Some of the most essential principles of business ethics are as follows:
Principle # (1) Self Interest:
The concept of self interest has been held as one of the most important elements in career planning and formulating management control systems. Personal goals are often at variance with corporate objectives and if the two can be made to converge, individual as well as organisational effectiveness and efficiency is known to increase.
It has also now been accepted by most executives that it is in the interest of organisations to be seen as acting ethically. John Akers, Chairman of the Board of IBM (1989) argues that business ethics are a key component of competitiveness in the society of the USA. He puts forward three ways in which every generation can keep alive the “common moral sense”.
First, adopting a role model as an ethical buttress such that a single credo can act as a guide to action. Second, teaching of ethics within the education system so that going back to the works of the great scholars will shed light on acceptable moral conduct. Third, he suggests that priorities be listed and the list adhered to.
In sum, Akers argues, that it would be of historical as well as competitive interest to corporations to give ethics a high status in their value system. Such a view has its pitfalls because it is all too easy to slip into modes of naive nationalism and thus reify management. When that happens “yes men” and other lumpen elements prevent management from knowing when they are going wrong.
On the other hand, the work of Thomas Donaldson (1989) internationalises the ambit of enquiry and poses the question: when standards of pollution, discrimination, and salaries appear lower in the host country, should multinational corporations always adhere to their home country standards? He goes further and asks: Does using home country standards imply a failure to respect cultural diversity and national integrity?
His work offers three paradigms along which business ethics can be interpreted:
(a) A social contract between productive organisations and society,
(b) Promulgating ten specific rights to form an “international standard of rights”,
(c) Providing for a moral “algorithm” to help multinational managers find compromises between conflicting norms in the home as well as in the host countries.
These three paradigms (which he calls concepts), are then employed in the analysis of ethical problems such as the distribution of hazardous technology, South African dis-investment, the Bhopal disaster and the Third World food problem.
In the process Donaldson has systematically followed the argument first mooted by Gunnar Myrdal in Asian Drama and has given it an ethical perspective. Goodpastor on the other hand takes up the same question from a position of moral philosophy and attacks the problem of the ethical dilemma at the very root by alluding to man’s intrinsic consciousness as well as his latent values.
Having his ideological roots in the Institutionalist School, Myrdal looks at the concept of economic development in a critical, holistic and inter-disciplinary manner. For instance, he describes the British Raj as a massive social service project to provide employment for the sons of the British upper classes at an enormous cost to the colonies.
He brings socio-political and cultural indicators within his overall calculus for the measurement of the “quality of life”. In a manner of speaking, Donaldson adds ethics to the original Myrdal framework and raises the “quality of life question” to a level where it can be studied, (in the tradition of Jurgen Habermas and the Frankfurt School of Sociologists), as a repository and embodiment of social consciousness. Investigators in the field of ethics owe a great academic debt to Donaldson for his expose.
The plethora of literature, emanating between 1970 and 1989 from radical scholars such as Andre Gunder Frank, Amiya Kumar Bagchi, Samir Amin, Immanuel Wallerstein, Sanjaya Lai, Robin Cohen, Oswaldo Sunkel, Bjorn Beckman, Celso Furtado, Octavio Paz, Pablo Casanova, Fernando Cardoso, Sorab Sadri, Dinesh Hegde, Mustafa Rauf and Terisa Turner, has understandably taken a diametrically opposite view of multinational investment. This is because the paradigm they used is essentially a Marxist one, whereas, Donaldson’s paradigm, is a Liberal one.
Given the fact that the “centre” has always tended to exploit the “periphery” and that logically the exchange is “unequal,” these works by radical scholars are very relevant now that India is liberalising its economy, but is unable to liberalise its polity. It is these radical writings by economists from the E.C.L.A. that raise the level of consciousness in the “satellite” states so that the populace do not conform blindly to the rules laid down by the “metropole”.
One burning issue is that of copyrights and patents. The nationalist Third World argument runs something like this-If knowledge is to be shared why should the developed countries behave like the monastic archivist, in the movie named after Umberto Eco’s book The Name of the Rose who simply collected and hid church manuscripts?
On the other hand, there is the counter argument- If a pharmaceutical company allocates more than eighty percent of its budget for research and achieves a scientific breakthrough, is the company not justified in selling the know how at a price (royalty)? Or should these countries go ahead and pirate the product if it increases the equilibrium level of employment and income as Sadri and Hegde (1995) have argued from a position of radical positive economics?
These questions regarding the ethical dilemma can only be resolved ideologically and there is never one correct answer. It depends on which side of the ideological fence the theorist is sitting, and what is his or her hidden agenda. The question of dumping is no different.
One common theme, however, runs through the liberal works cited above. All the works use the “self interest” framework in their analysis, whether at the individual, corporate, state or global level. While Akers uses the national perspective, Donaldson uses a global perspective. The common feature in the two works is the covert theme of enlightened self interest so that the corporate entity is portrayed as a moral agent.
Marxist scholars speak of alienation, exploitation and private accumulation of public wealth placing a label of immorality squarely at the doorstep of the corporate body. The liberal scholars place the same themes within the framework of reasonable business sense. Neither, of course, is entirely correct.
From a position of liberal political economy one could argue that Indian wheat supplies were giving muscle to Soviet hegemony, so that it was in the interest of the US through Pakistan to destabilise the Punjab. Any Prime Minister who invoked a rural based development programme was somehow marginalised or done away with and this can also explain why Manmohan Singh’s (and now Chidambaram’s) latest drive for liberalisation has knowingly overlooked the real development of the rural sector.
While one may disagree with such a premise, it is true that the ethics of state interference in the business sector (industrial or rural) of another country has evoked many passionate debates since the formation of the UNO, and not without good reason.
Principle # (2) Utilitarianism:
In the basement of University College, London sits a well dressed dead body. These are the embalmed remains of Jeremey Bentham, the Classical Economist who gave us the concept of “utility”. Outside the college is a small pub named after the same professor. Until a decade ago these were the only “legitimate” remains of “utilitarianism”.
