Education

n Defense of a Utilitarian Business Ethic

ANDREW GUSTAFSON

ABSTRACT

In this article, I suggest and support a utilitarian approach to business ethics. Utilitarianism is already widely used as a business ethic approach, although it is not well developed in the literature. Utilitarianism pro- vides a guiding framework of decision making rooted in social benefit which helps direct business toward more ethical behavior. It is the basis for much of our discus- sion regarding the failures of Enron, Worldcom, and even the subprime mess and Wall Street Meltdown. In short, the negative social consequences are constantly referred to as proof of the wrongness of these actions and events, and the positive social consequences of bailouts and other plans are used as ethical support for those plans to right the wrongs. I believe the main cause of the neglect of the utilitarian approach is because of misguided criticisms. Here, I defend utilitarianism as a basis for business ethics against many criticisms found in the business ethics literature, showing that a business ethics approach relying on John Stuart Mill’s utilitarianism supports

Andrew Gustafson is an Associate Professor of Business Ethics and Society, College of Business Administration, Creighton University, Omaha, NE. E-mail: andrewgustafson @creighton.edu. http://www.andygustafson.net

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Business and Society Review 118:3 325–360

© 2013 Center for Business Ethics at Bentley University. Published by Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.

principles like justice, is not biased against the minority, and is more reasonable than other views such as a Kantian view when dealing with workers and making other decisions in business. I also explain utilitarian moral motivation and use satisficing theory to attempt to defend utilitarian business ethics from questions raised regarding utilitarian calculus.

1REVITALIZING A UTILITARIAN BUSINESS ETHIC FOR SOCIAL WELL-BEING

Let us . . . find ourselves, our places and our duties insociety, and then, gathering courage from this newand broader understanding of life in all its relations, address ourselves seriously to the problem of making our- selves and our neighbors useful, prosperous and happy. Such is the supreme object of utilitarian economics.

Phelps and Myrick (1922, p. 7)

[T]he utilitarian standard is not the agent’s own greatest happiness, but the greatest amount of happiness altogether; and if it might possibly be doubted whether a noble character is always the happier for its nobleness, there can be no doubt that it makes other people happier, and that the world is in general is immensely a gainer by it.

Mill (1998, ch. 2, para. 9, l. 4)

Utilitarianism provides a vision of ethical behavior which holds the common interests of humanity as of utmost importance when we make a moral decision. Utilitarianism fits business well if we conceive of business as a means of transforming culture and society, and utilitarianism is the ethical perspective which most easily helps us to address the ethical relationship and responsi- bilities between business and society. Surely, nothing is more powerful than business itself in shaping our cities, our work environments, our playing environments, our values, desires, hopes, and imagination. Business provides great goods for society through goods and services, jobs, tax revenue, and many common outcomes, but it also has wide-ranging effects on a broad spec- trum of stakeholders. The utilitarian in business asks, how can

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we do business in such a way that it contributes to the greater good? Drawing here on the utilitarianism of John Stuart Mill, here I will first put forward some key features of a utilitarian business ethic—that the right actions are the ones which contribute to the greatest good for the most—and then in the latter part of the article, respond to some of the typical criticisms of utilitarianism in the business ethics literature in hopes of displaying utilitari- anism’s promise as a guiding vision for ethical business behavior.

Self-interested profit-maximization cost-benefit analysis is often labeled as “utilitarianism,” and that has often been the target of business ethicists, looking to get business to consider ethical inter- ests along with profit. These criticisms are useful and correct, so long as they are aimed at economic profit maximization, rather than the utilitarian ethics approach, but sometimes, the distinc- tion is not clearly drawn. Utilitarianism as an ethical theory is quite different than mere profit maximization, but the confusion is common. There is, actually, a severe gap in business ethics litera- ture regarding a utilitarian ethics approach to business ethics. Although there have been books in the field of business ethics written on Kantian business ethics (Bowie 1999), Social Contract business ethics (Donaldson and Dunfee 1997; Sacconi 2000), and Aristotelian business ethics (Hartman 1996; Morris 1997; Solomon 1993), no book has dealt with utilitarian ethics and business ethics per se. Although there has been some positive attention paid to the notion of “utilitarianism” as a basis for business ethics (Brady 1985; Elfstrom 1991; Snoeyenbos and Humber 2002; Starr 1983), mostly it has been critical (Audi 2005, 2007; Beauchamp and Bowie 2001; Bowie 1999; Bowie and Simon 1998; Desjardins 2011; Hartman 1996; McCracken and Shaw 1995; McGee 2008; McKay 2000; Velasquez 1995; Velasquez et al. 1989).

