Bruton, 8/04

Why Be Ethical?

            In 2000, Coca-Cola wanted Burger King restaurants to invest more heavily in a new menu item: Frozen Coke.  So Coke executives persuaded Burger King to run a three-week test promotion of the new product in Richmond, Virginia.  They hoped that a successful trial would encourage the fast food chain's franchisees to join a national four-week Frozen Coke promotion slated to take place in June of that year.  Burger King customers in Richmond were offered coupons for a free frozen drink with the purchase of a value meal.  Coke declared the promotion a success, concluding in a memo to Burger King that it had raised traffic 7.3%; sales, 3.2%; and profit by 3.4% in participating franchises.[1]  However, according to a lawsuit filed in May of 2003 by Matthew Whitley - a former Coke employee who claims that he was fired after protesting Coke’s marketing methods - the numbers were not what they seemed.  Whitley alleged that after the promotion initially appeared to be going poorly, Coke executive John Fisher secretly paid a Virginia man $10,000 to take hundreds of children to Burger King to buy value meals.  Coke originally portrayed Whitley as a disgruntled former employee and dismissed his claims, but in June of 2003 admitted that the results of the Richmond test marketing had indeed been manipulated.[2]

Three different types of ethical issues or questions can be raised about this and other business ethics cases.  The first is the issue of whether a particular action or business practice is morally right or wrong.  Most of this class - including most of the discussion in the text - will address questions of this kind taken from different aspects of business.  Did Coca-Cola do anything unethical in this case, for example? (Yes, clearly.)  A second kind of issue is the philosophical question of what, exactly, makes things that are morally wrong to do wrong.  (Coke’s actions were dishonest and misleading, but why is it wrong to be dishonest and misleading?)  The attempt to answer this question in general terms yields moral theories, some of which we will briefly survey in the first few weeks of class. A third kind of issue, which is the focus of this brief essay, is the question of motivation: supposing that we know what is right, why do it?  After all, the temptations behind deceit of the sort that Coke engaged in are clear: Coca-Cola stood to profit significantly had Frozen Coke caught on nationally, and had this happened, the individual executives involved might well have benefited personally. 

Questions about ethical motivation tend to have particular poignancy in business ethics.  This is because doing the morally right thing in business, at least in the short run, is often at odds with financial success.  Misleading customers, bribing officials of a foreign government, cutting corners on safety procedures in the workplace and many other questionable business practices can help the bottom line in many circumstances.  Unlike medical ethics, for example, which tends to be dominated by controversial issues like stem cell research, euthanasia and abortion, the rightness and wrongness of many business practices is not controversial.  No one seriously denies that fraud, deceit, theft, and discrimination are wrong.  While there are legitimate questions about borderline cases, and some kinds of issues tend to be more disputed than others (privacy, for instance) there are many clear cases.  And yet almost daily, it seems, we hear new reports of a business executive or other employee involved in questionable dealings.  Why?  Part of the problem, it seems, is that it is unfortunately just human nature (or at least the nature of many humans) to cut moral corners to get ahead.  But part of it too, arguably, is that for a long time, good ethics has been regarded as a hindrance to business (hence the common quip that “business ethics” is an oxymoron – a contradiction in terms).  To put it bluntly, there is a common belief in the business world that ethics is for suckers.  Ray Kroc, the founder of McDonald's, is reported to have said: "What do you do when your competitor is drowning? Get a live hose and stick it in his mouth."[3]  The sort of aggressiveness and even ruthlessness that is often thought to be necessary for business success seems to be at odds with a conscientious regard for others.  Many would agree with baseball manager Leo Durocher's famous remark that "nice guys finish last."

