Ethics homework

Ethics at Work Terris, Daniel

Published by Brandeis University Press

Terris, Daniel. Ethics at Work: Creating Virtue at an American Corporation. Brandeis University Press, 2013. Project MUSE. muse.jhu.edu/book/23072. https://muse.jhu.edu/.

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chapter one

Titans and Warhogs

A   concern about the moral behavior of busi- nesses and business leaders since the earliest years of European settle- ment in the New World. Even while the United States developed the world’s most productive capitalist environment, ideas about what con- stituted appropriate behavior in the business community became part of the national conversation. The term “business ethics” did not gain currency until the middle of the twentieth century, but long before that, a series of ideas and opinions about the appropriate limits on corporate activity had developed strong traditions. These traditions developed alongside the ideology of a laissez-faire free-market economy that emerged in the nineteenth century. In some ways these traditions re- garding business behavior took their strength from the individualist tendency in American life; in other ways, they drew more on ideas about the common good that had their roots in religion. The emerging cor- porations of the nineteenth and early twentieth centuries did not, of course, always operate in accord with those traditions; indeed, the rela- tive weakness of government allowed them a lot of latitude. Neverthe- less, they operated in an environment where, at the very least, corporate leaders were compelled to make a public case that they ran enterprises that not only made money for the principals but also contributed to the common good.

Different people and groups emphasized different aspects of business behavior. So what has emerged over the course of American history is not a single, indivisible conception of what we now call business ethics, but a cluster of interwoven strands of thought. Contemporary attitudes about corporate malfeasance are profoundly affected by the ways in which earlier Americans have responded to successive waves of corpo- rate scandal over the last two centuries. By sorting out these strands, and by examining the legacy that each has left for our own time, we are bet-

ter positioned to evaluate in a comprehensive way the ethics programs of major corporations like Lockheed Martin.

An understanding of these strands of thought is important because, in the end, corporations cannot themselves choose the standards on which their ethics programs will be judged. Lockheed Martin, as an engi- neering company, is good at measuring things, and its leadership cares a great deal about measuring success. This attitude applies to its ethics program, as much as to airplane, missile, and software design. Its ethics officers are constantly challenged to produce data that show the value of the program, and offer specific suggestions for improvement. How can we judge the success of this “ethical culture”? One measure, which Lock- heed Martin’s ethics staff embraces, is that the corporation has managed to avoid a banner-headline scandal since , when the merger of Lock- heed and Martin Marietta formed the corporation in its current guise. In an era when other major corporations—including some of Lockheed Martin’s largest competitors in the defense industry—have fallen prey to major scandals, this is no small achievement. Avoiding major scandals and earning the trust of the U.S. government are two important mark- ers, but they are not sufficient.

Ultimately, corporations are judged in the court of public opinion, which takes the broad view of the subject of business ethics. Lockheed Martin makes large claims for its ethics program, and for the place of values within its corporate culture. The company puts a premium on “the personal integrity of each of our employees and their commitment to the highest standards of personal and professional conduct that underlie the ethical culture of Lockheed Martin.” 1 A corporation may do a spectacular job of rooting out corruption, strengthening the moral fiber of its workforce, and associating itself with worthy social service projects, but if a small cabal of its senior executives succumbs to greed, or if its operations systematically despoil the environment, the com- pany’s claims to excellence in “ethics” will mean little.

By looking at history, I am arguing that the “court of public opinion” is not a shallow, fickle, ill-considered instrument of taste. It is, instead, a distillation of ideas and standards that have long and distinguished roots in American culture. A corporation’s ethics programs may satisfy a phi- losopher, or a management specialist, or even its customers. But it also needs to respond to the full complement of traditional expectations,

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established and articulated by leaders in business, government, the media, the arts, and other actors in public life.

This is especially true for defense contractors, who are, after all, part of a quasi-governmental industry. Lockheed Martin and its competitors are owned by individual private investors, but a significant proportion of their work responds to a public activity, the nation’s capacity to de- fend itself and to wage war. In some ways this quasi-governmental status gives them an edge in the public eye; they are able to bask in the glow of patriotism and the refracted glory of contributing to the mili- tary strength of a democratically elected government. In other ways, however, defense contractors come under especially intense scrutiny, from critics of the U.S. government’s military policies, from skeptics about the “military–industrial complex,” and from a general public that balks at the idea that corporations might be making exorbitant profits at the taxpayers’ expense.

Flagrant corporate greed seems easy to spot and easy to label, but on closer examination it turns out that there are a number of competing and overlapping definitions of business ethics. Or, more precisely, there are several competing analyses of corporate behavior, which lead to dif- ferent accounts of the standards to which companies should be held, the reasons that they violate those standards, and the remedies for the violations.

In this chapter I offer a small number of illustrations of five “strands of thought” that have emerged over the past  years. I am not at- tempting to paint a comprehensive history of American attitudes toward corporate ethics. My purpose is more modest. I mean only to suggest, through a selective look at aspects of American history, that the extent of historical scrutiny and activity regarding business practices has helped to create a climate where companies are expected to consider ethics in its broadest dimensions. In order to give a quick picture of the landscape, I summarize these five strands of thought briefly here, before turning to a fuller exploration of each in the balance of the chapter:

. The sins of the tycoon. The oldest and most persistent conception of business ethics in the United States focuses on the actions and moti- vations of individual actors: the titans of the business world. This strand of thinking rests on the assumption that corporate entities are exten- sions of the character of their leaders. Corporate leaders acquire power,

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and then they can use it for good or for ill. These leaders are public men and women playing leadership roles in American society, so there is little distinction between ethics in their corporate capacity and ethics in their private lives. Americans have traditionally been ambivalent about the tycoons of business; admiration for their power and achievements has often softened public judgment of their foibles. This conception of busi- ness ethics leads naturally to a crisp and simple remedy for scandal: Replace the chief executive officer (CEO), and trust in the character of the next generation of leadership.

. Business conduct. A second conception of business ethics focuses principally on how corporations conduct themselves according to the rules of their industry. The focus here is less on the behavior of individ- uals, but on how corporate entities act in relation to one another. This conception emerged in the middle years of the nineteenth century, as American industry developed and the frenzied atmosphere of growth and opportunity encouraged companies to cut moral corners in competing with one another. Price fixing, stock watering, aggressive underpricing— these kinds of tactics ultimately affect consumers and the society as a whole, but their immediate impact is felt within the corporate world itself. In our own day, this conception of corporate ethics falls roughly under the rubric of “business conduct,” and it focuses less exclusively on the actions of the top management and more broadly on the various corporate practices that may violate laws or organizational values.

. Putting workers first. Some people have been inclined to judge a corporation’s ethics principally on how it treats its employees and on the equity and justice that it practices within. In this conception, the relationship between labor and management is at the crux of a corpora- tion’s moral stature. This standard of corporate behavior became promi- nent in the second half of the nineteenth century, as the great labor battles in steel and other industries called attention to exploitation of the American worker. In the twentieth century, attention to company policies on working hours, diversity, and gender issues has further com- plicated this issue. While criticism of corporate labor practice has been a persistent strand in American thinking, we should also pay attention to ways that some companies have tried to instill an “ethical culture” among their workers through active efforts to impose company values on the private lives of their employees.

