Corporate Responsibility and Society

http://www.utm.edu/staff/jfieser/vita/research/business.htm

DO BUSINESSES HAVE MORAL OBLIGATIONS

BEYOND WHAT THE LAW REQUIRES?

Journal of Business Ethics 15(4) (Apr. 1996): 457-468.

James Fieser

The classic joke about business ethics is that the very concept "business ethics" is a contradiction

in terms. By its nature, business is supposed to be unscrupulous and driven by the need for

success, so where is there room for ethics? The basis of this problem involves a narrowly defined

area of possible actions which are legal, but which would also be considered immoral by many

people. For example, current laws permit a spectrum of exaggerated claims in advertising, yet

critics argue that many of these advertising claims would at the same time count as lying. Do

businesses need to carry the torch of morality beyond the constraints contained in the law? The

tendency in current discussions of business ethics is to maintain that businesses are indeed under

obligation to be moral beyond what the law requires. Contrary to this view, it will be argued here

that the typical business is under no such obligation.

I begin by criticizing the view that morality in business can be derived from the profit

motivation. The problem with this view is that it either confines morality to what at that time will

yield a profit, or it wrongly assumes that consumers will insist on moral business practices. Next,

I attack the position that there are specific business-related moral obligations beyond what the

law requires. This position fails because such supra-legal obligations appear optional to the

business person, and it is unreasonable to expect businesses to perform duties which appear

optional. Finally, I argue that business-related moral obligations are restricted to the moral norms

which are already contained in the law. This view can be supported either by a legal positivist

and contractarian theory of moral obligation, or by a criterion of moral obligation which entails

that a moral principle must have majority endorsement within a cultural context. It is noted in

conclusion that business ethics should not be viewed as a quest for independent moral principles,

but instead should be seen as part of a pre-legislative or pre-regulatory dialog.

BACKGROUND

The Scope of the Problem. The issue of deceptive advertising noted above is just one example of

a legal business practice which might be deemed morally impermissible according to our

common notions. In fact, many topics in business ethics can be seen as part of the larger

question, "Do businesses have moral obligations beyond what the law requires?" For example

the law currently allows businesses to access employees' medical records, monitor employees'

phone calls, and test employees for drug use. Several philosophers argue that, in spite of their

legality, these practices are violations of privacy and are not morally permissible (Des Jardins,

1987; Hoerr, 1988; Brenkert, 1981). Other examples would be environmentally damaging

business practices which are currently unregulated, conducting a legal business in an inherently

racist country, bluffing in labor negotiations, and maintaining unsafe working conditions which

meet only the bare minimum legal requirements. The issue of supra-legal moral obligations also

extends beyond the obligation of businesses to their employees and customers. Indeed, suppliers,

retailers, subcontractors, governments, regulatory agencies and any party affected by a business

practice may be subject to possibly immoral business activities which are legal.

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Recent discussions introduce several variables which complicate the general issue of supra-legal

moral obligations. For example, it is argued that corporations are quasi-public institutions, and

therefore have moral responsibilities which go beyond private proprietorships (Kristol, 1975).

Similarly, some have argued that the size of a business also has a bearing on its moral obligations

since, the larger the business, the more lives are affected by its decisions. (1)

For simplicity, I will

assume that corporations and private proprietorships of all sizes have the same theoretical

obligations, whatever those obligations may be.

Another factor involves the variety of supra-legal moral obligations which businesses are said to

have. Some obligations are oriented toward social welfare, such as donations to charities, and

others are obligations of noninterference, such as respecting an employee's right to privacy. (2)

The focus in this essay will be on the obligations of noninterference since these are the most

important and most commonly accepted moral obligations. Further, if it can be established that

businesses have no obligations of noninterference beyond what the law requires, then it would

not be difficult to show that they have no welfare obligations either.

Finally, discussions are also compounded by considering situations where duties conflict, and

one overrides the other. For example, Thomas Carson considers the legally permissible deception

which takes place in labor negotiations between unions and management. Technically, both sides

are lying to each other, and lying is prima facie immoral. However, according to Carson, since

each side expects the other to lie, then the prima facie obligation to be truthful in labor

negotiations is overridden (Carson, 1982). Theoretically, any supra-legal moral obligation may

be overridden by a stronger obligation which arises. But what is important for our purposes is to

determine whether there are in fact any supra-legal moral obligations to begin with. Thus, issues

involving conflicting duties will not be addressed here.

