Evaluating Business Ethics PDF

# Evaluating Business Ethics ## Normative Ethical Theories **Having completed this chapter you should be able to:** * Explain the role of normative ethical theory for ethical decision-making in business. * Identify the international differences in perspectives on normative ethical theory. * Under...

# Evaluating Business Ethics ## Normative Ethical Theories **Having completed this chapter you should be able to:** * Explain the role of normative ethical theory for ethical decision-making in business. * Identify the international differences in perspectives on normative ethical theory. * Understand and apply Western modernist ethical theories, i.e., utilitarianism, ethics of duty, and rights and justice. * Understand and apply alternative ethical theories, i.e., virtue ethics, feminist ethics, discourse ethics, and postmodernism. * Conduct a pluralist business ethics evaluation. **Key concepts and skills:** ### Concepts * Normative ethical theory * Egoism * Ethics of duty * Utilitarianism * Human rights ### Skills * Utilitarian analysis * Applying the categorical imperative test * Applying the UN Guiding Principles on Business and Human Rights * Applying Rawls' justice test * Conducting ethical discourse * Pluralist ethical analysis ## Introduction In our everyday lives, we constantly come up against situations where values are in conflict and where we have to make a choice about what is right or wrong. Maybe it is a question of whether to lie about something in order to protect a friend's feelings, or driving over the speed limit when rushing to avoid being late for a date, or perhaps, deciding whether to report a classmate you have seen cheating on their assignment. The point is that we all have some prior knowledge of what is right or wrong that helps us to decide what to do. Most of the situations that we are faced with in our personal lives are pretty much within the scope of what a typical person would be able to decide. In a business context, however, situations might become considerably more complex. Consider the case of a multinational company intending to establish a subsidiary in a developing country. There are a number of ethical problems that may arise - maybe the local public authorities expect to receive bribes for granting planning permission, perhaps labour standards in the country are particularly low, or possibly workplace discrimination is much more common than back home. There is also the additional problem that a variety of people will be involved, all of whom might have different views and attitudes towards these issues. Consequently, coming to an ethical conclusion in business situations is far more complex than in most of the situations where we as private individuals have to make ethical decisions. Perhaps more importantly, in a business context there is often a need for these decisions to be based on a systematic, rational, and widely understandable argument so that they can be adequately defended, justified, and explained to relevant stakeholders. Similarly, if we believe that an organization has acted unethically in responding to these issues, we need some concrete basis from which to argue our case. After all, at what point can we say that a particular behaviour is more than just different from what we would have done, but is in some way actually wrong? This is the point where **normative ethical theories** come into play. By **normative**, we mean ethical theories that propose to prescribe the morally correct way of acting. In this chapter, we will take a look at the major ethical theories and analyze their value and potential for business ethics. To begin with, though, we first need to be clear about how exactly we shall be using ethical theory in the context of this chapter and in the rest of the book that follows. ## The Role of Ethical Theory In locating a place for ethical theory in business, Richard De George (1999) suggests that two extreme positions can be imagined: * **Ethical absolutism:** On one side of the spectrum would be a position of ethical absolutism, which claims that there are eternal, universally applicable moral principles. According to this view, right and wrong are objective qualities that can be rationally determined. * **Ethical relativism:** The other extreme would be a position of relativism, which claims that morality is context-dependent and subjective. Relativists tend to believe that there are no universal right and wrongs that can be rationally determined—it simply depends on the person making the decision and the culture in which they are located. In its most well-known form, the notion of relativism occurs in international business issues, where it is argued that a moral judgement about behaviour in another culture cannot be made from outside because morality is culturally determined. Ethical relativism is different from descriptive relativism: while the latter merely suggests that different cultures have different ethics, the former proposes that both sets of beliefs can be equally right. Ethical relativism then is still a normative theory (De George 1999). Most traditional Western modernist ethical theories tend to be absolutist in nature. They seek to set out universal rules or principles that can be applied to any