Chapter 3 Expandedf

Chapter 3
Philosophical Ethics and Business

Objectives
• At the end of this session you should be able to:

1. Explain and evaluate the ethical tradition of
utilitarianism
2. Explain principle-based, or deontological, ethical
traditions
3. Explain the Rawlsian theory of justice as fairness
4. Describe and explain virtue-based theories of ethical
character
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Decision Point: Who is to say what is right or
wrong?
• An ethical relativist holds that ethical values are relative to particular
people, cultures, or times.
• When there are ethical disagreements between people or cultures,

the ethical relativist concludes that there is no way to resolve that
dispute and to prove that one side is right or more reasonable than
the other.
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Decision Point:
Application
• Imagine a teacher returns an assignment to you
with a grade of “F.”
• When you ask for an explanation, you are told

that, frankly, the teacher does not believe that
people “like you” are capable of doing good work
in this field.
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Decision Point:
Application
• When you object that this is unfair and wrong, the
teacher offers a relativist explanation. “Fairness is a
matter of personal opinion,” the professor explains.
• “Who determines what is fair or unfair?” you ask.
• Your teacher claims that his view of what is fair is as valid

as any other. Because everyone is entitled to their own
personal opinion, he is entitled to fail you since, in his
personal opinion, you do not deserve to succeed.
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Decision Point: Application
• Would you accept this explanation and be content with you
failing grade?
• If not, how would you defend your own, opposing view?
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Decision Point: Application
• Besides you and your teacher, should any other people, any other
stakeholders, be involved in this situation?
• What reasons would you offer to the dean in an appeal to have the
grade changed?
• What consequences would this professor’s practice have on
education?
• If reasoning and logical persuasion do not work, how else could this
dispute be resolved?
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Theological vs.
Philosophical Ethics
Unlike theological ethics, which explains human well-
being in religious terms, philosophical ethics provides
justifications that that all reasonable people can
accept, regardless of their religious convictions.
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Examples
• Example of philosophical justification: “You should
contribute to disaster relief because it will reduce
human suffering.”
• Example of religious justification: “You should
contribute to disaster relief because God commands
it,” or “because it will bring you heavenly rewards.”
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Preview
• This session will introduce several ethical frameworks that have proven
influential in the development of business ethics.
• Utilitarianism is an ethical tradition that directs us to decide based on
overall consequences of our act.
• Deontological ethical traditions direct us to act on the basis of moral
principles such as respecting human rights.
• Virtue ethics direct us to consider the moral character of individuals and
how various character traits can contribute to, or obstruct, a happy and
meaningful human life.
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Objective 1
• Explain the ethical tradition of utilitarianism
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I. Utilitarianism
1.1 Tenets
Utilitarianism tells us that we should act in ways
that produce better overall consequences than the
alternatives we are considering.
What is meant by better consequences?
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What is meant by better consequences?
• “Better” consequences are those that promote well-being the

happiness, health, dignity, integrity, freedom, and respect of all the
people affected.
1.2. Background
Utilitarianism was part of the same social

movement that gave rise to modern
democratic market capitalism.
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1.2. Background
Utilitarianism was part of the same social

movement that gave rise to modern
democratic market capitalism.
Leading utilitarian thinkers

• Jeremy Bentham 1748-1832
• JS Mill 1806-1873
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1.2. Background
Utilitarianism provides strong support for
democratic institutions and policies and opposes
those policies that aim to benefit only a small
social, economic, or political minority because of its
emphasis on producing the greatest good for the
greatest number.
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1.2. Background
Much of neoclassical economics, and the model of business

and management embedded in it, has its roots in utilitarian
thinking.
The economy and economic institutions could be said to be

utilitarian if they exist to provide the highest standard of
living for the greatest number of people, not simply to
create wealth for a privileged few.
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1.3.Utilitarianism: Examples
Consider the case of child labor.
In judging the ethics of child labor, utilitarian thinking

would advise us to consider all the likely consequences
of a practice of employing young children in factories.
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Dark secret of chocolate
• https://www.youtube.com/watch?v=7Vfbv6hNeng

What facts would we want to discover before

considering the consequences?
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What facts would we want to discover before

considering the consequences?
• Are children paid?