Ironically, all this criticism comes while we continue to use greatest good or common good analysis for most of our societal ethical issues. Considering societal benefit and harm is usually the basis for much of our discussion regarding the ethical failures of Enron, Worldcom, and the subprime mess and recent Wall Street Meltdown. Taxcheating, welfare or insurance fraud, racism, gender discrimination and harassment in the workplace, under- mining trust, stealing from the company, dishonest bookkeeping, and nearly any unethical business practice we can imagine are argued against and considered wrong in part, at least, because of

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the harm these activities do to the greater good. Utilitarianism in this sense is already widely used as an ethical appeal and busi- ness ethic approach, although it is seldom discussed in the lit- erature. The negative societal consequences (to investors, the market, homeowners, employees, the jobless, etc) are constantly referred to as proof of the wrongness of these actions and events, and the positive social consequences of bailouts and other plans are used as ethical support for those plans to right the wrongs. When we call on society to shared sacrifice, the reason given is almost always “for the greater good” which is to say, the greatest long-lasting happiness for the most—the prosperity of society into perpetuity. Yet, when discussed in business ethics litera- ture, utilitarianism is usually sketched, criticized, and then dismissed—usually because these “utilitarianisms” are quite dif- ferent than Mill’s classical utilitarianism. Here, I will attempt to provide a more intelligible view of how Mill’s classic utilitarianism can apply to business ethics and respond to a number of the key criticisms raised against utilitarianism in the business ethics literature, in hopes of bringing attention and support to the viability of a developed utilitarian business ethics.

What Mill’s Utilitarianism Is not

It is quite important from the start to realize that many views are criticized by the name “utilitarianism,” and we should first realize that the classical utilitarianism of Mill is not equivalent to a number of other theories referred to as utilitarianism—views which business ethicists are right to criticize. First, as mentioned, it is not mere profit maximization, which is from some business literature. Second, it is not preference utilitarianism—the view that the source of both morality and ethics in general is based upon subjective preference.2 (Rabinowicz and Österberg 1996). Third, it is not a “rational actor” model. (McCracken and Shaw 1995) The rational actor model “utilitarianism” is well defined by McCracken and Shaw as holding that (1) humans are rational, (2) rational behavior is characterized by preference or value maximi- zation, (3) businesses seek to be profit maximizing, (4) the moral good is utility, (so therefore) (5) ethical business practice consists of maximizing profits within a framework of enlightened, but not clearly defined, rules, rights, and obligations.

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This “rational actor model” is ethically problematic, and McCracken and Shaw are right to point out that “[t]o analyze business decisions using as a model an individual solely moti- vated by the maximization of value or of profits, without regard to his or her own character, is totally unrealistic. It does not speak to the role of ‘Nobility,’ ‘Sacrifice,’ ‘Sportsmanship,’ ‘heroism,’ and the like—” (McCracken and Shaw 1995, p. 301). Mill’s utilitari- anism, fortunately, does address such concepts as heroism, nobil- ity, and sacrifice, as we will see. The point here is simply that Mill’s utilitarianism model is quite different from a simple profit maximization model or a simplistic cost-benefit model which is often referred to as “utilitarian” in the literature.

