Chapter 2: Business Ethics and the Social Responsibility of Business

Question 1

What is the difference between law and ethics?

Answer 1

The law is influenced by moral concepts, but law and ethics are not the same. Legal actions are not always moral, and immoral actions can sometimes be legal.

Question 2

Can an act be legal but immoral?

Answer 2

Yes, for example, standing by while a blind man walks off a cliff without offering help is legal but considered immoral.

Question 3

Can an act be illegal but morally acceptable?

Answer 3

Yes, for instance, during World War II, people who sheltered Jews in violation of Nazi laws were committing illegal acts but were widely viewed as acting morally.

Question 4

What are some examples of legal business practices that may be challenged on moral grounds?

Answer 4

Examples include failing to fulfill non-legally binding promises, exporting banned products to other countries, and manufacturing tobacco or alcohol products.

Question 5

Why is the statement “if it’s legal, it’s moral” inaccurate?

Answer 5

Because legal acts can still be immoral, and some illegal acts can seem morally preferable, making the relationship between law and morality more complex.

Question 6

What is the goal of ethical theories?

Answer 6

Ethical theories aim to develop universal methods for making ethical judgments, helping people navigate complex moral decisions.

Question 7

How did earlier philosophers view the discovery of ethical principles?

Answer 7

Earlier philosophers analogized ethical principles to mathematical proofs, suggesting that fundamental ethical rules could be discovered through careful reasoning a priori (without experimentation).

Question 8

What is a priori reasoning?

Answer 8

A priori reasoning is based on theory and involves drawing conclusions from generalizations to particular instances, without relying on experimentation or experience.

Question 9

What do modern philosophers conclude about a priori ethical reasoning?

Answer 9

Modern philosophers recognize that while reasoning helps, the complexities of the world often make it difficult to fashion precise a priori ethical guidelines, meaning experience plays a key role in moral decision-making.

Question 10

Why is reviewing ethical theories useful in business ethics?

Answer 10

Reviewing ethical theories helps in analyzing business ethics issues, offering frameworks for understanding and addressing moral challenges in business.

Question 11

What is ethical fundamentalism?

Answer 11

Ethical fundamentalism, or absolutism, is an ethical approach where individuals look to a central authority or set of rules to guide their decision-making.

Question 12

What sources might individuals rely on under ethical fundamentalism?

Answer 12

Individuals may look to sources such as the Bible, the Koran, the writings of Karl Marx, or other religious or spiritual leaders, living or deceased.

Question 13

What is the key characteristic of ethical fundamentalism?

Answer 13

The key characteristic is the reliance on a central repository of wisdom or a set of principles to make ethical decisions.

Question 14

Is the reliance on a central authority always total in ethical fundamentalism?

Answer 14

No, in some cases, the reliance may be total, while in others, individuals may assess moral dilemmas independently, based on their understanding of fundamental principles.

Question 15

What is ethical relativism?

Answer 15

Ethical relativism is the doctrine that individuals must judge actions based on what they feel is right or wrong for themselves. It holds that morality is relative, and both parties in a moral disagreement can be correct.

Question 16

What does ethical relativism promote?

Answer 16

Ethical relativism promotes open-mindedness and tolerance, encouraging individuals to respect differing moral views.

Question 17

What is a major limitation of ethical relativism?

Answer 17

A major limitation is that if each person’s actions are always correct for them, no one can truly criticize immoral behavior, such as child abuse, if the person believes it is right.

Question 18

Why do most people reject ethical relativism?

Answer 18

Most people reject ethical relativism because it would allow morally wrong actions, such as child abuse, to be considered acceptable if the person believes them to be right.

Question 19

How does situational ethics differ from ethical relativism?

Answer 19

Situational ethics differs from ethical relativism in that it requires putting oneself in the other person’s shoes to understand their motivation, but it also makes a judgment on whether the action was ethical, unlike relativism, which simply accepts the action as right for the actor.

Question 20

What is the key distinction between ethical relativism and situational ethics in terms of judgment?

