Make business ethics less boring
Business ethics is too bland. That thought crossed my mind during a quite good speech on the topic by Vincent Nichols last week at St Paul’s Cathedral in London.
The Catholic Archbishop of Westminster said many things, but his main idea of how to improve businesses can be summed up in one sentence: “All businesses big or small should be able to demonstrate how they are making the world a better place through providing goods that are truly good, or services that truly serve people, and, by doing so, create employment and fair returns to investors, whilst minimising harm”.
A few moral relativists or free-market ideologues might argue with that, but most business people think they are already behaving as the archbishop thinks they should. They usually see themselves as well-meaning cogs in a basically benign economic machine which provides people with a remarkable array of desired goods and services, and does so efficiently, safely and in a way that is fair to workers and the world.
That self-image is fair. Most businesses in developed economies do work to a quite high ethical standard.
Still, Nichols is hardly alone – and not wrong – in worrying that some businesses have ethical problems. The concern explains why business ethics has become a standard part of the curriculum in MBA programmes, and the existence of numerous initiatives to promote corporate social responsibility and other virtues. The main problem with these worthy efforts is blandness: it’s not clear what business ethics classes are supposed to teach or what, for example, should be the aim of the Westminster archdiocese’s programme “A Blueprint for Better Business”.
One possibility is that ethical instruction should induce qualms. Moral training might have restrained the captains of finance from excessive bets and pay demands before and after the 2009 crisis, but I doubt it. Lloyd Blankfein of Goldman Sachs may have been only half-joking when he said the company he headed was doing “God’s work”. He sees high pay as an appropriate reward for doing a good job in Goldman’s basically good businesses.
If finance is to be made more ethical, Nichols and other crusaders will have to offer something more substantial and detailed than eloquent but vague calls for virtue. They will need to offer fairly sophisticated economic and sociological analyses. It is much the same for most other ethical issues in business. The obvious vices – dishonesty, deception, wilful damage, cruel treatment – are already considered unacceptable. Simple condemnations of greed and calls for solidarity are not enough to deal with problems such as excessive consumerism, irresponsible investing and manipulative advertising.
Still, I see one widespread error: the dangerous belief that people want what is good for them. This belief leads companies to strive for immediate profitability, because that’s what shareholders want. It leads managers to trust that sales and profit, which do indicate what customers want, also show whether customers are being well served. It leads advertisers to decide that any advertising which is effective must be good.
In fact, judgments are so distorted by ignorance, greed, envy and hedonism that people often crave things that are bad for them, their neighbours or their society. Crusaders for ethical business should challenge this false belief – and then provide a coherent objective vision of the relevant economic goods.
Right now, finance belongs at the top of the business ethics agenda. The trade is lost in a frenzy of greedy desires – of savers and investors seeking high returns and absolute safety, of borrowers looking for bargains, of finance professionals lusting after unjustifiably high incomes. The clear and clearly virtuous economic purposes of finance – gathering savings, allocating investments and providing reasonable returns to savers – are often ignored. In a more ethical financial system, customers who ask for things which are objectively unjust would not get their way. Rather, the industry would band together, perhaps guided by the government, to say no. The industry and its regulators would subject all products and activities to severe tests for genuine merit.
A similar determination not to pander to low desires could improve ethics in other economic activities. For example, little advertising qualifies as one of Nichols’s “services that truly serve people”. Rather, advertisers all too frequently raise unrealistic expectations and appeal to greed and gluttony. This is much less “truth well told”, an old slogan of the McCann Erickson agency, than a powerful tool for encouraging bad behaviour.
The moral case against much advertising is strong, but few business school ethics professors will make it, because advertising is too well entrenched in the modern economy. As an outsider, Nichols could take up the cause. He is unlikely to get very far, but at least he would not be bland. He would be calling for something like an ethical – and a cultural – revolution.