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Chapter 4

BUSI 1010U Chapter 4: WEEK 4 Reading - Utilitarianism


School
UOIT
Department
Business
Course Code
BUSI 1010U
Professor
William Thurber
Chapter
4

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Utilitarianism
Sunday, October 4, 2015
10:31 PM
One of the most commonly accepted ethical theories in the Anglo-Saxon world
Has been influential in modern economics in general
The basic principles of utilitarianism could be defined as follows:
oThis principle, also called the "greatest happiness principle" is the ultimate
consequentialist principle as it focuses solely on the consequences of an action that
results in the greatest amount of good for all people involved
It focuses on the collective welfare that is produced by a certain decision
The underlying idea is the notion utility, which Bentham sees as the ultimate goal in life
In this hedonistic rendition of utilitarianism, utility is measured in terms of pleasure and pain
(the 'hedonistic view' view)
Other interpretations of utility look at happiness and unhappiness (the 'eudemonistic' view),
while others take a strongly extended view that included in the equation not only pleasure and
happiness
Ultimately all intrinsically valuable human goods (the 'ideal' view)
The latter view in particular makes utilitarianism open to a great number of practical decision
situations and prevents it from being rather narrowly focused on pleasure and pain only
Utilitarianism has been very powerful since it puts at the center of the moral decision a
variable that is very commonly used in economics as a parameter, which measures the
(economic) value of actions: 'utility'
Analyzing two possible actions in a single business decision, we can assign a certain utility to
each consequence and each person involved, and the action with the highest aggregate utility
can be determined to be morally correct. Ultimately utilitarianism then comes close to what we
know as cost-benefit analysis
Utilitarian analysis can be very helpful are situations such as animal testing for medical
research
Ultimately, utilitarian thinking has been used in very extreme situations:
oFor example, the group of German generals and intellectuals who conspired to
assassinate Hitler in 1944 justified their attempt on utilitarian grounds as the murder
(pain) of one person opened the way to reducing pain of millions of other people
After analyzing all the good and the bad effects for the person included, we can now add up
'pleasure' and 'pain' for action 1, and result will be the utility of this action.
For action 2, the moral decision is relatively easy to identify:
oThe greatest utility of the respective actions is morally right one
In the hypothetical case, the decision would probably go in favor of action 1 (doing the deal)
as it involves the most pleasure for all parties involved, whereas in action 2 (not doing the
deal), the pain seems to dominate the analysis
o*refer to figure 3.3 (example if a utilitarian analysis)
Subjectivity
oUsing this theory you have to think rather creativity, and assessing such consequences
as pleasure or pain might depend heavily on the subjective perspective of the person who
carries out the analysis
Problems of qualification

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oUnder utilitarianism, health and safety issues in the firm require 'values' of life and
death to be quantified and calculator, without the possibility of acknowledging that they
might have an intrinsic worth beyond calculation
Distribution of Utility
oIt would appear that by assessing the greatest good for the greatest number, the
interests of minorities are overlooked
Utilitarian's were always aware of the limits of their theory. The problem of subjectivity
oFor example led to refinement of the theory, differentiating between what has been as
'act utilitarianism' or 'rule utilitarianism'
Principle of act utilitarianism by asking whether just in that single situation the collective
pleasure exceeded the pain inflicted
One would have to ask whether child labor in principle procedures more pleasure than pain.
Here the judgment might look considerably different, since it is not difficult to argue that the
pains of child labor easily outweigh the (mainly) economic benefits of it.
oRule utilitarianism then relieves us from examining right or wrong in every single
situation, and offers the possibility of establishing certain principles that we then can
apply to all such situations
Non-consequentialist theories
Two main types of non-consequentialist ethical theories that have been traditionally applied to
business ethics:
Ethics of duties.
Ethics of rights and justice.
These two approaches are very similar, stemming from assumptions about basic universal
principles of right and wrong.
Rights and duty have also been central to many religious perspectives on business ethics,
and remain important influences on business decision-makers worldwide, especially in regions
with high rates of religious adherence, such as Latin America, the US, the Middle East, and
Africa.
start from the basis of divine revelation, as found, for instance, in the religious tracts of the
three monotheistic religions of Judaism, Christianity, and Islam, which ascribe enduring duties
to God, or conversely, ‘God-given rights’.
regardless of whether the outcomes in given situation are in anybody’s self-interest (egoism)
or result in more pleasure or pain (utilitarianism), as consequentialist approaches would
suggest.
Ethics of Duties
In business ethics, the most influential theory to come from the perspective of ethics of
duty derives from the work of the German philosopher Immanuel Kant (1724–1804).
Kant argued that morality and decisions about right and wrong were not dependent on a
particular situation, let alone on the consequences of one's action
Morality was a question of certain eternal, abstract, and unchangeable principles
As a key enlightenment thinker, Kant was convinces that human beings do not need God, the
church, or some other superior authority to identity these principles for ethical behavior
He saw humans as rational actors who could decide these principles for themselves
Humans could be regarding as independent moral actors who made their own rational
decisions regarding right and wrong
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Kant developed a theoretical framework through which these principles could be derived,
called the 'categorical imperative'
Theoretical framework could be applied to every moral issue regardless of who is involved,
who profits, and who is harmed by the principled once they have been applied in specific
situations
The categorical imperative consists of three parts, which Kant puts forward as follows:
Maxim 1: Act only according to that maxim by which you can at the same time will that it
should become a universal law
Maxim 2: Act so that you treat humanity, whether in your own person or in that of another,
always as an end and never as a means only
Maxim 3: Act only so that the will through its maxim could regard itself at the same time as
universally lawgiving
These three maxims can be used as test for every possible action, and an action is to be
regarded as morally right if it 'survives' all three tests
Maxim 1 checks if the action could be performed by everyone and reflects the aspect of
consistency
oFor example, murder is an immoral action because if we allowed everybody murder
there would be no possibility of human life on earth; lying is immoral, because if
everybody were allowed to lie, the entire notion of 'truth' would be impossible, and an
organized and stable humans civilization would not be imaginable
Maxim 2 focuses on Kant's view that human deserve respect as autonomous, rational actors,
and that this human dignity should never be ignored
Maxim 3 scrutinizes the element of universality. I might come to the conclusion that a certain
principle could be followed consistently by every human being; I could also come to the
conclusion that in following that principle, I respect human dignity and do not just 'use' people
as a means only
This test therefore tries to overcome specifically the risk of subjectivity inherent in the
utilitarian analysis, since it asks us to check if other rational actors would endorse our judgment
of a certain situation
Kant's categorical imperative, in particular maxim 1, comes closest to a core tenet of many
religions, otherwise referred to as the 'golden rule': 'treat others as you wanted to be treated
yourself'
Difference between a religious and a Kantian approach to the golden rule is
oReligion recognizes God as the ultimate source of the values
oKant's approach reflects a different assumptions: if God is the creator of rational
human beings, then these humans beings should also be able to rationally understand and
decide whatever is morally right or wrong thing to do in a given situation - rather than
just being told what to do by divine authority
*refer to page 107 for moral test to ethical Dilemma 3*
Kant's theory is quite extensive, but already these can be quite helpful in a practical situations
and have had a considerable influence on business ethics thinking
oFor example, in chapter 2 we discussed the stakeholder concept of the firm
oHence, in order to treat employees, local priorities of their own, Evan and Freeman
suggest that firms have a fundamental duty to allow these stakeholders some degree of
influence on the corporation
Therefore, however also problems with ethics of duty
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