Digitally signed by Sundar K

Sundar K Sharma
DN: CN = Sundar K Sharma, C
= US, O = Worldwide
Foundation /Nepal, OU =

Sharma Research and Dwevelopment

Reason: I am the author of this
document
Date: 2010.06.25 18:05:57
+05'45'

Title of the essay: The Critical Discourse on ‘Morality of Profit’

Full name: Sundar Kumar Sharma

Mailing address: Kathmandu University, Human and Natural Resources Center, P. O.
Box. 6250, Balkumari Lalitpur
Contact telephone number: 0977-9803098006
E-mail: sharmak.1979@gmail.com

A brief biography of the author:

Sundar Kumar Sharma, independent researcher in the field of Political Economy of

Globalization and Human Development. Currently researching in Political Economy of

Climate Change and Development in Least Developed Countries (LDCs)

 The Critical Discourse on ‘Morality of Profit’

‘There is enough wealth in the world for everybody's need, but not enough for

anybody's greed’. - Mahatma Gandhi

Abstract

This paper analyzes the discourse of ethics, morality and legitimacy pointing towards the

theme of rational morality in the present situation of globalized world. The key

arguments of ‘morality of profit’ are focused on the ethical ground of making profits for

human welfare. Finally it has proposed for the social equity ventures as the emerging

enterprises for the social and human development. It has concluded the significance of

moral dimension in the framework of political economy of globalization for ending the

global poverty.

Key words:

Morality of profit, legitimacy, human development, social equity ventures, globalization

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Overview – Discourse of Ethics, Morality and Legitimacy

The significance of the theory of discourse ethics is that it upholds the possibility of

rational normative discourse across cultures and universally valid norms. The parameters

of such discussion define the realm of ‘morality’ (Moralität). In this way, the realm of

morality is limited to procedural norms that reflect a generalizable interest. This

compatibility is due to the fact that the principle of discourse ethics and the principle of

democracy both derive from the same discourse principle. Thus, although legitimate law

has to take into account a wider range of discourses than morality. Legitimacy addresses

the issues at more concrete levels; but should not come into conflict with the demands of

morality. In our present corporate world the evaluation, however, is still in terms of the

effects of the corporation’s functioning vis-à-vis the legal-political system (and not

directly in relationship to its ability to represent a generalizable interest as is the case in

terms of judgments of morality).

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The Rational morality

Rational morality is all about realizing evolutionary dynamics, the interpretation of their

implications and how to best align ourselves with the evolutionary process. Value

judgments are heavily biased towards 20th century secular humanism. The quintessential

human value of striving for perpetual self transcendence is discounted. The underlying

evolutionary dynamics that led to human values in the first place or are implied by it are

being ignored. Wanting to continuously self improve however is in itself a fundamental

human value represented in the constant quest for knowledge, understanding, wisdom

and personal growth. The criticism gets more fundamental when realizing that human

values are the product of billions of years of evolution. Rational Morality is one of the

outcomes of historical evolution in human conscience.

Morality and corporate responsibilities

Discourse ethics, as we have seen, defines morality in terms of the potential universal

validity of norms. From this perspective, valid norms demonstrate two characteristics.

Because morality exhibits these two characteristics, discourse ethics can, in principle, be

used either to try or generate valid norms by achieving consensus on universal interests.

While talking on the issues corporate responsibilities in the globalized world, four

necessary conditions can be posited for capitalist business practice to represent a

generalizable interest.

(1) Efficiency Condition – there is not an equally efficient alternative that is more

democratic, more egalitarian and/or less hierarchical;

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(2) Regulatory Condition – there is effective regulation which ensures that the promised

efficiency gains are realized;

(3) Redistribution Condition – there is, if necessary, redistribution of the social product

such that people actually partake in the efficiency gains which the structure promises;

(4) Anti-Colonizing Condition – there are measures in place to address any factors

(viz., colonizing tendencies) that undermine the possibility of moral discourse (and the

other three conditions).

Insofar as any claims to morality for the capitalist corporation per se require the

fulfillment of these four conditions, the morality of the individual corporation can be

explored in terms of their conformity to the spirit of these conditions.

Some existing corporate fashions are in contrary to a generalizable interest and, as such,

they are the clear violations of the demands of morality. Similarly, other individual

tactics used to gain a competitive advantage (e.g., corporate espionage, bribery, etc.) that

contravene the spirit of market competition also represent violations of the demands of

morality. There is also a violation of morality where corporations do not treat labor as

social agents or human.

Current scenario of the human world

- The human conscience and morality are forgotten!

