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12/26/09
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Business Philosophy

Foundational to the understanding of business are the philosophical writings of Immanuel Kant*. According to his views a business person can be ethical but in the same moment may not be moral . Simply because one follows all the professional and ethical rules does not mean a business is acting in a socially responsible way. As important as Kant is to fully understand the ethical dimension of business he did not understand the practical world of business where decisions must be made in the moment—nor of the passions, risks, temptations and emotions that define the daily course of a businesses activities.

Kant's deontological approach makes an important distinction between "principled actions and prudential ones." All to often businessmen go through life thinking they are moral because they see themselves as following all the laws and ethical commands required of them. It is prudent to be ethical, but if that action did not come from a higher purpose other than "appearing ethical" to the society the essence of being ethical is lost. Ethics, to many philosophers has a temporal and transcendent aspect to it. However, business people experience the world in a more utilitarian way due to the sometimes "Red Tooth and Claw" Darwinian nature of transacting goods and services. There is, it seems, a priority to things in business. If a businessman focuses on being virtuous instead of running a business for profit, they increase the likelihood their business will fail. And, being virtuous for the sake of "doing good," and feeling good for that action, also gives rise to questions of moral legitimacy for the Kantian. As later will be pointed out a legitimate form of virtue does exist in business but it is seen in terms of "indirect virtue."

Comparing schools of ethical thinking has led to little understanding of ethics. In fact, there is a certain element of gridlock between theories that is never resolved. Contemporary philosopher Peter Singer, has pointed out to the effect that "even after twenty-five hundred years of ethical reasoning philosophers still cannot tell you with any certainly whether rape is right or wrong." These seems an un resolvable tension between the Utilitarianism of Jeremy Bentham and the deontology of Immanuel Kant. But much of this conflict can be resolved reasoning ethics in an evolutionary context. It is a fallacy of reasoning to believe that all elements of the debate must exist in the same time and space. Evolutionary ethics provides the key to the middle ground between competing theories but in the last hundred years this approach has been rejected as a viable way of describing ethics. Much of this resistance can be traced to the belief of philosophers who think the Naturalistic Fallacy is a credible perspective in ethics. For a explanation of views in support of the Naturalistic Fallacy see The Temptations of Evolutionary Ethics by Lawrence Faber. A response to this illogic can be found in The Evolution of Ethics: An Introduction to Cybernetic Ethics.

In the twenty-first century "Enlightened Darwinian Ethics," not virtue, drives the basic business model. A civilization has been evolving slowly over thousands of years of time and there is an inherent priority to events as the world evolves. Civilization-building is an evolutionary process; a self-organizing, bootstrapping process, It starts out rough and raw, mean and unfair and slowly evolves in the direction of something principled and enduring. Virtue is the long-termed desired result of ethical actions but it perhaps should not come at the price of destroying a business that later could become virtuous and principled.

The business world is a highly organized, hierarchical society that has its own set of customs and ethics that must be acknowledge as well as the moral demands of the greater society. Its' first order moral commands seem to be: survive, maximize profits and do business in a "business like way." Its second order moral commands reaffirm the first but they are on a higher moral plane. Minimize risks and maximize profits buy adhering to professional codes of conduct, following established protocols and decorum require of every business person, and build a reputation as a trustworthy business. But, as Kant would object these second order commands in practice have more to do with prudence and appearances than principled actions. It should be noted that if one considers the Red Tooth and Claw Darwinian approach to business the only moral commands are "keep up appearances and don't get caught."

The Role of Indirect Virtue in Business Operations

Virtue has a role in business, but in the right time and place. When it operates it operate as" indirect virtue" and exists on a higher ethical plane that being virtuous for virtues sake. But, Kant admonishes the giving and charity of people who do it for the pleasures of seeing themselves as noble, heroic and moral. Giving to feel good seems to be what is going on in every corner of the economy. However, real virtue in business does seem to exist in business. Its nature is abstract and difficult to grasp. In order to understand ethics on this level one must view ethical actions as a dynamic, not a static, phenomenon. Ethical actions in business are defined in theory in terms of their "ethical moment." The word moment is an engineering term used to describe the sum total of stresses and forces on a building structure in a particular moment in time. Likewise ethical decisions in practice are the product of all forces, temptations, dangers, and ideology in a given moment in time. Business people are constantly tempted, stressed and challenged to make the right choices day in and day out. With time a workable ethical path emerges for business people that can accommodate both their principles and their business needs.