Possible Connections Between Morality and Business. In a capitalist system of business such as

ours, there are two fundamental conditions which define the nature and scope of business.

Informally, they are,

(1) Try to make a profit, and

(2) Obey the law.

For simplicity, I will refer to these as the profit principle and the law principle. On a purely

theoretically level, it is clear that both of these principles are necessary conditions for the general

notion of a business enterprise as we understand the concept in our society. Without the profit

principle, an institution would be better characterized as a nonprofit organization, social club, or

personal hobby. The law principle is also necessary since the laws are what establish the

contractual framework within which businesses operate. Further, if laws are backed by sufficient

sanctions, rejection of the law principle would be self-destructive for both the business and the

business owners. In addition to being necessary conditions for the theoretical concept of

business, these two principles are sometimes construed as moral requirements in actual business

practice. Managers of corporations are under a fiduciary obligation to make a profit for

stockholders, and this amounts to a moral obligation of trust. Also, the basic moral duty of

political obedience dictates that there is a prima facie moral duty to follow the law. For our

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purposes, however, it is sufficient to construe both the profit and law principles as being only

pragmatically obligatory. To violate either would risk financial and personal disaster.

Given the above two fundamental principles of business, where does morality enter into the

picture? There are three approaches: (1) morality is grounded in the profit principle, (2) morality

is grounded in the law principle, and (3) morality is introduced as a third factor. I will examine

each of these.

The first of these approaches maintains that there is a symbiotic relation between ethics and

business where ethics naturally emerges from a profit-oriented business. There are both weak

and strong version of this approach. The weak version is often expressed in the dictum that

"Good ethics results in good business." According to this view, moral practices are profitable; for

example, it is profitable to make safe products since this will reduce product liability law suits.

Similarly, it may be in the best financial interests of businesses to respect employee privacy,

since this will improve morale and thus improve work efficiency. Robert F. Hartley's recent

book, Business Ethics, takes this approach; using 20 case studies as illustrations, Hartley argues

that the long term best interests of businesses are served by seeking a trusting relation with the

public (Hartley, 1993). This weak version, however, is clearly flawed. First, many moral

business practices will have an economic advantage only in the long run. This provides little

incentive for businesses which are designed to operate exclusively on a short-term basis. Second,

some moral business practices may not be economically viable in the long run, such as, perhaps,

retaining older workers who are inefficient, as opposed to replacing them with younger and more

efficient workers. Third, and most importantly, those moral business practices which are good

for business depend upon what at that time will yield a profit. In a different market, the same

practices might not be economically viable. Thus, any overlap which exists between morality

and profit is both limited and incidental.

The strong version of this profit approach takes a reverse strategy and maintains that, in a

competitive and free market, the profit principle will in fact bring about a morally proper

environment. That is, if customers demand safe products, or workers demand privacy, then they

will buy from or work for only those businesses which meet their demands. Businesses which do

not heed these demands will not survive. Since this view maintains that the drive for profit will

create morality, the strong version can be expressed in the dictum that "Good business results in

good ethics" (which is the converse of the above dictum). Proponents of this view, such as

Milton Friedman, argue that this would happen in the United States if the government would

allow a truly competitive and free market. Unfortunately, this strong view is also flawed, since it

assumes that consumers or workers will demand the morally proper thing. In fact, consumers

may opt for less safe products if they know they will be saving money (for example, preferring a

cheaper car without air bags). Similarly, workers may forego demands of privacy at work if they

are compensated with high enough wages.

Thus, moral business practices will not simply emerge from the profit principle as suggested by

either the weak or strong views. Returning to the above list of approaches, I will postpone

discussion of the second approach until examining the third.

MORALITY AS AN ADDITIONAL FACTOR

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The third approach listed above maintains that morality must be introduced as a third factor,

distinct from the profit and law principles. This is the approach taken by the majority of writers

on business ethics, and is expressed most clearly in Gene Laczniak's widely reprinted essay,

"Business Ethics: A Manager's Primer" (1983):

Proper ethical behavior exists on a plane above the law. The law merely specifies the

lowest common denominator of acceptable behavior.