In 2005, the world’s billionaires — just 497 people (approximately 0.0008% of the

world’s population) — were worth $3.5 trillion (over 7% of world GDP). In 2008, the

World Wealth Report indicated that a lot of money had been lost as a result of the global

economic crisis. The evidence makes it clear that we are living on a world in which

poverty and hunger is the norm. Some 1.1 billion people in developing countries have

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inadequate access to water, and 2.6 billion lack basic sanitation. Millions of the world's

poorest children are among the principal victims of climate change - caused by the rich

developed world, a United Nations report said recently, calling for urgent action. “The 48

poorest countries account for less than 0.4 per cent of global exports. The alleviation of

poverty across the world must be the top priority of all peoples.

The UN's World Food Programme warned: "As the global financial crisis deepens,

hunger and malnutrition are likely to increase as incomes fall and unemployment rises. If

emissions are not brought under control, within 25 years, the report states:

310 millions more people will suffer adverse health consequences related to temperature

increases, 20 millions more people will fall into poverty; 75 millions extra people will be

displaced by climate change. The study compares for the first time the number of people

affected by climate change in rich and poor countries. "The world is at a crossroads.

Simple changes could help alleviate big problems. The report says South Asia's

governments need to urgently increase social spending to meet the challenge.

According to the World Bank, three quarters of the population in South Asia, almost 1.2

billion people live on less than $2 a day.

Muhammad Yunus describes this in terms of social business, a no loss, no dividend

company with social objectives. For Africa to develop sustainable

food policies partnerships are key. Banks and corporations and countries go bankrupt.

The human world is becoming more inhumane as the original human conscience and

morality are forgotten.

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Situation of Growth and Distribution

- Is this development?

The rich countries, comprising less than 1.4 billion people, were represented in The

World Economic Forum, January, 2009, in Davos. The wealthiest people and

corporations, and governments, in the world, gathered to discuss solutions to the failing

world economy. It is not acceptable that 0.0015% of the world's population control 80%

of the global wealth! Most people in the world today are poor, and living in appalling

conditions. Approximately half the world’s population now lives in cities and towns. The

financial systems of the world are interconnected business beyond banking.

Discussions on ‘Morality of Profit’

-Are profits morally justifiable?

While neoclassical economists have traditionally endorsed the pursuit of profits, many

moral philosophers have challenged profit making on a variety of ethical grounds.

Entrepreneurship can be considered as a legitimate source of profit, while the recent

advances in welfare economics weaken the case for the morality of profits. Ethical

dimension, covering the right to profits from economic rent; the morality of how profits

are used--those directed toward library or university endowments, for example, are

considered morally acceptable--and whether or not profits are deserved. Morality of

profit should be structured with moral and political philosophy, as well as with recent

genuine works in legal, political, and moral theory. The role of self-interest and religion

in morality, moral relativism, moral truth and objectivity all are equally important to

shape the discourse of Morality of profit. The comprehensive discourse should include

representatives of traditional moral theories as well as contemporary works on moral and

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legal theory. Morality of profit should reflect the breadth of the philosophical and

political spectrum in the globalized world. One the one hand Morality of profit can guide

the self-interest and morality, rule utilitarianism, war and terrorism, cloning, capitalism,

democratic government, multiculturalism, and reparations. Can morality be founded upon

facts about human nature, social agreement, volition, subjective preference, a priori

reasoning, intuition, or some other basis? To answer all these practical queries the ethics

and morality of profit is to be reviewed. What is the proper place of virtue in a complete

moral theory? It is critical to think whether objective moral truths can be grounded in an

understanding of the nature of human beings as rational and social animals. Finally, what

is the phenomenology of our moral experiences can reveal about moral objectivity?

-Are the markets Moral?

In most societies today, making profits are accepted as moral, if not especially

praiseworthy. This pure profit – surplus – accrues to a business as a reward to its

organization, for the act of entrepreneurship itself. The theory goes that the competition

in the product market ensures that value creation is the only method of creating surpluses,

by limiting, and eventually eliminating, all possibilities of value-grab. The new ‘love

your profits’ morality makes an implicit assumption of existence of perfect competition

in the market, and views all profits as purified by the trial of fire by Competitive Markets.

Although attempts to resolve economic and moral issues are welcome, Economy and

Morality has deep-rooted problems. Moral values must be universalizable. A moral value

is universally acceptable to all persons in a society who have a common interest in social

coexistence, a moral value is universally valid as the standard that enables the survival

and coexistence of human beings, permitting the pursuit of their plural conceptions of the

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good, virtue is linked to “a wide range of socially established cooperative human

activity”. Shared principles of justice will promote a just society through public reason.

“Evils of unregulated capitalism” and industrialization has exacerbated “inequalities,

poverty, unemployment, exploitation, alienation, and mammonism”.

