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An Overview of Ethics

(Excerpts from Velasquez, Business Ethics Concepts & Cases & Hosmer, The Ethics of Management)

Analysis of Ethical Problems in Management

The utilitarian principle holds that: 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. (Jeremy Bentham, 1748-1832). This view holds that profit maximization leads automatically from the satisfaction of individual consumer wants to the generation of maximum social benefits. Profit maximization is the only moral standard needed for management. Three steps are performed: 1. 2. Determine what alternative actions or policies are available. For each alternative action, estimate the direct and indirect benefits and costs that the action would produce for each and every person affected by the action in the foreseeable future. The alternative that produces the greatest sum total of utility must be chosen as the ethically appropriate course of action.


Rights and Duties

In general, a right is an individuals entitlement to something. If it derives from a legal system, it is a legal right. Legal rights are limited to the particular jurisdiction within which the legal system is in force. Moral rights or human rights are based on moral norms and principles that specify that all human beings are permitted or empowered to do something or are entitled to have something done for them. Contractual rights and duties (sometimes called special rights and duties or special obligations) are the limited rights and correlative duties that arise when one person enters an agreement with another person.

Kants Categorical Imperative

Kants first formulation of the categorical imperative is as says an action is morally right for a person in a certain situation if, and only if, the persons reason for carrying out the action is a reason that he or she would be willing to have every person act on, in any similar situation. The second formulation Kant gives of the categorical imperative says never treat people only as means, but always also as ends. An action is morally right for a person if, and only if, in performing the action, the person does not use others merely as a means for advancing his or her own interests, but also both respects and develops their capacity to choose freely for themselves.

Justice and Fairness

Distributive justice is concerned with the fair distribution of societys benefits and burdens. Egalitarian justice holds that there are no relevant differences among people that can justify unequal treatment. Every person should be given exactly equal shares of a societys or a groups benefits and burdens. Capitalist justice is based on effort. Benefits should be distributed according to the value of the contribution the individual makes to a society, a task, a group, or an exchange (based on work effort). Socialist justice is based on ability and need. First proposed by Louis Blanc (1870-1924), From each according to his ability, to each according to his needs. Justice as fairness (Rawls) says that the distribution of benefits and burdens in a society is just if and only if: A. B. Each person has an equal right to the most extensive basic liberties compatible with similar liberties for all, and Social and economic inequalities are arranged so that they are both: 1. To the greatest benefit of the least advantaged persons 2. Attached to offices and positions open to all under conditions of fair equality of opportunity Retributive Justice Retributive justice refers to the just imposition of punishments and penalties on those who do wrong. Major conditions under which a person could not be held responsible include ignorance and inability. Punishments must be consistent and proportioned to the wrong. Compensatory Justice Compensatory justice concerns the best way of compensating people for what they lost when they were wronged by others. Traditional moralists have argued that a person has a moral obligation to compensate an injured party only if three conditions are present: 1. 2. 3. The action that inflicted the injury was wrong or negligent. The persons action was the real cause of the injury. The person inflicted the injury voluntarily.

An Ethic of Care An ethic of care emphasizes two moral demands: We each exist in a web of relationships and should preserve and nurture those concrete and valuable relationships we have with specific persons. We each should exercise special care for those with whom we are concretely related by attending to their particular needs, values, desires, and concrete well-being as seen from their own personal perspective, and by responding positively to these needs, values,

desires, and concrete well-being, particularly of those who are vulnerable and dependant on our care. Virtue Theory & Ethical Relativism Virtue theory argues that the aim of the moral life is to develop those general dispositions we call the moral virtues, and to exercise and exhibit them in the many situations that human life sets before us. Ethical relativism questions if there are objective universal principles upon which one can construct an ethical system of belief that is applicable to all groups in all cultures at all times? Fortunately there is one principle that does seem to exist across all groups, cultures, and times and that does form part of every ethical system; that is the belief that members of a group do bear some form of responsibility for the well-being of other members of that group.

A Moral Reasoning Framework (Velesquez)

This suggests that moral reasoning should incorporate all four kinds of moral considerations, although only one or the other may turn out to be relevant or decisive in a particular situation. One simple strategy for ensuring that all four kinds of considerations are incorporated into ones moral reasoning is to inquire systematically into the utility, rights, justice and caring involved in a given moral judgment. Ask a series of questions about an action that one is considering: 1. 2. 3. 4. Does the action, as far as possible, maximize social benefits and minimize social injuries? Is the action consistent with the moral rights of those whom it will affect? Will the action lead to a just distribution of benefits and burdens? Does the action exhibit appropriate care for the well-being of those who are closely related to or dependent on oneself?

Manager's Decision Checklist

2. What are the legal alternatives?


1. What are the best economic alternatives? 3. Does a given decision result in greater benefits than damages for society as a whole, not just for our organization as part of that society? 4. Is the decision self-serving, or would we be willing to have everyone else take the same action when faced with the same circumstances? 5. We understand the need for social cooperation; will our decision increase or decrease the willingness of others to contribute? 6. We recognize the importance of personal freedom; will our decision increase or decrease the liberty of others to act?

7. Lastly, we know that the universe is large and infinite, while we are small and our lives are short; is our personal improvement that important, measured against the immensity of that other scale?