So why do the right thing in business, or anywhere else, for that matter?  Plato’s story of the Ring of Gyges poses this question pointedly, although Plato does not focus on business ethics in particular.  Suppose you could, through the use of a magic ring, make yourself invisible at will.  The Ring would allow you to do whatever you wanted with impunity and without fear of consequences.  You could walk into any store and take whatever strikes your fancy (suppose that the ring makes anything you touch invisible too), stroll into any bank and clean out the vault, or, as Plato puts it, “go into houses and lie with any one at [your] pleasure.”  (In the original myth, Gyges uses the ring to sneak into the Royal Palace, seduce the Queen, murder the King, and seize the throne for himself.)  Is there any reason to be “just” if you could easily get away with injustice?  (Plato uses the term ‘just’ to refer to all kinds of moral behavior.)  Glaucon argues that anyone who had the Ring of Gyges would act unjustly – that under these conditions the virtuous and the wicked would behave alike.  He takes this to be proof that people are not just willingly, but are so only because under normal circumstances, they fear the consequences of being immoral and unjust.  The Ring of Gyges makes its wearer immune from the law as well as concerns about reputation and most other benefits that usually go along with upright behavior; it would simply allow us to do the wicked things that we have all always (at least subconsciously) wanted to do.  The whole point of Glaucon's Challenge is to imagine a situation where self-interested reasons do not support ethical action.  The fact that no such ring exists is beside the point.  Even in real life, self-interest sometimes points in the direction of immorality.  Why be good when there is (often) so much to gain from being bad?

 

Egoistic Responses

 

Glaucon’s position assumes (or at least strongly suggests) what is often referred to as “psychological egoism” (PE) – the view that as a matter of psychological fact, people invariably behave self-interestedly.  (This is why he thinks people with the ring will do self-interested things.)  Common sense, it seems, agrees with PE up to a point – we think that in many or most situations, people do what serves their self-interest.  Psychological egoism goes beyond ordinary common sense, however, in asserting that all actions that humans ever have done or will do are self-interested.  PE denies, in other words, that actions are ever genuinely altruistic or done for the sake of others.  This further step makes the theory quite dubious.  It is usually true that a self-interested explanation can be imagined for what we do.  As Kant wrote, when we investigate the causes of actions (those of ourselves and others), the “dear self is always turning up”.  But the fact that self-interested explanations can be found does not mean that such explanations are always true.  You can always argue, for example, that well-heeled philanthropists (e.g. Bill Gates or Ted Turner) give enormous sums to charity so that they will get good publicity, or impress their friends, or not feel guilt, etc.  (These would be examples of self-interested explanations for apparently altruistic or generous acts.)  And sometimes, we can admit, these self-interested explanations are true.  The seductiveness of such explanations, however, should not mislead us into thinking that they are always true – surely, sometimes people do things for the sake of others.

Nonetheless, the most popular answers to the “why be ethical in business?” question are consistent with psychological egoism and Glaucon’s position.  Such answers essentially try to beat Glaucon at his own game.  One of the first things that is often said is that you should be ethical in business because bad ethics can land you (and/or your company) in "hot water," legally speaking.  This is no doubt true.  Criminal penalties can be leveled against both companies and their employees for many kinds of wrongdoing.  And, of course, bad ethics can lead to civil actions (lawsuits) against companies and/or their executives.  (In addition to Whitney's wrongful termination suit, Coca-Cola was threatened with a lawsuit from Burger King, but the two parties later managed to resolve their differences.[4])  Even if ultimately exonerated in court, defending against lawsuits can be very expensive, time-consuming, and a tremendous distraction.  It is preferable not to be sued in the first place. 

A second commonly mentioned reason for being ethical is that companies and people that behave unethically are likely to get a tarnished image that will hurt them financially.  Other things being equal, customers and other businesses are reluctant to do business with firms that have a reputation for shady dealings and mistreating others. (Think about how potential clients are likely to view the results of Coca-Cola’s next test promotion.)  The flip side of this coin is that companies and persons that behave well typically earn a positive public image (or "good will") that gives them competitive advantages in attracting customers, employees, and business partners.  Furthermore, ethical behavior often has other practical benefits.  A company that treats its employees considerately is likely to have lower employee turnover than a company that does not, leading to lower training and recruitment costs.  Employees who feel respected and valued are likelier to work hard on behalf of their employers.  Customers are less likely to demand their money back and are more likely to become repeat customers when they are sold quality products.  Companies that conduct business honorably are less likely to invite government scrutiny and regulation.  And so on, and so forth.  All of these benefits reduce costs in one way or another which leads to higher profits.  Into the “other practical benefits” category we can also include some popular personal answers.  Many people say that they do the right thing so that their conscience will not bother them, or so they can sleep better at night, or so others will treat them well in return.