Mill’s Utilitarianism

It is important to be clear about what Mill’s classic utilitarianism entails. When we seek common ethical principles, we really seek a common vision of the good, because we want a common vision for making decisions which provide at least semi-universal guid- ance. Although no ethical theory is without its difficulties, what an ethical theory provides is some shared common starting points from which to work out ethical decisions—as an individual and as a community. There is not a shared understanding of application in all cases, but the community shares the common starting point for making their case. There is, we might say, a hermeneutics of ethics, whereby the meaning of an ethic for a particular situation involves interpretation and so, dispute. The Bible and church tradition are to Christians a shared starting point—and obviously, not all agrees on the application of that text/tradition—but there is a shared assumption about where we should meet to try to come to conclusions. There are hermeneu- tical differences of interpretation of Scripture, as there are of the utilitarian principle, but utilitarians at least share a common vision for trying to work out ethical answers rooted in a shared assumption that what we all seek ultimately is to attain the greatest happiness for the most.

Three key aspects of Mill’s utilitarianism distinguish his ethics and so, a utilitarian business ethic: (1) it is consequentialist and has a shared goal of the common good at its heart; (2) it takes account of long-term consequences or the prosperity of society; (3)

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it entails nurturing moral education in culture by developing social concern in individuals.

First, Mill’s utilitarianism is a consequentialist ethical theory: Mill’s utilitarianism is concerned about the welfare of the many, rather than just the individual, as he says, “[the utilitarian] stan- dard is not the agents own greatest happiness, but the greatest amount of happiness altogether” (Mill 1998, ch. 2, para. 9, l. 4). It is not mere egoism and, in fact, calls on an individual to sacrifice one’s own happiness on occasion, if it is for the greater common good. For Mill’s utilitarianism according to this “Greatest Happiness Principle”—“the ultimate end, with reference to and for the sake of which all other things are desirable . . . is an existence exempt as far as possible from pain, and as rich as possible in enjoyments, both in point of quantity and quality” (Mill 1998, ch. 2, para. 10, l. 1). Greatest happiness might come by a wide distribution of hap- piness to the most, or in some cases, the interests of the many might be served actually by affording something to the minority (such as providing fair trial to all, even those who are apparently guilty—which maintains a happier society than one which does not provide fair trials (Sadam’s Iraq, Syria, North Korea, etc).3

Utilitarianism fits business well, because business often thinks in terms of utility. However, utilitarianism is not concerned with the interest of the individual only, or even of the larger distribu- tive sum or aggregate of the happiness of individuals (Audi 2007). Rather, Mill’s utilitarianism is concerned with the happiness of humanity as a whole—his is a corporate narrative aimed at “cre- ating bonds between the individual and humanity at large” (Heydt 2006, p. 105). On this view, “[h]umanity begins to appear as a ‘corporate being’ rather than as a simple aggregate of individuals, when one begins to imagine it as having a destiny” (Heydt 2006, p. 105).4 The difficulty is trying to help people to start to think of social utility, not just personal or profit-maximization utility, and to realize that we must consider long-term social utility, not just social utility for this evening. This involves having a vision of the good of humanity in mind when making decisions. In the words of Mill, the utilitarian conceives of life this way:

So long as they are co-operating, their ends are identified with those of others; there is at least a temporary feeling that the interests of others are their own interests. Not only does

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all strengthening of social ties, and all healthy growth of society, give to each individual a stronger personal interest in practically consulting the welfare of others; it also leads him to identify his feelings more and more with their good, or at least with an ever greater degree of practical consideration for it. He comes, as though instinctively, to be conscious of himself as a being who of course pays regard to others. The good of others becomes to him a thing naturally and neces- sarily to be attended to, like any of the physical conditions of our existence. (Mill 1998, ch. 3, para. 1, l. 30)

Such utilitarianism will not answer every single dilemma, but it does give direction in many situations. Mill believes humans have a fellow feeling toward other human beings, and that this feeling can be nurtured and trained as one develops a vision of oneself as a member of this society of humanity and as we integrate indi- viduals into a strong culture of concern for others (more of this on the succeeding paragraphs).

