Off Topic: Business & Values

[Greg Peisert <gpeisert@jamesgregory.com>]

Dear Margaret, Laura, et al;

  As you know, I believe there is a fundamental goodness, an ethical 
"rightness", a fundamental morality associated with Capitalism. I define 
"goodness" as that which promotes human life and happiness, and "evil" as 
that which destroys the same. After rethinking the arguments about drug 
dealers et al the past few days, I have concluded that the drug trade, and 
some of the examples of business corruption that are from time-to-time 
brought up on this list, represent a perversion of Capitalism, of business, 
at least as _I_ define it. Capitalism, as I understand it, is "business." 
It is trade among willing traders. It can thrive only within the context of 
the rule of law, not within the context of gang warfare and anarchy. That 
is why I see the world of drug dealers as so radically different from the 
business world in which I live. To equate them is, at least for me, like 
claiming an Osama Bin Laden terrorist training camp is really just an 
academic institution, and concluding, "Well, that's academia for you."

  I have seen and read about terrible abuses and intellectual dishonesty, 
bitter infighting and vicious character assassination occurring from 
time-to-time in Universities, among artists colonies, and within theater 
groups. But I do not conclude from those cases that education is "bad" or 
that all Universities are "corrupt" or that art is in some way "immoral" or 
that theater is "destructive." I conclude that whenever you have human 
institutions, there are those within them who pervert the institution and 
act corruptly. I see no exception in any institution or endeavor I can 
think of, be it academic, artistic or anything else. Humans, irrespective 
of their context, act like humans. Most act to the good most of the time. A 
few promote evil. All have the capacity for both.

  At its core, Capitalism rests on the fundamental notion of free, 
uncoerced trade, executed to the mutual benefit of the traders. It operates 
on the premise that mutual trade among free trading partners, to their 
mutual benefit, is "good" in the sense that it promotes life and human 
happiness. (That is the fundamental issue I was raising with respect to 
humanity's long-term prospects: Is this universal sense of a desire to 
promote one's self-interest a "fatal flaw" in human nature? It might be, 
but the question is probably irrelevant. I'm afraid I don't see much 
evidence for "social evolution" apart from the recognition by some that it 
is in their best interest to trade with each other rather than kill each 
other.) The excerpt from a book that Dr. Stephen Hicks is writing quite 
clearly articulates the nature and fundamental morality of free trade, (as 
I have define "good" or "virtue" in terms of promoting human life and 
happiness), and its fundamental value to all of us, at least as I see it. 
You may see it differently, but that's okay. Then we differ.

  Now, I know you can nit-pick it. I envisioned you reacting to certain 
things Stephen says and picking at them as I read the piece. If you do 
that, I think it's unfortunate. I don't agree with everything he says 
myself, especially the part about consumption. I will discuss it with him 
this summer when I see him at the IOS Summer Seminar. But if you look at 
the fundamental issue of how business creates value for all of us; how it 
makes possible our very way of life (which I happen to love and think, by 
and large, is great, compared to almost anywhere else in the world, or any 
other time in history), I don't see how to escape the idea that business, 
Capitalism, free trade, whatever you want to call it, is fundamentally good 
because overall it promotes life, and a better quality of life, for more 
people.

  So, I don't see business as bad or evil, or if it is, it is only such to 
the extent that humans are "bad" and "evil." The same must be said of any 
other profession. Business, like education, medicine, law, philosophy, 
religion, music, art, poetry, etc. it not "all bad" or "all good." It is 
conducted by humans, who act, strangely enough, like humans. I would argue 
that "most" of it is good, because most people are good. I may be deceived, 
but I don't feel powerless or victimized, even by very large corporations. 
I see life as full of alternatives. Life is not full of alternatives 
because I'm "rich" (I'm not) or because I have some special advantage (I 
don't). I have options just like my grandfather had options when he left 
Sweden at 18 and ended up in New York, penniless and knowing hardly a word 
of English. Nothing keeps me where I am except my desire to be here. I 
would argue that such is the case for most people, so long as they are not 
physically constrained by overt force. (I am not talking about the 
relatively few exceptions...the mentally retarded, the handicapped, those 
who are incapable of managing for themselves. Fortunately, such people are 
the exception, or we would die from our inability to care for ourselves 
even faster than we may die from our self-destructive instincts.)

   None of this obviates my earlier posts about whether we as humans, 
acting like humans, will act in the interest of our long term survival. 
That question seems very much open. It is indeed the desire of most people 
to better their lot in life, to have fun in life, to pursue happiness for 
themselves and their families. Those desires motivate much of the totality 
of human activity. If that fundamental desire to better one's lot in life, 
to pursue one's happiness, which appears to be shared by the vast majority 
(if not all) humans, is in the end self-destructive, I doubt there is much 
we can do about it. I don't see it being diluted or diverted in the 
slightest by "social evolution."

