Business ethics Flashcards

1
Q

Corporate social responsibility

A

a business has responsibility towards the community and environment

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2
Q

Stakeholder

A

all the people and groups associated with a business such as employees, customers, the local community, the country as whole and governments.

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3
Q

Shareholder

A

those who own the company and will make a profit if the company makes a profit.

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4
Q

Maitland

A

Argues that if workers in LED countries freely choose their work then there is no problem with jobs. Also, the income they are paid for working for international companies is more than they would be payed if they worked for local companies.

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5
Q

Weaknesses of Maitland

A
  • it is not a free choice if they are the only companies available or are the ones that pay the most - if you need to feed your family you will get whatever job you can. Also, since they are mostly uneducated it is not a free choice because they do not have the option of better jobs.
  • it doesn’t matter if they are payed more than the local companies, they are still not being payed enough to live, and so their wages should still be higher.
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6
Q

Adam Smith

A

People are born with a moral sense, an innate conscience and a feeling of empathy and sympathy with others within the community.
* The ideal is that business is unconstrained by governments, and so free market capitalism is the best way to encourage entrepreneurs
* Trickle-down economics - the benefits they make then flow down into the community, e.g. If a factory owner does well, this enables him to employ more workers, giving them job security
* This is guided by the invisible hand - it just happens because business owners are able to make a profit in a free market

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7
Q

Karl Marx

A

Critiqued capitalism in Das Capital. Marx did not like the idea that production in business was in control of individuals who controlled the labour forces by making profit from their work. He felt it undermined those who do not own the means of production - the working class whom he called the Proletariat. It put the capitalist class – the bourgeoisie- into a position where they could bargain for power over the working class.

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8
Q

Friedman

A

He claimed that the social responsibility of a business was to increase its profits - “the only rule of business is business”. He claimed that “Greed is good” - the world runs on individuals fulfilling their self interests, and the only cases in which the masses have escaped poverty are in capitalist societies - and that a free market enterprise was best and a capitalist society because it encouraged and allowed entrepreneurs to set up businesses. “Rules of the game” must be followed.

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9
Q

Shareholder theory - Friedman

A

The one and only obligation of business is to maximise its profits while engaging in “open and free competition without deception of fraud”

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10
Q

Robert Solomon (inspired by Aristotle)

A

The pursuit of profit is one of the main goals in business but not the only one. He wrote “we adopt a too narrow vision of what business is, e.g the pursuit of profits and then derive unethical or immoral conclusions form this.” Profit he claimed should be seen as a way of encouraging and rewarding hard work …building a better business and serving society better. A business should set out to make a profit by supplying quality goods to its customers, providing jobs and fitting into a community - good business should take the community into account, and when it does this productivity and profits are increased
Virtue and profit must thrive together

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11
Q

Anthony Weston

A

Social responsibility and profit are important. He gives the example of pharmaceutical company Johnson and Johnson - it lists its responsibilities to its stakeholders in order, placing shareholders at the bottom. In 1981, 7 people were poisoned by cyanide laced pills in Chicago, causing the company to take 22 million bottles off of the shelves in response. They also offered to exchange any already purchased bottles, and took huge losses through these actions. When they reintroduced the product it had tamper resistant packaging. Weston wrote that Johnson and Johnson was “proving that doing the right thing by stakeholders also benefits shareholders”

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12
Q

Ted Snyder

A

A business should set out to make profit foremost but social responsibility towards employees and stakeholders is important to some degree, although it is secondary to their purpose of profit making. His research suggests that moving to LEDCs benefits markets and businesses.

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13
Q

Sandel

A
  • Corporations have a moral responsibility to protect the human rights of their workers and look out for their wellbeing
  • The law cannot always provide a basis for the way that business should treat their workers - if they are operating in a country that doesn’t have good laws protecting their welfare, this doesn’t mean that companies should use their to their advantage - they should still treat them well and go beyond the legal obligations to do this
  • The purpose of a corporation is to contribute to the common good, but this is more than just making a profit and contributing goods, it is also about protecting workers
  • The declaration of human rights should be expanded and adapted to protect workers’ rights - we should aim to establish moral principles that can be upheld by everyone
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14
Q

Singer

A

Animals and humans all have a preference to feel pleasure and avoid pain - this should be considered by businesses and they should not be used as a means to an end

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15
Q

David Attenborough

A

We need to consider the environment very seriously indeed. Businesses’ impact on the environment needs to be seriously considered - climate change is very rapid and this is destroying the earth and animals.

