Assessing Ethical Influences

What is *'business ethics"?

Peter F. Drucker

Because corporations and those who manage them exercise great power in our society, their behavior ought to be governed by a more demanding set of standards than those that apply to private individuals. So argue the proponents of business ethics. Few corporate spokesmen have cared to challenge their logic directly; rather, they have insisted that the collective conscience of business is already at least as sensitive as even its critics could wish. Peter Drucker takes a different approach: he neatly punctures the original proposition and shows why it is not only wrong-headed but actually dangerous.

"Business ethics" is rapidly becoming the " i n " subject, replacing yesterday's "social responsibility." "Business ethics" is now being taught in departments of philosophy, business schools and theological seminaries. There are countless seminars on it, speeches, articles, conferenees and books, not to mention the many earnest attempts to write "husiness ethics" into the law. But what precisely is "business ethics'".' And what could, or should- it be? Is it just another fad, and only the latest round in the hoary American blood sport of business baiting? Ts there more to "busi- ness ethics" than the revivalist preacher's call to the sinner to repent? And if there is indeed something that one could call "business ethics" and could take seriously, what could it be?

Ethics is, after all, not a recent discovery. Over the centuries philosophers in their struggle with human hc^havior have developed different approaches to ethics, each leading to different conclu- sions, indeed to conflicting rules of behavior. Where does "business ethics" flt in or does it flt in anywhere at all?

The confusion is so great - and the noise level even greater - that perhaps an attempt might be in order to sort out what "husiness ethics" might be, and what it might not be, in the light ofthe major approaches which philosophers have taken throughout the ages

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(though my only qualification for making this attempt is that I once, many years before anybody even thought of "business ethics," taught philosophy and religion, and then worked ardu- ously on the tangled questions of "political ethics").

Business ethics and the Western tradition

To the moralist ofthe Western tradition, "business ethics" would make no sense. Indeed, the very term would to him be most objec- tionable, and reeking of moral laxity. The authorities on ethics disagreed, of course, on what constitutes the grounds of morality whether they be divine, human nature, or the needs of society. They equally disagreed on the specific rules of ethical behavior. But they were in complete agreement on one point: There is only one ethics, one set of rules of morality, one code - that of individual behavior, in which the same rules apply to everyone alike.

The moralist ofthe Western tradition accepts "extenuating" and "aggravating" circumstances. He accepts that the poor widow who steals bread to feed her starving children deserves clemency and that it is a more heinous offense for the bishop to have a concubine than for the poor curate in the village. But before there can be extenuating or aggravating circumstances, there has to be an ofTense. And the offense is the same for rich and poor, for high and low alike - theft is theft, concubinage is concubinage. The reason for this insistence on a code that considers only the individual, and not his status in life or society, is precisely that otherwise the mighty, the powerful, the successful will gain exemption from the laws of ethics and morality.

The only differences between ethically right and ethically wrong behavior which traditional moralists, almost without exception, would accept - would indeed insist on - are differences grounded in social or cultural mores, and then only in respect to "venial" offences. That is, the way things are done rather than the substance of behavior. Even in the most licentious society, fidelity to the marriage vow is meritorious, all moralists would agree; but the sexual license of an extremely "permissive" society, say seven- teenth century Restoration England or late twentieth century America, might be considered an extenuating circumstance for the sexual transgressor. And even the sternest moralist has always insited that, excepting only true matters of conscience, practices that are of questionable morality in one place and culture might be perfectly acceptable - and indeed might be quite ethical - in another cultural surrounding. Nepotism may be considered of

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dubious morality in one culture in today's United States, for instance. In other cultures, a traditional Chinese one, for example, it may be the very essence of ethical behavior, both by satisfying? the moral obligation to one's family and by making disinterested service to the public a little more likely.

But - and this is the crucial point these are merely qualifieations to the fundamental axiom on which the Western tradition of ethics has always been based: There is only one eode of ethics, that of individual behavior, for prince and pauper, for rich and poor, for the mighty and the meek alike.

A dual standard

And this fundamental axiom "business ethics" denies. Viewed from the mainstream of traditional ethics, "business ethics" is not ethics at all, whatever else it may be. For it asserts that acts that are not immoral or illegal if done by ordinary folk become immoral or illegal if done by business.

