The Proper Context of Business

Chapter 2 investigates the explanation Adam Smith gave in his famous Wealth of Nations (1776) for why some places are wealthier than others, and what political, economic, and other social institutions are required for increasing prosperity. The chapter discusses the conception of “justice,” as opposed to “beneficence,” that Smith offered The Theory of Moral Sentiments (1759), as well as Smith’s economizer, local knowledge, and invisible hand arguments from his Wealth of Nations that form the basis of his political economy. We look at the duties of government implied by Smithian political economy, including both what he argues government should do and what it should not do. We also look at empirical evidence to answer the question of whether Smith’s predictions on behalf of his recommendations have come true in the intervening centuries.

The Purpose of Business

Chapter 1 addresses the central importance of asking the why of everything we propose to do, not only the how. This is as important in business as in any other walk of life. This issues from the fact that human beings are essentially purposive creatures, that is, creatures who create and pursue ends, goals, and purposes. The final or ultimate goal of human life is, as Aristotle argued, eudaimonia—“happiness,” “well-being,” or “flourishing.” If that is our ultimate end, then all our activities should be deliberately ordered to help us achieve it. That includes business, and the political and economic institutions in which business operates. This chapter argues that business should contribute to and reflect our pursuit of eudaimonia. It closes with questions that this conception of human purposiveness suggests should be investigated, pointing the path forward for the rest of the book.

Introduction

The term “honorable business” will strike many as counterintuitive. Many are suspicious of business, as the widespread notion that business, or businesspeople, should “give back” to society—perhaps to atone for their sins—suggests. Honorable Business argues that there is a way of understanding business activity such that it is beneficial and even morally praiseworthy, and thus not in need of atonement. The introduction to Honorable Business outlines the elements of the book’s argument, including the content of each chapter, but it also places the book’s argument in its proper context: who its audience is, and why its argument is necessary.

Honorable Business and Valuing What We Ought

Chapter 8 looks at several more worries about, and objections raised to, markets and business. This chapter focuses specifically on concerns raised about how markets can induce us to misvalue things—valuing some things too highly, valuing other things not enough. Chapter 8 argues that it is not things but rather people and their choices that should be valued. It also argues that one can advocate both liberty and virtue, that is, respecting people’s right to choose while retaining the moral authority to criticize—though not interfere with—their choices. It argues that working for wages is not plausibly similar to slavery and hence, contrary to some critics’ claims, should not be described as such. Finally, the chapter discusses tragedies of the commons and explores the ways that honorable business might address and mitigate some, if not all, of them.

Honorable Business and Treating People the Right Way

Chapters 7 and 8 look more carefully at a series of worries about, and objections raised to, business, markets, and commercial society generally. Chapter 7 looks specifically at concerns about how we should treat people and whether markets and business are, or can be, consistent with proper relations among people. It examines the inequality to which markets can lead, considering in this connection G. A. Cohen’s famous “camping trip” scenario and his argument for “socialist equality of opportunity.” In contrast to Cohen’s “camping trip,” this chapter offers a “shipwrecked on an island” scenario, from which conclusions different from Cohen’s may be drawn. The chapter also examines the seeming unfairness of some of the outcomes of business activity, including in particular the undeserved luck involved. Finally, it explores the instability and displacement inherent in the “creative destruction” (in Schumpeter’s famous phrase) of markets, including its effects on human community.

Obstacles to Achieving the Purpose of Business

Chapter 6 looks at several problems businesses can face in the achievement of their proper goal within a market economy. These include Karl Marx’s notions of “alienation,” lying, and exploitation, the extent to which markets and commercial society can conflict with some of our deep-seated and possibly pretheoretic intuitions, and problems associated with asymmetries of knowledge and so-called rational ignorance. This chapter outlines how businesses should deal with such worries and address them in good faith. It also articulates a claim about the proper scope of business’s moral obligations, which will go some way toward helping businesses focus not only on what they can do but on what they should do.

From Business to a Just and Humane Society

Chapter 5 completes the argument on honorable business by specifying a “hierarchy of moral value” linking the individual businessperson’s activities to the purpose of a firm within a properly functioning market economy that is itself part of a just and humane society. If these relationships have been correctly described, the individual businessperson should be able to give an account of his or her professional activities that connects them all the way up the chain of moral purpose to the kind of society in which we should all want to live. The chapter also looks at the increase in material prosperity the world has experienced since approximately 1800 and connects that prosperity to the “hierarchy of moral value.” The chapter considers the role of government and regulation in the creation of prosperity and explores the extent to which the present argument connects to ethical theories of deontology, utilitarianism, and virtue ethics.

Markets and Morality

Chapter 4 raises the question of how markets and morality go together, and how our conception of honorable business might deal with some of the leading objections critics have raised to markets and business. It looks at and offers initial responses to a several worries, including inequality, unfairness and luck, externalities, low worker pay, price gouging, manipulation of consumer desires and choices, and profit-seeking. It also explores the notion of corporate social responsibility (CSR), and the extent to which there can be such a thing as “honorable profit.” Finally, the chapter suggests that the field of political economy, which informs the argument of this chapter and the book, is an exercise not in ideal theory but rather in practical, second-bests—and, as such, should aim at steady and widespread improvement if not perfection.

Why Business?

Chapter 9 brings the threads of the previous chapters together to develop an integrated picture of honorable business. It first argues that there is such a thing as honorable business, and it articulates its core elements, linking them to the conception of moral agency, hierarchy of moral value, and code of business ethics developed in earlier chapters. It also describes what dishonorable business is. It articulates the “negative” duties of business—the “don’ts—as well as its positive obligations—the “dos”—and argues that the “don’ts” require our attention first, but that the “dos” nevertheless can generate obligations as well. Chapter 9 suggests that honorable business not only provides material prosperity but also enables and encourages proper moral relations among people based on the mutual respect that our inherent dignity requires. Seen in the proper light, this conception of honorable business could actually be a moral calling.

A Code of Business Ethics

Chapter 3 argues that the ultimate purpose of business is to create value—for all parties, simultaneously. It explains what the purpose of a firm is, and, on that basis, it offers a proposal regarding what should be part of any firm’s mission statement. It then proposes a code of business ethics that captures the duties of the individual businessperson, and goes on to articulate a conception of honorable business that allows business to achieve its main purpose of the creation of value. This code enables the individual to navigate the inevitable dilemmas that arise in business, which are in important respects not dissimilar to dilemmas that arise in other walks of human life. It also describes a conception of professionalism that connects to business’s purpose and the “hierarchy of moral value” of which it forms a part.