The reasons discussed so far - avoiding legal sanctions, the advantages of a positive public image, and the other practical benefits - are all compatible with Glaucon’s point of view.  What we seem to be saying in each case is that we should be ethical because doing so is likely to be beneficial to us or to our companies (and that acting unethically is likely to be harmful).  All three reasons boil down to the idea that acting morally is in your self-interest, either by avoiding negative consequences of bad ethics or by gaining the benefits of rectitude.  And there is considerable empirical evidence showing that, at least as far as business is concerned, "ethics pays."  In a significant 1992 study, Harvard Business School  professors John Kotter and James Heskett studied 207 large American firms over a period of 11 years.  Comparing firms with a “balanced” approach (those that in addition to pursuing profits, take ethics seriously) to those with a narrow focus on profits, Kotter and Heskett discovered greater increases in revenue (682% vs. 166%), workforce (282% vs. 36%), stock price (901% vs. 74%), and net income (756% vs. 1%) among the firms with a balanced approach.  KPMG Consulting’s 2000 Organizational Integrity Study showed that firms whose management is perceived to be ethical by customers and employees often have a better bottom line, and many similar studies have reached the same conclusion.[5]

The fact that these reasons for being ethical are self-interested does not make them bad reasons, in and of themselves.  There are, however, at least two different problems with resting the case for ethics on self-interested reasons alone. The first problem is that sometimes it can be in your interest (or your company's interest) to do the wrong thing, and sometimes doing the right thing can cost you or your company money. Granted, this is not a common occurrence, particularly if we take a long-range view of things.  But if this were not true, wrongdoing would not tempt people as much as it does.  Unfortunately, not all lawbreakers are caught and punished, not all wrongdoers suffer a negative public image, and sometimes the benefits of being morally upright do not outweigh the costs.  Numerous examples could be cited here, but one such example involves software giant Microsoft, which was recently found guilty of having used illegal anti-competitive marketing practices against rival internet browser maker Netscape.  The initial ruling against Microsoft was harsh, as Judge Jackson ruled that Microsoft would have to divide itself into three separate companies.  On appeal, however (and after generous campaign contributions to the Bush administration), Microsoft eventually escaped with only a slap on the wrist.  Its legal defense was expensive, to be sure, and it has also suffered to an extent in the court of public opinion.  But Netscape is now on life support, and Microsoft has the dominant browser in the market.  In other words, it is far from clear that Microsoft’s bad behavior had a net negative effect on the company.  On the other hand, gun manufacturer Smith & Wesson lost many customers after it starting including safety locks on its handguns in March of 2000.  Though the decision was clearly ethical, sales declined, employees were laid off, and CEO Ed Shultz had to resign after the National Rifle Association raised strong protests.  So doing the wrong thing does not always make one worse off, and doing the right thing does not always pay off.

The other difficulty with resting the case for ethics on self-interested reasons is that it suggests that self-interested reasons are the best kind of reasons there are to be ethical, or that self-interested reasons are the only kind of reasons there are.  Think about someone who is wearing the Ring of Gyges who is considering murdering the king and seizing his throne.  He might think: “I shouldn’t do it – because what if the Ring wears off, or what if I’ll have trouble sleeping at night, or what if the subjects won’t accept a new King?”  He might, in other words, reason self-interestedly.  But he might also think, “It is wrong to kill somebody to serve my own interests, even if I wouldn’t get caught.”  Not only might he reason like this, but I think most of us would agree that there is something morally wrong with him if he does not.  So a further reason to think that self-interested reasons aren’t the whole story about being ethical is that there are perfectly good other-regarding reasons that we can and do act on.

