Discussion question for Business wk 6 Disc 2

BUSINESS ETHICS AND THE CHALLENGE OF THE INFORMATION AGE

Richard T. De George

Abstract; The standard ethical issues of business, so familiar to those in business ethics, are all being transformed as the Industrial Age is giving way to the Information Age. In the Information Age companies are learning to do business in new ways. The computer has entered and is entering more and more into all the realms of business so that it leaves none of them unchanged. This means that marketing is done differently, that manufacturing is done differently, that management is done differently, and so on.

As we enter the new millennium one of the central tasks facing those inbusiness ethics is to move, together with business, into the Information Age. When business ethics started as a field in the late 1970s, it was widely con-

sidered an oxymoron. The Myth of Amoral Business,' or the view that ethics has no place in business, held sway. It was not that businesses necessarily were im- moral. It was rather that they were considered amoral both by those in business and by the general public. Nonetheless, despite the Myth, business ethics served a needed social and business function, public opinion was awakened, and the Myth was slowly unmasked. Business ethics has developed and is now inte- grated at least nominally into most large corporations.

Although a strong impetus was given to this integration by the 1991 U.S. Federal Corporate Sentencing Guidelines, in fact it was because business ethics had been established by 1991 that the provisions of the Corporate Sentencing Guidelines emerged as they did. In the 1970s and before, the Guidelines' provi- sions—if not strictly unthinkable—would certainly not have been thought of or seriously considered. The Guidelines encourage firms to have someone in charge of ethics training and implementation and the enforcement of not only legal and but also ethical requirements—alien concepts under the Myth of Amoral Business.

The problems of business ethics were fairly well laid out and standards rela- tively well established by the late 1980s.2 Then a growing interest in ethical issues in international business came to the fore, as business became more and more international. A great deal of textile as well as other kinds of manufactur- ing has moved to developing countries, which are now in the process of entering into the Industrial Age, just as the United States and other developed nations are leaving it. The fact that Levi-Strauss has recently decided to close half of its factories in the U.S. and Canada and move its production to less developed nations

©2000. Business Ethics Quarterly, Volume 10, Issue I. ISSN IO52-I5OX. pp. 63-72

64 BUSINESS ETHICS QUARTERLY

where the cost of labor is cheaper and where its competitors have already gone is just one instance of many.̂ The ethical problems of the Industrial Age have been transferred together with industry to the less developed countries. Bribery, child labor,"* human rights abuses, pollution, unhealthy working conditions, be- low living wages, and so on,' are serious ethical issues on the international business scene. The absence of adequate background institutions and conditions, such as uniform enforced laws, enforced standards, consumer and worker orga- nizations and pressure, and institutionalized corruption leave less developed countries vulnerable to abuses that the more developed countries have more or less eliminated. But having been through the problems we and multinationals know what they are and know how multinationals ought to act, even if they do not always do what they should. Although solutions to these problems are com- plex and difficult, there is a certain growing consensus about them. As one example, the Organization for Economic Cooperation and Development recently drew up a code of conduct for multinationals that has secured multinational back- ing as well as endorsement by the World Bank and International Monetary Fund.̂ Although just one among a whole series of international codes for multinationals, its strong official backing is confirmation of the claim that the Myth of Amoral Busi- ness is being put to rest on the international as well as on the U.S. business scene.

The ethical issues of international business are important, and the global di- mension of business will continue to be a significant consideration for the foreseeable future. But human rights and child labor, for instance, are no longer central ethical issues for business in the United States or Japan or Western Eu- rope. They are central issues for those nations in the stage of industrial development, and indirectly for the multinationals that produce or purchase or distribute there.

The new aspect of globalization that we have not seen before is that related to the Information Age.