In its original sense, utility is the want satisfying power of a good or a commodity. Utilitarianism states that human beings maximise their pleasures and minimise their pain. In doing so they act rationally and consistently, choosing between alternatives. That philosophical underpinning, long since discarded by positive economists, surfaced afresh in the works of management theorists during the mid 1980s.
That utility cannot be measured lies at the heart of the issue regarding its academic applicability. Welfare economists, do however, use the cardinality concept to good effect, (as Tinbergen, Sen, and Scitovsky have demonstrated), but that is more an exception than the norm.
The mid 1980s saw the resurrection of Bentham. In October 1986 the Lord Mayor of London invited 100 representatives from industry and the professions to a conference on “company philosophy and codes of conduct”. A year later
In Wibren van der Berg’s (1991) paper
It is not difficult to understand that religious zealots of the retrograde variety, as well as the politicians who use their services, successfully convert stability into inertia and oppose all change which may even remotely threaten their fragile world. Their basic argument is simple. If we allow A, B will necessarily or likely follow.
Since B is not morally acceptable A must not be permitted either. Typical bureaucrats writing papers in professional journals have been known to use such arguments in their work. Self-appointed guardians of social morality find this a very convenient weapon to use against their ideological enemies. One only has to gaze at the Indian newspapers to find out what we exactly mean. Objections against certain T.V. programmes chant the same refrain.
This brings us to the issue of morality. In H L A Hart’s widely acclaimed work Law Liberty and Morality (1963), he distinguishes between “positive morality, (the morality actually accepted and shared by a given social group or society, also called popular or social morality), and, “critical morality”, (the general moral principles used in the criticism of actual social institutions including positive morality). Positions held by professional bodies on subjects like euthanasia, abortion, and in-vitro fertilisation often meet up with the “slippery slope” argument.
A case in point is the demonstrations held in India, Pakistan and elsewhere following the Imam’s fatwa from Iran, against Salman Rushdie’s very controversial work. Almost ninety five percent of the demonstrators or their demagogue leaders could not have understood the language used in The Satanic Verses, but they nevertheless became violently demonstrative of their “supposedly” injured feelings.
The point they missed was that Rushdie indulged in a highly intellectual satire of society and probably meant no offence to Islam as such. Hence “self interest” need not be enlightened; it can also be orchestrated for the fulfillment of some hidden agenda. History is filled with instances when a society stops progressing because criticism has been stifled, as was witnessed in Salazar’s Portugal, Pinochet’s Chile, Franco’s Spain, Videla’s Argentina, and Zia’s Pakistan.
The situation in Afghanistan after the Taliban made their presence felt is a poignant example of this tendency towards intellectual, social and cultural degeneration. So is the case when managements stop having “dialogues” with their officers and managers; they mistakenly treat inertia as if it is a sign of stability.
One very important development in the corporate sector of Indian industry in the wake of the liberalisation is the shift of emphasis from the policy of “trusteeship” to the policy of “profit making”. In the process the ethics of Indian business has suffered and management consciousness has regressed.
The slippery slope argument has been quite forcefully used against certain types of medicine which help control birth and which deal with mercy killing. It is not for us, here, to take a “moralistic” position in this very controversial subject except to state that the one industry particularly hit by the proponents of such an argument is the pharmaceutical industry.
Wibren van der Berg quite aptly sums up his argument by stating that, whereas, the “slippery slope” argument may have an important and legitimate place only in the context of law, it has a marginal one in the context of positive social science.
While on the one hand we have peripheral works such as those of McDonald and Zepp (1987) which use Benthamite utilitarianism very loosely and journalistically, on the other, we have the excellent Toulson and Smith paper (1991) which takes utilitarianism into an academic exercise for the vindication of Buchholz’s study on managerial work beliefs.
The fact that Sadri, Dastoor and Jayashree (1993) have found that the Buchholz study is not very applicable to India is another matter altogether. Utilitarianism has taken quite a bashing both at the hands of radical scholars like Paul Baran and Maurice Dobb as well as liberal scholars like Lionel Robbins and John Hicks.
But, nowhere can be found a more profound castigation of Utilitarianism than in Max Weber’s The Protestant Ethic and the Spirit of Capitalism (1930). Euphemistically speaking, one could say that, whereas, Marx killed Bentham, Weber performed the burial rights and C Wright Mills read the final obituary.
Yet in 1985 we have Jeffrey Barach arguing in the “Ethics of Hardball” the very same things which the positive economists had rejected almost half a century ago. Barach states that the “golden rule” is the mother lode of social ethics appearing in the teachings of every major religion. Yet, he says, this rule is constantly violated in all of mankind’s endeavours from love to war. He argues that modern management should move towards a Zero Sum Game where pain and pleasure are equilibrated.
This approach of Barach is a typically utilitarian position to take. Without a shadow of doubt Professor Bentham rides again and the phoenix has risen from the ashes as management scientists vie with one another to propagate theories which will justify their own capitalist greed to amass surplus value at any cost!
And, when the heavy hand of the CEO tries to put an end to it, acrimony abounds within the organisation as can be seen if one were to scan the pages of either The Economic Times or Business India in recent months. This brings us back to the choice between “trusteeship” and “profit making” alluded to earlier.
Principle # (3) The Categorical Imperative:
Like Plato, Aristotle, Xenophon, Josephus, the “Fathers of the Church”, Goethe and Hegel, the contribution of Kant to the corpus of philosophical thought is legendary. One cannot talk of modern philosophy without mentioning Kant, Hegel, Voltaire, Hume, Spencer and Spinoza. Three great philosophical works namely, Copleston’s History of Philosophy, Maurice Cornforth’s brilliant reply to Popper’s masterpiece The Open Society and its Enemies, in The Open Society and the Open Economy place Kant on a very high intellectual pedestal.
