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6-1 Moral Philosophy Defined When people talk about philosophy, they usually refer to the general system of values by which they live. Moral philosophy (Refers to the specific principles or values people use to decide what is right and wrong) , on the other hand, refers to the specific principles or values people use to decide what is right and wrong. It is important to understand the distinction between moral philosophies and business ethics. Moral philosophies are person- specific, while business ethics is based on decisions made by groups or when carrying out tasks to meet business objectives. A moral philosophy is a person’s principles and values. In the context of business, ethics refers to what the group, firm, or organization defines as right or wrong actions that pertain to its business operations and the objective of profits, earnings per share, or some other financial measure of success. For example, a production manager may be guided by a general philosophy of management that emphasizes encouraging workers to get to know as much as possible about the product they are manufacturing. However, the manager’s moral philosophy comes into play when he must make decisions such as whether to notify employees in advance of upcoming layoffs. Although workers prefer advance warning, issuing that warning could jeopardize the quality and quantity of production. Such decisions require a person to evaluate the “rightness,” or morality of choices in terms of his or her own principles and values.

Moral philosophies are guidelines for “determining how conflicts in human interests are to be settled and for optimizing mutual benefit of people living together in groups.” These philosophies direct people as they formulate business strategies and resolve specific ethical issues. However, there is no single moral philosophy everyone accepts. Moral philosophies are often used to defend a particular type of economic system and individuals’ behavior within these systems.

One such economic system is the theory of capitalism. Adam Smith is considered the father of free-market capitalism. He was a professor of logic and moral philosophy and wrote the treatise “The Theory of Moral Sentiments” (1759) and the book Inquiry into the Nature and Causes of the Wealth of Nations (1776). Smith believed business was and should be guided by the morals of good people. But in the eighteenth century, Smith could not imagine the complexity of modern markets, the size of multinationals, or the fact that four or five companies could gain control of the vast majority of the resources of the world. His ideas did not envision the full force of democracy, or the immense wealth and power some firms could wield within countries.

Under capitalism, some managers view profit maximization as the ultimate goal of an enterprise and may not be concerned about the impact of their firms’ decisions on society. The economist Milton Friedman supports this viewpoint, contending the market will reward

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or punish companies for unethical conduct without the need for government regulation. The emergence of this Friedman-type capitalism as the dominant and most widely accepted economic system created market-driven societies around the world. Even China’s communist government adapted national capitalism and free enterprise to help it become a leading economic power.

The United States exported the idea that the invisible hand of free-market capitalism can solve the troubles of mankind and guide societies toward greater happiness and prosperity as a result of the increased availability of products. Marketing helps consumers understand, compare, and obtain these products, thereby increasing the efficiency and effectiveness of the exchange. However, free markets will not solve all problems. For example, excessive consumption has negative effects on the environment and can be psychologically, spiritually, and physically unhealthy. More is not necessarily best in every situation.

Economic systems not only allocate resources and products within a society but also influence, and are influenced by, the actions and beliefs of individuals (morals) and of society (laws) as a whole. The success of an economic system depends on both its philosophical framework and on the individuals within the system who maintain moral philosophies that bring people together in a cooperative, efficient, and productive marketplace. There is a long Western tradition going back to Aristotle of questioning whether a market economy and individual moral behavior are compatible. Individuals in today’s society exist within a framework of social, political, and economic institutions.

People facing ethical issues often base their decisions on their own morals, values, or principles of right or wrong, most of which they learned through the socialization process with the help of family members, social groups, religions, and formal education. Individual factors that influence decision making include personal moral philosophies. Ethical dilemmas arise in problem-solving situations when the rules governing decision making are vague or in conflict. In real-life situations, there is no substitute for an individual’s own critical thinking and ability to accept responsibility for his or her decisions.

Moral philosophies are ideal moral perspectives that provide individuals with abstract principles for guiding their social existence. For example, a person’s decision to recycle waste or to purchase or sell recycled or recyclable products is influenced by moral philosophies and individual attitudes toward recycling. It is often difficult to implement an individual moral philosophy within the complex environment of a business organization. On the other hand, our economic system depends on individuals coming together and sharing philosophies to create the values, trust, and expectations that allow the system to work. Most employees within a business organization do not think about the particular moral philosophy they are using when confronted with an ethical issue.

Many theories associated with morals refer to a value orientation and concepts such as economics, idealism, and relativism. The concept of the economic value orientation (Associated with values quantified by monetary means; according to this theory, if an act produces more economic value for its effort, then it should be accepted as ethical) is associated with values quantified by monetary means; according to this theory, if an act

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produces more economic value for its effort, then it should be accepted as ethical. Idealism (A moral philosophy that places special value on ideas and ideals as products of the mind) , on the other hand, is a moral philosophy that places special value on ideas and ideals as products of the mind. The term refers to the efforts required to account for all objects in nature and experience and to assign to them a higher order of existence. Studies uncovered a positive correlation between idealistic thinking and ethical decision making. Realism (The view that an external world exists independent of our perceptions) is the view that an external world exists independent of our perceptions. Realists assume humankind is not naturally benevolent and kind, but instead inherently self-centered and competitive. According to realists, each person is ultimately guided by his or her own self-interest. Research shows a negative correlation between realistic thinking and ethical decision making. The belief that all actions are ultimately self-motivated seems to lead to a tendency toward unethical decisions.

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