One blatant example is the treatment of extortion in the current discussions of "business ethics." No one ever has had a good word to say for extortion, or has advocated paying it. But if you and 1 are found to have paid extortion money under threat of physi<.:al or material harm, we are not considered to have behaved immorally or illegally. The extortioner is both immoral and a criminal. If a business submits to extortion, however, current "business ethics" considers it to have acted Luiethically. There is no speech, article, book, or conference on "business ethics," for instance, which does not point an accusing finger in great indignation at Lockheed foi' giving in to a Japanese airline company that extorted money as a prerequisite to considering the purchase of Lockheed's falteinng L-1011 jet plane. Therc> was vei'y little difference between Lock- heed's paying the Japanese and the pedestrian in New York's Central Park handing his wallet over to a mugger. Yet no one would consider the pedestrian to have acted unethically.

Similarly., in Senate confirmation hearings, one of President Reagan's cabinet appointees was accused of unethical practices and investigated for weeks because his New Jersey construction company was alleged to have paid money to union goons under the threat of their beating up the employees, sabotaging the trucks and vandalizing the huilding sites. The accusers were self-confessed labor racketeers; no one seemed to have woi'ried about their ethics.

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One can argue that both Lockheed and the New Jersey builder were stupid to pay the holdup men. But as the old saying has it, "Stupidity is not a court-martial offense." Under the new "busi- ness ethics," it does become exactly that, however. And this is not compatible with what ethics always was supposed to be.

Cultural adaptation

The new "business ethics" also denies to business the adaptation to cultural mores which has always been considered a moral duty in the traditional approach to ethics. It is now considered grossly unethical - indeed it may even be a "questionable practice" if not a criminal offense - for an American business operating in Japan to retain as a "counsellor" the distinguished civil servant who retires from his official position in the Japanese government. Yet the business that does not do this is considered in Japan to behave antisocially and to violate its clear ethical duties. Business taking care of retired senior civil servants, the Japanese hold, makes possible two practices they consider essential to the public interest: that a civil servant past age 45 must retire as soon as he is out- ranked by anyone younger than he; and that governmental salaries and retirement pensions - and with them the burden ofthe bureau- cracy on the taxpayer - be kept low, with the difference between what a first-rate man gets in government service and what he might earn in private employment made up after his retirement through his counsellor's fees.

The Japanese maintain that the expectation of later on being a "counsellor" encourages a civil servant to remain incorruptible, impartial and objective, and thus to serve only the public good; his counseliorships are obtained for him by his former ministry and its recommendation depends on his rating by his colleagues as a public servant. The Germans, who follow a somewhat similar practice - with senior civil servants expected to be "taken care of" through appointment as industry-association executives - share this conviction. Yet, despite the fact that both the Japanese and the German systems seem to serve their respective societies well and indeed honorably, and even despite the fact that it is considered perfectly ethical for American civil servants of equal rank and caliber to move into well-paid executive jobs in business and foundations and into even more lucrative law practices, the Ameri- can company in Japan tbat abides by a practice the Japanese consider the very essence of social responsibility is pilloried, in the present discussion of "business ethics," as a horrible example of unethical practices.

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Surely "business e t h i c s " assumes that for some reason the ordinary rules of ethics do not apply to husiness. "Business e l h i c s . " in other words, is not ethics at all, as the term has commonly been used by Western philosophers and theologians. What is it t h e n ?

Casuistry: the ethics of social responsibility

"It's casuistry." tbe historian of Westem philosophy would answer. Casuistry - the first attempt to think through "social responsibility" and to embed it in a set of special ethics for those in power - was first propounded in Calvin's Institutes, then taken over by the Catholic theologians of the Counter-Reformation and developed into a "political ethics" by their Jesuit disciples in the seventeenth century. It asserted that rulers, because of their responsibility, have to strike a balance between the ordinary demands of ethics which apply to them as individuals and their "social responsibility" to their subjects, their kingdom - or their company.

To the casuist the "social responsibility" inherent in being a ruler that is, someone whose actions have impact on otbers is by itself an ethical imperative. As such, the ruler has a duty, as Calvin first laid down, to subordinate his individual behavior and his individual conscience to the demands of his social responsi- bility. Precisely because it considers social responsibility an ethical absolute, casuistry must end up becoming politicized. In giving primacy to political values and goals, it subordinates ethics to politics. Similarly, "business ethics" argues that the responsibility which business and the business executive have, precisely because they have social impact, must determine ethics and this is a poli- tical rather than an ethica! imperative.