Most liberals and many radicals agree with some of Kantian positions, and, it is to Kant that we turn when we examine this ethical framework. Brig. H D Grant (Retd.) writing in 1985 seems to be unknowingly and unwittingly resurrecting Kant, when he says that there should be an “honour code” for corporations just as for the armed forces.
He says that the constant endeavour to put the ethical and other interests of the organisation and nation above
One may then rightly ask- what is management after all? Quite simply if you plan your work and then work your plan, you are in the business of management. The word “manage” derives from the Latin manus meaning hand and from the Italian maneggiare which refers to the training of a horse. In short, management implies “taking the reins” or directing behaviour.
Hence, a philosopher could well argue that by logical inference, management is anathema to Kant’s categorical imperative, and one is indeed hard pressed to find works, in the field of management, of a reasonable academic standard vindicating Kant. What we have is an assortment of articles in business journals written by non-academics on the subject of business ethics.
It is only in the realm of management behaviour that we come some way towards vindicating Kant. This is when individuals take a stand on questions of principle, for, it was Hegel, (in the highest tradition of Germanic philosophy), who said that when a moral issue is involved, the minority of one is enough to take a stand and change the course of history.
In Darrell Fasching’s informative paper (1981) the reader is introduced to the etymological origins of words such as management, corporation, and consciousness. He goes on to distinguish between micro-ethics, (educating the manager’s conscience), and macro-ethics, (educating the corporate conscience). In arguing for the need to enhance public confidence in the corporation’s social value, Fasching comes as close to Kant as can reasonably be expected, given the divergence between modem management and the categorical imperative.
Of course, only when one reads the works of Louis Althusser, Jean Paul Sartre, C Wright Mills, Herbert Marcuse, Franz Fanon, Barrington Moore, Ralf Dahrendorf, and Paulo Friere does one get, through their (passing) criticism of modern management, a glint of Kant’s metaphysics, Hegel’s dialectic and Marx’s class antagonism.
This Kantian position has been re-affirmed by Indian managers. For instance, in his address given at the opening of the Bihar Branch office of the NIPM in Jamshedpur, a senior corporate executive (K C Mehra) remarked that one must first sell himself to the customer and then sell his organisation. If the product is any “damn” good he need not bother, for, it will sell itself.
This makes good business sense and yet does not fall foul of the categorical imperative, since the “selling” has to be based on trust, faith, and acceptability, thereby, making the activity ethical. More and more corporate managers have started propagating this philosophy in recent years.
When the Chief Executive of a company does not go about fighting a popularity contest, but concentrates on delivering the goods he immediately gets branded as someone who wants to upset the apple cart. Recent board room battles in many large companies like Tata Steel, and the ethos generated from the office of the man at the helm of affairs in TELCO, Jamshedpur in 1994-5 (the brilliantly enigmatic Sarosh Ghandy), will bear adequate testimony in support of this contention.
At what point will a person at the helm of affairs stop being a nice guy and become a task master? Or are these two qualities necessarily discrete variables which cannot co-exist? We opine that one can easily be a hard task master and a fair man at the same time. The acid test is when the “security” of the executive is in question.
Those who have nothing to hide have nothing to fear as Marx rightly suggested. Perhaps that is why corporate executives like Sarosh Ghandy, Ramesh Bhasin, Suraj Khorana, Arun Sinha, and Russi Mody could afford to walk around without the need of an armed guard even in a disequilibrated Bihar. Using the “categorical imperative” the validity of this argument is quite simple to understand.
But, the sad point in the above
Principle # (4) Duty:
Duty assumes a hierarchy, a set of obligations and range of stated or unstated expectations regarding modes of behaviour. St Benedict set up an order in about 630 AD whose motto was Ora et Lahara meaning “pray and work”. This took duty to extreme limits.
Several recent writers also opt for this position, albeit subconsciously, when they argue about “managerial prerogatives”. Personnel management scholars are more prone to take this position than others. But it is very seldom that people who talk of duty speak of accountability as well. And, it is only when one is accountable for one’s actions does one approach ethical behaviour.
In his paper, Saul W Gellerman (1989) raises three very thought provoking questions:
(a) How can organizations protect themselves from employees who behave unethically?
(b) Are unethical actions usually the work of an unscrupulous few or does management inadvertently corrupt employees who are ordinarily honest?
(c) Do reward systems and disciplinary procedures, (or even ethical codes themselves), induce honest employees to do dishonest things? One only has to look around the larger society and polity, which one is a part of, to see the force of Gellerman’s enquiry. He opines that ethics must be “managed”.
Every organisation has its share of liars, apple-polishers, and Judases (given that modem managers and academics have come a long way and raised the price considerably since the Biblical thirty pieces of silver). The question is begged – Who does one owe one’s duty to? To the self, to the cause, to the profession, to the community or to the employer? When persons, supposedly educated sit on the fence and see where the wind blows before they give their opinion reminds of the immortal words of Dante in Divine Comedy-
The hottest place in Hell is reserved for those who are silent during a moral crisis.
Once again the unfortunate part is that these fence sitters who appear to progress materialistically are denigrating themselves ethically all the time. And sadder still is the fact that they do not realise it. Ernest Gundling (1991) examines the US and the Japanese styles of management quite differently from Ronald Dore’s thesis in British Factory Japanese Factory (1973).
He says that the Japanese are (a) self oriented, (b) stick to their principles, and (c) take recourse to law and legal remedies, (adjudication rather than conciliation), in a dispute. It is a fact that such dichotomies have long held an explanatory value and reflect the “perceptions of duty” which the managers subscribe to.
What emerges is the “ethical values” of a particular culture specific system of management very much like what William Ouchi generalised from. S K Chakraborty, was later
Was not Lord Acton’s classic remark – All power corrupts and absolute power corrupts absolutely immortal? How will one explain the activity of the boss who uses spies to find out what his subordinates are up to after duty hours or what of the lecturer who goes around waste paper baskets to collect scraps of discarded notes to build up a case against colleagues who threaten to destroy his fragile world?