The most convenient way to explore this approach is to consider the supra-legal moral principles

which have commonly been offered. (3)

Suggested Moral Principles. Three of the broadest moral principles which have been suggested

are as follows:

Harm principle: businesses should avoid causing unwarranted harm.

Fairness principle: business should be fair in all of their practices.

Human rights principle: businesses should respect human rights.

An example of the harm principle is found in Michael Hoffman's essay on "Business and

Environmental Ethics" (1991). Hoffman assumes the binding nature of this harm principle

without offering any justification for it, and continues by arguing that it is immoral for

businesses to cause environmental damage because of the harm which it produces. (4)

The human

rights and fairness principles would function similarly in addressing questionable business

practices. (5)

The attraction of these principles is that they appeal to universal moral notions which

no one would reasonably reject. But, the problem with these principles is that they are too

general. For, these principles do not tell us specifically what counts as harm, unfairness, or a

violation of human rights. Does all damage to the environment constitute harm? Does it violate

an employee's right to privacy if an employer places hidden surveillance cameras in an employee

lounge area? Broad principles of harm or human rights do not answer these questions. More

specific guidelines seem to be required.

Fortunately, more specific moral principles have also been offered. Although there is no

complete list of such principles, the following two will serve as illustrations:

Autonomy principle: businesses should not infringe on the rationally reflective choices of

people.

Veracity principle: businesses should not be deceptive in their practices.

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These principles are often appealed to as a means of showing the immorality of specific

questionable business practices. For example, Richard Lippke (1989) argues that businesses

should limit surveillance of employees since failure to do so will undermine the employee's

autonomy. Pain (1983) argues that child-oriented advertising is immoral since it misleads

children and thus violates the principle of veracity. Clearly, neither of these principles will

address all questionable business practices (for example, these principles are irrelevant to the

issue of environmental damage). This suggests that a longer list of more specific principles must

be arrived at to cover all relevant issues. Even if this could be accomplished, there is a serious

limitation to the use of these specific principles. Unlike the more general moral principles which

are virtually universally acknowledged (such as the harm principle), these more specific moral

principles are not universally accepted. Both the autonomy and veracity principles, for example,

have been challenged. (6)

Both the general and specific principles above are abstract in nature. That is, they consider harm

broadly, or autonomy broadly. Because they are abstract, they will be either difficult to apply to

concrete situations, or they will be difficult to prove. An alternative approach is to forget the

abstract, and focus instead on concrete situations which affect the particular interests of

consumers, workers, stockholders, or the community. The recent stakeholder approach to

business ethics attempts to do this systematically. It may be expressed in the following:

Stakeholder principle: businesses should consider all stakeholders' interests that are

affected by a business practice. (7)

A stakeholder is any party affected by a business practice. Accordingly, the stakeholder approach

to business ethics emphasizes the mapping out of the various parties affected by a business

practice. But this approach is limited since there is no clear formula provided for how to

prioritize the various interests once they are mapped out. Should all stakeholder's interests be

treated equally -- along the lines of a utilitarian calculus? Few defenders of the stakeholder

approach advocate treating all interests equally. Alternatively, should the stockholders' interests

have special priority? If this route is taken, then the stakeholder principle is merely an extension

of the profit principle.

Perhaps the best way to arrive at more concrete moral obligations in business is to list them issue

by issue. This is the strategy behind corporate codes of ethics which address specific topics such

as confidentiality of corporate information, conflicts of interest, bribes, and political

contributions. (8)

Consider the following issues from Johnson and Johnson's Credo:

We are responsible to our employees, the men and women who work with us throughout

the world. Everyone must be considered as an individual. We must respect their dignity

and recognize their merit. They must have a sense of security in their jobs. Compensation

must be fair and adequate, and working conditions clean, orderly and safe. We must be

mindful of ways to help our employees fulfill their family responsibilities. (9)

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Corporate codes of ethics are often viewed cynically as attempts to foster good public relations

or to reduce legal liability. Further, corporate codes of ethics often prohibit actions which are

already illegal, such as bribery, and thus bring nothing new to the table. Nevertheless, a

corporate code of ethics is a reasonable model for understanding how moral principles are to be

articulated and introduced into business practice. (10)

The practical advantage of this approach is

that it directly stipulates the morality of certain action types, without becoming ensnared in the

problem of deriving particular actions from more abstract principles (such as the harm principle).