situation to provide the answer as to what is right or wrong. Contemporary ethical theories provide us with some alternative perspectives on ethical theory. They often tend towards a more relativistic position. However, in the course of this chapter we want to show that for the practical purposes of making effective decisions in business, both of these positions are not particularly useful. Our position therefore is one of **ethical pluralism**. This occupies something of a middle ground between absolutism and relativism. Pluralism accepts different moral convictions and backgrounds, while at the same time suggesting that a consensus on basic principles and rules in a certain social context can, and should, be reached. Ethical theories, as we shall show, can help to clarify different moral presuppositions of the various parties involved in a decision - one person may tend to think in terms of one theory, while another might think in terms of a different theory. In making good business decisions, we need to understand this range of perspectives in order to establish a consensus on the solution to ethical problems (Kaler 1999b). Rather than establishing a single universal theory, in this chapter we will present the different theoretical frameworks as complementary resources or conceptual tools that help us make a practical, structured, and systematic assessment of the right and wrong in particular business decisions. Theory can help to clarify these situations and each theory highlights different aspects that need to be considered. ## The Role of Ethical Theory This view rests on two basic things that John Kaler (1999b) suggests we already know about morality before we even try to introduce ethical theory into it. First, morality is foremost a social phenomenon. We apply morality because we constantly have to establish the rules and arrangements of our living together as social beings. It seems reasonable to accept the argument of descriptive relativism - that there is a diversity of moral convictions, be they religiously, philosophically, or otherwise ideologically grounded, is a given. Hence, even if there were one and only one 'objectively' right moral conviction, it is simply a matter of fact that this is not widely agreed upon. It only takes a quick visit to the pub or café to listen in to the conversations around us to discover that people from the same street or place of work differ considerably in their moral views and convictions. From a business angle, this gets even more important due to globalization, since this multiplies the relevant 'supply' of moralities by the sheer number of different cultural contexts playing a role in business decisions. As morality seeks to solve questions of right and wrong in organizing social life, we cannot therefore realistically rely on an absolutist position, since empirically we can see a variety of moral perspectives. If we are to make good decisions that are acceptable to others, we obviously need to develop some knowledge of the different moralities that we are likely to face. The second of Kaler's (1999b) assumptions is that morality is primarily about harm and benefit. Right and wrong are largely about avoiding harm and providing benefits. After all, if we did not dislike harm or value benefits, there would simply be no need for morality. As we will see further on, 'benefit' and 'harm' are matters that are conceptualized differently by various ethical theories. Nevertheless, there is a certain consensus about the fact that morality should ultimately help a society to avoid harm and provide benefits for its members. Given this focus, it is possible to partly refute the position of the relativists and assert that morality is more than a subjective feeling or opinion since it is about actual harms and benefits that we need to address. Ultimately, the logic of relativism is that everything is just different and nothing is wrong (Donaldson 1996). This 'anything goes' approach to morality is not very helpful when we see genuine harm being inflicted on people. The value of ethical theories lies in the fact that they help to rationalize and understand the hunches or gut feelings we all have about what is right or wrong. Furthermore, they make it possible to engage in a rational discourse between individuals whose moral values are different from each other. Nowhere is this diversity more evident than on the web where every conceivable moral position on business ethics is articulated. Ethics Online 3 provides an overview of numerous blogs on business ethics where one can see how different ethics experts apply their knowledge of theory and principles to address real-life events in the business ethics world. ## Normative Ethical Theories: International Origins and Differences In Chapter 1 we argued that business ethics thinking varies across the world. This is particularly the case in the use of ethical theories. However, it is probably fair to say that the academic debate on business ethics has so far been largely dominated by thinking originating in Europe and North America. In fact, more narrowly, most of the literature available in English is more or less dominated by an Anglo-American view, whereas many of the continental European or Asian approaches are less widely received