• Do they have a fixed term contract?
• What happens if they want to break the contract?
• What conditions do they work under?
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What are problematic consequences?
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Child Labor
Problematic consequences:
Children suffer physical and psychological harms, they are
denied opportunities for education, their low pay is not
enough to escape a life of poverty, and so forth.
What are the consequences if children in poor regions are

denied factory jobs?
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Child Labor
What are the consequences if children in poor regions are denied
factory jobs?
• These children would still be denied opportunities for education; they

are in worse poverty; and they have less money for food and family
support.
• In many cases, the only alternatives for obtaining any income
available to young children who are prohibited from joining the
workforce might include crime, drugs, prostitution.
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Child Labor
• Consequences to the entire society:
• Child labor can have beneficial results for bringing foreign investment
and money into a poor country.
• What is the downside of this?
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What is the downside of this?
• Multinationals are implicated in colluding with governments

in covering up their violation of international conventions
such as the United nations Global compact.
• This creates conditions in which corruption and violation of

other conventions can flourish.
Utilitarianism: Examples
It is possible under certain circumstances
to argue on utilitarian grounds that such
labor practices are ethically permissible
because they produce better overall
consequences than the alternatives.
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1.4. Utilitarianism:
Lessons from Examples
• Because utilitarians decide on the basis of
consequences, and because the consequences of our
actions will depend on the specific facts of each
situation, utilitarians tend to be very pragmatic
thinkers (but not egoists).
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2. Utilitarianism and Business: Profit Maximization
vs. Public Policy Approaches
Another question remains to be answered:

How do we achieve maximum overall
happiness? What is the best means for
attaining it? Two answers prove especially
relevant in business and business ethics.
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2.1 Profit Maximization Perspective
• 3.1 Profit-Maximization Perspective: Based on the
tradition of Adam Smith, this claims that free and
competitive markets are the best means for attaining
utilitarian goals.
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By pursuing profits, business insures that scarce

resources are going to those who most value
them and thereby insure that resources will
provide optimal overall satisfaction.
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This version would promote policies that

deregulate private industry, protect property
rights, allow for free exchanges, and encourage
competition.
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2.2 Public Policy Perspective
• The Public Policy Perspective turns to

policy experts who can predict the
outcome of various policies and carry
out policies that will attain utilitarian
ends.
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2.2 Public Policy Perspective
• According to ‘progressive principles of public administration’ there
should be a division of labor between the political and administrative
sides of government.
 Political leaders establish the goals that they argue will maximize
overall happiness.
• Administrators use their expertise to formulate the most effective
means to achieve these goals within prevailing institutional
arrangements.
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2.3 Administrative v Market Disputes Over
Utilitarian Policy
• Consider regulation of unsafe or risky products.
• One side argues that questions of safety and risk should be

determined by experts who then establish standards that
business is required to meet.
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2.3 Administrative v Market Disputes Over
Utilitarian Policy
• The Other Side Argues that the best judges of acceptable
risk and safety are consumers themselves.
• A free and competitive consumer market will insure that
people will get the level of safety that they want.
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John Katsos Hypotheticals
1. The ancient Romans used slaves as gladiators, forcing them to fight
to the death for entertainment. Is it right to force a small number
of people to be gladiators if it gives millions of people pleasure?
Would it be morally acceptable to pay people to fight to the death?
Group 1: Argue for
Group 2: Argue against
The ancient Romans used slaves as gladiators, forcing them to fight to the death for entertainment. Is it right to force a
small number of people to be gladiators if it gives millions of people pleasure? Would it be morally acceptable to pay
people to fight to the death?
For Against
The ancient Romans used slaves as gladiators, forcing them to fight to the death for entertainment. Is it right
to force a small number of people to be gladiators if it gives millions of people pleasure? Would it be morally
acceptable to pay people to fight to the death?
For Against
1. The ancient Romans used slaves as gladiators, forcing them to fight to the death for entertainment. Is it
right to force a small number of people to be gladiators if it gives millions of people pleasure? Would it be
morally acceptable to pay people to fight to the death?
For Against
• Individual gladiators may have chosen it relative to
alternatives.
• Path to freedom &/or glory
• Pacified working classes.

• Fighting skills learned.
• Gladiator contests had to follow some rules.
• Virtues of courage and mercy could be demonstrated

1. The ancient Romans used slaves as gladiators, forcing them to fight to the death for entertainment. Is it
right to force a small number of people to be gladiators if it gives millions of people pleasure? Would it be
morally acceptable to pay people to fight to the death?
For Against
• Individual gladiators may have chosen it relative to • Reinforced institution of slavery
alternatives.
• Encouraged war as emperors needed to fight war to get
• Path to freedom &/or glory more slaves.
• Pacified working classes. • Treated people as objects.
• Fighting skills learned. • Coarsened Roman culture.
• Gladiator contests had to follow some rules.
• Virtues of courage and mercy could be demonstrated