But, the limitation of the corporate code model is that the principles offered will appear to be

rules of prudence unless their distinctly moral character can be established. And this is where the

difficulty begins. (11)

Two essays have become modern-day classics in critique of specific supra-legal moral

obligations: Albert Carr's "Is Business Bluffing Ethical" (1968), and Milton Friedman's "The

Social Responsibility of Business is to Increase its Profits" (1970). To make my own case against

specific supra-legal moral obligations, it will be helpful to see the limitations of Carr's and

Friedman's arguments.

Carr and Friedman's Critique of Additional Moral Principles. Carr attacks supra-legal moral

obligations by considering the problem of legal deception in business. Carr argues that such

deception is like bluffing in poker, insofar as deception is part of the rules of the business game.

Since we do not morally condemn poker players for attempting to deceive opponents with their

poker faces, by analogy we should not condemn businesses for doing what is necessary to legally

make a sale when it involves going contrary to our common moral intuitions. (12)

Although Carr

focuses on deception in particular, the examples he cites indicate that he has a broader range of

moral issues in mind, such as product safety and employee working conditions. In short,

businesses have no moral obligation beyond what the law requires since those are the rules of the

game. Carr's argument fails, though, since the poker/business analogy breaks down too quickly.

For, poker players know the rules of the game before hand and join the game voluntarily. By

contrast, even well informed consumers and workers may not have full knowledge of the

questionable businesses practices which are legally permitted. Further, unlike poker games,

consumers may not be in a position to opt out of the consumer game.

In his essay, Friedman argues that it is contrary to the nature of a well-run corporation to

advocate supra-legal social responsibility since it amounts to a hidden social tax. Being socially

responsible (beyond what the law requires) will mean reduced returns to stockholders, higher

prices for customers, or lower wages for employees. For Friedman, this makes the socially-

minded executive an unelected civil servant, and this, in turn, is subversive to a free society. The

only responsibility of business, then, is to increase its profits so long as it stays within the bounds

of the law. But Friedman's argument fails since business money spent on moral causes is not like

a tax in at least one important way. Taxes imposed by governments are mandatory. However, no

one's association with a socially responsible corporation is mandatory. Consumers can choose to

spend their money elsewhere; workers can choose to be employed elsewhere; stockholders can

choose to invest elsewhere. Since these are free associations, it is difficult to see how such

corporate social responsibility is subversive to a free society.

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Thus, neither Carr's poker analogy nor Friedman's hidden social tax argument refute the view

that businesses have supra-legal moral obligations. In spite of their respective failures, there are

good reasons to reject the view that businesses must acknowledge additional moral principles,

which I present in the next section.

Unreasonableness of Supra-legal Moral Obligations. The main reason for rejecting the position

that businesses must abide by supra-legal moral principles is that it is an unreasonable

expectation. The argument is as follows:

(1) A moral obligation is valid only if an agent can be reasonably expected to perform

that obligation.

(2) In our society, business people cannot be reasonably expected to perform obligations

above what the law requires.

(3) Therefore, in our society, business people do not have moral obligations above what

the law requires.

The basis of premise one is the general moral principle that ought implies can. That is, we are

only obligated to perform those actions which we are capable of performing. The notion of what

we are "capable of performing" has been understood several ways in ethical discussions. At

minimum, it entails that it must be logically possible for us to perform an action. For example, I

cannot be obligated to become a married bachelor since this is a logically impossible task.

Further, the principle also entails that an action must be physically possible for me to perform.

For example, it is physically impossible for me to rid the entire world of disease, hunger, and

poverty. Given my limited physical abilities, I would have to be a miracle worker to accomplish

these tasks. Therefore I am not morally obligated to perform these actions which are beyond my

physical abilities. Although the ought implies can principle entails the requirement of both

logical and physical possibility, these two implications are so self-evident that from a normative

stand point they are almost trivial. (13)

However, there is a broader and more normatively

interesting use of the ought implies can principle which can be expressed in two related ways:

(a) I am under obligation only if it is psychologically possible to perform an action.

(b) I am under obligation only if it is reasonable to expect me to perform an action.