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16
Q

Alan Sugar

A

So as long as you make profit that’s what matters. If you choose to be ethical then it’s to make profit. If you choose to be cheap to make more profit then workers will be exploited, this is inevitable.

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17
Q

Robert Reich

A

Argues that triple bottom line (when companies make themselves accountable for their social responsibility by recording what they have done) and the enhanced business review (r, where businesses demonstrate how they have taken account of corporate social responsibility in their dealings on a global scale) are not enough, there need to be international laws holding companies accountable, it should not be a choice that they are left to make.

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18
Q

Stakeholder theory - Freeman

A

Corporations should be run for the benefit of all stakeholders, not just shareholders - so executives must simultaneously try to promote the interests of all stakeholders and balance their interests appropriately when they conflict

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19
Q

British American Tobacco case study?

A

The tobacco industry in Indonesia is very problematic - many young people smoke and this leads to many deaths due to lung cancer both directly and due to second-hand smoke. The companies often advertise near schools even though they have agreed with governments not to do this.

The main company advertising tobacco products is British American Tobacco, and their suppliers use young children in tobacco fields to pick the leaves, even though this is highly dangerous work.

The Indonesian government has not signed the UN framework to stop big tobacco industries because they acquire a lot of revenue from the industry (10% of state revenue) and it provides around 10 million jobs.

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20
Q

What are advertisements for?

A

Advertisements are designed to increase sales, and attempt to change the attitudes, cognitions and behaviours of consumers through targeted advertising. Adverts for children often work best because they are highly impressionable.

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21
Q

What laws govern advertising?

A
  • Consumer Protection From Unfair Trading Regulations - this states that you cannot mislead or harass consumers, e.g. By including false or deceptive messages, leaving out important information, or using aggressive sales tactics.
  • Business Protection from Misleading Marketing Regulations - this states that as well as being accurate and honest, you must not make misleading comparisons with competitors.
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22
Q

What are arguments for ethical advertising?

A
  • Promotes the positive use of products.
  • Gives consumers the information they need to make an informed decision on what products to buy and how these may enhance their lives.
  • Proves that companies have morals and care about customer needs.
  • Will attract more customers.
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23
Q

Arguments against ethical advertising?

A
  • Companies might be lying about how ethical they actually are, e.g. H&M putting out environmental campaigns even though they are a fast fashion company that uses cheap labour.
  • More profits can be made if adverts are not ethical.
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24
Q

How does Amazon treat its employees?

A

Employees working for amazon are notoriously treated badly - they have to work 55 hour weeks, and they are often so exhausted by the targets they have to reach that they fall asleep standing up. Their toilet breaks are timed, and some workers even had to be attended to by ambulance crews due to them collapsing on shift.

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25
Q

How does Google treat its employees?

A

They know that their employees want to be part of something with no hidden agendas, so they are very transparent, giving their workers an honest perspective no matter what. Their employees feel valued and engagement typically follows this.

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26
Q

Arguments for treating employees well?

A
  • They are people who deserve respect and to not be exploited. Basic human rights should be upheld, including the protection of livelihood and health.
  • People need jobs to survive
  • Well-rested workers are more efficient and accurate - Breaks, sick pay and holidays can help improve productivity.
  • It is important to be empathetic in all aspects of life, both in and out of work, e.g. by giving maternity leave.
  • Morale will be improved
  • If your workers don’t get injured, then they are able to work more.
  • Care for workers helps to turn more of a profit as it encourages good work, exploiting them actually will not help with this.
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27
Q

Arguments for treating workers poorly?

A
  • Your employees choose to work for you and they can quit if they really want to.
  • If you are part of a large company, you may be important to the economy of the country you are operating in, and therefore if treating employees well leads to a reduction in profit, this could negatively impact the economy which may then end up impacting entire communities.
  • Ethical practices are often costlier and more time-consuming to put in place, which reduces profits.
28
Q

What is whistleblowing?