Second, Mill’s utilitarianism pursues long-term benefit and so has rules of morality following from the Greatest Happiness Principle (GHP) which provide moral guidance.5 Mill says, “Whatever we adopt as the fundamental principle of morality [the GHP], we require subordinate principles to apply it by” (Mill 1998, ch. 2, para. 24, l. 52), and he points out that such subordinate principles are both necessary for morality and ultimately grounded in the GHP. To those who think that we can have no intermediary principles and must always refer back to the GHP directly, Mill responds:

It is a strange notion that the acknowledgement of a first principle (GHP) is inconsistent with the admission of second- ary ones . . . The proposition that happiness is the end and aim of morality, does not mean that no road ought to be laid down to that goal, or that persons going thither should not be advised to take one direction rather than another . . . Nobody argues that the art of navigation is not founded on astronomy, because sailors cannot wait to calculate the Nautical Almanack. Being rational creatures, they go to sea with it ready calculated, and all rational creatures go out upon the sea of life with their minds made up on the common questions of right and wrong. (Mill 1998, ch. 3, para. 24, l. 36)

So for Mill, there are subordinate intermediate principles deriving from the GHP which are affirmed in light of their overall long-term

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happiness-producing benefit. In holding to principles of justice and other such virtues, utilitarianism focuses on the long-term or cumulative benefit, not merely the local, short-term, or immediate benefit.6 Mill is like a stock buyer with a long-term view of things, who rides out the ups and downs of the market. A company which follows this utilitarianism will be concerned with fair treatment of employees, honest habits with customers and suppliers, and just policies because acting with justice, fairness, and honesty will, in the end, produce the greatest happiness for the many—through increased productivity, a strong reputation, and customer loyalty all leading to a positive outcome. Fortunately, we have history and experience to turn to, to help us discover best practices and establish values worth pursuing grounded in precedent: “During all that time mankind have been learning by experience the tendencies of actions; on which experience all the prudence, as well as all the morality of life, is dependent” (Mill 1998, ch. 2, para. 24, l. 9). We have seen on Wall Street the negative conse- quences of not maintaining fairness, prudence, and honesty in the subprime meltdown, for example, and this is not news to us—we saw the same lessons in Enron, Worldcom, the savings and loan scandal, etc. The actions which led to the meltdown were committed in violation of principles which we know bring about societal stability and prosperity, and those acts were committed without regard to the long-term societal market consequences. Thinking we are an exception to the rule often gets us in trouble.

Overall historic tendencies, not particular exceptions, guide the decision. Mill’s utilitarianism is concerned not with static results but with dynamic trends.7 When Mill says “actions are right in proportion as they tend to promote happiness, wrong as they tend to produce the reverse of happiness,” he is looking for derivative rules of action which only usually or more often than not promote the benefit of the many. This means it can stick to a principle in the face of possible exceptional circumstances.8 The utilitarian sticks to his tried and true principles in the face of pressure to change course. If, in general, an action (i.e., telling the truth) tends to promote happiness, we should do that even if in this particular instance it does not produce happiness, or we do not see how it will—because telling the truth tends overall to produce benefits to the many as we have seen from previous empirical observations. We can have quite intelligent guesses as to what actions tend to

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promote happiness for the many9—principles like “do not murder,” “do not cry wolf,” “do not lie,” and other such principles. These principles, by and large, tend to promote happiness for the many. Again, the utilitarian looks at decisions like a long-term investor looks at stock—a long-term investor does not sell when- ever the stock goes down and buy whenever it is going up—and a utilitarian does not reject the principles he knows from cumula- tive experiences from the past as it will provide the foundation of a happier society every time it becomes inconvenient or unclear if on this specific occasion the benefit will come.10

Third, moral education toward a culture of ethical–social concern is essential (Gustafson 2009; Heydt 2006). Mill’s utilitari- anism relies on education and the development of social ties to undergird our moral motivation so that we will act according to the GHP. This is the sort of corporate culture construction which we achieve through strategized ethical training and integrity development, not unlike the model Sharpe-Paine calls the integrity approach (in contrast to the compliance approach) (Paine 1994). Throughout his Utilitarianism and On Liberty, we find Mill arguing that without proper socialization and moral education, people will not be enabled to pursue the GHP because they will be oblivious to it and incapable of desiring it. But fortunately, because humans have fellow feelings, these can be nurtured and trained toward a strong culture of social concern:

[T]he smallest germs of the feeling are laid hold of an nour- ished by the contagion of sympathy and the influences of education; and a complete web of corroborative associations is woven round it, by the powerful agency of the external sanctions. This mode of conceiving ourselves and human life, as civilization goes on, is felt to be more and more natural. (Mill 1998, ch. 3, para. 1, l. 44)

The first means of encouraging utilitarianism is not legal, but cultural: “that education and opinion, which have so vast a power over human character, should so use that power as to establish in the mind of every individual an indissoluble association between his own happiness and the good of the whole” (Mill, Utilitarian- ism, 2.18). This is exactly the job of us in business ethics and the job of any corporation which really wants to ensure moral

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employees—to nurture this social sentiment, encourage the moral imagination so that our students or employees can realize the consequences of their acts on others, and to come to habitually think not in terms of immediate personal gain, but think of themselves in community. So, for example, Mill would say that training employees to be ethical should not simply be oriented around rules and enforcement but should center on nurturing a corporate culture which has implicit expectations of moral behav- ior and concern for others as human beings. Once they under- stand ethical behavior as “of course!—that’s just the way we do things around here,” then they have come to see ethics as a matter of course—expected without question; bloodstream beliefs as an esteemed businessman I know puts it.11

When speaking of external sanctions, Mill recommends “laws and social arrangements should place the happiness, or . . . the interest of every individual, as nearly as possible in harmony with the interest of the whole” (Mill 1998, ch. 2, para. 18). This we attempt to do through taxation, through equal opportunity legis- lation, tax-incentives for innovations, federal sentencing guide- lines, Sarbanes–Oxley Act, etc—we try to provide incentives for people and companies to do what is in the public interest through external sanctions. These can of course also be positive incen- tives, such as awards or ethical responsibility lists published by organizations or magazines such as Business Ethics Magazine. However, we know that codes and rules alone do not change personal or corporate character—culture formation is essential.

With these three principles in mind, we can better see the possibility of a utilitarian business ethic, and also, see how Mill can respond to typical criticisms of his position most commonly brought up in the business ethics literature.

Common Criticisms and Responses

One helpful way to understand the adequacy of a theory is to hear its responses to its critics—and there are plenty of opportunities with regard to this, as was mentioned, as most commentators on utilitarianism in the business ethics literature have had reserva- tions about utilizing utilitarianism. Here, I will provide five key typical criticisms of utilitarianism brought up in the business ethics literature and respond to each in turn. My goal is to initiate

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further development of utilitarian business ethics in the field—not by criticizing critics, but by distinguishing Mill’s utilitarianism from other forms of thought which might be criticized by that label. Common criticisms of utilitarianism found in the business ethics literature include the following:

1. The Convenience Objection: utilitarianism undermines prin- ciples such as justice and truth telling, which would make the keeping of contracts a matter of convenience at best.

2. The Supererogatory Objection: utilitarianism leads to irratio- nal and futile conclusions which are unworkable and unten- able in the business place because it asks too much of us.

3. The Majority-bias Objection. utilitarianism is biased against the minority viewpoint and so is unnecessarily blind both to the dignity of individuals and to innovation from dissenters.

4. The Motivation Objection: utilitarianism fails to provide moral motivation for this social concern it requires.

5. The Calculation Objection: utilitarianism is considered fatally flawed insofar as it cannot provide an adequate calculus system to do the utilitarian calculus, leaving it impotent to assist in making ethical business decisions.

Here, I aim to show that one can, on the basis of Mill’s utilitari- anism, respond to these criticisms and that a robust and fruitful utilitarian theory can be quite able to help us develop a vision of business ethics.

