Sunday, April 6, 2008

Notes on Corporate Social Responsibility: Bowie's Stuff

Notes: “Kantian Business Ethics”, by Norman Bowie

The basic picture: Spell out the basics of Kant’s ethical theory and apply it to business contexts. The claim is that Kantian ethics has much to contribute to business ethics.

The paper at a glance: the labels of the main sections of the paper, and the main idea covered in each such section:

-Section 1: “Background” (pp. 3-4): Discussion of some rudimentary biographical facts about Immanuel Kant, as well as the main concepts that make up the basis of his ethical theory.

-The highest good is the Good Will (i.e., acting with the sole intention (or, motive) of doing one’s duty).

-So, it is the intention, or motive, of an action, and not it’s consequences, that determine if an act is morally right or wrong.

-Preliminaries to discussion of the Categorical Imperative:

-Maxim: a principle or basis of action. Maxims have the following formal structure: “Do action A in circumstances of kind C for purpose P”. (e.g., “Make a phone call whenever you have the urge, and are not in class, for the purpose of making others think that you are usually available when they need you.” ). They therefore specify (i) an action, (ii) a set of circumstances in which the action should be performed, and (iii) a purpose or goal which your are trying to achieve by the action.

-Imperative: a command (e.g., “You ought to help elderly women cross the street.”; or, “You should not lie to people.”). There are two kinds of imperatives:

-Hypothetical imperative: a command that you should obey if doing so will help you get something you want or desire. They have the form, “If you want X, then you should do Y”. (e.g., “If you want good grades, then you should study hard”.).
-Notice that your obligation to obey a hypothetical command depends on whether or not you want the thing specified in the first part of the command: If you don’t want that thing, then you have no obligation to obey the command.

-Categorical Imperative: A command that you have to obey no matter what, even if obeying the command won’t satisfy any of your desires or wants. Categorical imperatives have the form, “Do X”: there are no ifs, ands, or buts (e.g., “don’t murder”; or “be honest when you are talking to your parents”). These are the only kinds of imperatives that apply to morality.

-The three formulations of the Categorical Imperative (‘CI’, as the teacher calls it):
-1st Formulation (“The Formulation of Universal Law” (‘FUL’)): Act only on maxims which you can will to be universal laws of nature.

-2nd Formulation (“The Formulation of Humanity” (‘FH’)): Always treat the humanity in a person as an end, and never as a means merely.

-3rd Formulation (“The Formulation of the Kingdom of Ends” (‘FKE’)): So act as if you were a member of an ideal kingdom of ends in which you were both subject and sovereign at the same time.

-Only humans can act freely: they have free will.

-This allows them to act rationally: they can freely choose to act according to the dictates of reason.

-And this, in turn, allows them to act morally: because we are rational, we can use reason to discover true, universal moral rules; and because we are free, we can choose to follow those rules.

-Section 2: “The Self-Defeating Nature of Immoral Actions” (pp. 4-7): Discussion of the 1st formulation of the Categorical Imperative, and some of its implications for business ethics.

-Preliminaries: the idea of universalizing a maxim, and the two kinds of contradictions that can be generated from a universalized maxim:

-Universalizing a maxim: taking one of your personal maxims and conceiving of a world in which that maxim become a law that everyone knew about and had to obey.

-when universalizing a maxim generates a logical contradiction: when you attempt to universalize the maxim, the key concept in the maxim becomes incoherent/logically contradictory.

-when universalizing a maxim generates a practical contradiction: obeying the maxim wouldn’t work as a means to achieve the purpose or goal in the maxim.

-The Universalizability Test implied by the FUL: Suppose you are considering doing some action, and are wondering if it is morally permissible to do that action. To find out if it really is morally permissible, try to universalize the maxim upon which the action is based. If you can universalize that maxim without generating a logical contradiction or a practical contradiction, then the action is morally permissible. But if you can’t universalize it without generating one of the two types of contradiction, then it is not morally permissible.

-Notice that saying that an action fails the universalizability test is not to say that the action has bad consequences. ***Consequences have nothing to do with morality in Kantian ethics.***

-The 1st Formulation of CI is a principle of “fair play”.

-Sample applications of the FUL to business contexts:

-Theft of company goods by employers, customers or managers: FUL says that it’s morally impermissible, since it can’t be universalized.

-Breaking contracts: impermissible, since it can’t be universalized. Generates a practical contradiction.

-An objection from Hegel and from Bradley:

-Korsgaard’s reply:

-Another objection: contract-breaking happens all the time in the business world. Yet people still engage in making contracts. But Kant’s universalizability test would seem to imply that contract-breaking would generate a practical contradiction: if we universalized the maxim of breaking contracts, then no one would enter into contracts, since they knew that no one would honor them. Therefore, Kant’s universalizability test is shown to be false and worthless.

-reply: No. The objection fails to appreciate that a threshold level of contract-breaking frequency must be reached before the act of contract-breaking won’t work as a means of achieving certain ends. But that threshold hasn’t been crossed.

-Section 3: “Treating Stakeholders as Persons” (pp. 7-10): Discussion of the 2nd formulation of the Categorical Imperative, and some of its implications for business ethics.


-Two kinds of value: instrumental and intrinsic.

-Instrumental value: “Instrument value”, or “tool value”: If something has mere instrumental value, then it is valuable only to the extent that you can use it (as an “instrument” or “tool”) to get something else. As soon as such a thing becomes useless, it is considered worthless. E.g., cars, doorstops, and in general, inanimate objects have mere instrumental value).

-Intrinsic value: If something has intrinsic value, then it retains its value even if it is completely useless. In other words, it doesn’t have value in virtue of its usefulness as a tool. Kant argued that people have intrinsic value, in virtue of their possessing free will and rationality (which, in turn, enables them to act rationally, and therefore, morally). Their free will and rationality gives them inherent worth and dignity.