A

A whistleblower is a worker who reports any kind of wrongdoing that they have witnessed their employer taking part in. The wrongdoing disclosed must be in the public interest. The concerns can be raised at any time. Whistleblowers are protected by law (Public Interest Disclosure Act), and so cannot be treated unfairly in the workplace or lose their job due to their reporting.

29
Q

What are the three main ways of whistleblowing?

A
  1. Making an anonymous claim
  2. Making a claim where you give your name but request confidentiality
  3. Make a report of your concerns to the media
30
Q

Whistleblowing case study - Edward Snowden

A

An ex CIA employee who leaked documents about global surveillance programs, he is now living in Russia after having been granted asylum

31
Q

Whistleblowing case study - Julian Assange

A

The founder of WikiLeaks which has been responsible for over 1.2 million information leaks since 2006, he is currently in prison

32
Q

Whistleblowing case study - Lisa Martin

A

She exposed abuse at a care home to the police, but now feels she has been a troublemaker and this is stopping her from getting a new job

33
Q

Arguments for whistleblowing?

A
  • People should try to bring about change.
  • People may feel that it is the right thing to do based on personal reasons such as their conscience or believing that it is important to be truthful.
  • It is very difficult to detect wrongdoing without a whistleblower.
  • It can help stop wrongdoing in the workplace, including breaches of human rights.
  • Organisations that embrace whistleblowing find that managers have better information to make decisions and control risk.
  • Whistleblowers respond more positively when they feel that they are listened to.
34
Q

Arguments against whistleblowing?

A
  • Employees should be loyal to the company that they work for.
  • If whistleblowers go public with their information it may unfairly discredit the company.
  • It could be used for personal gain, e.g. for money from the news to sell their story.
35
Q

What is globalisation?

A

Globalisation is the continuing process of building connections socially, politically, culturally and economically, on a global scale, through improvements in technology, communication, business, trade, immigration and tourism. This creates global interdependence.

36
Q

Globalisation case study - Nike

A
  • Contracted with Taiwan and South Korea for manufacturing. Workers in these countries fought for improved wages and unions, leading them to move production to China, Indonesia and Vietnam.
  • In the 1990s, there were reports of child labour, extremely low wages (as the company had lobbied the government) and forced overtime in their factories, as well as physical abuse from factory overseers, exposure to harmful chemicals and poor air quality. There were protests from the workers and human rights groups then pressured them to change by bringing media attention to the issues.
  • They issued a code of conduct which regulated the conditions and safety requirements for its factories. In 2004, they released a responsibility report, which established further health and labour standards, including allowing independent monitoring and investigations.
  • However, they do not always follow their code of conduct - between 50-100% of their factories require more working hours than set out, and in 25-50% of their factories, workers are still not being paid the minimum wage.
37
Q

Globalisation case study - Bangladeshi factories

A
  • In 2012, there was a fire in a factory in Bangladesh that killed 112 workers, and five months later, there was another in a different factory that killed over 1000, and left even more employees with injuries.
  • In 2013 there was an Accord on fire and building safety which was signed by global unions and over 200 brands, making them accountable for factory safety. However, this did not stop the issues, and in 2017, 21 workers died and 50 more were injured in a H&M factory. Tesco factories were also found to have missing fire extinguishers.
38
Q

Globalisation case study - Apple

A
  • Apple has many factories in China, but these have been found to treat workers poorly. They are exhausted and often fall asleep on their 12 hour shifts, sometimes their shifts can be as long as 16 hours, and their requests for days off are often declined. This causes exhaustion and stress, and in 2010, there were 14 suicides in one of the factories.
  • This led Apple to publish a set of standards stating how their factory workers should be treated. However, these were demonstrated to have not been followed, with overtime being compulsory and employees having to attend unpaid meetings before and after work.
  • Continuing further down Apple’s supply chain leads us to Indonesia, where their raw materials are mined. Here, child labour has been found, as well as incredibly dangerous conditions. Workers as young as twelve are digging tin by hand, and they are constantly at risk of landslides.
39
Q

Globalisation case study - textile factories

A

In Indonesia, textile factories line the riverbanks, and empty their waste into the water. This textile dye is causing such bad pollution that children living nearby contract skin diseases. There are no laws against this and businesses are not held accountable.

40
Q

Arguments for globalisation?

