Business Ethics And Capitalism example essay topic

Can Business Ethics & Capitalism coexist? The concept of business ethics has tried to change the way businesses operate over the years. Business ethics is a form of ethics that governs the actions of businesses to circumvent the affects business has on every day society. But some question its effectiveness in the application of capitalism. Several case studies have shown that this is the case; many companies place the pursuit of money in front of the pursuit of virtue. Although, the majority of companies are not in the spotlight of acting unethically, can we conclude that they follow the ethical norms?

It is natural for normal human beings to act ethical but businesses are on a completely different playing field. But could business ethics be clearly possible in capitalism? In order to understand the debate of business ethics, one must understand the concept of capitalism. Capitalism in its purest form is free enterprise, meaning that the market functions with minimal interference from government and other forces. If this is possible then businesses compete with each other on an equal playing field and whoever has the upper hand can gain much of the market. Each business will fight for there own share of the market and it is basically survival of the fittest, whoever has the better product, price, quality will win over customers.

Capitalism is a free-market approach to economics but one other practice makes capitalism different from any other economical system. Within capitalism investors play a large part in business in capitalism. In theory there are several different kinds of investors in capitalism. One can 'loan' money to a company and the company will promise to return that loan with interest but the most common type of investment is ownership into the company or business. This type of ownership takes place through the concept of stock. Stock is an actual stake within the company bought in the stock market.

In capitalism the stock's price can either fluctuate up or down. This notion of the stock market plays the biggest part in a capitalist economy because a companies stock is an indication on how well the company is performing. Milton Friedman, a University of Chicago professor, suggests that the only responsibility of businesses is to their stockholders. He advocates that a businesses function is to make as much money as possible in any and every way, as long as the rules of society are followed (Friedman 33). If these principles are followed then capitalism will benefit society because of open and free competition. Businesses will compete with each other giving consumers the advantage and therefore help the economy profit.

Friedman believes that capitalism the economy will take care of itself and any outside forces would disrupt its process. In capitalism the worker is a commodity in so as to produce the products needed for the market. Each individual does what they are best at producing and if everyone does this then each person's needs are taken care of. When each person is working they are paid money for their labor. With this money they can buy goods, which can fulfill their own desires, and so the trading of money for goods can take place in a capitalist market driving the economy forward (Smith 158).

Capitalism depends on a free economy but does business ethics shake the very structure of a free economy? Some critics agree that business ethics infringe on the right of a free capitalist economy but others say that businesses are not following their social responsibility and so there should be a place for business ethics in a capitalist economy. But what kinds of ethics would be applicable to a free market economy such as capitalism? In business ethics there are several different types of ethical behavior that exist. Although there are many different kinds of ethical behavior, three are the most prevalent within society; these are utilitarianism, deontology, and virtue ethics. In Utilitarianism ethical behavior depends on the results of the course of action.

The ethical decision is made on the grounds that the results outweigh the consequences. Otherwise known as maximizing the greatest good. In utilitarianism there can be two different types of behavior. Either maximizing the greatest good for yourself or maximizing the greatest good for yourself and others. (Donaldson 3).

Utilitarianism behavior produces a balance between the consequences and happiness when choosing a course of action. It is concluded that happiness is most desirable and therefore should be the grounds for ethical behavior. But everyone has different ideas about happiness, so actions must satisfy the happiness of the most number of people for ethical conduct. Utilitarianism simply put by John Stuart Mill, is the "greatest happiness for the greatest number" (Donaldson 3). The second type of ethical behavior can be described as deontology. In deontology, ethical behavior depends on duty.

This means that actions must be done with good intentions or the "right" reasons. In order to have ethical behavior in deontology decisions must be made without bad intentions because if it is made with bad intentions it is not deemed as ethical. This duty can be represented as a purely good act, done with the right reasons instead of greediness. Duty should be common principles that all humans share. In deontology moral actions do not depend on the greatest happiness of all but it depends on the moral worth of the action itself, i.e. actions are done for the sake of what is right not its consequences (Donaldson 7).

Actions in deontology can be illustrated in one question, "Could I wish that everyone in the world would follow this principle under relevantly similar conditions?" (Donaldson 8). The third and final commonly used type of ethical behavior is virtue ethics. Virtue ethics, unlike utilitarianism and deontology, depends on the virtue of the individual. This virtue is learned from their surroundings so that he or she can be an upstanding member of the community. When this virtue is obtained the individual can make ethical decisions without a second thought. The virtue of an individual should be naturally good in order for a person to have ethical decisions (Donaldson 10).

If the person makes all the right decisions but does them only to make himself or the company look good, then this person does not have virtue itself because he gives his ethical actions a second thought and he is only doing these things because he must. Even though there are many ways of defining ethics, it is troublesome to apply to capitalism. Capitalism is the concept of a free market, so with ethics ruling businesses decisions, does the concept of a free market does exist? In my opinion business ethics and capitalism do not mix because the two are naturally contradictory. Even though there are many kinds of ethics they are all a type of control to one's actions and in a capitalist free market, there are no controls. In capitalism business are expected to make the pursuit of profit its first priority but with business ethics this is not the case.