An illustration of (a) might be a case where my chronic fear of heights absolves me from

rescuing someone on a steep ledge. As an illustration of (b), Joel Feinberg (1986) implicitly

relies on this reasoning in his essay on "Abortion." Feinberg argues that in cases of contraception

failure, a woman is not morally responsible for her pregnant condition: "When a person takes all

the precautions that she can reasonably be expected to take against a certain outcome, then that

outcome cannot fairly be described as her responsibility." With both (a) and (b) there is much

room for interpretation concerning what tasks would be psychologically impossible or

unreasonable for me to perform. When taken too far, there is a risk that my moral obligation is

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absolved if I merely feel emotional discomfort, or if I am merely inconvenienced. For example,

an employer who is a racial bigot might argue that he is not obligated to consider hiring someone

of a different race since this would cause him discomfort. This would clearly be unacceptable.

Given the flexibility of (a) and (b), the burden of proof is on the agent to demonstrate that his

appeal to (a) or (b) is legitimate.

Returning to the argument above, premise two maintains that in our society business people

cannot be reasonably expected to perform obligations above what the law requires. The reason

why such an expectation would be unreasonable is that our society lacks a homogeneous source

of external morality which might form the content and motivation for a distinctly supra-legal

moral obligation. (14)

The most universal aspects of western morality have already been put into

our legal system, such as with laws against killing, stealing, fraud, harassment, or reckless

endangerment. The moral mandates which remain (external to the legal system) do not have the

backing of society to carry universal prescriptive force. Further, these principles appear to be

optional as philosophers dispute about their validity and society wavers about its acceptance. The

principles of autonomy and veracity noted above are examples of abstract principles which are in

dispute. And, for any specific issue under consideration, such as child-oriented advertising or

bluffing in labor negotiations, we will find opposing positions on our supra-legal moral

obligations. It is, therefore, unreasonable to expect businesses to perform duties about which

there is so much disagreement and which appear to be optional.

The unreasonableness of such a moral requirement in our society becomes all the more evident

when we consider societies which do have a strong external source of morality. Islam, for

example, contains a broad range of moral requirements such as an alms mandate, prohibitions

against sleeping partners who collect unearned money, and restrictions on charging interest for

certain types of loans (particularly for relief aid). Thus, in Muslim countries which are not

necessarily ruled by Islamic law, there is a strong source of external morality which would be

binding on Muslim businesses apart from what their laws would require. Similarly,

Confucianism has a strong emphasis on filial piety; thus, in Chinese and other Confucian

societies, it is reasonable to expect their businesses to maintain a respect for elders even if it is

not part of the legal system. In Western culture, or at least in the United States, we lack a

counterpart to an external source of morality as is present in Muslim or Confucian societies. One

reason is because of our cultural pluralism and the presence of a wide range of belief systems.

Even within Christianity, the diversity of denominations and beliefs prevents it from being a

homogeneous source of Christian values. In short, without a widely recognized system of ethics

which is external to the law, supra-legal moral obligations in our society appear to be optional;

and, it is unreasonable to expect business people to be obligated to principles which appear to be

optional.

BUSINESS ETHICS WITHIN THE BOUNDS OF THE LAW

To review, it was noted above that there are three approaches to understanding the place of

morality in business. One approach is to ground morality in the profit principle. This approach

fails since it either confines morality to what at that time will yield a profit, or it wrongly

assumes that consumers will insist on moral business practices. A second approach is to

introduce morality as supplement to the profit and law principles. This approach fails since it is

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unreasonable to expect businesses to perform duties which appear to be optional. The final

approach is to restrict moral obligation in business to those norms contained in the law. Given

the failure of the first two approaches, this final approach will be the default choice, so long as it

can be supported by an acceptable account of moral obligation. It is beyond the scope of this

essay to present a full-fledged account of moral obligation; nevertheless, certain assumptions

about moral obligations can be made explicit.

Moral Obligation and the Law. Two theoretical routes can be taken which support the view that

businesses have no supra-legal moral obligations. First, from a legal positivist and social

contractarian standpoint, it can be argued that moral obligation in general is confined to the law

since (1) morality is restricted to a set of mutually beneficial social rules and, (2) these rules are

expressed in the law. If all morality is contained in the law, then, clearly, the moral obligations of

businesses are also to be found exclusively in the law. Although this approach will appeal to

legal positivists, it probably takes too narrow of a view of the nature of moral obligation to gain

wide acceptance. For, there are many types of nonbusiness-related conduct which are legal, but

which we may want to classify as immoral, such as sexual infidelity, or lying to friends.