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. Social responsibility. A fourth conception of business ethics places priority on the impact of a company on the local, national, and (in more recent times) the international communities of which it is a part. This strand of thinking pays most attention to the corporation as a public actor. The impact of industry on the natural environment was the start- ing point. In our own era, the notion of “corporate social responsibility” takes into account a host of environmental, economic, and social factors, as well as the impact of business on democratic government in the United States and abroad. What began as assessment of the impact of companies on their immediate environment now also includes an ex- amination of corporations as global players.

. The perils of profits. No treatment of business ethics in the United States is complete without a consideration of that small but influential band of Americans that has offered a persistent critique of the moral shortcomings of the profit motive itself. Capitalism by its nature gener- ates a tension between equality and liberty, so skepticism about profits runs through the thinking of Americans of all political stripes con- cerned about the contours of a just society. Given our attention to Lock- heed Martin, it is particularly interesting to examine attitudes over the course of United States history toward profits generated by weaponry and war.

These conceptions of business ethics are clearly not mutually exclusive. Adherents of “corporate social responsibility,” for example, are certainly concerned about labor issues overseas, and some are vocal critics both of individual corporate leaders and of the profit motive itself. Yet I believe that these conceptions represent different enough starting points and emphases that they lead to different vocabularies, different standards of judgment, and very different conclusions about moral performance. One person may hold up a corporation as a sterling example of corpo- rate ethics because it has diligently addressed its history of bribery and fraud, while another person may be excoriating the same company for the heartless manner in which it laid off workers by the thousand.

It should be said, at the beginning, that American opinion on all these strands of thinking has always been complex. Ambivalence about the country’s powerful engines of economic growth has been an American way of life for more than  years. Keen and biting judgments about cor- porate greed go hand in hand with admiring encomiums for the power

 : Ethics at Work

and ingenuity and energy of the most ruthless exploiters. This ambiva- lence also explains a great deal about the contemporary business climate. In the early years of the twenty-first century, the scandals continue to pop up with stunning regularity, thanks in part to American willingness simultaneously to voice public critique and harbor secret admiration.

An important goal for every corporation that is undertaking an ethics program in a serious way is to convince the broader public of the depth and effectiveness of its work in this area. More importantly, ethics programs have to be deep and strong enough to address the next crisis, not just the ones that a corporation has suffered or weathered in the recent past.

The Sins of the Tycoons

In , Robert Keayne began to write his will. A prosperous merchant in the Massachusetts Bay Colony, Keayne used the occasion of his final testa- ment for more than disposing of his estate. The document, which even- tually ran to more than , words, was an elaborate account and justification of his commercial dealings in Puritan New England. Over the course of his career in Massachusetts, Keayne had been accused on numerous occasions of extracting too much profit from his fellow colonists; in one of the most vigorously disputed incidents, he was ac- cused of marking up six-penny nails to eight and even ten pence per pound. For these and other similar matters, he had been tried formally in courts of law as well as informally in the court of public opinion, eventually attracting the attention of even such a worthy as Massachu- setts governor John Winthrop for his “corrupt practice.”2

Keayne’s anguished “apologia” stands near the beginning of the story of how Americans have fixed on the moral character of leading business- men as the ultimate measure of business ethics. Like many others after him, Robert Keayne pursued profits through what he considered classic Puritan virtues, like discipline and thrift, only to find himself (as he saw it) both rewarded for his prominence and castigated for his success. He lived in one of the most prestigious houses in colonial Boston, and he served the colony in a variety of appointed posts, yet his neighbors fre- quently judged his very prosperity as evidence of greed, heartlessness, and betrayal of his faith.

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One of the challenges for Keayne and other business leaders of his day was to try to establish just what constituted ethical behavior in an era of shifting standards and vigorous moral and theological dispute. In Keayne’s day, for example, some of New England’s most prominent ministers were impassioned opponents of “usury,” which at that time meant accepting any interest on a loan of money. But the view was los- ing ground to a rising tide of acceptance, even among Puritan clerics. Charging interest on a loan to the poor was still unacceptable, but a con- sensus was developing that interest-bearing loans between the better classes were an engine of economic growth, and therefore acceptable in furthering God’s plans.3 The success of a merchant was ultimately meas- ured not just by how much wealth he acquired, but by how nimbly he was able to situate his business dealings within the context of disputed moral precepts. Keayne’s story is an early iteration of one of the contin- uing themes in the story of American business leaders. Admired for their success, American leaders of industry have tended to equate their wealth with righteousness, believing that the success of their competitive tactics justified them morally as well as economically. For a time, public opin- ion supported their self-assessments—until changing standards of busi- ness practice exposed their deficiencies.

By the time Benjamin Franklin was making his fortune as a printer in eighteenth-century Philadelphia, the strict local control of the theocracy was a thing of the past, but Franklin was no less zealous than the Puri- tan divines in declaring the connection between commercial success and his version of the moral life. Franklin famously counseled young men to develop habits of temperance, thrift, discipline, and industry, keeping track by means of a literal moral ledger, a written account of their virtues and their foibles. More important, however, was Franklin’s insistence on the appearance of virtue: A reputation for moderation and integrity, based on well-timed acts of kindness and charity, was for the printer an indispensable business asset.

Treating ethics as a matter principally of personal habit and outward appearance, Franklin encouraged Americans to judge their leaders—in business and otherwise—by public manifestations of character, rather than by the ins and outs of their financial dealings. This is not to say that Franklin exactly countenanced fraud or theft, but his moral system was based on weights and balances, so that failings in one department (let’s

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say, shady financial dealings) might be offset by strong performance in another (spending money wisely, perhaps, or donating conspicuously to local institutions for the improvement of the poor). Business ethics, for Franklin, was the glittering example of a man’s public character, and the sum total of his contribution to his society. It is perhaps only slightly un- fair to Franklin to suggest that in his influential scheme, the obscure but honest merchant is less “ethical” than the wealthy philanthropist whose fortune was enhanced through the occasional bribe.

In the nineteenth century, American attention to the character of its business leaders hit its full stride. Indeed, the question became unavoid- able, as the titans of the industrial era developed economic networks on a scale unimaginable to the Puritans and the Founding Fathers. The growth of the nation and the industrial revolution fostered enormous economic enterprises that came to be seen, fairly or not, as living em- bodiments of their bold and (sometimes) ruthless founders. John Jacob Astor’s American Fur Company exploited the vast frontiers and made its founder the owner of great swaths of the developing metropolis of New York City. Cornelius Vanderbilt made several fortunes through steam- ships and railroads. Andrew Carnegie in steel, John Rockefeller in oil, J. P. Morgan in banking—the names of the founders became synony- mous not only with their companies but with entire industries.