Is the head of any institution justified in calling his senior staff and then making his senior staff wait in front of his office for hours on end just so that his weak ego gets a periodic massage? Could the same officers not be more gainfully utilised during the time they were sitting for the supremo to usher them in?
Is an academic administrator justified in going to student hostels to take unofficial feedback on his teaching faculty? Is teaching faculty similarly ethical when they are seen to consistently give poor marks to certain kinds (ethnic or academic) of students?
Is it ethical for an outgoing head of an academic institute to create enough instability so that his more efficient replacement, has a hard time and the former’s inadequacies are not thrown into relief? Similarly, who and what can justify professors not entering a classroom for years on end and yet drawing a regular salary in some institutions of higher learning with the full knowledge and support of the “academic-administrator” at the helm of a post-graduate institute?
Is not the tax payer’s money ill spent and the government subsidy squandered in the process? The million dollar question is posed: Who defines duty and where does loyalty end and duty begin? What if loyalty leads one to unethical behaviour or what if duty makes one condone a grave offence or gross irregularity? And in lieu of this “pardon” when will the boss demand his “pound of flesh” in the name of duty?
Is it ethical for academics to criticise the new Director of an academic institute merely because he likes to play according to the book and does not want to harbour favourites? Is it ethical for managers to criticise the CEO for his lack of knowledge on production systems, when the real reason is because on a matter of principle their loan application has not been sanctioned? The answer to each of these questions is born out of an ideological conviction as well as the level of consciousness of the various actors.
Duty is a nebulous term to say the least, and, is usually defined by the personal preference of the actors. It could be duty to oneself (in which case it falls in the self interest category). It could be duty to a cause (in which case it falls into the ideological conviction category).
It could be duty in the hope of a higher reward (in which case it could fall into the utilitarianism category). Duty could imply placating the ego of a devious superior or repaying past favours to him (in which case it would be a question of loyalty). Or, it could be duty to one’s beliefs (in which case it could fall into the categorical imperative typology).
Principle # (5) Justice:
Also clearly linked to the concept of “duty” is the framework of “justice”. Michael Hyman, Robert Skipper and Richard Tansey (1991) argue that every decision managers make must be based on a strict code of ethics to ensure fairness to all. For this they say, managers must ask themselves and honestly answer specific questions. Once again, the answers are subjective.
[A sceptic might correctly argue that to claim objectivity is in itself a subjective action]. The authors hit the nail on the head when they wrote this about “fairness to all” but it is only through self discipline alongside of a general rise of social consciousness that this kind of policy can be followed.
In Republic, Plato dealt with the key question: Is a just life better than an unjust one? In that dialogue, the students who have gathered around Socrates ventured several feeble reasons. Most assumed that justness always led to pleasure, while injustice led to pain. Gloucon, a more cynical student then posed the problem to Socrates thus: Suppose an unjust man had a magic ring that would make him invisible and a just man too had a similar ring.
The just man would be modest enough to perform good actions and take no credit. The unjust man would do evil and take no blame. Gloucon wondered what would make justice better than injustice, if justice led to poverty and injustice led to pleasure and riches? In the modern day context Gloucon’s challenge is – “If a person could lie, cheat and steal and never get caught, why would he or she be very honest?”
Anyone listening to the debates in the Indian press about the stock market scams, the Bofors issue, parliamentary horse trading, and ballot rigging will agree that there may be quite a following for Gloucon in the higher echelons of government.
In their article in the Economic Times, (1993) Sadri and Hegde raise questions about the wisdom, rationality and chances of success behind the recent drive to liberalise the Indian economy by Gloucons in the Central Government. Here the role of the media to carry a policy prescription to the masses is questioned. And it is precisely such “second opinions” which help a democracy to mature and social justice to blossom.
If a slight digression is permitted, one could question the definition of democracy itself before even considering whether it is worth aspiring for, unless the consciousness of the masses has matured. The textbook definition of democracy, culled from Lincoln’s Gettysburg Address, is that it is the government of the people by the people and for the people.
It seems strange that few have asked the question: “Which people”? And, only when we know which people we are speaking of, can we decide whether it is just or unjust. And, what is just to one group may quite easily be unjust to the other group, just as one man’s freedom fighter is another man’s terrorist.
David Vogel (1991) opines that much of the public interest in ethics stems from the media depiction of the present times as an era of greed symbolised by the Wall Street scandals associated with insider trading, hostile take-overs and junk bond financing. Cremer and Zepp (1987) have elaborated events in the various financial markets during the stock market crash.
On reading their work it could be demonstrated how the ethical perceptions varied with the perceiver’s political-economic positions and with the contingency of the situation. Social justice was, in each case, used as an excuse to distort facts and mystify reality, by the key players in the market. In a subsequent paper published in the Ilmu Masyarakat, Sadri (1991) makes this point more strongly.
Is not social justice close to the notion of summum bonum (the greatest good of the greatest number)? If what is perceived as good for all, (by a chosen few), is not in consonance with ethics what will be the position of the executive? Nothing could be a better example than an ill conceived incentive bonus scheme negotiated by the personnel department to placate the labour aristocracy and the union ranks, much to the detriment of production and profit.
Justice is denoted by a blindfolded figure of a woman holding a pair of scales in one hand and a sword in the other. Is justice therefore really blind? Is the concept of summum bonum or the dictum bahu jan hitayo bahu jan sukhayo (meaning more or less the same thing) realistic? The problem is that only a chosen few decide what is g6od or bad for the total mass. This paper argues in the negative in respect of the view of the greatest good of the greatest number.
If what brings pleasure to many is clearly contributory to cultural growth, we will argue that the centre page of Debonair has more to contribute to the Indian ethos than Tagore’s Gitanjali. Surely, the shallowness of such an argument is writ large and yet politicians and society leaders are not averse to using this argument when they seek to justify their actions. Managers who have risen by dint of apple polishing are also prone to such behaviour.