It is almost a truism to say that humankind has entered the Information Age. Yet, exactly what that means is understood differently by different people. Eor the United States the new stage is marked by the fact that the U.S. in 1998 had more people employed in high-tech industries than were employed by the auto industry at its height, and that in recent years information technology has been the motor driving more than a third of the economic development of the coun- try.̂ Computers and information technology are transforming the way we work, the way we live, the way we learn, the way society works. The extent to which business has entered the information age is hinted at by the Y2K problem, which will cost as much as $600 billion dollars to correct worldwide.^ This shows the extent to which business not only in the United States but internationally has integrated and become dependent on computer technology. Even though the de- veloped world is entering into the Information Age ahead of the less developed world—where, for instance, half of the population has never spoken on a tele- phone—the Information Age is global in reach and is impacting the less developed countries as well, although in ways that are different from the ways it is impacting

THE CHALLENGE OF THE INFORMATION AGE 65

the more developed countries. The differences give rise to different ethical issues in the two cases, as well as to questions of inequality and domination of a new type.

The standard ethical issues of business, so familiar to those in business eth- ics, are all being transformed as the Industrial Age is giving way to the Information Age. In the Information Age companies are learning to do business in new ways. The computer has entered and is entering more and more into all the realms of business so that it leaves none of them unchanged. This means that marketing is done differently, that manufacturing is done differently, that management is done differently, and so on.

Two examples will illustrate the point. The first is the way products are now marketed on the World Wide Web. Although total sales from e-firms is less than 1 percent of the U.S. total, companies such as Dell, which sells its computers exclusively by use of the Web, and Amazon.com are perfecting the techniques of one-on-one marketing. By collecting data on their customers they are able to tailor their ads to fit the patterns of interest their customers have demonstrated in previous visits. Other companies go much further and develop personal pro- files of customers and potential customers by recording their visits to their Web sites, sometimes by noting which sites they come from and go to, and by con- necting this with personal information about individuals available from multiple sources—from credit companies or from customer surveys that customers have completed or from data supplied by subscription and other lists. One-on-one marketing raises a host of ethical issues—especially having to do with the ethi- cal use of information supplied for one purpose and used for another purpose, ownership of such information, informed consent, and privacy, among others.

The other example is Wal-Mart, whose most valuable resource is arguably its database, which it uses to tailor its orders from suppliers to suit each particular store. Its data base includes the profile of the general customer for each store and Wal-Mart orders product delivered from the supplier or manufacturer to each store exactly when that store needs it—saving itself storage and other costs.' This is extremely efficient. Wal-Mart does not use suppliers that cannot meet its rigid demands. It presages one of the waves of the future. Yet what these rigid demands do to suppliers, what strains such demands put on workers and others, have yet to be investigated. The point, however, is that computers and their use are changing marketing, and spawning a whole host of ethical issues that those in the field of business ethics have barely begun to uncover or investigate.

Business ethicists have traditionally waited for ethical issues to emerge in business before tackling them. The initial developments in the field in the 1970s and 1980s consisted in first unmasking the Myth of Amoral Business and them helping business face the issues that were uncovered. The developed societies are presently in a comparable position with respect to the Information Age. The newly emerging Myth of Amoral Computing and Information Technology is simi- lar to the Myth of Amoral Business. Business people, as well as most of the general public, for the most part consider the developments related to the computer and information technology as technical, largely beyond their comprehension, and

66 BUSINESS ETHICS QUARTERLY

so as something apart. Computers, of course, are simply machines and so cannot be held morally accountable. Too often those who use them do not understand their internal workings, and it seems unreasonable to hold them accountable for the ma- chines over which they have so little control. Hence the excuse that "the computer is down" is accepted by both the giver and the receiver as a legitimate excuse for which neither party holds anyone ethically responsible.