A
  • Good for the economy.
  • Maitland - creates more jobs across the world.
  • May lead to universal laws which protect people.
  • Connects countries with free market trade which develops ideas in business.
  • Allows capitalism in capitalist societies to grow with all of its global benefits.
  • We can work globally to create a better environment through businesses.
  • Good ethical practices in certain countries can spread across the world and it is easier to spot poor ethical practices and raise these as an issue.
  • We can share skills globally, e.g. medical skills in hospitals, teaching skills in schools.
41
Q

Arguments against globalisation?

A
  • Workers are exploited and treated as a means to an end.
  • There are currently no universal laws which protect workers or the environment so damage is being done.
  • Privatisation of business who work overseas means that many people can be left without necessities, e.g. clean water. Private companies do not take care of public needs well.
  • Workers in more developed countries can lose their jobs if a company wants to move to a country where workers are more able to be exploited.
42
Q

How does Kant apply to corporate social responsibility?

A
  • We have a duty to act ethically, and doing duty for duty’s sake is what matters, not the consequences of an action. Because we all have autonomy and reason, companies should not treat people as a means to an end - employees should have safe working conditions and good pay. Also, customers should not be sold defective goods or misled by advertising as this would not be fulfilling the company’s duty to its customers.
  • Environmental considerations also need to be made by not destroying communities, e.g. the river in Indonesia being polluted by textile dye. This will mean that the people living there are treated as autonomous and rational beings.
  • It is also the duty of businesses to display corporate social responsibility by obeying government laws. These must be formed as categorical imperatives and be reasoned through duty - they can then be universalised. For example, the laws could include “you ought not to pay below the minimum wage” or “you ought not to discriminate in the workplace”.
43
Q

What example does Kant use to show how duties to customers must be fulfilled?

A

Kant gives the example of a greengrocer - he should not overcharge his customers because it is his duty to do so. There should be no other motivations behind this act, such as making a profit from doing so or because he liked his customers.

44
Q

What does Kant believe about advertising?

A

Kant believes that businesses have a duty to be truthful and honest in advertising, because if they don’t then it become a contradiction in the law of nature, since lies contradict the nature of truth. If companies break promises through their advertising they contradict the nature of promise-keeping. This also contradicts the will - the people who own the business would not will this for themselves so they should not will it for others.

45
Q

What does Kant believe about treatment of employees?

A

All rules on employee treatment should follow the principle of universalizability - everyone should have the same wages, health and safety measures and holiday pay. They should also make sure that employees are not being used as a means to an end since humans are all rational beings.

46
Q

How does Kant apply to whistleblowing?

A
  • Workers have a duty to blow the whistle because they should keep to the categorical imperative of truth telling. If they see others being exploited then they also have a duty to blow the whistle since the other workers are being used as a means to an end when they should not be.
  • Whistleblowing also makes sure that businesses are obeying the universalised rules that cover treatment of customers and employees. Kant also approves of government laws that protect whistleblowers as the government is doing its duty of protecting its citizens and holding companies accountable.
  • However, something Kant does not address is the conflict between the categorical imperatives of truth telling and loyalty - one could argue that employees should also be loyal to the business that they work for.
47
Q

How does Kant apply to globalisation?

A

Kant would argue that globalisation is good if universal laws are kept in business, but this is not the case in today’s world as most laws operate within the country that the business is operating in, and often these laws can be unethical. This means that people would be treated as a means to an end and exploited.

48
Q

What aspects of global business would Kant approve of?

A
  • When work is freely chosen and provides opportunities for workers to exercise their autonomy in a job - but this is often not the case in LEDCs since the workers there do not have full knowledge of what the health and safety conditions and pay should be. They also cannot complain for fear of losing their jobs which help them survive
    • Work that supports the autonomy and rationality of human beings, e.g. By providing a salary that is sufficient to allow for independent living and allowing whistleblowing and protests
    • Work that does not undermine a worker’s moral development - but again this is usually not the case, e.g. the workers in textile factories know what the effects of dumping waste in the river are but they cannot change anything because they are held hostage by their job
49
Q

What would Kant expect good businesses to do?

A
  • Consider all the affected stakeholders in its decisions and be as honest as possible to them all
    • Ensure that no one stakeholder has priority over the others
    • Consider more than just the number of stakeholders in each group when their interest conflict
    • Govern relations with stakeholders according to the rules of justice
50
Q

Kant - is good ethics good business?

