ACES TAGUM COLLEGE, INC.

BA 4 – Good Governance and Social Responsibility

MODULE 1
Lesson 2: THE PHILOSOPHICAL BACKGROUND OF BUSINESS
ETHICS

‘Without moral perception, man is only an animal. Without morality, man as a rational being is
a failure.”
- Ramon B. Agapay
INTRODUCTION

Business Ethics as an applied branch of General Ethics must be studied from the
perspective of philosophy. This is because ethics is part of philosophy, and it is unthinkable
to discuss ethical concepts and moral principles without being philosophical. Secondly, the
process of moral reasoning involves the use of metaphysical terminologies and concepts that
is best understood only in the light of philosophical abstractions.

At the end of the lesson, the students are expected to:

• Compare and contrast ethics and philosophy
• Evaluate the nature of the human act from the ethical
OBJECTIVES
perspective
• Analyze critically the various approaches of evaluating the
morality of the human conduct
• Understand man’s nature as a moral being
• Differentiate ethics from morality
LESSON PROPER

THE PHILOSOPHICAL BACKGROUND OF BUSINESS ETHICS

1. Ethics and Philosophy

What is Philosophy?

Philosophy, etymologically, came from two Greek words “philos,” which means love,
and “Sophia,” which means wisdom. Philosophy means “love of wisdom.” Ancient tradition
tells us that the early Greek thinkers called themselves “wise men,” and that out of humility,
Pythagoras (570-490 B.C.E.) wanted to call himself simply a “lover of wisdom” or
“philosopher”. Hence, a philosopher is one who literally loves wisdom.

As a science, philosophy is interested with the meaning of reality including our human
experiences. It is a science that seeks to explain the ultimate cause of everything by the use
of human reason alone. To philosophize means to wonder about life, to question reality and
to find sense in what we do as human beings. Philosophy as a science therefore gives the
one philosophizing an opportunity not just to reflect and think but also to analyze the
contents of his thoughts. In this case, philosophy is not actually an abstract or speculative
science, as some people think, but a subject that is directed towards meaningful activity as a
result of profound reflection and analysis.

Other definitions of philosophy:

1. Philosophy, according to Plato, is the highest form of inquiry.

2. For William James, philosophy is a collective name for questions that have not been
answered to the satisfaction of the one asking the question. (Questions like: Who am I? How
do I live? Where am I going? Are queries that have no concrete answers.)

3. For some, philosophy is the world view of the person (weltanschauung, in German)
or the person’s philosophic view of the universe or reality in relation to the purpose of
actions and events. (Peter Parker, a.k.a. Spiderman has his own personal philosophy – “with
great power comes great responsibility.”)

4. For others, philosophy is a conceptual analysis or thinking about thinking or simply

reflecting on the contents of our thoughts.
 5. Still for others, philosophy is primarily concerned with finding the meaning and
worth of reality including our human experiences.

6. Philosophy is also defined as the science that studies the ultimate causes or
explanation of things attained by the use of human reason alone.

These different definitions of philosophy only affirm that it is a metaphysical science

which basically deals with abstractions. It is from this perspective that Business Ethics, as an
applied branch of philosophy, must be discussed since it involves investigating the human
values which are basically metaphysical in nature and which are operative in fiduciary
relationship both in business transactions and in the interactions of people in business
organizations and in the corporate world.

2. Divisions of Philosophy

1. Theoretical or Speculative Philosophy –studies the truth to be known, e.g. God, immortality
of the soul, origin of the universe, among others.

2. Practical Philosophy –studies truths to be acted upon, e.g., ethics, axiology, semantics, and
the like.

Figure 2. Divisions of Philosophy

Under Theoretical or Speculative Philosophy are the following:

a) Cosmology

is a subject that studies the origin and destiny of the universe, evolution and the
ultimate fate of the entire universe. The word “universe” comes from the Greek word
“kosmos.” The first philosophers were actually “cosmologists” since they dealt with the
questions regarding the origin of the universe in a scientific and philosophical manner.

b) Ontology
 deals with the nature of existence of things and the status of reality. The word “onta”
is a Greek word which means “being.” Ontology is also referred as the theory of being.
“What does to exist mean?” or “What is the nature of being?” are some of the questions
often asked in Ontology. Ontology is actually a branch of Metaphysics.

c) Metaphysics

came from the Greek words – meta (beyond) and physikon (nature). As a branch of
philosophy metaphysics studies the nature of the mind, the self and consciousness. It also
investigates the nature of religion, existence of God, the concepts of time, space, cause and
chance.