since most of the literature is published in languages other than English. And although we find several continental European approaches also in American and UK textbooks, the general use and the necessity for theory in business ethics is fairly different on both sides of the Atlantic. Though our core focus in this chapter is on European and North American approaches, we acknowledge that there is a growing debate and literature on African, Asian, and Latin-American perspectives on business ethics. We believe it is helpful, then, to highlight some relevant differences in the mainstream debate in Europe and North America as they most commonly appear in the published literature (see Palazzo 2002)—albeit with a note of caution about the dangers of generalizing such a rich and diverse body of work. * **Individual versus institutional morality:** As we saw in Chapter 1, some approaches to studying business ethics tend to have a more individualistic perspective on morality while others tend to focus more on the economic system and the wider governing institutions. Therefore, normative ethical theories in the US tend to be more applicable to individual behaviour, whereas in Europe the design of institutions in the economic system seems to be the main influence in developing and applying theory. * **Questioning versus accepting capitalism:** Most of the mainstream business ethics literature in the US does not particularly question the existing framework of management, but rather sees ethical problems occurring within the capitalist system, which it treats as a given. In Europe, relevant parts of business ethics focus on questioning the ethical justification of capitalism. Hence, considerable effort in business ethics theory has been dedicated to defending or refining the ethical legitimacy of capitalist economic thought. Although one has to say that not all of this work has been immediately helpful in solving day-to-day issues in business life, it nevertheless helps to develop a more critical and distanced approach to the institutions that govern and determine business decisions, and therefore provides help in understanding certain ethical dilemmas in business, including corporate governance, employee rights, and stakeholder involvement. * **Justifying versus applying moral norms:** Europe is characterized by a strong pluralism of moral convictions and values. Therefore, the challenge for business ethics on the theoretical level often involves the justification and ethical legitimation of norms for addressing ethical dilemmas in business situations. In the US, however, judging by most American business ethics textbooks, these issues do not seem to take such a dominant position: apart from a section on normative theories in business, most textbooks treat the question of which moral values are appropriate as a given and chiefly focus on the application of morality to business situations. Notwithstanding these differences, it is important to recognize that no single normative theory can be 'claimed' or attributed to any individual country or region. As we shall now see, most of the traditional theories routinely embraced by American authors are in fact European in origin. And, as indicated in Chapter 1, there is of course a wealth of ethical thinking in business beyond the North American and European context. However, in terms of theoretical approaches to the field, the debate beyond this context is rather limited, albeit with some important additions concerned with Asian and other approaches to business ethics. A key difference to the approaches discussed later in this chapter is that much of the thinking in Asian business ethics, for example, is either informed by religion, such as Islam (Wienen 1999) or Buddhism (Gould 1995), or traditional community values, such as the Chinese Guanxi approach (Chenting 2003). European and North American approaches, in contrast, are mainly based on philosophical arguments, as we will discover in the following sections. So before we explain these philosophical arguments, let us briefly look at the difference between our normative ethical theories and religious ethics. ## Normative Ethical Theories and Religion Religious teaching about ethics and normative ethical theory from philosophy both tend to have the same aim when applied to business, namely how to decide what is the right thing to do when faced with moral problems in commerce. Both are therefore focused on ensuring that business is responsible, avoids doing harm and contributes to societal benefits. However, there are two main differences between the approaches: * **Source of rules and principles:** Religions typically invoke a deity or an organized system of belief (e.g., the teachings in the Qu'ran or the Talmud) as the source of determining right and wrong. Therefore, faith is the critical requisite for acting ethically. Philosophical theories, on the other hand, are based on the belief that human reason should drive ethics. Thus, rationality is the critical requisite for acting ethically. * **Consequences of morality and immorality:** Acting ethically according to normative philosophical theory is primarily considered a matter of creating tangible social benefits and harms for others. While these are still important in religious