Friday, August 30, 2019

A few things wrong with how Business Ethics is usually taught


Next week I start again my Business Ethics classes at the university, and I’ve used the summer recess to get up to date in the literature on the subject, surveying the materials other teachers use to impart the key contents of the discipline in the impressionable heads of their entrusted students, and boy, am I disappointed! Not necessarily with the books and articles I’ve read (although many of them were just a collection of bromides and thinly-veiled magical thinking, more on that in a moment, in fairness I have to say that in some -sadly rare- cases they achieved through sheer effort a status of “almost-readability”), but with the discipline of business ethics itself, which I cannot avoid but seeing as teetering on the brink of moral bankruptcy (but hasn’t it been in such state since its very inception?). And the problems of the discipline are highly illustrative of the problems of the whole system of highest learning (universities and associated institutions), which in turn are but another manifestation of the malaise that affects our whole society, trapped by what I have in many other occasions called a “toxic” dominant reason. To put it in a simplified way that my readers can easily grasp, the causal chain would flow as follows (causes to the left of the arrows, consequences to the right):

Dominant reason (desiderative) -> sick social system -> corrupted forms of transmitting most advanced knowledge (university) -> incoherent, inequality-perpetuating discipline (Economics and Business Administration) -> despicable self-serving, injustice-legitimating subdiscipline (business ethics).

So yep, given the world we live in, what else could we expect? The poor, sad subject that I happen to teach is but another exponent of a social system gone awry, as it couldn’t help doing given the contradictions and false premises on which it is predicated. And, if that were the case, there is not much to do but either fold and leave the table or play by the rules and step up the ante. And I’m not a quitter, and I still see the opportunity to positively influence the lives of the bunch of young persons I teach each year as an invaluable gift, so of course I’ll keep at it as long as I can, trying to raise the bar within my limited possibilities, and not falling in what I see as the deadening complacency of the field (‘cuz, man, is the field complacent to the bone!)
And such raising the bar requires a clear-eyed criticism of the things I don’t like in the current books that are used to teach the poor kids, so that’s what I intend to do in this post. Now a word of caution is convenient, as I wouldn’t want to convey the impression that everything that has been written until now is utter crap (which having one book authored by me in its final pre-printing stage, could be construed as the crassest & crappiest product-placement ever!). What I will be criticizing is frequent enough and widely accepted enough, but not all the books containing “Business Ethics” in their titles commit all the sins, and some of them are more considered and better thought out, better executed and probably better intentioned also, than others. I will not be naming names (no need to create enemies and no use in singling out the most egregious malfeasants…) but I hope to offer my readership enough criteria to judge by themselves, if they ever come across such texts, to what extent they partake of the denounced defects. Defects that we can group under the following headings:

·         Acritical (many times unacknowledged) acceptance of the current social arrangement (post-industrial, globalized, short-term oriented capitalism)

·         Exclusive focus on a slice of human life (salaried employment) that, when taken in isolation, can only be very problematic from an ethical standpoint

·         Disregard for the tradition (let’s call it “non-business ethics”) of the preexisting field it should have arisen from

·         Underlying assumption (sadly, not borne enough by the facts) that being ethically good helps the business earn more money

·         Excessive emphasis on recent articles, normally very shallow and of little originality, at the price of ignorance of deeper and more difficult primary sources (books)

·         Lack of commitment to any kind of “substantive” values (so old-fashioned!) other, that is, than a facile hyper-individualism of the utilitarian stripe (everybody should be maximally free to do his or her own thing, as long as he doesn’t harm others… of course not helping and not caring cannot be strictly considered harms, so all is good if we each pursue our own egoistic interests) shorn of every commitment to previous traditions or social bonds

Hmmmm… I wonder if I will be able to cover all of them in a single post, let’s proceed and decide based on how long each mini-rant turns out to be, as you are about to find that the tone is, indeed, quite “ranty”.