A

For Kant everyone should do their duty regardless of inclination or emotion, and this leads to good business. Because categorical imperatives have to be universalizable, then all businesses must conform to the same standards and laws in a very competitive free market, which benefits them. If relative ethical values were in place then this would leave smaller business at a disadvantage since they would be unable to compete with the rate of production of larger businesses, but since they both have to avoid child labour and pay fair wages, this levels the playing field. If we follow the rule that no one should be exploited or used as a means to an end, then this will avoid unfairly high prices, misleading advertising and faulty products, leading stakeholders to place more trust in the business, making it a profit.

51
Q

What are the strengths of using Kant with business ethics?

A
  • The duties apply to everyone universally and are absolute - this allows the system of laws to be fair
  • Uses reason which avoids the issues with emotion - that it is unreliable and subject to change
  • It is a deontological system of ethics and so does not rely on consequences that cannot be accurately predicted
  • Acknowledges the fact that people can never be used as a means to an end or exploited since they are rational beings
  • Avoiding contradictions in the will allows us to live as members of a society where we do not inflict harm on each other
52
Q

What are the weaknesses of using Kant with business ethics?

A
  • It lacks flexibility and relativity
  • It lacks compassion
  • There can be a conflict in duties, and Kant does not provide answers for this
  • Animals can be exploited as they are not thought to be rational like humans
  • Sometimes individual people can be exploited for the sake of a greater end
53
Q

How do Nagal and Williams critique Kantian ethics?

A

It does not consider consequences which should be thought through

54
Q

How does Bentham’s utilitarianism apply to corporate social responsibility?

A

According to Bentham’s act utilitarianism, businesses should be using the hedonic calculus to decide which actions they could take would bring the most happiness and the least pain - quantity of happiness is more important than quality. There are several outcomes that this could lead to:
1. A business may ignore corporate social responsibility as far as possible if they reason that this will cause more profit to be made, and that higher profit will bring the greatest net happiness. (e.g Nike)
2. A business may think that corporate social responsibility brings about more happiness because it can lead to higher profits. This is because stakeholders will believe that they are valued, causing them to be more willing to invest in the products of the business.
Some may argue that the second option is superficial and not genuinely producing change, but for Bentham, the consequences are what is important, and so as long as more happiness is created, this is what matters, not what the intentions of the business are.

55
Q

How does Mill’s utilitarianism apply to corporate social responsibility?

A

According to Mill (and weak rule utilitarianism), the quality of happiness is more important than the quantity of happiness. Higher pleasures (the virtues, e.g. promise keeping and truthfulness) should be aimed for and lower pleasures avoided. Therefore when it comes to advertising of products, it should be honest and not misleading, no matter if this would make the company more profits. Rules that avoid harm and preserve human rights should also be adhered to, such as treating employees fairly and paying them a good wage - businesses should keep to government laws that bring about these virtues.

56
Q

How does Singer’s utilitarianism apply to corporate social responsibility?

A

For Singer (and preference utilitarianism), there is a preference to not feel pain which runs across all species. Therefore, genuine corporate social responsibility would mean that a business should take into account all of the preferences of its stakeholders and try to avoid bringing any of them pain - this would include treating employees well and producing truthful advertising. They would also have to make environmental considerations since we have to account for the preferences of future generations. All of these preferences would be true preferences, rather than manifest preferences such as making a profit.

57
Q

How does utilitarianism apply to whistleblowing?

A
  • Bentham would argue that one should first try to solve the problem that is being raised through the business’ own complaints procedure, since this would most likely cause the greatest happiness - it would solve the problem of unethical practices and make people happier without giving the business bad press or causing them to close down. However, if this does not work then we must use the hedonic calculus to see whether blowing the whistle will cause more harm than good, e.g. in the case of Lisa Martin this may have caused more pleasure than pain since clients and their families would be happier even though the business itself closed, but in the case of Edward Snowden it may have caused more pain than pleasure since he compromised national security.
  • But, according to Mill and Brandt, it may be better to follow a rule that allows whistleblowing since it helps the common good and retains ethical business
58
Q

How does Bentham’s utilitarianism apply to globalisation?