I have never read of a business praised for their ethical behavior in business magazines because profit is praised over ethics. Capitalist businesses are supposed to be cutthroat. The only virtuous action deemed in capitalism is greed and this greed is the cornerstone of capitalism. Businesses are supposed to cut corners and do whatever it takes to achieve maximum profit. For example, certain businesses like automakers and shoemakers move their operations overseas to cut down costs of making the product. Now this is terribly unethical because first of all the jobs that could be given to U.S. citizens are moved to other areas of the world where cheap labor exists.

This leaves many U.S. citizens out of jobs because they cannot compete with the cheap labor in other areas. The standard of living in the U.S. is higher than in other countries. Secondly, these jobs require long hours with harsh conditions and even some child labor takes place in these factories. Human beings should not to be treated in this manner but it still takes place.

The cost of producing these goods in another country is cheaper for the businesses because they pay them a lower salary. This salary is pretty high compared to the standard of living in these countries but these people should not be exploited for the economical misfortune. Though this can benefit many people, people should not be used for some means to some end. Not only do businesses pay these people low wages, but they increase the price of the product once it is sold in the U.S. Although businessmen know this practice is unethical they still continue to exploit others. Because businesses are out for profit they cut corners and exploit human beings as a result of greediness. In a free market businesses must do what they can to beat out the competition, even if it means behaving in an unethical way.

In capitalism, ethics cannot exist because profit is the first priority. Forget people and society, as long as businesses make money, they don't care about anyone else but themselves. Therefore, as long as the pursuit of profit comes before anything else, capitalism cannot coexist with business ethics. It would be pleasing to see that all companies follow business ethics but its just not the case. Although we believe that people are good certain individuals will always be consumed by greed and choose not to act ethically. Certain businesses will always decide to act in an unethical manner and employees, stockholders, etc. will always feel the effects of this unethical behavior.

One such example that illustrates this appalling practice of unethical behavior very well is the case of Enron. Enron looked like another normal Fortune 500 company but something was not right within the company itself. The company was rotting in its core with unethical behavior and soon it spread throughout the company. Though most of its employees were ethical, Enron's business leaders were extremely corrupt. Without competent business leaders the company could not stand. Enron's business leaders lied and cheated its way to the top.

The business leaders had a complete disregard for its employees well being. For example, Enron's top official Kenneth Lay told employees to hold on to their stock because he said the company would bounce back while at the same time he sold off millions of shares of his own Enron stock. Not only did he outright lie to his employees, he froze their 401 k plans when the company was on the verge of bankruptcy so that would keep the stock price up. This complete lack of ethical behavior shows that many people are controlled by greed because in a capitalist economy businessmen are only concerned about money. Within Enron there was something wrong with its corporate culture. Employees were threatened if they had spoken up about unethical behavior.

Each of its employees was evaluated every six months and if they were not a "team player" they would be let go. This use of fear to control people seems eerily familiar. One can think of Enron's executive board as dictators controlling the company. If one employee did not comply with the rest then they faced stern consequences. Using fear to control employees is one of the worst unethical actions a person can make.

Enron's executives ruled the company with an iron fist, forcing everyone below them to follow this unethical behavior. Enron surely did not follow ethical behavior and it only fell apart after it had crossed the rules of society. But who's to know what went on before Enron got busted. More unethical behavior could have taken place without our knowledge. So how are we to know that all businesses are following ethical behavior?

Many businesses are not complying with ethical behavior and this is shown by recent government investigations. We must look at the bigger picture and see that capitalism and business ethics do not mix but there exists an economical system where the pursuit of profit and ethics compromise. When unethical businesses conduct business it always makes more problems instead of solving them so instead of trying to combine capitalism and ethics, one can convert the economy into a socialist economy. In Europe several countries have converted to the socialist system of business with success.

Although these European countries have not converted fully into a socialist economy they endorse a capitalist / socialist economy. They promote social ends and have a social conscience while conducting business (Friedman 33). These European businesses take these social responsibilities seriously because the business is within society and not outside it and therefore they must take care of society like society has taken care of it. It is hard for American businesses to have a social conscience because we are still stuck in a capitalist economy and as a result ethics is constantly uncared for. Now, this is not a quick fix to the capitalist economy but it is a welcome alterative to trying to combine business ethics and capitalism.

One must accept that businesses exist within society and social ills should not be ignored. We cannot apply two completely different things into the same economy, instead we should compromise into another type of economical system that can have a social conscience and still manage to make a profit. Recently many companies have had their unethical behavior uncovered and this placed doubt in the minds of many. Capitalism and ethics cannot truly exist together because in capitalism there can be no control and ethics as a form of control. In capitalism Greed is the number one priority in capitalism and ethics cannot sidetrack this priority. Although over the years business ethics and capitalism seemed to have coincided one cannot conclude that the two can coexist because of the many kinds of unethical behavior takes place in our capitalist economy, much of which is still hidden.

The unethical behavior uncovered by the government recently is just the tip of the iceberg and I am sure as long as people try to combine ethics and capitalism, unethical behavior will still run rampant, revealed or not. Only one action can deter unethical behavior in the U.S. economy, and that is changing the whole system because if not we will continue to live in an unethical economy where greed is the only precedence.