Making their way in a highly competitive (and unregulated) era, these early corporate leaders used a variety of unscrupulous means to build their fortunes, and widespread public criticism followed in their wake. Vanderbilt forced competitors in the railroad industry to conform to his will by refusing to ship their goods until his demands were met. (Asked later why he did not simply sue his competitors, the “Commodore” replied, “The law, as I view it, goes too slow for me when I have the rem- edy in my own hands.”4) Carnegie was painted as the picture of evil for his company’s forceful suppression of striking steel workers. Rocke- feller’s Standard Oil created its own economic climate by simply swal- lowing up competitors and thereby becoming the principal target of antitrust legislation.

These titans faced at times withering public criticism of their finan- cial dealings, but they also succeeded to a great extent in persuading the American public to follow and adapt Benjamin’s Franklin system of moral balance in judging their business ethics. Andrew Carnegie and John D.

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Rockefeller, in particular, sold themselves as men of character who hap- pened to make huge fortunes, and they made strategic philanthropic commitments that fortified their reputation for virtuous contributions to their communities and to the nation. Carnegie’s writings on the “Gospel of Wealth” made a case for the moral efficacy of philanthropy, through which a rich man can become “the mere agent and trustee for his poorer brethren, bringing to their service his superior wisdom, ex- perience, and ability to administer, doing for them better than they would or could do for themselves.”5 Rockefeller gave millions to foun- dations bearing his name and those of his family members, having secured his personal fortune before the company he founded was finally fragmented through antitrust law in .

The titans’ philanthropic enterprises did not entirely distract the American public from their sharp business practices. But the sheer scale of their enterprises—in both the for-profit and the nonprofit world— attracted ambivalent admiration. Their identification with the public impact of their work inevitably encouraged critics to think about busi- ness ethics in terms of personal character. This provided an easy target for caricature and criticism, but it also tended to temper harsh judg- ments. Their shortcomings, after all, were merely human failings.

American ambivalence about the character of its business leaders was expressed most richly in the work of its novelists. Occasionally, Ameri- can culture has given birth to an unadulterated portrait of heartless greed, like the aptly named Gordon Gecko in Oliver Stone’s film Wall Street. But more often American writers balanced the moral scales of their businessmen characters by calculating the personal cost of financial success. In The Rise of Silas Lapham, William Dean Howells portrayed a nouveau-riche paint manufacturer from rural New England who is slowly ground down by the social and economic pressures of his deci- sion to settle his family in Boston. Abraham Cahan described the bitter- sweet side of the immigrant success story in The Rise of David Levinsky, in which the penniless arrival becomes a wealthy garment manufacturer, only to discover that he has abandoned the sources of meaning and plea- sure that he had once found in the (unprofitable) study of Jewish texts. Joe Stecher, another successful immigrant character, makes the tran- sition from labor to management in the printing industry in William Carlos Williams’s In the Money; Stecher is emotionally torn by having to

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break a workers’ strike in the plant where he once toiled. F. Scott Fitz- gerald gives his reader tantalizing hints of the kinds of moral compro- mises that enabled Jay Gatsby to buy a mansion on the shore in West Egg, but our judgment of Gatsby is informed mostly by his apparent fragility and the single-mindedness of his passion.

Of all the American novelists, however, it was Theodore Dreiser who produced the most complete, ambitious, and complex portrait of an American business tycoon. In a series of three novels—The Financier (), The Titan (), and The Stoic ()—Dreiser created a portrait of a ruthless magnate, Frank Cowperwood, whose charm lies in his utter candor about his hunger for money and power and about his willingness to utilize unsavory means to secure them. With precision and with pre- science, the trilogy illustrates just why Americans so often suspend judg- ment when considering the ethical lapses of corporate leaders.

Cowperwood makes his fortune first in banking in Philadelphia, then (after a stint in the penitentiary for fraud) in the dynamic natural gas and street railway industries in Chicago. Dreiser spares us no detail of the ruthless tactics that his protagonist uses to achieve his ends. Once he fixes on the streetcar business, Cowperwood announces early on that in- dustry dominance is his goal, and he deliberately sows dissension among his competitors through a combination of misinformation, threats, and deception. When it serves his purposes, he participates with gusto in the corrupt world of Chicago politics, bribing generously, and cheerfully changing parties when the political winds shift. He manipulates the financial markets to serve his own ends, and he bends the law to his own advantage. In one memorable scene, a small businessman named Ray- mond Purdy tries to hold out for an above-market price for a useless warehouse on a piece of property vital to the development of one of Cowperwood’s streetcar lines. One Saturday, a demolition crew shows up and the warehouse is destroyed. Mr. Purdy tries to pursue justice in the courts, but he is thwarted at every turn, and he receives nothing for his property. Cowperwood’s project proceeds unimpaired, and Dreiser allows his reader to savor the sheer, heartless roguishness of his protag- onist.6 Cowperwood does not see himself as unethical. He is quite aware that some of his actions press at the boundaries of the lawful and the ac- ceptable, but he sees himself as playing within a set of rules that he had no part in establishing.

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The Cowperwood trilogy stands alongside many other novels, films, and other products of American culture that have helped Americans personalize the whole field of business ethics. Writers like Dreiser have both reflected American fascination with the titans, and have also helped to shape attitudes about them. Dreiser’s portrait had its counter- part in the work of muckraking journalists of his day, who exposed the excesses of corporate America, while at the same time scarcely conceal- ing the journalists’ admiration for the raffish and outlandish character of the men whom they pilloried. Oscillating between outrage and admi- ration, we see business leaders in the context of a society built on con- quest, so we both exaggerate their importance and suspend our judg- ment. It is, in the end, their “intent” that matters more than their actions, and there is no malfeasance in the intent to succeed.

The business scandals of the s and the early part of the twenty-first century have tested and extended the American focus on the titans of business. A decade of controversy regarding the Microsoft Corporation has focused on the figure of Bill Gates, a new breed of titan who is never- theless widely admired and vilified in much the same terms as the titans of Frank Cowperwood’s era. Microsoft’s hunger for dominance is seen as an extension of Gates the man. The scandals at Enron, WorldCom, and Tyco, among others, are often portrayed as extensions of the misdeeds of a handful of individuals at the top of the corporate pyramid, and the new form of narrative for relating their stories is the widely publicized trial.

Yet as the Tyco trial in  and  revealed, judgments about these corporate leaders can be complex. For six months, the prosecution of Dennis Koslowski and other leaders of the Tyco Corporation laid out a careful documentation of the ways in which the executives had system- atically siphoned off corporate funds for private use, thereby, in effect, robbing the company’s assets and by extension its stockholders. Yet the case ended in a highly publicized mistrial, when the press reported that one juror, a seventy-nine year-old woman named Ruth Jordan, was holding out against conviction. As Jordan reported publicly once the trial was over, she was fully persuaded that the Koslowski and his associ- ates had raided the till at Tyco. But she was not persuaded that they had actually intended to commit a crime. By Jordan’s lights, they were simply doing what was expected, cooperating at every stage with Tyco’s board of directors, and acting in a way consistent with business practice across the country. Without intent, where was the crime?7

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The American emphasis on the character of the leaders of business enterprise suggests the enormous importance of leadership in develop- ing corporate ethics programs. One response has been to focus attention on penalties for senior executives who abuse their position. Removing “bad apples,” instituting harsh punishments for white-collar criminals, spreading around accountability: These are some of the remedies that emerge in response to this strand of thinking. At the same time, it has become a truism in the field that no program of any depth or impact can take root without a CEO of the highest integrity, and one who is willing to make the program a public priority. This emphasis suggests, in effect, that one of the most important steps a corporation can take with regard to ethics is to find leaders of impeccable character.