The word metaphysics is said to originate from the mere fact that the corresponding
part of Aristotle’s work was positioned right after the part call “ physics.” But it is not
unlikely that the term won a ready acceptance as denoting this part of philosophy because it
conveyed the purpose of metaphysics, which is to reach beyond nature (physis) as we
perceive it, and to discover the “true nature” of things, their ultimate essence and the
reason for being.

d) Psychology

Psychology for the Greeks was basically a study about the nature of the soul of the
person and other entities. It was the philosopher Aristotle who coined the word Psychology
which came from the Greek words – psyche meaning soul and logos meaning science or
study. Today, Psychology is defined as a science that studies human and animal behavior.

e) Theodicy

Theodicy is also known as Rational Theology. Etymologically, Theodicy came from the
Greek words – theos meaning God and dike meaning justice. As a branch in philosophy,
Theodicy investigates the nature, being and the attributes of God not based on the bible and
divine revelation but by logical abstraction and reasoning.

f) Epistemology

Epistemology comes from the word episteme meaning knowledge. It is a branch of

philosophy that addresses the philosophical problems surrounding the theory of knowledge.
Epistemology is concerned with the definition of knowledge and related concepts, the
sources and criteria of knowledge, the kinds of knowledge possible, the degree of its veracity
and the exact relation between the one who know and the object known.

Under Practical Philosophy are the following:

a) Semantics
 Semantics came from the Greek words sema meaning sign or mark and semantikos
meaning significant. This practical branch of philosophy studies the meaning of words and its
linguistic forms, their functions and their relationship to other words.

b) Axiology

The word Axiology is from the Greek words axios meaning worthy, and logos, meaning
discourse or study. Axiology is thus the discourse or study of the philosophy or system of
value judgments or worthiness. Axiology studies values, its origin, types and characteristics.

c) Aesthetics

Aesthetics is the branch of philosophy that aims to establish the general principles of
art and beauty. It is the study of beauty and art. It can be divided into the philosophy of art
and the philosophy of beauty. It is a relatively new branch of philosophy that emerged in the
early 18th century (early 1700s) in England and Germany, more than 2000 years after the
emergence of the other branches of Western philosophy (which began earlier in Greece,
around 600 B.C.E.).

Aesthetics came from the Greek word aisthetikos which means one is perceptive of
things through his sensations, feelings and intuitions.

d) Logic

Logic deals with the nature of thinking and reasoning using empirical support to
establish the truth. It is the study aimed at determining the conditions under which one is
justified in passing from given statements, called premises, to a conclusion that is claimed to
follow from them. Logical validity is the characteristic of an argument that guarantees that if
the premises of the argument are true then the conclusion must necessary be true.

Deductive Reasoning – reasoning from universal truth to particular.

Inductive Reasoning – reasoning from particular to universal or principles.

e) Ethics

The term ethics is derived from the Greek word ethos which means “characteristic
way of acting” which is proper to man as a rational being. The Latin word ethos is mos (or
mores). Hence, we understand why Ethics is sometimes called a Moral Science or Moral
Philosophy.

The goal of ethics as a science is to investigate the nature of the human act or
human conduct. But the formal object of Ethics, meaning its point of view in studying the
human conduct, is right morality or rectitude of human acts.
 Ethics is a philosophical science that studies the morality of human acts. As a
science, ethics is concerned with the analysis of the nature of the human conduct form the
point of view of morality.

Many of us hold, whether one knows it or not, that there are two district and
contradictory principles that operate within the structure of our human behavior. First, man
believes that there are certain things that he should not do to anyone or to others.
For example, stealing or harming our bodies. Second, man believes that values are
“subjective” and incapable of being disputed between different individuals. These claims are
contradictory since claiming that it is wrong to steal from you is in fact a value judgment. But
if the second claim that value judgments are subjective is true, then how can the first claim
be true as well? The claim that stealing is wrong is merely man’s subjective opinion, and
therefore man has no grounds on which to claim that another has really been wrong.

