PHILOSOPHICAL BACKGROUND OF BUSINESS ETHICS

A. Greek and Graeco-Roman Ethics

1. Socrates - “Virtue is knowledge”

Man must know first what is good. If a man knows what is good, he will
inevitably follow it. According to Socrates, “No man will deliberately do wrong if
he knows what is good.

Example:

a. A man will not steal because he knows that stealing is not good.
b. A student will not cheat even if he has the opportunity to do it because he
knows that it is wrong.

Thought:

If businessmen know what business practices are right and wrong, they
will be prevented from wrong-doing in business.
2. Plato

He agred that the first need is to know what is good for if a man succeeds in
knowing what is good, he will know courage and justice – the embodiment of
good.

3. Aristotle - “Doctrine of the Mean” or the “Ethics of Moderation

Every situation stimulates in a man a certain kind of natural emotion or action

such as fear, anger and punishment. If it shows too much or too little of the naturally
appropriate reaction, it becomes “vice” (Aristotle’s term for wrong).

Example: THE SOLDIER

A natural reaction to dangerous situation is fear: too much fear is exhibiting

cowardice, too little is being fool-hardy: showing the right amount of fear is
courageous.

When a soldier has too much fear, he will be of no use since he will hide rather
than fight the enemy. On the other hand, if the soldier shows no fear, he will die
immediately because he will not protect himself. However, if a soldier exhibits fear
without cowardice, he will be able to guard himself from immediate danger and at the
same time not be too fearful to kill the enemy.

Thought:
 Man should do things moderately. Neither too shy nor too aggressive, neither to
follow the extreme in fashion, drinking, smoking, socializing, sexual behavior or
immerse in work without time for recreation or vice versa.

Having just enough profit as a compensation for one’s industry. To take less is
being foolish and would result to bankruptcy. To take too much shows greed and
selfishness.

4. Epicurus – “Doctrine of Pleasure or the “School of Epicureanism”

The pleasure is the sole good and pain is the sole evil.

According to Epicurus, virtuous conduct and speculative activities are justified if

they make life pleasurable. Unless it will lead to painful consequences, pleasure must
not be rejected. Likewise, pain should not be chosen unless it will ultimately lead to
greater pleasure.

Example with Thought:

1. Taking big as a profit as possible yields immediate pleasure in money but it

will ultimately result in business downfall because customers will soon know
that they are taken advantage of and will no longer patronize the business.
2. Taking no profits would not be good since it does not reward risk or effort and
will bring a sense of loss rather than pleasure. It will also lead to bankruptcy.
The people who invested in the business will lose their money and the closed
business will have lost the opportunity to serve the customer.
3. Taking just enough profit to reward one’s efforts is good: it will give pleasure
and a sense of achievement and it will also result in business success.

B. Christian Ethics or the Doctrine of Love

Ethics spring from man’s relationship with God. The bulwarks of the Christian
belief are:

1. To love God
2. To love one’s neighbor as one’s self

These commands develop sense of duty in doing good. Christian ethics are firmly
rooted in the teachings of the Old Testament and tne New Testament. These include the
Ten Commandments, the teachings of Jesus Christ and the writings of Apostle Paul.

Thought: “Do unto others as you would like others do unto you”

If the businessmen would follow the teachings of Jesus, they would avoid
unethical acts and would make business decisions that would be fair to themselves, their
customers and to their community.
C. Medieval Ethics

According to Abelard, man’s actions are good or bad depending on their cause
and intention. An action is good not because it is intrinsically good but it has a good
intention.

Example: SELLING BELOW COST

Selling an outmoded item or a shelf-worn material below cost is fair but selling
below cost to force a competitor out of business is unfair.

Thought:

An act may be good at one time and bad another time depending on the intention

Note: Ethical philosophy after the middle ages is called modern ethics.

D. Modern Ethics

1. Hobbes

There is a need for moral laws but it would be foolish to observe them if others do
not.
Many businessmen today recognize the need for rules to guide business decisions
however, they themselves cheat, lie, misinterpret things, rationalizing that other
people do it anyway.

2. Utilitarianism

2.1 Jeremy Bentham and John Stuart Mill- founded Utilitarianism

“The greatest good is the greatest pleasure of the greatest number”

2.2 Moore
Problems in Ethics
a. The problem of determining what state of affairs are good
b. The problem of what affairs are right
According to Moore, the right action is the one that will bring the greatest amount
of intrinsic good to the individual.

Example: EXAMINATION
 When a student faces an exam, he has several alternatives open to him. He can
study and be prepared for the examination, he can say “bahala na” and not study at
all and he can prepare “codigo” which he plans to copy when the instructor is not
looking.
Examining the alternatives open to him, the student may choose to study and be
prepared for the examination – the action that will bring him to the greatest amount
of good grade and the satisfaction of learning something which the other alternatives
will not provide.

3. Immanuel Kant (1724-1804)

He echoed the teaching of Abelard which is, “man’s actions are good or bad
depending on their cause and intention (motive)”. If the act came from the sense of
duty then the motive is good and the act is right. Talents such as intelligence and
with are good only when employed in the service of duty.
4. Hegel

According to Hegel, an act must be judged right or wrong not only by its motive
or commonality but also its content. The content of the act comes from the laws,
institutions and the customs of the community. The rightness and the wrongness of
the act depend on its harmony with the laws and traditions of the society.

Example: WIVES

It is wrong for the Christians to marry two wives because it is against its beliefs
but it is right for the Muslims because their culture and their laws allow it.

Thought:

An act is wrong if it is in contrary with the laws, customs and traditions of the
community and right if it accord with them.

5. Pragmatism or Instrumentalism
Founded by James (1842-1910) and Dewey (1859-1952)

It advocates that the moral problems come from conflicts between impulses or
desires. Any action that will bring harmony to this conflict is the right one. Dewey
believed that there is no absolute good since every solution gives rise to further
conflicts which must be dealt with in the same way.

Other Schools of Ethical Philosophy

a. Naturalism (Ethics of Domination)

 “What is natural or normal is right. Any actions that are unnatural are abnormal or
wrong.”

Example: FIGHT
It is normal to fight back when under attack; thus, thus it is also right.

Flaw: What is normal or natural varies with each person.

b. Rationalism (Doctrine of Reason)

“Reason is right and emotion is wrong.”

Anyone whose actions are based on reason lives a moral life for only a rational
being has the ability to see clearly what is right and what is wrong. This is because
reason requires a man to act not on the basis of his own likes of dislikes but with
based on consistency, deliberation and impartiality.

Rationalization. Finding excuses for doing what one wants because of self-interest,
impulse or emotion. It makes unreasonable conduct appear reasonable.

Rationalism Vs. Rationalization

Rationalization
A poor lady who justifies his stealing of milk by saying that she is poor and
cannot afford to buy.
Rationalism
A student who decides not to join his friends in the disco bar because he needs to
prepare for an exam.
c. Humanism (Principle of Humanity)

“Man is inherently good and thus he should not be subjected to indignities and the
evil acts of his fellowmen.”

A man must be respected, must not be cheated, lied to and taken advantage of and be
treated fairly and honestly.

d. Hedonism (Doctrine of Pleasure)

“Pleasure is the main goal of life”

The greater and more intense the pleasure that one gets out of his actions, the more
right are his actions.
E. Confucian Ethics

Confucius believed that righteousness begins with the individual. If each person
governs himself well, he will govern his family well. It each family is well governed then
the whole country will also be well governed.