A

For Bentham, each individual situation of a business becoming globalised would have to be taken into account on their own (using the hedonic calculus) to see if it would bring more net happiness than harm.

59
Q

How does Mill’s utilitarianism apply to globalisation?

A

For Mill, globalisation may be seen as a destructive force that causes more harm than good. Companies use child labour and are not easily held accountable for their actions, retailers do not pay employees in LEDCs a fair wage, and regulations on safety and the environment are not followed because there are no international laws. Therefore, rules need to be in place that prioritise higher pleasures, human rights and avoiding causing harm, but since these don’t exist, globalisation is immoral.

60
Q

Bentham - is good ethics good business?

A

Bentham’s utilitarianism lends itself to business ethics because it uses the cost-benefit analysis in the form of the hedonic calculus. But, as before, this could lead to different outcomes:
1. Good ethics may not be good business - using the example of the Ford Pinto (a car with design problems that led to loss of life and injuries) we can see that they carried out a cost-benefit analysis and found that the profit to be made was more than the cost of injuries and life lost. Ford was heavily criticised for this and they gained a bad reputation
2. Good ethics may be good business, as the business may genuinely take into account the greatest happiness for all to make sacrifices themselves - if Ford Pinto had taken into account the happiness of their customers it would have fixed the design of the car and sacrificed short term profit for an increased reputation and customer loyalty, leading to long term profit

61
Q

Why do some argue that Utilitarianism is too complex for use in business ethics?

A

Some may argue that utilitarianism is too complex to use in business ethics, as trying to take into account the happiness of every stakeholder is far too time-consuming and difficult, as well as the fact that consequences are impossible to accurately predict. This means that good ethics may not be good business.

62
Q

Mill - is good ethics good business?

A

Mill’s utilitarianism seems to more consistently lead to the idea that good ethics is good business. This is because of his emphasis on higher pleasures and following rules that lead to no harm and uphold human rights. For example, zero-hours contracts for act utilitarians could be seen to be moral since it would bring the business more profits and allow them to be more flexible and cost-effective. But, for a rule utilitarian, it would be exploitation of the worker and a lower pleasure, demonstrating that it is actually immoral.

63
Q

Singer - is good ethics good business?

A

For Singer, good ethics is good business. This is because one must take into account trade-offs when considering different preferences. For example, in the case of Pepsi, there have been many complaints that their water usage has caused a drought in India, and so they could trade their preference to make a large profit with the locals’ preference to have water.

64
Q

Strengths of using utilitarianism with business ethics?

A
  • Utilitarianism is a teleological approach where the outcomes are important, allowing the ends to justify the means.
  • It recognises that compassion is important and that people deserve to be happy.
  • Bentham’s is a relative approach and therefore allows for flexibility.
  • Mill’s is an approach based on rules which protects minority rights, but does accept that in certain situations these rules can be broken, so it does allow for some flexibility.
  • Empirical evidence supports the approach - “happiness is a fact”.
  • Mill recognises the fact that humans have the potential to be virtuous and fulfil their nature as reasoned beings, which is why quality of happiness is more important than quantity.
  • Singer and Bentham recognise that all sentient beings have preferences, including animals - “the question is not can they reason but can they suffer”.
  • Personal preferences should be aligned with general welfare.
65
Q

What are the weaknesses of using utilitarianism with business ethics?

A
  • Deontological ethics are preferable to teleological ones where the outcomes cannot be accurately predicted.
  • The hedonic calculus is difficult to work out - we can disagree over the factors and it is an incredibly time-consuming process to undertake.
  • Bentham ignores that all types of happiness are not of equal value.
  • Bentham rejects the idea of human rights - “nonsense upon stilts”.
  • G.E. Moore’s naturalistic fallacy - Bentham and Mill are both ethical naturalists.
  • Mill puts too much emphasis on intellectual pleasures and ignores that bodily pleasures can bring happiness too - he is elitist.
  • It is better to have rules than flexibility in ethics - Dostoevsky.
  • Singer assumes that our own preferences are the same as everyone else’s but this may not always be the case.
66
Q

How does Nozick critique utilitarianism?

A

He rejects the idea that pleasure leads to human happiness and suggests that qualities such as integrity and self-worth can lead to happiness even though they may induce suffering.