis that loss of nature cannot be easily compensated. The question which of these two views is correct ties in closely with questions about justice more generally, and the value we ascribe to the value of nature.

11.5 The Precautionary Principle In the case of the 3M plant in Antwerp, it is quite clear who is responsible for the pollution. There is a causal link between polluter and pollution. However, in many other cases of ecological disruption, the causal link is much less clear and can be difficult, if not impossible, to establish, which makes assigning responsibilities much more complex. It would be absurd to claim that a drive in my car caused a deadly heat wave in Botswana. But with our current scientific understanding of climate change, it would be equally absurd to claim that my driving has nothing at all to do with changing climatic conditions. The problem is that no clear causal link can be made between my specific behavior and the concrete harm caused to others.

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This disconnect between cause and effect occurs not only at the level of individual behavior. It occurs just as much at the level of collective behavior or at the level of companies and nations. For example, when a company like Shell decides to continue emitting, its emissions undoubtedly contribute to some form of damage, but it is impossible to determine where exactly that damage is being done, and who the victim will be. Emitted greenhouse gases enter a global atmosphere. The harm done is distributed in such a way that it is impossible to identify its specific source. This difficulty of reconstructing a causal chain poses a particular challenge for ethical discussions of justice and sustainability. The disconnect between cause and effect, or the difficulty of reconstructing a causal chain between actions, creates the possibility for companies to continue unsustainable activities. It allows responsibilities to be denied or minimized. This can be avoided by making the Precautionary Principle central to a sustainable policy. This principle is borrowed from (international) environmental law. There are various interpretations of the precautionary principle. However, the general idea in each case is that, in principle, damage must be prevented, and that scientific uncertainty about the consequences of a given activity cannot form an excuse to escape responsibility. According to the precautionary principle, the burden of proof for the absence of any harmful effects lies with the actor who intends to undertake the activity. Thus, the precautionary principle alleviates the (legal and moral) requirement that a person can only be held liable for damages if a causal chain can be demonstrated. Despite the fact that the precautionary principle is included in major international treaties, there is still tension over the scope of the principle. Companies often do not wish an overly strict application of the precautionary principle, as it may lead to a serious limitation of production. Conversely, ecological action groups typically push for strict application of the precautionary principle. Cultural differences can also be observed. For instance, European regulations apply the precautionary principle much more strictly than in the US. As a result, while the US perceives little harm in genetically modified food or the use of hormones in the meat industry, European regulations exercise greater caution. Regardless of these differences and discussions about the application of the precautionary principle, it is clear that this principle is an essential part of a sustainable policy. The prevention of ecological damage should be the starting point and the slightest indication of this justifies intervention. Conversely, not intervening when there are indications that damage may occur may be considered unethical.

11.6 Intergenerational Justice There is a philosophical issue surrounding sustainability that we have not yet fully addressed. At the heart of sustainability lies the fact that it is not only about the needs of current generations, but also about the needs (and rights) of future generations. Sustainability is a concept that entails an important intergenerational

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component. This intergenerational component creates specific ethical and philosophical challenges. For instance, a philosophical question that can be asked is whether it is possible to have ethical responsibilities towards future generations. Some philosophers will explicitly argue that this is not possible. They often start from the claim that the formation of a moral community is only possible when there is contact between members of that community, or when members can reap the benefits of other members’ efforts. There are also philosophers who argue that future generations do not exist (now) and that we cannot have obligations to what does not exist (Golding, 1972: 85–99; Beckerman, 2006: 53–71). Nonetheless, most philosophers do not doubt that people living now have a responsibility to leave a livable world behind. However, despite embracing this idea, several philosophical issues remain. For example, even if we want to morally respect future generations, we do not know what kind of world they will want to live in: will they not prefer a wealthier world, even if it means that much biodiversity will have been lost? Similar questions can also be asked about previous generations. For instance, the effects of climate change that we are increasingly experiencing today are mostly due to the emissions of previous generations. However, who bears moral responsibility for the emissions of previous generations? Should it be the nations or companies that emitted the most in the past? Or those who were able to profit the most from those emissions? To what extent can they be held accountable for past emissions, in other words, can we hold the nations that contributed and benefited most from these emissions in the past accountable? The issue is quite relevant: should this be the case, Western countries must take a much greater (financial) responsibility than they have been willing to take up so far. After all, historically Western countries have been the big polluters. We therefore see, for example, that such discussions play a crucial role in climate negotiations. It is beyond the scope of this introduction to the concept of sustainability to develop answers to these questions. Rather, it should be noted that a comprehensive approach to the moral responsibility for sustainability must develop a position on this.

11.7 Conclusion Sustainability implies a caring and responsible treatment of the environment and nature. According to the deep ecology view, this requires assigning intrinsic value to nature. But sustainability is also concerned with the needs of our and future generations. Therefore, sustainability is closely connected to concern of justice. Who will bear the burden of ecological damage, who benefits from activities that cause ecological damage, and how should burdens and benefits be shared? This question is particularly complex in the case of sustainability because it involves not only the needs of current generations but also those of future and previous generations. Rather than answering these questions, we have tried to show that embracing sustainability implies asking fundamental ethical questions and

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addressing philosophical concerns. If we want to avoid that sustainability is just an empty term, easily used for greenwashing, we must include such ethical and philosophical discussions in the development of a sustainable CSR policy.

References 3M (b). Investing in a more sustainable world [online]. 2022. [accessed on 21 March 2022]; through https://www.3m.com/3M/en_US/sustainability-­us/ Beckerman, W. (2006). The impossibility of a theory of intergenerational justice. In J. C. Tremmel (Red.), Handbook of intergenerational justice (pp. 53–71). Edward Elgar Publishing. Bell, A. (2021). Sixty years of climate change warnings: the signs that were missed (and ignored) [online]. 5 July 2021 [accessed March 2022]; throughhttps://www.theguardian.com/science/2021/ jul/05/sixty-­years-­of-­climate-­change-­warnings-­the-­signs-­that-­were-­missed-­and-­ignored ClientEarth. (2022). The greenwashing files: Shell [online]. 2022 [accessed on 21 March 2022]; through https://www.clientearth.org/projects/the-­greenwashing-­files/shell/ Dawe, N. K., & Kenneth, L. R. (2003). The faulty three-legged-stool model of sustainable development. Conservation Biology, 17(5), 1458–1460. Golding, M. P. (1972). Obligations to future generations. The Monist, 56(1), 85–99. Griffin, P. (2017). The carbon majors database. CDP carbon majors report 2017 [online]. (2017) [accessed on 21 March 2022]; through https://climateaccountability.org/pdf/ CarbonMajorsRpt2017%20Jul17.pdf IEA. (2021). Global CO2 emissions rebounded to their highest leven in history in 2021 [online]. 8 March 2022 [accessed on 21 March 2022]; through https://www.iea.org/news/ global-­co2-­emissionsrebounded-­to-­their-­highest-­level-­in-­history-­in-­2021 Lefevere, F. (2021). 3M probeert te sussen: ‘Onze werknemers hebben tien keer hogere bloedwaarden dan inwoners Zwijndrecht en worden niet ziek’. VRT NWS [online]. 29 oktober [accessed on 21 March 2022] through https://www.vrt.be/vrtnws/nl/2021/10/29/3m-­probeert-­te-­susse/ Naess, A. (2005). The shallow and the deep, long-range ecology movement: A summary. In A. Drengson & H. Glasser (Red.), Selected works of Arne Naess, X (pp. 7–12). Springer. Von Carlowitz, H.  C. (1713). Sylvicultura Oeconomica, oder Haußwirthliche Nachricht und Naturmäßige Anweisung zur Wilden Baum Zucht. Johann Friedrich Braun. Watts, J. (2018). We have twelve years to limit climate change catastrophe, warns UN. The Guardian [online]. 8 October 2018 [accessed on 21 March 2022]; through https://www.theguardian.com/ environment/2018/oct/08/global-­warming-­must-­not-­exceed-­15c-­warns-­landmark-­un-­report

Chapter 12

Corporate Responsibility for Human Rights Bert van de Ven

Abstract  This chapter presents a business ethics framework that can be used to determine the moral responsibility that firms have when it comes to human rights. It starts with a discussion of the relatively new phenomenon of firms being sued for human rights violations in developed countries as is shown by the case of Shell. It also discusses when a firm should be considered complicit in a human rights violation, and what duties firms have to promote human rights. Questions 1. What role do human rights play in business ethics? 2. What is the governance gap and what part does it play in business ethics? 3. When is a company complicit in a human rights violation?

12.1 Introduction

Case 12.1 In 2021, a Dutch court ordered Shell to reduce its greenhouse gas emissions by 45% compared to 2019 and to do so by 2030. The oil and gas company was astounded by this ruling and rejected it outright. The court based its decision on the 2015 Paris Climate Agreement, an international deal that explicitly links human rights to global warming. One line of defense taken by Shell was that the Paris agreement was a deal brokered between countries, which meant (continued)

B. van de Ven (*) Department of Philosophy, Tilburg University, Tilburg, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_12

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Case 12.1 (continued) that Shell was not a party. Nevertheless, the court ruled that this did not absolve Shell as a company of its own responsibility to prevent climate change (De Rechtspraak, 2021). Shell did not abide by what it saw as a disappointing ruling and went on to launch an appeal. There are several reasons why Case 12.1 is relevant when reflecting on human rights in a contemporary context, taking into account the full range of problems and developments. Firstly, this case demonstrates that environmental issues are increasingly being viewed within the realm of fundamental rights and human rights. As a result, businesses across the globe can expect to face an increasing number of lawsuits filed by citizens and NGOs with the aim of forcing them to modify environmental policies that can be seen as violating human rights. Secondly, it is important to note that the parties who brought this case sought to correct the democratic political process by means of legal action. Legal scholar Laura Burgers made the following observation about this approach: “Viewing something as a human right can legitimize a decision that goes against the democratic majority, and therefore against government decisions.” (Burgers, 2020). At first glance, such a decision appears to lack democratic legitimacy. However, Burgers (2020, pp. 70) argues that this need not be the case if the courts are seeking to protect fundamental rights that form part of the basis for democracy. If citizens cannot count on the protection of their freedom and their very existence, she argues, how are they supposed to participate in a democracy? She bases her view on the “co-originality principle” put forward by philosopher Jürgen Habermas (1996). This principle states that the personal freedoms and social rights of citizens are prerequisites for exercising political rights, such as participation in public debates and the opportunity to be politically active. Fundamental rights and democracy thus co-originate (Schaffer, 2015). Generally speaking, we have become accustomed to rulings in which courts  – often international courts – seek to protect fundamental rights and democratic values. However, such cases tend to involve countries where legislative processes are less robust and the protection of fundamental rights is often lacking. That’s why this particular climate case is rather special: it indicates that fundamental rights are now being invoked to protect individual freedoms and democratic values even in economically developed countries. As we have seen in Chap. 2, rights can have both moral and legal validity. In the case of human rights, this is often, but not always, the case. In the European Union, unlike other parts of the world, human rights have acquired legal validity. Especially in the European context, invoking human rights can be an effective way of demanding legal protection for a fundamental right outside of the political arena. This gives companies even more reason to pause and consider how to formulate an adequate response when called to account for a human rights violation. The third reason to examine this case more closely is that it highlights a phenomenon known as the governance gap. This is the gap between what governments promise to do to protect human rights, and what they actually do. This governance

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gap is relevant to companies because civil society groups look to the business community to step in and make up the shortfall in such cases (see Chap. 6 and more specifically the notion of corporate citizenship). One argument for this expectation is that there is no international government with the power to impose laws that are binding on citizens and businesses. As a result, existing legislation and enforcement lack the necessary scope. The governance gap presents the business community with problems. It exerts pressure on their “license to operate”. Increasingly, companies face the prospect of having to justify their actions and policies in various arenas where a range of stakeholders will seek to secure their rights, perceived or otherwise, by going to court. That said, “freedom of enterprise” is itself a fundamental right, both in a liberal democracy and according to the Charter of Fundamental Rights of the European Union. In concrete terms, this means that, from a legal standpoint, it is not a foregone conclusion that companies should have to intervene to protect the rights of parties at every turn. Shell is aware of this position, which is why it decided to appeal the court ruling in Case 12.1. After all, how can a single company be held responsible for the climate threat? There are all sorts of disadvantages to the idea that companies should be held responsible for such matters (see Chap. 5). For one thing, there is unfair competition. After all, a court ruling that applies only to Shell leaves other companies free to supply oil and gas products without any such legal restrictions. From the point of view of business ethics, what support can be offered to the managing director of an international corporation who not only seeks to operate within the confines of the law but is also willing to take a critical look at the societal legitimacy of their business activities? If we assume that the management of Shell wants to do the right thing while serving the interests of their stakeholders, is it morally acceptable for Shell to challenge the court’s ruling in our example? How far should companies go when it comes to filling the governance gap?

12.2 Human Rights This chapter offers a framework for further defining the responsibility of companies to protect human rights. First, we will briefly consider the moral basis for human rights themselves. The basic problem with human rights is that there is no consensus on the scope of rights: which rights does this term cover? There are ethicists and philosophers who insist that the scope of human rights should be subject to strict limits in order to prevent people demanding the right to anything they might desire, from Wi-Fi access to gym membership. Those who favor restricting the list of human rights therefore argue that it should only include the bare essentials which, if lacking, would make it virtually inconceivable for a human being to live with dignity. In contrast, there are others who favor an expansive view and have no objection to all kinds of goals and values being seen as human rights. They argue that the historical development of human beings and the society they live in means that human rights can never be set in stone, and so drawing up a definitive or limited list

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is a futile exercise. We can explore the difference between these two views by looking more closely at the intent behind them. Whereas the restrictive view emphasizes the ability of parties (such as the government) to meet the claim generated by the rights, the expansive view attaches greater value to the appeals generated by the formulation of rights. For the purpose of this chapter, it is not necessary to take a position in this discussion. However, a company will always have to examine whether or not it has been rightly accused of complicity in a human rights violation in order to determine its possible response to any such allegations. This is essential, both from a moral perspective and from a business perspective, in terms of protecting a company’s reputation.

12.3 A Business Ethics Framework– Complicity The business ethics framework presented below can help answer the tough questions a company faces in terms of its moral responsibility for the human rights situation in the various countries in which it operates. The framework covers the following aspects: 1. the company’s complicity in a human rights situation 2. the company’s influence on the human rights situation. These aspects are explained below. In this regard, direct and indirect complicity are morally problematic. Being complicit is morally wrong and necessitates an active effort to do things differently: it amounts to participation in the violation of rights. In many cases, however, a company is a spectator with a varying degree of power to effect change. The question then becomes what duty a company has to step up to the plate. As a rule of thumb, greater power comes with greater responsibility for the spectator. According to the United Nations Global Compact, a non-binding pact for businesses, direct complicity occurs when a company “provides goods or services that it knows will be used to carry out the abuse [of human rights]”. (UN Global Compact, n.d.) In addition, direct complicity occurs when a company adapts its own products or services to government regulations in such a way that they help enable human rights violations. One example might be an internet company that aids the Chinese government in imposing censorship. Another example of direct involvement is the role played by the company Caterpillar in the conflict between Israel and the Palestinian people. When Caterpillar began producing bulldozers that were designed to the specifications of Israel’s Ministry of Defense and used to destroy the homes of Palestinian civilians, it became difficult for the company to maintain that it was not involved in an activity that the UN had condemned as a war crime. The company therefore came in for public criticism from several civil society organizations, including the Anglican Church. The church even called for an investment boycott of the company.

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This example is a clear case of direct complicity: Caterpillar, as a supplier to the Israeli army, did not destroy Palestinian homes directly but it did make modifications to its standard models so that they would be better suited to this specific purpose. In other words, Caterpillar was clearly aware that its products would be used to perpetrate this human rights violation. By supplying armored bulldozers, Caterpillar helped enable the excessive and illegal violence against the Palestinian population. It is this direct complicity that makes Caterpillar’s actions problematic. As long as Caterpillar supplies these special bulldozers, it cannot do business with the Israeli military without becoming involved in human rights violations. Caterpillar should therefore stop supplying these bulldozers. Otherwise, it is guilty of direct complicity in the violation of human rights. Indirect complicity occurs when a company benefits from human rights violations without directly contributing to them (Brenkert, 2016). Media companies which broadcast the 2022 World Cup in Qatar are an example of this position. Indirect complicity does not necessarily involve a company intentionally seeking to profit from a human rights violation; it is enough for the company to benefit somehow in the full knowledge that human rights are at stake. Both in the case of direct and indirect complicity, there is a causal relationship between the business activities and the violation of human rights. In the case of the media companies, the substantial sums they paid for broadcasting rights helped make it possible for the World Cup to be held in Qatar. In addition to complicity in the form of a direct or indirect causal relationship between the business activities and the human rights violation, there may also be tacit complicity. This occurs when a company remains silent or passive while it can see that a government (or a private organization with which it has a relationship) is violating human rights. The central issue here is whether a company has a positive duty to speak out against such violations. This brings us to the next point: a company’s responsibility to use its influence to further human rights.

12.4 Influence and Positive Duty As we saw in the introduction, Shell argued that it is not a party to the Paris Climate Agreement. In addition, in a response to the lawsuit Shell argues that a court is not the competent authority to lead the global energy transition (Luttikhuis, 2018). In its ruling, however, the court invoked a different legal basis – human rights: “It is generally accepted that companies have a duty to respect human rights. That is an independent responsibility that applies to companies, separate from the actions of nation states. This responsibility also extends to suppliers and customers.” In this statement, the court is referring to what is known as the “horizontal responsibility of citizens, institutions and businesses” for human rights, alongside the vertical responsibility held by governments. In other words, the court points out that the citizens and businesses in a society cannot simply lay the task of safeguarding the rule of law at the government’s door. Everyone has a (horizontal) duty in this regard.

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Whereas courts were previously less inclined to be convinced by such arguments, the tide now seems to be turning: across the world, over one thousand such cases have been filed. This trend indicates that many citizens and organizations expect more from the judiciary than from politicians when it comes to securing fundamental rights, such as the right to life and the right to a stable family life. In some cases at least, the court’s decision has justified this confidence. As noted above, this trend now appears to be gaining ground in developed economies too, where the division of labor between the state and the economy was seen as reasonably effective and carried considerable legal weight. Chap. 6, Sect. 6.4 already stated that this division of labor does not work perfectly and that this leads advocates of the CSR doctrine to assign moral responsibility to companies. This responsibility can be substantiated by applying the principles set out in Chap. 6, Sect. 6.5, which make CSR more concrete. The second and third principles are especially relevant: 1. A company’s responsibility with regard to an issue increases the more the company is part of an industry that causes collective harm (e.g. by means of harmful emissions). 2. A company’s responsibility increases the more power it has to take significant action that others cannot take. Both principles apply in the case of Shell: the company is part of the fossil fuels industry and is therefore responsible, both individually and collectively, for preventing climate catastrophe. While Shell’s reluctance to compromise its corporate interests by taking more rapid action than its competition in this area is certainly understandable, this results in precisely the kind of deadlock that politicians have so far failed to break. Leaders will have to step up to the plate and, in light of the third principle, Shell is a logical candidate. This principle’s relevance to the case is further reinforced by the idea of global citizenship, an idea that holds particular significance for multinational corporations. Governments are unable to address abuses without the help of business, and this calls on corporations to take an active responsibility for promoting human rights, especially in situations that involve a weak state. This is also known as positive responsibility, as the action expected goes beyond the principle of not violating human rights (negative responsibility). A feature of the third principle (the Spiderman principle) for determining a company’s responsibility for human rights is that it is open-ended. There appears to be no limit to a company’s positive moral responsibility: a company seems to bear responsibility for every human rights issue over which it exerts a degree of influence. In business ethics, this discussion has centered on the meaning of a company’s sphere of influence. The basic idea is that a company not only has a direct impact on its environment through its own activities, but can also use its influence to persuade other actors (e.g. governments) to respect human rights. As a rule, companies – even powerful multinationals – tend to be rather reticent in this regard. They do not see it as their responsibility to lecture the government of a country in which they are a

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guest on the morality of their actions. In an international climate where even EU countries would rather do business than criticize human rights violations by a country like China, it may be too much to ask companies to take the lead. Yet this is a question that each company has to answer for itself. It may be able to exert a favorable influence on other actors in their network behind the scenes. If so, it can be argued that companies have a best-efforts obligation to advance the cause of human rights (Dubbink & Van de Ven, 2012; Wood, 2012). However, such a positive obligation needs to have an upper limit, otherwise a company would be working endlessly to make the world a better place. Stephan Wood therefore proposes four conditions that a company’s influence should meet if it is to take responsibility for human rights: 1. The company has a morally meaningful relationship with the party who holds or violates the right in question. 2. The company is able to make a difference to the state of affairs. 3. The company is able do this at little cost to itself. 4. The threat to the rights of the holder is significant (Wood, 2012, pp. 93).