Equally important, the casuist inevitably becomes the apologist for the ruler, the powerful. Casuistry starts out with the insight that the behavior of rulers aficcts more than themselves and then' families. It concludes that rulers must, therefore, in conscience and ethics, subordinate their interests, including their individual morality, to their social responsibility. But this implies that the rules which dtnnde what is ethical for ordinary people do not apply equally, if at all, to those with social responsibility. Ethics for them is instead a cost-benefit calculation involving the demands of individual conscience and the demands of position and that means that the rulers are exempt from the demands of ethics, if only their behavior can be argued to confer benefits on other people. And this is precisely how "business ethics"" is going.

: Ah-KTXSEY QUARTEKTA'

Significantly, under the casuist's analysis the ethical violations which to most present proponents of "business ethics" appear the most heinous crimes turn out to have been practically saintly.

Ends and means

Take Lockheed's bribe story for instance. Lockheed was led into paying extortion money to a Japanese airline by the collapse ofthe supplier of the engines for its wide-bodied L-1011 passenger jet, the British company Rolls Royce. At that time Lockheed employed some 25,000 people making L-lOll's, most of them in southern California which then, 1972-3, was suffering substantial unemploy- ment from sharp cutbacks in defense orders in the aerospace industry. To safeguard the 25,000 jobs, Lockheed got a large government subsidy. But to be able to maintain these jobs, Lock- heed needed at least one large L-1011 order from one major airline. The only one among the major airlines not then committed to a competitor's plane was All-Nippon Airways in Japan.

The self-interest of Lockheed Corporation and of its stockholders would clearly have demanded speedy abandonment ofthe L-1011. It was certain that it would never make money - and it has not made a penny yet. Jettisoning the L-1011 would immediately have boosted Lockbeed's earnings, maybe doubled them. It would have immediately boosted Lockheed's share price; stock market analysts and investment bankers pleaded with the company to get rid of the albatross. If Lockheed had abandoned the L-1011 instead of paying extortion money to the Japanese for ordering a few planes and thus keeping the project alive, the company's earnings, its stock price, and the bonuses and stock options of top management would immediately have risen sharply. Not to have paid extortion money to the Japanese would, to a casuist, have been self-serving. To a casuist, paying the extortion money was a duty and social responsibility to which the self-interest of the company, its share- holders and its executives had to be subordinated. It was the dis- charge of social responsibility ofthe "ruler" to keep alive the jobs of 25,000 people at a time when jobs in the aircraft industry in southern California were scarce indeed.

The only surprising thing about such examples is that business has not yet used them to climb on the casuist bandwagon of "business ethics." For just as almost any behavior indulged in by the seven- teenth century ruler could be shown to be an ethical duty by the seventeenth century casuist, so almost any behavior of the execu- tive in organizations today - whether in a business, a hospital, a

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university, or a government agenc\' - could he shown to be his ethical duty under the casuistic cost-benefit analysis between individual ethics and the demands of social responsibility. There are indeed signs aplenty that the most apolitical of "rulers," the American business executive, is waking up to tho political potential of 'business ethics." Some of the advertisements which large companies Mobil Oil, for example - are now running to counter the attacks made on them in the name of "social responsibility" and "business ethics" clearly use the casuist approach to defend business, and indeed to counterattack. But if "business ethics" becomes a tool to defend as ethical acts on the part of executives that would be condemned if committed by anyone else, the present proponents of "business ethics.'" like their casuist predecessors 400 years ago, will have no one to blame but themselves.

Professional fig leaf

Casuistry started out as higb morality. In the end, its ethics came to be summed up in two well-known pieces of cynicism: "An ambassador is an honest man, lying abroad for the good of his country,"' went a well-known eighteenth century pun. And a hundred years later, Bismarck said: "What a scoundrel a minister would be if, in his own private life, he did half the things he has a duty to do to be true to bis oath of office."

Long before that, howover, casuistry had been killed off by moral revulsion. One lesson that might well be pondered by today's proponents of "business ethics,'" so many of whom are clergymen, is that it was precisely their embracing casuistiy that made the Jesuits hated and despised, made "Jesuitical"' a synonym of "immoral," and led to the Jesuit ordei- being suppressed by the Pope in ihe eighteenth century.

The origin of "business ethics" is political, as was that of casuistry. Its basic thesis, that ethics for the ruler, and especially foi- the busi- ness executive, has to express "social responsibility/" is exactly the starting point ofthe casuist. But if "busint\ss etbics" is casu- istry, then it will ncjt last long --- and long before it dies, it will have become a tool of the business executive to justify what for other peoi)le would be unethical behavior, rather tlian a tool to restrain ihe business executive and to impose tight ethical limits on busi- ness. Insofar as "business ethics" comes even close to ethics, it comes close to casuistry and will, prediciably, end up as a fig leaf for ihe shameless and as special pleading for ihe powerful and ihe wealihy.

