Business Ethics and Efficiency
This and the next chapter articulate a theory of business ethics that fits with how the book has approached corporate governance and corporate law. It takes the “market failures approach” (MFA) to business ethics as a starting point, a view that takes efficiency to be the primary moral principle for business. The MFA holds that businesses have an ethical duty not to exploit “market failures,” the inefficiencies and misallocations systematically and predictably effected by markets. This view is strong because it provides a robust account of business’s ethical duties within the framework of contemporary economic theory; business ethics is neither a wet blanket draped over the C-suite nor a self-serving rationalization of business’s self-interested activities. Instead, business ethics is shown to fit within a larger scheme of social cooperation, taking seriously businesses’ place within that scheme, particularly within a competitive market characterized by deontic weakening.