12.4.1 A Morally Meaningful Relationship The above conditions require further elaboration before they can serve as a guide for conduct in any practical sense. First, it is necessary to determine what counts as a meaningful relationship. Wood argues that, in addition to the nature of the relationship between the company and the party involved (e.g. shareholder, employee etc.), a morally meaningful relationship can also be based on the relevance of the interests at stake in relation to the business activities, or the products and services (Wood, 2012, pp. 83). For example, a company has a more far-reaching responsibility as regards the rights violations of citizens when its products or services are used as opposed to instances where that is not the case. In the Caterpillar case described above, there is certainly a meaningful relationship: the company’s bulldozers were used to violate human rights. This relationship therefore stems from an involvement in terms of its own business activities, products and services and not from entering voluntarily into a cooperative relationship with the Palestinian people. In recognizing the responsibilities that arise from a company’s relationships with its environment, Wood goes beyond the existing United Nations framework. The UN framework only assigns moral responsibility to companies for the negative impact of their business activities on human rights and for the influence they can exert by preventing these violations. No mention is made of companies having the responsibility to make a positive impact on their social and ecological environment. Positive responsibility of this kind is recognized in the ISO 26000 guideline on corporate social responsibility: “An organization should make reasonable efforts to encourage organizations in its sphere of influence to follow responsible labor

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practices, recognizing that a high level of influence is likely to correspond to a high level of responsibility to exercise that influence.” (International Organization for Standardization, 2010, Clause 6.4.3.2). As ISO sees it, a company’s influence on human rights through its network does provide enough of a basis for a positive duty. This position is also consistent with the third principle of responsibility mentioned above. The practice of corporate social responsibility therefore goes beyond the limited framework set out by the United Nations. The fact that Wood goes beyond the UN framework does not mean that there should be no limit to corporate positive responsibility. Wood’s condition that a morally meaningful relationship needs to exist is something that already limits a company’s positive responsibility: human rights violations in a sector and a country where the company does not operate are clearly not part of the deal. By the same token, a transnational corporation is not morally responsible for human rights violations in a country where it operates but does not maintain a relationship with the party who holds or violates the right in question. An example might be a software company that supplies the banking sector in Qatar and has no involvement in rights violations in the country’s construction sector.

12.4.2 The Ability to Make a Difference The second condition Wood gives for assigning positive responsibility for human rights to a company is its ability to make a valuable contribution to improving the situation in which human rights are at stake, either alone or in cooperation with other parties. This does not mean that a company has to provide the ultimate solution to the problematic situation, but rather that it is obliged to make an effort to contribute to a solution. One example of such an effort is the Accord on Fire and Building Safety in Bangladesh. The Rana Plaza fire in Bangladesh prompted outrage in the affluent West: why were the workers who produce the inexpensive fast fashion widely available in our chain stores being forced to work in such unsafe conditions? Although Western retailers do not employ these workers, their position at the end of the supply chain puts them in an indirect, morally meaningful relationship with the people who make the products they sell. And the fact that these retailers benefit from the low prices sweatshops charge for the clothing they make also makes them tacitly complicit in the abuses. However, the problem is so widespread that it is difficult for an individual company to make a difference. The Bangladesh Accord is an attempt to hold the entire industry to an agreement that limits their purchases to suppliers that have been verified as complying with rules for a safe working environment. It is an approach that can bring about structural change in the human rights situation in the Bangladesh garment industry.

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12.4.3 Low Costs Wood’s third condition for assigning positive responsibility means that a company can only be asked to make a contribution that does not compromise its obligations to other stakeholders. These obligations are compromised when a company’s earnings are substantially impacted by its humanitarian efforts or these efforts seriously disrupt its business operations. It is important to emphasize that this caveat only applies to the positive duty to contribute to the improvement of the human rights situation. It does not apply to the obligation not to violate human rights and not to be complicit in such violation. A company may be morally obliged to cease operations that violate human rights or make the company complicit in violations by others. A second observation is that, in practice, the costs associated with advancing the cause of human rights are often not all that high, especially when borne by a large number of parties, as is the case with the Bangladesh Accord mentioned above. This condition is also related to the two conditions that precede it. That is to say, when the morally meaningful relationship is strong and a company’s ability to positively influence the situation is clear, an increase in costs should be readily accepted.

12.4.4 Significant Threat Lastly, Wood stipulates that a weak or limited relationship between a company and the holder of rights can still form sufficient grounds for corporate responsibility. This applies when the threat to human rights is serious. Wood’s final principle stands in the way of an overly narrow interpretation of positive responsibility which might arise from the low-cost constraints imposed by the third principle. For example, pharmaceutical companies are sometimes required to make their drugs available for free or at cost price to people in countries with deficient healthcare systems. These include HIV inhibitors and, during the COVID-19 crisis, free vaccines. Not only do the pharmaceutical companies have a morally meaningful relationship with the holders of the right to adequate healthcare, but they also make a product that can save lives. It could be argued that the third condition is not met in such cases: the free distribution of drugs, some of which cost a fortune to develop, is not something the pharmaceutical industry does readily, given the interests of other stakeholders in the company. But in this case, Wood’s fourth principle overrules the third: the severity of the threat is so great that companies are nonetheless obliged to take responsibility by cooperating with the global distribution of their life-saving drugs on humanitarian grounds. The need for the governments of wealthier countries and other parties to step in to keep the costs reasonable does nothing to alter this obligation.

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12.5 Conclusion The sections above present a business ethics framework that can be used to set out the moral responsibility that companies have when it comes to human rights. The Shell case shows that companies that do not take human rights seriously enough are increasingly likely to be taken to task by the courts. But even when respect for human rights is not enforced by a court ruling, a company should organize its operations in such a way that they do not violate human rights. We have also argued that powerful transnational corporations have a special responsibility to take the governance gap not as a given but as an opportunity to play a fitting part in advancing the cause of human rights. Moreover, when a company chooses not to critically examine its own role, it also runs all kinds of business risks with regard to its reputation in the eyes of governments, consumers and investors. In doing so, it also passes up the opportunity to fulfill a significant role in furthering the social and environmental sustainability of the global economy.

References Brenkert, G. (2016). Business ethics and human rights: An overview. Business and Human Rights Journal, 1(2), 277–306. https://doi.org/10.1017/bhj.2016.1 Burgers, L. (2020). Should judges make climate change law? Transnational Environmental Law, 9(1), 55–75. https://doi.org/10.1017/S2047102519000360 De Rechtspraak. (2021, mei 26). Royal Dutch Shell moet uitstoot terugbrengen [online]. Assessed on 4 April 2022, via https://www.rechtspraak.nl/Organisatie-en-contact/Organisatie/ Rechtbanken/Rechtbank-Den-Haag/Nieuws/Paginas/Royal-Dutch-Shell-moet-CO2uitstootterugbrengen.aspx Dubbink, W., & van de Ven, B. (2012). On the duties of commission in commercial life. A Kantian criticism of moral institutionalism. Ethical Theory and Moral Practice, 15(2), 221–238. https:// doi.org/10.1007/s10677-­011-­9283-­x Habermas. (1996). Between facts and norms. Contributions to a discourse theory of law and democracy. The MIT Press. International Standard ISO 26000. (2010). Guidance on social responsibility. ISO. Luttikhuis, P. (2018, April 4). Milieudefensie begint zaak tegen Shell om milieuschade. NRC Handelsblad. Retrieved May 5, 2022, from https://www.nrc.nl/nieuws/2018/04/04/ zaaktegen-­shell-­om-­milieuschade-­a1598077 Schaffer, J. K. (2015). The co-originality of human rights and democracy in a democratic order. International Theory, 7(1), 96–124. https://doi.org/10.1017/S1752971914000426 UN Global Compact. (n.d.). Principle 2. Retrieved May 15, 2022, from https://www.unglobalcompact.org/what-­is-­gc/mission/principles/principle-­2 Wood, S. (2012). The case for leverage-based corporate human rights responsibility. Business Ethics Quarterly, 22(1), 63–98. https://www.jstor.org/stable/23223699

Chapter 13

Advertising Ethics Ronald Jeurissen

Abstract  Advertising aims at persuading consumers to buy products and services. The more persuasive advertising is, the more effective, but also the closer it comes to the limits of moral acceptability. In this chapter, we discuss one such a limit, namely, when advertising moves from information to manipulation, through deception and seduction, and thereby becomes harmful to consumers. The potentially manipulative features of social media advertising are explored. Stereotypical advertising can be harmful when it belittles certain groups, and it can thereby become a cause of discrimination and social inequality. When advertising leads to over-consumption, it can be detrimental to consumer health, and it can be harmful to the environment. This may give cause to more regulation and restrictions on advertising in the future. Questions • • • • • •

What is advertising? When is advertising manipulative? What is the role of the concept of ‘autonomy’ in the ethics of advertising? What is stereotyping in advertising, and why is it harmful? How can social media advertising be harmful? How can advertising harm consumers and the planet?

13.1 Introduction Case 13.1 In an advertisement on Dutch television, the German travel company TUI claimed the following: (continued) R. Jeurissen (*) Nyenrode Business Universiteit, Breukelen, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_13

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Case 13.1 (continued) The same smile with so much more attention for the rest of the world. We take you to the most beautiful destinations on earth. You fly with one of the most sustainable airlines in Europe to a sustainable accommodation. Discover what TUI can do for you … and book one of our 600 sustainable accommodations from € 279 per person per week. TUI, discover your smile.

A complainant before the Dutch Advertising Code Commission1 found TUI’s advertisement misleading. It was suggested in word and image that people book a very sustainable holiday at TUI.  The advertisement uses the phrases ‘the most sustainable flights’ and ‘the most sustainable airlines’. Subsequently, the word “sustainable” is used many times. This gives the consumer the false impression that TUI air travel vacations are sustainable. As the complainant puts it: Just because of the journey by plane, which involves very high fuel consumption and CO2 emissions, an air travel holiday is much less sustainable than about any holiday where you travel to the holiday destination with another means of transport. TUI may offer air travel that is more sustainable compared to other air travel, but train travel, bus travel and even travel with a passenger car or camper are many times more sustainable2

In today’s market society, advertising is a very important means of marketing products. Marketing is aimed at influencing the market by convincing the buying party that the manufacturer is offering something of value to the buyer. Communication is indispensable for marketing and advertising is an important form of marketing communication. Advertising is important for the functioning of the economy, because it helps increase consumer demand, which enables suppliers to increase their sales, and hence their profits. No wonder that advertising is a legal activity in market-­ oriented societies. However, there are limits to what is legally allowed and morally desirable in advertising. Somewhere advertisers can cross a moral line and advertising becomes manipulation of the consumer, in the form of deception or seduction. This chapter explores the moral boundaries of advertising. According to the American Marketing Association, advertising is: the placement of announcements and messages in time or space by business firms, nonprofit organizations, government agencies, and individuals who seek to inform and/or persuade members of a particular target market or audience regarding their products, services, organizations or ideas.3

Advertising is a broad phenomenon. Forms of advertising include: print, commercials on mass media and social media, teleshopping, telemarketing, sponsorship, product placement, packaging, labels, direct marketing and buzz marketing. ‘Ideas’ include the promotion of certain values, opinions and behavior (e.g. by a political campaign organization).  For information on the Dutch Advertising Code Commission, see https://www.reclamecode.nl/ english/ 2  See Advertising Code Commission ruling: reizen-en-toerisme-2015-01195/149059/ 3  https://www.ama.org/topics/Advertising/ 1

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The core moral problem of advertising ethics is always the same in all forms of expression: advertising tries to influence people’s beliefs, attitudes and behavior. However, influencing people is morally sensitive. It touches on human freedom, which many believe to be a crucial value. It also touches on the human capacity to act rationally. This too is a crucial moral value that should not be compromised by advertising. Therefore, many people agree that advertising should be bound by certain moral boundaries. That’s what advertising ethics is all about. This chapter discusses a number of issues from advertising ethics. Advertising can influence consumers in several ways. We can make a general distinction between cognitive and emotional ways of influencing. In both cases, the moral boundary between permissible and impermissible lies where legitimate forms of influence change into forms of manipulation. Before discussing the ethics of marketing, let’s briefly look at how advertising is regulated in the Netherlands and Europe.

13.2 The Ethics of Advertising An important moral principle of the ethics of advertising is that consumers should not be hindered in making an autonomous choice. A consumer choice is autonomous when it is made: 1. in full possession of one’s faculties, 2. based on an understanding of the situation, 3. free from controlling influences that determine the action (Velasquez, 2014). These criteria indicate a minimum; the consumer’s autonomy must be sufficiently guaranteed. It is unrealistic to expect consumers to always make all their choices based on full information and without any guidance from the seller. That is not necessary or required. A consumer does not need to have access to all available product information to be able to make an autonomous purchasing decision. It is only important that the consumer sufficiently understands what the offered products contain and that the influence of the seller is not too great. An important minimum condition that advertising has to meet under criterion 2., is that it should be recognizable as such. This is why blocks of commercials on tv are always separated from the programs by a jingle, to mark the transition. And in principle it is not a problem if sellers try to entice consumers to use certain products, through attractive advertisements or by playing on people’s emotions. But somewhere there is a moral limit to influencing consumers. That boundary is at the point where influence takes the form of manipulation. Influencing people through advertising is allowed, but manipulating people is not allowed. So, what exactly is manipulation?

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13.2.1 Manipulation Manipulation lies between determination and persuasion. In determination, someone’s behavior is directed completely independently of his own consciousness and his own will. Think of subliminal advertising, in which advertisers use words or images that consumers don’t consciously detect, to stimulate a certain attitude or behavior. In a movie, for example, it could be the displaying of an image of a certain product on the screen for just a few milliseconds; not consciously noticeable, but still effective to unconsciously arouse a desire for the product at the movie concession stands. The effectiveness of this particular form of subliminal advertising is scientifically disputed, and legislators have already banned it just to be on the safe side. In case of persuasion, advertising offers a completely rational argumentation, which speaks to the consumer’s free will and rationality. A good example of this is offered by the market vendors displaying their wares, calling out what is for sale and showing the prices. Actually, numerous European languages have a word for advertisement based on the root “reclam”, stemming from the latin ‘reclamare’, which means ‘to shout’.This very basic and unpretentious form of advertising is perhaps also the most purely rational, in that it only communicates business data about the product, notably the substance, and the price. Most advertising falls somewhere in between the extremes of determination and persuasion. We then enter the broad field of manipulation. Although the case of manipulation is not as clearcut as the case of determination, the manipulated consumer choice is not sufficiently free either. Examples include strong financial incentives, indoctrination, propaganda, emotional manipulation, irrational persuasion, enticement, seduction, and deception. What distinguishes manipulation from determination is that manipulation does not completely relegate one’s freedom; the behavior is not determined by the influence. A consumer who is misled about a product is cognitively manipulated towards a particular choice, but he still has a choice. Affective manipulation occurs when the emotions and imagination of the consumer are played in such a way that this hinders a rational assessment of the desires generated. The line between persuasion and manipulation is not so easy to draw in concrete situations. However, the theory of the philosopher-economist Amartya Sen (1977) regarding ‘second order preferences’ may help to think about this line in a general sense. Second-order preferences are preferences about preferences. For example, we may prefer a certain type of chips over carrots, but we may also wish that we would prefer carrots over chips instead. This preference over preferences (for chips and carrots) is a second-order preference. Second-order preferences assess the compatibility of desires with the whole of a person’s conceptions of the world, its overarching life plan, and self-image. They also test desires for possible harmful consequences. In their ability to formulate second-order preferences, consumers have a means of rational assessment of the desires that advertising is trying to arouse in them. However, not all consumers are equally capable of letting their secondorder preferences actually guide their behavior.

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13.3 Cognitive Manipulation in Advertising Cognitive manipulation occurs in advertising particularly through claims about products and services that are misleading. We can call something misleading when – explicitly or implicitly – it is suggested that a product has a certain property, while this property does not appear in actual practice. This does not always involve a straightforward lie. Lying makes commercial contracts void and is generally considered bad advertising practice. But sometimes advertisement can purposely be ambiguous in such a way that buyers may be hindered in making a good judgment as to whether a product will meet their needs. Consider for example these front and back labels from the bottle of an alcoholic beverage sold in Dutch supermarkets (Fig. 13.1). The back label reads: Tradition Rouge has a smooth, fruity taste derived from the French grape varieties, Grenache, Syrah and Carignan. Not too sharp, but round and smooth, so that Tradition Rouge is a pleasure to drink both as an aperitif, with dinner, and in the evening.

However, not many Dutch consumers are so versed in the French vernacular as to understand what a ‘boison aromatisée à base du vin’ is, had they been able to find the very small printing in the first place, amidst the overwhelming verbal and pictorial suggestions of this being a bottle of French wine: it is a flavored beverage, based on wine. Many consumers may have been misled by this product information, thinking that they had bought a bottle of French wine (Fig. 13.1). It is tempting for a marketeer to mislead. The truth and nothing but the truth is not always the best promotion. Consumers are sensitive to a little illusion. But they do not want to be tricked. Advertisements are misleading mainly because of the

Fig. 13.1  Product labels

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claims they make. Even if they are not literally untrue, they can still mislead the recipient of the message. Our previously discussed case of the airline TUI can illustrate this.

13.3.1 Follow-up Case 13.1: Misleading Environmental Claim by Travel Company TUI Earlier we discussed the TUI cases in which a complainant objected to allegedly misleading claims made by TUI.  In its defense to the Dutch Advertising Code Commission, TUI stated, among other things, that its airline TUIFly is one of the most sustainable airlines in Europe, with one of the lowest CO2 emissions per passenger kilometer in Europe. With the ISO-14001 environmental certification, TUIFly commits itself to continuous improvement of its environmental performance. The accommodations offered by TUI are independently certified as ‘sustainable accommodations’ by a quality mark recognized by Global Sustainable Tourism Council (GSTC). The GSTC is a non-profit organization co-founded by various United Nations entities. TUI is aware that travel, viewed from an environmental point of view, is not sustainable in itself. As a travel organization, TUI considers it important that its trips are as sustainable as possible. Within TUI, the Sustainable Tourism department is working on making holidays and its own business activities more sustainable.4

The judgment of the Advertising Code Commission is relevant to our discussion of the concept of deception. The Commission considered the way in which TUI advertises its sustainability misleading. Environmental claims must be demonstrably correct. The burden of proof rests on the advertiser. The more absolute the environmental claims are formulated, the more stringent requirements are placed on the evidence. (…) With the current state of technology, it is difficult to imagine that many products can be proven to be absolutely harmless to the environment. That is why great restraint is in order with regard to absolute claims. It should be realized that words such as ‘environmentally friendly’, ‘clean’, ‘green’, ‘good for the environment’, which are used without further nuance, are quickly understood by the public as absolute claims.5

With respect to the use of the word ‘sustainable’ in TUI’s advertisement, the Commission ruled that the word ‘sustainable’ has no clear-cut meaning. The statement refers to ‘sustainable accommodation’ without explaining what the advertiser means by this. In its defense, the advertiser stated that accommodations offered by TUI have been certified as ‘sustainable accommodation’ by a so-called GSTC (Global Sustainable Tourism Council) recognized seal of approval,

 Source: travel-and-tourism-2015-01195/149059/  Source: travel-and-tourism-2015-01195/149059/

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but there is no such explanation or clear reference to it in the television advertisement. For this reason and because the sustainability claim is also reinforced by a reference to the flights included in the air travel, the Commission considers the statement unclear about the environmental benefits of TUI’s air travel touted in the statement.6

13.4 Affective Manipulation in Advertising There are very few products that, in addition to their functional properties, do not have, or could not acquire, some kind of emotional value. This sentimental value makes products attractive. Advertisers can respond to this, but must be aware that influencing affections can rapidly degenerate into manipulation. The creation of desires is actually as old as the world and not every creation of a desire is manipulative. Every new invention or product release creates a desire that was often not there before. Strictly speaking, that is a form of influencing desires. For centuries, people have been able to maintain themselves quite well without wireless telephones, but nowadays an existence without a mobile phone seems unthinkable to many. Production creates demand. But is this manipulation? Philosopher and economist Richard Hayek thinks not. In a reductio ad absurdum argumentation, Hayek (1961) contemplates that, as a matter of fact, all higher cultural tastes in society are supply driven in this sense: Clearly my taste for the novels of Jane Austen or Anthony Trollope or C. P. Snow is not “original with myself.” But is it not rather absurd to conclude from this that it is less important than, say, the need for education? Public education indeed seems to regard it as one of its tasks ‘to instill a taste for literature in the young and even employs producers of literature for that purpose. Is this want creation by the producer reprehensible? Or does the fact that some of the pupils may possess a taste for poetry only because of the efforts of their teachers prove that since “it does not arise in spontaneous consumer need and the demand would not exist were it not contrived, its utility or urgency, ex contrivance, is zero”? (347)

Following Hayek, we can argue that the fact that a desire is created by the body that aims to fulfill it, as happens in advertising, does not in itself say anything about the value of that desire, as long as the way in which the desire is created is not manipulative. In Hayek’s view, an advertiser who generates desires for the purpose of sales promotion is just one among many influences from a consumer’s cultural environment, that each individually is unable to determine the consumer choice. Hayek concludes that It would scarcely be an exaggeration to say that contemporary man, in all fields where he has not yet formed firm habits, tends to find out what he wants by looking at what his neighbors do and at various displays of goods (physical or in catalogues or advertisements) and then choosing what he likes best. (Hayek, 1961, 347)

 Source: travel-and-tourism-2015-01195/149059/

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When, then, is it problematic or wrong for advertisers to arouse consumer desires? The answer to that question will sound familiar: it is wrong to arouse or change people’s desires in such a way that they are no longer able to make a free and rational choice. In such cases, the consumer’s autonomy is compromised. In the context of affective influencing, the rational side of the matter is particularly important. Affective advertising becomes manipulative when it is made difficult for consumers to subject their product preferences to rational scrutiny. This is especially the case when advertising associates the experience of the product with goals and values that in reality are not fulfilled, by the physical properties of the product. For example, associations between alcoholic beverages and sports are never allowed. When advertising succeeds in effectively implanting irrational associations into consumers’ minds, it becomes more difficult for them to base their consumption decisions on a balanced judgment about the true characteristics of the product.