  So, while business, like all human institutions, is anything but 
"perfect" (whatever "perfection" might be), I see no basis to castigate 
business as being somehow evil or fundamentally destructive, as being less 
worthy, moral, or virtuous, than other human endeavors. Having said that, 
I'll leave you to Hicks' article. Again, I hope you don't nit pick it and 
blow up on this point or that, for if you do, you miss the more important 
fundamental, axiomatic issues, many of which are embedded in Hicks' piece.

Best,

  -- Greg



The Best Work of the Best Minds

by Stephen Hicks, Ph.D.

Copyright 1994
Institute for Objectivist Studies
82 Washington Street, Suite 207
Poughkeepsie, NY 12601
Phone(914) 471-6100
Website: http://www.ios.org


This excerpt was originally printed in the IOS Journal, Volume 4, Number 2, 
June 1994.
This article is excerpted from the introductory chapter of The Virtuous 
Dollar Chasers, a book on business ethics that Prof. Hicks is writing with 
grant support from the Institute for Objectivist Studies.

I am sitting on the shore of Lake Ontario. It is late spring, and the sun 
rose about five minutes ago. The waters, which appeared blue-black before 
the dawn, are now touched by green. The air is warmer, but I can still 
taste the sharpness of the night. I am listening to the beginning of a 
symphony.

Next to me on the rock is a portable compact disc player. It is about the 
size of my hand and weighs a pound. I purchased it, after some bargaining, 
from a Pakistani immigrant in New York City. The plastic casing was made 
from oil from the Middle East, and the electronic components were 
manufactured in Japan. The compact disc I am listening to was recorded in 
London, manufactured in Germany, and purchased from a mail-order house in 
Toronto. My compact disc player is truly a cosmopolitan product.

I usually take this for granted. I make an average salary-slightly less 
than the national median last year-yet I routinely buy luxuries no medieval 
king ever could. In my portable compact disc player, the best work of the 
best minds in music, electronics, manufacturing, transportation, and 
merchandising has been coordinated into a package that, for less than a 
day's pay, allows me to enjoy the sunrise over Lake Ontario while 
experiencing the passion of a 19th century Russian musical genius.

The Business of Creating Values

This is a book about business ethics. Ethics is about what is valuable and 
how to achieve it. Each of us needs physical values-food, housing, and so 
on. We also need psychological values-challenges, pride of accomplishment, 
security, friendships, the experience of beauty. But to achieve values, we 
need the character traits that will enable us to plan and act effectively: 
the willingness to face facts, to think for ourselves, to act on our best 
judgments, to give credit where it's due.

My musical sunrise was made possible by thousands of such individuals. 
Compact disc players are a product of the vast network we call the business 
world: the cooperative system of value-seeking individuals who produce and 
trade to mutual advantage. Artists, financiers, manufacturers, 
transportation and merchandising experts-many individuals, each with his 
own goals to achieve-cooperate as buyers, sellers, coworkers, bosses and 
subordinates to create disc players.

Start with the orchestra. Each member of the orchestra acquired a 
specialized expertise and found a way to integrate his love of music with 
the need to make a living. By cooperating, the orchestra's members create 
something of value: beautiful music. The orchestra sells its product to the 
manufacturer of compact discs. To manufacture the discs, the manufacturer 
cooperates with financiers, who provide something of value: capital. The 
manufacturer hires engineers to create something of value: a compact disc. 
The manufacturer cooperates with experts in transportation, advertising, 
and merchandising, who cooperate with me.

I give them something of value-money-and in return they give me something 
of value: music anytime, anywhere. Everyone involved is seeking to live the 
good life, and all of us are better off as a result. If ethics is about 
what is of value, then business is about the cooperative production and 
trade of one important category of values.

For most of us the business world is the primary arena in which we pursue 
our values. Our work gives us the means to satisfy our needs, and it calls 
upon our highest levels of commitment, energy, creativity. Successful work 
is measured by the value of the product-the harvest, the hydraulic press, 
the bond offering, the sculpture-and the pride and financial rewards that 
follow.

Beyond these values, the business world is valued for many other reasons. 
For some, it is the cosmopolitan nature of business. Canadians enjoy South 
American figs in January. Britons fly to Athens and take a Scandinavian 
cruise ship to Istanbul.

