MGMT 1040 Lecture Notes - Lecture 3: Ethics, Distributive Justice, Pg. 99

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20 Jul 2016
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HOSMER CHAPTER 4
Moral Analysis and Ethical Duties
Moral problems arise when financial performance and social performance are in conflict
Financial performance is easy to measure (revenues, cost, profits)
Social performance is difficult to measure but represents overall satisfaction of population
Results of moral problems can benefit, harm, impose rights of and expand rights of stakeholders
Key is to find equitable balance between financial and social performance and logically convince
others to accept the balance
In a global economy, stakeholders become more diverse, therefore; effectively resolving moral problems
becomes more important
It is impossible to avoid all harms or rights ignored
Evaluative methods: study economic outcomes, legal requirements, and ethical duties
Economic outcomes: based on impartial market choices. Manager should produce with the least wanted
(cheapest) resources to produce the most wanted (highest price) goods
Greatest satisfaction for shareholders of the firm
Greatest satisfaction for members of society
Theoretical and practical problems exist with this approach…
Theoretical problem: “optimal benefits for all” can only occur if following conditions met:
oAll input factor and output factor markets are truly competitive
oAll suppliers and all customers within those markets are fully informed
oAll external costs are totally included
Legal Requirements: Managers must always obey the law because the law supposedly represents
collective moral standards of society.
Theoretical and practical problems exists…
Critical practical problem: hard to write legal requirements that will cover all current + future
moral problems that may enter a court
Critical theoretical problem: most legal requirements are not wholly representative of all
cultural, religious, economic, and social situations
Ethical Duties: Defined as duties you believe you owe to other people based on your own rational
thought. No one can tell you your duties...
Universal principles help decide ethical duties…
Can use them to convince others to support your situation.
Universal Principles: rules for decisions/actions that are:
Not limited to cultural, religious, economic, or social situation
Thought to lead to overall well-being and satisfaction of society
Easily understood why the principle leads to overall benefit
oE.g. Aristotle: Person should be open, honest, truthful, and proud of what he does (i.e. Greek
society’s varied, proud citizens)
Moral Philosophy: Study of proper thought and conduct.  Universal principles
How people normatively should think about issues
Tried to establish logical thought process based on an incontrovertible principle
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oThe principle could determine whether a decision/action was right or wrong
No agreement on incontrovertible principle
oMany proposed first principles help to estimate degree of rightness or wrongness of a given
action
All moral problems involve compromises for those benefits/harms and rights exercised/denied
Moral philosophy helps to make the “right” choice and define ethical duties to each other
Principle of Self-Interests (Protagoras and Democritus)
Greek philosopher (from Athens)…
Making life satisfying and fulfilling in the long run
o“Better a good life than a pleasant dinner.”
Only the long-term goal of a good life matters
Evaluative goals for a good life must combine comfortable conditions + cheerful companions
oAchieved only by moderation in personal lifestyles and accepting public standards
oNecessary to follow these 2 to avoid irritating others
Justice is seen as a contract where everyone agrees not to harm anyone
Principle of Personal Virtues (Socrates, Aristotle, and Plato)
Moderated or enlightened self-interest not acceptable to these philosophers
Socrates: Problem that one can act unethically to reach a position of wealth and power where he
has no fear or retribution
oEveryone should act with honour, pride, and self-worth  don’t have to be kind or
concerned for others. Follow these 3 values, for the goal of human existence: to pursue
excellence.
Socrates: goal to develop “first rule for a successful life”
oRational pursuit of excellence (knowledge of the good)
“Never take any decision/action that is not open, honest, and truthful, and that you would
not feel proud to have reported on the front page of the newspaper.”
Principle of Religious Injunctions (early religious writers of many faiths)
Previous principle: problem that personal virtues aren’t enough
Stressing community and duty of kindness and compassion is present in major world religions
o“Never take any action that is not kind and compassionate toward others, and that does not
forward a sense of true community, a belief that all of us should work jointly toward a
common goal.”
Principle of Government Requirements (Hobbes and Locke)
Hobbes: assumption that everyone is self-centered  people are equal in strength of body and
mind.
Locke: Right to liberty and property  development of social contract
Basic ethical principle: “obey the law to avoid chaos and loss”
“Never take any action that violates the law because the law represents the agreed-up minimal
moral standards of our full society, and those minimal standards must be observed by all to
maintain the peace among all and advance the well-being of all.”
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The Principle of Universal Duties (Kants, 1724-1804) pg. 96
States: none should take any action we wouldn’t be willing to see others be free or even
encouraged to take in similar situations
oProblem: doesn’t allow for comparison or relative ranking of alternatives
oDecision/action is either morally right or wrong, with no room for gradual alternatives
States: We should always treat others as ends (worthy of dignity and respect), and never as means
to our own ends
oProblem: Difficult not to treat others as means to our ends
Kant’s Ethics: duty-based and non-consequentialist
System is based on rules or principles that govern decisions
The Principle of Distributive Justice (Rawls, 1921-2002) pg. 97
Social Contract (Veil of Ignorance): Where people did not know what abilities, skills, or resource
they might have, and their potential for earnings to satisfy their needs.
Single and simple agreement  inequalities in distribution of material benefits of social
cooperation would be permitted only as long as it was reasonable to assume that those
inequalities would work out to benefit for all.
Distributive Justice: seeks just distribution of benefits and burdens. Rawls: distribution of
resources in society creates inequality, argued in favour of arranging social institutions in a
manner that promotes the least well off in society (those with the least income, education, skills,
wealth, competence, influence, or power). In effect, the demands of distributive justice can be
expressed as “never take any action that harms the least among us”
The Principle of Contributive Liberty (Nozick, 1938-2002) pg. 98
Dual roles that no one should interfere with;
The voluntary exchange of other persons
The self-development efforts of those other persons
 As such so everyone can arrange their own voluntary exchanges to their own best advantage
 Liberty (the right to develop skills) is more important than justice (the right to receive benefits)
because self-development leads to greater personal abilities and consequently to greater social benefits
Proposed Ethical Solution: “never take any action that interferes with the rights of others to
develop and improve their skills and abilities”  otherwise, this would deny everyone’s rights to
pursue our own self-interests through voluntarily exchange
Summary of the
Principles and
Problems in the
Major Ethical
Systems
(Figure 4.2 on pg.99)
Statement of the Principle Problem with the Principle
Self-Interests Never take any decision or action that is not
in the long-term, enlightened self-interests of
yourself and of the organization to which you
belong, due to the probability of retaliation by
those who feel harmed.
Some people will go ahead with short-
term actions that do harm to others in the
belief that they can achieve a position of
such wealth and power that they can
ignore the possibility of future retaliation.
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