13.4.1 How Advertisers Create Desires Affective manipulation through the creation of desires is very common in advertising. Charles Revson, co-founder of the Revlon cosmetics company in 1932 believed, “in the factory we make cosmetics; in the store we sell hope.”7 A method that advertisers use to create desires is association. When advertising evokes certain meanings in connection with a brand, those meanings are eventually associated with that brand by the consumer. The brand is then ‘loaded’ with meanings that the advertiser has added to it, with a sales objective in mind. For example, an advertisement campaign for a beverage shows young, beautiful and happy people drinking the beverage, while having a good time together, while. Although the beverage itself may be no more than flavored water with sugar or sweetener, the advertisement campaign can load emotional qualities to the brand, such as happiness and social success, by the consistent pictorial association of the product with the young, beautiful and happy people. Advertisers can apply associations in ways that are quite subliminal. One example is the product placement of brand items with high emotional value, or status value, in movies and tv shows. In James Bond movies, for example, the famous British secret service agent, is consistently shown with expensive watches, of brands like Rolex, Seiko, and Omega. In fact, Omega has been an official franchise partner of the James Bond movies since 1995, occasionally releasing its own limited edition Bond watches for purchase.8 An appearance in a Bond movie adds great emotional value to an expensive luxury item like this one. Advertisers pay high prices for the placement of their product in prestigious movies. The movie then acts as an

 https://www.revloninc.com/our-company/our-founders.php  https://www.omegawatches.com/en-us/planet-omega/cinema/james-bond

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advertising platform and a mediator of brand associations. Everyone knows that James Bond is fiction, but not everyone will always notice that some of this fiction is advertising.9

13.4.2 Stereotyping and Respect for the Person Since advertisers can only count on short-lived and superficial attention, advertising is vulnerable to stereotyping: typical portrayals of certain situations or groups, in which particular striking characteristics are highlighted. Stereotyping is often used to make advertisements amusing. However, sometimes humor gives rise to belittling or denigration. We all know the happy family, or the confidence-inspiring man-in-­white-lab-coat. At some level we realize this is a caricature of reality, but we are not always explicitly aware of this. In this way advertising can disseminate or reinforce simplifications (Grau & Zotos, 2016). Stereotyping can be harmful by what it omits, in other words: by creating the impression that this typical trait to a large extent characterizes all members of a particular group, instead of being just a means to simplify communication. By depicting people from a certain group in a distorted, biased way, stereotypical advertising can belittle certain groups and become a cause of discrimination and social inequality. In 2008, the European Parliament adopted a Resolution on how marketing and advertising affect equality between women and men, emphasizing that “advertising which conveys discriminatory and/or degrading messages based on gender and all forms of gender stereotyping are obstacles to a modern and egalitarian society”.10 The Advertising and Marketing Communications Code of the International Chamber of Commerce (ICC), has an article on ‘Denigation’, which reads as follows: Marketing communications should not denigrate any person or group of persons, firm, organisation, industrial or commercial activity, profession or product, or seek to bring it or them into public contempt or ridicule.11

It is the vein of the aforementioned Resolution of the European Parliament and the ICC code, that the French Autorité de Régulation Professionnelle de la Publicité (ARPP) issued an opinion concerning a print advertising distributed by the company Chauffage du Nord in 2021, to promote its heating systems sales and maintenance services.

 Watchers of movies are typically not aware of the fact that the movie also serves an advertisement goal, so the product placement is slightly at odds with the above-mentioned criterion that advertising should be based on an understanding of the situation. 10  European Parliament (2008). Resolution of 3 September 2008 on how marketing and advertising affect equality between women and men (2008/2038(INI)). P6_TA(2008)0401. 11  International Chamber of Commerce, Advertising and Marketing Communications Code, 2018 Edition, International Chamber of Commerce, Paris, 2018. https://iccwbo.org/content/uploads/ sites/3/2018/09/icc-advertising-and-marketing-communications-code-int.pdf 9

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The ARPP’s Jury of Advertising Code considered that the visual, which shows a naked woman, accompanied by the text When it’s cold outside, Heating from the North, I love it!, constituted a breach of the ARPP’s ethical rules.12 The Jury noted in particular: that this advertising uses the woman’s body as a foil for a product that has no direct relation to it and thus reduces women to the function of objects. For the ARPP and the responsible professionals who constitute it, such advertising visuals clearly go against the commitments (…) made by advertising self-regulation on the subject of respect for the image of women in publicity.

13.5 Social Media Advertising Internet, social media and the online reality exert an important influence on contemporary society. We can speak of socio-technical systems: technical innovations that also have a major social and cultural influence on the definition of contemporary society (see also Chap. 10). This new reality has a major impact on advertising ethics. We need to learn to look differently at all kinds of aspects of advertising ethics. Here we discuss two issues that are of great concern today.

13.5.1 Uncertainty About Whether Something Involves Advertising The first issue is a particular problem of deception that is particularly prevalent in social media advertising today. Here it may be unclear to the consumer that there is advertising in the communication with third parties. This is especially the case with influencer marketing. Case 13.2 is an example of this. Case 13.2 Influencer advertising on Tiktok.13 An influencer films himself holding a can of energy drink, and posts it on TikTok. He asks two young women: ‘Can pineapple be put on a pizza?’ and ends the video with the question: ‘what do you people think? ‘The subject line of the video post reads: (continued)

 The judgement of the ARPP’s Jury of Advertising Code, including the visual, can be accessed here: https://www.jdp-pub.org/actualite/publicite-chauffage-du-nord-avis-du-jury-de-deontologiepublicitaire/ 13  Source: food and drink 12

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Case 13.2 (continued) What do you think? Can pineapple be on a pizza? @bangenergy @bangenergy.ceo #BangEnergy

The Dutch Advertising Code Committee received a complaint against this advertisement with the following argumentation: the influencer has posted several videos on the platform, in which he promotes the energy drink ‘Bang Energy’, but nowhere in the videos or in the captions is it indicated that there is a collaboration or advertisement. The product is always very clearly visible. The caption does read “@bangenergy @bangenergy.ceo #BangEnergy” but does not specify that it is an ad.

According to the complaint, it is not sufficiently clear from the statement that there is a collaboration or a relationship, as a result of which the statement is in conflict with the Dutch Advertising Code. Since modern social media raises many problems related to manipulation and deception, the RCC has formulated separate and clear rules for the transparency of social media advertising especially for this purpose. According to these rules, advertising from influencers should be clearly identified as such. This is a requirement that applies to all advertising. In particular, if the advertiser and the influencer have entered into a ‘relevant relationship’, where the influencer receives compensation of any kind, transparency should be provided about the relationship an influencer has with an advertiser.14

On the basis of these regulations, the Advertising Code Committee ruled in favor of the complainant. Among other things, the following consideration was given: It is not clear from the content and context of the advertisement that the energy drink in question is being promoted. Although Bang Energy’s product is constantly in the picture and it is noticeable that it is held by the influencer, there is no mention that it concerns advertising for this product, while this is not clearly apparent from the advertisement in any other way. After all, the video post seems to be about a different subject than the energy drink, namely the question of whether pineapple should be put on a pizza. In the caption to the video, the influencer has posted the following statements “@bangenergy @ bangenergy.ceo #BangEnergy”, but these statements do not make it sufficiently clear to the consumer that this concerns advertising for the energy drink.

The influencer was sponsored by Bang Energy for his advertising work. The Advertising Code Committee established in this regard that the mere use of an ‘@’ followed by the (brand) name of the advertiser was insufficient to speak of an explicit mention of this relevant relationship, because such mention is not necessarily to be understood as indicative of sponsored content.

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 www. Reclamecode.nl/category/ Reclamecode-social-media-influencer-marketing

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13.5.2 Ethical Aspects of Online Behavioral Advertising The second issue concerns target marketing; in particular the so-called ‘Online Behavioral Advertising’ (OBA). In addition, analyzes of the online behavior of consumers are used to determine their individual profile and to target advertisements accordingly. The ICC provides the following definition of OBA: The term OBA refers to the practice of collecting information about a user’s online activity over time, on a particular device and across different, unrelated websites, in order to deliver advertisements tailored to that user’s interests and preferences (OBA, 2012, 2).

Consumer data used for this purpose includes online browsing and search history, media consumption data (e.g. video views), app usage data, purchases, click-­ through responses to ads, and communication content, such as what people write in emails or posts on social networking sites (Boerman et al., 2017). There are a number of ethical snags to this form of advertising that are recognized in the academic literature and in advertising self-regulation in Europe (EDAA, 2011). Consumers have the impression that OBA invades their privacy and they experience a lack of control over what advertisers do with their personal data. In the European Union (2016), the General Data Protection Act binds the use of personal data to rules (including limited use, the principle of consent and the right of access), but that does not allay the concerns of consumers. Ethical problems can arise when the algorithms used in data analysis for OBA profile consumers in ways consumers cannot recognize themselves as, or do not want to be identified as. Some consumers appreciate personalized internet advertising and find them useful, while other consumers place a high priority on their privacy and do not want to be tracked by businesses in this way. As online advertisers become more transparent about OBA, consumer concerns seem to diminish as they become convinced that advertisers collect and process their personal data in a responsible manner. When an advertiser collects and uses information without transparency and without permission, this can lead to consumers experiencing a violation of privacy, which reduces their trust in the advertising (Boerman et al., 2017). Ultimately, this is also not in the interest of the advertisers themselves, so it is to be hoped that self-regulation of advertising in Europe can continue to work in the future, supported by both ethical and commercial reasons.

13.6 Advertising, Health and the Limits to Growth Thus far, we have explored the ethics of advertising from the perspective of consumer autonomy. Autonomy is an important value for people in a free and democratic society, because autonomy enables citizens to protect their own interests, to take care of themselves and thus effectively to be free. But there are many other values that are important for consumers, that are deer to them, because they are necessary conditions for people to be able to lead a good life. Two important, and interrelated, values in this regard are health and sustainability. Both values may be negatively affected by advertising, and this may lead to future curtailments of

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advertising, notably for products that are considered to be unhealthy (think of food containing high levels of fat, sugar or salt), or bad for the environment (think of products or services that have high CO2 emission, and hence contribute to global warming). It is not a matter of dispute that advertising aims at the promotion of consumption, in order to increase sales and production. It is also generally acknowledged that advertising is effective in this regard, which explains why companies keep spending billions and billions of euros on advertising. Statista, a provider of marketing and consumer data, calculated global spending on advertising to have been at $ 793 billion, in the year 2022, coming from 488 billion in 2014.15 But the promotion of consumption can lead to over-consumption, and related health problems. Or it can lead to environmental degradation, through the cumulative and increasing use of raw materials and energy, and because of waste. On our finite planet, the limits to growth have becoming in sight, and more and more advertising for more and more products may not be a good idea. As these ideas take hold in society, advertising may lose its legitimacy and may face increased curtailments. In most countries, advertising for tobacco and alcoholic products have now almost completely been banned from media and public spaces. More products are to follow, in particular food products classified as unhealthy. An important new instrument for this classification is the Nutri-Score, a science-based front-of-pack nutrition label, aimed at facilitating consumers in making healthier food choices. The Nutri-Score was adopted by the French Ministry of Health in 2017, and has since been introduced in several West-European Countries. It is promoted by the European Commission and by the World Health Organization, but is does not (yet) have a formal legal status. It can be anticipated that the Nutri-Score will become an instrument for NGOs and for governments to regulate and curtail advertising for food products now officially classified as unhealthy, aiming at more restrained consumption. In the United Kingdom, for example, the Department of Health and Care is preparing restrictions for the placement and promotion of ‘unhealty’ or ‘less healthy’ foods, as part of British Government’s commitment to reduce obesity. These measures will mean that less healthy products are no longer promoted in key locations, such as checkouts, store entrances, aisle ends and their online equivalents. Also, a ban is introduced of multibuy deals on foods and drinks that are high in fat, salt, or sugar, including buy one get one free (BOGOF) deals, ‘3 for 2’ deals, and restrictions on free refills for soft drinks.16 As governments, faced with increasing costs of health case, turn to preventive measures to keep their populations healthier, it can be expected that the advertising for food products will face increasing regulation and curtailment. The ‘happy smoker’ and ‘happy drinker’ have already disappeared from the advertising world, and it can be expected that other depictions of unhealthy consumption will follow suit.  https://www.statista.com/statistics/273288/advertising-spending-worldwide/  https://www.gov.uk/government/news/government-delays-restrictions-on-multibuy-dealsand-advertising-on-tv-and-online

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13.6.1 Advertising and the Limits to Growth In 1972, the Club of Rome sounded the alarm over an exponential increase of global CO2 emissions, that it attributed to the increased combustion of fossil fuels. The authors warned that these emissions might lead to a warming of our planet (Meadows et al., 1972, 71–74). Half a century later, everyone on this planet has become familiar with the effects of global warming. The report of the Club of Rome was entitled ‘The Limits to Growth’, and its key message was that the effects of unfettered economic growth will ruin the environment. The message has been repeated many times over since, with increased empirical evidence and increased urgency. Now, the time has come to seriously begin to think about limiting economic growth. “The last two centuries of extraordinary economic growth in high-income countries”, says economist Kate Raworth, “are largely due to the availability of cheap fossil fuels”. But we now understand that this path is unsustainable. Raworth concludes that “it is time to go green without growth instead” (Raworth, 2017, 265). Can there still be a role for advertising in a society that aims for sustainable business and limited growth, or even “degrowth” (Hickel, 2021)? Till so far, the goal of advertising has always been to increase company revenues through increased consumer demand. This has worked, because in an affluent society consumers can afford to behave in an insatiable way. Exploring this frontier has always been where the profits lay: more, bigger, and faster. But now consumer mentality is beginning to change. Environmentally aware consumers want to spend less money and they want to spend it on products that provide better value for their money, last longer, that are produced under fair working conditions and put less strain on the environment. These new consumer trends will confront producers with shifts in demand, that will require new marketing strategies, and also new ways of advertising (Jeurissen & van de Ven, 2008). Those companies and advertisers that best understand these shifts, and how to communicate in terms of them, will be best placed to win the hearts and minds, and the money, of the future’s sustainable consumers. More socially and environmentally savvy consumers will prefer longer-­lasting, high-quality goods produced with dedication, skill and craftsmanship to the stream of mass-produced everyday price bargains now sold everywhere. But such high-quality goods are expensive and perhaps scarce. So consumers will be interested in figuring out their availability and affordability. That is where advertising can be useful again, but necessarily on a lower scale than in our current affluent society.

13.7 Conclusion Advertising is a legal way for producers to bring their products and services to the attention of consumers. Advertising may be informative, but dry information does not make effective advertising. That is why advertisers always feel the need to go the extra mile in the persuasiveness of their advertising. When they do so, however,

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the limits of what is morally acceptable in advertising come into view. In this chapter we have seen that those limits are reached where advertising moves from information to manipulation, through deception and seduction, which makes advertising harmful to consumers. When advertising stimulates over-consumption, it can be detrimental to consumer health, and it can lead to environmental degradation. This may lead to more regulation and restrictions on advertising in the future.

References Boerman, S., Kruikemeier, S., & Zuiderveen Borgesius, F. (2017). Online behavioral advertising: A literature review and research agenda. Journal of Advertising, 46(3), 363–376. https://doi. org/10.1080/00913367.2017.1339368 European Digital Advertising Alliance (EDAA). (2011). European industry self-regulatory framework on data-driven advertising, EDAA, Brussels. https://edaa.eu/wp-­content/uploads/OBA-­ Framework.pdf Grau, S. L., & Zotos, Y. C. (2016). Gender stereotypes in advertising: A review of current research. International Journal of Advertising, 35(5), 761–770. Hayek, F. (1961). The non  sequitur of the “dependence effect”. Southern Economic Journal, 27, 346. Hickel, J. (2021). What does degrowth mean? A few points of clarification. Globalizations, 18(7), 1105–1111. International Chamber of Commerce. (2012). ICC resource guide for self-regulation of online behavioral advertising (OBA), ICC, Paris. https://iccwbo.org/content/uploads/sites/3/2012/11/ ICC-­Resource-­Guide-­for-­Self-­Regulation-­of-­Online-­Behavioural-­Advertising-­1.pdf Jeurissen, R. J., & van de Ven, B. W. (2008). Frugal marketing: Can selling less make business sense? In L. Bouckaert, H. Opdebeeck, & L. Zsolnai (Eds.), Frugality. Rebalancing material and spiritual values in economic life (pp. 227–248). Peter Lang. Meadows, D. H., Meadows, D. H., Randers, J., & Behrens III, W. W. (1972). The limits to growth: A report to the club of Rome, Universe Books, New York. Raworth, K. (2017). Dougnut economics: Seven ways to think like a 21st-century economist. Random House Business Books. Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of individuals with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation). https://eur-­lex.europa.eu/legal-­content/EN/TXT/PDF/?uri=CELEX:32016R0679&from=EN Sen, A. (1977/1982). Rational fools. Choice welfare and measurement (pp.  84–106). Harvard University Press. Sen, A. K. (1977). Rational fools: A critique of the behavioral foundations of economic theory. Philosophy & Public Affairs, 317–344. Velasquez, M. (2014). Business ethics: Concepts and cases (7th ed.). Harlow.

Chapter 14

Tax Avoidance as a Moral Issue Jelle van Baardewijk

Abstract  Tax avoidance is normal in business, especially among large multinationals. In a strict legal sense, it’s not forbidden, but ethically it is questionable. In fact, there are good moral reasons to tax. One important reason is that, as a company, you contribute to the institutions that you yourself benefit from, such as the education system, public transportation, sports facilities, and so on. Another is that taxation makes for a more just society. This chapter presents an argument against tax avoidance based on the importance of contributing to your local community. It draws on the work of the philosophical sociologist Manuel Castells on the tension between globalization and localization. Questions 1. Why do we pay taxes and what do we pay taxes on? 2. What types of tax avoidance are there and how do they differ from tax evasion? 3. In what sense is tax evasion connected to globalisation? 4. What does Manuel Castells mean with ‘space of flows’? 5. What are the main three moral arguments against tax avoidance?

J. van Baardewijk (*) Kenniscentrum Business Innovation, Rotterdam University of Applied Sciences, Rotterdam, The Netherlands Vrije Universiteit Amsterdam, Amsterdam, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_14

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14.1 Two Cases Case 14.1 The journalistic LuxLeaks revelations show that the Dutch clothing company WE signed tax deals with the government of Luxembourg. This way, profits from the Netherlands were siphoned off to the British Virgin Islands via Luxembourg. Because different WE company units (e.g., the clothing brand O’Neill) mutually charged huge interests and royalties, the actual economic profit in the Netherlands was artificially kept low. The accountancy and consultancy company PwC was involved in this construction.