3. Definitions of Ethics

• Ethics is the practical science of the morality of human acts.

• Ethics is the study of human conduct from the standpoint of morality.
• Ethics is a normative science based on reason which studies human conduct and
provides norms for its natural integrity and honesty.
• Ethics is a practical science that guides us in our actions that we may live rightly and
well.
• Ethics is the science which lays down the principles of right living.
• Ethics is the science of human acts with reference to right and wrong.
• Ethics is the scientific inquiry into the principles of morality.

4. Ethics and Morality

Morality refers to the quality of goodness or badness in a human act. Good is
described as moral and bad as immoral. It means conformity to the rules of right conduct. It
implies judgment and refers to what we would call moral standards and moral conduct while
ethics is used to refer to the formal study of those standards and conduct. For this reason,
Ethics is also often called “moral philosophy.”
Ethics, on the other hand, involves the study of those standards and judgments which
people create. Ethics assumes that the standards exist and seeks to describe them, to
evaluate them, or to evaluate the premises upon which those standards exist. Ethics
basically investigates the nature of moral principles, ethical systems and moral norms that
people use to justify their moral judgments. E. Babor (2004) argues that while ethics provides
principles or bases for right or wrong and good or bad actions, morality actualizes the theory.
Ethics in this case outlines the theories of right or wrong, good or bad actions. Morality,
however, translates these theories into actions. Thus, according to Babor, morality is nothing
else but a doing of ethics.

5. Ethics as a Normative Science

Ethics is a branch of philosophy and is considered a normative science because it is
concerned with the systematic study of the norms of human conduct, as distinguished from
formal science such as Mathematics, physical sciences such as Chemistry and Physics, and
empirical sciences such as Economics and Psychology. As a science, however, ethics must
follow the same rigors of logical reasoning as the other sciences.
Ethics is a normative science because it involves a systematic search for moral
principles and norms that are used to justify our moral judgments. The formation of a sound
moral judgment presupposes a profound analysis and justification of an ethical principle or
theory.
There are three categories of General Ethics:

Figure 3: The Three Phases of General Ethics

1. Descriptive Ethics – consists of studying and describing the morality of a people, culture,
or society. It also makes comparisons and contrasts on the different values, principles, code
of ethics, beliefs, and practices of people. It serves as the foundation of Normative Ethics
and provides a standard of the morality of a people, culture or society. This is closely related
to Anthropology, Sociology and Psychology as these disciplines aim to discover the moral
beliefs held by a given society, group or organization. It does not prescribe or attempt to
assess the moral soundness of any ethical system but only to describe objectively the values
and beliefs or people.
Examples:
Psychological Egoism – a concrete example of Descriptive Ethics is the study of
human motivation. It says nothing about what is good or bad or right or wrong, rather it
simply declares results based on various scientific studies.
Cultural Relativism – does not prescribe how people should act, rather it describes
how people, when grouped and observed in their own cultural realities, actually differ in their
behavior. What is good or bad, moral or immoral according to this theory is relative to the
people’s own culture or sets of cultural beliefs and practices.
In other words, Descriptive Ethics is very objective in studying human behavior but it
does not provide a clear standard of morality. It simply describes how people act and does
not prescribe how people should act.
2) Normative Ethics – involves moral judgment bases on ethical norm or theory. This
consists both of the basic moral principles and values and the particular moral rules that
govern people’s behavior, which is right or moral and wrong or immoral. The three tasks of
Normative Ethics are the following:
a. To form into a related whole the various norms, rules and values of a society’s
morality.
b. To find the basic principle form which the particular norm can be derived.
c. To justify an ethical norm or moral principles.
3) Metaethics – is a brand of Normative Ethics. Metaethics is concerned with analysis of the
meaning of words and the logic of moral reasoning, e.g., it analyzes moral terms like, “good,”
“bad,” “moral”, “immoral,” “moral obligation,” and the like. Metaethics does not describe
moral beliefs or people, does not evaluate the process of moral reasoning but simply analyzes
the usage and meaning of words.