There are also allusions to the “immoral pursuit of profit” and “the great social evils of

laissez-faire”. The market is not a universal solution to human problems, and it is

worthwhile to consider non-market institutions and values that might provide boundaries

to social reliance on market coordination.

-Is profit a means, or an end?

From Human development perspectives profit is regarded as economic means, such that

it is means for capability enhancement in human development. For profit-entrepreneurs

Profit is regarded as an end and pocketed or reinvested for further profit. For social

entrepreneurs profit is regarded as means and put into serving people. Profit is not the

gauge of value creation; nor is customer satisfaction; social impact is the gauge. Social

entrepreneurs look for a long-term social return on investment.

-What is the relationship between greed and profit?

Greed is a classic topic in human development and it inevitably affects many of our

choices and decisions. Although greed is typically viewed as uniformly negative and

reprehensible, we propose that people's attitudes and opinions about greed are actually

subject to change. In particular, studying economics may help legitimize and even

beautify greed. Previous research shows that economics education might make people

more self-interested because self-interest maximization is central to most economic

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models. Because greed and maximizing self-interest are sometimes difficult to separate,

conceptually or empirically, we propose that studying economics may make people view

greed as potentially positive and beneficial. In that sense accumulation (economic)

without moral and social values can be translated as greed. shared familiarity with a set of

From the perspectives of human behavior and motivation , some economic principles

emphasizes that 1) people are self-interested utility-maximizers, 2) individuals should be

unimpeded in their pursuit of their own self-interest through economic transactions,

and 3) virtually all human interactions are economic transactions.

But it is to be clear that all transactions should not be guided with the motive of greed

but should be social welfare oriented.

-Can the pursuit of profit be understood as a good in itself or a necessary evil?

In the free market system, U.S. policy is "directed at creating conditions that favor the

maximization of corporate profit." Corporate investments have fattened the profit

margins by employing labor in Mexico, Cambodia, India, Pakistan, and Malaysia. In real

estate terms, it’s location, location, location. In this scenario, the major challenges of

these days are- how we can integrate the self-interest and social responsibility of

globalized corporations? The basic logic of capitalism is profit. This pursuit of profit

requires economic expansion, the creation of new markets and the intensive exploitation

of existing markets. Potential profits also exist in the areas of society that have

historically sat outside capital markets, such as domestic services, recreation and leisure.

But in our world the profit accumulates within some capitalist corporations and camps.

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Reflecting to the context, Susan George, one of the world economy observatories says

‘Capitalism itself is not bad but the capitalist are too greedy….’

-What are our core ethical responsibilities as we seek profits?

Business must have a "social conscience" and should take seriously its responsibilities for

providing employment, eliminating discrimination, avoiding pollution. The discussions

of the "social responsibilities of business" in these days are notable for their analytical

looseness and lack of rigor. What does it mean to say that "business" has responsibilities?

Only people have responsibilities. The first step toward clarity in examining the doctrine

of the social responsibility of business is to ask precisely what it implies for whom. If we

wish, we may refer to some of these responsibilities as "social responsibilities." What

does it mean to say that the corporate executive has a "social responsibility" in his

capacity as businessman? What, then, is ethics about? In the widest sense, ethics makes a

human community possible. Ethical transformation of corporations in the globalized

economy is only the viable option. There is no alternative except transforming the

institutions of globalization. Ethics is for all. And business ethics – ethics as applied to

the business arena – is for all business people. Enough profit is enough. While making

profits we don’t have to forget the humanistic principles of social equity, ecological

sustainability, moral ethics, and human welfare etc.

Enterprises for social and human development

-solution to global poverty

We have to seek profit in the sense that profit is also on offer as new markets are created

in sectors historically the domain of governments and charitable institutions. New social

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business ventures and enterprises are created following deregulation of the economy and

redistribution of profit to social and human development sectors. Considerable business

opportunities exist within the realm of state social services like health, welfare and

education, should the government be of a mind to open these areas up. As a core social

service, education plays a pivotal role in the reproduction of society. It provides benefit to

business, wider civic society and the individual recipients of learning. It progressively

equips children with skills and aptitudes useful to business in the creation of profit and

distribution of the same for human development. In this regard, we can succeed to

maintain the ethics of business and morality of profit by educating and informing

institutions and peoples on morality of profit, promoting corporate ethics in the line of

social conscience and responsibilities, addressing the issues of enterprises solutions to

global poverty. In the present context, social equity ventures can play a vital role of

change agents and institutions in the social sector. These should be guided with a

mission to create and sustain social value (not just private value). It will teach the basic

difference between ‘living a “moral” life and living a “prosperous” life’. The new

ventures should consider social cooperation as a Standard, moral learning & the moral

sense and regaining morality in the Business. This system involves people working

together in a kind of moral economy. Moral discourse must return to a central place in

political economy of the globalization.

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