Yet history suggests that this ideal of the CEO as moral beacon may be an unreliable foundation for improved corporate behavior. For one thing, some CEOs’ conception of righteousness may not extend broadly enough to satisfy a full set of expectations: Andrew Carnegie and John D. Rockefeller saw their profits as instruments of godliness, made pos- sible by business decisions regarding labor management and competi- tive practices that others saw as crass exploitation. For another thing, the pressures on corporate leaders from both inside and outside their enter- prises to present themselves as models of dynamism and innovation come into inevitable conflict with standards of ethics. American am- bivalence about power, as reflected in Dreiser’s trilogy and the Tyco trial, tends to reinforce the moral authority of leadership itself, tempting those in power to consider the health of their company as a public good. Furthermore, as circumstances change, so do the standards of ethical be- havior, and leaders schooled in one era may find their ideals out of step with the expectations of another age. These trends suggest that while ethics programs may indeed have to start with strong leadership, they need also to make leaders themselves a principal focus of their activities.

Business Conduct

Analyzing the ethics of business is a quite different matter if our gaze is focused on corporations as entities, rather than on the character of the individual men and women who lead them. We may be considering the very same types of competitive skullduggery and abuses of power, but their causes and consequences look quite different if our working as-

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sumption is that corporate entities have a collective life and character. In this perspective, we see corporations in their broader context, as mem- bers of particular industries and as part of American business culture. It challenges the widespread myth that for-profit organizations are inher- ently amoral enterprises, capable only of focusing collectively on profit and survival; it assumes that the actions of corporations as entities can be weighed in moral terms, and that those both inside and outside the organization can influence a corporation to change its behavior accord- ing to ethical standards.

This strand of thinking about the ethics of American business could only begin to take hold in the middle of the nineteenth century, once the industrial revolution gave birth to larger corporate entities. Before that era, the scale of business was smaller, the character of business culture more personal, and it was quite natural to think of business ethics purely in terms of the character of the rich. In an era of dynamic change, how- ever, the corporation itself came to have a public face. With technology and transportation driving the scale and scope of commerce, the stan- dards of business behavior were in a state of flux. Decision making was by necessity decentralized in larger companies, so the source of corpo- rate actions became harder to trace. The nineteenth century gave birth to powerful new symbols of the faceless corporation: first the railroads, with their vivid marking of the American landscape; then the more ab- stract concept of the trusts in steel and oil, conjuring up images of secret power and manipulation.

Looking at corporations rather than at individuals calls our attention to particular corporate tactics, rather than to individual expressions of unbridled rapacity. Nineteenth-century companies found ingenious ways to press legal and ethical boundaries in their pursuit of advantage and profit. The notion of “conflict of interest,” for example, took some time to develop. In the middle of the nineteenth century, it was commonplace for directors of railroads to organize, as a side business, construction companies with a specialty in building railroad tracks. The railroad com- pany, then, would outsource its line construction business to these new companies, thereby allowing its own directors to negotiate with them- selves and profit personally by the arrangements. These types of insider deals applied to the purchase of materials and supplies in the railroad industry, as well as in other fields.8

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Insider deals that benefited individuals were comparatively simple to spot and criticize, but the more complicated relations between corpo- rations gave rise to a realm of business ethics that was more difficult to assess. One such area was “restraint of trade,” the arrangements between powerful corporations that protected the mutual interests of large play- ers. Concerned that chaotic competition would lead to price wars that would undermine the stability of their industries, corporations worked together to form “pools” through which competitors agreed on prices for particular products and services. Successful pools, which were legal at the beginning of this era, protected the profits of corporations, although it was notoriously difficult to enforce discipline through such loose and informal arrangements. Sometimes pools were formed within single in- dustries; sometimes they involved arrangements between complemen- tary industries, such as between railroads and shipping companies.

It was by no means straightforward, however, to assess restraint of trade practices in ethical terms. “Pooling” struck many outsiders as a gross violation of standards of fairness, since the practice kept prices artificially high at the expense of other businesses and ultimately the consumer. But to other observers, the benefits of providing stability and predictability in the system outweighed its disadvantages. After all, cut- throat competition had its own set of negative consequences: the temp- tation to cut costs by sacrificing quality and even cheating the buyer; driving honest brokers from the marketplace; and the creation of a boom-and-bust cycle that made it difficult for consumers to plan ahead with regard to services and costs. It was easy to inveigh against pooling in abstract moral terms, but the issue was more complicated in light of the overall state of American business and society. Historians looking back on this period have disagreed about who was more virtuous: the corporate leader who supported a pool that created stability, or the courageous individual who broke the agreement and helped undo a form of monopoly.9 In the era after the Civil War, some pools developed into more comprehensive forms of “trusts,” which allowed an ever smaller number of companies to control costs and prices more thoroughly.

Contemporary controversies over practices in financial reporting, accounting, and company value have their historical antecedents in the nineteenth century as well. Financial reporting, even to company in- siders, was virtually nonexistent at the beginning of the industrial era.

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The absence of complete or even partial financial reports allowed cor- porations to operate with relative impunity, and it put buyers and sell- ers of their stock at an enormous disadvantage. Public pressure in the form of media attention and legislation gradually brought about more complete disclosure by the beginning of the twentieth century, but it was still very difficult for the public to trace or even to understand the pre- cise nature of complex corporate transactions.

At the beginning of the industrial era, American corporations had a comparatively free hand with regard to these business practices, but by the early years of the twentieth century, a regulatory environment began to curb corporate excesses. Landmark federal legislation like the Interstate Commerce Act () and the Sherman Anti-Trust Act () embodied the new focus on business practice by addressing corporate behavior on a large scale, and by attempting to create a public counterweight to the concentration of power and influence in the private sector. While vigor- ous enforcement of legislation was uneven (it took two decades for the Sherman Anti-Trust Act to come fully to fruition, with the breakup of Standard Oil in ), one question was settled definitively by the early years of the twentieth century: There was no longer any dispute over the idea that the behavior of corporations toward their stakeholders and toward one another was a matter of public concern.