6. The Problem of Ethical Relativism and Situation Ethics

Ethical Relativism

Ethical relativism claims that when any two cultures or any people hold
different moral values of an action, both can be right. An action may be right for one
person or society and the same action taken in the same way may be wrong for
another reason, and yet, both persons are equally correct. While ethical practices
from the point of view of culture, situational ethics (or moral subjectivism) emphasizes
moral differences based on personal beliefs and convictions.

Approaches to Moral Differences

There are four approaches in dealing with moral differences, which can be
found in the following diagram:
 Figure 4: Approaches to Moral Differences
a) There is No Moral Truth

This philosophical perspective believes that there is no ultimate right or wrong.

This view is called moral nihilism. Moral Nihilism is akin to moral skepticism which
holds that we cannot know whether or not there are moral truths. Moral subjectivism,
on the other hand, holds this moral view differ from one person to another. This
results to a subjective morality., in which case, what is good for one person may be
bad for another.

b) There is No Universal Moral Truth

Each culture has its own set of rules that are valid for that culture, and we
have no right to interfere, just as they have no right to interfere with our rules. This
view is known as ethical relativism. This ethical paradigm maintains that there are
moral truths that exist but these truths are relative and dependent on cultures and
beliefs of people.

c) Deep Down, We Can Find Basic Moral Truths

This philosophical perspective believes that despite differences, people of

different cultures can still agree on certain moral basics. People find some common
ground on basic moral principle. This is called soft universalism.

d) There Is One Universal Moral Truth

This view is also known as hard universalism or moral absolutism. This moral
paradigm maintains that there is only one universal moral code that everybody must
follow. Because this moral code is universal and objective, moral problems and moral
conflicts can be solved through proper moral reasoning.

7. Deontological vs. Teleological Approaches to Ethics Evaluation of the Human Conduct

Figure 5: Elements of an Action

Deontological Ethics

Deontological Ethics or non-consequentialist approach is a body of ethical theories

that measures and evaluates the nature of a moral act based on the validity of the motive
of an act. This means that if the motive or intention of the act is good, then regardless of
the consequences, the whole action is good.

Examples of Deontological Ethics:

Kantian Ethics or Kantianism – this is known as the categorical imperative approach,

the idea that one should always base his actions on maxims or rules that are believed to be
universal. For Kant, the moral goodness or badness of the act does not depend on the
consequences of the act but on the motive or intention of the actor, e.g., the motive is good
if it is an expression of the person’s sense of duty.

For instance, the unconditional duty of a nanny to enter into a burning house to saves
the baby. The mental process for the nanny would be a series of questions. Are all paid
nannies obligated to rescue babies from danger? Is the duty unconditional? Does the
particular situation require such action of the nanny? If the nanny’s answers to the three
questions are yes, then she has a binding moral duty to act.

Divine Command Theory – This ethical theory holds that the standard of right and
wrong is the will or law of God. The Christian Ethics is an example of an ethical system that
uses the deontological approach in evaluating the morality of human conduct, e.g. the will of
God is expressed in the Bible and in these sacred sources of morality, then that act is
unethical regardless of its perceived or actual consequences.

Teleological Ethics

The word teleology came from the Greek word tele which means far or remote.
Teleological Ethics or the consequentialist theory measures the morality of an action based
on its consequences and not on the motive or intention of the actor. If the consequence of
the act is good, regardless of the motive then act is always morally good.

Examples of Teleological Ethics:

Hedonism or the view that pleasure (regardless whether the pleasure is mental or
physical, but mostly sensual) is the only good as an end. For instance, drinking till the last
drop, eating until you cannot swallow are some examples of a good action that should be
pursued.
 Utilitarianism is another example of a consequentialist theory. This school of thought
maintains that “the greatest good is the greatest happiness or pleasure of the greatest
number.” This means that if the action can provide the greatest happiness to the greatest
number of people who are affected by the action, then the action is considered to be
morally good. For instance, if stealing will enable me to help many poor people, then stealing
becomes good.