In business there are two basic models and variants in between. First there is the powerful-predator approach and then there is the powerful-prey approach. Powerful predators employ any nefarious means to deceive manipulate a person to act against their interest. By device they deny their client autonomy of choice by any means possible. On the other hand powerful prey are basically "straight shooters" with sufficient intelligence to grow and manage a business without using low-minded tactics. They create highly efficient business that are well-managed and so do not suffer the large expenses of poorly run predatory establishments. Competence and talent allow them the space to treat people fairly being far from the constant clash of emotions that predatory businessmen create for themselves. By acting in a dignified way they do not necessarily maximize their profits but the foster little collateral blowback from their society for their existence. Thus, without reflecting on their virtue this approach addresses ethical actions that what Immanuel Kant might consider virtuous.

Mathematical Game Theory and Levels of Business Competence.
Businessman to businessman ethical concepts

What contemporary ethics philosophers cannot appreciate is that "business" as a dynamic ongoing process has certain customs that define ethical actions among veteran business people. These standards of moral and ethical conduct do not affect the buying public, rather they define the "fitness" of the individual business person to even be a business person. Business in some sense might be thought of as a form of social warfare in which any personality weakness is fair game. Unscrupulous businessmen make up for a lack of intellectual capacity and talent by inciting and provoking conflict. Handling such people without taking a loss can be facilitated in certain instances by using mathematical game theory as a guide. Since such competitors will "push every possible emotional button" it is difficult for a well-intended business person to follow the high moral standards of Kant in every instance. Some method such a game theory must be available to keep the conflict from spiraling down into spiritless combat.The business experience can be a pressure cooker of conflicts that come from contact with a wide spectrum of life styles and moral codes. Conflict lowers the efficiency of any business operation. Without the spirit of cooperation and trust evident in such a world principled ethics will not endure long. Thus, it is important to recognize that principled actions are ultimately necessary to truly gain in business. If a person operates at the level of spiritless struggle they create walls for themselves they cannot surmount. They restrict themselves from a larger community of principled people who can easily discern their predatory nature. Being bared from certain "nectars of civilization" those who are unprincipled must make up for the difference by endlessly accumulating wealth and power. So when Kant says principled ethics are necessary he means to the effect that people do not get something for nothing. A type of Heisenberg principle operates with ethics. You can have the money and power but you cannot have all the "nectars" you desire. You can have the nectars but you may not have a significant amount of wealth and power. One may want to be seen as sophisticated but at the same time that person cannot trash the culture with their backwoods ways.

Kant's approach as well as the approach of the Utilitarian's are important to understanding ethics in a business context. Finding the balance is what is difficult.

*Immanuel Kant is perhaps the most difficult philosopher to understand yet he is key to understanding "principled ethics," To this end Professor Michael J. Sandel has a book and CD entitled Justice: What's The Right Thing To Do? Here, he has a talent for presenting the issues in understandable terms.

indirect virtue

So, as long as beginners can adhere to the prudential commands of ethical law so much the better. And, as many business people have come to understand there are many levels to becoming a Master Business person. A first approximation of this idea might be found by conceptualizing business learning into five levels. The first level is the start-up where survival is most important in a sea of competition. The fifth level denote a high-level of the mastery of business. Business in this respect is somewhat akin to martial arts in which the categories are defined by personal wealth and power and time in service as a savvy businessperson. Because this complex dynamic works at the foundations of business it is difficult to demand that virtue ethics be imposed immediately on business behavior.

Notes:

A person can be ethical and at the same time principled in a way that strives to make the world a better place for all. If everyone in the world is "in it for themselves" the world would develop more slowly. This is because an environment of cooperation and trust inspires cultural and economic growth in ways that are faster and more efficient than would occurred in an environment of spiritless business arrangements. So, if virtue in business dealing is included in defining business behavior, everyone benefits instead of a few. But, one cannot include virtue directly to business behavior because there is one important hurdle to overcome and that is the necessary Darwinian selection of the the fittest to survive. Concerning oneself with goodness and virtues becomes a distraction in the everyday struggle for a business to survive. This is particularly important in the start-up days of a business. Here business people have a finite time to achieve what in physics is called "escape velocity." A rocket cannot escape the pull of gravity unless it accelerates at a certain pace for a certain amount of time. In business gravity is the combined effects of all other business in the same venture all competing for a market share of goods and services. Certainly ethics plays an important part in a business reaching escape velocity because ethical behavior minimizes "blowback" from angry and displeased customers who feel cheated, abused and exploited. Unethical behavior tends to build for the merchant a bad reputation long remembered by the public. The effects of unethical behavior is "reverse advertising."