Convenience: Utilitarianism Has No Principles: Justice and Rights Go out the Window It is often said that utilitarianism cannot adequately provide an explanation for rights, duties, or justice because it will compro- mise these for expedient good of the greater happiness for the majority: “Perhaps the strongest criticism that can be made against a utilitarian approach is that it completely and totally ignores rights [of individuals]” (McGee 2008). Utilitarians are cari- catured at being willing to do anything, so long as the majority benefits. For example, it has been said that Oliver North’s decep- tive lying about the Iran-Contra affair of the 1980’s was a clear example of utilitarian reasoning:

North’s method of justifying his acts of deception is a form of moral reasoning that is called ‘utilitarianism.’ Stripped down

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to its essentials, utilitarianism is a moral principle that holds that the morally right course of action in any situation is the one that produces the greatest balance of benefits over harms for everyone affected. So long as a course of action produces maximum benefits for everyone, utilitarianism does not care whether the benefits are produced by lies, manipu- lation, or coercion. (Velasquez et al. 1989)

Here, utilitarianism is characterized as justifying acts of deception through lies, manipulation, or coercion. If one considers happi- ness of the majority above all else, it is said, then a utilitarian will give up justice for expediency and will ignore principles and rights when it is beneficial to the majority. Hartman likewise claims that “[t]he determination always to perform whatever act, or even whatever sort of act, maximizes happiness will have unhappy consequences, not least as a result of the breakdown of rules and institutions that enable people to trust one another” (Hartman 1996, p. 46). This criticism actually makes the point for utilitari- anism! On Mill’s utilitarianism, if in fact an act would have unhappy consequences—including “the breakdown of rules and institutions that enable people to trust each other”—then a utili- tarian should not do that act. Lying and ignoring rights and otherwise undermining basic stabilizing foundations of society which make it a happy one are not in line with utilitarianism, but quite rejected by a utilitarian ethic.

However, there is still an apparently difficult dilemma for the utilitarian here: either Mill remains committed to the principle of utility when possible exceptions arise, in which case he acknowl- edges that sometimes one morally ought to violate such alleged rights as liberty and freedom, or else the utilitarian remains com- mitted to these rights even when they violate the principle of utility. Mill addresses such concerns when he says, “We are told that an utilitarian will be apt to make his own particular case an exception to moral rules, and, when under temptation, will see an utility in the breach of a rule, greater than he will see in its observance” (Mill 1998, ch. 2, para. 25, l. 4). His response is, first, to admit that utilitarianism can be misused as a rationalizing excuse for doing evil—but all moral creeds can be misused. Second, he points out that there are often “conflicting situations” and that “[t]here is no ethical creed which does not temper the

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rigidity of its laws, by giving a certain latitude, under the moral responsibility of the agent, for accommodation to peculiarities of circumstances” (Mill 1998, ch. 2, para. 25, l. 19). In the recent scenario where a choice had to be made to break previous prom- ises to united auto workers and help General Motors (GM) survive or fulfill those promises and let them go bankrupt, a great many people agreed with utilitarian thinking that in such a difficult situation, survival will bring about greater benefit than fulfilling promises to the union (New York Times 2005). However, GM made those promises in good faith (we trust) not realizing the extraor- dinary possibility of extinction was coming. These decisions are quite difficult, with conflicting sides, and as Mill says, “Though the application of the standard may be difficult, it is better than none at all: . . . only in these cases of conflict between secondary prin- ciples is it requisite that first principles should be appealed to” (Mill 1998, ch. 2, para. 25, l. 28). In normal (nonextraordinary) situations, a utilitarian does not give up principles which support the well-being of society in the light of apparent short-term goals. In the literature, this is known as “rule utilitarianism” (Carson 1997; Starr 1983). A utilitarian would say that supporting higher pleasures of noble sentiments of fidelity and loyalty for the sake of the greater good would outweigh short-term benefits of breaking trust.12 Preserving rights, duties, and justice is essential to pro- viding the possibility for the greatest happiness for the many—and for maintaining trust in the markets.13 Mill says of justice, “Justice remains the appropriate name for certain social utilities which are vastly more important, and therefore more absolute and impera- tive, than any others are as a class” (Mill 1998, p. 107). Honest business dealings, acting in good faith, fair trials, equality before the law, civil rights, etc are all social utilities on Mill’s view because they provide for a happier society overall, despite short- term costs (of keeping this contract, despite its liability). We can think of many examples of companies which have sacrificed integ- rity and trust for short-term benefits, and in the end, when such companies as Enron or others collapse, it is impossible to say that their breaking of trust led to a greater benefit for the majority involved, much less that as a general rule breaking trust or tossing aside principles of integrity leads to greater happiness.14

