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Business Ethics
Concepts & Cases
Manuel G. Velasquez
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Chapter Two
Ethical Principles in Business
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Utilitarianism
Actions and policies should be evaluated on the basis of the benefits and
costs they will impose on society.

The only morally right action in any situation is that whose utility is greatest
by comparison to the utility of all the other alternatives .

Leading utilitarian theorists:
Jeremy Bentham (traditional utilitarianism)
an action is right from an ethical point of view if and only if the sum total of
utilities produced by that act is greater than the sum total of utilities
produced by any other act the agent could have performed in its place.
John Stuart Mill
Mill defines utilitarianism as a theory based on the principle that "actions
are right in proportion as they tend to promote happiness, wrong as they
tend to produce the reverse of happiness." Mill defines happiness as
pleasure and the absence of pain.

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How to Apply Utilitarian Principles
First, determine what alternative actions or policies are
available to me in that situation.
Second, for each alternative action, estimate the direct
and indirect benefits and costs that the action will
probably produce for all persons affected.
Third, for each action, subtract the costs from the
benefits to determine the net utility of each action.
Fourth, the action that produces the greatest sum total
of utility must be chosen as the ethically appropriate
course of action.
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Criticisms of Utilitarianism
Critics say not all values can be measured.
Utilitarians respond that monetary or other
commonsense measures can measure everything.

Critics say utilitarianism fails with rights and
justice.
Utilitarians respond that rule-utilitarianism can
deal with rights and justice.
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The Concept of a Right
Right = an individuals entitlement to something.
Legal right = An entitlement that derives from a legal system
that permits or empowers a person to act in a specified way or
that requires others to act in certain ways toward that person.
legal rights derive from the laws of the society.
Moral (or human) rights = rights that all human beings
everywhere possess to an equal extent simply by virtue of being
human beings.
Legal rights confer entitlements only where the particular
legal system is in force.
Moral rights confer entitlements to all persons regardless
of their legal system.

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Moral Rights
Can be violated even when no one is hurt.
Are correlated with duties others have toward the
person with the right.
Provide individuals with autonomy and equality
in the free pursuit of their interests.
Provide a basis for justifying ones actions and for
invoking the protection or aid of others.
Focus on securing the interests of the individual
unlike utilitarian standards which focus on
securing the aggregate utility of everyone in
society.
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Three Kinds of Moral Rights
Negative rights require others leave us alone.
(Sleep ,study or silent )
Positive rights require others help us.
(sinking , extinguish fire)
Contractual or special rights require others
keep their agreements.
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Contractual Rights and Duties social rights social obligation
Created by specific agreements and conferred only on the
parties involved.
Require publicly accepted rules on what constitutes
agreements and what obligations agreements impose.
Underlie the special rights and duties imposed by accepting
a position or role in an institution or organization.
Require
(1) the parties know what they are agreeing to,
(2) no misrepresentation, (Representative deliver good image)
(3) no duress or coercion , force ,
(4) no agreement to an immoral act. (Contract to steal bank)
Any contract violate these requirements consider void
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Kant and Moral Rights
Immanuel kant : argues in his theory (the categorical
imperative) which based of the moral principle ,
that there are certain moral rights and duties that all human
possess regardless of any utilitarian benefit for other.
Individuals generally must be left equally free to pursue their
interests.
Moral rights identify the specific interests individuals should
be entitled to freely pursue.
An interest is important enough to raise to be a right if:
we would not be willing to have everyone deprived of the
freedom to pursue that interest
the freedom to pursue that interest is needed to live as free
and rational beings.
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Kants Categorical
Imperative (First Version)
We must act only on reasons we would be willing to have anyone
in a similar situation act on.
The first version of this theory made formulation that Requires two
criteria for determining moral right and wrong :
universalizability and reversibility.
Similar to questions:
What if everyone did that?
How would you like it if someone did that to you?