The “stock market scam” in India is another case in point. Could Harshad Mehta and his team have acted alone? Could the Finance Ministry and the Reserve Bank of India have been in the dark for so long? Was he being detained for fear that he might come out of prison and expose those in power?
Were his final journalistic interviews politically orchestrated? More scams will be unearthed and history shall repeat itself yet again. The acid test of democracy will be when a politician actually gets convicted for the charges leveled against him/her. This looks unlikely unless the judicial system is re-examined and the values of some of its leading lights are de-colonised.
Looking closely at the other scams which have hit the headlines since 1995 we could venture to ask: Who in Indian politics today really has the moral gumption to adopt a “holier than thou” attitude when clearly the crisis of leadership has reached alarming proportions?
Will the law of nature hold in that after hitting rock bottom, history will throw up a more ethical leadership in the Indian State? Is the political drama now being enacted in New Delhi and other parts of India, yet to reach its climax? Is India doomed to remain in the vicious cycle of poverty, under-development and neo-colonialism?
Or is it thanks to the Manmohan Singh – Chidambaram – IMF triumvirate that we are we about to see the light at the end of the long dark tunnel? Or are these mere shadows as in Plato’s analogy of “The Cave” where the real world outside the cave is far different from perceptions of reality in the minds of the chained people who see fleeting shadows on the wall in front of their eyes?
And how ethical are the social, political and religious leaders who are responsible for these false notions? Should India not be in everlasting debt to Harshad Mehta for exposing the ills of the financial system, allowing a greater catastrophe to be averted? These are questions that plague many an ethical mind.
Let us look behind the letter of the law to gauge societal expectations and agendas. Under Indian law a person convicted of rape gets a lower punishment than one who is convicted of burning down an empty structure. Could we not argue that in a democratic country private property is more sacrosanct than an affront to human dignity? Law is, therefore, nothing but codified class relationships and justice can be seen only in the context of strictures passed to serve the interests of the class in power.
Principle # (6) Neutralisation:
When people claim to be cruel in order to be kind, they are acting in the neutralisation mode. Similarly, when academics hide their ignorance behind jargon or victimize students for positing contrary opinions, they are acting in the neutralisation mode. Personnel managers who playoff one union against the other to maintain peace often take recourse to this norm of justifying the unjustifiable, in the name of some greater good.
Over the past decade, a great number of articles have begun to appear in “company journals” and “in house magazines” which highlight this aspect of the ethical dilemma. For instance, Barry Posner and Warren Schmidt (1984) question what are the key values which guide American managers.
It is an accepted fact that the subject of managerial values is complex and collecting data on the subject is a major problem. The authors argue that making an “effective” organisation, i.e. one which is productive, has a high morale, provides leadership, projects a positive image and maximises profits is not the only goal of a corporate executive. Professional and personal integrity is a personal characteristic which should be highly rated by managers at all levels. Most writers on business ethics would subscribe, at least publicly, to this view.
Charismatic leadership is generally associated with integrity. This may not always be true, but nevertheless the assumption remains. Few managers, however, try to wrestle with ethical dilemmas, and thus, they deny responsibility for actions which may seem to be unethical. Evidence from research suggests that organisations, like individuals, need the opinions of others to ensure that broader perspectives are applied to the understanding of problems.
The growth of knowledge itself rests on this paradigm, for when diverse opinions are discounted truth becomes illusive. To gain social legitimacy managers deny any ulterior motives to their actions and refuse to accept that harm to others might have resulted from them.
Their action is thus “neutralised”. When managers have one rule for themselves and another for their subordinates in the name of “managerial control” they operate in the neutralisation mode. This particular norm gives sociological investigators a field day to formulate their own paradigms.
In their paper Ann Howard and James Wilson (1982) cite the AT&T study which showed that during the 1970s new managerial recruits lacked drive and initiative to move up the hierarchy. Economists like Galbraith in The Affluent Society attribute this to the security afforded in the employment market by the business cycle.
It appeared; however, from the AT&T study that many young people from the late 1980s are encapsulated in the notion of privatism, avoiding involvement in anything beyond their immediate interests. Since they believe, their real life begins after work hours, there is often a painful fragmentation between work and leisure. The authors here detect a flowering of a “me generation”, a crisis of authority, and an age of cynicism.
Neutralisation then becomes the obvious recourse for this new breed of managers, and attempts are made to legitimize the illegitimate or justify the unjustifiable. One only has to speak to the average student in management schools across India to know that most have taken up this type of education only to buy a ticket into the labour market.
In the case of such students, there is a clamour for grades and students choose such topics for their dissertations which would appeal to the executives interviewing them at the end of their academic sojourn or where through apple polishing (discretely called extra class participation), the leniency of the examiner is assumed. After all these students are seeking to maximise their own advantage.
No one can fault them for doing so. Rationally, this is all in keeping with the nature of the beast we call a free market economy. At the risk of over generalisation we can posit that, in any society where the mediocrity thrives and the comprador class is in power, everyone tries to beat the system. What is alarming is the rise in the number of such young managers of tomorrow, and, the work ethic they will probably imbibe and generate in the years to come.
Principle # (7) Legality:
In a thought provoking paper Richard Nelson (1984) examines the late Hannah Arendt’s “action philosophy” as a guide for managers. Modem managers often echo the evidence presented at the Nuremberg Trials where soldier after soldier reiterated that he was merely following orders. Under pressure from the organisation and the solidarity demanded by their peer group, the managers tend to discard their conscience and obey orders.
Nelson’s paper presents a managerial philosophy that combines individual thinking and judging with the “civic group” action of other managers. The “organisational citizen”, (not much different from J S Mill’s “rational man” or J M Keynes’s “institutional man”, is constructed with the “Adolf Eichman” sort of manager in view, to whom thinking about the organisation as a separate corporate entity is alien; he is like the Machiavellian “Richard III” type of manager who condones and co-operates with harmful behaviour for personal gain; and, the “Faust” type of manager who co-operates with harmful behaviour for what he considers to be a greater mission for his organisation.