Beginning around , American industries also began to police themselves through the development of the first codes of ethics. These codes developed first in trade associations, especially in industries com- prised of many small businesses, as opposed to major industries domi- nated by corporate giants. Smaller concerns, after all, had more to gain than large companies from informal agreements that restrained preda- tory practices. Hence, pioneers in developing codes of ethics included such groups as the National Ice Cream Manufacturers’ Association, the National Hay Association, the National Knitted Outerwear Associa- tion, the National Bottle Manufacturers’ Association, and the Memorial Craftsmen of America. The codes attempted to restrain unfair compe- tition by condemning underpricing, deceptive advertising, bribery, incomplete public reporting, and underhanded efforts to steal away customers from competitors. These agreements were voluntary and entirely unenforceable, except through the threat of expulsion from the association, but they served as a check on commercial anarchy. “In the

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relations between competitors,” wrote an optimistic early student of these codes,

we see the emergence of a great ethical principle. It is generally called Co-operation. I am more inclined to speak of it as the Prin- ciple of Common Interest. When men in the same line of trade rec- ognize that they have a common interest and act accordingly, with due regard for the rights of the public, their relations become to that extent more normal, harmonious, productive. . . . Following the principle of common interest is proving a better way of doing business than the old method of pursuing merely individual ad- vantage.10

Codes were no guarantee of actual ethical behavior, but they were an in- dication of the increasing acceptance by industry itself of a company- centered view of business ethics. It is also important that these earlier initiatives took root in industry consortia, enabling companies to adopt ethical standards while minimizing the risk of competitive disadvantage. Developing ethics programs through consortia may, in fact, be a very practical way to achieve progress, but it also suggests the difficulty of counting on improvement in the absence of agreement among peers.

Considering corporate practice in the context of individual industries became a standard feature of the American landscape over the course of the twentieth century, and the source of considerable public and govern- ment attention. Major scandals rippled across the country with regu- larity, in widely different industries. In , the focus was on the prac- tices of major life insurance companies, which had conspired to drive smaller competitors from the field.11 In the early s, the electrical industry, led by General Electric and Westinghouse, was under the microscope for its schemes of bid rigging and price fixing.12 Bribery around the world was the center of attention in the s, with inter- national players in defense and oil in the hot seat.

For our purposes, what is most important here is that a view of busi- ness ethics in terms of corporate and industry behavior has become a fixture. This view coexists with, and does not replace, the older strand of thinking that focuses on the substantive and symbolic actions of indi- viduals. A focus on business practice concentrates attention on a corpo- ration’s behavior as part of its peer community. Does it engage in anti-

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competitive practices? Does it seek unfair advantage through immoral arrangements with suppliers or public officials? Does it adhere to the reg- ulations of industry as promulgated by federal and state governments? Do its financial reporting processes adequately inform its investors? It is true that improvement of the standards of business practices not only benefits the industry but ultimately benefits the larger public as well. But the limitation of this perspective is that it is prone to narrow its scope of inquiry, and to be generous in comparing one corporation’s behavior to those of its competitors. The focus on business conduct has led to pro- ductive oversight and self-regulation of American industry, but it can also serve to deflect attention away from the impact of business on the widest dimensions of American politics and society.

Putting Workers First

Labor relations are not always discussed in terms of business ethics, but workers are a key “stakeholder” in any consideration of corporate beha- vior. When considering the actions of tycoons or the business conduct of corporate entities, the treatment of employees is an important topic, but it tends to play a relatively minor role in ethical assessments. In the early codes of ethics, for example, fair and safe working conditions are mentioned nearly universally, but these clauses tend to be minor entries on a long list of topics.13 Yet for many observers, the treatment of work- ers has been the starting point for judging corporate behavior, rather than merely an entry on a comprehensive list. With this consideration paramount, a different set of issues takes center stage: working condi- tions and questions of safety; employment practices, including discrim- ination; the labor of children and other disadvantaged populations; fair procedures in matters of discipline, promotion, and termination; the rights of workers to organize, and the responses of corporations to labor unions. Labor issues are not always thought of as matters of ethics per se. But to those for whom labor comes first, an ethics initiative that side- steps this question can never be legitimate or complete.

Most often, the focus has been on exploitation. Starting early in the industrial era, the incidence of death and injury led to outcries about unsafe working conditions. The rise of labor unions in the years after the Civil War led to a series of bitter battles with American industry; among

 : Ethics at Work

the most notable were the violent strike-breaking tactics in the steel industry in the s, overseen close up by Henry Frick and implicitly endorsed from a safe distance by Andrew Carnegie.14 During the Pro- gressive Era, the photographs of Lewis Hine alerted Americans to the prevalence and social costs of child labor, a practice eventually curtailed (although not ended) through legislation. Discriminatory practices of businesses with respect to women and minority employees were ex- posed and to some extent corrected over the course of the twentieth cen- tury. In the era of globalization, the assessment of corporate perform- ance in this area has been carried around the globe, with attention to the labor practices of multinational corporations in their facilities in the de- veloping world. Each of these familiar aspects of the history of business and labor has its own set of narratives and debates.

What is important for our purposes is that these issues represent the single most significant standard of business ethics for a substantial seg- ment of the American public. Does an organization provide fair and ad- equate compensation for its workforce? Do fringe benefits adequately protect workers from major expenses in terms of health care and other forms of catastrophe? Is the working environment safe and healthy? Do workers have adequate protection from harassment and abuse from their superiors? Are employees sufficiently protected from arbitrary or abrupt dismissal from their jobs? Do workers have adequate opportu- nity to organize to lobby for rights and privileges that they feel that they deserve? Corporations prefer to recognize these as issues best dealt with by human resources departments. But even companies themselves have come to recognize that the treatment of employees is as much an ethics issue as conflict of interest or competitive practices. Since human re- sources departments are established principally to enact the policies and reflect the interests of management, they tend to be inadequate, by them- selves, as ethics offices for labor relations. This suggests an area of vul- nerability for corporations striving to become model citizens: the chal- lenge of creating independent internal mechanisms that fairly serve the interests of the average worker.

Some Americans, however, have taken a very different approach to the ethics of labor practice. Rather than focusing on corporate exploita- tion, they have viewed American business as an opportunity for creating a community based on moral uplift. This idea of the corporation as moral

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community receives less attention than the standard portrait of ex- ploitation, but it is worth our sustained attention, because many con- temporary business ethics programs reflect and extend it.

From the earliest era of industrial development, some leaders be- lieved that one of the most important functions of American business was to create an environment that would improve both the lives and the character of their workers. As the persuasive power of churches weak- ened, and as the growth of cities imperiled the ideal of close-knit, small- town communities, some began to look to the factory to halt the slide of virtue. Industrial facilities, after all, were where an increasing number of Americans spent most of their waking hours. Besides, workers were a captive audience.

The mills of Lowell, Massachusetts, provided one setting for this type of social experimentation. In the s and s, the mills employed young women from all over New England who left (primarily) rural homes and families in search both of economic opportunity and a mod- icum of independence. Housed on site in the shadow of the mills, these workers found themselves “protected” by a series of rules and programs intended both to assure their reliability as employees and to keep them on the path to righteousness. From the point of view of their employers, these programs used the corporate structure to effect positive social change through fortifying the character of a generation of otherwise lost young women. From the point of view of contemporary social critics and later historians, these programs represented a paternalistic form of social control: Released from the restrictive sphere of rural New En- gland, the mill workers found themselves trapped in an equally oppres- sive environment that monitored their every movement.15

This conception of the corporation as a moral community did not fade away with nineteenth-century evangelicalism. Indeed, it received an enormous boost from the systematic social science of the Progressive Era. The first decades of the twentieth century gave birth to the develop- ment that was first called “welfare work” and eventually came to be called “welfare capitalism.” American businesses, wearied and bloodied from labor strife, began to take a new tack, placing an emphasis on “human relations” and benefits programs that leaders hoped would create a sense of common interests among ownership, management, and the workers. One of the innovators in this field was Colorado Fuel and Iron (CF & I),

 : Ethics at Work

owned by John Rockefeller, Jr. Rocked by violent labor struggles in the s that culminated in the famous “Ludlow Massacre” in , CF & I instituted the “Rockefeller Plan” in . This initiative created a system of employee representation in company decision making, and commit- ted the corporation to greater transparency in its wage scales, employ- ment practices, and observance of the mining laws.16 While the Rocke- feller Plan never fully lived up to its promise of employee empowerment, it provided an important model for rethinking the relationship between labor and management, and for consideration of a company’s obliga- tions toward its workers as an essential element of business practice.