• 2. US President Truman ordered atomic bombs to be dropped on
Hiroshima and Nagasaki in 1945, knowing that many thousands of
non-combatants would be killed, in order to save more lives by ending
the war. Assume that the decision did result in fewer lives lost. Was
it morally right?
• Group 3: Argue for
• Group 4: Argue against
2. US President Truman ordered atomic bombs to be dropped on Hiroshima and Nagasaki in 1945,
knowing that many thousands of non-combatants would be killed, in order to save more lives by
ending the war. Assume that the decision did result in fewer lives lost. Was it morally right?
For Against
For Against
For Against
Japan would have committed national suicide taking
many 1000s of Americans with them.
More ‘innocent’ civilians would have died if war had

continued.
Reconstruction of Japan could be started sooner.
Geneva Convention did not outlaw it.
Truman demonstrated a capacity to make tough

decisions.
For Against
Japan would have committed national suicide taking Set nuclear arms race in motion.
' many 1000s of Americans with them.
Radiation continued to affect people for decades.
More ‘innocent’ civilians would have died if war had
continued. Devastating environmental effects.
Reconstruction of Japan could be started sooner. 2nd bomb unnecessary-should have waited.
Geneva Convention did not outlaw it. Geneva convention would have banned it.
Truman demonstrated a capacity to make tough Truman was reckless.

decisions.
3. Suppose that banning certain kinds of fast food and snack foods
would result in millions of people living longer, healthier lives.
Would such a ban be morally justified?
Group 5: Argue for

Suppose that banning certain kinds of fast food and snack foods would result in millions of people living longer, healthier lives.
For Against
Suppose that banning certain kinds of fast food and snack foods would result in millions of people living longer,
healthier lives.
For Against
3. Suppose that banning certain kinds of fast food and snack foods would result in millions of people living longer,
healthier lives.
For Against
Other people affected by unhealthy diet (health care
costs)
Fast food is addictive –treat it like a drug-only banning

works
Addicts don’t have free choice.
Healthier population more productive.
Ban would enhance family life.

3. Suppose that banning certain kinds of fast food and snack foods would result in millions of people living longer,
healthier lives.
For Against
Other people affected by unhealthy diet (health care Is fast food unhealthy?
costs)
There are policy alternatives (taxing, education etc)
Fast food is addictive –treat it like a drug-only banning Illegal activities to circumvent ban would be
works encouraged.
Addicts don’t have free choice. Governments may interfere with other freedoms.
Healthier population more productive. Dignity of individual right to choose how to live
disrespected.
Ban would enhance family life.
Dishonesty encouraged.
4. Suppose that Jack is in the hospital for routine tests, and there are
people there who need vital organs right away. A doctor has the
opportunity to kill Jack and make his death look natural.
Group 7: Argue for

Suppose that Jack is in the hospital for routine tests, and there are people there who
need vital organs right away. A doctor has the opportunity to kill Jack and make his
death look natural.
For Against
death look natural.
For Against
death look natural.
For Against
Many people saved. Only Jack dies.
Better people saved.
Organ transplant practice improved.
Doctor shows courage.

death look natural.
For Against
Many people saved. Only Jack dies. Violates Hippocratic code.
Better people saved. Undermines public trust in medical profession.
Organ transplant practice improved. Treats humans as means to end.
Doctor shows courage. Can encourage other unethical practices.
Murder.
3. Strengths and weaknesses of utilitarian decision-making
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3.1 Strengths of Utilitarian Ethics
• Liberal (no one’s happiness is more important than another’s)
• Able to describe much of human decision making
• Easy to understand
• Forces us to examine the outcomes of our decisions
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3.2 Weaknesses with Utilitarian Ethics
3.2.1 Issues with comparing alternatives
Because of a lack of moral imagination and empathy,
there will be a tendency to
o explore a limited set of alternatives and
o ignore the consequences, especially the harmful
consequences, to anyone other than those closest to
us.
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3.2.2 Do the ends justifies the means?
 We have certain duties or responsibilities that we
ought to obey, even when doing so does not produce
a net increase in overall happiness.
 These are called ‘categorical imperatives’
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Decision Point:
Do the Ends Justify the Means?
• Critics argued that some actions, torture among them, are so
unethical that they should never be used, even if the result was lost
opportunity to prevent attacks.
• Many critics argued that all people, even terrorists, deserve

fundamental rights of a trial, legal representation, and due process.
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II. Deontology: Making Decisions based on Ethical
Principles
• Principles
• Rules
• Duties
• Laws
• Roles
• Categorical imperatives
• Social contract
• Human rights
• Justice
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Principles
Deontological ethical frameworks are principle-based.
• This approach tells us that there are some rules that we ought
to follow even if doing so prevents good consequences from
happening or even if it results in some bad consequences.
• i.e. utilitarian ends do not justify any and all means to those
ends.
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Rules and Duties.
• Rules or principles create ethical duties that bind us to act or

