Business Ethics - a Contradiction in Terms?



"Business ethics" is a popular phrase for many businesses, but for others it sounds hollow. Business is about making profits, after all, for private individuals, private companies, public companies and shareholders. Ethics, on the other hand, is about doing things as they, perhaps morally, ought to be done, playing by a set of rules that are widely accepted but not necessarily cost-beneficial. Business ethics, therefore, is about making profits without breaking ethical rules. This naturally raises many questions, and the answers to them often depend on one's political persuasion - or one's conception of what ethics are.

At one extreme, some advocates of the free market believe that something called the "hidden hand" of the market will deliver collective good. The market allocates resources according to supply and demand. That is, where there is a need, it will be filled - and thus people's desires will be fulfilled. In the "hidden hand" concept the collective good is satisfied, therefore this - by definition - must be ethical. Sounds ideal, but also idealistic.

The problem is whether the outcomes justify the means - it doesn't matter how we do things as long as we get results - or if the means themselves are as important, if not more so. To complicate all this a little more, one could also ask if better means or methods can lead to better results. In other words, can business that is done ethically be better business? If this is the case, we need a definition of what we mean by "better means" and "better results" and for whom they are better, the business or the consumer or those employed in the business. But what is ethical and unethical often depends on what part of the world you come from, and your cultural or religious background, rather than being universal.

Many people also argue that the question of ethics in business hinges on whether business is more profitable, in the long-term, for the health of the planet and us, the people who live in it. The question is about means as well as ends.

Cultural differences are clearly important in explaining some of the problems we have in defining adequately what we mean by business ethics. Many societies have - in Anglo-Saxon terms - much looser concepts of how business does and should operate and some have much tighter conceptions. Bribery, for example, is a dirty word in most Anglo-Saxon cultures, but in many other societies, perhaps most, it is treated as a fact of life - how things get done. In other words, it is normal.

We need to ask if there is a "natural" or "universal" set of criteria for evaluating corruption, whether we judge by the aggregate "happiness of most of the people most of the time", or by more concrete, systematised - perhaps moral - criteria based on notions of what is right and what is wrong.

Advocates of ethical business ask if it is ethical for Western multinational companies, for example, to use cheap, often child, labour in Third World countries to produce sports shoes that will be sold on Western markets, while it is viewed as unethical for leaders of this particular poor country to take side-payments for themselves to secure lucrative contracts for these companies. The Western consumer is happy with his sports shoes, the leader happy with his income, the multinational happy with its profits. The only people that suffer are the ones that make the shoes.

There are, nevertheless, certain businesses and business practices noticeably more ethical than others. Anita Ruddock's Body Shop, for example, is widely seen as an example of an internationally successful business that uses ethical criteria when searching for raw materials in developing countries (while also actively promoting recycling). It is also possible to choose investment funds that promise their clients only to invest their money in more or
less "ethical" projects, for example, environmentally friendly concerns. There are more and more coffees available on the market whose profits go to the local farmers, who then earn more than if they had to sell their coffee beans to big international suppliers. We pay a little more, but we can enjoy our coffee more!

We shall never have the perfect world. The market will never please all of the people all of the time, and ethical business - however ethical - will still be business, with the bottom line profit. Yet, it is clear that within this some businesses can be more ethical than others.

Joe Harper