Answer 20

Ethical relativism passes no judgment beyond determining the actor’s belief in their decision, while situational ethics involves making a judgment about the morality of the action after understanding the actor’s perspective.

Question 21

What is the central concept of utilitarianism?

Answer 21

Utilitarianism assesses actions based on their consequences, determining that actions are moral if they produce the greatest net pleasure compared to pain.

Question 22

Who is one of the most influential proponents of utilitarianism?

Answer 22

Jeremy Bentham, who famously declared that a good or moral act is one that results in “the greatest happiness for the greatest number.”

Question 23

What is the difference between act utilitarianism and rule utilitarianism?

Answer 23

Act utilitarianism evaluates each individual act based on whether it maximizes pleasure over pain, while rule utilitarianism supports following general rules that maximize overall pleasure, even if in some cases it may not produce the best outcome for an individual situation.

Question 24

How do rule utilitarians differ from act utilitarians in decision-making?

Answer 24

Rule utilitarians focus on whether general rules will produce the greatest satisfaction for society, while act utilitarians focus on the specific pleasure or pain of each individual act.

Question 25

How does cost-benefit analysis relate to utilitarianism?

Answer 25

Cost-benefit analysis applies utilitarian principles by quantifying costs and benefits to identify the course of action that achieves the greatest economic efficiency, promoting the greatest happiness.

Question 26

What is the primary purpose of cost-benefit analysis?

Answer 26

The primary purpose is to maximize society’s wealth by selecting the program or alternative that provides the greatest economic benefits relative to its costs.

Question 27

What is a real-world example of how utilitarian principles might be applied?

Answer 27

An auto designer might prioritize improving an expensive airbag system that saves lives and prevents injuries over improving a less impactful car hood latch, based on a more favorable cost-benefit analysis.

Question 28

What are the main criticisms of utilitarianism?

Answer 28

One criticism is that it can ignore justice by sacrificing the rights or well-being of a minority for the greater good. Another criticism is that it is difficult to accurately measure and compare pleasure and pain.

Question 29

Why might utilitarianism be considered problematic when applied to certain actions?

Answer 29

It could justify actions that harm individuals, such as forcing people to undergo painful procedures for the benefit of others, as long as it maximizes overall pleasure, which many people find morally unacceptable.

Question 30

What is the central idea of deontology?

Answer 30

Deontological theories hold that certain principles are right or wrong regardless of the consequences, emphasizing that actions must be judged by their motives and means, not just by results.

Question 31

How do deontologists judge the morality of actions?

Answer 31

Deontologists judge actions by the motives that lead to them and the means used to achieve results, not just by the consequences.

Question 32

What is Immanuel Kant’s categorical imperative?

Answer 32

The categorical imperative is a principle that states actions must be capable of being made universal laws and must respect the autonomy and rationality of all human beings, treating them as ends in themselves, not merely as means to an end.

Question 33

How does Kant’s categorical imperative guide moral decision-making?

Answer 33

It requires that one act according to a principle that could be universally applied and that treats others with respect, asking “What if everyone acted this way?”

Question 34

How is Kant’s philosophy similar to the Golden Rule?

Answer 34

Kant’s categorical imperative is similar to the Golden Rule in that it encourages individuals to treat others as they themselves would wish to be treated, acknowledging a self-centered perspective in ethical decision-making.

Question 35

What is one of the main criticisms of Kantian ethics?

Answer 35

A major criticism is its rigidity and formalism, such as adhering strictly to telling the truth even in situations where lying might prevent harm, like protecting someone from an abusive person.

Question 36

Why might deontologists be criticized for their approach?

Answer 36

Deontologists are criticized for not considering the consequences of actions, such as when telling the truth might cause harm, as in the case of hiding a person from a dangerous abuser.

Question 37

How does Kant view the sacrifice of individuals for the greater good?

Answer 37

Kant rejects the idea that sacrificing individuals for the greater good is acceptable, believing every person deserves respect simply because of their humanity.

Question 38

How does Kant’s ethics differ from utilitarianism in decision-making?

Answer 38

Kantian ethics rejects the utilitarian idea that the ends justify the means, emphasizing the importance of moral duties and respect for others over the potential benefits of an action.