decide in certain ways.
• For example, many would argue that there is an ethical rule

prohibiting slave labor, even if this practice would have
beneficial economic consequences for society.
death look natural.
For Against
Many people saved. Only Jack dies. Violates Hippocratic code.
Better people saved. Undermines public trust in medical profession.
Organ transplant practice improved. Treats humans as means to end.
Doctor shows courage. Can encourage other unethical practices.
Murder.
1. Where do we find these principles?
• 1.1.The law is one example of a type of rule that we
ought to follow, even when it does not promote
happiness.
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1. Where do we find these principles?
• 1.1.The law is one example of a type of rule that we
ought to follow, even when it does not promote
happiness.
 Example: We have a duty to obey traffic laws even if
it gives us a thrill to break them.
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1.2 Social Roles
• Rules may be derived from various institutions in which we
participate or from various social roles that we fill
• (eg as friends, family members, students, citizens, good
neighbors, employees, managers, teachers, students, university
faculty members)
• Can you relate this to

• 1. JKH#4 The doctor harvesting Jack’s body parts?
• 2. Arthur Anderson auditors in the case of Enron?
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1.3 Role-based duties
• Perhaps the most dramatic example of role-based duties

concerns the work of professionals within business.
• Many of these roles, often described as “gatekeeper
functions,” insure the integrity and proper functioning of
the economic, legal, or financial system.
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Principles
• Principles
• Rules
• Duties
• Laws
• Roles
• Social contract
• Human rights
• Justice
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Categorical Imperatives
Many philosophers believe there are ethical duties
that are more fundamental and that bind us in a
stricter way than the way we are bound by contracts
or professional duties.
Many philosophers believe there are ethical duties that are more
fundamental and that bind us in a stricter way than the way we are
bound by contracts or professional duties.
• You should not be able to “quit” ethical duties and

walk away from them in the same way that one can
dissolve a contract or walk away from professional
duties by quitting the profession.
Many philosophers believe there are ethical duties that are more
fundamental and that bind us in a stricter way than the way we are bound
by contracts or professional duties.
• You should not be able to “quit” ethical duties and walk away from them in the
same way that one can dissolve a contract or walk away from professional duties by
quitting the profession.
• Philosophers would say that ethical duties should be categorical

imperatives, rather than hypothetical ones:
• “I should or must (an imperative) obey a fundamental ethical rule no
matter what (a categorical).”
Human Rights and Duties
• Many ethical traditions agree that each and every human
being possesses an intrinsic value, or essential dignity, that
should never be violated.
Human Rights and Duties
• Many ethical traditions agree that each and every human being possesses
an intrinsic value, or essential dignity, that should never be violated.
• A common way of expressing this is to say that each and every human
being possesses a fundamental human right to be treated with respect,
and that this right creates duties on the part of every human to respect
the rights of others.
• According to the eighteenth century German philosopher Immanuel Kant,

to treat someone as a means or as an object is to deny them this right.
1. The ancient Romans used slaves as gladiators, forcing them to fight to the death for entertainment. Is it right to force
a small number of people to be gladiators if it gives millions of people pleasure? Would it be morally acceptable to pay
people to fight to the death?
For Against
Individual gladiators may have chosen it relative to Reinforced institution of slavery
alternatives. Encouraged war as emperors needed to fight war to
Path to freedom &/or glory get more slaves.
Pacified working classes. Treated people as objects.
Fighting skills learned. Coarsened Roman culture.
Gladiator contests had to follow some rules.
Virtues of courage and mercy could be demonstrated
Human Rights
• The concept of a human or moral rights is central to the principled-
based ethical tradition:
• The inherent dignity of each individual means that we cannot do

just anything at all to another person.
• Human rights protect individuals from being treated in ways that

would violate their dignity and that would treat them as mere
objects or means. Rights imply that some acts and some
decisions are “off limits.”
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Human Rights
• The concept of a human or moral rights is central to the
principled-based ethical tradition:
• Our fundamental moral duty (the “categorical imperative”) is to

respect the fundamental human rights of others.
• Our rights establish limits on the decisions and authority of