Nelson’s paper further argues that Hannah Arendt’s “action philosophy” idealises the institutional manager and is found useful for five reasons:
(i) It helps to appreciate and understand the pressures that managers are subjected to, and, that these pressures are not a new phenomenon, being different in form rather than in content from the problems of the past,
(ii) It helps, given the mutable nature of objective social reality, to understand the range of ideal type responses to organisational stimuli,
(iii) It acts as a guide to decision making when an ethical dilemma is involved,
(iv) It is free from all accepted ideologies, and as such, serves as an ideal type of framework for decision making under conditions of relative uncertainty,
(v) Philosophy, the mother of all sciences, provides a theoretical foundation for decision making on a holistic plane. Here a question arises- are duty, loyalty, justice and legality discrete ideas? They have been separated only to facilitate a review of literature, and, for the proper positioning of divergent views so that objective social reality appears less opaque.
Nelson treats law and legality in the tradition of Salmond’s Jurisprudence rather than in the tradition of Marx. The former looks at law as a structured set of rules for the conduct of social behaviour. The latter looks upon it as codified class reflationships.
The paper, accordingly, lays the basis for a code like that of Moses, Hammurabi, Justinian and the rest, against which actual behaviour can be judged and understood. The codes of conduct of professional bodies (medicine, law), philanthropic bodies (the Lions and the Rotarians), and socio-cultural bodies (the Freemasons and the Theosophists), could also, be seen as devolving from such a perspective.
Robert Chater (1980) echoed a similar theme when he surveyed and analysed the statements on Business Ethics prepared for the California Roundtable. The moot question is: do these codes of conduct restrict innovative behaviour and prevent people from taking a stand based on their convictions?
Are people being forced to conform? If so, is it healthy for society and its continued progress and evolution? To use the Hegelian metaphor is order not the antithesis of freedom? And should order, therefore, be pursued by any organisation or by society? What does freedom imply? To do what one wishes or give freedom to the other to practice what the other wishes?
Is it not true that only those who have strayed willingly off the beaten path are those who have created a way of their own? Pundit Madan Mohan Malviya’s marathon feat in setting up the Benares Hindu University is legendary. In more recent times let us take the case of Perin C Mehta, the founder of Jamshedpur Women’s College or Madioma Madan the founder of Jamshedpur Co-operative College or Quinn Enright s.j. who founded the Xavier Labour Relations Institute, and scores of other unsung heros of the educational world in India like Professor Ushaben Mehta, Professor Alu Dastoor, and Rev. M N Biswas to appreciate the point being made, more clearly.
Principle # (8) Ideological Conviction:
With the help of a syllogism one can argue thus: The answers we get to social issues depend on the questions we ask. The questions we ask depend on the values we hold. And the values we hold are born out of our ideology. Hence, ideology is germane to all thought and all action.
And yet, we tend to assume it away. For instance, the dictum oft misquoted and attributed to Marx- “religion is the opiate of the masses” can best be analyzed in terms of ethics. For Marx and Engels, the philosophy of religion was termed as metaphysics which was visualized in terms of the ideological perspectives and class positions of the investigators.
Marx and Engels argued that this metaphysics produced a blind ritual. This is what they called “religion” as distinct from “metaphysics”. Marx’s dictum should be seen against this background, else it will be misunderstood, as it generally is. Looking around the world, one cannot help but notice cults that indulge in unethical behaviour supposedly under “divine” inspiration or for the sake of propagating a particular mode of conduct.
This is when one finds Marx’s dictum to be true. The theme of ethics in business, changes a little when David Vogel (1991) analyses the problem thus-
The public interest in business ethics has increased significantly over the last
Looking back just one decade from 1980, numerous corporate executives in the USA were convicted for making illegal contributions to President Nixon’s 1972 re-election campaign. Looking ahead just one decade we saw the Stock Market Crash of 1987, when some authors were prompted to castigate the Hong Kong Stock Exchange for closing down all dealings for four full days, and trading stocks on the “grey market”.
While yet others saw a hidden agenda and argued that the penalty meted out to the offenders was a British attempt to curb the financial power of certain Chinese lobbies within the Hong Kong Stock Exchange. What happened in southern India more recently when the stock exchange was closed down is one of those anachronisms of history that seek to defy logic.
The high-handed manner in which Indira Gandhi declared a “state of national emergency” when the Allahabad High Court nullified her election, and the inept way in which her successor, Moraiji Desai dismissed JRD Tata as Chairman of Air India prove that petty mindedness and megalomania rather than ideology (or rationality) is at work.
This was recently re-confirmed by the manner in which the Congress led Central Government was clinging to power and the fascist tendencies exhibited by some parties in the Opposition. The analysis by Connie Bruck (1988) of Michael Milken, (of junk bond fame), reveals him as a man driven less by self interest than by megalomania.
The top brass involved in the recent financial scam in India (1992) and the political recriminations that followed on all sides of the ideological battle-field could also be so described. History is replete with examples where megalomania has overtaken both common sense and self interest. The failure to realise this has been man’s undoing, for, as Marx once said: history repeats itself; on the first occasion it is a tragedy, on the second it is a farce.
One can also sometimes see a religious conviction springing from the subconscious mind at work, in human affairs. Islamic banking which prohibits the payment of interest is a case in point. Both St Augustine in The City of God and St Aquinas in Summa Theological observed that a businessman could conduct himself without sin and yet not be pleasing to God.
In a way, the Catholic could no more have been an ethical money lender six centuries ago, (see Shakespeare’s Shylock), than he can be a socially responsible drug dealer today. But, like all things in life, attitudes, beliefs, values change with time. For, if they do not change with time we shall have a situation as in India today where inertia is mistaken for stability and is zealously guarded. Managers, politicians and professionals alike who are insecure in their position try to “build territories” within which they feel “safe to exist”.