A second theoretical approach, which may be called the majority endorsement approach, allows

for the possibility of supra-legal moral obligations which are nonbusiness-related, such as sexual

fidelity. The majority endorsement approach relies on a specific criterion of those things that we

in fact call "moral obligations":

To be a called a "moral obligation" a principle must have majority endorsement within a

cultural context.

This criterion does not address the metaphysical issue of an ideal standard of moral obligation.

Instead, it only answers the linguistic question of what we generally mean when we say "we have

a moral obligation to do X." Majority endorsement may not be the only thing that we mean when

we say that a moral obligation is present; however, it is a key meaning which is difficult to

dispute. Like cultural relativism, the majority endorsement criterion appeals to what is endorsed

in a given cultural context. It differs from cultural relativism, though, in two important ways.

First, cultural relativism denies the existence of an ideal standard of morality beyond how a

culture actually behaves. By contrast, the majority endorsement criterion is restricted to the

meaning of the expression "moral obligation" and leaves open the possibility that an ideal

standard of morality exits. Second, whereas cultural relativism appeals to the behavioral norm of

a given society, the majority endorsement criterion appeals to the principles which are endorsed

in a given cultural context, irrespective of how those people actually behave.

On the majority endorsement criterion, several levels of obligation will naturally emerge,

corresponding to various cultural contexts. There will be a set of obligations which have majority

endorsement within international and national social units. Other sets of obligations will have

majority endorsement within smaller cultural contexts, such as those within religious

denominations, families, or civic organizations. Some non-business principles, such as sexual

fidelity, are broadly endorsed by our society and may thus be considered morally binding, even

though they are not legally mandated. Other principles, such as prohibitions against abortion, are

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endorsed by smaller groups, such as religious conservatives. These would be deemed morally

binding only within those contexts.

In our culturally pluralistic society, the only business-related moral obligations which are

majority-endorsed by our national social group are those obligations which are already contained

in the law. These include a range of guidelines for honesty in advertising, product safety, safe

working conditions, and fair hiring and firing practices. Indeed, the unifying moral force of

businesses within our diverse society is the law itself. Beyond the law we find that moral

obligations of businesses are contextually bound by subgroups, as with a business which is

operated by traditional Muslims or environmental activists. In these case, the individual

businesses may be bound by the obligations of their subgroups, but such obligations are

contingent upon one's association with these social subgroups. And, clearly, the obligations

within those subgroups are not binding on those outside the subgroups. If a business does not

belong to any subgroup, then its only moral obligations will be those within the context of

society at large, and these obligations are in the law.

The majority endorsement approach does not imply that all business practices which are illegal

are also immoral. For example, the morality of insider trading is commonly defended, although

the practice is currently illegal. Instead, it is only maintained that business practices which are

deemed immoral by our broad social community have already been incorporated into the law as

a result of decades of evolution in business-related law. It is, of course, and empirical claim that

all business obligations which are majority-endorsed by our society at large have in fact been

incorporated into law. In the absence of any nation-wide surveys indicating possible supra-legal

business obligations, though, this claim can only be established indirectly. The strongest

indicator is that no unambiguous and broadly endorsed list of supra-legal business obligations

has emerged in the literature on business ethics. Further, as noted above, most obligations listed

in corporate codes of ethics are mandates already contained in the law, such as issues relating to

bribery. Corporations which assume an obligation beyond the law, either in their corporate codes

or in practice, take on responsibilities which most outsiders would designate as optional. A good

example is found in the mission statement of Ben & Jerry's Ice Cream, which includes the

following:

Social Mission -- To operate the company in a way that actively recognizes the central

role that business plays in the structure of society by initiating innovative ways to

improve the quality of life of a broad community -- local, national, and international.

Consistent with this mission, the highest paid employees of Ben & Jerry's will not earn more

than seven times more than the lowest paid full-time employees. "We do this," they explain,

"because we believe that most American corporations overpay top management, and underpay

entry-level employees -- and because everyone who works at Ben & Jerry's is a major

contributor to our success." (15)

In spite of the merits of this pay scale policy, it clearly lacks

majority endorsement in our national social group, and would not be a binding obligation.