others.
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Child Labor
This rights-based framework of ethics would object to child labor
because such practices:
a. Violate our duty to treat children with respect.
b. Violate the rights of children by treating them as mere means to the
ends of production and economic growth and as children, they have
not rationally and freely chosen their own ends, so they are used as
tools or objects.
c. Even if child labor produced beneficial consequences, it would be
considered ethically wrong because it violates a fundamental
human right.
Human Rights and Governments
• Human rights, or moral rights, have played a central role in the
development of modern democratic political systems.
• 1. The U.S. Declaration of Independence speaks of “inalienable
rights” that cannot be taken away by government.
• 2. Following World War II, the United Nations created the U.N
Declaration of Human Rights as a means for holding all governments
to fundamental standards of ethics.
Human Rights and Governments
• The Civil rights movement in the United States applied a human rights
perspective to discriminatory legislation in the Southern States
• https://www.youtube.com/watch?v=3vDWWy4CMhE
Ethical principles and the U&N Global
Compact
• The UN launched its Global Compact in 2000 as a way of encouraging
business throughout the world to commit to ethical business
practices.
• The multinational companies involved in the sale of chocolate (eg

Nestle) were all signatories to the UNGC
• Lets go through the 10 principles to see which ones they could be

accused of violating.
UN Global Compact 10 Principles
• Human Rights
1. Businesses should support and respect the protection of

internationally proclaimed human rights.
2. Businesses should make sure that they are not complicit in human
rights abuses.
• Labour
3. Businesses should uphold the freedom of association and the

effective recognition of the right to collective bargaining.
4. Businesses should uphold the elimination of all forms of forced and
compulsory labour.
5. Businesses should uphold the effective abolition of child labour.
6. Businesses should uphold the elimination of discrimination in
respect of employment and occupation.
• Environment
7. Businesses should support a precautionary approach to

environmental challenges.
8. Businesses should undertake initiatives to promote greater
environmental responsibility.
9. Businesses should encourage the development and diffusion of
environmentally friendly technologies
• Anti-corruption
10. Businesses should work against corruption in all its forms,

including extortion and bribery.
4. Moral and legal rights in business
In business, employees typically have three
types of rights:
• Rights based on legislation or judicial rulings,

such as minimum wage or equal
opportunity.
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In business, employees typically have three types of rights:
• Rights based on legislation or judicial rulings, such as minimum wage or equal
opportunity.
• Goods that employees are entitled to based on

contractual agreements with employers, such as specific
health care packages or paid holidays.
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In business, employees typically have three types of rights:
• Rights based on legislation or judicial rulings, such as minimum wage or equal

opportunity.
• Goods that employees are entitled to based on contractual agreements with

employers, such as specific health care packages or paid holidays.
• Moral entitlements to which employees have a claim

independently of any particular legal or contractual
factor, originating with respect owed to all human beings
such as being giving reasons for management decisions
that go against them.
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Challenges to An Ethics of Rights and Duties
• There is no agreement about the scope and range of such rights.
• For example, how would we decide between one individual’s right to

medical care and the physician’s right to just remuneration of his/her
work?
• Suppose the person needing medical care could not afford to pay a
just fee for the care?
Challenges to An Ethics of Rights and Duties
• We need a practical guide to decide what to do when rights come
into conflict.
• Libertarian and Egalitarian theories of justice offer ways to think

through conflicts between the fundamental rights of liberty and
equality.
Principles
• Principles
• Rules
• Duties
• Laws
• Roles
• Social contract
• Human rights
• Justice *
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Liberty and Equality
• If autonomy, or “self-rule,” is a fundamental characteristic of human

nature, then the freedom to make our own choices deserves special
protection as a basic right.
• But since all humans possess this fundamental characteristic, equal

treatment and equal consideration is also a fundamental right.
• Liberty and equality are “natural rights” that are more fundamental
and persistent than the legal rights created by governments and
contracts.
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III Social Justice
1. Libertarian versions of social justice
Libertarian versions of social justice conceive rights in
terms of negative freedoms i.e.as freedom from
coercion, fraud, deception, theft, restraint of trade etc .
III Social Justice
Libertarian versions of social justice conceive rights in terms
of negative freedoms i.e.as freedom from coercion, fraud,
deception, theft, restraint of trade etc .
Note these are like public goods.

