What is business ethics

Business ethics

1. Term: Business ethics deals with the question of how moral norms and ideals can be brought to bear under the conditions of modern economy (implementation problem). More recent approaches expand the term by understanding economic ethics as an economic theory of morality or economic ethics, in accordance with a modern concept of economics as a general theory of behavior. The justification of norms, e.g. of human rights, and the economic consequences of moral behavior are thus also the subject of business ethics.

2. Problem: The basic problem of business ethics is that the competition typical of market economies for morally motivated advance and additional services by individuals - individuals, companies, associations, states, etc. - which lead to cost increases or loss of profit, leaves no room. Morality and competition seem (often) to be mutually exclusive in the execution of an action.

3. The solution: a) Quite a few authors rely on diagnosis and therapy Want of individuals An: Egoism and greed for profit are seen as the causes of the evils, and a change in consciousness and repentance are recommended as therapy. The focus here is on preferences the human.

b) Such thinking is through the basic Paradigm shift obsolete in modern economics. The moral philosopher Smith decouples motives for action and (aggregated) results: "We do not expect what we need to eat from the benevolence of the butcher, brewer and baker, but rather that they look after their own interests." Or to put it another way: the prosperity of all does not depend on the benevolence of the individual.

c) Morality and competition can be realized simultaneously in that they at different levels be set. A distinction is made between the framework of action and the actions within the framework or between rules of the game and moves; Then competition can take hold in the moves, and morality comes into play via the rules of the game (rules). Morality does not appear as a direct action-guiding motivation, but as a restriction of action. The framework can be shaped by (regulatory) policy (regulatory economics). Business ethics is paradigmatic order ethics or institutional ethics. It is compatible with the economic concept of action insofar as action within the framework follows the incentives; therefore one could also speak of incentive ethics (ethics).

4. Implications: The competition requires a - political - consensus on the rules of the game and an enforcement body (judiciary, cartel office). The competition is a social event for the benefit of consumers (consumer sovereignty) in that it forces providers to orientate themselves towards the interests of the customer and to pay attention to the efficiency of the use of resources. The incorporation of morality in generally binding rules is due to their competitive neutrality: this is the only way to protect the moral behavior of individuals from the opportunism of (potential) competitors. Since morally undesirable, outrageous conditions are not attributed to moral defects of the actors, but to deficits in the order, the desired corrections must begin with a reform of this order; In contrast, moral appeals tend to be counterproductive: change in conditions due to a change in attitude is the motto.

5. Thesis: The basic thesis is: The systematic - not the only - place of morality in the market economy is the framework.

Explanation: The emphasis on the framework does not make responsible behavior on the part of the individual actors superfluous (corporate social responsibility), on the contrary: the framework is fundamental incomplete, and to the extent that it is even systematically designed towards a structured incompleteness, as it wants to open up room for maneuver (freedom) for individuals, but this in a canalizing form for the purpose of successful social cooperation. The thesis merely states that this morally motivated endeavor of the individual must remain unsuccessful on a broad front in society and even damage morality in the long term, if the moral actors are not protected from opportunistic exploitation by their less moral competitors by incorporating morality into the framework become. Without anchoring in the framework, individual morality has no chance in the long run in competition.

6. Significance of the paradigm shift: a) Such a conception of business ethics takes account of the changes that have come with the functional differentiation into social subsystems evolved. The old "housekeeping" is becoming a modern "national economy" and today it is a world economy. It is characterized by a deep division of labor, anonymous exchange processes, long production (red) paths with the participation of many actors, growing interdependencies and a high level of complexity. The result of a modern economy therefore has no individual, no company, no state, no trade union, etc., in their hands; consequently no individual is responsible (to be blamed) for this. The extraordinary increase in prosperity and freedom in the western industrial nations is based on conditions that create a new constellation for the realization of moral intentions and ideas: The traditional Western small group ethics must paradigmatically be converted to an ethics of large, anonymous social groups (within which, of course there are still small groups).

b) The social one turns out to be the central problem Control of actions. In small, manageable groups, informal control is possible in daily dealings and is sufficient to assert moral norms and ideals. In large anonymous groups, the contribution made by the behavior of individuals can hardly be controlled, or only at high cost. Therefore, the system of - fundamentally indispensable - control must be changed: The control is modern as
(1) Complete self-control along the lines of self-interest in connection with
(2) a suitable system of rules (including competition) reinforced with sanctions, which steers the actions of the actors in the generally desired paths.

7. The moral quality of the market economy: The moral quality of the market economy consists in the fact that it represents the best known instrument for realizing the solidarity of all people by serving the well-being of the consumers. This statement remains fundamentally correct, even if the sometimes considerable differences in performance and purchasing power have to be kept in mind and - in the social market economy - give cause for redistribution in order to improve the market economy.

8. General instructions for action: From these considerations, the general instruction follows that the actors should always behave in accordance with the system (system conformity). This can be explained: The actors should observe the framework and strive for long-term profit maximization within the framework. From the fundamental incompleteness of the framework it follows as a further instruction that the actors should either contribute to the improvement of the framework, which then binds them themselves, or in the case of "incomplete contracts", individual moral, fair behavior according to the "spirit" of such contracts practice; these problems belong in the areas of business ethics and corporate social responsibility.