THK McKlNSEY QL'ARTEKLY

There is one other major iradiiion of ethics in the West, ihe ethics of prudence. It goes all ihe way back to Aristotle, but its spirit can best be summed up by ihe advice which then-Senator Harry Truman gave to an Army witness before his commiiiee in ihe early years of World War II: "Generals should never do anyihing that needs to be explained io a Senate Committee - there is nothing one can explain to a Senate Committee."

Prudence and self-development

"Generals," whether the organization is an army, a corporation, or a university, are highly visible. They must expect their behavior to be seen, scrutinized, analyzed, discussed and questioned. Pru- dence thus demands ihat they shun actions that cannot easily be understood, explained, or justified. But "generals," being visible, are also examples. They are leaders by their very position and visibility. Their only choice is whether their example leads others to right action or io wrong aciion. Their only choice is between direction and misdirection, between leadership and misleadership. They thus have an ethical obligation to give the example of right behavior and to avoid giving the example of wrong behavior.

The ethics of prudence does not spell out what righi behavior is. It assumes thai what is wrong behavior is clear enough - and if there is any doubt, ii is questionable and io be avoided. Prudence makes ii an etbical duty for ihe leader io exemplify the precepts of ethics in his own behavior - to avoid any act which would make him the kind of person he himself could not respect. "If you don't want to see a pimp when you look in the shaving mirror in the morning, don't hire call girls the night before to entertain congressmen, customers, or salesmen."

The trouble wiih the ethics of prudence is that it can so easily decay inio ihe hypocrisy of public relations. Concern wiih what one can justify becomes, only too easily, concern with appearances. Leadership through right example easily degenerates into ihe sham of charisma and into a cloak for misdirection and misleadership. It may turn inio self-indulgence insiead of self-discipline, inio say- ing " [ like" raiher than " I know."

Executives, of course, do set examples, whatever the organization. They "set the tone," "create ihe spirii," "decide the values" for an organization and for ihe people in it. They lead or mislead, in other words. And they have no choice but to do one or ihe other. Above all, the ethics or aesthetics of self-development would seem

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to be tailor-made for the spec:ifir dilemma of the executive in the modern organization. By himself he is a nobody and indeed anony- mous. His neighbors in the pleasant suburb hi which he lives in a comfortable niiddle-chiss house only know that "Joe works some- place on Park Avenue.'" And a week after he has retired and has left that big corner office on the twenty-sixth floor of his company's skyscraper, no one in tbe building even recognizes him any more. Yet even though individually they are merely cogs in an organiza- tion and easily replaceahle, collectively these anonymous execu- tives are the leaders in a modern society. Tbeir function demands discipline and self-respect. To live up to the performance expecta- tions society makes upon them, they have to strive for excellence rather than be content with lackadaisical mediocrity.

One would therefore expect the proponents of "business ethics" to focus on the ethics of prudence. By and large, however, they will have nothing to do with it. And the reason is clearly that the ethics of prudence is the ethics of authority. While today's discussion of ''business ethics" clamors for responsibility, it rejects out of hand any authority, particularly where business executives are concerned. Authority is not legitimate: it is ''elitism."

The ethics of interdependence

There is another. non-Western ethics that is highly relevant to the issues ''business ethics" seeks to address. It is the most successful and durable of tbem all: the Confucian ethics of interdependence.

Confucian ethics elegantly sidesteps tiie trap into which the casuists fell: it is a universal ethics, in which the same rules and imperatives of behavior boid for every individual. There is no ".social responsibility" overriding individual conscience, no cost- benefit calculation, no greater good or higher measure than tbe individual and his behavior, and altogether no casuistry, ln Confucian ethics, the rules are the same for all. But there are different general rules, according to the five basic relationships of interdependence, which for the Confucian embrace the totality of individual interactions in civil society: superior and subordinate (or master and servant): father and cbild; husband and wife; oldest brother and sibling; friend and friend. Right behavior is that individual behavior which is truly appropriate to the specific relationship of mutual dependenct" because it optimizes benefits for both parties. Other behavior is wrong and unethical. It creates dissonance instead of harmony, exploitation instead of benefits, manipulation instead of trust.