Question 39

What do social ethics theories focus on?

Answer 39

Social ethics theories focus on the special obligations that arise from the social nature of human beings, including individuals’ rights and obligations within society.

Question 40

What do social egalitarians believe?

Answer 40

Social egalitarians believe that society should provide all persons with equal amounts of goods and services, regardless of the contribution each person makes to society’s wealth.

Question 41

What is John Rawls’ theory of distributive justice?

Answer 41

Rawls’ theory suggests that a just society would be formed by people in a “natural state” who do not know their future status (rich, healthy, etc.), emphasizing equality of opportunity and fairness, particularly for the least advantaged.

Question 42

How does Rawls’ theory differ from a strictly egalitarian approach?

Answer 42

Rawls does not argue for strict equality in outcomes but stresses equality of opportunity and ensuring the least advantaged are not unduly harmed, while rewarding talent and ambition.

Question 43

What is the “veil of ignorance” in Rawls’ theory?

Answer 43

The “veil of ignorance” is a hypothetical condition in which people do not know their future status in society, allowing them to create a fair and just system that considers the needs and rights of all members.

Question 44

What is Robert Nozick’s main focus in social ethics?

Answer 44

Nozick focuses on liberty, asserting that the most important obligation society owes its members is to respect their individual freedoms and rights in a market-based system.

Question 45

What do libertarians believe regarding the distribution of wealth?

Answer 45

Libertarians believe that society’s rewards should be based on market outcomes and oppose redistribution of wealth, seeing it as unjust for society to take wealth earned by individuals and give it to others who did not earn it.

Question 46

How do libertarians view wealth disparities?

Answer 46

Libertarians view wealth disparities as a natural result of differing abilities to navigate the market. Those who accumulate wealth have done so through market efficiency, and this is not seen as unjust.

Question 47

What does the comparison between Rawls’ and Nozick’s theories highlight?

Answer 47

Rawls emphasizes justice and fairness in the distribution of society’s benefits, especially for the least advantaged, while Nozick stresses individual liberty and opposes interference in market outcomes.

Question 48

What is a challenge in ethical decision-making in a social context?

Answer 48

A challenge is that behavior that is ethical on an individual level may not lead to a just society, as different ethical theories assess society’s structure and wealth distribution in different ways.

Question 49

What is intuitionism in ethics?

Answer 49

Intuitionism holds that a rational person possesses inherent powers to assess the correctness of actions, with some individuals having more insight into ethical behavior than others, similar to artistic talent.

Question 50

How does the good persons philosophy relate to intuitionism?

Answer 50

The good persons philosophy suggests that individuals who wish to act morally should seek out and emulate those who consistently know the right choice and act accordingly, aligning with intuitionism.

Question 51

What is the “Television Test” in ethical decision making?

Answer 51

The Television Test encourages individuals to imagine that their ethical decisions are being broadcast on national television. A moral decision is one they would feel comfortable sharing with the public.

Question 52

What are the six “institutions” of the capitalistic system according to Adam Smith in The Wealth of Nations?

Answer 52

The six institutions are economic motivation, private productive property, free enterprise, free markets, competition, and limited government.

Question 53

What is the role of the free market in the capitalist system?

Answer 53

The free market operates to equate supply and demand, adjusting prices based on the willingness to offer goods/services and the consumer’s ability to pay, ensuring efficient resource allocation.

Question 54

What did Adam Smith believe about the role of government in the economy?

Answer 54

Smith believed that government should set the rules, enforce them, and stand aside, allowing the market and free enterprise to operate independently.

Question 55

What are the assumptions of Smith’s economic model that real economies often fail to meet?

Answer 55

Smith’s model assumes standardized products, numerous firms with small market shares, no barriers to entry, and output where marginal cost equals market price, but real economies rarely meet these conditions.

Question 56

Why is government intervention in business necessary according to critics of capitalism?

Answer 56

Government intervention is necessary because capitalism fails to efficiently allocate resources, achieve social goals like equitable wealth distribution, and address public policy issues such as health, safety, and full employment.