teaching, there is also an important element of spiritual consequence for the decision-maker. These consequences might include salvation, enlightenment, reincarnation, or damnation. Of course, different religions often have very different things to say about how to go about achieving the goals of ethical business. Followers of Judaism, for example, tend to exhibit some distinctive business practices that can be directly traced back to basic tenets of their faith (Tamari 1997). One such form of Jewish observance is specific periods of abstinence from economic activity. In Jerusalem, this has given rise to a long-running 'Sabbath war' between secular and orthodox residents over whether shops, cinemas, and bars should remain open on the Jewish day of rest (Linthicum 2014). Islam also provides certain rules about appropriate business practices, which has even given rise to a distinct system of banking consistent with the principles of Sharia Law that forbids the charging the interest, often referred to as 'Islamic banking' (Ariff and Iqbal 2011). In many parts of the world, the influence of religious principles is less direct, but they continue to shape business conduct, even if most economic actors are not devout followers. This is nowhere more visible than with the Protestant work ethic that has shaped large parts of the global economy, especially Northern Europe and North America, where it has been found to give rise to self-discipline, hard work and honesty (Jones 1997). It is important, however, not to overemphasize differences in religious principles when it comes to business. Interfaith groups have long promoted their common cause of improving ethical practices in business. The Interfaith Centre for Corporate Responsibility, for example, seeks to use the collective influence of values-based investors to improve corporate attention to social and environmental issues, regardless of denomination. Similarly, the Interfaith Declaration, an accord between Christian, Jewish and Muslim leaders, established an influential set of business principles based on commonalities across their religions. It emphasizes the shared commitment to justice, mutual respect, stewardship, and honesty across the three religions.2 Ultimately, although religious principles continue to be influential on the institutional fabric of economic life, their direct effect on business culture and practice is significant in only certain regions of the world. This is because substantial processes of secularization—i.e., movement towards a non-religious form of organizing—have taken place in many workplaces across the globe. As such, normative ethical theories, based on philosophical principles, remain at the cornerstone of business ethics for much contemporary business. ## Western Modernist Ethical Theories In Western societies, the ethical theories traditionally regarded as appropriate for application to business contexts are based on philosophical thinking generated in Europe and North America beginning with the enlightenment in the eighteenth century. This age is often referred to also as 'modernity' as it modernized a lot of traditional thinking dominated by religious approaches throughout the Middle Ages. We refer to these theories, therefore, as 'Western modernist'. They generally offer a certain rule or principle that one can apply to any given situation - hence, they are absolutist in intention. These theories are normative because they start with an assumption about the nature of the world, and more specific assumptions about the nature of human beings. Consequently, the degree to which we can accept the theory and the outcome of its application to particular business situations depends chiefly on the degree to which we share their underlying assumptions. As they have a rather well-defined rule of decision, the main advantage of these theories is the fact that they normally provide us with a fairly unequivocal solution to ethical problems. These theories generally can be differentiated into two groups (see Figure 3.1). On the right-hand side of Figure 3.1, we have theories that base moral judgement on the outcomes of a certain action. If these outcomes are desirable, then the action in question is morally right; if the outcomes of the action are not desirable, the action is morally wrong. The moral judgement in these **consequentialist** theories is thus based on the intended outcomes, the aims, or the goals of a certain action. Therefore, consequentialist ethics is often also referred to by the term teleological, based on the Greek word for 'goal'. On the other hand, we have those theories that base moral judgements on the underlying principles of a decision-maker's motivation. An action is right or wrong, these theories suggest, not because we like the consequences it produces, but because the underlying principles are morally right. These **non-consequentialist** approaches are quite closely linked to Judeo-Christian thinking and start from reasoning about the individual's rights and duties. These philosophic theories, also called **deontological** (based on the Greek word for 'duty'), look at the desirability of principles, and based on these principles, deduce a 'duty' to act accordingly in a given situation, regardless of the desirability of the