The title of this module is "Why does business need ethics?", but we haven't really touched this question yet. We've talked about a pair of theories which attempt to describe the moral responsibilities of businesses, but we haven't talked about why they would have these responsibilities.
It would be convenient and expedient to be able to dispense with ethical considerations when we make business decisions. If we could divorce ethics and business, then we could make business decisions that focus solely on profits. We would be able to ignore the impact of our decisions on other persons, businesses, and societies because we would be making business decisions and not ethical ones.
This view is called, by Freeman, the Separation Fallacy.  In short, the Separation Fallacy is the claim that the statement "x is a business decision" has not ethical content. That is, when we make a statement of that sort we are making a claim that need not be analyzed in the light of ethical concerns. According to this fallacy, the statement "Moving all of the jobs in Alabama to India" is a business decision, and as such we don't have to concern ourselves with the various ethical dimensions of the statement.
Freeman gives us two arguments that point to a need for the integration of business and ethics, and the rejection of the Separation Fallacy. Let's take a quick look at those arguments.
The first is called the Open Question Argument. According to this argument, there are several questions that are always open when we make a decision. Here are a few of those questions.
- If this decision is made for whom is value created and destroyed?
- Who is harmed and/or benefited by this decision?
- Whose rights are recognized or infringed by this decision?
- What kind of person will I become if I make this decision? 
These questions are questions of ethics. We would not find it odd to ask these questions if our decision was "I am going to throw a brick through this store window and start stealing TVs." Why then should we find it odd to ask them of business decisions? Business decisions are a sort of decision, and so we must address these questions. This is a rule of philosophy that we refer to as "treating like cases alike." This rule demands that when we find cases which lack significant differences, we treat them in the same way. In this case, the differences between business decisions and all other decisions are negligible so we must treat them in the same way.
The other argument involves the Responsibility Principle.
|"Most people, most of the time, want to, actually do, and should accept responsibility for the effects of their actions on others." |
Specifically, Freeman argues that it applies to the people managing a business in the same way that it applies to everyone else. This principle is one that is basic to ethics. When we use the term "action" we are talking about a thing that something did. If we say "Julie threw coffee on Mike's face." then we are not just describing a thing that happened. We're describing a thing that someone did.
It is natural, and appropriate, to respond to such a statement by asking questions like "Why would Julie do that?" or "What did Mike do to deserve that?" These questions are an indication that someone is responsible for the coffee-throwing. We want more information about what happened. We want to know who is responsible, because it will certainly figure in to our ascription of blame. Was Julie just in a bad mood, and she decided to chuck hot coffee in Mike's face? Was Julie just holding a cup of coffee when the bus hit a massive pothole and the coffee splashed in Mike's face? Was Mike being a huge jerk, and he deserved the scalded face? In the first case, Julie acted wrongly because she was just being malicious. In the second, it doesn't look like anyone was at fault. In the last case, it seems like Mike was responsible for his own fate.
This habit of giving responsibility to persons is not limited to "bad" actions. We also give responsibility for good things to people. "Mike saved the drowning kittens. Good for him!" Mike would probably be upset if he didn't get credit for saving the kittens, or if someone else got credit, because he wants to take responsibility for the act. Ascribing responsibility to people is a bit of a double-edged sword. If we are going to be responsible for the good things, then we are going to have to take responsibility for the bad ones too.
One reason that we would not ask these sorts of questions of business decisions is that we would find it inconvenient. It is inconvenient to consider the plight of others, and we could make a greater profit if we did not have to do so, but it may be that we cannot behave ethically without doing so.
1. p. 59
3. p. 60