Replies to Possible Criticisms. Both the contractarian and the majority endorsement approaches

sketched above invite specific criticisms. Against the contractarian position in particular, it is

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commonly argued that for any given law, we may ask whether that law itself is morally proper.

This implies that a law will have moral force only if there is a moral standard external to the law.

And the contractarian view, as described above, denies that there is a moral standard external to

the law. But this argument fails to recognize that even a proposed moral standard can also be

subjected to external confirmation. Suppose I maintain that X is the moral standard which

justifies a given law. I can then ask if X is itself morally proper. This suggests a second moral

standard, Y, against which I am judging X. This will lead to an infinite regress of moral

principles since I can then ask if Y is itself morally proper, and so on. If at some point in the

regress a given moral standard must be deemed foundational, there is no reason why this cannot

be maintained about the initial law itself. Fortunately, this entire problem is not relevant to the

majority endorsement position since the majority endorsement view does not deny that there is a

standard of morality external to the creation of specific laws. Instead, it maintains only that the

business practices deemed immoral by the broadest spectrum of society are already proscribed

by the law.

A second argument, applicable to the majority endorsement approach in particular, is that the law

is primarily a reactive institution, which will always involve a time lag. (16)

Even in the most ideal

conditions, the law will lag behind our moral condemnation of certain unscrupulous (yet legal)

business practices. Thus, prior to the enactment of a law, there will be a period of time when a

business practice will be deemed immoral, yet the practice will be legal. This would be a

continuing problem since changes in products, technology, and marketing strategies would soon

present new questionable practices which would not be addressed by existing legislation. In

response, it is theoretically possible that an unscrupulous business practice might be broadly

condemned by our national social group before it is actually made illegal. In reality, however,

most new laws regulating questionable business practices do not emerge in reaction to a national

outcry, but instead emerge from controversies which are isolated from most citizens. (17)

Even

well informed business people may not be aware of such new policies until they become law, as

with new advertising or pollution standards. Thus, although the law is a reactive institution, at

this stage in the development of business-related law, the cue for new laws is not taken from our

national social group. In fact, the enactment of many business-related laws may both pre-date

and create a national moral consensus on certain issues, rather than the reverse.

CONCLUSION

The cautious conclusion to be drawn from the arguments above is that the typical business in our

society has no moral obligation beyond what the law requires. There are four reasons for offering

this conclusion cautiously. First, it has been taken as axiomatic that capitalism is not an

inherently immoral economic system. Of course, socialist critics argue otherwise, and, although

it cannot be explored here, the existence of the socialist critique must at least be acknowledged.

Second, given the majority endorsement criterion of "moral obligation," some businesses may

take on supra-legal moral obligations by virtue of their association with a subgroup, such as with

environmental activists. When this occurs, they will be assuming the supra-legal obligations of

that subgroup. However, for businesses on the outside, these obligations are optional since they

are contingent on one's voluntary association with that subgroup. Third, the conclusion applies

only to countries such as our own whose business-related laws are morally conscientious. The

situation may be different for some developing countries with less sophisticated laws and

J. Fieser, Do businesses have moral obligations beyond what the law requires?

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background institutions. Finally, the thesis offered here has only been established indirectly,

based on the apparent absence of majority-endorsed supra-legal moral principles. Ideally, a more

direct tactic would be to examine possible supra-legal moral principles which are relevant to the

specific topics of deceptive advertising, employee privacy, safe working conditions, pollution

control, affirmative action, product safety, doing business in third world countries, and other

problematic areas. Clearly, though, the direct approach is highly cumbersome if not impossible,

and this suggests the benefit of the indirect approach, in spite of its limitations.

So, if the typical business in our society has no moral obligation beyond what the law requires,

what task is left for business ethics? Important questions are still raised by discussions on

deceptive advertising, and the other issues listed above. But, these discussions should not be

viewed as a quest for supra-legal moral principles, as is usually done. Instead, they should be

part of a pre-legislative or pre-regulatory dialog with the goal of clarifying or changing the law.