-treating someone as a mere means to an end: this is the same thing as treating someone as though they had mere instrumental value (“tool” value). That is, treating them as a mere thing, to be used as one sees fit, and then abandoning them when your done using them.

-treating someone as an end in themselves: This is the same as treating someone as though they had intrinsic value. According to Kant, if something has intrinsic value, then you can’t treat them like an inanimate object, to be used at your disposal. A thing with intrinsic value is priceless, and can’t be used or manipulated to suit your own ends. Rather, you must respect a bearer of intrinsic value, and seek to benefit it. Again, Kant believed that all persons have intrinsic value.

-Negative freedom: freedom from deception and coercion.

-Positive freedom: freedom to develop one’s human capacities (e.g., the capacities for rationality and morality)

-The FH implies another test for moral permissibility/impermissibility: The Respect for Persons test: If an act violates a person’s positive or negative freedom, then it is morally impermissible. But if it doesn’t, then it’s morally permissible.

-violating someone’s negative freedom amounts to deceiving or coercing them.

-violating someone’s positive freedom amounts to hindering their rational or moral development.

-Sample applications of the Respect for Persons test in business contexts:

-Caveat: Doesn’t imply that commercial transactions are immoral. For even though you treat someone as a means to an end in such transactions (e.g., to increase profits), you don’t thereby treat them as a mere means. For if the transaction is consensual and voluntary by all parties involved, then although they are being used as a means, they aren’t used as a mere means. And the respect for persons test only rules out treating others as mere means.

-Application 1: Can’t coerce or deceive an employee or boss.

-Application 2: employers can’t be secretive about the company’s financial records. Leads to an unequal balance of power, which can then lead to an abuse of power against employees. Businesses need to practice open book management. Equal access to the company’s information.

-Application 3: employers need to create work for employees that is meaningful, and which makes possible and encourages the development of their human capacities. For example:

-allow the employees to exercise responsibility, power, creativity.

-some conditions of meaningful employee work:
1) is freely chosen and provides opportunities for the worker to exercise autonomy on the job
2) supports the autonomy and rationality of human beings: work that lessens autonomy or that undermines rationality is immoral.
3) provides a salary sufficient to exercise independence and provide for physical well-being and the satisfaction of some of the worker’s desires.
4) enables a worker to develop rational capacities.
5) does not interfere with a worker’s moral development.

-managers are morally required by Kant’s ethics to provide such meaningful work, based on the 2nd formulation (FH), and the Respect for Persons test it implies.

-Application 4: downsizing and massive layoffs: permissible? An open question. Depends on a number of factors.

-Section 4: “The Business Firm as a Moral Community” (pp. 10-12): Discussion of the 3rd formulation of the Categorical Imperative, and some of its implications for business ethics.

-The 3rd formulation of CI, the FKE, implies that the rules of a business must be universally endorsable by all rational agents. This follows from the dignity and respect that applies to persons (since they have intrinsic value, due to their free will and capacity for rationality)

-But if so, then the FKE implies at least 7 principles of company organization (see text, p. 10, for the statement of the principles).

-Implication 2 of the FKE for business: the imperfect duty of beneficence and corporate social responsibility: Kant argued that someone benefits you, then you have an obligation to benefit them in return. But corporations benefit greatly from society: (i) society protects businesses by providing the means to enforce their contracts; (ii) society provides the requisite infrastructure for the normal functioning of a business (roads, sanitation facilities, police and fire departments); (iii) it provides an educated workforce (that’s you guys!) that is necessary for a successful business. Therefore, since businesses benefit from society in these ways, they have an obligation to benefit society in return. This probably implies that it should stop engaging in “creative” techniques in tax evasion.

-Implication 3: management must adopt a “Theory Y” account of human nature. Employees tend to behave according to the way they are treated, so treat them as though they were responsible, active, initiative-takers.

-Implication 4: decentralize and democratize the company’s power structure. No authoritarian hierarchy of power. All stakeholders (e.g., stockholders, employees) must participate in company decisions and policies. No blind following of orders.

-Section 5: “The Purity of Motive” (pp. 12-13): Discussion of a major objection to the application of Kantian ethics to business, as well as the author’s replies to the objection.

-The objection: If Kantianism is true, then an act is considered moral only if it is purely morally motivated: if an act is tainted by partially selfish motives, then that act is immoral. But even the most morally upright CEO makes decisions that are at least partially motivated by considerations of self-interest (e.g., profitability). But if so, then Kantianism implies that no business can be conducted in a way that satisfies the demands of morality, which is absurd.
-Reply 1: That’s right. Kant was mistaken in thinking that a moral action could contain no self-interested motives. But we can revise his account by allowing for such motives. As long as the maxim behind an act meets the demands of universalizability, respect for persons, and universal endorsibility, then the act is moral. There is no need to go further and say that the agent’s motives must be “pure” in this sense.

-Reply 2: People naively think that if a business makes decisions in order to increase profits, then it is necessarily acting according to their own self-interest. But this is false. Businesses are usually making such profitable decisions out of an obligation to stockholders, to obey contracts with the public, and to abide by charters of incorporation.

-Reply 3: It’s probably in a business’s best interest to strive for purity of motive, even if we drop it as an obligation. Businesses should abandon “bottom line” thinking: “perhaps we should view profits as a consequence of good business practices instead of a goal of business.” (p. 13)

-Section 6: “Kant’s Cosmopolitanism and International Business” (pp. 13-16): An argument that Kantian ethics, if applied to international business, will lead to a universal, minimal, “market morality”, as well as contributing to world peace.