 

Socrates’ Answer

 

Socrates’ response Glaucon's Challenge, not included in our excerpt from the Republic, is more subtle than the egoistic responses considered above.  In a nutshell, his reply is to show that the unethical person ends up with a bad life, quite apart from the normal consequences of immoral behavior that we have mentioned thus far.  Socrates contends that the virtuous life is the best life, regardless of how living morally affects our external fortunes.  “Vice harms the doer,” he thinks, even if the “doer” does not get caught.  In fact, Socrates believed something stronger still: vice harms the doer more than it harms any of its victims.  And in his case, this was not merely academic speculation.  Socrates spent the bulk of his life exhorting the youth of Athens to live virtuously.  Tragically, Socrates was falsely convicted of two capital crimes - impiety and corrupting the youth - and sentenced to death. (Essentially, Socrates was made a scapegoat for Athens's failures in the Peloponnesian War.)  Even though he was innocent, and even though his friends gave him the opportunity to escape from jail as he waited for his sentence to be carried out, Socrates was convinced that it would be wrong for him to avoid his execution, since he had had his day in court and lost.  Socrates held true to his belief that intentionally doing wrong, even to save his own life, would be worse than suffering an unjust death.  Why did he think this?

Towards the end of the Republic, Socrates eloquently describes how the tyrant suffers.  The tyrant is Socrates’ paragon of vice and immorality; like someone who has the Ring of Gyges, tyrants are able to do pretty much do as they please. (Think of Saddam Hussein and his brutal oppression of his own people.)  Socrates’ point is that this power to do whatever they desire ends up making tyrants prisoners of their own limitless appetites.  When one gives in to corrupt desires, these desires only grow stronger until they become insatiable.  Tyrants end up as slaves to themselves - prisoners of their own worst nature.  And Socrates thinks that tyrants are simply an especially vivid illustration of what happens to anyone who repeatedly commits wrongdoing.  Giving in to dishonorable inclinations weakens the control of reason, which creates a cycle of further wrongdoing as base and immoral appetites grow stronger still.  A recent illustration of Socrates’ point can be found in Business Week’s description of Dennis Kozlowski.  Kozlowski was earlier his career hailed as a model business executive.  But as his power grew, so did his penchant for greedy and reckless behavior.  Towards the end, one gets the sense that Kozlowski was frantically stealing and spending money as fast as he could, in a desperate gambit to find inner comfort, or fulfillment, or whatever it was that he was looking for.  As the author of that article notes, Koslowski is a shining example of the old adage that “money can’t buy happiness.”  And this story has been repeated over and over throughout history.  While one might expect people to become more cautious as their misdeeds multiply, since the chance being caught increases with each new transgression, it usually works the other way around.  It is as though with each mistake, the Koslowskis of the world become more desperate and needy.  Happiness, to Socrates’ way of thinking, consists of a harmonious ordering of one’s soul that is the result of rational self-control.  Koslowski was obviously out of control, and he was also, it seems, miserable.

A slightly different way to end up at basically the same kind of point is to ask yourself: what kind of person do I want to be?  When most of us take up this global perspective on our lives, we find that we do not wish to be persons of bad character.  Most of us, anyway, want to be good people.  If that is true of you, this then provides some leverage on the “why be ethical?” question.  The reason we should not lie, cheat, steal and so forth is that we do not want to be the kind of people who do these sorts of things.  We do not like what immoral behavior makes of us.  In a way, this still gives a self-interested answer to the motivational question: I do not want to do bad things because I don’t want to be the sort of person who would do bad things.  But the self-interest we are talking about now is a “moralized” sort of self-interest.  We see that living ethically is an inseparable part of living well, and that is the point of agreement with Socrates.

 

A Third Approach

 

As with the previous answers to the “why be ethical?” question, I certainly do not want to say that the sort of moralized self-interest that Socrates appeals to is not a good reason to do the right thing.  There is considerable insight here, and Socrates is surely right that many people who behave badly become victims of their own decadence.  But it might be that Socrates has exaggerated the misery that comes from injustice.  He assumes, for example, that once someone starts giving in to ignoble desires, that these desires will become dominant as the individual gradually loses the ability to resist them.  One might question, however, whether this is necessarily true.  So too, it might seem that doing a few bad things is not necessarily inconsistent with the “person I want to become,” especially if the benefits of these few bad things are great enough. 

But let us consider a different approach.  What reason do I have not to lie, cheat or even murder others, or to take examples more directly relevant to this class, what reason do I have not to cheat on expense reports, lie to customers, or take home supplies from the company storeroom when no one is looking?  More basically still, what reason do I have not to hurt other people?  What is wrong with the simple answer - because other people would be hurt.  Absolutely nothing.  Anyone who accepts that other people matter can be quite satisfied with this.  The egoist, of course, might insist on the further question: why is the fact that other people would be hurt a reason for me not to do such and such?  But we should not let this further question trouble us unduly.  There might be little that we could say to persuade anyone who asked it, but that does not change the fact that taken seriously, it is an outrageous question.  