Ford Motor Company put into place an even more ambitious plan, which vividly illustrated the strengths and the drawbacks of the welfare capitalism ideology. The company was growing rapidly in the years after , as it began to perfect its assembly-line techniques. But the assembly- line method gave birth to a significant labor problem. Efficiency de- pended on a reliable workforce; if an employee, trained to handle a spe- cific task on the assembly line, did not stay on the job, or if his attendance was erratic, the gap at his station could disrupt the entire process. If a worker was drinking too much, or if illness or conflict at home inter- fered with the regularity of his habits, his attendance suffered. So Ford introduced a series of measures to help its workers stay on the straight and narrow: incentives for workers to save a portion of their earnings, a “Medical Department” to promote health, and a primitive ethics pro- gram to encourage workers to abandon bad habits. An in-house maga- zine, Ford Times, derided the spoiled and dissolute “dude employe” [sic], who wears a “high collar” and “is not the one that knuckles down to hard work. . . . The dude employe does not like perspiration, so he sees that he does not exert himself.” The magazine listed a series of “profit chok- ers”—bad habits that cost the corporation money—which included “doctoring records to suit the boss” and “‘padded’ pay rolls through tar- diness and shirking” and “employes working ‘their’ way instead of the Company’s.”17

Ford’s efforts in this area reached their apogee with the introduction of the “Five Dollar Day” in . This program offered a daily wage of nearly double the going rate to any worker who lived a clean and thrifty life and who was willing to undergo inspection of his private affairs by the Ford Sociological Department, which was established for this

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express purpose. To qualify, the company explained, a worker had to “show himself sober, steady, industrious, and [he] must satisfy the super- intendent and staff that his money will not be wasted in riotous living.” The wage was described as a “profit-sharing” plan; workers on the “Five Dollar Day” were encouraged to think of themselves as partners with management.

The Sociological Department proceeded to employ a battery of inves- tigators, primarily recruited from the existing ranks of white-collar em- ployees of the company. (Ford did not want to hire college-trained soci- ologists; the thinking was that their academic training rendered them unfit for dealing with real people in the real world.18) These investigators made scheduled and surprise home visits, both interviewing workers at home and checking up on what was happening with their families while workers were on the job. Ford was particularly obsessed with the virtue of “thrift”: If a worker was saving money, the thinking went, then other virtues were likely to follow in its wake. Bank records, therefore, were among the investigators’ primary sources of information. The incentive system was clear: Workers in compliance received compensation at sub- stantially higher levels than those who fell out of grace with the Socio- logical Department.

Ford promoted the Five Dollar Day with a vigorous internal public relations campaign. It published “Human Interest Stories” that illus- trated success (the alcoholic who gave up drink, and then, after the req- uisite time, earned his way to prosperity) and failure (the “Five Dollar Day” man who got married and started squandering his pay on house- hold goods and later gambling and liquor, and who therefore lost his privileges under the program).19 These publications touted not only the value of the program for Ford’s workforce, but the value of the program for the workers themselves. Company profits, the character of indi- vidual workers, and the corporate sense of family were inextricably intertwined. The program was paternalistic and intrusive, but as its chronicler has pointed out, it also “marked a progressive shift from the older idea of individual and moral causes of poverty to the more mod- ern idea of social and environmental ones.”20

The advent of World War I heralded the decline and the eventual abandonment of the Five Dollar Day. The U.S. government took advan- tage of the structure of the Sociological Department to co-opt its inves-

 : Ethics at Work

tigations under the guise of national security in wartime. The program became a tool for cracking down on Michigan’s immigrant population and for promoting patriotism in its crudest sense. The postwar recession of – proved its final undoing, as the program finally became a victim of cost-cutting measures.

Ford’s early-twentieth-century efforts suggest that concern about de- veloping a moral community among employees has long-standing roots. It also shows the hazards of this type of endeavor. Ford boasted of its program as good both for the workers (who ostensibly benefited by developing better personal habits) and for the company (which bene- fited by a more reliable workforce). But to critics of the time, and even more to later generations, the Five Dollar Day looks ominously like a full-fledged effort at oppressive social control. It raises the question of whether it is possible for corporations to undertake a self-conscious program of moral uplift without threatening cherished ideals of indi- viduality and independence.

During the s, however, welfare capitalism flourished, and to some extent corporations minimized the paternalism that had characterized Ford’s efforts. Major companies like United States Steel, General Electric, and Procter & Gamble made visible public voluntary commitments to policies that extended benefits and privileges to their workforces. These commitments included, in various circumstances, pension, housing, medical and insurance plans, commitment to high wages, and the de- velopment of in-house structures for employee representation. The leaders of these corporations spoke openly about trying to instill a fam- ily atmosphere in a large corporation, in which all the members em- braced a common mission and felt a common stake in the corporation’s success.21 Although the economic shock of the Great Depression took a severe toll on welfare capitalism, its elements persisted in a different form in the postwar era in such companies as Eastman Kodak and Sears Roebuck.22

Welfare capitalism was a study in mixed motives. It represented some personal convictions of American business leaders, who genuinely be- lieved that they could achieve a harmony of interests within their corpo- rations. Yet it was also in many cases a self-conscious effort to undermine worker radicalism through co-optation. Companies often provided just enough new benefits to stave off discontent, and they created in-house

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employee representation plans that could be controlled and monitored, unlike the traditional labor unions.

No American business would dare to intrude so openly into the lives of its workers in the twenty-first century as Ford Motor Company did in the s. Yet the conception of corporate ethics as a composite of the personal character of a company’s workforce is very much alive. An employee-centered vision of business ethics, whether it focuses on the ex- ploitation of workers or on the improvement of their character, repre- sents an important contrast to focusing on the character of business lead- ers or on corporate business conduct. It can call our attention to a more democratic idea of business ethics, by conferring importance on the role and the actions of the wage workers at the bottom of the employment pyramid, but it also highlights issues of social control. Welfare capital- ism was an important forerunner of the contemporary business ethics movement, both as an admirable model and as a cautionary tale.

Social Responsibility

A fourth conception of business ethics puts the primary emphasis on a corporation’s impact on the outside world. It treats a business first and foremost as an integral part of its society (and sometimes of the global community), and it considers the role that companies play in shaping the conditions of life for the people with whom it comes into contact. This view assumes that corporations do in fact wield considerable power and influence over the world that they inhabit, and it treats their impact as a set of deliberate decisions. It also assumes that public perceptions of corporations matter, that business ethics can be influenced from with- out, as well as take root from within.

