This page contains A*/A grade levelsummary revision notes for the Business ethics.

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AO1 content for business ethics

For General questions, it’s up to you what to mention for AO1 marks.
For focused questions, your AO1 marks will be for whatever the question focuses on from this list:

Kant
Utilitarianism

On/or:

CSR
Globalisation
Whistleblowing

CSR

CSR = corporate social responsibility. It’s the theory that businesses have a responsibility not just to make profit for their shareholders but also to their stakeholders.
A stakeholder is anyone who is affected by the business, including its employees, customers and wider community.
Environmental CSR = businesses have a responsibility not to destroy the environment.
Social CSR = businesses have a responsibility to not mistreat nor be involved in the mistreatment of its employees, customers and wider community. E.g. minimum wage, health & safety provisions, not benefitting from any kind of exploitation (e.g. sweatshops).
Case study:
Util: environmental CSR is valid, but social CSR might not be, it depends on the situation. If it maximises general happiness for a business to exploit, then that could be valid.
Kant: all violations of CSR treat people as a mere means and are therefore morally wrong.

Globalisation

Globalisation is the phenomenon where world economies, industries, markets, cultures and policy-making/politics are connected. Businesses are global entities.
The ethical issues arising from this are things like off-shore outsourcing – when a business closes a factory in a 1st world country and opens it in a third world country. This loses jobs from 1st world countries, and causes exploitation in 3rd world countries.
A further issue is that businesses now have a lot of power and this allows them to influence a country’s laws. A global corporation can bring a lot of jobs and economy to a country, which allows it to ask the politicians to change the laws to favour their business in return.
Ultimately globalisation leads to monopolies – businesses having power allows them to crush their competition so they dominate the market.
This destroys the benefits of free market capitalism – innovation, economic growth and cheap prices.
Case study:
Utilitarians liked Adam Smith’s free market capitalism idea, but they would generally not approve of the way globalisation destroys competition (except in the cases where it happened to maximise happiness – it depends on the situation).
Kant also like Adam Smith’s free market capitalism, but he would not approve of the way globalisation destroys competition and leads to people being exploited (treated as ends)

Whistleblowing

Whistleblowing is the act of going public with information about shady/unethical business practices. The upside is that the unethical practices are likely to stop, but the downside can be that the business goes bankrupt and its employees lose their jobs.
Case study: E.g. Edward Snowden – worked for the NSA in America and told the media that they were illegally spying on innocent American citizens.
Whistleblowing is legally protected in many countries, like the UK. Employers aren’t allowed to treat you unfairly or fire you if you whistleblow.
The idea behind this is to encourage whistleblowing, to enable employees to hold employers accountable because whistleblowing is generally seen as a good thing in mainstream liberal democracy.
Util: it depends on the situation. If the suffering alleviated by the whistleblowing outweighs the suffering caused by effect on the business, then whistleblowing is good, however if the conditions are reversed then whistleblowing is bad.
E.g. if a scientist runs a lab who is a genius and about to cure cancer, but is also a psychopath who likes to torture his employees, a Utilitarian would say don’t whistleblow.
Kant: All shady/unethical business practices are likely to treat people as a mere means, so would be wrong for that reason and deserve whistleblow.
Furthermore, Kant claims that lying is not universalizable – so lying is always wrong, no matter the situation. This is another reason that telling the truth during whistleblowing is morally right.

Sweatshops

Sweatshops are an example of the violation of social CSR.
They are the consequence of globalisation.
They are typically what people whistleblow about.
Util & Kant would disagree/debate about this issue.

Utilitarians sometimes defend sweatshops. Will MacAskill points that that people who work in sweatshops are technically better off as they would likely starve without it. So technically happiness is being increased.
Most people want to counter that we should just demand that the sweatshops treat its employees better.
However, if we force a business to lose profit to do that, it would also lose its incentive to open a factory in the developing country in the first place.
So it looks like the benefit gained by sweatshops is inseparable from its exploitation.

Counter

Many would criticise Utilitarianism for justifying ignoring human rights. Kant would argue that it’s always wrong to exploit people by treating them as a mere means, regardless of consequences.

Evaluation:

However, Mill’s Rule utilitarianism solves this issue. It claims that we don’t judge every single action, we judge which rules would maximise happiness if followed.
Mill’s harm principle states people should be free to do what they want so long as they are not harming others.
Mill would likely argue that so long as people autonomously choose to work in a sweatshop, then that is fine. They are choosing to accept the risks. Though Mill would likely ban children from them, as they cannot consent.
Kant’s approach of simply banning sweatshops seems more in-line with our moral intuitions. However, when we consider that technically people would be left worse-off without sweatshops, Rule Utilitarianism seems the better approach. It seems better to allow sweatshops than for their workers to die
Primark example clothes were being made by exploited workers in a sweatshop. When the public became away, Primary simply cut ties with the sweatshop. This meant those workers lost their jobs, leaving them worse off.