consequences. ## Egoism Egoism is one of the oldest philosophical ideas, and it was already well known and discussed by ancient Greek philosophers such as Plato. In the last three centuries, it has been quite influential in modern economics, particularly in relation to Adam Smith's (1723–90) ideas about the design of liberalist economics, and Milton Friedman's advocacy of free markets with limited government. The justification for egoism lies in the underlying concept of humans: as we have only limited insight into the consequences of our actions, the only suitable strategy to achieve a good life is to pursue our own desires or interests. A common interpretation of Adam Smith's (1793) economic thought is that the pursuit of individual self-interest is acceptable in the economic system because it produces a morally desirable outcome for society through the 'invisible hand' of the marketplace. This argument may thus be summarized as saying that one is likely to find a moral outcome as the end-product of a system based on free competition and good information. That is, everyone must be free to pursue their own self-interests, unencumbered by market imperfections such as monopolies or limited knowledge of the products and prices available in the market. In this way, everyone gets to participate equally in the market, and any bad behaviour will quickly be punished. For example, if a producer makes and sells shoddy or faulty products, then consumers may suffer in the short term as a result of the inadequacy of the products that they have bought. However, in the longer run, providing consumers know about alternative choices, the producer's trade will suffer as consumers turn to other producers. Hence, the producer will avoid producing shoddy goods for their own self-interest, thus producing a situation that is beneficial to all. Because of his aim to produce wider social benefits, some have likened Smith's theory to 'egoist practices for utilitarian results' (Beauchamp and Bowie 1997: 18). It is important to distinguish egoism based on desire from selfishness. Whereas the egoist can be moved by pity for others in seeking to remove his own distress caused by their plight, the selfish person is insensitive to the other. So, for example, a firm donating to charity to improve the reputation of the company can be perfectly in line with an egoistic philosophy, whereas ignoring the charity and spending the funds on a self-promotional advertising campaign that has the same effect on reputation would be more about selfishness. Within moral philosophy, an important criticism of egoism based on desire is that it renders patently different approaches to life as being equivalent; therefore, the life of the student who just gets drunk every night in the bar is as admirable as the student who works hard for a first class degree, providing both followed their desire. Therefore, within this school of philosophy, an egoism based on the pursuit of interests is the ultimate rendering of this concept (Graham 1990). The idea of interests based on the pursuit of one's long-term well-being enables one to distinguish between the life of the hard-drinking student and that of the hard-working student. In this formulation, a gap opens up between desire (or longing) and what is in one's ultimate interests, such that one can say that it is not in the interest of the drinking student to give in to immediate desires. An egoism based on interests therefore approaches the idea of objective value - as in, that one way of acting is objectively better or 'more ethical' than another. This leads to the notion of 'enlightened egoism', which is quite often discussed in the context of business ethics. We have come across it already in Chapter 2 when discussing 'enlightened self-interest'. For example, corporations might invest in the social environment, for instance, by supporting schools or sponsoring a new ambulance for the local health service, because an improved level of social services is in the interest of workforce retention and satisfaction. If we apply the theory of egoism to the case in Ethical Dilemma 3, we would have to look at the actors involved and analyse whether they freely pursue their own desires or interests in engaging in the deal. This certainly applies to the manager and his Thai partner, and by the looks of the case, it could also apply to the parents of the family business. As for the children, it could be that they are quite happy to help the parents and just take it for granted that things work like this in their world. From this perspective, an egoistic look at the situation might consider the deal as morally acceptable. One might, however, wonder if it is in the children's long-term interest to engage in this type of work: although one could argue that it prevents them from being forced into far less desirable forms of work, moral concerns arise when considering that this type of work prevents them from gaining a decent education, enjoying time for play, and exposes them to fairly long working hours, all of which casts some doubt on whether they really are able to freely pursue their own interests. The latter considerations then would tend to suggest that from an egoistic point of view this action might be immoral. It does not take much