1.     Acritical acceptance of current capitalism


 Well, a book needs to share some essential tenets with its readers in order to be of some use to them, shouldn’t it? Let’s not forget the discipline of Business Ethics was born in the nineteen seventies in American universities (but not in philosophy, or cultural studies departments, which were a hotbed of radicalism, apparently) catering to students of Economics and BA, not marked back then by their enthusiastic endorsement of alternative lifestyles or countercultural sympathies. Also, in those seminal days, the world was split between two warring doctrines, capitalism and communism, and a good fraction of the intelligentsia (more in Europe than in the USA), many of them leading voices in moral philosophy, was unashamedly aligned with the latter against the former. So it may have made sense then to make the moral case for free markets and the private enterprise as the most efficient way to produce and distribute goods, and by such production and distribution, to distinctly contribute to the well-being of the human beings that constitute society. But nowadays, to repeat how wonderful unfettered capitalism is, to (mostly) ignore or, at most, pay lip service to the existence of market failures (treating them as an odd and infrequent exception, and not the almost universal rule they are), to leave aside whole areas of the economy that may be best served by non-market arrangements, sounds at best disingenuous, at worst manipulative.

And redundant to the bone, as the line about “the free play of supply and demand in perfectly competitive markets guarantees (almost a tautology, as I’ve incessantly repeated in this blog) that the maximum of individual needs are met with the minimum of inputs, and thus with maximum efficiency” has been drilled in the minds of the gullible students a gazillion times when they arrive to their business ethics class, so they are convinced enough of it. It is not bad (but not something I see done frequently enough, or ever, really) to remind them that such lofty statement has the extraordinary merit of being, in addition to a tautology, profoundly false (counterintuitive as it may sound) and profoundly irrelevant, as there are almost no perfectly competitive markets to begin with, and trying to make the actually existing ones more so has historically caused as much harm as good (if not more).

2.     Unhealthy focus on productive activities


I know it makes prima facie sense that something called “Business Ethics” busies itself, mainly (even exclusively) with what businesses do, and thus analyzes and considers the myriad ethical conundrums that may be experienced in the course of professional activity. But there is both something defensible and something fishy about such delineation of interests. First with the defensible: it is fully justified to single out areas of ethical reflection, as the field of ethics has become so vast, so sprawling (although, as in so many other areas, covering a vast area normally comes at the expense of doing it in a very shallow and superficial way) as to demand more than a normal human’s lifespan to survey in tis entirety. Such singling out has been successfully done in the field of life sciences (“bioethics”, which is kind of the ur-precursor of any applied ethics, requiring the mastery of a lot of knowledge from the object field: a bioethicist must previously know a lot about of complex biological systems and medical procedures in order to be able to give an informed opinion about their ethical implications) and even of religious studies (from moral theology to dogmatic ethics, although their relationship with secular ethics is at best “problematic”), so why couldn’t it be done for business? Isn’t business, after all, a separate area of human activity, with its own and distinct dilemmas and rules to be scrutinized?

Well, not really. And because it is so integral a part of everybody’s life, traditional ethics has dealt with business activity intensively: Plato, in his Republic forbade the Philosopher Kings and the Guardians of the ideal city to own gold or to get involved in commerce. Aristotle railed against lending money with interest (a professional activity; well, he actually railed against any professional activity, as the ideal life was for him that devoted to abstract contemplation and reflection, bios theoretikos), Kant used extensively the example of the shopkeeper that charged the right price for the wrong reason… all of them would have been baffled by the suggestion that they were trespassing on the realm of a distinct discipline, which was in charge of defining “how things should be” in the conduct of professional activities.