The situation is replicated within companies as well. The technical part of the firm is in the hands of the technical people. The general managers do not accept or assume responsibility for the breakdown or failures of the technology they use, and the technical people tend to feel responsible only for what they are told to do. Hence with respect to technology there is a tendency for no one to accept responsibility and for no one to impute or assume responsibility. The result is clear, for example, in the Y2K problem. There was an enormous literature in 1998 and 1999 dealing with the Y2K problem, explaining it and how it emerged and detailing the difficulties it might create and the lawsuits it might generate for companies that fail to be Y2K compliant. But the absence of any discussion of the ethical dimension of the problem was striking. No one asked who was morally responsible for preventing the problem, or for seeing it coming earlier than they did, or for fixing it before the last minute.'" Both the general and the specialized literature ignored any ethical dimension, even though a great many people might potentially be harmed.

That there was no ethical discussion is an instance of the Myth of Amoral Computing and Information Technology. No one was ethically responsible be- cause no one is ethically responsible for computers. The problem, which was foreseeable and known by many even in the 1970s, came to be called a "bug" and was referred to as the "Y2K bug." This was an instance of covering over responsibility by renaming the phenomenon. A computer bug is a defect in a program that is not known by the programmers and that emerges with use. The use of two places iwstead of four for dates in computers was not a bug but a conscious decision that was probably ethically justifiable at the time the con- vention was introduced, since it saved expensive memory space, and hence computing time and money. That the convention was justifiable into the late 1990s is dubious.

The lack of knowledge of the details of computers and information technol- ogy tends to keep general managers from accepting responsibility for this aspect of their business. The general public has been acquiescent in making do with inferior computer products that fail with a much greater frequency than most of the other products they buy. Technical excuses are accepted as excusing condi- tions exempting companies from moral responsibility because the general public does not know enough to challenge the excuses or evaluate their validjky. Tech- nological advances have come upon us so quickly and computers and information technology are expanding so rapidly that the general public has not had time to raise ethical issues or to develop ethical intuitions or gut reactions to many of the developments. Without such intuitions people tend to fall back on analogies

THE CHALLENGE OF THE INFORMATION AGE 67

with other domains in which they feel comfortable. They translate their feelings and beliefs about federal mail to e-mail, or about newspaper or book publishing to Web site publishing. Yet the analogies are often poor and when pressed people have difficulty defending their views, in part because the views are not developed.

A result of the lag of consciousness behind technology is the failure to accept or assign ethical responsibility that is characteristic ofthe Myth of Amoral Computing and Information Technology. Hence an important task for the business ethicist is to help overcome the ethical-technical gap, and to help both business and the general public see clearly the ethical responsibilities of business in this area and to help business act responsibly. This means taking the leadership in raising and discussing the ethical dimension of business in the Information Age. Although communications—use of e-mail and of the World Wide Web—are becoming ubiquitous in business, there are still many firms that have not drawn up clear guidelines for their employees about what is and is not allowed in this regard. Many employees still erroneously believe that e-mail is private and comparable to federal mail. Whether they are allowed to use the Internet for their personal needs or wants—be it entertainment or shopping or pursuing one's hobby or other personal interests—is often not made clear to employees. Perhaps they should know that on company time they should not pursue personal interests. But what about during lunchtime or breaks or after hours? Ethics does not dic- tate any particular policy. But fairness requires that employees know the rules they are expected to obey with respect to the new communications media, lest they be penalized for breaching rules they did not know existed, or feel unjustly treated when their e-mail is read by others.

Since the problems have often not yet clearly emerged, the business ethicist cannot engage in business as usual. The task is to anticipate issues; to help de- velop and promote practices that help people, that keep them from harm and that protect their rights; and to think proactively instead of reacting to harmful and unethical practices after they have been adopted by some segment of business. A key to anticipating such problems is using logical or conceptual analysis. First, this involves searching for the logical presuppositions—in this case the logi- cally necessary values that underpin the practice or system. Second, it involves analyzing the structure or organization of information technology and identify- ing the crisis points at which problems are likely to occur so they can be anticipated. Third, it involves asking and answering how positive values can be built into structures as they arise and develop. Of course not all ethical issues can be anticipated and many will not emerge from logical analysis and will sur- face only in practice and from use. Yet the conceptual approach can help us anticipate more than we might expect.