This strategy is adopted in a recent essay by Shaheen Borna et al. (1993) on "The Deceptive

Nature of Dial-a-Porn Commercials and Public Policy Alternatives." The authors argue that dial-

a-porn advertisements are frequently deceptive since callers are typically led to believe that the

dial-a-porn operator will engage in sexual conversation. In reality, however, operators are not

permitted to do so. As a consequence, the authors suggest several legislative possibilities. The

most reasonable recommendation is to require that warning messages be included within dial-a-

porn advertisements which inform potential users that the operator cannot and will not engage in

sexual conversation. Aside from the merits of their particular analysis, their discussion is a model

for how business ethics should have public policy as its goal. (18)

NOTES

1. For example, the Corporate Democracy Act of 1980 (H.R. 7010) attempted to provide more

public control over corporations with annual sales of more than 250 million or more than 5,000

employees.

2. Paralleling the distinction between positive and negative rights, welfare obligations may be

seen as positive duties, and the obligations of noninterference may be seen as negative duties

(both passive and active). In the realm of business, positive duties might include hiring the

unskilled unemployed as a means to reducing poverty, keeping prices low to fight inflation even

though it is in the best interests of the company to raise prices, and supporting charities. Negative

duties in the realm of business would involve issues of product safety, employee privacy, and

deceptive business practices.

3. It is not being suggesting that all supra-legal moral obligations must reduce to formalized and

systematic principles of obligation. It may well be that supra-legal moral obligations are more

like virtues, or an accumulation of good reasons, neither of which are formalized principles.

Nevertheless, whatever is said here concerning moral principles could also be reworded in the

language of virtues or good reasons. For purposes of theoretical discussion, though, it is more

convenient to construe moral obligations in terms of principles.

J. Fieser, Do businesses have moral obligations beyond what the law requires?

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4. As a biocentrist, Hoffman is concerned specifically with the harm that is inflicted directly

upon environmental collections though environmental damage by businesses, and not the harm

which this damage causes to humans.

5. The principle of human rights is advocated by De George (1986). Pain (1983) appeals to the

principles of fairness.

6. Robert Arington (1982) argues that many of our choices in life are not autonomous, and

consequently autonomy is an empty moral issue. Jennifer Jackson (1990) argues that an

intentional deception is a lie only when the person who is deceived was entitled to trust the

deceiver. Thus, for Jackson, many acts of intentional deception in business will be morally

permissible when customers are not entitled to trust the business.

7. See Joseph W. Weiss (1994).

8. See Manley (1991).

9. Printed in Stephen Landekich (1989).

10. A recent study based on surveys of over one thousand corporate officials notes that "the

adoption of business codes of ethics is the most effective way of encouraging ethical business

behavior, respondent believe" (Touche Ross and Co, 1988).

11. Perhaps a combination of the above types of principles are necessary for systematically

developing the position that there are moral obligations beyond what the law requires. Even so,

this will not bypass the general problem presented below.

12. Carr's precise position on the moral status of deceptive business practices is unclear. At times

he suggests that such deception does not qualify as lying since it is part of the rules of the

business game. At other times, though, he argues that the sphere of common morality does not

even intersect with sphere of legal business practices.

13. The ought implies can principle is used most often in metaethical discussions rather than

normative discussions. In such cases the principle has important philosophical implications. For

example, in discussions of moral dilemmas it is usually argued that genuine (and unresolvable)

moral dilemmas cannot exist since (a) in such situations I cannot physically perform both

actions, and (b) I am only obligated to perform what is physically possible. Thus, only one of the

two actions can be my true obligation.

14. James Davison Hunter argues that the lack of a homogeneous source of moral authority in

the United States feeds a culture war: "the culture war emerges over fundamentally different

conceptions of moral authority, over different ideas and beliefs about truth, the good, obligation

to one another, the nature of community, an so on." Culture Wars: The Struggle to Define

America, (Basic Books, 1991). Hunter suggests that the law (particularly judiciary precedent)

only perpetuates this conflict by advancing the interests of one side of the cultural divide.

J. Fieser, Do businesses have moral obligations beyond what the law requires?

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Although Hunter may be correct regarding some religiously oriented issues, such as abortion, in

business-related issues laws and judiciary precedents do not have this kind of negative impact.

15. As appears in White (1993).

16. This argument is presented by Laczniak (1983). See also Christopher Stone (1975).

17. An exception to this is sexual harassment legislation which has emerged in reaction to a

national outcry. However, the problem of sexual harassment extends beyond the business realm

to governmental, educational, and religious institutions.

18. I wish to thanks to Noman Lillegard for his comments.