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An example of the Confucian approach to the ethical problems discussed under the heading of "business ethics" would be sexual harassment. To the Confucian it is clearly unethical behavior because it injects power into a relationship that is based on func- tion. This makes it exploitation. That this grossly unethical be- havior on the part of a superior takes place within a business, or any other kind of organization, is basically irrelevant. The master/ servant or superior/subordinate relationship is one between individuals. Hence, the Confucian would make no distinction between a general manager forcing his secretary to submit to his amorous advances and Mr Samuel Pepys, England's famous seventeenth century diarist, forcing his wife's maids to do the same.

It would not even make much difference to the Confucian that today's secretary can, as a rule, quit without suffering more than inconvenience if she does not want to submit, whereas the poor wretches in Mrs Pepys' employ ended up as prostitutes, either because they did not submit and were fired and out on the street, or because they did submit and were fired when they got pregnant. Nor would the Confucian see much difference between a corpora- tion vice president engaging in sexual harassment and a college professor seducing coeds with implied promises to raise their grades.

Individual hehavior

Finally, it would be immaterial to the Confucian that the hehavior in question involves sexual relations. The superior would he equally guilty of grossly unethical behavior and violation of fundamental rules of conduct if, as a good many of the proponents of "business ethics" ardently advocate, he were to set himself up as a mental therapist for his subordinates and help tbem to "adjust." No matter how benevolent his intentions, this is equally incompatible with the integrity of the superior/subordinate relationship. It equally abuses rank based on function and imposes power. It is therefore exploitation whether done because of lust for power or manipulation or done out of benevolence - either way it is unethical and destructive. Both sexual relations and the healer/patient relationship must be free of rank to he effective, harmonious and ethically correct. They are constructive only as friend-to-friend or as husband-to-wife relations, in which differences in function confer no rank whatever.

This example makes it clear, I would say, that virtually all the concerns of "business ethics," indeed almost everything "business

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ethics" considers a problem, have to do with a relationship of interdependence, whether that between the organization and the employee, or the manufacturer and the customer, or the hospital and the patient, or the university and the student, and so on.

Looking at the ethics of interdependence immediately resolves the conundrum which confounds the present discussion of "business ethics": What difference does it make whether a certain act or behavior takes place in a husiness, in a nonprofit organization, or outside any organizational context? The answer is clear: None at all. Indeed the questions that are so hotly debated in today's discussion of "business ethics," such as whether changing a bospitalfrom "nonprofit" to "proprietary and for profit" will affect either its behavior or the ethic^s pertaining to it, the most cursory exposure to the ethics of interdependence reveals as sophistry and as non-questions.

Mutual obligations

The ethics of interdependence thus does address itself to the question which "business ethics" tries to tackle. But today's proponents of "business ethics" deny, explicitly or implicitly, the basic insight from which the ethics of interdependence starts and to which it owes its strength and durability: They deny inter- dependence and its corollary: equality of obligations. Children owe obedience and respect to their parents. Parents, in turn, owe affection, sustenance and, yes, respect to their children. For every paragon of filial piety in Confucian hagiology, such as the dutiful daughter, there is a paragon of parental sacrifice, such as the loving father who sacrificed his brilliant career at court to the care of his five children and their demands on his time and atten- tion. For every minister who risks his job, if not bis life, by fear- lessly correcting an Emperor guilty of violating harmony, there is an Emperor laying down his life rather than throw a loyal minister to the political wolves.

In the ethics of interdependence there are only obligations, and all obligations are mutual obligations. Harmony and trust that is, interdependence require that each side be t)bligated to provide wbat the other side needs to acbieve its goals and to fulfill itself.

But in today's American and European discussion of "business ethics." ethi('s means that one side has obligations and the otber side has rights, if not entitlements. This is not compatible with the ethics of interdependence or indeed with any ethics at all. It is the

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politics of power, the politics of naked exploitation and repression. And within the context of interdependence the exploiters and the oppressors are not the bosses, but the ones who assert their "rights" rather than accept mutual obligation and, with it, equality. To redress the balance in a relationship of interde- pendence - or at least so the etbics of interdependence would insist - demands no pitting power against power or right against right, but matching obligation to obligation.

To illustrate: Today's "ethics of organization" debate pays great attention to the duty to be a "whistle-blower" and to the protection ofthe whistle-blower against retaliation or suppression by his boss or by his organization. This sounds high-minded. Surely, the subordinate has a right, if not indeed a duty, to bring to public attention and remedial action his superior's misdeeds, let alone violation of the law on the part of a superior or of his employing organization. But in the context of the ethics of interdependence, whistle-blowing is ethically quite ambiguous.

