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

AO1 content

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).
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.
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.

AO2 content

Sweatshops

Sweatshops are an example of the violation of social CSR.
They are the consequence of globalisation.
They are typically what people whistleblow about.
Utilitarians sometimes defend sweatshops. Will MacAskill points that that people who work in sweatshops are technically better off. Without that work, they would have no job and would likely starve. So even though the working conditions are terrible, it’s better than nothing. So technically happiness is being increased. Plus, rich westerners get lots of cheap stuff so they are happier.
Most people want to counter that we should just demand that the sweatshops treat its employees better – that we boycott businesses who use them. However, if we forced a business to lose profit to treat its employees better, it would lose its incentive to open the factory in the 3rd world country in the first place. If a business has to treat its employees as well as we do in the 1st world, it may as well open the factory in the 1st world. Then, those 3rd world workers would lose that employment. So unfortunately, the benefit gained by sweatshops is tied to its exploitation.
Many would criticise Utilitarianism for ignoring human rights. Human rights are deontological, like Kantian ethics. Kant would argue that it’s always wrong to exploit people by treating them as a mere means. The consequences of exploiting people being good doesn’t make it ok. Our society operates on human rights and it is incompatible with consequentialism. Utilitarians would say it’s ok to violate rights if the consequences are good, but that could lead to allowing terrible actions against innocent people – e.g. sweatshops.

Evaluation:

Mill’s version of Utilitarianism solves this issue.
Mill’s Rule utilitarianism claims that we don’t judge every single action, we judge which rules would maximise happiness if followed.
Mill’s main rule was the harm principle – 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. However Mill would likely ban children from working in them, because they cannot have informed 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.
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.
Kantian ethics might seem intuitive logically, in the abstract, nonetheless when applied to real-life situations it leaves people worse-off compared to other systems like Rule utilitarianism.

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: we can’t predict the consequences of:
Whistleblowing: We might calculate that whistleblowing is good – because a harmful business practice might end without the company going bankrupt. But, our calculation could be wrong – if the business did then go bankrupt, its employees would all become unemployed – which would cause a lot of unhappiness – perhaps more happiness than we prevented by ending the unethical business practice. So, calculation seems very difficult for whistleblowing.
Globalisation &/or CSR: Utilitarians think it can be justified to allow exploitation 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 significantly, it’s also 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 become powerful enough to influence laws (as they already are..) – 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.

Defence of Utilitarianism:

However, Kant’s 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.
Furthermore, Mill avoids the calculation problem altogether.
Act Util: an action is good if maximises happiness.
Rule Util: an action is good if it follow a rule which will maximise happiness if everyone follows it.
Mill says that as a society, we should debate and 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.
Mill’s harm principle would only allow ‘exploitation’ when it is freely chosen by an adult. This principle is not in danger of spreading exploitation, it will only justify it in cases of extreme poverty where it actually has utility.
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 would 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

CSR enthusiasts (ESG): good business is good ethics
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. Good business and good ethics are linked.
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

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.
The issue with Marx is that communism has never really been shown to work.
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 Marx and Friedman.
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. So they would be in favour of whistleblowing, CSR and against globalisation. Kant would be more restrictive of capitalism than Mill, but they broadly represent the same approach.
This middle-ground approach has been successful in liberal democracies.