Mill’s utilitarianism sees that for society to maintain its happiness-producing capabilities long term, it must maintain

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respect for certain values such as justice, fairness, and civil (society-granted) rights which require some to sacrifice for the greater good. Obviously, these are values which a corporation must preserve to maintain a positive healthy workplace. In addi- tion, we know now more than ever that market stability requires a great deal of trust on the part of investors, which in turn requires upright honest behavior on the part of companies.

So, it is not as though the utilitarian regularly denies these values and principles for short-term expedient gain. To do so would be to undermine the most important values in society which ensure long-term happiness. Why is it wrong to break contracts? The utilitarian would argue that it is wrong in large part because breaking contracts tends to undermine faith in business as an institution, and this would undermine the happiness-producing capacity of our society at large. When can we? In extraordinary circumstances. It is obvious that GM’s deci- sion to not fulfill contracts with their workers was considered an extraordinary act—an anomaly, not one which forever under- mined trust in GM—because their workers made new contracts with GM and the financial institutions stepped up to loan to them once again after that extraordinary decision to break the contract. To say that utilitarians do not really stick to principles because in extraordinary circumstances they will sometimes make exceptions is like saying that the school superintendant does not care about the children’s education because he called off school due to inclement weather. Both require difficult judgment calls, and both, if done well, will be done in a principled and thoughtful manner. To characterize these extraordinary exceptions as random or capricious is quite untrue to classic utilitarianism.

Supererogatory: Utilitarianism When Followed Leads to Futile Actions The first criticism we addressed is the concern that the utilitarian will not stick to the GHP always, whereas this second criticism is concerned that if the utilitarian does, it will result in absurdity. Utilitarianism asks us to act for the benefit of the many, but sometimes, such actions seem futile if others are not correspond- ingly cooperating. In short, it seems irrational to act on a rule which assumes others are acting likewise, if they are in fact not doing so. Hartman provides a great example in which your

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department can finish the project due the next day if all 10 of you stay late, but everyone goes home at 5 except you. “Surely,” says Hartman, “you have no moral obligation to the organization to work alone all night if you know your effort will be futile” (Hartman 1996, p. 46). This is the principle Hartman later devel- ops as an “exit” principle—the notion that it is rational, at certain times, to exit previous agreements (Hartman 1996, p. 170). His point, as I understand it, is a good one: does not utilitarianism seem to lead to supererogatory acts and have no limit of obligation? Velasquez brings a similar criticism against utilitarianism when he says that a “standard utilitarian claim” is “that businesses and agents in general have the duty to provide for people’s basic wants right up to the point where the costs begin to outweigh the benefits . . . For example, so long as cor- porate assets could provide advertising, pure utilitarians would say that it would be wrong to use them for such corporate purposes” (Velasquez 1995, p. 873). Again, utilitarianism on this criticism leads to unrealistic expectations and obligations.

In responding to Velasquez first: perhaps some models of thought would advocate the reallocation of funds as per Velasquez’ suggestion, but Mill’s utilitarianism does not need a company to cease to spend money on operations to increase the fulfillment of other people’s wants, for example, for the manager to give all their advertising budget to the local soup kitchen. The reasons are many. There are multiple promises and good faith obligations made to investors, stockholders, and other stakehold- ers such as employees and suppliers which would all be broken for the sake of soup, and randomly breaking such contracts in nonextraordinary circumstances would not be acceptable—a society where commitments are fulfilled, salaries are paid, jobs are maintained, tax revenues are produced, and investors are repaid, and the owners fiduciary interests are maintained will be a society happier than one where such fidelity and trust is absent (on the other hand, if the company was in New Orleans after Hurricane Katrina and made a corporate decision to divert special funds from advertising toward helping with the emergency, it might very well be considered acceptable). Second, the point of utilitarianism is not merely to give people what they want or to provide a communistic equality which brings all down to a common low level of means. Having concentrated wealth in