Case 14.2 Social Database analyses Twitter data. Thanks to their unique algorithm, they are able to help companies in targeting Twitter users with effective advertising. Social Database is so successful that even Twitter uses its services. Chances of the company being acquired in the future are high, just like it happens to other successful scale-ups. This way, the entrepreneurs can make huge profits. Therefore, financial advisers have already recommended officially establishing the company in a country with significantly lower taxes on earnings in the event of such an acquisition. For now, however, the entrepreneurs are keeping their company in the Netherlands. ‘If you live and work here in the Netherlands, then you should also want to pay taxes here,’ one of them said.

14.2 Tax Avoidance as a Moral Issue Tax avoidance is of all times, but in the present, globalised world it has become something very cut-and-dried.1 Multinationals do not generally consider tax avoidance as optional anymore. Fashion company WE, for example (Case 14.1), avoids taxes as if it were the most natural thing in the world. Which it indeed seems to have become. KLM, for example, employs pilots living in countries in which they pay less tax than in its home country the Netherlands. These pilots travel back and forth to Schiphol airport, while KLM pays for the commute (Joosten, 2022a). Another example is the globally operating American Uber, which is located in the Netherlands because the taxi company pays less tax here than in the United States. WE, KLM and Uber justify their natural tax avoidance in view of the necessity to cut down on

 Irene Plas translated this chapter.

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costs because of the worldwide competition. As a matter of fact, they prefer not to call it tax avoidance themselves, but rather use the euphemistic ‘tax optimisation’. It is interesting that tax avoidance seems to happen less in SME’s (Small and Medium Enterprises; less than 100 workers). On the one hand, this is because they lack the means and knowledge to join the international game of cat and mouse between companies, accountants, and governments (Römgens & Kiezebrink, 2016). On the other hand, SME’s are likely to pay taxes because they are more obviously intertwined with the Dutch economy via their personnel, products, and services. Their tax burden forms a cost item to them, but at the same time, a societal contribution. This, for example, goes for Social Database (Case 14.2). Tax avoidance is generally seen as legal, whereas tax evasion is illegal, because in the latter case, the taxable person knowingly misrepresents their financial reality. For example, when a company conceals an existing banking account in Switzerland, or a stock of cryptocurrency, this is tax evasion. Technically, there is no violation of legal rules in case of tax avoidance: companies shuffle with profits among subsidiary com panies, for example, in order to lighten the tax burden of the entire group (as in Case 14.1). In practice, however, the difference between tax avoidance and tax evasion is a matter of degree, and they often go hand in hand (Römgens & Kiezebrink, 2016). The common understanding of this distinction is based on a formalistic, legalistic view on the matter. On closer inspection, we can see that while tax evasion is indeed illegal, tax avoidance should be seen as neither legal nor illegal. Tax avoidance involves the exploitation of mismatches between tax regimes, and by doing so, companies put themselves outside of national jurisdictions. With this, they operate beyond the categories of legal/illegal. Hence, tax avoiding companies morally venture out onto thin ice. Cleverly using national legislation which countries have not mutually finetuned implies contributing less to those countries than intended. This makes tax avoidance such an important topic in business ethics. As the business ethicist Van Luijk describes, a business makes itself legally intangible by tax avoidance: One cannot say that something is morally acceptable because it is not prohibited legally. Deftly swimming through the loopholes of the law and then head on to the Antilles may perhaps make a company legally intangible, but this does not imply it is morally acceptable. (1993, pp. 32)

Van Luijk rightly notes that tax avoidance may well not be punishable in a legal sense, but that does not make it morally acceptable. He writes this as a corporate ethicist from the businesses’ perspective. This is important, because companies and their directors can choose whether or not to pay taxes in their home country or avoid it. It is a task of the business ethicist to confront companies and their workers with this choice through education, advice, and research, and to motivate them to reconsider these choices. However, disclosures by the International Consortium of Investigative Journalists show that companies are not the only ones avoiding taxes: LuxLeaks (2014), SwissLeaks (2015) and the Panama Papers (2016) revealed remarkably enough that governments themselves fully cooperate in tax avoidance. Hence, business

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ethics can also help governments by calling attention to the moral aspects of these disclosures. The following example may clarify how this works. The LuxLeaks disclosed how the Luxembourgish government signed tax rulings with businesses on a large scale during the period 2000–2012. This enabled multinationals, including WE and chip producer ASML, to pay significantly lower taxing tariffs than the official ones. It is a salient matter that Jean-Claude Juncker, at that time President of the European Union, was Prime Minister of Luxembourg from 1995 to 2013. He must have known the ins and outs of these tax rulings. Confronted with these disclosures, Juncker expressed that he thought this practice was morally dubious, but also remarked that everything had been legal from the Luxembourgish tax authority’s perspective (Piketty, 2020, pp.  726). This statement from Juncker resembles the Van Luijk quote, but apparently, Juncker still sees no objection to swimming through the loopholes of the taxing system. This example illustrates how entrenched and normalized the practice of tax avoidance has become among companies as well as states. How has tax avoidance become so widespread that there is no longer a moral taboo on it? Which ethical arguments can be brought in against the current practice of tax avoidance? That is what this chapter is about. Section 14.3 discusses in outline why and how we levy taxes in the first place. Section 14.4 discusses the various types of tax avoidance: (1) using tax havens, such as the Netherlands by Uber, for example; (2) attracting big companies as happens in Luxembourg. In Sect. 14.5, I take a social-philosophical approach and discuss the work of Manuel Castells to explain how tax avoidance was able to become so widespread. Although we learn from this discussion that it has become quite challenging to maintain an ethical taxing morale in a global networking society, we consider the weighty ethical arguments for doing so in Sect. 14.6. In the final, Sect. 14.7, we discuss why it is so important to counter tax avoidance at both the company and the governmental level. One important step is to scrap the ‘tax industry’ of consultants and accountants.

14.3 Why Do We Pay Taxes and What Do We Pay Taxes On? A national government has various types of income. The most important ones are: 1. taxes; 2. natural resources; and 3. company shares. In the Netherlands, the state generates most income through taxation, but in Norway, for example, the situation is rather different because of the vast oil fields up there. Moreover, countries possess shares in big companies. These shares do not always result in financial returns, and do not typically make up a significant part of the governmental income.

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Taxes are characterized by their obligatory character, and the absence of any direct quid pro quo (return benefit) individuals or organisations are entitled to as a result of paying them (Smith, 2015, pp. 4). Taxes are mainly used to pay for government spending, for example, on education and infrastructure. Apart from this so-­ called budgetary function, government incomes also have an instrumental function. Among these are: 1. wealth redistribution; 2. protecting national industriousness (for example, to keep an airline on board); and 3. stimulating certain developments (such as sustainability). Ethicists and economists typically focus on just redistribution of income through the tax system (more about this soon), but the design of economic institutions is also an ethically salient concern. On this, I will first make a few remarks. If we want to redistribute wealth, we (1) need to consider how this value is created in the first place. Consequently, we need to reflect on the company shares the government owns (2), and the governmental stimulus policy (3; for example, the tax benefits a tax code provides). For example, is it defendable that the Dutch government lent large sums of money to KLM to keep the company afloat during the Covid-19 lockdown period? On one hand, an airline like KLM contributes significantly to the Dutch economy. Its home base, Schiphol Airport, plays an important networking role in European aviation, resulting in a significant number of jobs. On the other hand, this networking function is so polluting that we may wonder if KLM is still compatible with the Dutch climate goals (compare Joosten, 2022b). Of course, bailout funds can only be spent once. The Dutch government could also have chosen to raise teachers’ salaries, and by doing so reduce the shortage of teachers. These are all moral choices a government should consider and in which the citizens’ various interests and values should be taken into account. This is why we can never talk about morally neutral economic policy, and this is why ethics is needed to help to clarify which investments are more better than others. Let’s move one step backwards to economic redistribution through taxation in order to realise more socioeconomic equality. To simplified, in most OECD countries, taxes are levied as following: 1. on working wages and income; 2. on company profits; 3. consumption via the VAT; and 4. on wealth. Over the last few years, criticism has greatly increased on the design of tax systems, because they allow the rich to reduce their tax burden, whereas the poor and middle-­ class have been burdened heavily. For example, Thomas Piketty (2013) argues that states should levy far more tax on wealth and far less on labour. His main argument is relatively simple and convincing: through interest, capital may grow exponentially, whereas labour income does not. Another criticism of Piketty is that taxes are insufficiently progressive: someone who earns piles of money may well pay a considerable amount of taxes, but not enough. As a result, they can build up their

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capital, which they can then invest, for example, in a second or a third house. This is how they can rapidly accumulate their wealth. This is both morally and economically problematic. Global socioeconomic inequality is on the rise. Moreover, this money tends to flows back less speedily into the ‘real’ economy, because the rich invest a lot and so spend less on consumer goods.

14.4 Tax Avoidance Multinationals in particular tend to see taxes as an expense. They generally minimise this expense to maximise their profits. The idea that taxes are part of the deal and are a crucial way through which a company makes a contribution to society (see Case 14.2) is not typically reflected in a companies’ attitude towards taxes. Countries, such as the Netherlands, Luxembourg and Switzerland play a dubious dual role when it comes to tax avoidance: they house a large number of multinationals that participate in tax avoidance and facilitate businesses to do so. Roughly speaking, there are two ways in which this may occur. I already mentioned in the introduction it is a matter of degree whether something is tax avoidance or straight tax evasion and, therefore, fraud. It is important to keep this in mind. First of all, one can avoid taxes by making use of a network of international branch offices in countries like the Netherlands, Monaco and the Bermuda Islands, which have a tax-haven reputation. In 2019, Google managed to pay only 2.4% taxes this way, whereas the United States maintains a 35% revenue tax. In 2022, the Netherlands housed roughly 12,400 letterbox firms – officially called conduit companies – which are mainly focussed on tax avoidance facilitation (Ter Haar, 2021). Pfizer siphons off patent profits on covid vaccines via the Netherlands, Uber taxis drive all around the world, but Uber is supposedly located in the Netherlands. Similarly, Fiat and even the Rolling Stones are multinationals ‘located’ in Netherlands. Among others, this happens through (sham) trade between subsidiaries of a bigger organisation, for example, through licencing, just like with WE (Case 14.1). Ter Haar (2021) shows how little money this makes for the Dutch economy – apart from the tax industry of fiscal consultants and accountants, that is – whereas the costs for the countries in which the companies truly operate are massive. Later on, I will come back to this tax industry, a moral monstrosity that pits countries against each other and complicates collective responsibility. A second type of tax avoidance concerns the transfer of economic activities to countries with an attractive taxing climate. Google, for example, also has an office in Ireland, and there are many other countries that provide a home for some of the activities of large firms from, say, the United States. Ireland is probably the most well-known example of a country that incentivizes this behavior, mainly through a low corporate tax rate. Companies often deliberately acquire other companies in countries with attractive tax climates to avoid taxes this way.

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14.5 Tax Avoidance Goes with a Global Networking Society Tax avoidance is of all times (compare Palan et al., 2013). Nevertheless, its present character and size tell a lot about our current society. In the footsteps of Manuel Castells (1996), I call our current society a global networking society. On the one hand, we as citizens live together in communities, neighbourhoods and cities; environments which, in the end, are part and parcel of a country. In this context, Castells speaks of the spaces of places. Of course, our economy is intertwined with this local three-dimensionality. Simultaneously, our economy and living together globally organised within networks: goods consumed in Europe are produced in Asia, and vice versa. TV and computers allow news from all around the world to enter our living rooms. In this way, apart from our local bedding, modern countries are internationally intertwined in what Castells calls the spaces of flows, Castells (1996, pp. 440-448). Think also of architecture with these spaces of flows: the Canary Wharf in London, Charles de Gaulle airport, or the skyscrapers in the Frankfurt financial district. This architecture does not reflect any specific location, but could be part of any metropolitan landscape, from New York to Shanghai. People who travel and work in or near this space of flow have a different life from those with a local life. In a spiritual sense, New York and Shanghai are closer to them than Leeds or Bristol. Maybe, they even feel as if they are world citizens first and foremost, and citizens of a country second. They speak English just as easily as their mother tongue (for a business ethical reflection on language, see Van Baardewijk (2019)). As a result of the mentality, the constructed environment, and the language that go with the space of flow, people feel less responsible for local and national societal institutions, such as a good road system, or a working police force. The question, therefore, is how the spaces of places and spaces of flows can harmoniously coexist together. Already in the 1990s, Castells showed we shouldn’t be too optimistic about this. Almost three decades later, his research has only become increasingly urgent. Those ‘nowhereshires’ are connected to worldwide flow networks: scientists in the United States are in direct contact with those in Australia, but not with the university’s surrounding neighbours. Banks and other financials trade with each other, whereas they have hardly any local branch offices left. For the time being, the global flow economy finds her peak in the worldwide trade in shares and other financial products, in which every second counts and which never sleeps. Capital flourishes in the spaces of flow, but most labor is limited by space. The ones that do not participate in the knowledge economy – the primary school teacher and thatcher, for instance – are not part of the space of flow in which the banker and scientist move daily. The people in the space of flow – the present day elite, according to Castells – lack a sense for the dynamics of the locality of home, neighbourhood, town and country. In short: elites are cosmopolitan, people are local. The space of power and wealth is projected throughout the world, while people’s life and experience is rooted in places, in their culture, in their history. Thus, the more a social organization is based upon ahistorical

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flows, superseding the logic of any specific place, the more the logic of global power escapes the socio-political control of historically specific local/national societies. Castells (1996, pp. 446)

The elite of the spaces of flow form a small group which, through their own micro-­ networks, influences macro-networks, such as those of big companies, the stock exchange, and science. Think specifically of business lunches in posh hotels, which all look the same worldwide, where decisions are being made with global impacts, like the relocation of the Unilever head office to the United Kingdom. During such decisions, there may be a concern for local citizens, but this is not self-evident. As a matter of fact, the global networking society is an order that stands outside the national and even international politics. The flow space is a network that is not connected to any particular civil community, and any particular communal concerns. It is delocalized and stimulates no local care. Hence, paying taxes is no longer natural, no question of civil integrity, but an arbitrary choice directors may or may not take out of concern for their corporate social responsibility. The existence of the space of flow is a given fact, as well as an ideal for many college educated professionals. This also explains why politicians go along with the wishes of those that operate within these networks. Politicians also know that a space flow junction can be shifted – just like Max Verstappen, who lives Monaco for tax reasons – and therefore think that the interests of companies and wealthy people better be taken seriously. Their economic rationale is that it is better for a country to receive small tax rates from many companies than receive large rates from a few companies. This explains why the Netherlands hosts relatively many letterbox firms and why Luxembourg offers many tax rulings. The cultural power offered by the spaces of flow also explains why companies do not need to account at all for what profits per country they make (for more information on country-by-country reporting, see Murphy (2016). Multinationals with subsidiaries can easily adopt the profit (or loss) in the Dutch or, for example, Luxembourgish balances. After all, the directors and accountants think and speak globally, not nationally. The reality of the spaces of flow justifies their position. The question is, however, for how long countries will allow these unbridled spaces of flow to exist.

14.6 Tax Avoidance: Ethical Contra Arguments There are numerous ethical arguments against tax avoidance. The most significant ones are the following: 1. We have a duty to pay taxes, because we have a duty of duty of care towards our local community; 2. because all businesses need to pay taxes, companies cannot make exceptions for themselves; 3. tax avoidance is unjust towards the countries companies depart from.

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The first argument against tax avoidance, which I see as the most important one, deals with the interests of citizens and companies that actively contribute to the community. Because we live in a highly individualized society, talk about the common good has come to feel awkward. Instead, we stress the ethical ideal of the protection of individual interests and rights. But it only take a quick moment to realise how much human beings as individuals lean on institutions and relationships (see also: Verbrugge et al., 2018). Our individual and business interests rely on a well-functioning educational system, an efficient road network, a broad range of products and services to choose from, as well as a shared mentality, a language, cultural expressions, friends, family, a set of values, and so forth. Multi-nationally operating businesses lean on these shared institutions and mentality: they use the motorways, take on well-educated personnel, thrive in a culture of skills development, et cetera. This institutional climate is an essential consideration when businesses consider opening a new office somewhere. Those who do not contribute to these institutions, walk away from their responsibility. I call this first argument against tax avoidance the ethical argument of obligatory local provision. The second argument against tax avoidance is based on fairness with respect to the SME’s that typically do not have the means to participate in the game of international tax avoidance. Consequently, SME’s carry the responsibility for the above discussed institutions and mentality disproportionally. In fact, SME’s are being disadvantaged compared with multinationals. Even though in practically every country SME’s do more for the common prosperity than the big companies where, on the whole, fewer people work. Something comparable goes for very rich individuals, like professional athletes and CEO’s of multinationals. Why would they have to contribute lower percentages than others? In short, tax avoidance is especially something that multinational companies and super rich citizens can engage in, putting a higher burden on all other tax payers. We can therefore call this argument the unjustified disadvantage of SMEs and ordinary citizens. A third argument against tax avoidance concerns international justice. A country simply disadvantages another country by facilitating tax avoidance. This should especially concern us if we recognize that this especially disadvantages Third World Countries. In countries in South America and the Middle East, for example, much tax avoidance takes place through countries such as Luxembourg, the Netherlands and Ireland (Dietsch, 2015). The issue is that multinationals operate from the spaces of flow, where they can easily choose which country to operate in, at least fiscally. This then leads to taxing competition between countries. International cooperation is needed – actually, the OECD just initiated a minimum global tax rate of 15% – to stop this vicious cycle. The ethical argument here is that the disadvantages of tax avoidance in the country of origin are much bigger than the advantages in the country of avoidance. What is more, the advantages of the present international competition essentially turn out in the advantage of companies and rich people. We can call this the argument the international injustice of tax avoidance.

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14.7 Government, Businesses and Tax Industry Change The business ethicist Van Luijk, quoted at the beginning of this chapter, is right that businesses have a moral responsibility to pay taxes, even though, according to the letter of the law, tax avoidance is not illegal. However, the question is if the morality at the basis of the Van Luijk quote can still exist in the globalized networking society. True, there are plenty moral issues in this networking society, but people and companies are inclined to wave them away with the excuse that the world has changed, nation-states are old-fashioned, and competition is too fierce. Those arguments will not last when we reason ethically from the place people live and work in. An important part of the responsibility to pay taxes falls on companies themselves. The government can help here by underlining its importance, and, perhaps, design stricter rules. Nevertheless, from a business ethical point of view, it is also essential that companies experience it as meaningful to contribute to society. They must awaken from their illusion that they only exist in the spaces of flow, and acknowledge they are part and parcel of a society bound to a place. Teachers and journalists can help with this challenge. Political change is also required: individual politicians often have a one-sided view on the national self-interest. Think of Juncker’s behavior in the LuxLeaks case, or Rutte’s behaviour concerning the lobbying by Unilever and Shell. Their narrow self-interest wins from taking collective responsibility. This is morally abject, but not incomprehensible in an international order highly geared towards the space of flow. The global dynamic of mutually reinforcing self-interest thinking leads to a race to the bottom in which countries attempt to outvie each other with lower taxes so more companies will register in their country. In the end, all countries will be the losers in this tax competition. The solution is a new international alliance against tax competition. Fortunately, there are signs that countries worldwide are becoming more willing to do something against tax competition. In October 2021, for instance, 136 large and small economies agreed to introduce a minimum corporate tax rate of 15%. Still, there are many other things that could be done internationally. For example, think specifically of agreements to have companies report their revenues on a country-by-country basis and also attach national profit taxes to that. That would be revolutionary. Countries like The Netherlands, Ireland, and Luxembourg would initially lose out due to job losses in the tax avoidance industry. In another way, it could also gain substantially. Just think how many companies make their money in these countries – Microsoft, Google, Facebook, and so on – without paying profit tax here. Such an innovative international tax system will not be realistically achieved soon, because politicians have not yet realised that such a system is in the well-understood self-interest of countries. Fortunately, there is a trend of working towards a Tax Governance Code, which will help to convince both businesses and politicians for more international tax cooperation (Gribnau, 2020). Besides new regulations and a more conscious business community, the tax industry around morally dubious tax advice also needs to be reduced, in order to make tax avoidance less profitable. This industry, also called the Wealth Defense

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Industry, consists of law firms, funds, and consultants and helps companies minimize tax costs. It is also closely intertwined with the big accounting firms Deloitte, KPMG, EY and PwC, again indicating how widespread tax avoidance has become in recent decades (see also Case 14.1 on WE). The entire Wealth Defense Industry should reflect upon its own practice: does it actually have a value-creating function in the economy? Or, is it in fact undermining the local-national economy? This is a hard question to ask highly skilled professionals living and working in the flow space. Critical education and journalism are needed to create space for reflection on these issues. In the end, tax avoidance will not disappear without new political restrictions. Indeed, you cannot leave business ethics entirely to companies if the market believes it exists in a moral vacuum (see Chap. 5). Yet the question remains: how can companies deal with taxes in a morally responsible way? Do they opt for maximizing profits by paying as little tax as possible, or do they take responsibility for the country in which they live and work? Strictly speaking, this is not a substantive moral dilemma (see Chap. 4), but motivational problem, because the profit one makes by paying less tax comes at the moral price of shirking one’s responsibility for the collective commons. In such a case, a company should choose the moral good over economic gain. This reasoning may feel old-fashioned to people who think and live from what Castells calls the space of flow. But I hope to have made it clear in this chapter that that space of flow ultimately takes root through people in ordinary local social worlds. Those who recognise that – and possibly shake off the feeling of being old-­ fashioned – are also likely to be willing to pay taxes. Education, research and journalism help cultivate that recognition. And that is necessary, because tax serves essential purposes, but somehow that realisation has not been sufficiently highlighted in recent decades. A key explanation for this is clear: there is a morally questionable tax industry that actively helps companies swim through the loopholes of the law.