thought to discover certain weaknesses in egoist ethics. To begin with, this theory works fine if there is a mechanism in society that makes sure that no individual egoist pursues their own interests at other egoists' expense. In Adam Smith's thinking, this mechanism would be the market. Although we can see that the market usually works quite well, there are numerous situations where this does not seem to be the case, and where the egoism of single actors leads to unfavourable results. Current concerns about growing income inequality, for example, are fuelled by the idea that markets are not functioning perfectly and we thus witness a heavily skewed distribution of wealth to the top 1% of earners in society. Another example would be the sustainability debate: the victims of today's resource depletion or global climate change are future generations, which are not yet present to take part in any kind of market. This clearly shows some initial limitations of egoist theory. Ethics on Screen 3 discusses some of these issues around egoism in the context of the movie Margin Call, which explores the events leading up to the financial meltdown of the late 2000s. ## Utilitarianism The philosophy of utilitarianism has been one of the most commonly accepted ethical theories in the Anglo-Saxon world. It is linked to the British philosophers and economists Jeremy Bentham (1748–1832) and John Stuart Mill (1806–73) and has been influential in modern economics in general. The basic foundation of utilitarianism is the 'greatest happiness principle'. This is the ultimate consequentialist principle as it focuses solely on the consequences of an action, weighs good outcomes against bad outcomes, and encourages the action that results in the greatest amount of good for everyone involved. Unlike egoism, it does not only look at each individual involved, and ask whether their individual desires and interests are met, but it focuses on the collective welfare that is produced by a certain decision. The underlying concept in utilitarianism is the notion of utility, which Bentham sees as the ultimate goal in life. Humans are viewed as hedonists, whose purpose in life is to maximize pleasure and minimize pain. In this hedonistic rendition of utilitarianism, utility is measured in terms of pleasure and pain (the 'hedonistic' view). Other interpretations of utility look at happiness and unhappiness (the 'eudemonistic' view), while others take a strongly extended view that includes not only pleasure or happiness, but ultimately all intrinsically valuable human goods (the 'ideal' view). These human goods would typically include aspects such as friendship, love, trust, etc. The latter view in particular makes utilitarianism open to a great number of practical decision situations and prevents it from being rather narrowly focused on pleasure and pain only. Utilitarianism has been very powerful since it puts at the centre of the moral decision a variable that is very commonly used in economics as a parameter that measures the economic value of actions: 'utility'. Regardless of whether one accepts that utility really is quantifiable, it comes as no surprise to find that utilitarian analysis is highly compatible with the quantitative, mathematical methodology of economics. So, in analyzing two possible options in a single business decision, we can assign a certain utility to each action and each person involved, and the action with the highest aggregate utility can be determined to be morally correct. Ultimately utilitarianism then comes close to what we know as cost-benefit analysis. Typical situations where utilitarian analysis can be very helpful are analyses of proposed initiatives, such as social and environmental impact assessments of mining or infrastructure projects. These assessments take into consideration all of the likely positive and negative impacts of a given project, including the impact on employment, community development, and environmental quality with a view to determining whether the project will have an overall benefit to society. For example, in most developed countries, new mining projects have to undergo extensive social and environmental impact assessments before they can get permission to begin operations. Such permitting long prevented the opening of Europe's largest proposed gold mine around the town of Rosia Montana in Romania since studies had demonstrated the likelihood of significant social, environmental, and cultural damage. In 2013 a mass protest movement arose in the country after the Romanian Government proposed a new law that would enable the Rosia Montana Gold Corporation to finally start operations after years of failing to acquire the necessary environmental permits. If we apply this theory to the situation described in An Ethical Dilemma 3, we first have a look at all the actors involved and analyse their potential utility in terms of the pleasure and pain involved in different courses of action, say either going ahead with the deal (action one) or not doing the deal (action two). We could set up a simple balance sheet, such as that depicted in Figure 3.3. After analysing all of the good and bad effects for the persons involved, we can now add up 'pleasure' and 'pain' for action 1, and the result will be the