The calculation issue

Utilitarianism faces the issue that we cannot predict the consequences of actions before they happen – we don’t know the future. We cannot measure subjective mental states like pleasure/pain. We certainly can’t do this under the time constraints involved in many moral situations.
Kant makes this criticism of consequentialism himself to defend his approach. We can only really predict and control what we do, so ethics is about doing the right action regardless of the consequences.
Application of the issue to Whistleblowing:
We might underestimate the damage of whistleblowing to the business and employees.
It’s very hard to know in advance what would or would not cause bankruptcy to a business, especially for employees who rarely have knowledge of its finances.
So, calculation seems very difficult for whistleblowing.
Application of the issue to Globalisation &/or CSR:
Utilitarians would generally be against exploitation of the environment. However exploitation of people could be justified if it maximises happiness, even if that violates CSR or results from globalisation.
However, it’s possible for them to underestimate the amount of unhappiness caused by the exploitation.
More generally, it’s hard to calculate how dangerous it is to allow businesses the right to exploit people. If we allow a business to ignore people’s rights, and businesses gain even more power over our laws, then the exploitative practice could spread.
Noam Chomsky made this argument, that we must not give businesses too much power, otherwise they will trample our rights at the first opportunity.
Allowing exploitation is a dangerous game. It’s difficult to calculate the long-term effects – including whether it could really be limited to those cases where it maximises happiness. It’s a slippery slope. Give businesses an inch of exploitation and they will take a mile.
so Kant’s approach seems more reliable and safe than Utilitarianism.

Counter:

However, Kant’s deontological approach leads to counter-intuitive extremes. E.g. he would say you can’t even lie to save a life, because consequences are unpredictable. Similarly, in the context of business ethics, Kant would say you can’t exploit (treat as mere means) to save a life either.
Util’s approach actually seems more intuitive.

Evaluation:

Furthermore, Mill’s rule utilitarianism avoids the calculation problem altogether.
It claims an action is good if it follows a rule which will maximise happiness if everyone follows it.
As a society, we can figure out which social rules will best maximise happiness, and then follow those rules. Over time we can improve and change our rules.
E.g. one of Mill’s favourite rules was the harm principle – that people should be free to do what they want so long as they are not harming others. He thought if we follow this rule, people will be happier.
This means we don’t have to calculate the consequences of every moral action before we do it.
We simply need to know the moral rules our society has best judged to maximise happiness and then act on those rules.
Mil was actually very against exploitation and even thought that society should strive towards worker-owned co-ops as the best long-term approach for an ethical economy.
So Mill might only allow exploitation in the short-term, but require that we phase it out long-term.
So our society will need to figure out rules about CSR, globalisation and whistleblowing and then follow those rules.

Adam Smith & Capitalism vs Milton Friedman vs Kant & Utilitarianism

Adam Smith is called the ‘father’ of capitalism. He argued economies grow best through markets, where businesses compete to provide products/services.
Competition causes better and cheaper products over time. It harnesses people’s self-interest to provide value for others in return for money.
Smith said this system works so well it’s as if it’s guided by an ‘invisible hand’.

Milton Friedman: argues Smith’s is still valid today. His ‘shareholder theory’ claims the only ethical responsibility of a business is to increase profits for shareholders by fairly competing in the free market.
There is no moral responsibility when it comes to the management of your own private property.
This is one way of arguing that what’s good business is good ethics.
Those further left often regard CSR as hypocritical window dressing, meaning making something appear good while overall it is bad. A business which engages in CSR for public relations purposes might be doing so to distract from their unethical practices.
Left-wing or fully marxist economists argue that capitalism is inherently exploitative and therefore CSR is merely hypocritical window-dressing.
Karl Marx argued that capitalism was inherently exploitative. It necessitates inequality because there will always be a class division between those who own the businesses and those who work for them.
The workers labour mainly contributes towards the profits of the owner. This causes alienation, where workers feel undervalued and used. Most of the value they produce goes to enrich someone else. This is psychologically destructive. Marx thought business could never be ethical under a capitalist system. He would argue CSR and whistleblowing can never go far enough.
This can apply to capitalism in general, because by encouraging a slightly healthier version of capitalism, people might feel less motivation to address the problems of capitalism or they might even be deceived that capitalism is not the cause of the problems to begin with.
Anand Giridharadas summed up this self-serving hypocrisy well in this article title: “Jeff Bezos wants to start a school for kids whose families are underpaid by people like Jeff Bezos.” The subtitle was “A free crash course in why generosity is no substitute for justice”.