They are non-excludable and non-rival
i.e. One person having the protection of these rights does
not preclude others from also having these protections
III Social Justice
Libertarian versions of social justice conceive rights in terms of negative freedoms
i.e.as freedom from coercion, fraud, deception, theft, restraint of trade etc .
• Government activity to enforce contracts and compensate for harms would be

considered just.
• Other government regulation would be seen as unjust interference.
• Businesses should be free to pursue profit in any voluntary and non-deceptive

manner.
2. Egalitarian versions of justice
Egalitarian versions of justice conceive rights in terms of positive
freedoms i.e. freedom to have basic human needs met and to enjoy an
equal opportunity to enjoy free education, health care etc
Governments should actively interfere in markets to assure the

provision of these rights.
2. Egalitarian versions of justice
Egalitarian versions of justice conceive rights in terms of positive
freedoms i.e. freedom to have basic human needs met and to enjoy an
equal opportunity to enjoy free education, health care etc
Governments should actively interfere in markets to assure the

provision of these rights.
As entitlements they are merit rather than public goods in the sense
that they are ‘rival in consumption’.
i.e Some people must be taxed to fund the entitlements of others.
Which two of these rights enable positive
freedoms?
• Right to privacy • Right to a fair trial

• Right to freedom of conscience • Right to non-discriminatory
• Right to free speech treatment
• Right of due process • Right to vote
• Right to ownership of property • Right to minimal education ;
• Right to subsistence.
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Note
• Protecting negative freedoms upholds the same freedoms for others.
• Enabling positive freedoms may require some coercion of others if

they do not voluntarily agree to provide for them.
III. Social Justice:
3. Rawlsian Justice as Fairness
• The American philosopher John Rawls offers a contemporary version
of the social contract theory that attempts to find a way to think
through the competing claims of liberty and equality.
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Social Justice: Rawlsian Justice as Fairness
• Rawls’s theory of justice consists of two major components:
a. a method for determining the principles of justice that
should govern society, and
b. the specific principles that are derived from that method.
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The Rawlsian Method
• Rawls contended that decisions are fair when they are impartial.
• Our decisions are typically biased by our knowledge of our position in
the social structure and the factors that will influence our likely future
position.
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The Rawlsian Method
• Rawls contended that decisions are fair when they are impartial.
• Our decisions are typically biased by our knowledge of our position in the
social structure and the factors that will influence our likely future position.
• e.g rich people tend to more libertarian and poor people tend to be more
egalitarian
• To ensure the impartiality of assessments of justice we should ask ourselves

whether we would make these evaluations if we were in an ‘original
position’ characterized by a veil of ignorance about our eventual position in
society.
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Thought experiment
• Imagine you are on a spaceship with a group of other human beings
on your way to start a new colony on Mars.
• While on the spaceship you must agree on a set of basic principles to
govern the new society.
• You will make this decision under a veil of ignorance about your
eventual position in that society
Rawlsian Principles of Justice
Rawls argues that under these conditions,

individuals would be extremely risk averse.
Why?
They would unanimously agree on the two

principles of justice that would govern a fair society.
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First Principle
Each individual is to have an equal right to the most extensive

system of basic liberty compatible with a similar liberty for
others.
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First Principle
Each individual is to have an equal right to the most extensive

system of basic liberty compatible with a similar liberty for
others.
This principle deals with negative freedoms
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First Principle
Each individual is to have an equal right to the most extensive system of basic
liberty compatible with a similar liberty for others.
Rawls argues that the basic liberties of citizens are

• the liberty to vote and run for office,
• freedom of speech and assembly,
• liberty of conscience,
• freedom of personal property and
• freedom from arbitrary arrest.
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Second Principle
Social and economic inequalities are to be arranged so that
• They are to be of the greatest benefit to the least-

advantaged members of society (‘maximin principle’)
• Attached to offices and positions that must be open to

everyone under conditions of fair equality of opportunity.
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Second Principle
• The second principle that is derived from the veil of
ignorance under which individuals would choose that
benefits and burdens of a society should generally be
distributed equally.
• An unequal distribution could be justified only
 if it would benefit the least advantaged members of
society and
 only if those benefits derive from positions for which
each person has an equal opportunity.
3-111
Reality Check: Sharing the pie
• Imagine your favorite dessert. You are cutting a pie before the arrival of
the guests, you don’t know which slice will be yours once your guests are
allowed to choose theirs first. (This is comparable to having to decide
behind the veil of ignorance.)
• So, you are likely to cut each slice the same size so that you will at least
end up with a slice as large as everyone else and, at least, no smaller. The
same will be true, Rawls would argue, with the distribution of goods and
services in a social group.
• If you are not certain in which group you might fall once the hypothetical
veil is lifted, you are most likely to treat each group with the greatest care
and equality in case that is the group in which you later find yourself.
• See diagrams, next slide.
3-112
Pie distribution under Veil of Ignorance
25% 25%
You
Your Friend
Your Friend
Your Friend
25% 25%
Pie distribution without Veil of Ignorance
20%
You
40% Your Friend
Your Friend
Your Friend
20%
20%
3-113
Midterm 13-15 March 25%
• The midterm will cover material from the first half of the course.(up
to end of chapter 3)
• It will be held over two class periods.
• The first class period will comprise a case study worth 12.5 marks and
the second a short answer question worth 7.5 marks and multi-choice
questions worth 5.
IV.Virtue Ethics: Making Decisions based on Integrity and
Character
• In the field of business ethics , some scholars and practitioners are
turning from both a utilitarian emphasis on consequences and a
Kantian focus on rules to the more ancient tradition of virtue ethics
that asks the question ‘what would a virtuous person’ do in
situations where there are no clear cut solutions to ethical dilemmas.
3-115
IV.Virtue Ethics: Making Decisions based on Integrity and
Character
• In the field of business ethics , some scholars and practitioners are
turning from both a utilitarian emphasis on consequences and a
Kantian focus on rules to the more ancient tradition of virtue ethics
that asks the question ‘what would a virtuous person’ do in
situations where there are no clear cut solutions to ethical dilemmas.
• This is particularly evident in studies of ethical leadership where a