Unlike the utilitarianism theory ,which focused on the
consequences, kantian theory focuses on interior motivation.
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Kants Categorical
Imperative (Second Version)
Never use people only as a means to your ends, but
always treat them as they freely and rationally
consent to be treated and help them pursue their
freely and rationally chosen ends.(dont use people
to get what you want)
Based on the idea that humans have a dignity that
makes them different from mere objects.
It is, according to Kant, equivalent to the first
formulation.
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Criticisms of Kant
Both versions of the categorical imperative are unclear.
Or it is not precise enough to always be useful. ( didnt
tell us what the moral rights the human have)

Rights can conflict and Kants theory cannot resolve such
conflicts. (Didnt tell us what is the limits of each right or
how they be balanced). I want to listen to music and my
neighbor wants to sleep which one has the moral rights)

Kants theory implies moral judgments that are mistaken.
Against the universalizablitiy and reversibility
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Libertarian Philosophy
Freedom from human constraint is necessarily good and
that all constraints imposed by others are necessarily evil
except when needed to prevent the imposition of greater
human constraints.
Robert Nozicks Libertarian Philosophy:
the only moral right is the negative right to freedom
the right to freedom requires free use of private
property, freedom of contract, free markets, and the
elimination of taxes to pay for social welfare programs.

A free market contrasts with a controlled market or regulated
market, in which government policy intervenes in the setting of
prices.
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Types of Justice
Distributive Justice
requires the just distribution of benefits and burdens.
(cotton mills and coal mine)
Retributive Justice
requires the just imposition of punishments and
penalties.
Compensatory Justice
requires just compensation for wrongs or injuries.
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Principles of Distributive Justice
Fundamental
distribute benefits and burdens equally to equals and unequally to unequal's ( 2
employees have the same certificate and other to have deferent certificates)
Egalitarian
distribute equally to everyone (workers in the same work and workers doing
deferent work)
Capitalist
distribute according to contribution how we measure the contribution? People
are same in their efforts?
Socialist
distribute according to need and ability (distribute the burden depend on the
ability and distribute the benefit depends on the need )
Libertarian
distribute by free choices What about freedom from ignorance and freedom from
hunger .
Rawls
1-distribute by equal liberty, 2-equal opportunity, and 3-needs of disadvantaged.
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Retributive and Compensatory Justice

Retributive Justice = fairness when blaming or
punishing persons for doing wrong.

Compensatory Justice = fairness when
restoring to a person what the person lost when
he or she was wronged by someone else.
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Ethic of Care
Ethics need not be impartial.
Emphasizes preserving and nurturing(care)
concrete valuable relationships.
We should care for those dependent on and
related to us.
Because the self requires caring relationships
with others, those relationships are valuable
and should be nurtured.
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Objections to Care Approach in Ethics
An ethic of care can degenerate into
favoritism.
Response: conflicting moral demands are an
inherent characteristic of moral choices
An ethic of care can lead to burnout (tired).
Response: adequate understanding of ethic of care
will acknowledge the need of the caregiver to care
for him or herself.
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Theories of Moral Virtue
Aristotle
virtues are habits that enable a person to live according to reason
by habitually choosing the mean between extremes in actions
and emotions
Aquinas
virtues are habits that enable a person to live reasonably in this
world and be united with God in the next
MacIntyre
virtues are dispositions(behavior) that enable a person to achieve
the good at which human practices aim
Pincoffs
virtues are dispositions we use when choosing between persons
or potential future selves
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Objections to Virtue Theories
It is inconsistent with psychology which
showed that behavior is determined by the
external situation, not moral character.
Response: moral character determines behavior in
a persons familiar environment.
Response: recent psychology shows behavior is
determined by ones moral identity which includes
ones virtues and vices.
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Unconscious vs. Conscious
Moral Decisions
Unconscious Moral Decisions
Comprise most of our moral decisions.
Made by the brains X-system using stored prototypes to
automatically and unconsciously identify what it perceives
and what it should do.

Conscious Moral Decisions
Is used in new, strange, or unusual situations for which the
brain has no matching prototypes.
Consists of the conscious, logical but slow processes of the
brains C-system.
Evaluates reasonableness of our intuitions, cultural beliefs,
and the norms stored in our prototypes.