Counter

Friedman would say a business has no responsibilities at all, except to fair competition in the free market. So he would reject the idea that CSR is needed at all – but if a business wants to do it for PR, that’s fine. The idea that it’s ‘hypocrisy’ covering up for their exploitative practices, Friedman would reject as nonsense – because he doesn’t think free market capitalism is exploitative.

Evaluation

The issue with Marx is that communism has never really been shown to work. Some argue that it’s never been properly tried. But when something keeps failing, it’s valid to question whether there’s an issue with its compatibility with human nature.
Also, those in absolute poverty dropped from 70% to 12% from the 60s until 2012, significantly thanks to globalisation. Capitalism has brought so many people out of poverty in the last century, making Marx’s critique seem outdated.
However, the economic problem for Friedman is that unchecked capitalism will be destructive, even to the free market itself. Globalisation grants businesses the power to destroy competition. All the things Smith argued to be good about capitalism, innovation and cheaper products, require competition. So, Smith and Friedman are wrong about what will enable good business and ethics.
Furthermore, Friedman has an ethical misunderstanding regarding the nature of a social contract. Social democracies wish to create a society where a % of their profits go to the government to fund institutions that help everyone. Participation in redistributionist economies requires accepting those terms. If people don’t want to live in a society which takes some of their profits to help others, they can live somewhere else. The idea that everything people earn through the free market or do with their business is just their property, is not an absolute ethical fact. It merely describes a libertarian society. So taxes aren’t unfairly taking people’s ‘property’ in a social democracy.
Kant & Mill both said they liked Smith’s ideas. They both believe in capitalism, but think it needs to be restricted in order to be ethical.
This looks like the correct middle-ground between Marx and Smith. It has proven successful in liberal democracies.
Kant would be more restrictive of capitalism than Mill, but they broadly represent the same approach. They would be in favour of whistleblowing, CSR and against globalisation.

Question preparation

Key paragraphs:

AO1 content (for whatever the question involves)
Sweatshops (as an example of globalisation, violation of CSR & the sort of thing people whistleblow about – and the Util defence of it vs Kant’s rejection).
The calculation issue (Kant’s criticism of consequentialist ethics like Utilitarianism).
Adam Smith & Milton Friedman: total free market capitalism is good. Ethics is not relevant to business – Businesses have no ethical responsibilities except to compete fairly in the free market. So what’s good for a business competing fairly in the free market is ethically good.
Vs Marx: capitalism is bad. What’s good for business is never going to be ethical.
Vs Kant & Util: capitalism can be good if it’s controlled. What’s good for business might not be ethical – so businesses need to be controlled in order to maintain good ethical outcomes.

Question types:

General plan:

AO1 content for whatever the question involves
Sweatshops (Util vs Kant)
The issue of calculation – Kant’s criticism of Utilitarianism

Assess theory X (Kant or Util) on sub-issue Y (CSR/Globalisation/whistleblowing)

AO1 – explanation of issue Y, Application of theory X to issue Y
Sweatshops
The issue of calculation – Kant’s critique of Utilitarianism.

Weirdly worded questions:

Is good ethics good business? [40]

AO1: explain CSR & globalisation – as issues which have suggested that unrestricted capitalism, businesses doing whatever they want, might lead to unethical issues.
Smith & Friedman: ethics has no place in business. A Business’ only responsibility it to make profit by competing fairly in the free market. So they would say good business has no ethical issues or concerns attached to it whatsoever.
Whereas: Marx would say good ethics requires getting rid of capitalism and business completely.
And: Util & Kant would say, capitalism is good, but it needs restricting when that would maximise happiness (Util) or fulfil duty (Kant). So, they would say good ethics isn’t necessarily good for business, but that nonetheless we should require businesses to be ethical even if that costs them profit.
AO2: Sweatshops – seem to be an example where what’s good business isn’t ethically good. But: Util actually defends the ethics of sweatshops.
But: Kant disagrees

Can human beings flourish in the context of capitalism and consumerism? [40]

Same content as the question below

P1: AO1 on CSR & globalisation & then application of Kant and Util

P2: Sweatshops (usually seen as an example of capitalism conflicting with human flourishing – though Util would then defend them, while Kant would be against them)

P3: Adam smith & Friedman vs leftists vs Mill/Kant’s classical liberalism/centricism

Whether CSR is just hypocritical window-dressing covering the greed of a business