utility of this action. After having done the same for action 2, the moral decision is relatively easy to identify: the greatest utility of the respective actions is the morally right one. In our hypothetical case, the decision would probably go in favour of action 1 (doing the deal) as it involves the most pleasure for all parties involved, whereas in action 2 (not doing the deal), the pain seems to dominate the analysis. This example demonstrates some of the complications with utilitarian analysis. Proponents and critics of proposed practices can both summon a host of benefits and harms to support their cases, making any comparative assessment difficult. Case 3, for example, elaborates the controversies around the exploration of the oil sands in Canada, where a longstanding debate on the pros and cons of development has so far not led to a conclusive outcome. This points to some core problems with utilitarianism: * **Subjectivity:** Clearly when using this theory you have to think rather creatively, and assessing such consequences as pleasure or pain might depend heavily on the subjective perspective of the person who carries out the analysis. * **Problems of quantification:** Similarly, it is quite difficult to assign costs and benefits to every situation. In the example, this might be quite easy for the persons directly involved with the transaction, but it is certainly difficult to do so for the children involved, since their pleasure and pain is not quantifiable. Especially in these cases, it might be quite difficult to weigh pleasure against pain: is losing a good contract really comparable to forcing children into labour? Similarly, under utilitarianism, health and safety issues in the firm require 'values' of life and death to be quantified and calculated, without the possibility of acknowledging that they might have an intrinsic worth beyond calculation. * **Distribution of utility:** Finally, it would appear that by assessing the greatest good for the greatest number, the interests of minorities are overlooked. In our example, a minority of children might suffer so that the majority might benefit from greater utility. Of course, utilitarians were always aware of the limits of their theory. The problem of subjectivity, for example, led to a refinement of the theory, differentiating between what has been defined as 'act utilitarianism' versus 'rule utilitarianism': * **Act utilitarianism:** looks to single actions and bases the moral judgement on the amount of pleasure and the amount of pain this single action causes. * **Rule utilitarianism:** looks at classes of action and asks whether the underlying principles of an action produce more pleasure than pain for society in the long run. Our utilitarian analysis of Ethical Dilemma 3 used the principle of act utilitarianism by asking whether just in that single situation the collective pleasure exceeded the pain inflicted. Given the specific circumstances of the case, this might result in the conclusion that it is morally right, because the children's pain is considerably small, given the fact, for instance, that they might have to work anyway or that school education might not be available to them. From the perspective of rule utilitarianism, however, one would have to ask whether child labour in principle produces more pleasure than pain. Here, the judgement might look considerably different, since it is not difficult to argue that the pains of child labour easily outweigh the mainly economic benefits of it. Rule utilitarianism then relieves us from examining right or wrong in every single situation, and offers the possibility of establishing certain principles that we then can apply to all such situations. ## Non-Consequentialist Theories The other main branch of traditional ethical theory is non-consequentialism. Here we shall look at the two main types of non-consequentialist ethical theories that have been traditionally applied to business ethics: * **Ethics of duties.** * **Ethics of rights and justice.** These two approaches are very similar, stemming from assumptions about basic universal principles of right and wrong. However, while rights-based theories tend to start by assigning a right to one party and then advocating a corresponding duty on another party to protect that right, ethics of duties begin with assigning of the duty to act in a certain way. Rights and duty have also been central to many religious perspectives on business ethics, and remain important influences on business decision-makers worldwide, especially in regions with high rates of religious adherence, such as Latin America, the US, the Middle East, and Africa. Such approaches start from the basis of divine revelation, as found, for instance, in the religious tracts of the three monotheistic religions of Judaism, Christianity, and Islam, which ascribe enduring duties of humans to God, or conversely, 'God-given rights'. In such a revelation of what is right or wrong, human behaviour has its divine, eternal validity—regardless of whether the outcomes in a given situation are in anybody's self-interest (egoism) or result in more pleasure or pain (utilitarianism), as consequentialist approaches would suggest. In secular societies, the ideas of rights and duties are equally as strong