By: Andrei A. Stryzhko
Dr. John A. DiCicco
December 4, 2012
Can business ethics be clearly possible in capitalism?
"The next generation of leaders in finance will be defined not by the amount of money they amass, but by the stewardship they exercise as fiduciaries and the responsibility they demonstrate to their communities." John Rogers, President of CFA Institute. The concept of business ethics has tried to change the way businesses operate over the years. Business ethics is a form of ethics that governs the actions of businesses to circumvent the affects business has on every day society. But some question its effectiveness in the application of capitalism. Several case studies have shown that this is the case; many companies place the pursuit of money in front of the pursuit of virtue. Although, the majority of companies are not in the spotlight of acting unethically, can we conclude that they follow the ethical norms? It is natural for normal human beings to act ethical but businesses are on a completely different playing field. But could business ethics be clearly possible in capitalism? In order to understand the debate of business ethics, one must understand the concept of capitalism. Our understanding of capitalism is incredibly limited. Despite this being the prevailing world economic system. As a snapshot, capitalism is a socio-economic system and the current global economic paradigm. It originated in the West, gained a foothold in the 1700s and 1800s and ultimately replaced feudalism. It has gone through various developments, from Mercantilism, Industrialism, Keynesianism, and the latest, Neo-Liberalism. It exists in established democracies. Capitalism in its purest form is free enterprise, meaning that the market functions with minimal interference from government and other forces. If this is possible then businesses compete with each other on an equal playing field and whoever has the upper hand can gain much of the market. Each business will fight for their share of the market and it is basically survival of the strongest, whoever has the better product, price, quality will wins over customers. Capitalism, it is said, propels people to work hard, in order to succeed financially, and therefore wider society benefits from the increased productivity of the population. It is also leads inexorably to individual liberty, freedom and democracy. As capitalism is defined as socio-economic system it is supposed to touch upon not only principles of economy, but also the interests of its socium, which could be their moral views. Here steps in business ethics. But the questions arises, how can capitalism take human moral aspect into consideration if there is no other goal than profit, and there can be no other goal because profit-making is the essence of capitalism, it is its strength and advantage over all other economic systems in history. In a capitalist system, goods and services are not produced in order to satisfy desires of consumers or to give work to employees. It is the other way round. In capitalism, the workforce is used, production is organized and consumers are shaped in order to make profit. So capitalism is a simple one-goal system stimulating self-interest and exploiting some elements of human nature, not necessarily the best. Another reason why many business persons argue that ethics and capitalism don’t coexist is that the corporation (and any similar legal structure) has no inherent ethical compass. It is based on the idea that it is easier for one person to misbehave when he can cast the blame on a group he belongs to, rather than when he must bear full responsibility for his actions. This is clearly true, and is one of the things which allow mobs of people to do things which no individual in the group would normally do. Although, businesses do hold...