Most people, I would assert, do the right thing because they realize that it is the right thing to do.  That does not work for everyone, of course, and that is why we have a legal system, police, jails, and so forth.  But consider an interview I once saw on the evening news.  A plane leaving the airport in Washington, D.C. crashed into the Potomac River one dark and rainy night in the early ‘80s.  As the plane sank, many passengers had trouble escaping from the downed jet and were in immanent danger of drowning.  A passing motorist who witnessed the crash stopped his car, jumped in and swam across the river, and pulled several people to safety.  He did this at considerable risk to himself, since the water was freezing cold and the plane might have easily taken him down with it.  When reporters asked why he did it, he looked a little puzzled.  He did not respond by saying that he did it to get on the evening news, or so that he could sleep better at night, or because he feared that people would criticize him if he didn’t.  He said he did it simply because “it was the right thing to do.”  People were dying and needed his help, and saving them was clearly what needed to be done.  His answer was striking only because it occurred in response to such extraordinary circumstances.

I am certainly not saying that in the same situation, most of us would do what this man did.  His response was truly heroic.  What I am suggesting, though, is that the moral motivation that this man displayed in heroic fashion is not that much different from what should motivate us in more mundane circumstances.  The reason one should do the right thing – and the reason most of us do it, I suggest – is that it is the right thing to do.  This is what Aaron Fuerstein said about his response to the destruction of his manufacturing plant (in the video shown in class); to lay off his workers or relocate his the plant overseas was simply not a viable option to Mr. Fuerstein –  it simply was not the right thing to do.  And the “right thing to do” here is simply a shorthand way of saying, “because I owe it to my employees,” or “because of what they have done for me,” or “because they need my help,” and so on.   

But is doing the right thing for its own sake reason enough to do it?  Well, for some people, obviously not.  And even people who are motivated by moral reasons tend to lapse into self-interested responses when confronted with the “why by moral?” question.  But I do not think that we should put too much stock in this. When we ask “why be moral?” we are sometimes looking for a rationale that would be convincing even to hardened scoundrels (the Dennis Koslowskis of the world).   Virtually everyone recognizes the force of self-interested reasons.  Indeed, had I been called on to try to convince someone like Saddam Hussein to stop raping, torturing and killing his own people, I think my best strategy would have been to appeal to his limitless selfishness.  But appealing to self-interest to answer “why be moral?” risks making it sound as though self-interested reasons are the only kind there are, and this is simply not true.  Often times the best reason to do the right thing is simply that it is the right thing to do.  That is how the best of us are motivated, and so that should be the motivation of us all.

 

Study questions:

1. Is Leo Durocher right?  Name a “nice guy” (or woman, obviously) who has not “finished last”.

2. Socrates attempts to argue that wrongdoing makes one miserable, and that (true) happiness can be found only through the life of virtue.  Suppose he is right about this - would that show that justice is good for its own sake (and that Thrasymachus is wrong)?  (Tricky)

3. What is something you’ve done that was not self-interestedly motivated?  Can a self-interested explanation for this action be found?  Does that make the self-interested explanation true?

4. What answers to the motivational question - i.e. why be ethical? - have been overlooked here?  Can you think of any additional reasons for doing the right thing beyond those already mentioned?

5. Kant thought that it is morally better to do the right thing because it is right rather than because it is in our interest.  Is this correct?

 



1 Theresa Howard, “Burger King, Coke May Face Off in Frozen Coke Suit,” USA TodayJune 4, 2003.

2  Sherri Day, “Coke Confirms Product Test was Rigged,” New York TimesJune 18, 2003.

3  Quoted in Glenn Martin, “Once Again: Why Should Business Be Ethical?,” Business & Professional Ethics Journal 17 (1998): 39.

4  Sherri Day, “Coke Makes Up With Burger King Over Rigged Test of Frozen Drink,” New York Times, August 2, 2003.

5  http://ecampus.bentley.edu/dept/cbe/newresearch/18.html.