We can start with the notion of information, which should be kept separate from the notion of data. Data are what is stored in computers and in databases. But not everything in those databases is true or accurate, which is part of a set of problems. By information we mean true representations of the world. What is essential in the Information Age is not data but information. What are crucial in

68 BUSINESS ETHICS QUARTERLY

the Information Age, and what are presupposed by it, are both truth and accu- racy. Unless the data are both accurate and true, they are worse than useless. They are counterproductive. Truth and accuracy become needed virtues in the Information Age, and falsehood, inaccuracy, lying, deception, disinformation, misleading information are all vices and enemies of the Information Age, for they undermine it. Information must be about something and so has content. The content may be of various kinds: information about the world, such as provided by science; about society; about individuals; about corporations; about individu- als. Each kind raises its own set of issues. But fraud, misrepresentation, and falsehood are inimical to all of them.

Information, to be useful, must be communicated. Hence truth and accuracy carry over irito the sphere of communication. Other virtues are presupposed as well. Commimication should be clear if it is to convey its message. Communica- tion requires a certain amount of trust on the part of the recipient—trust that the communication is truthful and accurate without having to take the time and ef- fort to verify or validate it. Trust is typically earned by the communicator showing himself or herself to be reliable.

Given the vast amounts of information available in data bases and on the Web, there is the obvious problem of information overload. Since the Web pres- ently enjoys a great deal of freedom of expression, much is posted and available on any topic. But finding it and trusting it raise problems. Web publication does not have some of the safeguards that society has come to expect in newspapers that are supposed to check their sources, in books by scholarly or reputable presses that submit manuscripts to review and editorial processes, in journals that con- tain articles that are peer-reviewed. There is an obvious need for surrogate authenticators, similar to Consumer Reports for consumer products. Perhaps learned societies can take on the task of providing lists of reliable Web sites in their areas. For instance, well-known and trusted medical centers might list reli- able medical Web sites, and other private independent bodies could help in a variety of areas. These could then be easily accessible through search engines and might appear first in many of the subject areas. Trustworthy businesses need to be identified as well as untrustworthy ones—a task, perhaps, best done by independent groups.

Two other aspects of communication have yet to emerge but can be antici- pated. One is the simplification of human-machine communication through the use of speech recognition that makes the learning of arcane commands obsolete and the use of computers and the Internet as easy as using telephones used to be. Such technology is necessary if we are not to have divided societies and a di- vided world, segregated by not only access to but also by ability to use the tools of the Information Age. A second is the perfection of translation machines that will make communication on the Internet possible in all languages, with each person being able to read in his or her own native language information on any site worldwide. Both can be considered not only technological imperatives, but also

THE CHALLENGE OE THE INFORMATION AGE 69

ethical imperatives if we are to promote communication and undermine domina- tion—cultural as well as political—and make universal access truly possible.

Communicating to children on the Internet has potential educational benefits and equally impressive potential dangers that raise thorny questions about the relation of free speech and the protection of children. What is communicated is as important as how it is communicated.

Information can lead to enlightenment and to empowerment. We find this in societies, as governments are discovering that it is more and more difficult to keep their populations in the dark about what they do or about what others are doing. The days of the Iron Curtain, so familiar in the Soviet Union during the Cold War, are today no longer possible, as experience in China demonstrates. Corporations are also finding that sharing information, making available infor- mation in data bases to large segments of employees, and providing ready access to information in other ways increase efficiency and productivity.

Yet there is another side to information as well. In an Information Age infor- mation about people can be used as a form of control, power, and manipulation. Databases threaten individuals to the extent that they may contain misinforma- tion or false information or information about them taken out of context, which may be used in some way to harm them. The specter of governments collecting all the information on an individual contained in any one of thousands of data bases is one facet. Corporations using similar databases and collecting informa- tion on individuals with or without their knowledge and using it in ways that perhaps the individual would not authorize raise serious issues of ownership of property, harm, and violations of privacy, at the least.