References Castells, M. (1996). The rise of the network society. Vol. 1: The information age: economy, society and culture. Blackwell Publishing. Dietsch, P. (2015). Catching capital: the ethics of tax competition. Oxford University Press. Gribnau, H. (2020). Tax governance, maatschappelijke verantwoordelijkheid en ethiek in context. In H. Gribnau (Ed.), Tax governance, maatschappelijke verantwoordelijkheid en ethiek: Tijd voor een code? (pp. 15–27). Ministerie van Financiën. Joosten, T. (2022a, February 18). Belastingontwijkende KLM-piloten in strijd met voorwaarden staatssteun. Follow The Money. Retrieved April 11, 2022, from https://www.ftm.nl/artikelen/ belastingontwijkende-­piloten-­brengen-­klm-­in-­gevaar Joosten, T. (2022b). De blauwe fabel. Waarom we de KLM al een eeuw lang tegen elke prijs in de lucht houden. Follow the Money. Murphy, R. (2016). Country-by-country reporting. In T. Pogge & K. Mehta (Eds.), Global tax fairness (pp. 96–142). Oxford University Press.

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Palan, R., Murphy, R., & Chavagneux, C. (2013). Tax havens. Cornell University Press. Piketty, T. (2013). Kapitaal in de 21ste eeuw. De Bezige Bij. Piketty, T. (2020). Kapitaal en ideologie. De Geus. Römgens, I., & Kiezebrink, V. (2016). Grote bedrijven, kleine lasten: Een onderzoek naar de effectieve belastingdruk van grote Nederlandse bedrijven. SOMO. Smith, S. (2015). Taxation: a very short introduction. Oxford University Press. Haar, B ter. (2021). Op weg naar acceptabele doorstroom. Rapport van de Commissie Doorstroomvennootschappen. Retrieved from: https://www.tweedekamer.nl/kamerstukken/det ail?id=2021D44949&did=2021D44949 Van Baardewijk, J. (2019). De taal van een eerlijke economie. In L. Jensen & D. Rovers (Eds.), Against English. Pleidooi voor het Nederlands (pp. 167–180). Wereldbibliotheek. Van Luijk, H. (1993). Om redelijk gewin. Oefeningen in bedrijfsethiek. Uitgeverij Boom. Verbrugge, A., Buijs, G., & Van Baardewijk, J. (2018). Het Goede Leven en de Vrije Markt. Lemniscaat.

Chapter 15

Meaningful Work Willem van der Deijl

Abstract  We hold an ambivalent attitude towards work. On the one hand, we see job creation as a good thing, as a way in which companies can contribute to society. On the other hand, work is often seen as something undesirable in itself. This chapter surveys a number of important philosophical questions related to the value of work in the context of business ethics: what is good work, and what is dignified work? What is exploitation? And should our general attitude towards automation be positive, negative, or more nuanced? Questions 1. What is meaningful work? 2. What is undignified work, and exploitation? 3. What is the luddite fallacy? 4. What ethical questions does automation raise?

Case 15.1 Sara is a manager at a chain supermarket. She receives an attractive offer from a company that sells cleaning robots. If the company can deliver on its promise, the supermarket will reduce its personnel needs by 2 worker per day. Supermarket employees have picked up on the news and have mixed attitudes towards it. First and foremost, they are worried about their job security. But, there are also other considerations. The robots will also bring down costs, allowing prices to come down. Furthermore, the work will change when (continued)

W. van der Deijl (*) Department of Philosophy, Tilburg University, Tilburg, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_15

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Case 15.1 (continued) cleaning will no longer be a substantive part of the work, and they will spend more time on other tasks. This will be accompanied by a somewhat higher salary, but it is uncertain whether all existing employees have the capacity to operate the robots.

Case 15.2 Said is a manager at a warehouse company. Until now, the company has always been very hierarchical: the managers in the warehouses give tasks to the warehouse workers. The workers have asked for more say in the distribution of tasks and the way the schedules are made. Said can see that this would have advantages, but also worries that this will eventually lead to a situation in which certain tasks are not done, or not done satisfactorily. He also worries that workers might give themselves too much freedom, and that productivity will eventually go down. Employees counter that it is the hierarchical structure that leads to inefficient assignments. They themselves have a much better view of how the work could be done efficiently.

15.1 Job Creation Businesses are often praised for creating jobs. Why is job creation so desirable? The reasons seem obvious: gainful employment plays an important role in people’s lives. When you become unemployed, you not only lose income; the loss may also be a blow to a worker’s self-esteem, to their social network, and to their sense of purpose in life. In 1930 virtually everyone in the Austrian village of Marienthal became unemployed when a local factory closed. Research in this village showed that despite the strong welfare system in place at the time, cultural and civic life came to a complete standstill after the closure. Festivals were no longer celebrated, people retreated more into their homes, despite everyone having more free time on their hands. As the prospect of unemployment is so unattractive to most people, it is not surprising that we celebrate job creation, and get nervous when jobs disappear. The choice Sara must make in Case 15.1 therefore seems to be a trade-off between cost reduction on the one hand, and the interests of workers on the other. Yet on reflection, this trade-off is not so straightforward. Purchasing a machine that saves work is a form of automation: substituting human labor with a machine or an automated process. Automation usually occurs through a change in the use of technology. Automation increases productivity: the same amount of output requires fewer people, so output per worker goes up. Automation usually increases economic output. When people hear “automation”, their mind quickly goes to modern technology and digitization, but automation is a broad term. Automation is a

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phenomenon of all times: weaving machines automated the European textile industry at the beginning of the industrial revolution. Even something like the invention of the wheel can be seen as a process of automation: using a cart, a person can carry much more goods than without one. In the short term, automation reduces the demand for human labor, but history shows that automation does not lead to large waves of technological unemployment. Typically, the productivity gains increase economic output, lead to increases in salaries, and eventually to new jobs. So Sara’s choice is not a simple trade-off between the interests of workers and shareholders. Instead, it is a choice that affects the interests of workers in complex ways. On the one hand, acquiring a cleaning robot may lead to current workers being laid off and to fewer new people being hired. But, in the long run, it is part of a trend that can actually create jobs and prosperity. At the same time, it also changes the type of work that is available to workers and the opportunities it creates may affect different people unevenly. For instance, it may create opportunities for more highly educated workers, while low-skilled workers could lose out. Historically, during the Industrial Revolution, automation led to the disappearance of the middle class of artisans and tradesmen. Today, there is concern that the negative effects of automation will be borne mainly by the working class and the (lower) middle class. It is important to note that the effects of automation can vary by industry. In some industries, automation may reduce the variety of tasks available to people. In Sara’s supermarkets, workers will no longer have to spend much time on cleaning. More time is left for a narrower range of tasks, such as filling the shelves and helping customers. In other companies, automation seems to proceed in such a way that only monotonous tasks remain. In his book Bullshit Jobs, anthropologist David Graeber (2018) discusses a company that specializes in checking forms. The company has a computer program that works so well that no mistakes are actually made. However, customers often still demand that their forms are double-checked by a human. As a result, the company has hired a number of employees to check forms that never contain errors. As a society, we should ask ourselves if that is something we should want to ask of people, whether this is still dignified work. The same question is often asked of other repetitive work, such as assembly line work, or other work in which people have very little autonomy, such as some jobs in distribution centers. But what exactly is dignified work?

Box 15.1: ‘The Luddite Fallacy’ In late 18th or early nineteenth century, during the rise of the industrial textile industry, there lived a now legendary person, Ned Ludd. Ned worked in a textile workshop and he saw that the use of machinery was increasingly replacing the workers in the workshop. According to legend, Ned Ludd destroyed two machines in a moment of anger, starting a workers’ revolt against technology. Many machines were destroyed. The group went by the name of the Luddites. While the historicity of Ned Ludd is in doubt, the luddite uprisings certainly did happen. (continued)

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Box 15.1  (continued) The name of this group is the origin of what economists today sometimes call the Luddite fallacy. The fallacy is a name for the common thought that technology is bad for workers because it lowers the immediate demand for work. The reason that some economists have called it a fallacy is that the work that disappears in one place always reappears elsewhere, and ultimately, technological progress leads to an increase in efficiency, which in turn leads to more economic activity, more jobs, and higher wages. According to this line of argument, it is short-sighted to be angry at technological advances that make your work obsolete. Ultimately, technologization will lead to an improvement of your economic position. It is not so clear, however, that this criticism of the Luddite fallacy is fair. When you lose your job because of a technological innovation, you do face direct adversity, economic and otherwise. While technological progress is generally expected to create new work, many people will still have to be retrained to do so. Much of your experience, prestige and market value may be lost as a result. This particularly applies to older workers. If you lose your job as a result of automation, it is not at all certain that the new jobs that will be created will be available to you. Moreover, there are economists who see a the current wave of automation as a radically different type of automation than before, one that will also have significantly different consequences. One example is The Second Machine Age (2014), by Erik Brynjolfsson and Andrew McAfee. In this book, the authors argue that until now, human workers have always had an advantage over technological processes: it takes less time to teach a human to do a new task than it takes for a developer of an automated process to perform that same task. But, current developments in artificial intelligence may put an end to this advantage. AI systems may at some point outpace us. People will then no longer be able to keep up with automated processes. The job-creating properties of technology will then diminish dramatically, while technology will still make some work that we currently do obsolete. If Brynjolfsson and McAfee are right about this, society will face a large shift in the way we relate to work. Companies will play a central role in this transition (see Box 15.2).

15.2 Dignified Work As we discussed at the start of this chapter, work is important to most people. But not all work is equally good. An important criticism of nineteenth-century labor relations, articulated by Marx and others, focused on the type of work that many workers in nineteenth-century factories did. It was hard, heavy and repetitive work, making long hours, that made the worker appear to be little more than an appendage to a machine. While these working conditions are now quite rare in western economies, there are still jobs that share characteristics with these nineteenth century

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factory jobs: work in fast-food restaurants, for example, in which every operation that is expected of workers is precisely prescribed. Perhaps the work of meal delivery drivers and cab drivers fits this as well. In much of this work, the workload is high, and people are expected to do exactly what their onboard computers command. Some philosophers argue that not all work is dignified. Work that is not dignified harms the worker, but most importantly, it does not treat the worker with the respect and dignity that every human being is entitled to. A primary reason for labeling work as undignified is poor working conditions. Examples of poor working conditions in the workplace are easy to find. A report released in 2018 on Amazon’s warehouses reported that workers wore diapers while working there, because toilet breaks were not allowed (Organise, 2018). At the time of the construction of stadiums for the World Cup in Qatar, Amnesty International reported that many migrant workers in Qatar were working long hours in the scorching heat, while living under the fear that their residence permits would be revoked if they would protest or quit (Amnesty International, 2016). Many workers died in the process. Such working conditions are undignified and therefore morally problematic. A possible objection to this is that the migrant workers themselves voluntarily chose to accept the terms of their employment. Apparently, the benefits outweigh the disadvantages for them, because they have the option to quit. This brings us to the second reason why some work is not dignified. Working contracts are sometimes very unfair, as the Amnesty’s report cited above already showed. Beside seizing travel documents, employers sometimes charge excessive amounts for “breaches of contracts” or for accommodation and travel arrangements, indebting workers into retaining their jobs. Migrant workers may also not have been properly informed about the contents of their contracts or were forced by circumstances into accepting an unfair offer. In case of the Qatar stadiums, many migrant workers made their choice from a situation of vulnerability: they had few prospects in their country of origin; they would most likely spend their life living in abject poverty if they would not leave. This goes to show that even when guest workers do make a free choice, it is not true that every consequence that follows from a free decision is for that reason just and equitable (Scanlon, 1998). Taking advantage of someone’s vulnerable position to benefit oneself is called exploitation. To see why exploitation is generally morally problematic, consider the principle of humanity we discussed in Chap. 4: we should never treat others as a mere means, but always also as an end in itself. When we take advantage of someone’s vulnerability to benefit ourselves we instrumentalize a person, without regard for their interests. If we also cared about the other person’s interest, we would not exploit their vulnerability. A third way in which work can be undignified is that work may fail to treat us as an autonomous being. Being autonomous is being able to make one’s own choices. Of course, being employed sometimes means following directions: your employer hires you to do certain tasks. If you would choose to disregard these tasks and do whatever you feel like doing, you will legitimately lose your job. But, certain types of work treat us as if we are not autonomous beings, as if we are incapable of making good choices. If you work in a fast food restaurant, and all the steps you need to take to prepare burgers are exactly prescribed, there are no choices involved in

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doing your job, you are essentially following an algorithm all day. We can seriously question if such work still treats us as an autonomous agent. If you were able to make your own choices, why would all the steps required of you be prescribed for you? Compare working in a fast food restaurant to the work of a restaurant chef. In essence, this work is very similar: in both jobs you are in the kitchen, using your hands to prepare dishes for customers. But in practice, the work of a chef is almost nothing like the work in this fast food restaurant. A chef is expected to make creative choices, develop their own recipes, and choose which ingredients go well together. The ethical difference between their work comes down almost entirely to autonomy: fast food workers have no autonomy, chefs do.

15.3 Autonomy and Democracy at Work A lack of autonomy is a common complaint of employees in many modern workplaces: nurses complain that they have much less time with patients than they think would be appropriate; teachers complain that they have too little freedom in developing their own teaching programs; and dockworkers want to be able to choose whether to work overtime. One suggested solution for this is that companies should provide workers with more opportunities for self-direction. In 2020, a number of prominent thinkers, including economist Thomas Piketty and philosopher Elizabeth Anderson, published a pamphlet for more workplace democracy (Ferreras et al., 2022). Self-direction in work and workplace democracy are two separate ideas. You can be self-directed in a non-democratic company, and a democratic company may choose to limit the autonomy of individual employees. But, both oppose the highly hierarchical structure that is now widespread in business: operational staff reports to managers, who in turn report to middle managers or company executives, who in turn report to their managers. Not only can this be highly inefficient, as managers sometimes know less about the work being done than operational staff, but it is also problematic in itself that workers do not get a say in how they operate. Many northern European countries already have laws that require some employee involvement in company decision making. In Denmark, every company with more than 20 employees must have a worker’s council, in Germany it is required for companies with more than 5000 employees. A worker’s council has the right to consult with the employer. Depending on the subject, a worker’s council sometimes has the right to consent or the right to advise. According to proponents of workplace democracy, employee involvement should be expanded. Not only does this ensure that workers’ interests are safeguarded. It also gives workers at least some autonomy over their own tasks. This does not mean that as a worker you never have to do tedious chores, but rather that you can decide with colleagues how you think the chores should be distributed.

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Although the democratization of work sounds attractive, it also has downsides. On the one hand, other stakeholders of the company, such as shareholders and consumers, may have a legitimate concern that the democratization of work comes at the expense of their interests. Here you can counter that in many countries shareholders currently hold a disproportionate amount of power. It is not unreasonable that shareholders are involved in the decision making, but currently a shareholders’ meeting usually has the ultimate power in a company. Employees may not invest their money, but they do invest their time, their labor, and their talents in the company. Therefore, they should at least have some say. Democracy should not be expected to flawlessly protect the interests of all the workers. Employees may choose to give the worst tasks to all the newcomers, who, as a minority in the company, would not be able to prevent this. Nevertheless, democratization still seems an improvement over the current situation where managers decide what happens, under the ultimate governance of shareholders. The hierarchical decision structure regularly leads to undesirable working conditions and an undesirable lack of autonomy among employees. Finally, it is sometimes objected that democratizing work will be inefficient. Although truly democratic companies are (still) rare, Northern European companies with working councils are among the largest in the world. The world’s largest automobile company is Volkswagen, a German company with well-established co-­ determination bodies. Moreover, existing research on cooperatives  – fully employee-owned companies – shows that these companies are even more productive than traditional capital-driven companies (Pencavel & Craig, 1994; Fakhfakh et al., 2012). While it is difficult to say exactly what the effect of co-determination on efficiency is, it seems at the very least premature to claim that co-determination comes with a reduction in efficiency.

Box 15.2: A Future Without Paid Work? In the previous box, we discussed Brynjolfsson and McAfee’s prediction that the current wave of digitization may well allow technology to replace work faster than it can create work. This prediction is not uncontroversial, but it confronts us with an important question: how desirable is the existence of paid work? A report by consultancy McKinsey (Bughin et al., 2018) predicts that nearly half of the jobs people currently have in Western economies could be automated by 2050. If changes to the economy will not generate a sufficient amount of new jobs, the question arises of how we as a society should deal with this. In the early twentieth century, the economist John Maynard Keynes (1931) wrote an essay in which he predicted that by 2032 people would only have to work an average of 15  hours per week if living standards were to remain constant. Although our standards of living have increased, Keynes correctly predicted a dramatic increase in worker productivity. While most people still (continued)

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Box 15.2  (continued) have paid work for more than 15 hours a week, the amount of time people spend in paid work has also decreased over time. In the mid-twentieth century, a 48-hour work week was the norm in most Western economies, and still is in some European countries, while it has decreased in Western Europe. As we take further leaps in productivity in the coming decades, Keynes’ prediction will become increasingly relevant. Is it desirable that we will continue to spend much of our waking time in the workplace, or would it be better to work less? If technology will actually reduce the demand for human labor, our societies could choose to further distribute the remaining work among workers. In Northern European countries, an increasing proportion of workers already work less than 40 hours a week. If the need for human labor declines, reducing working hours seems an obvious solution. One problem, however, is that automation is not expected to have a proportional effect on all possible jobs. Low skilled work (such as bus drivers, warehouse workers, as well as administration workers) will be disproportionally affected. It will not always be possible to distribute the work of researchers, IT workers, and teachers among the groups that lose jobs due to technology. Automation may thus lead to polarization and an increase in inequality. Keynes himself was also concerned about the problem of boredom. If paid work disappears, many people will have more free time. Would we not become bored without paid work? He wrote about our work ethic – ‘the old Adam,’ as he called it: For many ages to come the old Adam will be so strong in us that everybody will need to do some work if he is to be contented.

This seems paradoxical. Gainful employment is not typically something we look forward to. As philosopher-economist Joseph Heath (Heath, 2009, 313) writes: ‘Generally speaking, work is bad, which is why people seek to avoid it.’ We are also all familiar with the slogan “Thank God it’s Friday,” which expresses that your job is a burden that briefly falls away over the weekend. Yet this picture is distorted. Work also has many benefits for the workers, besides earning an income. Many proponents of the idea that a world without paid work is desirable think that in such a world we could easily introduce a basic income. The question, however, is whether with a basic income, but without paid work, we would be as happy as we would be in a world in which we did have to work. Paid work structures our days, and people without paid work are generally less happy and satisfied with their lives, even if they have sufficient resources to live on. Free time, it seems, is especially valuable if you do not have much of it. With more time on our hands, we will have to look for ways to spend it on hobbies and social activities. Not everyone may be quite good at this. (continued)

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Box 15.2  (continued) A final important aspect to highlight about the desirability of a world in which paid labor may disappear is that there is a lot of things we need to take care of! Before we get bored, there seem to be plenty of important things we need to do: there is a major climate crisis (see Chap. 11); extreme poverty affects millions; and there are increasing numbers of elderly people who require care. Addressing all these issues will require human labor: windmills and solar panels need to be made; economic development requires work; and technology may never be able to fully substitute caregivers in nursing homes in a dignified way. Before we dream of world without work, much work still needs to be done.