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institutions such as corporations may lead to more efficient eco- nomic growth and so, help bring about prosperity to society. An argument could be made that it is more advantageous to the well-being and overall happiness of society for the company to advertise well and increase revenues and grow, provide more jobs and dividends and tax revenues for the local community, than for the soup kitchen to increase its budget.

We might respond in three ways as utilitarians. First, if it is an extraordinary circumstance, and in fact the greater good is not served in staying, then we should not stay, unless an important socially beneficial principle is preserved. In effect, the utilitarian agrees with Hartman’s exit principle: “in a community in which some people are free riders—the usual state of affairs—it is not rational to want to want to be a contributor all the time . . . you ought to want to be the sort of person who contributes until others clearly show they will not; then you can reciprocate by withholding your contribution” (Hartman 1996, p. 184). Of course, in principle, one should always try to fulfill promises and obligations, be faithful, loyal, etc. Loyally staying to burn the midnight oil out of loyalty to the company is admirable, but if it really is impossible for you to do your work without the others present, then it may simply be absurd.

Second, it seems that not being able to complete the goal of the group does not necessarily mean that one has no reason to complete one’s own responsibilities from a utilitarian viewpoint. Utilitarians who see that none of their neighbors recycle are not excused from recycling, despite the fact that their actions alone will not make much of a difference. With regard to this “staying late” example, a utilitarian may say that you do have an obligation—and your obligation is to stay relatively late, as late as it would have taken all of you to get finished, granted you can do your work without the input from the others. In other words, other people not doing their part does not mean you have 10 times as much responsibility, or all the responsibility, but it also does not mean that you are relieved from doing your part.

Third, there are long-term benefits to the many which come from sticking to principle apart from the immediate short-term gain. We can easily see this in research and development depart- ments, where many ultimately fruitless projects are pursued in

340 BUSINESS AND SOCIETY REVIEW

hopes that some of them will come to fruition. In football practice, third stringers do all the same drills as the starters knowing they likely will not play Friday night in the game. The point is, the utilitarian does support practices which are rooted in principles that are thought to have long-term benefits, but these principles are always guided by the basic guidance of utility—what will bring about the greatest good in the long run.15 A utilitarian upholds certain principles because of a belief that maintaining the prin- ciples will produce a society in which happiness production is more possible and likely. This is exactly the very heart of integrity and trust which business depends on. If we do not act on good faith principles, then business cannot happen, and society becomes unable to provide basic happiness ultimately. In cultures of extreme corruption and no good faith trust, there is no capacity for business interaction. If a person is surrounded by lazy irre- sponsible coworkers, that in itself is no excuse to give up their own integrity and work ethic because we know a society in which people act with integrity will be a happier one.

Majority Bias: Utilitarianism Is Biased in Favor of Majority, and So, Is Unfair to Minority Rights Utilitarianism is undeniably for the happiness of the majority. The greatest happiness is what we strive for in our ethical decisions. However, certain freedoms for the minority are always supported by Mill with utilitarian arguments. Another criticism often raised against utilitarianism is that it will regularly undermine people’s rights, particularly when they are in the minority.16 For example:

A straightforwardly utilitarian rule consistently applied may violate people’s rights. Consider a rule that licenses discrimi- nation against the handicapped and thus saves all the money that would be spent in accommodating them. There is no evident algorithm for trading off rights and utility insofar as they are distinct, not least because there is not reason to suppose they are commensurable. (Hartman 1996, p. 46)

Hartman is right to point out that the needs of handicapped and money are incommensurate goods. Yet, we constantly are put in situations where we must weigh them and make judgments, and we do—in light of a common good principle, much like the GHP. So, the choice is not either: pursue utility or help the disabled—

341ANDREW GUSTAFSON

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