Attention to the collateral impact of industry goes back to the dawn of the industrial era. Its most prevalent form for many years was an emerging environmentalism, a critique of the scarring impact of indus- try on the natural landscape. In Victorian England, the air blackened and the water fouled by a coal-burning industrial boom were manifes- tations and symbols of commercial callousness. In the United States, the railroad and the steam engine served as representations of a spreading industrial impulse that seemed to pay little attention to the human con- sequences of its march. These early critiques were, however, relatively

 : Ethics at Work

general. They were aimed more at industry writ large, rather than at the actions of particular corporations. They were less about business ethics, with its concentration on decisions by corporations and their leaders, and more about a critique of the system of industrial capitalism.

A more specific view of what came to be known as corporate social responsibility began to emerge in a coherent way in the United States in the years after World War II. The triumph of free enterprise and the uni- versal recognition of American influence on a global scale laid the ground- work for a perspective that generally endorsed capitalism but sought to humanize it by asking businesses to serve social ends. In the s, for example, the Federal Council of Churches, the multidenominational organ of the American Protestant establishment, commissioned a series of books on ethics and economic life that touched on Christian per- spectives but were intended to frame the issues in a secular and acces- sible manner. In the first of these volumes, published in , Howard R. Bowen, a professor of economics at Williams College, developed a de- tailed conception of the social responsibilities of businessmen.

According to Bowen, the strength of American prosperity was mak- ing possible a new and more generous idea of the role of the corporation in society:

The day of plunder, human exploitation, and financial chicanery by private businessmen has largely passed. And the day when profit maximization was the sole criterion of business success is rapidly fading. We are entering an era when private business will be judged solely in terms of its demonstrable contribution to the general wel- fare. Leading thinkers among businessmen understand this clearly. For them, therefore, the acceptance of obligations to workers, con- sumers, and the general public is a condition for survival of the free-enterprise system. Hence, even if the interests of stockholders be taken as the sole aim of business, concern for broader social ob- jectives becomes obligatory for management.23

This optimistic assessment rests on a fundamental assumption that in the postwar era,American businesses can afford to care about their impact on the general welfare. Accordingly, Bowen lists a series of social goods to which he believes businesses should be contributing, and against which they should be judged. These include the broad distribution of a high standard of living; a widespread sense of economic progress and

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security; abstract concepts like order, justice, and freedom; and “the de- velopment of the individual person.” The traditional concern about the natural environment is, in this scheme, just one area among many that fall within the responsibility of businessmen and the corporations that they lead.

What is going to drive businessmen to show the concern for the gen- eral welfare that Bowen believes is necessary (and perhaps inevitable)? Bowen places a great deal of weight on “informal social controls.” Cor- porate leaders, he points out, are part of peer networks, and their social standing within those networks matters a great deal to them. Public pressure for corporations to act positively has a huge impact on these leaders. “The means of achieving higher morality in business behavior,” Bowen argues,“is to create public attitudes that enlarge the moral respon- sibilities of business. Once this is done, business, with its new and broad- ened concern for public approval, will respond.”24 Ultimately, he suggests, one of the most decisive factors in encouraging corporate responsibility will be the egos of their leaders. Businessmen want to be loved, and they enjoy the role of educating and leading the broader public. Once they understand that they can play this part only by making their organiza- tions into good corporate citizens, positive results will naturally follow.25

Bowen’s analysis may seem unduly sanguine about the prospects for corporate concern for the broader community, but his basic premises undergird what has become a broadly accepted principle in twenty-first- century corporate America. Corporate social responsibility has become so fashionable that its acronym (CSR) can stand alone, and the concept has become a tool by which companies have attempted to turn a public relations problem into a public relations asset. Rather than passively al- lowing others to form judgments on their harmful impact on local and national communities, corporations have called attention to specific ac- tions that they have taken to improve people’s lives. Bowen’s emphasis on the importance of public relations in encouraging these efforts was prescient: CSR programs now form the backbone of many of corporate America’s largest advertising campaigns, especially in industries (big to- bacco comes to mind) that have been vulnerable to public criticism for their social impact.

Contemporary advertising campaigns like those of Philip Morris fol- low a long-standing tradition of humanizing American industry through

 : Ethics at Work

the mass media. Roland Marchand has traced this effort to define an image of a “corporate soul,” beginning most dramatically with the thirty-year campaign launched by AT&T in  to convince American consumers that a big, warm-hearted monopoly was exactly what the United States needed in the telecommunications industry. AT&T drew on nostalgia for small-town life, sentimental ideas about the average working man and working woman, the pull of patriotism, and the lure of bigness itself to try to convince the public that big business, far from being heartless, had a core mission to touch and improve the lives of people across the country. “Ma Bell” trumpeted the ideal of “service” in the figure of a “storm-swept” employee repairing a phone line, or the operator acting as a “weaver of speech.” Other companies promoted their progressive policies toward their workers, or their contributions to the unemployed during the Great Depression. Marchand credits these campaigns with successfully deflecting widespread public criticism of monopolistic practices and aggressive profit seeking in the first half of the twentieth century.26

This is not to say that corporate social responsibility is merely a public relations ploy. American corporations spend tens of millions of dollars annually on community improvement programs in areas like education, youth development, beautification, health, and social services to the needy. In an era of reduced government services, these programs are sig- nificant contributions to private-sector philanthropy. Promoters of CSR argue that these programs represent corporate ethics at its best. If a business is going to be judged by its impact on individual lives, what bet- ter way to assess its values than by looking at the positive steps it takes to ameliorate the communities in which it conducts its business?

Corporate critics have responded by calling attention to different types of community impact. Environmental issues remain near the top of the list of concerns, but that list is much longer than it was in the early years of industrialization. Community impact has expanded to include the nature of the products that a business produces, the economic impact of a company on consumers, and the side effects of its research and devel- opment activities. The new wrinkle in the twenty-first century is the in- creasing emphasis on global impact in an era of multinational busi- nesses. Emerging issues include child labor practices in Asia, industry effects on global warming, and corporate intrusion in domestic politics

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in developing countries. Critics agree with CSR supporters that com- munity impact is the first standard of measuring business ethics, but they draw very different conclusions about how well corporations meet that standard.

The Perils of Profits

A fifth strand of thought about business ethics focuses on the nature of capitalism itself. As we have seen in the example of Robert Keayne, mis- trust about profit seeking has its roots in the earliest moments of Amer- ican history. A small but persistent minority has voiced a deep-seated strain of skepticism about the corrupting power of free enterprise over the past  years. These critics do not look at corporate misdeeds as simply the actions of greedy individuals, nor as aberrations from a healthy norm, nor as accidents of mismanagement or negligence. Instead, they see corporate foul play as the inevitable result of a system that encourages aggressive competition, rewards the ambitious and the cold-hearted, and makes prosperity for the few a greater social good than the well- being of the many. In this view, corporate ethics efforts are a distraction, a gloss over inevitable problems of exploitation and corruption.