15.4 Conclusion We cannot predict the future, but we do know that the labor market is ever in flux. Companies play an important role in this, not only because they create work, but also because they play an important role in developing technology that changes, or eliminates work. This is not new. At the beginning of the twentieth century, the labor market looked completely different than it does today. At that time In the United States, 40% of the work force worked in agriculture, and 30% worked in industry. Today, about 2% of the population works in agriculture, 20% in industry, and almost everyone else works in services. All of these changes have been driven by technology. While technological development and the associated changes in the labor market have brought us many good things – economic growth, more money for every hour we work, better stuff – it also raises many ethical questions. How far can we go in replacing workers? Is job creation always a good thing? How can we eliminate undignified work and exploitation? And how can we fairly involve workers in corporate decision-making?

References Amnesty International. (2016). Qatar: Abuse of world cup workers exposed [online]. via: https:// www.amnesty.nl/actueel/qatar-­abuse-­of-­world-­cup-­workers-­exposed. Accessed 2 April 2022. Brynjolfsson, E., & McAfee, A. (2014). The second machine age: Work, progress, and prosperity in a time of brilliant technologies. WW Norton & Company. Bughin, J., Hazan, E., Lund, S., Dahlström, P., Wiesinger, A., & Subramaniam, A. (2018). Skill shift: Automation and the future of the workforce. McKinsey Global Institute, 1, 3–84. Fakhfakh, F., Pérotin, V., & Gago, M. (2012). Productivity, capital, and labor in labor-managed and conventional firms: An investigation on French data. ILR Review, 65(4), 847–879.

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Ferreras, I., Battilana, J., & Méda, D. (2022). Manifesto: Work. Democratize. Decommodify. DECARBONIZE (pp.  17–22). University of Chicago Press. https://doi.org/10.7208/chicago/ 9780226819631-­002 Graeber, D. (2018). Bullshit jobs. Simon & Schuster. Heath, J. (2009). Filthy lucre: Economics for people who hate capitalism. Harpercollins Canada. Keynes, J.  M. (1931). Economic possibility for our grandchildren. Essays in persuasion. Macmillan. Organise. (2018). What’s it like working in an Amazon warehouse? The results. Organise [online]. Through https://organise.network/blog/2018/2/9/whats-­it-­likeworking-­in-­an-­amazon-­ warehouse-­the-­results. Accessed 2 April 2022. Pencavel, J., & Craig, B. (1994). The empirical performance of orthodox models of the firm: Conventional firms and worker cooperatives. Journal of Political Economy, 102(4), 718–744. Scanlon, T. (1998). What we owe to each other. Harvard University Press.

Chapter 16

Animal Business, a Blind Spot of Companies Monique Janssens

Abstract  Companies have a strong moral responsibility towards animals. Consumers, investors and NGOs are becoming more critical of the treatment of animals by companies. Nevertheless, the topic of animal ethics seems to be a blind spot in the corporate social responsibility policies of most companies. As moral actors, companies should take the interests of animals into account in their decisions. More specifically this means that companies should take the current and future welfare of animals into account, including continuation of their lives. Based on this corporate responsibility, critical reflection is offered on various categories of corporate impact on animals. The chapter concludes with managerial implications for different industries. Questions 1. What reasons do philosophers provide for considering the interests of animals? 2. For which type of companies should animal ethics be a central concern? 3. How can companies act ethically towards animals?

Case 16.1 In a slaughterhouse, a pig is plunged alive into boiling hot water, hanging by her hind legs, and she drowns, while in severe pain. An inspector from the Food and Consumer Product Safety Authority, reviewing video recordings of the slaughter line writes: “I saw that immediately after the nose came into contact with the hot scalding water, a pig began to move and the animal raised its head to avoid contact with the hot water. As the pig’s head sank further into the hot water, the movements of the entire body became more violent.” The killing of the pig had failed and no one had noticed.

M. Janssens (*) Ethisch Bedrijf (Ethical Company), Rotterdam, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1_16

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Case 16.1 is one of the examples of downright horrendous treatment of a (non-­ human) animal by a company.1 In this case, a clear mistake was made. But even if no mistakes are made, the killing of animals in the livestock industry raises ethical questions. Animals are used throughout society, also by corporations, as a means to achieve human goals. They are bred or captured to serve people and their pets as food. Animals with certain genetic characteristics are bred to be used as pets or as laboratory animals. Animals in circuses and dolphinariums are imprisoned and have to learn tricks to entertain people. In all these cases, the interests of the animals take second place. Almost anyone will agree by intuition that this intensive use of animals comes with moral responsibilities. Anyone will be horrified by the example of a pig that is being boiled alive and agree that this should be avoided. There is also a legal recognition that animals have intrinsic value: different from objects, animals have an inherent ethical importance, a value for themselves and in themselves. Hurting them, for instance by causing them unnecessary pain, is something we should ethically avoid. We should take their interests into account when making decisions. This holds not only for individual people, but also for companies. But how far should they go? Animal welfare is not yet broadly seen as an aspect of sustainability or corporate social responsibility (CSR). For example, animals are barely mentioned in the international standard for sustainability ISO26000, or in the seventeen Sustainable Development Goals (Visseren-Hamakers, 2020). At the same time, consumers are increasingly asking for animal-friendly products. Some stop eating animals, others choose products with an animal welfare label. A growing group is becoming vegan and stops consuming dairy, honey, wool, and leather. Marine mammal parks and zoos are increasingly criticized or even avoided by more and more people. But whose responsibility is it to ensure that companies treat animals well? Different parties point at each other: The consumer should refrain from buying products that harm animals! Companies should not produce or sell irresponsible products! The government should regulate things better! The reality is that each party has a stake in the suffering that companies inflict on animals. Everyone bears some of the responsibility, including the companies themselves. In this chapter, we discuss the responsibility of companies.

16.1 Philosophical Foundation Why should a business take animals into account? You may think: surely humans have a moral status above animals? Perhaps you think that animals are there to be eaten. Increasingly fewer people believe we do not have any moral responsibility towards animals. Consequently, it can be strategically prudent for all companies to

 Throughout this chapter, we will refer to “animals” to connotate non-human animals.

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move along with a changing world, and acknowledge some moral obligations towards animals. But, there are also some good ethical arguments for our moral obligations towards animals. We can make the case for our ethical duties towards animals from a variety of ethical perspectives that correspond to the categories of moral reasons we discussed in Chap. 4.

16.1.1 Consequences Jeremy Bentham (1780/2007), as early as the eighteenth century, succinctly but powerfully wrote these now legendary words, “The question is not, Can they reason? nor, Can they talk? but, Can they suffer?” In doing so, he indicates that animals are morally relevant beings that matter when we make choices and trade-offs. Bentham was a utilitarian, someone who thinks that ethics is only concerned with the consequences for the welfare of individuals of our choices. And since animals can also experience welfare, it is important to consider their welfare as well. This approach to animal ethics has been elaborated both theoretically and practically by the contemporary Australian thinker Peter Singer (1975/2009). Singer believes we should strive for maximum welfare and minimum suffering. When you have positive and negative experiences, such as pleasure or pain, you are what philosophers call sentient. Most animals are sentient, and therefore have a level of welfare. According to this view, the interest of animals should therefore also count morally. Their interests count for them just as much as our interests count for us.

16.1.2 Principles Other ethicists argue that we have duties to animals because there are ethical animal rights, parallel to human rights. Christine Korsgaard (2018) sees animals as “passive residents” who have a right to be treated well by “active residents” (humans). We should recognize that right because, like humans, animals are “ends in themselves”. This means that you cannot use them at will. This view acknowledges that animals, like people, have intrinsic value that we should protect (see also Regan, 1983/2004).

16.1.3 Virtues Martha Nussbaum (2007) argues that the attitude of wonder and respect for other life is an important ethical virtue. A human is a social and intelligent animal, who should have the opportunity to use those capabilities. We owe it to each other to support each other in this. Just like a virtuous person supports other humans to lead

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good lives, a virtuous person also supports non-human beings to flourish. They also have capabilities that they can use and develop. We should therefore respect the capabilities of other beings and allow them to express them.

16.2 Impact and Context At the beginning of this chapter, we saw that animals often experience a direct impact from companies. Companies can also have an indirect impact on animals. Companies may for instance contribute to the pollution or destruction of habitat of animals; build drilling platforms at sea that disrupt marine animal communications; build cars that collide with animals; pay for animal pest control in and around corporate buildings; and organize corporate events in which meat, fish, eggs, and dairy products are consumed. Because of the large variety of ways in which companies affect animals, integrating animal ethics into corporate reflection can be quite complicated. One principle that can help here is the spiderman principle: with great power comes great responsibility (see Chap. 6). A company can and should do more for an animal that is kept and slaughtered in its own custody than for an animal in the ocean that suffers from the ships that transport the company’s products. Yet, companies must address indirect consequences as well. Additionally, CSR policies must account for differences in needs and preferences between animal species – the mouse has different needs than the elephant – and between individuals – dogs differ, and the same holds for goats or chickens. A third difficulty is that different people in organizations may have different perceptions of what we owe to animals in different contexts. Animals can be classified in terms of their relationships with people: 1. Production animals: all the animals that are kept for the purpose of economic production, such as cattle, chickens, and pigs. 2. Laboratory animals: often mice, rats, guinea pigs and rabbits, but also cattle, chickens and pigs, among others. 3. Companion animals: usually dogs and cats, but also fish, rabbits, mice, rats, guinea pigs, and many reptile species. 4. Entertainment animals: animals in zoos, dolphinariums, public aquariums, and animals used in sports, among others. 5. Working animals: such as assistance dogs, rescue dogs, police dogs, police horses. 6. Animals in the wild: such as birds, fish, wild boar, deer, foxes, amphibians, reptiles, but also for example insects. This is not a static classification. Animals can move from one category to another. For example, an animal living in the wild may be captured and put into a zoo to continue living as an entertainment animal. A production animal can be bought by a private individual and then kept as a companion animal. And the chickens in your backyard may be both.

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16.3 Biological Arguments Above, we saw some different philosophical arguments for animal ethics. An important question is where we draw the line between who counts morally, and those that do not. Different philosophical views can draw the line (slightly) differently. However, the concept of sentience provides a good guide (Duncan, 2006). In addition, memory, anticipation, and the ability to cope with challenges and changes can play a role in animal ethics (Spruijt et al., 2001). Expecting or remembering a positive or negative experience can deepen the experience (Varner, 2012). Think of a happy anticipation, a nice memory, fear of what is to come, or a painful thought about the past. Some philosophers think that these abilities can heighten an individual’s moral importance. How an individual deals with the future and the past also depends on their character. One person may stand a thousand fears when they need to do a difficult exam, another person may feel pleasantly challenged. We are used to seeing all animals as one large group, but we should not forget that the so-called ‘animal kingdom’ includes very different animal species, and that each species includes very different individuals. Which animal species have sentience? This is not a trivial question. It is not possible to experience what a cow experiences. In fact, it is not even possible to really know what another human is experiencing. Research in biology nevertheless uses four criteria for the presence of sentience, based on references to our own experiences as humans (Warren, 1997): 1. The presence of a nervous system similar to that of humans. 2. A similar way of responding to injury (screaming, whining, yelling, groaning). 3. The presence of organs for tactile sensation and/or behavior suggesting that tactile stimuli are also experienced (not sufficient for sentience, but often associated with it). 4. The presence of neurochemicals that in humans are related to the experience of pleasure, pain, or emotion. Based on these criteria, various researchers have drawn conclusions about a large variety of animal species. There is much scientific evidence that at least all vertebrates (mammals, birds, reptiles, amphibians, and fish) have sentience. Moreover, there is also evidence that there are other groups of animals that also seem to have it, such as crustaceans (lobsters, crabs), and additionally there are some categories of animals we might give the benefit of the doubt, such as insects (some bees) and mollusks (mussels). Some philosophers have suggested we should not divide the world up into creatures with and without sentience, but rather conclude that there is a continuum of sentience, ranging from simple animals, through near-persons (creatures that are aware of the past and the future) to persons (creatures that can give their mental state of being in the past and future a place in their life story; Varner, 2012; DeGrazia, 2011).

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16.4 Interests of Animals If we take the interests of animals seriously, we are likely to be confronted with difficult questions about animal welfare, animal rights, and animal capabilities. Because the first two concepts are the most developed in the philosophical literature, we concentrate on them. How can we make these concepts concrete in an ethically robust manner?

16.4.1 Animal Welfare Everyone has a basic idea of what animal welfare is: a situation in which an animal is comfortable and does not suffer. A little bit of stress does not have to be bad and can even be pleasant. Boredom, on the other hand, can be very unpleasant, just like too much stress. Other important aspects of animal welfare may affect the situation (e.g. whether animals can choose where to walk and where to lie down) and being able to perform behavior that fits the species (scratching for chickens, rooting for pigs, trotting for horses). Yet it remains very difficult to determine when an animal’s welfare is sufficiently protected. This problem is not fundamentally different from the question when a human’s welfare is sufficiently protected. Is it enough not to be sick and not te be hungry or thirsty? Or is our welfare only sufficiently protected if we have an average income and a family, while we live in a nice house with friends nearby? After all, welfare is constituted, at least for a significant part, by our personal experiences, and these are difficult to compare. Similarly, it is difficult to determine how animal welfare can be measured, and even more difficult to determine its importance vis-à-vis other ethical values, such as food accessibility, land use, or sustainability. Still, a lot can be done with a combination of science and common sense. Anyone can understand that cooking pigs alive exceeds all boundaries. Moreover, in general, reducing the production of animal products aligns, rather than conflicts, with most other important moral concerns. Animal agriculture tends to produce large amounts of greenhouse gas emissions, and 77% of agricultural land is used for animal agriculture. Reducing animal agriculture can therefore both reduce the space required for food production, and decrease greenhouse gas emissions.

16.4.2 Right to Continue Living Do animals have a right to continue living? Every second, animals are killed by humans and by animals, in livestock farming and in nature. One difference between most animals who kill and most humans who kill is that the humans have moral

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sense and could decide not to kill the other creatures. If animals have a right to life, we are capable of respecting it, while predatory animals are not. Here, an important question is: If one could kill an animal without stress or pain, would it still be bad to do so? Most animal ethicists working on this topic believe that the answer to that question is “Yes”. Even if an animal has a limited understanding of the future, you are still taking away a part of their life that they could have spent in a way that would have been good to them. Several animal ethicists say that you should not kill animals (or have them killed, for that matter), for the same reasons you would not kill your healthy dog or cat, even if it would be done without pain. Pigs and cattle can enjoy life just as much as your pets. If you are not convinced of that, watch some videos of cows, pigs, goats, and chickens having fun. There is no difference with cats and dogs. Cows dance. Pigs solve puzzles. Rats love to be tickled. Crows slide down snowy roofs. Some animals are just unlucky to be seen as food. There is a strong ethical case for an animal right to life. This makes killing animals problematic. Therefore, the general normality with which animals are killed in the food industry and in hunting practice is questionable. Not everyone may agree to this. Traditions and cultural transmission can get in the way of our open minds. What also plays a role is that we rarely get to see the killing of animals. Therefore, the increasing number of public videos showing animals in both pleasant and unpleasant situations is slowly tilting the image we have of animals and the public opinion on animal use. We can translate these insights to business ethics: a truly ethical company should not want to participate in the killing of animals. No more commercial killing of animals (with the exception of euthanasia in the interest of the animal) would mean: no meat, no leather, no dairy (for milk production, bull calves are taken from their mother cows and killed at an extremely young age) and no eggs (for egg production, redundant male chicks of laying hens are still killed on a large scale, although a method for determining the sex in the egg is available). For all these animal-based products, excellent alternatives exist. Replacing animal-based food is much easier than replacing animal testing. Why don’t we do it?

16.4.3 Freedom and Captivity Some argue that animals may be better off in captivity. After all, animals in captivity get food, water, safety, and shelter. But, there are reasons to doubt that animals in captivity really are better off than animals in the wild. An animal in confinement can hardly make any choices, while making choices is important to their welfare. Anyone who keeps an animal and argues that the animal is better-off that way, has a moral responsibility to make sure that the animal leads a good life.

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16.5 Animals and CSR 16.5.1 Animal Rights, Animals as Stakeholders, and Externalities for Animals In Chap. 6 we discussed several concrete approaches to CSR in practice. One of the first was stakeholder theory. People sometimes think stakeholder theory is only about human stakeholders. Increasingly, scholars acknowledge that animals can also be stakeholders. They too are individuals or groups who are impacted by the actions of companies. There is something at stake for them. From the perspective of the corporate citizen approach, companies have an important civil duty to help protect the rights of animals, because governments cannot do this alone. From the market failure approach, we can say that animal suffering, for example in livestock production, is an important negative externality: it is a negative consequence of trade between livestock and consumers (and all suppliers involved), for which the parties involved (the animals) have not given their consent.

16.5.2 Animals as Workers One perspective that can help to clarify some ethical questions about animals is to see animals used in human production as workers. After all, they work for us, albeit not voluntarily. (There are those who prefer to describe them as enslaved, but conceptualizing animals as involuntary workers goes far enough for now.) If we see animals as workers, we can see they also have workers’ rights. This might seem strange. However, it may not be so strange when you consider that we already use the term “retirement” for rescue dogs, sport horses and some laboratory animals. People who work with these animals often have a strong sense that the animals are entitled to retirement after all they have done for humans. It is therefore not so strange to think about other workers’ rights for animals, such as the right to moments of rest, the right to holidays and the right to be represented in corporate decision making.

16.5.3 Five Freedoms Several frameworks have been developed by animal ethicists to monitor the interests of kept animals. One well-known example is the Five Freedoms framework (Brambell, 1965). According to this framework animals are entitled to: 1. freedom from hunger and thirst; 2. freedom from discomfort;

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3. freedom from pain, injury or disease; 4. freedom to exhibit normal behavior; 5. freedom from fear and stress. While developed in 1965, this framework is still widely cited by companies. Unfortunately, it is not very precise. The framework also raises the question what “normal” behavior is. Only a very low percentage of the world’s chickens can scurry in the dirt, few pigs can take mud baths, and no dolphin or whale in a dolphinarium can travel for miles on end.

16.5.4 Fourteen Requirements New insights have led to the expansion of Brambell’s Five Freedoms. A fine example is a list of fourteen requirements (Brando & Buchanan-Smith, 2018). They are more concrete than the Five Freedoms, and can provide guidance as a checklist and a starting point for discussion: 1. absence of prolonged hunger; 2. access to appropriate food and species-typical foraging opportunities; 3. absence of prolonged thirst; 4. comfortable places to rest and sleep; 5. appropriate temperature and choice between temperature zones; 6. sufficient space to move freely according to their natural behavior; 7. a sense of control over the environment; 8. absence of serious injury; 9. absence of disease; 10. absence of pain due to improper management, handling, capture or transport; 11. proper treatment by, and relationship with caregivers; 12. the ability to perform normal, non-harmful, social behavior; 13. the ability to perform other species-specific behaviors; 14. prevention of negative emotions such as fear, despair, frustration, or boredom, and stimulation of positive emotions such as safety and satisfaction.

16.6 Concrete Issues for Different Sectors Now that we discussed the different theories and considerations, we can consider some concrete ethical questions related to animals in different business sectors.