Which takes us, naturally, into the fishy part of such separation. Karl Polanyi chronicled in his The Great Transformation (and I have incorporated much of that chronicle in my own account of how current dominant reason came to be: Short summary of dissertation: how western dominant reason came to be) how modernity has separated a distinct realm of thought and activity, called “the market”, from the rest of social life, providing it with special rules and procedures that, in the end, benefitted a few and damaged many. The successful societies that out-produced their competitors (and thus out-gunned them in the battlefield, and imposed their set of values on them) have elevated precisely the production of material goods, and its subsequent exchange and eventual enjoyment, to the ultimate goal of life, never mind such enjoyment necessarily had to be concentrated between fewer and fewer of them. That means that the lot of the majority of humankind under our current social arrangement is to produce for a diminishing number of ultra-rich plutocrats that already own more than could be properly enjoyed in a hundred of lifetimes. Not a very enticing prospect. And traditional ethics, that intends to put all of human life under its magnifying glass, could not fail to notice the abhorrence of such a state of affairs. A state of affairs legitimized by a dominant reason I have called “toxic”, and that certainly is incompatible with a life well lived, as the lives both of the plutocrats, of the toiling masses and of the swelling non-toiling ones are sadly stunted and robbed of much of their potential by such arrangement.

So, the logical response (without any supremely evil intelligence having to formulate and implement it) is not to try to improve the damaging social arrangement (too complicated!) but to do away with such annoying, Jiminy-cricket-like discipline entirely, and convince people that just a fraction of it is enough. Not to live well, of course (any discipline that taught how to live well would be ultra-dangerous to today’s hypercompetitive capitalism), but at least to produce well. A sad, “short-winged” (the unforgettable words of the recently departed Javier Muguerza) justification for a sad, short-winged subset of activities that would have no place in any reasonable life plan.

3.     Disregard for non-business ethics


Of course, we may start by asking ourselves “does it really make sense to define a “Business Ethics” in the first place, as separate from old, unadulterated, no-qualification-needed, Ethics?” Come to think about it, businessmen need more than a smattering of mathematics, and nobody ever came up with the idea of carving a separate “business mathematics” to teach Econ and BA students how to add, multiply, subtract and divide (which is typically more than enough for 99.9% of what they actually do in their professional lives). With the ability to gather and process greater amounts of data than ever before, statistics (a branch of maths, I know, but bear with me) has become a very useful tool in the conduct of businesses. But again, nobody (yet) has come out proclaiming the need to create a separate discipline, “Business Statistics”, to sort out the specificities of applying the knowledge of the field to the business world, without minding with all the annoying theoretical baggage statisticians have developed during centuries. We do teach statistics to students, to the level we consider may be beneficial and useful for them, even if that means repeating a lot of what students of mathematics will find in their first year of statistical training.

But not so in business ethics, where, with some honorable exceptions, twenty five centuries of ethical discussion are entirely and conspicuously absent. If they are mentioned at all, they are dispatched in a few pages, in a highly bastardized form (something along the lines of “there are three traditions: virtue ethics, utilitarianism and deontology; all are similarly impractical and unintelligible, and they were never able to agree on anything, so let’s not lose more time considering them and go back to discuss how bad Enron was and how lying and cheating will make you earn less money on the long term”). And I think there are a couple of reasons for that. The first one is that, under that apparent equanimity, business ethics is already profoundly identified with only one of the traditions it purports to evaluate so dispassionately: namely, with utilitarianism, as that is what permeates all of the theoretical framework of economics, since its modern inception (from Adam Smith to the Austrian school, including marginalists, welfarists, Keynesians -starting, of course, with Keynes himself, neokeynesians, Fisherians, neofisherians, monetarists, supply-siders and whatnot, all avowedly utilitarian to the bone), so they just can’t see the point in discussing, or taking seriously anything else.