In doing so they plan, plot, connive and cheat to remain at the zenith of their power. Quite often an insecure manager will insist that nobody from the personnel department speaks with those who are working under him without his being present. This reflects primarily the inability of the manager to trust his subordinates and secondarily his desire to hide some unsavoury truths from being exposed to top management through the personnel department’s dialogue with his team.
The Iron Law of Oligarchy formulated by Roberto Michels has thus been proved correct several times over.’ It would be wrong to give ideology a negative connotation, like Napoleon, out of the fear of Hegelian thought, had done in the case of the ideologues. It is only a socio-cultural phenomenon.
One of the most potent forms of ideology is religion. The history of colonialism is rife with the use of religion to fan and foment unrest. In India the Sepoy Mutiny of 1857 was planned at the Paltan Kali Mandir at Meerut. It simultaneously erupted in Meerut on the ground that some soldiers had been humiliated for insubordination and in Barrackpore where the cartridges were supposed to have been greased with beef fat and a soldier refused to use them.
Modern historians question this spontaneous theory and argue that the action was pre-planned. What it began as was a mutiny, what it is described as, is a war of independence, and what it ended as, is the last gasp of Indian feudalism. Similarly, in the Great October Revolution of 1917 the shots fired from the battleship Aurora signalled the outbreak of violence and the headquarters for the history making event was the Fortress of St Peter and St Paul.
In recent times Latin America produced what came to be known as Liberation Theology, and the role of Catholic priests in organising Red Indian peasants is well documented. Regis Debray narrates how the celebrated Che Guevara was helped by priests and betrayed by the very peasants whom he tried to help in Bolivia. The betrayal of the Naxalite movement by the Communists in West Bengal decades ago reverberates with the same historical logic.
Prior to the Renaissance, Italian businessmen were known to put the bodies of dead animals in the shops of their competitors in order to gain a competitive edge. In India today, finding cockroaches in soft drink bottles is a similar instance. Queen Elizabeth I knighted Francis Drake for plundering Spanish ships and killing their crew.
Captain Cook was knighted for ravishing native women and bringing back jewels for Her Britannic Majesty. The History of the Great American Fortune (1909) describes Jay Goul, an extremely successful business operator as a “freebooter” and a “pitiless human carnivore, glut-toning on the blood of his numerous victims, a gambler destitute of a usual gambler’s code of fairness in abiding by the rules”.
In India many a stage magnate was well known for stealing poor writers’ plays and making a fast buck at the box office. In Taiwan and Singapore, for instance, intellectual copyrights do not make sense as they are flouted with impunity. Nothing, however, succeeds like success, and therefore, one would be surprised if one were to find Carla Hill giving strictures to Japanese businessmen or the Dunkel Draft having a notable impact in Japan, Singapore or the People’s Republic of China.
Let us also take the case of an Indian businessman in West Africa who allegedly bought out a ship full of beer declared unfit for human consumption by the Spanish Government and sold it with impunity. He then got a local priest (witch doctor) to bless the beer, an Indian (medical) doctor to declare it safe for consumption “in small quantities”, and went ahead to market it.
Sadri (1985) also cites the case of businessmen in Lagos who imported spices and lentils from India as “pet food” because “pet food” was exempt from customs duties by Nigerian law. Here were examples where ideology was used for obtaining an unfair trade advantage.
On the other hand, we have the case of James Burke, the CEO of Johnson and Johnson who voluntarily withdrew bottles of Tylenol from the market after three US citizens died from a few poison laced capsules. There is as much to be said for consumer lobbies as there is for a socially responsible businessman.
This example also shows that there is little truth in the view that “a businessman has to be corrupt to survive” – Fundamentally it is a question of how ethical the businessman is and to what limits he wishes to stoop to conquer. Does he want to maximize his objective function (profit) as in the case of Hong Kong or does he have a long run view as in the case of Japan? Is their a counter-vailing tendency (to use the Galbraithian term) which can offset this crazy craving for profits?
Coming back to India, the greatest bane of macroeconomic growth has been the unabated expansion in population levels. More are born in the name of religion than they die for that cause in India. Family planning thus becomes the most rational imperative. Yet there was an outcry against the recent advertisement for Kamasutra condoms even though it was excellent in terms of the communication form, message content and presentation style.
Self styled “protectors of social values”, speak of such advertisement as corrupting the youth, when it may be their decadent ways of visualizing social reality which seem to be the real corrupters. While the explicit display of sex in such an advertisement can be offensive to some people, in the larger interest of “education”, and the rise in social consciousness it helps to bring about, the advertisement’s display should be upheld.
In a country where parents talking to their sons about condoms is taboo, and in a country where sex education in schools is frowned upon and replaced by religious dogma, such advertisements of explicit sex are very ethical because they carry an ethical message; a message which would make the difference between life and death, if not communicated. Gettel was right when he said that public opinion is neither public nor opinion.
This brings us to an examination of public good versus private gain, a question that has always troubled the moral philosophers. David Vogel (1991) notes that capitalism purported to be the first social system in which the wealthy could claim they received their wealth as a “just” reward for performing a socially useful function.
As against this, the philosopher Pierre Proudhon had exclaimed “property is theft” almost a century and a half ago. Early scholars of the Christian Church, called “The Fathers of the Church” such as St Gregory of Nyssa and St John Chrysostom have said exactly the same thing as Proudhon except that their perspectives were different.
Three decades ago, Che’ Guevara in his Angolan Diaries likened capitalists to a race of wolves: he who gets there does so at the cost of others. The argument that capitalist competition can lead to co-operation is only possible when the level of consciousness has reached a height where free markets are utilised ethically.
Guevara’s aforementioned argument can be better appreciated when we observe that during the days of the Biafran civil war many multinational companies ferried arms and supplied funds to both sides in the civil war making a quick million in the bargain. During the Yom Kippur war, US firms were accused of taking advantage of the Arab oil embargo to make unprecedented profits.