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16.6.1 Livestock Industry The food industry ‘processes’ most animals used in human production and poses the greatest threat to animal welfare (Francione, 2010; Rollin, 2006). In addition to being killed prematurely, animals in the livestock industries suffer many harms. For example, chickens and cows develop sore legs due to a combination of their artificially heavy weight and poor footing. Chickens have their sensitive beak tip burned off to prevent mutual pecking (which is actually caused by the housing systems and animal density). In piglets, the tails are burned off to prevent tail biting (caused by boredom). Male piglets are also castrated at a young age without anesthesia, to prevent a “boar taint” in the meat later on. Almost all animals in the livestock industry show clear signs of stress and boredom (De Goede et al., 2013; Webster, 2013). Depending on species and farm type, improvements are possible. Cages may be enriched (with straw and toys), and farms can provide more space, better housing, and  free range-options, and allow for more social interaction between animals. Farmers can do more to prevent barn fires, and arrange safer, more comfortable, and shorter transport. Slaughterhouses can improve conditions in the slaughterhouse. However, industrial slaughter without pain and stress is virtually impossible. An interesting concept is Planet Husbandry, a way of keeping animals closer to their natural needs by allowing them to roam freely in a wide area (Webster, 2013). However, this method requires so much space that it is difficult to apply in densely populated areas. Breeding ‘dual-purpose animals’ can prevent redundancy of male animals as a by-product. Dual-purpose chickens, for example, make it possible to use the male chicks as broilers. Nevertheless, the animals are still killed prematurely. It is now possible to determine the sex of the chick in the egg at an early stage of development, so that the eggs with male chicks can be destroyed early on, before they develop. More progressive companies can take larger steps and move away from producing, processing, and selling animal-based products. This can be done by developing, producing, processing or selling plant-based options, depending on the company’s position in the production chain. Plant-based products that mimic animal products (milk, egg, poultry, meat and fish) in taste, smell and texture are booming. Changing industrial practices will take time, as the idea that we may use animals as we please is deeply ingrained in our culture. This feature of our culture is sometimes called carnism (Gibert & Desaulniers, 2014). A company that produces or trades animal food can choose the path of gradual change or opt for faster steps. The first path calls for more welfare for the animals, for example through quality labels; the second path calls for a solid process of substituting animal products with alternatives. Young companies in particular are increasingly opting for the latter and see it as a unique selling point.

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16.6.2 Fur, Leather, and Wool Industry The fur and leather industry are particularly controversial, because fur and leather are luxury products, for which there are plenty alternatives (fake fur, cork, fruit peel pulp, et cetera). This has led to a ban in fur farming in numerous European countries. Sheep, goats, llamas, alpacas and angora rabbits are used for wool production. The wool industry is also tainted by animal welfare problems. For example, the wool of angora rabbits is pulled from the skin, which is extremely painful for them. In sheep farming, mulesing is notorious: the unanesthetized cutting away of pieces of skin around the anus to prevent flies from laying eggs in the skin folds. Increasingly, alternatives to wool that do not require animals emerge. Moving towards those options may be best way to address the animal ethics concerns for companies working in these industries.

16.6.3 Fishing Fishes have their own sad story. To begin with, their ability to experience pain and stress has long been denied. Today, there is a large body of scientific evidence indicating that fishes are sensitive and intelligent individuals, able to learn, recognize individuals, make friends, avoid enemies, and build memories. Moreover, it is often forgotten that what we call fish is a group of animals made up of thousands of species. When we speak of fish as a category of animals, we must recognize that this category includes species that are as different as mice and elephants. The welfare problems in this sector are complex (Bovenkerk & Meijboom, 2012). To begin with, wild-caught fishery is associated with tremendous animal suffering. Fishes are caught in nets and thrown into bins on the deck. The fishes who are not on top are crushed, and the top ones slowly suffocate. In addition to wild catch, there is a rapidly growing large-scale farmed fish industry, in which fishes live in cramped basins, with nothing to do apart from swimming gill by gill. This causes much stress, making the animals susceptible to disease. In rare cases, fishes are killed in a relatively animal-friendly way, but most meet their end slowly and gruesomely. They are skinned alive, frozen, placed in salt or ammonia baths, or gassed with carbon dioxide. Improving the welfare of fish requires collaboration with biologists, physiologists and ethologists (Bovenkerk & Meijboom, 2013). Cephalopods are extremely intelligent animals with a complex nervous system that we still barely understand (Broom, 2007). It is very likely that they are sentient. For this reason, they have been added to the list of animals with sentience used by the European Union for its regulation of animal experimentation (Fiorito et al., 2014). Sensory abilities have been demonstrated in crabs, lobsters and some shrimp species. Although they too have a different nervous system than vertebrates, the likelihood that they have a similar capacity for suffering is very high (Broom, 2007;

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Elwood et al., 2009). However, in practice, they are still frequently pulled apart or boiled alive. Other life forms seem simpler, such as oysters, mussels, snails and sea slugs. Nevertheless, there is also research that has demonstrated goal-directed behavior and cognitive abilities in some of these species that could very well indicate an experience of pain, such as avoidance of rewards (a positive experience) if associated with electric shock (a negative experience). In other words: the fact that they do no longer take nice food rewards if these come with an electric shock, shows that they experience the shock as something negative, something like pain (Crook & Walters, 2011).

16.6.4 Insect Culture Insects are very nutritious. The idea of growing insect as food on a large scale is popular, because insect farming could provide an efficient, low carbon, and ecologically harmless alternative to animal agriculture. However, much is still unclear about the possibility of insect sentience and welfare. The fact that we cannot measure their positive or negative experiences does not mean that these are not there. Moreover, here too we are dealing with many different species. One complicating factor is that many more individuals are needed to produce the same amount of nutrients. If insects have any animal rights, such as a right to life, an insect industry would violate these rights in extremely large numbers. Caution in the cultivation of insects therefore seems to be warranted.

16.6.5 Entertainment Industry Animals are also used in the entertainment industry, like circuses, sea mammal parks, or camel, donkey or elephant rides. Here, animals need not get killed prematurely, but they do face other issues, such as confinement, boredom, and sometimes cruel training methods. In zoos as well, animals live in restricted spaces, without the freedom to choose their own mate. Zoos can improve their welfare by enriching their habitat and providing substitute activities for foraging and hunting, for example by hiding their food (Keulartz, 2016.). In some cases, animal-friendly training methods can be helpful (Haraway, 2008; Hearne, 1991). We can also question the practice as a whole. Is it really necessary to display animals in circuses, zoos and aquariums? Perhaps the sacrifice asked of the animals to entertain us is too high a price to pay. Ethical questions also arise for companies that are only indirectly involved. Can we really raffle off tickets to a dolphinarium, organize a meeting in a zoo, or sponsor horse or dog racing?

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16.6.6 Animal Experiments Many sectors, including the food industry and the pharmaceutical industry, use animals in experiments. Laboratory animals are relatively well protected by law: their welfare is subject to strict requirements and animal experiments require approval by an ethics committee. Nevertheless, there still are many animal welfare problems that require attention from the companies responsible for them (Haraway, 2008; Hearne, 1991). One example of a way to reduce unnecessary animal suffering is the concept of 3Rs, which is used worldwide as a code of conduct and has been adopted into legislation in most countries. It stands for Replacement, Reduction and Refinement. Before starting a research or education project involving animal experiments, one should first assess if the same goal can be reached without animal experiments. This is called Replacement. If that is not possible, then one should Reduce the number of animals within scientifically sound boundaries. Finally, one should look for Refinement of the animal experiments by maximizing animal welfare (e.g. by pleasant and social housing) and minimizing suffering (e.g. by using painkillers when they undergo painful procedures and euthanizing animals who suffer too much).

16.6.7 Indirect Impact on Animals Even in sectors without direct animal use, an examination of the impact on animals is useful. Consider animal pest control, the effects of pollution on wild animal populations, as well as the impact that construction activities, transportation and catering can have on animals (Janssens & Kaptein, 2016; Varner, 2012). There are forward-­ thinking companies and consultants that use effective animal-friendly ways to control pests, such as prevention and deterrence. Caterers and restaurants increasingly offer vegetarian or vegan options that companies can make use off. Even if companies do not want to restrict the choices of meals for their workers and partners, they can choose to make vegan food the default choice. Doing so would result in a significant reduction in the consumption of animal products and a large step forward for the ethical treatment of animals.

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Varner, G.  E. (2012). Personhood, ethics, and animal cognition: Situating animals in Hare’s two-­level utilitarianism. Oxford University Press. Visseren-Hamakers, I.  J. (2020). The 18th sustainable development goal. Earth System Governance, 3, 1–5. Warren, M.  A. (1997). Moral status; obligations to persons and other living things. Oxford University Press. Webster, J. (2013). Animal husbandry regained: The place of farm animals in sustainable agriculture. Routledge/Earthscan.

Glossary

Absolute (the absolute)  This term should be understood in relation to an important need that underlies philosophical questions: the need to find things that are real and valid without exception (instead of only appearing to be so). This book assumes that, for people in a modern society, the absolute can only have meaning as the unconditional. Action  An action is an instance of intentional behavior: something an individual does for which they can be held accountable. Not every form of behavior or every movement is an action. Reflexes (e.g. the knee jerking when struck by a doctor’s hammer) are not usually referred to as actions. Common criteria for calling something an action include whether is has been done freely or results from a deliberate choice. (a) external: An external action is a physical action. (b) internal: An internal action is an action in thought only. Asymmetry of power  Asymmetry of power exists when there are at least two parties, one of whom has greater opportunities to influence the projects of the other (positively or negatively) than vice versa. Influence can also involve constituting, shaping or curtailing. Automation  Replacing human labor with a machine or an automated process. Automation usually comes about through a change in how technology is used. Autonomy  The degree to which an individual is able to direct the path of their own life. To do this, an individual must be able to make their own choices freely and on the basis of sufficient and correct information. Boundary  The boundaries to our actions are the limits beyond which we must not go. For example, the duties that come with respecting human rights. If we accept that slavery is inhumane, there are certain things we should not do, such as going into business with a company that makes use of slave labor. This book also looks at limits to our mindset or our way of thinking.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 W. Dubbink, W. van der Deijl (eds.), Business Ethics, https://doi.org/10.1007/978-3-031-37932-1

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Business ethics  A branch of applied ethics that deals with the moral behavior of market participants. This encompasses ethical questions and dilemmas that arise due to the fact that, as a market participant, you have to make choices that have moral weight. (a) descriptive: Descriptive business ethics is not concerned with what companies should do, but with how companies view their own duties, moral reasons for acting and moral responsibilities, as well as how they give expression to these factors through their business operations, and how this relates to real-world corporate behavior. (b) fundamental: Fundamental business ethics deals with all essential philosophical questions as they relate to business ethics. These include questions about the meaning and ground of morality in the context of the market. (c) normative: Normative business ethics refers to all moral questions that relate directly or indirectly to matters of how one should behave. Key concepts in this regard are right and wrong, good and bad. Categorical  Categorical stands in opposition to hypothetical. A principle, rule or reason is hypothetical when you have to follow it if your aim is to achieve a specific goal. For example, “make a lot of money if you want to be financially secure” is a hypothetical rule because it prescribes a course of action in relation to the goal of financial security. A rule, principle or reason is categorical if it is not hypothetical. The rule “respect others”, for example, is categorical. In this book, the philosophical term “categorical” is used synonymously with unconditional. Character  A collective term that refers to all the traits and abilities that make a person a unique individual. See also Virtue. (a) development: An individual’s character can change. When a person acquires virtues, their character improves from a moral perspective and they can be said to go through moral character development. Often, the term “character development” is only used when the person themselves can be identified as the driver of change. Collective action problem  Collective action problems occur when individuals make choices that have the best consequences for them individually, but have negative consequences for the collective as a result of the fact that everyone acts this way. Common interest  There are interests that members of a community (or society) share by virtue of the fact that together they form a community (or society). These are collectively known as the common interest. Compatibilism  Broadly speaking, this is the view that determinism – the idea that everything that happens, including our own actions, has a cause beyond itself – can coexist with moral judgments. In Chap. 3, we examine compatibilism as the specific idea that you can deny that free will exists (i.e. has reality) yet still argue that moral judgments are correct or incorrect. Complicity  You are complicit if you knowingly assist or participate in an act that is morally problematic. In a corporate context, it can be argued that a company is complicit in human rights abuses when it provides goods or services that are instrumental in such abuses.

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Compromise  When a choice needs to be made in a situation where there are two opposing principles, interests or reasons at stake, and it is impossible to uphold both, you can try to solve this opposition by finding an option that reconciles these conflicting principles, interests or reasons to some degree. This kind of solution is known as a compromise. “Compromise whenever possible” is an important moral principle, which means that, in terms of morality, compromise is not viewed as second best, inferior or suspect. However, the principle, “never compromise when it is not called for” is also of crucial importance. Brokering a compromise in cases where compromise would be morally unacceptable is immoral. Conditional  A principle, commandment or reason is conditional if it applies only when a certain condition is met. An example is the claim “If you want a good grade, you need to study”. The condition here is that “you want a good grade”. In practical philosophy (ethics) a prescription or commandment is conditional if its normative force for the agent is dependent upon a condition having meaning for an agent. The commandment “Don’t walk on the grass, if you want to avoid being fined” is conditional because the commandment “do not walk on the grass” is made dependent upon the condition “you want to avoid being fined”. Conditional prescriptions lose their normative force if people decide they don’t care about the condition. (see also: unconditional) Conscious  If we are conscious or aware of our reasons, it means that we can reflect on them explicitly. In this sense, conscious contrasts with unconscious. Sometimes we can be unconscious of a reason that is nevertheless relevant or valid. In certain cultures, for example, it is considered bad manners not to greet people in the street. Failure to do so can therefore be perceived as offensive. This represents an important reason for greeting people, but one of which you may not be conscious. Consequences  In ethics, consequences basically refer to all effects that have some value (positive or negative). For example, if your action results in less disease, less suffering or more happiness, then its consequences are positive. If your action results in more disease, more suffering and less happiness, its consequences are negative. Corporate social responsibility (CSR)  When a company has a moral responsibility that goes beyond the minimum market morality, this is described as the company’s social responsibility. A company is seen as engaging in CSR when it takes these moral responsibilities seriously and acts accordingly. Deception  Deception is a form of manipulative communication whereby no verifiable untruths are told but which makes a suggestion that does not match reality. Differentiated society  A society is differentiated when it has given rise to different spheres that order our actions. Each sphere has its own purpose, logic and meaning. A differentiated sphere also tends to have its own morality. In a modern, highly differentiated society, the market is also a differentiated sphere. Philosophers have identified several ways in which a highly differentiated

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society can differentiate: in terms of culture, society, and p­ erson. In this book, the differentiation of society plays an important role, as this is what creates the market. But differentiation of culture is also highly relevant, as it sets morality apart as a specific kind of normative thinking, distinct from a legal or economic perspective. Dilemma  A situation in which you have to choose between two options, and there are good reasons to choose both. When a person is faced with a dilemma, they sincerely want to make the right decision. (a) moral: A dilemma is moral in nature if all of the reasons at stake are moral reasons. For example, when important principles, rights, consequences or virtues are at stake. Discretion  Morality leaves room for discretion when the rules, principles or reasons applied stop short of dictating what you should do and allow room for your own judgment. Discretion implies that there are limits to the room granted: it does not give you the freedom to decide arbitrarily. Discrimination  Discrimination occurs when unjustified distinctions are made in how people are treated. Distinctions are unjustified when they are made on the basis of traits that are irrelevant. What is or is not relevant will vary according to the context. Diversity  This term refers to the extent to which a range of people are represented in a particular group, club, company or organization. Diversity is greater when people from a wider range of relevant categories are represented. The categories considered relevant may vary according to context, but the term is usually associated with the representation of groups in society who have frequently encountered discrimination. Division of labor  In this book, we mainly discuss institutional division of labor. This is the idea that the government is responsible for regulating the market, while the market is responsible for production. It follows from this division that companies do not have the responsibility to regulate themselves. Duty  This is a central concept in morality. On the one hand, it refers to what morality demands of you and, on the other hand, what needs to be done (hence the demand). Of course, this is not a logical necessity but a practical necessity. Not all moral theories put equal importance on the concept of duty. Theories that align the moral and the sensible attach less importance to duty than theories that see the sensible and the moral as clashing under some circumstances. (a) positive: A duty that calls on you to do something that you might not otherwise have done, for example, the duty to actively intervene in an emergency. Positive freedoms generally grant greater discretion to the person who is subject to the duty. You can contribute to alleviating a famine, for instance, by donating money, raising funds, mobilizing political support or calling on companies in the region to act. (b) negative: A duty that calls on you to refrain from doing something that you might otherwise have done. For example, you have a duty not to kill others. Duty of care  The principle that people have a duty to care for their community, and the people and other things of value in that community. Duty of care assumes that, by nature, humans are creatures that depend in some way on communities. This principle has gained relevance in recent years due to the public debate about

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whether some people or organizations occupy a parasitic position in relation to one or more communities. In the context of paying taxes, duty of care emphasizes that where people operate as individuals or businesses, they have an obligation to contribute to the institutions necessary for those communities to flourish. Empirical reality  In this book, we distinguish between the concepts of reality and empirical reality. We talk about reality when referring to all phenomena that we, as humans, have to take seriously. This is a broader definition than empirical reality, which refers to all phenomena that are material or have a material substrate, and that we humans can perceive with our senses. The distinction is crucial for (the grounding of) morality as morality, like other normative discourses, is not part of empirical reality. The normative never leads an entirely material existence. Equity  Those who take rules designed to deliver justice and apply them to specific cases without a second thought can sometimes end up creating an even greater injustice. The same rule can have very different consequences, for example depending on whether it is applied to the rich or the poor. Many legal systems therefore assign a role to equity. Equity does not create new rules for fair treatment. It consists of second-order rules of application, intended to ensure that justice is applied fairly in real-life situations. Ethics  Ethics is the philosophical discipline that is concerned with reflecting on the desirability of actions and the duty to act, both for individuals and other actors. Another word for ethics is “morality”. Exploitation  Exploitation occurs when someone takes advantage of another person’s vulnerability or difficult circumstances. For example, you exploit someone from a poor country if you make them work very hard and pay them very little because they have very few options. Exploitation can occur through labor market inequality. In real life, there is more asymmetry of power than the theory of how the free market should function can actually tolerate. There is thus also a lot more exploitation out there than free market advocates sometimes suggest. External perspective  When you look at a phenomenon from an external perspective, you take a step back and refuse to take the assumptions of that particular perspective for granted. If you take a critical look at the rationality assumption made by rational choice theory, many aspects of this theory suddenly seem strange. That is because you are taking an external perspective. An external perspective is never neutral: it always involves adopting another perspective whose assumptions you are not questioning at that time. In other words, you are not looking at things “as they really are”. A major issue in contemporary philosophy is how we should think about the relationship between perspectives. Which perspective should we give primacy to, and when? Fact  We use the term “fact” to refer to something we know to be the case or something that is intended to refer to something we know to be the case. A statement of fact contrasts with a normative statement. A statement of fact is a claim that we know something to be the case. A normative statement makes claims about what should be the case.

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Factors of production  Economics distinguishes between a number of elements that are necessary to make products: these are usually listed as labor, capital, initiative, organization and land. These are also referred to as the factors of production. Fallacy  A fallacy is an apparently sound argument that turns out not to be a sound argument after all. Formal  Statements are formal when they are devoid of real-world specifics but merely relate to the structure of something. Formal statements always have a certain degree of abstraction, and often a high degree. “One and one is two” is a formal statement. It concerns the structure of the process by which people count. The formal nature of a statement is always defined relative to the substantive aspects of thought and speech. We cannot speak of “the formal level” as such. Philosophers can also examine the formal structure of formal statements. In other words, they ask formal questions about the meaning of the formal. Freedom  It is sometimes said that people are free when they can make choices without restrictions and unfree if they cannot. However, this definition must be nuanced. Usually, we do not count natural restrictions as restrictions to freedom. The fact they people cannot fly as birds does not make them “unfree”. It is thus better to say that human beings are unfree when factors in their social environment put them in a position that no longer allows them to choose freely. There is no objective list of these factors. Any list is at least partly normatively co-determined. Freedom therefore is a normative concept. However, sometimes we do count some natural factors as making people unfree. It is thus sometimes said that physically challenged people are unfree, meaning that others also have a responsibility in making them free. Freedom is a crucial value in modern society, and has value for immanent and instrumental reasons. Why human beings value freedom so much goes unexplained to some extent. It is a core value that we value beyond explanation. This dimension of freedom is sometimes called “natural freedom”. Freedom is also an important criterion for assigning responsibility in terms of interpersonal obligations. Governance gap  This is the gap between what governments ought to do and promise to do to protect human rights, and what they actually do. Greenwashing  A term used to describe the activities of companies, organizations or individuals who pretend to be more environmentally friendly than they really are. Ground  Questions about the ground of morality deal with the principles that are necessary to speak of the reality of morality. According to some philosophers, for example, morality presupposes free will or the existence of absolute rules (rules that are not relative). To “ground” morality therefore can be to show that we humans have reason to assume that humans have free will. Grounding  The grounding of morality refers to what is necessary to make the discussion of morality possible. Questions about the grounding of morality can be divided into questions about its ground (see Ground) and its meaning (see the second definition under Meaning).