The notion of privacy that we frequently use is often vague, as we fail to distinguish physical privacy from communication privacy, from information pri- vacy, from privacy of thought. Frequently we couch claims in terms of the right to privacy, when what is really at issue is the right not to be harmed. Exactly where our actions done in public and information about us stop being public and turn into private property is far from clear. What peoples' expectations are vary widely, some guarding information about themselves assiduously, while others give it away freely, and some even become exhibitionists, giving up their physi- cal privacy by placing video cameras in their bedrooms for any interested voyeur to see on the Web. Although Americans sometimes think of themselves as valu- ing privacy more than others, the European Community has recently passed legislation that makes it illegal for any business to collect information about anyone for one purpose and either use it for another purpose or sell it to another company without the informed consent of the person providing the informa- t i o n . " Many European countries have even outlawed unrequested phone solicitations to one's home, and similar unsolicited direct marketing via e-mail. Yet these are practices that many U.S. companies engage in freely.

In the Information Age national borders are easily traversed and become in- visible as data are sent around the world in fractions of a second. Under such

70 BUSINESS ETHICS QUARTERLY

conditions the need for compatible laws in all or at least in the major countries is clear. In the instance of information privacy laws, should Europe change its laws to mesh with those of the United States or should the United States adopt the much more restrictive policies of the European states? What are the ethical im- plications of each policy, and what are the effects on all—on business, on consumers, on the general public? Are there rights involved—for instance, some version of the right to privacy—and if articulated, does that lead to precluding certain practices?

The question of privacy quickly slips into the question of ownership. Owner- ship of information is a central issue laden with ethical implications that have barely been raised. Who owns information about individuals? Can such infor- mation rightly be owned? How may such information be used? Although we have long had intellectual property laws and protection provided by copyright, patent, trade secrecy laws, and the like, the development of the Internet and the information explosion require a rethinking of ownership and of property rights with respect to information. The recent extension of the copyright law to life plus seventy years and to ninety-five years for a corporate owner,'^ as well as the extension of patent protection to certain kinds of algorithms embedded in software'-' are clear indications of the need to find means of protecting intellec- tual property that are more appropriate to the new property that is being developed. In an age in which software manufacturers claim that their product is out of date within four years, in which it is difficult to prevent on-line copying, and in which some software developers make freely available their source code, protecting programs for ninety-five years makes little sense.

Business has proceeded for the most part without any general discussion about the ethics of these issues. It has lobbied for the laws that are in its interest, as one would expect it to do. Enveloped in the Myth of Amoral Computing and Information Technology, many firms do not consider the ethical implication of many practices that have become available through technology. The gathering and use of information, the tracking of people as they visit a company's Web site, and increasing use of direct one-on-one marketing are all taking place un- der the cover of the Myth. But all of these have ethical implications that should be unveiled and discussed. The technologists over and over tend to pursue lines that are technologically feasible and in the interests of business with little thought of ethics and without due regard for consumers. For the most part the technol- ogy industry and businesses have adopted the "opt in" mode as the default for gaining information and require individuals to "opt out" if they learn of some practice and choose not to participate. Cookies—or a brief message indicating one has visited a Web site—are automatically placed on the hard drive of people's computers, often without their knowing that such technology even exists. Web tracking is also practiced unbeknownst to many Web users. Intel and Microsoft both developed chips and techniques to gather information on users or to iden- tify the computers they used.'"* In these two instances privacy watchdogs raised

THE CHALLENGE OF THE INFORMATION AGE 71

enough complaints to get the practices changed so that the default in the chips is off instead of on. But in many other instances the default is on rather than off, and one must take the trouble to reject cookies or to refuse to have one's name on a list or refuse to have information about oneself that is submitted for one purpose used for another.