person’s development of a trustworthy character through the
cultivation of virtues gives leaders the moral capital to engage a
following who trust the leader not to mislead them.
3-116
1. Virtue Ethics: Character
• An ethics of virtue shifts the focus from questions about
what a person should do, to a focus on who that person is.
• An ethics of virtue shifts the focus from questions about what a
person should do, to a focus on who that person is.
• Virtue ethics recognizes that our motivations are not the

sorts of things that each one of us chooses anew each
morning, rather, human beings act in and from character.
• An ethics of virtue shifts the focus from questions about what a
person should do, to a focus on who that person is.
• Virtue ethics recognizes that our motivations are not the sorts of
things that each one of us chooses anew each morning, rather,
human beings act in and from character.
• Virtue ethics seeks to understand how virtuous traits are

formed and which traits bolster and which undermine a
meaningful, worthwhile, and satisfying human life.
2. The Dynamics of Virtue
According to Aristotle;
• virtues are traits
• acquired through reasonable actions
• that seek to find the ‘golden mean’ between excess
and defect.
3-120
Virtues between excess and defect
Defect Vice Virtue Excess Vice
Courage
3-121
Cowardice Courage
3-122
Cowardice Courage Recklessness
3-123
Humility
3-124
Self- Humility
abasement
3-125
Self- Humility Arrogance

abasement
3-126
Hope
3-127
Despair Hope
3-128
Despair Hope Fantasy
3-129
2. The Dynamics of Virtue
According to Aristotle;
• Virtues are traits
• acquired through reasonable actions
• that seek to find the ‘golden mean’ between excess and defect.
• This quest for ‘the golden mean’ produces those habits

• that define excellence of character in a situation
• so as to constrain individuals from acting in a way that would
compromise their integrity.
3-130
Development of Virtues
• Virtue ethics also reminds us to examine how character traits are
formed and conditioned.
• Much of our character is formed by such factors as our parents,
schools, religious groups, friends, and society.
• Powerful social institutions such as business and our places of
employment, as well as our particular social roles within them,
have profound influence on shaping our character.
3-131
3. Virtues and Business Culture
• Virtue ethics reminds us to look to the actual practices we find in the
business world and ask what type of people these practices are
creating.
• Many individual moral dilemmas that arise within business can best
be understood as arising from a tension between the type of person
we seek to be and the type of person business expects us to be.
• Our next session will look at how we develop virtues and character
by giving voice to our values in the face of pressures to compromise
them.
3-132
Change in nature of justification
Think about how perspectives based on consequences,
principles and virtues can be applied to the following
issues:
• Should an executive turn down a multimillion dollar
bonus?
• Should the manager of a multinational approve the
employment of child labor in a developing country?
• Should a purchasing manager considering outsourcing
ignore the appeal of an established supplier that he
should value his loyalty?
3-133
Decision Point: Should Managers Value Supplier Loyalty?
• The scenario opens with a purchasing manager for a large retail store
telling a long-time supplier that they are turning to a foreign supplier
for a particular product.
• The supplier pleads with the purchasing manager, reminding him that
they have always done their best to cut costs, despite increasing costs
of materials, high taxes and low wages for employees.
• The supplier asks the manager “Don’t you feel any loyalty to us, to our
employees, to fellow American citizens?”
3-134
Decision Point: Should Managers Value Supplier Loyalty?
• The manager responds that he is not happy canceling their