Trust and whistle-blowing

To be sure, there are misdeeds ofthe superior or ofthe employing organization which so grossly violate propriety and laws that tbe subordinate (or the friend, or the child, or even the wife) cannot remain silent. This is, after all, what the word "felony" implies; one becomes a partner to a felony and criminally liable by not reporting and, thus, compounding it. But otherwise? It is not primarily that to encourage whistle-blowing corrodes the bond of trust that ties the superior to the subordinate. Encouraging the whistle-blower must make the subordinate lose his trust in the superior's willingness and ability to protect his people. They simply are no longer his people; they become potential enemies or political pawns. And in the end, encouraging and indeed even permitting whistle-blowers always makes the weaker one - that is, the subor- dinate - powerless against the unscrupulous superior, simply because the superior no longer can recognize or meet his obligation to the subordinate.

Whistle-blowing, after all, is simply another word for informing. And perhaps it is not quite irrelevant that the only societies in Western history that encouraged informers were bloody and infamous tyrannies - Tiberius and Nero in Rome, the Inquisition in the Spain of Philip II, the French Terror, and Stalin. It may also be no accident that Mao, when he tried to establish dictatorship in China, organized whistle-blowing on a massive scale. For under the

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regime ofthe informer, no mutual trust, no interdependencies, and no ethics are possible.

In a relationship of interdependence it is mutuality of obligation that creates true equality, regardless of differences in rank, wealtb. or power. Today's discussion of "business ethics" stridently denies this; it tends to assert that one side has all the duties and the other one all the rights. But this is the assertion ofthe totalitarians who shortly end up by denying all etbics. If a set of ethics is one-sided, then the rules are written by those who have the position, the power, the wealth. If interdependence is not equality of obligations, it becomes domination. Ethics becomes tbe tool ofthe powerful.

Ethics or "ethical chic"?

Clearly, one major element of the peculiar stew that goes hy the name of "business ethics" is plain old-fashioned hostility to business and to economic activity altogether - one of the oldest of American traditions and perhaps the only still-potent ingredient in the Puritan heritage. Othe'rwise, we would not even talk of "busi- ness ethics." There is no warrant in any ethics to consider one major sphere of activity as having its own ethical problems, let alone its own ethics. Business may have special political or legal dimensions, as in "business and government," to cite the title of a once-popular college course, or as in the antitrust laws. And "business ethics" may be good politics or good electioneering. But that is all. For ethics deals with the right actions of individ- uals. And then it surel>' makes no difference whetber tbe setting is a community hospital, with the actors a nursing supervisor and a patient, or the National Universal General Corporation, the actors a quality control manager and a consumer, the buyer of a bicycle.

"Business ethics" is fashionable and provides speeches at con- ferences, lecture fees, consulting assignments and lots of publicity. And by purveying its tales of wrongdoing in high places, it caters also to the age-old enjoyment of society gossip. Altogether, "busi- ness ethics" might well be called "ethical chic" rather tban ethics and indeed might be considei'ed more a media event tban a serious moral or philosophical issue.

Ethics, however, has as much to say to the individual in our society of organizations as it ever had to say to tbe individual in earlier societies. It is just as important and just as needed nowadays. And it surely requires hard and serious work.

THE McKINSEY QUAHTEKLY

A society of organizations is a society of interdependence. The specific relationship which the Confucian philosopher postulated as universal and basic may not be adequate, or even appropriate, to modern society, to the ethical problems within the modern organization and between the modern organization and its clients, customers and constituents. But the fundamental concepts surely are. Indeed, if there ever is a viable "ethics of organization," it will almost certainly have to adopt the key concepts which have made Confucian ethics both durable and effective:

• Clear definition ofthe fundamental relationships;

• Universal and general rules of conduct - that is, rules that are binding on any one person or organization, according to its rules, functions and relationships; and

" Focus on right behavior rather than on avoiding wrongdoing, and on behavior rather than on motives or intentions.

An effective organization ethic, indeed an organization ethic that deserves to he seriously considered as "ethics," will have to define right behavior as the behavior which optimizes each party's benefits and thus makes the relationship harmonious, constructive and mutually beneficial.

But a society of organizations is also a society in which a great many people, though unimportant and indeed anonymous by themselves, are yet highly visible as leaders in society. And thus it is a society that must stress the ethics of prudence and self-develop- ment. It must expect its managers, executives and professionals to demand of themselves that they shun behavior they would not respect in otbers, and act instead in ways appropriate to the sort of person they would want to see in the mirror in the morning.

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