Americans watch Australian movies on Japanese televisions while eating 
take-out Chinese food. For others there is the excitement of huge 
endeavors-high-rise multiplexes, billion dollar mergers. For still others 
there is the excitement of innovation: more powerful computers, affordable 
bread-making machines, sleek new sports cars. Yet this zest for business is 
not limited to the international, the large-scale, or the innovative. The 
business owner who starts a printing business or a welding shop is usually 
as passionate about his business as the executive who lives in three time 
zones. The business is his creation, the result of his foresight, his 
energy, his courage in the face of risk.

The "Competence Ethic" and Its Competitors

Very little writing about business ethics captures the excitement and 
romance of business. Even less communicates a sense that business is a 
noble calling that could be celebrated in poetry and song. Instead, a sense 
of suspicion and strained tolerance often hangs over business that does not 
hang over other professions. Many hail the scientist, the artist, the 
teacher, even the politician, as doing exciting and noble work, but will at 
best feel indifferent about the business professional.

We can point out that business has provided the arena in which countless 
individuals have satisfied their needs and achieved their dreams. Beyond 
that, it can be argued that business has been more successful than any 
other profession in overcoming traditional religious, ethnic, racial, and 
sexual barriers. Business says: judge individuals by their competence. The 
primary question in business is: Can he deliver the goods? Only where the 
business ethic of competence has taken hold are religious and ethnic 
feuding, racism, and sexism on the defensive.

For example, the rise of the business ethic during and since the 
Enlightenment has led many former national enemies to decide that they 
would rather produce and trade than make war. Compare current relations 
between England and France with their past. The same could be said for 
relations between France and Germany, Korea and Japan. Consider the fact 
that from 1815 to 1914-the heyday of capitalism-there were no major 
international European or North American wars. Contrast that with the 
almost constant wars from 1914 to the present-during the rise of various 
national and international versions of socialism.

Business also breaks down religious barriers. The fact that for many 
centuries Jews were allowed to engage in banking while Christians were not 
was a major reason why Christians were less energetic in their efforts to 
stamp out Judaism. The ongoing Islamic jihad against the decadent West has 
been muted by the fact that the West is the major customer for Middle 
Eastern oil. In business, few care whether you worship by handling 
rattlesnakes or rosaries.

The competence ethic of business also breaks down racial and sexual 
barriers. On countless occasions, individuals of different races and sexes 
have sat down at boardroom tables and negotiated deals peacefully. To the 
extent that the ethic of competence is accepted, the stupidity of judging 
people by sex or race is obvious.

The business world undermines irrational social barriers because the 
economic interests of all humans are the same. Any human of any color, 
nation, sex, or religion who can satisfy my economic interests is of value 
to me. So I am more likely to want to deal rationally, productively, and 
peacefully with him.

Despite all this, in the eyes of many a cloud of suspicion hangs over 
business.

The reason is that the moral tradition out of which the competence ethic of 
business arises conflicts with a competing moral tradition that holds 
business to be immoral or, at best, amoral. For those who subscribe to this 
latter moral tradition, ethics is felt to be more a matter of stoically 
doing one's duty rather than having fun, of fulfilling one's obligations 
rather than fulfilling yourself, of obeying the rules rather than doing 
what's practical, of giving away rather than creating. Stooping to 
stereotypes, if this tradition's view of ethics could be personified, she 
would appear as a matron who goes about sniffing disapprovingly at anyone 
who seems to be having a good time. Having a good time means 
self-indulgence-but, she would declare, we are not here to have a good 
time; we are here to serve others, to be stewards for future generations, 
to be nice, to take up as little space in the world as possible. Above all, 
she would continue, we are here to sacrifice selflessly-to society as a 
whole, to God, for the greatest happiness of the greatest number, to Duty, 
to the working class, to the ecosystem.

The theme of this book is that morality is not about human sacrifices. The 
traditional anti-business ethic is dead wrong. We are not born to serve; we 
are-every single one of us-ends in ourselves. We are here to live our own 
lives, to achieve self-fulfillment, to be ambitious, to consume as many 
valuable resources as possible. Ethics is not about renouncing and 
sacrificing personal values. It is about producing and consuming them. Life 
is, in the most serious philosophical sense, about having a good time.

The Ethical Core

"Business ethics is a contradiction in terms." This cliche, usually said 
half-seriously, is an extreme form of the traditional anti-business ethic. 
Its advocates will say, for example, "Look At that business executive: he 
cheated the customer. Well, that's business for you. It's a lowdown, 
dog-eat-dog world."

Lowdown behavior certainly occurs in business. It also appears in any 
profession. Some scientists fake the data. Some artists turn to forgery. 
And some politicians demand bribes. Yet the value of science, art, and 
government are not sullied by these corrupt deeds. Rather, to the extent 
that people engage in such corrupt deeds, they are neither scientists, 
artists, nor politicians. The scientist who fakes his data is not a bad 
scientist; he is not a scientist at all but, to the extent he fakes, a 
corrupter of science.