business, but that he has a responsibility to his own company
and that their supplier-retailer relationship is purely business
and contractual-based, so it is not an issue of loyalty.
• The manager concludes by saying that he believes the entire
society will benefit if they seek the lowest cost products, and
that, as a result of the boost in the economy, eventually the
jobs will come back to America.
• The supplier concludes by saying that this is an unfair view
and that it might be time the retailer’s owners reduced their
profits to keep loyal suppliers in business.
3-135
Question
• Of the arguments offered by these 2 people, can you identify:
• Which one is essentially utiltarian?
• Which appeals to the duties and responsibilities of the purchasing
manager?
• Which is concerned with economic justice or fairness?
• Which is concerned with personal virtue?
3-136
Which one is essentially utiltarian?
3-137
Which one is essentially utiltarian?
• The manager concludes by saying that he believes the entire
society will benefit if they seek the lowest cost products, and
that, as a result of the boost in the economy, eventually the
jobs will come back to America.
• Are there economic arguments for maintaining supplier
loyalty?
3-138
Which appeals to the duties and responsibilities of the purchasing manager?
3-139
Which appeals to the duties and responsibilities of the purchasing manager?
• The manager responds that he is not happy canceling their business,

but that he has a responsibility to his own company and that their
supplier-retailer relationship is purely business and contractual-based,
so it is not an issue of loyalty.
• Does the manager owe anything more to the supplier? Has he

treated him with the respect he is owed as a human being?
3-140
Which is concerned with economic justice or fairness?
3-141
Which is concerned with economic justice or fairness?
• The supplier concludes by saying that this is an unfair view and that it
might be time the retailer’s owners reduced their profits to keep loyal
suppliers in business.
• Would supplier and purchasing manager be able to agree on

principles of fairness if they did not know who was going to occupy
which role in society?
3-142
Which is concerned with personal virtue?
3-143
Which is concerned with personal virtue?
• The supplier asks the manager “Don’t you feel any loyalty to us, to our
employees, to fellow American citizens?” The manager responds that
he is not happy canceling their business, but that he has a
responsibility to his own company …….
• Is this a situation where the purchasing agent has an opportunity to

develop the virtues associated with ethical leadership rather than
just ‘hiding’ behind his role?
3-144
Midterm 6-8 March 25%
• The midterm will cover material from the first half of the course.(up
to end of chapter 3)
• It will be held over two class periods.
• The first class period will comprise a case study worth 12.5 marks and
the second a short answer question worth 7.5 marks and multi-choice
questions worth 5.

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Chapter 3

Philosophical Ethics and Business

• At the end of this session you should be able to:

• When there are ethical disagreements between people or cultures,

• When you ask for an explanation, you are told

• “Who determines what is fair or unfair?” you ask.

• Your teacher claims that his view of what is fair is as valid

• If not, how would you defend your own, opposing view?

What is meant by better consequences?

• “Better” consequences are those that promote well-being the

Utilitarianism was part of the same social

Utilitarianism was part of the same social

Leading utilitarian thinkers

Much of neoclassical economics, and the model of business

The economy and economic institutions could be said to be

In judging the ethics of child labor, utilitarian thinking

In judging the ethics of child labor, utilitarian thinking

What facts would we want to discover before

What facts would we want to discover before

• Are children paid?

In judging the ethics of child labor, utilitarian thinking

What are problematic consequences?

What are the consequences if children in poor regions are

• These children would still be denied opportunities for education; they

• What is the downside of this?

• Multinationals are implicated in colluding with governments

• This creates conditions in which corruption and violation of

Another question remains to be answered:

By pursuing profits, business insures that scarce

This version would promote policies that

• The Public Policy Perspective turns to

• One side argues that questions of safety and risk should be

• Path to freedom &/or glory

• Pacified working classes.

• Gladiator contests had to follow some rules.

• Virtues of courage and mercy could be demonstrated

• Pacified working classes. • Treated people as objects.

• Fighting skills learned. • Coarsened Roman culture.

• Gladiator contests had to follow some rules.

• Virtues of courage and mercy could be demonstrated

More ‘innocent’ civilians would have died if war had

Reconstruction of Japan could be started sooner.

Geneva Convention did not outlaw it.

Truman demonstrated a capacity to make tough

Truman demonstrated a capacity to make tough Truman was reckless.

Group 5: Argue for

Fast food is addictive –treat it like a drug-only banning

Addicts don’t have free choice.

Healthier population more productive.

Ban would enhance family life.

Group 7: Argue for

Better people saved.

Organ transplant practice improved.

Doctor shows courage.

Better people saved. Undermines public trust in medical profession.

Organ transplant practice improved. Treats humans as means to end.

Doctor shows courage. Can encourage other unethical practices.

 These are called ‘categorical imperatives’

• Many critics argued that all people, even terrorists, deserve

• Rules or principles create ethical duties that bind us to act or

• For example, many would argue that there is an ethical rule

• Can you relate this to