This prompted Premier Golda Mier to remark that Moses made the Israelites wander in the wilderness for forty years and choose that one spot to settle down where there was no oil! The invasion of Kuwait was condemned by the UNO in 1991, whereas, the rape of Iraq was hailed by the very self same esteemed body.
This point was brought home in the controversial defence of Sadam Hussain, not from an ideological position but from a rational viewpoint. Voltaire was, perhaps, right after all, when he claimed that morality lay on the side of the heavier artillery. All this is indeed a far cry from the argument put forward by Max Weber who held that the Protestant Ethic was responsible for the spread of capitalism and from the treatise of Joseph Schumpeter which forecast a cataclysmic change in the nature and form of capitalism.
A new dimension to that polemic is given by the reactionary stance taken by George Gilder in Wealth and Poverty (1985), when he argues that capitalism begins not with material self interest but by “giving”. Because the inventor has no guarantee of return on his investment, his investment constitutes a gift to the community.
This is very much akin to Adam Smith’s invisible hand of the market equilibrating total social benefit with the total social cost. Whereas, Gilder equates investment with philanthropy, David Laidler (1987) postulates that active gambling yields satisfaction to the individual who undertakes it, over and above
Laidler in the highest tradition of positive microeconomics equates investment with calculated risk while Gilder in the highest tradition of dubious philanthropy equates investment with a social gift. Of course, the first approach does not preclude social responsibilities of business but merely speaks of the risk taking ability of the entrepreneur.
Perhaps the best analysis of the ethical dilemma can be seen in Stephen Cohen and John Zysman’s (1987) work. They point the finger unequivocally at the contribution of the service sector to the national welfare. Managerial ethics has certainly come a long way since the 15th– 17th century Christian Church’s dictum Homo mercator vix aut numquam Deoplacerepotest meaning that the merchant can scarcely if ever, be pleasing to God.
But, if God is supposed to be fair, then why the discrimination? Contrasting this with the philanthropical contributions of G D Birla, one may begin to see how ideological perceptions as well as the acceptability of such gestures have changed. Ethics is after all, person specific, context specific and culture specific.
To cite another example, the Papal Bull issued by Pope Paul VI in 1973 and titled Humanae Vitae brought the debate on contraception into the forefront of Catholic consciousness and evoked many a heated debate about whether or not an organism was a living person at the moment of conception or a few months thereafter. Such “ethical” issues often lie at the heart of any analysis of the behaviour of society in general or a group within it.
On another plane altogether is the setting up of the JRD Tata Foundation for Business Ethics at the Xavier Labour Relations Institute, Jamshedpur. It has been argued that ethical behaviour makes consistent belief and trust in the dependability arid the bona fides of management possible.
This, in turn, helps business to enhance its effectiveness and its efficiency thereby improving its competitive edge. The corporate cultures of progressive companies like Godrej Soaps, TISCO, Vikram Ispat, Larsen & Toubro, Hindustan Lever and TELCO, reflect this argument clearly.
Hence business ethics makes good economic sense as Joseph Sciortino (1992) using the case of Sysco Food Systems USA has demonstrated at some length. In an “in company programme” for senior managers of India Polyfibers at Barabanki in 1992 the participants included ethical behaviour within a draft corporate strategy formulated by them during the discussions.
Hence the need to be ethical is being realised in all sorts of industries at all levels of management. In fact in his valedictory address at the end of another “in company programme”, the then Vice President, of Upcom Cables at Lucknow, (P Hargopal), made this very point when he said that once we become more ethical, then as managers, our effectiveness and efficiency automatically improve.
One only has to look at governments across the world and over a period of time to find out what would happen if the State acted unethically. Managers learn that lesson quickly, but, unfortunately many use it to remain in power more often than to be honest because it is good to be so.
Principle # (9) The Light of Day:
Perhaps the most original treatment to date, of the ethical dilemma, is the statement made in 1991 over a coffee table in Bombay, (and not minuted for posterity), that “if you cannot discuss your decision freely and openly, it is not ethical”. In this statement the metaphysics of Kant’s “reason”, the realism of Hegel’s “dialectic”, the pragmatism of Heideggar’s “phenomenology” and simple home truths regarding human behaviour have been neatly encapsulated.
At the same time Kant’s “categorical imperative” has been emasculated, and, Bentham’s “utilitarianism” has been rendered impotent. Robert Chatov (1980) came close to taking this position but failed to state it categorically. He, however, failed to grasp the moot point: there can be no such thing as a bad student – there can only be a bad teacher.
So also, there is no such thing as a labour problem – there is only a management problem. This point was also made by Dastoor in her Fellowship Thesis at NITIE in 1994. Chatov fails to see that the very concept of managerial prerogatives is in itself quite suspect.
Similarly, rules regarding insider information, bribery, ballot rigging, and avoidance of anti-trust laws are examples of unethical practices that cannot be openly discussed. [This does not mean that company secrets will be openly flouted but that transparency of action is imperative since free flow of information will increase in the years to come].
The “light of day” argument used by Dastoor has been expanded into The Praxis School of thought formulated by Sadri and later used to good effect in her empirical research by Dhun Dastoor and Jayashree in their academic papers. Quite simply it reflects a kind of “sophistry” and a need to conform and belong to peer group expectations.
To take the argument to a logical end – if a dacoit in the Chambal Valley killed thirty Thakurs and looted their houses, and then went and openly discussed it in his jungle camp, the dacoit would be acting ethically within the framework of such a definition. This may be stretching a point, but this is done only to strengthen the argument.
In the case of a company the same rule can be applied. If you can discuss a dismissal of an employee openly then his or her dismissal is ethical. Patrick Murphy (1989) begins by asking “what is an ethical company?” He advocates the use of corporate credos, ethical programmes, and ethical codes to create ethical corporate structures.
James O’Toole (1991) points out that there is a prevalent belief that those who appear to play straight have an ulterior motive. Instances in the Asian context abound which can lend weight to this cynicism. One only has to follow the daily newspapers and examine campus politics in places where’ there are even less than 50 teaching staff, to see the point.