Saturday, January 3, 2015

The ethics of business

Something got me thinking about business ethics and that brought to mind a short piece I wrote for the Jewish Western Bulletin (now The Jewish Independent) in 2003. The item described a course by the Jewish Learning Institute (JLI) and, although more than a decade has passed, I think part of the article is worth repeating:
Are the rules of conduct in business different from those in private life? Must a businessperson deal equitably with all, even the ignorant, weak and foolish? What constitutes fraud or theft? Who defines principle and where do the rules originate?

Nobel laureate Milton Friedman focused modern debate with his statement that ethics were not the concern of a corporation and that its only social responsibility was to increase profits. Others argue that good ethics are good business and a requisite of success. More recently, critics of business blamed amoral corporate governance for encouraging fraudulent, corrupt and illegal behaviors.

Friedman's thesis was broader than his famous quote.

"Only people have ethics," he said. "Ethics is me, the individual, as a person. I'm ethical or unethical." Clearly, Friedman believes that core individual values are important to everyone, corporate managers included.

The history of western business ethics reveals religious traditions at the root. Judaism's precepts, in particular, have provided important foundations for the ethical practice of business. However, perhaps in search of secularity, today's business schools hesitate to teach ethical issues. For example, among the almost 100 offerings of the University of British Columbia MBA program, only one six-week course specifically focuses on ethics.

Many other well-regarded business schools share this disinterest in an important subject. Some ethicists believe that results in a harmful void in the training of tomorrow's leaders. Writing in the Journal of Business Ethics, Martin Calkins states that we should "look to religions to understand better the working of big institutions and the motives that drive people to act morally."

According to Rabbi Yechiel Baitelman, "The first question after death is 'Nasata v'netata be'emunah' ('Did you conduct your business affairs with honesty and with probity?') This establishes ethical obligations between people as fundamental and demonstrates that social and ritual behavior rank equally as inseparable parts of Jewish morality."

JLI participants study the vital principle of Jewish law derived from the verse "You shall do that which is fair and good in the sight of the Lord." (Deuteronomy 6:18) Baitelman will demonstrate how that principle applies, not simply in business activities, but in all personal relationships and social obligations...

Comments about business schools teaching ethics may be out of date. I hope it is now a subject given more attention.

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  1. Don't forget the 10 Commandments

    Never in BC.?

    Media and politicians watering hole and golfing buddies.?

  2. Thanx for the reprint, Norm. Such a simple concept shouldn't warrant much debate, but here Milton got it upside down: people have morals, business has ethics. Even a clock has an ethical aspect. The artifice of the business corporation is immanently an ethical thing. Friedman's profit can be accepted as either ethical or not, depending on one's morality. Other examples of moral fibrosis exist in fields of science and diplomacy; they all too often grant themselves some kind of immunity or separateness from the basic morals of the human community; Machiavelli, for example, could closely argue ethical murder for the sake of the state.

    Ethics makes morals legal. Friedman suggested ethics are a singular, personal attribute when, plainly, ethics and law are inseparable from society and pluralism. Every attempt to absolve capitalism from social responsibility requires some parlour trick like tearing out the concluding pages of "The Wealth of Nations" (where Adam Smith conceded to sovereign intervention in the economy.) The opportunities to circumvent, say, conflict of interest or insider trading regulation are paradoxically both reduced and expanded by the very legalese of literal ethics, a fact that's dogged lawyers since the advent of preferred seating around the campfire. The spirit of the letter often has to be cited to find truth, and that is most often homiletic, oral and utterly moral--- in contrast to strictly legal, literal and ethical. Friedman absurdly attempted to both reduce corporate responsibility to strictly profit motive, then also absolve it from any social responsibility at all. He liked cake---and eating it too.

    Judaism is highly legalistic because it has such a long tradition during which moral-ethical, oral-literal and personal-communal habits of consensus have been developed and perfected; interpretive latitude and respect for a variety of opinions effectively inoculate Torah jurisprudence from self-serving Machiavellian or Friedmanite triteness so that dogmatic ethical legalese is complemented by homilies we simple people can understand. Even the village idiot can understand a little debt forgiveness or appreciate a little nourishment from the unharvested corners of a field, such conduct long being Jewish tradition, and firmly grounded in basic care for the community.

  3. Ethics and BC Politics, specifically the BC Liberals, simply can't exist in the same sentence. Morality and ethical conduct, should be a requirement for any democracy, yet the world is full of examples to the contrary. Here in BC, the concept of the corporation being some sort of entity whereby individuals, can shirk moral or ethical responsibility, by hiding behind corporate largess and legalities has become a fine art. Socialization of debt and privatization of profits, while controlling the message by manipulating the voters, is now a fine art, that sadly, does not appear to have a means of being removed. Elections are events, every 4 years, that temporarily slow this process. But it inevitably continues...what can be done?

    1. Right. Besides, we don't even get to ethics because when assessing BC Liberals we have first to get past what may or may not be BC Liberal ethical lapses behind blatant law-breaking that has simply gone un-prosecuted.

      Stephen Harper, another neo-rightist, also likes to confuse ethics, like when he interpreted his party's "In&Out" campaign funding fraud conviction as merely a "difference of opinion" between him and the courts. The question isn't whether he's being ethical or not---it's really: why does he think a legal conviction is ethically ok?



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