AO1: explain what CSR is

The ‘hypocrisy critique’ is made by:

People who argue that CSR gives businesses an opportunity for good PR by advertising their occasional fulfilment of CSR, which just acts as cover for their violations of CSR.
Leftists go further and argue that even if CSR were perfectly followed, that wouldn’t go far enough and is just good PR for capitalism in general which is inherently exploitative.
Adam smith & Friedman: CSR is unnecessary because the only responsibility a business has is to make profit.
Marx: CSR makes capitalism seem better than it is, which is a problem. The only fully ethical solution is to get rid of capitalism.
Util & Kant: Kant would always be in favour of CSR, and Utilitarianism would mostly be in favour of CSR. Kant would claim that CSR should always be followed by a business – it’s not acceptable to use it merely as window-dressing – also, intention matters for Kant but not for Util.
Sweatshops: a business might be doing CSR for hypocritical window-dressing – to distract from sweatshops (e.g. apple) – however a Utilitarian might actually defend sweatshops and thus think sweatshops shouldn’t (always) be a violation of CSR at all.

Leftism vs Friedman vs Kant+Util classical liberalism (centricism)

CSR is typically a centrist or centre-left position. Those further left often regard CSR as hypocritical window dressing, meaning making something appear good while overall it is bad. A business which engages in CSR for public relations purposes might be doing so to distract from their unethical practices.
Left-wing or fully marxist economists argue that capitalism is inherently exploitative and therefore CSR is merely hypocritical window-dressing.
This can apply to capitalism in general, because by encouraging a slightly healthier version of capitalism, people might feel less motivation to address the problems of capitalism or they might even be deceived that capitalism is not the cause of the problems to begin with.
Anand Giridharadas summed up this self-serving hypocrisy well in this article title: “Jeff Bezos wants to start a school for kids whose families are underpaid by people like Jeff Bezos.” The subtitle was “A free crash course in why generosity is no substitute for justice”.

Counter

Adam Smith: free market capitalism is good.
Milton Friedman: modern defender of Adam Smith’s views.
Friedman would say a business has no responsibilities at all, except to fair competition in the free market. So he would reject the idea that CSR is needed at all – but if a business wants to do it for PR, that’s fine. The idea that it’s ‘hypocrisy’ covering up for their exploitative practices, Friedman would reject as nonsense – because he doesn’t think free market capitalism is exploitative.

Evaluation

Kant & Util: liked Smith to a degree – believe in capitalism – but think it needs to be restricted in order to be ethical. So they would be in favour of CSR and against globalisation.
Capitalism has brought so many people out of poverty in the last century, making the left-wing position seem to be going a bit far. However, if left unchecked, Capitalism will be destructive, even of the free market itself, due to globalisation. So Friedman is totally wrong.
Kant & Util seem to have a good middle centre ground between these two approaches.

How should a business treat its stakeholders? [40]

A stakeholder is a person who has anything to do with a business whatsoever. E.g. employees, customers, people who live in the local community.

The idea of CSR is that a business doesn’t just have responsibilities to its shareholders, but also to stakeholders, e.g. to treat it’s workers and customers fairly and to not destroy the environment.

AO1: explain CSR

AO2: sweatshops debate: CSR says sweatshops are bad, but Util defends the the ethics of sweatshops. And Kant disagrees.

AO2: Smith & Friedman vs Marx vs Kant & Util

Smith & Friedman: a business only has responsibility to it’s shareholders, not stakeholders.

Marx: would say mistreatment of stakeholders is immoral, but inherent to capitalism, so we should be communists.

Util & Kant: defend CSR – Kant would say we have a duty to not treat anyone as a mere means, including stakeholders. Util would say that mistreatment of stakeholders is wrong when it fails to maximise happiness.

Does globalisation encourage or discourage good ethics as the foundation of good business?

AO1: Globalisation – What’s good for a business is not good ethics
Sweatshops – are a consequence of globalisation and are good for business, but don’t seem like good ethics.
But: Util would say they are good ethics (and good business)! And Kant would disagree – arguing they are not good ethics, even if they are good business.

Friedman: ethics and business have nothing to do with each other!

Leftists would criticise: what is ethically good is not going to be good for business. Business needs heavy restriction (leftism), or perhaps even being completely under state control (marxist) in order for good ethics to be possible.

Kant & Util: middle ground position – allowing capitalism – but thinking it needs significant restrictions – globalisation especially shows that, since it enables businesses to destroy the free market through monopolisation.

Kant & Util would say good ethics is not necessarily good business, which means businesses have to be forced to fulfil duty over profit (Kant) or prioritise the maximisation of happiness over profits (Utilitarianism).