Suppose, by analogy, you investigated a school and discovered many students 
who cheated, put forth minimal effort, and said that they were there only 
to "get the piece of paper." And suppose that some of the teachers graded 
arbitrarily, were more interested in indoctrination than teaching, or 
became teachers only because they liked to have sex with children. Such 
immoral behaviors do not invalidate education. They do not justify cynical 
comments such as: "Well, that's education for you. Ethical education is a 
contradiction in terms."

The core of education is the acquisition of knowledge. Knowledge is good: 
It is a form of power that is essential for human life. Knowledge can be 
learned only by honest methods-although a diploma, the symbol of knowledge, 
can be acquired honestly or dishonestly. The same holds for business. The 
core of business is the creation of wealth. Wealth is good: it is a form of 
power that is essential for human life. Wealth can be produced only by 
honest methods-even though money, the symbol of wealth, can be acquired 
honestly or dishonestly.

We do not say: "He cheated on the test; that shows how immoral education 
is." Rather, we say: "Education is wonderful, but this cheater has 
corrupted it." The same should hold for business-or any profession. The 
cold-hearted businessman, the sexually repressed librarian, and the nerdy 
scientist do not define their professions.

The first questions to ask of any profession are, What is it? What values 
does it create? and How does it achieve those values? Then, having answered 
those questions, we deal with the problems caused by distorted or improper 
values and shady methods.

Power Through Principles

Business is the production of values for trade. Both production and trade 
are necessary for business. A man living on a desert island, producing and 
consuming what he needs, is making a living but he is not in business. But 
if he produces an extra wingo and trades with the woman on the neighboring 
island for a framister, then they are in business. Business begins with 
trade: a buyer and a seller form a relationship. From small beginnings, 
great things can happen.

Trade enriches both buyer and seller, making possible increased production 
and trade. As production and trade increase, so does specialization, which 
further increases production and trade. Specialization can take many forms. 
One form is by commodity: I produce only wheat and you produce only beans. 
Another form of specialization occurs within a business by employment. 
Typically, the employer provides capital and strategy and carries the risk 
for the business, while the employee provides labor and other skills.

As the scope and scale of the production and trade grow, businesses arise 
that specialize in services to producers of commodities: transportation, 
advertising, brokerage, banking, financial markets, insurance, legal 
services. All such services produce value for trade. Advertisers and 
brokers bring buyers and sellers together, lawyers provide knowledge and 
advice, insurers provide risk reduction, speculators provide capital and 
liquidity, and so on.

The increased complexity of the business world has not changed its 
essential nature: from wingos and framisters to international compact disc 
players, business is still the production and trade of value. What has 
changed is the complexity of the human relationships involved, the scale 
and abstractness of the values at stake, the difficulty of evaluating the 
merits of competing values, and accordingly the ease with which errors 
about values and how to get them can be made.

The purpose of business ethics is to discover the evaluative principles 
necessary to deal with the complex business world. Explicit, principled 
knowledge gives a business professional a framework within which to think, 
judge, and act consistently. Knowledge is power, said the philosopher 
Francis Bacon. Ignorance is impotence. Only with knowledge can the good can 
be achieved, errors avoided, and problems diagnosed.

Selling and buying raises, for example, issues of fraud, liability, caveat 
emptor, and bluffing. Employment raises issues of merit versus affirmative 
action, the status of unions, drug testing and privacy, and 
whistle-blowing. Financial markets raise questions about the moral status 
of corporate raiders, junk bonds, and the property status of information. 
Corporations enjoy a special legal status, so there are questions about why 
corporations deserve it. Large-scale business raises issues of large-scale 
waste disposal and how one weighs the values of a clean and beautiful 
environment. And complicating all of these areas is the question of the 
proper scope of the government's involvement.

In each of these areas, business professionals make errors, some of them 
dishonest. Contracts are broken, lies are told, employees are treated 
arbitrarily, employees steal, confidential information is revealed, cons 
are pulled, politicians are blackmailed, bad checks are written.

But despite the errors and immoralities that occur in the complex world of 
big business, the crucial fact is that the same fundamental moral appraisal 
of business applies. A university is more complex than a one-room school 
house, but the same positive moral appraisal of education applies to both, 
no matter how many more opportunities for errors and corruption the complex 
nature of the university allows.

Business is essentially good. Ethics is about what is valuable, and 
business is the production and trade of one key category of values.

Stephen Hicks is chairman of the Department of Philosophy at Rockford 
College, Rockford, IL



Copyright 1994
Institute for Objectivist Studies
82 Washington Street, Suite 207
Poughkeepsie, NY 12601
Phone(914) 471-6100
Email: ios@ios.org