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Harm  The negative consequences of your actions that have moral weight. Human rights  The recognition that all human beings have a duty to protect all other human beings in certain aspects of their lives, simply because they are human too. Identity  Matters of identity are questions about who you are and who you should be. Your moral character and character development are important aspects of your identity (see Character). Inclusion  This term indicates the extent to which a diverse range of people are respected, expected, and integrated within a certain group (club, company, or organization). Instrumentalization  We attach value to certain things because they enable us to achieve other things. If we think something is only important because it helps us reach another goal, then we have instrumentalized it. Internal perspective  When you look at a phenomenon from the internal perspective of a particular field, you take the assumptions of that particular perspective for granted. For instance, you can look at moral behavior through the eyes of a psychologist, an economist or a sociologist. By choosing one of these internal perspectives, you fully accept the assumptions associated with it and view the phenomenon according to the rules of this perspective. From any internal perspective, every other perspective seems strange. Interpretation  To interpret is to give meaning to a phenomenon (see the second definition for Meaning). An interpretation clarifies a concept from the internal perspective, thereby assuming that the concept holds value for us. Invisible hand  A key metaphor in economics which represents the idea that a free market leads to optimal market efficiency. The image of the invisible hand suggests the idea of a spontaneous guiding force that operates without the need for intervention from a supervisor, government or planner to ensure the most effective distribution of resources among market participants. This order is also described as being realized “behind people’s backs”. Judgment  When we make a decision about how to solve an issue or how to act, we make a judgment. (a) good vs. bad: Given that proposed actions require us to decide what to do or not to do, we can label these options as good or bad. (b) right vs. wrong: This is another way of saying “good vs. bad”. (c) personal: A personal judgment is one that the individual makes for themselves having weighed up the various reasons. In this sense, all judgments can be seen as personal. Frequently, however, the concept of personal judgment implies that personal elements have somehow played a significant role in the judgment. Viewed from this perspective, every personal judgment has a degree of discretion. Justification  The provision of sufficient reasons to take a certain course of action. If you can give sufficiently valid reasons for making a particular choice, you have given a justification. This applies to moral choices, but also to choices about what you should or should not believe. If we can give enough good reasons to believe X, we have provided a justification for our belief.

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Libertarian principle  According to the libertarian principle, injustice only occurs when an individual’s freedom of choice with regard to themselves and their property is curtailed. This also means that if the owner of a company employs someone of their own free will and pays them from its own capital, this cannot be unjust. Luddite fallacy  Contemporary economists use this concept to refer to the misplaced idea that if technology replaces human labor, it will also lead to fewer jobs and less employment. In practice, the latter is far from always the case. In many instances, technological advances have also led to increased economic prosperity, which in turn has created more jobs in the long term. Manipulation  Manipulation is a form of influence in which the person being manipulated no longer has full freedom of judgment. Manipulation covers such practices as strong financial incentives, indoctrination, propaganda, playing on people’s emotions, irrational persuasion, enticement, seduction, and deception. (a) affective: Affective manipulation involves using emotions to influence a person’s judgment to the extent that they are no longer capable of making a fully rational decision. (b) cognitive: Cognitive manipulation occurs when a person’s judgment is no longer fully rational as a result of the influence exerted on them. Market participant  An actor that is capable of entering into transactions in the market with full independence, in the sense that the actor is recognized by others as acting independently. In other words, a market participant is an actor to whom we attribute market transactions. Meaning  The term “meaning” can be used in two different ways. The meaning of a word is the explanation of what that word refers to or represents. Dictionary definitions provide the meaning of a word in this sense. In philosophy, these meanings are important because the precise definition of a term can make a big difference to the validity of a discussion. In its second sense, the term “meaning” refers not to the dictionary definition but to the place something should have in our lives, in other words, to the wherefore of the concept (its point or purpose). By asking about the meaning of X in this way, we are asking how X should be understood, given that it occupies a place of value and significance in our lives. Merit principle  According to the merit principle, people should benefit from work opportunities and financial rewards in accordance with their merit. This merit consists of how much work someone puts into something, how much talent someone has, and how much someone actually contributes. In light of this principle, it is unfair for one person to earn more than another person unless they outshine them in one or more of these aspects. Minimal morality/minimal market morality  A minimal set of moral rules that is widely recognized as valid in the market and supported by a range of arguments. A crucial criterion for adding a rule or principle to minimal morality is that a market cannot function without it or cannot function adequately within a society. There is a lack of consensus about what constitutes minimal market morality because people have different views of what is needed to constitute a market and for a market to function adequately within a society.

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Moral  See Ethics, Morality. (a) amoral: A matter is considered to be “amoral” when it is not subject to moral reasoning. Morality has no role to play in such issues. Choosing between a slice of apple pie or pear pie is an amoral choice. One may taste better than the other, but the reasons for choosing one or the other are not typically moral reasons. (b) Immoral: An action or an issue is immoral if it violates the principles of morality. To claim that you are entitled to ignore moral principles because you consider yourself to be an amoral being would be an immoral statement. Moral evaluation framework  A moral evaluation framework is the set of rules, principles and reasons that structures your reflection on moral issues. Moral hazard  In situations where someone (a principal) appoints an advocate (an agent) on a contract basis to represent their interests, economists use this term to describe the possible risks that result from incentives the agent has to act against the principal’s interests. Moral will problem  You have a moral will problem when you know what the morally right thing to do is in a given situation but you have doubts about whether to do it, because it conflicts with your self-interest. It is only immoral to experience this type of problem in exceptional cases. On the whole, moral will problems are part and parcel of being human. It’s giving in to non-moral motivation that is immoral. Morality  See Ethics. (a) public: Public morality encompasses all moral rules that everyone is required to follow. While these rules are necessary to constitute a society, they also contain historical-political elements. (b) private: Private morality covers rules about which people can make individual choices. In modern society, the principle of not hitting your child falls under public morality, while not eating meat is part of private morality. It is a characteristic of modern society that many debates revolve around whether a rule or principle is a matter for public or private morality. These debates usually center on issues that are considered part of public or private morality for historical-political reasons. Motivation  The conscious or unconscious intentions that drive a person to choose one option rather than another. Objective  Something is considered objective when it is valid regardless of how individuals view it or think about it. Being able to take the objective perspective is itself value-laden. For example, it requires someone to value the objective and the truth. “Let’s look at this objectively” is therefore a normative and even a moral statement. Paradox  This is described in everyday language as an apparent contradiction: two statements that seem as if they cannot both be true and yet they are, if you interpret them in a certain way. “Slow down to speed up” is an example of a paradox. In philosophy, the term tends to be interpreted more broadly. Philosophers see two assertions or things in reality as paradoxical when we struggle to understand how both can be true or valid and yet we have to conclude that they are. In this sense, a paradox begs the question “How can we understand reality in such a way that both claims are true?” For instance, a paradoxical aspect of morality is its absolute nature, even though specific moral judgments are largely determined by cultural-­historical factors.

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Pareto efficiency  A situation is Pareto efficient when no one can improve their position without adversely affecting someone else’s. Person  In philosophy, a person is sometimes defined as a being that is not only alive but also entitled to claim a right to life because their life is valuable. The person is a human being with worth. Personhood comes with rights but also with duties: the duty to live in such a way that you earn this worth. Philosophy  Philosophy can be defined as thinking about thinking. (a) practical: Practical philosophy is concerned with the desirability of acting and duty to act in general. Both ethics and political philosophy belong to the category of practical philosophy. (b) theoretical: Theoretical philosophy deals with philosophical questions about knowledge, science, and logic. (c) normative: Normative philosophy is concerned with the matter of how one should behave. (d) political: The branch of practical philosophy specifically concerned with how society should shape its institutions, and how political choices should be made. Practical necessity  Actions that people experience as if they are (practically) necessitated are experienced as a feeling of having no choice whatsoever: “I simply have to do this; I have no choice”. In movies especially this feeling of necessiation, is often captured in a dramatic scene: the hero embarks on the journey that they feel must be undertaken while they know the chances of returning are slim. The movie hero sacrifices themselves. Precautionary principle  The precautionary principle states that, as a rule, you should prevent harm and that uncertainty about the consequences of a particular course of action does not exempt you from this rule. In other words, you have to be more or less certain that a course of action does not cause harm before it is permissible to pursue it. The precautionary principle has grown to prominence in ethics in the 20th century as the (negative) consequences of technology driven actions have become enormous, especially for future generations. Many of these consequences were ignored more than they were unpredictable. Primacy  A principle, reason or rule has primacy when it takes precedence over other principles, reasons, and rules. Principal (vs. agent)  When a stakeholder hires someone to represent their interests, we can refer to the stakeholder as the principal in this situation and the representative as the agent. These terms are strongly associated with the principal-agent problem (see Moral hazard). Principle  A principle is a general rule of action, normative in nature, that is often still undetermined to some degree. The exact implications of a principle are not clear in every context. In certain contexts, one principle may be trumped by another. The principle “do not kill” offers an important guideline for action, yet in a situation where you need to defend yourself, the implications of this guideline are not entirely clear. A distinction is often made between a principle and a rule. Rules do define how to act in all cases. Privacy  This is the extent to which individuals can shield their private life from the surveillance and influence of unwanted parties.

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Problems of action  Problems of action concern reflecting on the choices between various actions that actors are required to make. Problem of many hands  When a large number of people play different roles in a complex collaborative process, errors may occur. The problem arises when, due to the number of participants and the complexities involved, it is very difficult, if not impossible, to hold someone individually responsible for an error, even though everyone had a part in the process that led to it. A problem of many hands is hard to manage as it is hard to hold people responsible for the problems that arise. Productivity  This term describes how much is produced per factor of production, i.e. per hour of labor, unit of capital, area of land or unit of a commodity. When productivity rises, it means that more is being produced with the same resources or factors. Professional ethics  Systematic and critical reflection on the often implicit norms and values held by practitioners when carrying out their profession. Professional ethics aims to evaluate and promote the moral quality of the actions and attitudes of professionals (as individuals and collectively). Prudence (wisdom)  It is prudent to do something when you have clear non-­moral reasons for doing it. For example, as a cyclist it is wise to take good care of your bike: you have good reasons to do it, though none of them are (necessarily) moral. Depending on how the concept of self-interest is defined, being prudent overlaps with acting in your self-interest. If the concept is narrowly defined prudence and self-interest do not overlap. A prudent person will know that people have a tendency to act against their self-interest, narrowly defined (e.g. when they act out of anger or neglect their family as they are focused on money making). If the concept is broadly defined, being prudent and acting in one’s selfinterest overlap. The relation between morality and prudence is complex. All moral theories see it as positive when prudence and morality coincide to the greatest possible extent in a society. However, moral theories take different views of the relationship between the moral and the prudent. In theories modeled on classical antiquity, the two categories tend to overlap; in these theories the prudent and the wise also tend to coincide. Modern theories emphasize that in specific cases there can be tension between the two. These theories tend to define the prudent in terms of self-interest and less in terms of its intimate relation to wisdom. Reality  Questions about the reality of morality relate to its authenticity, in other words the extent to which moral principles and rules such as “respect human rights” can indeed be said to refer to something that exists (see Ground). The reality of morality stands in opposition to morality as an illusion. Normally, things exist if they are “out there” in the world, in the way we ordinarily say that stones and trees exist. Fata morgana’s are thus normally seen as illusions. Yet, as morality refers to the world as it ought to be, its reality cannot be existence as being “out there” be”. Its reality must be a special kind of existence: “having reality” thus does not necessarily mean that morality is something that exists materially. That is why the term “reality” is used to refer to the existence

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of morality. It refers to all things that are necessarily meaningful from a human perspective. These can be things that only exist in the world of thought. By definition, morality’s only claim to reality comes from the internal perspective of morality. If not, it would only have reality in relation to other contexts, such as reputation management. Reason (for action)  Reasons are the considerations that should drive us when we are choosing between several options. Faced with a choice between A and B, we have a reason to do B when there is a consideration that should make us prioritize B over A. (a) private reason: A private reason is one that pertains to you alone. We argue against the existence of private reasons in Box 4.1. (b) Reason (faculty): philosophers sometimes refer to Reason (often capitalized) as a faculty (or ability) that is characteristic for human beings. Insofar as they see themselves as guided and supported by that faculty a reason refers to the thing that makes a (rational) human being prefer one option rather than another. Reflection  When you reflect you are consciously engaged in reasoning. Relativism  In ethics, relativism holds that specific moral rules are not valid for everyone but relate only to certain individuals, cultures or mindsets. Because morality is intrinsically linked to the claim of unconditionality and practical necessity, relativism presents a much greater paradox for morality than for a field such as law. The claim that morality “is relative” can be descriptive, normative, or fundamental. In order to response to the criticism of relativism it is important to keep these interpretations apart. (a) cultural relativism: In ethics, cultural relativism holds that specific moral rules are only valid within a specific culture. For example, the specific moral rules that apply in the US may be different from those that apply in the Middle East, East Asia, or South America. Respect  Respecting others means recognizing them as having worth and therefore as deserving of certain things. When we respect others we recognize, for example, that they deserve to be included in morally significant decisions that have a significant impact on them, or that they deserve to be told the truth and to be treated fairly. Responsibility  Your moral responsibility refers to all the things you should do (in the future) or should have done (in the past), from a moral perspective. Right  A moral right is a moral protection of an interest. If Anne has a right to X, it means that others have a duty not to take X from Anne, and possibly even a duty to provide Anne with X when they can. (a) legal: Rights can also be enshrined in law and defended within the context of a country’s legal system. Self-discipline  Every individual is capable of imposing rules on themselves. By doing so, you make a conscious decision not to make particular choices. In other words, you discipline yourself. Many philosophers put self-discipline at the heart of morality: the process by which you freely and voluntarily impose certain principles on yourself as the basis for your actions. In this regard, self-discipline is not something negative. It is through self-discipline that you become a person (i.e. a human being whose acts are not driven by troubling tendencies or passions, such as anger, greed or thirst for power). Self-discipline is crucial for morality but not a unique feature. A business person also needs to exercise selfdiscipline to advance their economic goals.

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Self-interest  Your self-interest is what makes your life better for you, from your own perspective. (a) enlightened: Enlightened self-interest is a concept expressing the idea that what makes your life better for you is deeply connected to the interests of others. For example, the chances of you living a good life are enhanced by living in a well-functioning society, and society can only function well if the interests of others are also taken into account. In other words, there is a strong relationship between your self-interest and the interests of others. The notion of “enlightened self-interest” offers an explanation for why people sometimes tend to act against their own interests: they lack the insight to see that their long-term interest would be better served by a broader view and acting differently. Self-love  The degree to which a person is concerned with their own self-­interest. The term “self-love” is often used by philosophers to express a concept that is wider than the concept of self-interest. Self-interest is the business end of selflove. A person who allows themselves to take an angry and envious position in relation to the world is acting out of self-love: they are unable or unwilling to put themselves to one side. People who adopt such a position tend to act against their best interests. (a) Intellectual: If a person suffers from excessive intellectual self-love, they believe that their own views and those of their immediate circle offer them all the knowledge and understanding they need. Shareholder  An individual or organization that owns shares in a company. Spiderman principle  The principle that the more power you have, the more responsibility you should be expected to take. It is named for superhero Spiderman, who spoke the line “With great power, comes great responsibility”. Stakeholder  The term “stakeholder” can be used to refer to any party with an interest in a company or whose rights may be violated by a company’s actions. Opinions differ on exactly who can be defined as a stakeholder. Subjective  A view or thought is subjective when its validity depends on what specific individuals think of it or about it. If all human beings hold the same view on a certain matter, we may still call it subjective if there is no objective reason why human beings should have that view. In that case philosophers speak of the matter being “universally subjective”. This means that they apply to all – or almost all – people, yet no – distanced - reason can be given for them from an objective perspective. Things can also be subjective or subject bound. This means that it is clear that this thing belongs to an entity but no objective (meaning giving) reason can be given for that relationship. A common example is clothing: people in almost all cultures wear clothes of some description but they are still considered part of the subjective realm as there is no objective reason why human beings must wear clothes. The fact that human beings see in color can also be considered a subjective characteristic of the human species, because whatever a person sees is inherently tied to a person’s own perspective. Subjectivity  The degree to which something is subjective (see Subjective). Super salary  An excessive salary that cannot be justified on the basis of relative productivity, talent or effort.

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Supererogatory  An action is supererogatory when it has moral value but goes beyond your duty. It is not something you don’t have to do from a moral perspective, but something that is morally desirable. Some theories of morality attach great significance to this category, while others dismiss it as unimportant. Helping others is often considered “supererogatory”, although rescuing a person in dire need is often considered a duty. Surveillance capitalism  A term used to describe a free-market economic system that operates largely on the basis of collecting and trading personal data and related (meta)data. Surveillance society  A society in which various parties exercise ever greater control over the everyday lives of citizens. This is accompanied by a considerable asymmetry of power and insufficient checks on those in power The state with its public authority is the most important of these parties but an extra worrisome aspect of surveillance society is that private companies (big companies) also have the power to control ordinary citizens. Tax avoidance  Taking action to reduce the payment of taxes in ways that are not explicitly prohibited by law. This includes the use of shell companies in tax havens. Tax evasion  Taking illegal action to avoid paying taxes. Tax evasion occurs when an individual, organization or business pays less tax than it legally should, using methods that are against the law. Tax evasion is always a form of fraud. Triple bottom line  The “bottom line” is a way of referring to the total amount a company has earned or lost over a given period. The concept of the triple bottom line indicates that, in addition to profit, two other important aspects should be incorporated into a company’s annual results: sustainability and social impact. Unconditional  Principles, reasons or rules are considered unconditional if they always apply. In other words, their validity is not dependent on a particular set of circumstances. In practical philosophy (ethics) a prescription being unconditional means that its normative force does not depend on any condition. An unconditional commandment always holds. This is why unconditional commandments are said to “necessitate”. See also: Conditional. Unnatural naturalness  This term is used by some philosophers to refer to the particular nature of human beings. In one respect, humans, like other biological creatures, act according to their nature. Just as lions follow their nature in hunting and killing prey, human actions are also driven by nature. Yet in modern society, being willing and able to conquer and alter one’s nature is often seen as a defining human trait. In this sense, human nature can be said to be unnatural. Philosophers who give unnatural naturalness a central place in their thinking about humanity also tend to emphasize that human beings are free agents. It is this freedom that makes human beings unnatural. Value  Something has value if it is better that it exists (or has reality). Something can be valuable to a specific individual. For Anne, it may be of value to have a painting in her home if it enriches her quality of life. Sometimes, people makes claims about what is valuable for particular individuals, but people sometimes

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also make claims about what is valuable in general. For example, people sometimes say that freedom is valuable if the world is a better place when people can live in freedom. The ground for value is something that philosophers can disagree on. Some philosophers will argue that real value cannot be subjectively grounded while others will argue that looking for objective value is meaningless or dangerous (or both). (a) economic: Something has economic value insofar as you can trade it. Economic value is therefore replaceable: a loss of value can be compensated by an alternative with the same amount of economic value. (b) non-economic: Non-economic value is not reducible to what you can obtain through trade. Happiness, health, friendship, and love are all examples of non-economic value. Virtue  A virtue is a character trait with moral value. Sometimes virtue can be expressed as an ability, for example, the ability to be courageous and in doing so to strike a healthy balance between cowardice and recklessness. Voluntariness  A choice is voluntary when we have taken it of our own free will. Voluntariness is a crucial concept in the ultimate grounding of morality. The concept primarily plays a role in morality insofar as it relates to personhood. The relationship between freedom and voluntariness in morality is complex and subject to debate. Some argue that unfreedom (coercion) carries strong implications of involuntariness; others view this relationship as being much more complex. Wherefore  The “wherefore” of something should be clearly distinguished from the “why”. The question “why” is primarily a matter of causes and explanations. From an external perspective, to ask why is to look for causes. For example, a psychologist may ask why a businessman is so ambitious and come up with a Freudian interpretation. The question of wherefore interprets a phenomenon in terms of meaningful values in the context of an internal perspective. To this end, wherefore often refers to an immanent value or intrinsic purpose (which, from any external perspective, will remain in some sense alien). Whistleblower  An employee who goes beyond the bounds of their own organization to seek public attention for an issue, motivated by a sense of personal or professional responsibility. The employee regards the issue as serious misconduct or abuse that is not being adequately addressed within the company or organization. Workplace democracy  A way of organizing a company or working environment in which the people who work there have democratic control over the work or production process.