At times, this strand has taken the form of socialism and other, more radical forms of political thought. Some of America’s most incisive thinkers and writers have weighed in as skeptics about the premises of capitalism, from the agrarian outlook of Thomas Jefferson, to the “single tax” system of Henry George, to the horrifying portrayal of meat facto- ries in Upton Sinclair’s The Jungle, to the numerous critics who decried the failures of capitalism amid the widespread suffering of the Great Depression. The cadences of the argument are familiar in our own time, in rhetorical attacks on the military–industrial complex and on multi- national corporations. Taken far enough, these critiques are so compre- hensive that they offer little common ground for discussion with those concerned about corporate ethics.

For our purpose, however, I want to explore a less radical version of the same skepticism that is shared by a wider swath of the American public. Despite a prevailing laissez-faire ideology, Americans have seldom viewed the pursuit of profit as an inalienable right, and they have often shown concern about the corrupting nature of profit itself, when pur-

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sued in particular circumstances. One such circumstance has been the mix of business and war. The United States has always relied on private industry to supply the military needs of the nation, but Americans have been deeply ambivalent about profits earned in wartime, or even on de- fense in times of peace. This variation on a more general skepticism about free enterprise has obvious relevance when considering the cor- porate ethics of the defense industry in our own time.

Concern about war profits began during the Colonial and Revolu- tionary eras, a time when frontier wars kept demand for supplies high, when price gouging in times of emergency was rampant, and when plunder and looting were routine sources of income for professional sol- diers. As essential as supplies were to the maintenance of European settle- ments and later to the successful war of independence, a natural stigma attached to the merchants who made these military efforts possible. During the Revolutionary War, the colonists’ reliance on the rhetoric of “virtue” brought down criticism on patriots like the New Jersey mer- chant Robert Morris, who became, somewhat unfairly, a living symbol of exploitation of military funds.27

Widespread public outrage about war profits accelerated during the Civil War. In a notorious early incident, Brooks Brothers, the New York clothier, sold low-quality uniforms for the New York volunteers who en- listed in the Union Army. The ragged appearance of these troops spurred public wrath at what became known as the “shoddyocracy,” the legion of suppliers accused of providing inferior products to the Union military effort. Other major U.S. companies received a jump start from war ex- penditures; American Express, for example, thrived on the burgeoning railroad express business, sending packages from family and friends to soldiers in the field, and making a tidy profit by shipping corpses home from the front. The Civil War also created the country’s first weapons millionaire, firearms manufacturer Samuel Colt. As the war dragged on over four long years, public outrage mounted at the figure that the New York Times called “the self-styled loyalist, who puts money in his purse at the expense of soldiers who go to fight rebels.” 28

By the time of World War I, concerns about profits in wartime were no longer exclusively the province of editorialists: They had become the stuff

of legislation. As war began in Europe in  and , public attention focused on major concerns like Du Pont, whose chemical products

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included various powders used in new forms of weaponry. A major sup- plier to the Allies, Du Pont had made so much money in the military powder business by  that, even before U.S. entry into the war, Con- gress passed the first excess profits tax in American history, aimed spe- cifically at the company’s wartime gains. Critics of big business began not only to question the idea of windfall war profits, but also to accuse industry of fomenting conflict for the sake of financial returns. When Congressman John Nelson blamed the war itself on “Big Business, The Interests, the System, the Corporations, the Money Power, Wall Street, or the Rockefellers and the Morgans,” he was near the front of a long line of mainstream Americans who have not hesitated to name the profit mo- tive as the prime mover in U.S. defense policy.

This line of argument reached an apex in  and , when Con- gressman Gerald P. Nye of North Dakota and Congressman Arthur H. Vandenberg of Michigan presided over a set of hearings that historian Stuart Brandes calls “the most sweeping consideration of the war profits issue in American history.” The Nye-Vandenberg committee took as its ostensible field of inquiry American participation in the Great War, but its impact was felt during a time when conflicts in Europe were heating up and American industry was positioning itself for a share of the de- fense business that might result. The committee and its staff waged an unabashed assault on the industry practices of two decades before, fo- cusing on excess profits, insider deals, and complex financial transac- tions. It implicitly advanced the argument that “merchants of death” had dominated United States policy during World War I, and that they were lurking still, waiting for their opportunity to exploit death and destruc- tion again. The committee’s conclusions have not stood the test of time well; historians have faulted its partisan character and even compared its tactics to the later McCarthy-era hearings. In its own day, however, the committee was a powerful driver of public opinion; a Gallup poll con- ducted in  found that  percent of the American people favored the prohibition of the sale of munitions by private parties.29

Some of the most egregious profit making in the war industry was curbed by federal legislation during the first half of the twentieth cen- tury. Nevertheless, the powerful skepticism about the mix of profits and war continued to play a powerful part in the years after World War II, reaching a crescendo in the critique of an unholy alliance between gov-

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ernment and business during the Vietnam War. American skepticism about defense industry profits has not just been the province of a radi- cal fringe—it forms a minor but deeply ingrained part of mainstream thinking. As such, it stands for a view of business ethics that questions the premise of the essentially virtuous role of free enterprise. It fuels as- sumptions about the immorality of war profits that make it difficult to apply conventional ideas of business ethics to the defense industry. To those who start from this perspective, ethics in the defense industry will always begin with a substantial handicap.

These perspectives represent five distinct starting points for considering ethics in American business: the role of the corporate leader; the con- duct of businesses according to industry practice; the experience of the average worker; the impact on the larger community; and the nature of profit itself. They do not represent a common consensus on the behavior of corporations, or a consistency of ideas across time and geography. To the contrary, they suggest the very great challenge that corporations face when creating ethics programs, precisely because the true scope of the field is so broad. These strands of thought are less contrasting view- points than they are shades of emphasis, but they lead in very different directions and to very different judgments. Because of their deep histor- ical roots, they also have a profound influence on the way that contem- porary Americans think about corporate players, and they shape the thinking of scholars and practitioners in the ethics field.

Critics of corporations, as well as their defenders, tend to begin with one of these perspectives and stick with it. While this can lead to trench- ant critiques and seamless defenses, it often creates discussions at cross- purposes. A company is hailed as a leader of corporate ethics for its work in an American neighborhood, while decried as a global villain for its labor practices overseas. Another trumpets its freedom from accounting scandals, while corporate watchdogs decry its chief executive for padding his own paycheck. Partisans of these perspectives might as well be speak- ing different languages.

The very breadth of these considerations suggests a daunting task for corporations. By its very nature, corporate ethics is an evolving process. In a world of rapidly changing standards and circumstances, no corpo-

Titans and Warhogs : 

ration can hope to operate with perfect integrity, especially under such a broad spectrum of expectations for busineses. Americans are uncom- monly generous about failure, but only in the context of whole-hearted effort. Patching up a single problem will likely satisfy no one in the long run, when problems emerge in new and unforeseen areas. But this is just another way of saying that corporate ethics is a continuous process, rather than the rollout of a single product. What the history suggests is that responding to discrete problems of corruption or exploitation is a short-term fix. The challenge is to develop an approach that is suffi-

ciently supple, dynamic, and self-critical to engage ethics issues in their most fundamental—and therefore most threatening—dimension.

 : Ethics at Work