We can anticipate many of the business ethics issues of the Information Age by simple analysis of some of the key concepts. Many of them—I have sug- gested privacy and intellectual property—require new and fresh ethical analyses.

The upshot is that business ethicists have a whole range of issues to which they have scarcely turned their attention. While they play catch-up, various groups—some businesses deeply involved in information technology, some law- yers and politicians, and some computer and technology experts and organizations—are filling the void. The result is that vested interests are driving the development of business and law in these areas, often without informed pub- lic discussion or debate and without sufficient concern for the interests of workers, consumers, and the general public. The business ethicist in the general areas relating to the Industrial Age has raised the central issues and brought them into the open for general debate. The necessity of doing so in the emerging era of information is of paramount importance. The time is ripe to make the discourse accessible, state the issues in understandable terms, and ask the questions that vested interest groups do not ask: are there practices that should not be devel- oped, research that should not be pursued, information that should not be stored and collected and disseminated, as well as interests that should be protected and harm that should be avoided? If the challenge for business is to learn to integrate information and its use into new ways of doing business and to accept ethical responsibility for the technology it uses and produces, the challenge for the busi- ness ethicist is to learn enough about information technology to anticipate the ethical issues, or at least to spot them and deal with them before they produce great harm or are so entrenched as to be difficult to change.

Notes

'For a fuller explanation of the Myth of Amoral Business see, Richard T. De George, Business Ethics, 5th ed. (New York: Prentice Hall, 1999). chapter I.

^See Richard T. De George, "The Status of Business Ethics: Past and Future," Journal of Business Ethics 6 (1987): 201-211.

'Leslie Kaufman, "Levi Strauss to Shut Half of Its Factories in U.S. and Canada," The New York Times, February 23, 1999, p. 1.

••In his State of the Union address ("The Text of the President's State of the Union Ad- dress to Congress," The New York Times, January 20, 1999, p. A22), President Clinton called for the end of chitd labor—a noble and ethical end, but more difficult to achieve than to call for. And what multinationals do in the interim until all societies effectively prohibit child labor—which for many means ending widespread poverty—is a complicated issue.

72 BUSINESS ETHICS QUARTERLY

'On January 31,1999, Kofi Annan, the Secretary General ofthe United Nations, address- ing the World Economic Forum in Davos, Switzerland, called on firms collectively and through their business associations "to embrace, support and enact a set of core values in the areas of human rights, labor standards, and environmental practices . . . areas in which universal values have already been defined by international agreements . . . and areas, . . where . . .if we do not act. there may be a threat to the open global market."

••Paul Lewis, "Corporate Conduct Code is Proposed for Third World Nations," The New York Times, April 29, 1999, p. A7.

'President William J. Clinton, "Remarks By the President at Massachusetts Institute of Technology 1998 Commencement," June 5, 1998.

*Based on the Gartner Group's widely reported estimate. See, for example. Lee Gomes, "Why Prepping Mainframes for 2000 Is So Tough," The Wall Street Journal, December 9, 1996, p. Bl.

'Emily Nelson, "Logistic Whiz Rises at Wal-Mart," Wall Street Journal, March 11,1999, p. Bl.

'"See Richard T. De George, "Computer, Ethics and Business," Philosophic Exchange, 1997-1998, pp. 44-55.

"Edmund L. Andrews. "European Law Aims to Protect Privacy of Data," The New York Times, October 26, 1998, p. 1.

'^Copyright Term Extension (Public Law 105-298) was signed by President Clinton on October 27, 1998.

'•'The U.S. Supreme Court in Diamond v. Diehr (450 U.S. 175 [198I|) upheld the first granting of an algorithm-related patent.

'"Don Clark, "Intel Rushes to Modify User-Identification Chip," The Wall Street Journal, January 26, 1999, p. B7; John Markoff, "Intel Goes to Battle as Its Embedded Serial Number Is Unmasked," The New York Times, April 29, 1999, p. Cl.