8. The “Moral Sense” in Us

One of the basic questions in ethics is to determine how people develop their
fundamental concepts of good and evil. Traditional ethics believes that man has a natural
insight to morality, this being a gift of the Creator who gave man a “moral sense.” This moral
sense is native in all persons regardless of race, religion, culture, education and creed. Man,
therefore, is a moral being. He knows the fundamental distinction between what is good and
bad, what s moral or immoral. This basic knowledge of right and wrong is what differentiates
man from animals. The next three theories namely, that of Aquinas, Kohlberg, and Freud
attempt to explain the fundamental question of how people develop their concept of morality.

1. The Synderesis of Man According to St. Thomas Aquinas

According to Aquinas, the moral sense in man is manifested and expressed in three
different ways:

1) Man is able to distinguish or to know what is good and what is bad. Of all creatures,
only man has the capacity to know the difference between a good and a bad action.

2) Man is always obligated to do good and avoid evil. In any given circumstance, man
is the only creature who feels this primary duty to do what is good and avoid what is
evil.

3) Man know that he accountable for his actions-good or bad. Of all creatures, only
man realizes that the performance of an action entails rewards and punishments. If he
does a good action he expects rewards. If he does an evil action he expect
punishment.

2. Freud’s Theory of the Id, Ego, and the Superego

Freud founded the Psychoanalysis Theory (Theory of the Psyche) where the
approach is to understand human behavior which views men and women as constantly torn
between internal unconscious forces and external social forces. The key points of
psychoanalytic theory are the following:
 1) Man must learn to control his inborn desires.

2) Man must achieve fulfillment in ways that are harmonious with others.

For Freud, a healthy personality is manifested by a person who has an ego that does
an effective job of coping with the urges of the id and at the same time, is not pressured by
the restrictions of the superego.

Business Application

A businessman may be tempted to cheat his customers in the process of selling (id).
He realizes however, that to give in to this enticement would be a violation of the Code of
Ethics for Businessmen and other positive laws, like the Consumers Act of the Philippines
(superego). He therefore discerns well and begins to rationalize that it is better not to fool or
cheat the customer (ego). In this case, the perceived good action, e.g., not fooling the
customer is a decision made by the ego as a result of its interaction with the enticement of
the id and the pressure of the superego.

3. Kohlberg’s Theory of Moral Development

His theory of moral development was based on the earlier works of the Swiss
psychologist Jean Piaget. Kohlberg helped to clarify the general cognitive developmental
approach of Jean Piaget, through his analysis of the changes in moral reasoning or extending
the approaches into a series of stages.

Figure 6. Kohlberg’s Theory of Moral Development

Kohlberg’s Classification of the Person’s Moral Development

LEVEL STAGE SOCIAL ORIENTATION

Pre-conventional 1 Obedience and Punishment

2 Individualism, Instrumentalism, and Exchange

Conventional 3 “Good Boy/Girl Image”

4 Law and Order

Post-conventional 5 Social Contract/Rights

 6 Principled Conscience

7 Transcendental Morality

1) Pre-conventional. This behavior is generally found in young children and older

children. There are two stages in this level: 1) reaction to punishment, and 2) the
desire for the right behavior that will satisfy the person’s self-interest. Stage 1 -
explains the concept of being good by following commands and authority and
avoiding being punished.

Stage 2 - is a stage of individual instrumental purpose and exchange. This means

fair deals for concrete exchanges. This is characterized by a view that right behavior
means acting in one’s own best interests. Stage 2 also promotes the “I’ll scratch
your back and you scratch my back” type of mentality.