The other reason, of course, is that such consideration of what is good for the human being is profoundly anti-humanistic, and profoundly inimical to human flourishing. But, coming from the intellectual milieu of economics, they have already been taught that the world (both the natural and the social) is just a set of finite resources that admit of different uses (taken almost verbatim of Lionel Robbins’ definition of the field), and their distinctive know-how is to find rules to determine the “best” use of those resources, the one that “maximizes satisfaction” (which is but a synonym for “utility”… see how an economist cannot but be utilitarian through and through?), or the kind of satisfaction for which consumers express their preferences. Doesn’t matter if those “resources” are barrels of oil, tons of iron ore, square meters of land, pieces of machinery (lathes, presses, blast furnaces), meters of optic fiber, lines of code of computer programs or… hours of human beings! At its core, the economic outlook sees people’s time as one interchangeable resource more, which admits of alternative uses all the same, and which can be entered in an equation with all the previously stated numerical quantities to define a “best possible outcome” to be maximized. But let us remember what that old fart, Kant, had to say about lumping together human mind and other “resources” (page 48-49 of my edition of the Foundations of the Metaphysic of Morals):

 In the realm of ends everything has either a price or dignity. Whatever has a price can be replaced by an equivalent, while whatever is above price has dignity. […] there is something that comprises the precondition whereby something can have its purpose in itself alone. This does not have a relative value – a price – but rather an intrinsic value – dignity

Powerful stuff. Which kind of throws a wrench into the whole of economic thinking, because if there is something (uses of human minds, with all their ingenuity, but also variance and unpredictability and quirky behavior) that cannot be measured and compared with all the other resources, and requires some “spooky stuff” type of consideration (what’s that “dignity” thing about, anyhow?) all the maximization and legitimation of our current business practices (from outsourcing to countries with laxer labor standards to slashing social benefits of employees and pushing environmental standards to the bare minimum) becomes automatically suspect, when not outright indefensible.

So yep, in that sense it becomes fully understandable that business ethics texts don’t busy themselves too much with old mushy ethical traditions. Nobody likes being told that their whole world outlook maybe, regardless from how they style to call them themselves, entirely incompatible with the good life and how a fully human being should live…

4.     Assumption that being good = earning more money


I have to confess this is the one that most annoys me. Although, given the previously exposed paucity of their intellectual underpinning, it is also wholly understandable. If you cannot ground your appeals to moral behavior in any respectable tradition (that, in the end, presupposes certain metaphysical commitments that may not be everybody’s cup of tea), what do you have left? You try to take advantage of the naivete and lack of life experience of your students, and shove down their throats the lie that, in the long run, “acting good” is the best course of action for the bottom line. That being moral is the most astute and savvy business decisions they can make, as the press, full of shenanigans and malfeasance being punished, amply attest. Aaaaaaagh! Where to start debunking this?

Let’s start with the flimsy empirical base. When you see lots of cockroaches in a house, and you smash them, you don’t conclude that the house is probably clean, because all the cockroaches you saw in the last couple of hours are dead. You conclude (correctly) that the house is still full of cockroaches because for every one you have seen, there are probably thirty (or forty, or one hundred) that you are not seeing. So the fact of Enron, and Siemens, and McKinsey in South Africa, and Cambridge Analytica being brought to light and prosecuted doesn’t mean there is a strong enough incentive for companies in general to behave ethically, it only means there is a strong incentive for companies not to be caught! Some authors realize that the amount of bad press of certain corporate actors is a poor index of the ethical compliance (or lack thereof), so they have attempted to “scientifically” measure the (purported) correlation between ethical excellence and shareholder value, conveniently forgetting that the first one is nigh impossible to accurately measure, and producing an interesting subset of the literature devoted to “demonstrate” (the conclusion being preordained there are few surprises in the results achieved) how the most ethical companies see their stock raise more than their less scrupled competitors, and even suggesting a causal mechanism for such discrepancy (companies that behave more ethically and spend more on signaling their virtue are more reliable, more trustworthy, and thus can reduce their transaction costs with suppliers and exact a higher price for their products or services from customers)…

As I’m running out of time (have to run back home to my second son’s birthday!), and there are so many elements of awful reasoning in this line of thinking, I will leave the completion of its debunking for a following post, along with the remaining two areas of discrepancy

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