and have been enshrined in various norms and laws, including everything from a doctor's duty of care to a citizen's right to privacy. ### Ethics of Duties In business ethics, the most influential theory to come from the perspective of ethics of duty derives from the work of the German philosopher Immanuel Kant (1724–1804). Kant argued that morality and decisions about right and wrong were not dependent on a particular situation, let alone on the consequences of one's action. For Kant, morality was a question of certain abstract and unchangeable obligations—defined by a set of a priori moral rules—that humans should apply to all relevant ethical problems. As a key Enlightenment thinker, Kant was convinced that human beings do not need God, the church, or some other superior authority to identify these principles for ethical behaviour. He saw humans as rational actors who could decide these principles for themselves. Hence, humans could therefore also be regarded as independent moral actors who made their own rational decisions regarding right and wrong. Kant subsequently developed a theoretical framework through which these principles could be derived, called the 'categorical imperative'. By this he meant that this theoretical framework should be applied to every moral issue regardless of who is involved, who profits, and who is harmed by the principles once they have been applied in specific situations. The categorical imperative gives rise to three key principles that, taken together, constitute a 'test' of whether a particular action should be deemed ethical: * **Consistency:** An action can only be regarded as right if the rule guiding that behaviour should be followed consistently by everyone in all cases, without contradiction. So, for example, murder is an immoral action because if we allowed everybody to murder there would be no possibility of human security on earth; lying is immoral, because if everybody were allowed to lie, the entire notion of 'truth' would be impossible, and an organized and stable human civilization would not be imaginable. * **Human dignity:** Kant states that you should always act so that you treat other humans 'always as an end and never as a means only.' Humans deserve respect as autonomous, rational actors, and this essential human dignity should never be ignored. We all use people as means, as soon as we employ them or pay them to provide us with goods or services. However, this does not mean we should only treat them as means to achieve what we want and just forget about their own needs and goals in life, and their expectations to make their own choices. * **Universality:** The rules guiding our actions should also be, according to Kant, 'universally lawgiving.' That is, they have to be acceptable to every rational human being, not because they have been told to accept them but because they are rationally acceptable. 'Because reason is the same for all rational beings, we each give ourselves the same moral law' (De George 1999: 88). This element of the test therefore tries to overcome specifically the risk of subjectivity inherent in utilitarian analysis, since it asks us to check if other rational actors would autonomously come to the same judgement. In other contexts, this point has been referred to as the 'New York Times test' (Langvardt 2012: 383)—namely, if you would be uncomfortable that your actions were reported in the press it means that you believe others disagree with the rules guiding your actions, and so you can be fairly sure that the rules are of doubtful moral status. As some have argued, Kant's categorical imperative, in particular the principle of consistency, comes close to a core tenet of many religions, otherwise also referred to as the 'golden rule': 'treat others as you wanted to be treated yourself' (Brammer et al. 2007: 231). This core principle is more or less explicitly embedded not just in the three monotheistic religions, but also in Buddhism, Hinduism, and Confucianism amongst others (Romar 2004). Figure 3.4 in fact shows that the golden rule is a common feature of various belief systems across the world. The core difference between a religious and a Kantian approach to the golden rule is that while religion 'recognizes God as the ultimate source of value' (Pava 1998: 604), Kant's approach reflects a different assumption: if God is the creator of rational human beings, then these human beings should also be able to rationally understand and decide whatever is the morally right or wrong thing to do in a given situation - rather than just being told what to do by a divine authority. If we apply Kant's moral 'test' to Ethical Dilemma 3, we get the following insights: * **According to the principle of consistency**, the first question would be to ask if we would want everybody to act according to the principles of our action in all circumstances. Obviously, as the product manager you are already uncomfortable about applying the principle of exploiting child labour from a third-world context to your own family back home in Europe. You probably would not like this to become a law that is consistently applied, which would then suggest that this activity could be deemed immoral on the basis of inconsistency. * **Regarding the principle of human dignity**, it is