Business and Organization Application: Some individuals do the right thin only to avoid
punishment or to obtain approval, e.g., an employee who thinks that the only reason
not to steal money from the employer is the certainty of getting caught and then
fired. The person at this stage has little sense of the needs of others. At the second
stage, the person becomes aware that others have their needs also and begins to
defer to them to get what the individual wants.
2) Conventional. This level is generally found in an ideal civilized society, hence, the name
“conventional.” The first stage of this level (Stage 3) is the Stage of Mutual
Interpersonal Expectations, Relationships and Conformity. This is characterized by an
attitude which seeks to do what will gain the approval of others, commonly referred to
as “Putting oneself in the other person’s shoes.” Stage 3 is also known as the “good
boy and good girl” orientation stage. This implies that a good or bad behavior of the
person depends on his/her conformity or non-conformity with the norms of his/her
immediate community or environment. Stage 4 on the other hand, is the Stage of
Social System and Conscience Maintenance wherein one is oriented to abiding by the
law and responding to the obligations of duty. Individuals adopt social rules without
considering the underlying ethical principles involved. It emphasizes only obedience to
the laws, respect to authority and performing one’s duties so that social order is
maintained. In this context, the good or the bad behavior is dependent on the
person’s conformity or non-conformity with the laws created by the state or
government. A person is considered a law abiding citizen when she or he follows the
laws of society but will be considered a deviant when the same person violates the
same laws.
 Business and Organizational Applications: Stage 3 of this second level describes that
right behavior is one that conforms to conventional expectations, e.g., an employee
considers the importance of being a loyal follower and avoids conflicts. Stage 4 on the
other hand, explains that the right behavior consists of performance of duty, respect
for authority and maintaining social order, e.g., an employee adheres to the
organizational rules and policies and obeys orders from the superiors.
3) Post-Conventional. This third level of moral thinking is one that Kohlberg felt is not
reached by the majority of adults. Stage 5 is the Stage of Prior Rights and Social
Contract or Utility. It is the stage of understanding of rights and values. It gives the
person a sense of democracy but relativity of rules. This means that people at this
stage realize that there are fundamental concepts of right and wrong but the
application of which is confined to their own culture and environment. Each person’s
moral rights however, must be protected. The last stage (Stage 6) is the Stage of
Universal Ethical Principles. It is based on respect for universal principles and the
demands of individual conscience. Action is controlled by internalized ideals that
demand pressure to act accordingly regardless of the reaction of others in the
immediate environment. At this stage Kohlberg believed that people do good and avoid
evil because they are convinced that there are universal ethical principles that govern
and justify their actions.

Business and Organization Applications: Stage 5 maintains that the laws may be
important and must be followed but they are not absolute, e.g., they can be changed if
necessary. Stage 6 maintains that people could act in accordance with their
conscience and based universal ethical principles, e.g., when an employee discovers
that formal rules and laws are at odds with these principles, the individual is likely to
act in accordance with these principles rather than with the rules.
The last stage of Kohlberg’s stages of moral development is called
Transcendental Morality. At this stage, Kohlberg believes that people can transcend
their concepts of good and evil by integrating them with their religious convictions.
Thus, murder is evil because it is against the divine law, e.g., The 10 commandments.

9) Two Ethical Systems

1) Atheistic Ethics assumes that only matters exists and man is responsible only to
himself since there is no God who creates and rules the universe. Atheistic theories
propose the following principles:

• Matter is the only reality.

 • Man is matter and does not have spiritual dimension
• Man is free and must exercise his freedom to promote the welfare of
society.
• There is no life after death.
• Man is accountable only to the State.
2) Theistic Ethics assumes that God is the Supreme Lawgiver. Everything must
conform to God’s eternal plan of creation. Man is accountable for his actions and
deserves either a reward or punishment in this life or in the next. Theistic theories
postulate the following truths:
• God is the Supreme Creator and Lawgiver.
• Man is free and must use his freedom to promote his personal and
social interests along with his fellowmen.
• Man has an immortal soul which cannot die.
• Man is accountable for his actions, both good and evil.
LESSON 2: ACTIVITY

Case for Analysis: Expired Gravy

Mang Toot’s fast-food chain has been known in the business not just only for its
great tasting food and excellent service but also for its cleanly prepared dishes. One day,
Emong, a service crew of Mang Toot’s Makati branch, was preparing the gravy. He was
unaware that the starch he used was already expired. He only noticed it after some time and
the gravy had already been served to some customers. Knowing that it might cause harm to
the customers, he immediately told Bartolome, the branch manager, about it. Bartolome told
Emong not to tell anyone about it, besides, no one is complaining.

Questions:

1. What is the moral issue in the case?

2. If you were Bartolome, what are you going to do?