Business Ethics MGT610
THEORY OF ETHICAL RELATIVISM
Some theorists maintain that moral notions apply only to individuals, not to corporations
themselves. They say that it makes no sense to hold businesses "responsible" since businesses
are more like machines than people. Others counter that corporations do act like individuals,
having objectives and actions, which can be moral or immoral just as an individual's action
In 2002, for example, the Justice Department charged the accounting firm of Arthur Andersen
for obstruction of justice. Arthur Andersen was caught shredding documents showing how they
helped Enron hide its debt through the use of several accounting tricks. Critics afterward
claimed that the Justice Department should have charged the individual employees of Arthur
Andersen, not the company, because "Companies don't commit crimes, people do."
Perhaps neither extreme view is correct. Corporate actions do depend on human individuals
who should be held accountable for their actions. However, they also have policies and culture
that direct individuals, and should therefore be held accountable for the effects of these
Nonetheless, it makes perfectly good sense to say that a corporate organization has moral duties
and that it is morally responsible for its acts. However, organizations have moral duties and are
morally responsible in a secondary sense; a corporation has a moral duty to do something only
if some of its members have a moral duty to make sure it is done, and a corporation is morally
responsible for something only if some of its members are morally responsible for what
Virtually all of the 500 largest U.S. industrial corporations today are multinationals. Operating
in more than one country at once produces a new set of ethical dilemmas. Multinationals can
escape environmental regulations and labor laws by shifting to another country, for example.
They can shift raw materials, goods, and capital so that they escape taxes. In addition, because
they have new technologies and products that less developed countries do not, multinationals
must decide when a particular country is ready to assimilate these new things. They are also
faced with the different moral codes and laws of different countries. Even if a particular norm
is not unethical, they must still decide between competing standards in their many operations.
Ethical relativism is the theory that, because different societies have different ethical beliefs, there
is no rational way of determining whether an action is morally right or wrong other than by asking
whether the people of this or that society believe it to be right or wrong by asking whether people of
a particular society believe that it is. In fact, the multiplicity of moral codes demonstrates that there
is no one "right" answer to ethical questions. The best a company can do is follow the old adage,
"When in Rome, do as the Romans do." In other words, there are no absolute moral standards.
Cultural relativism asserts that morality varies from one culture to another, since similar
practices are regarded as right in some cultures and wrong in others. However, regarding
practices as right or wrong does not necessarily make them so, nor does it exclude the
possibility of demonstrating that moral beliefs are mistaken. For this reason, cultural relativism
does not prohibit the possibility of justification. Ethical relativism, on the other hand, makes
the philosophical assertion that there is no standard of right or wrong apart from the morality of
a culture. Whatever practices a culture holds to be right is actually right for that culture. There
Business Ethics MGT610
is no possibility for justification because there exists no standard outside that culture. Ethical
relativism results in an uncritical acceptance of all moral beliefs as equally valid.
Critics of ethical relativism point out that it is illogical to assume that because there is more
than one answer to an ethical question that both answers are equally correct ─ or even that
either answer is correct. They also maintain that there are more similarities than differences
even among what seem to be very divergent societies.
The late Philosopher James Rachels put the matter quite succinctly:
The fact that different societies have different moral codes proves nothing. There is also
disagreement from society to society about scientific matters: in some cultures it is believed
that the earth is flat, and evil spirits cause disease. We do not on that account conclude that
there is no truth in geography or in medicine. Instead, we conclude that in some cultures people
are better informed than in others. Similarly, disagreement in ethics might signal nothing more
than that some people are less enlightened than others. At the very least, the fact of
disagreement does not, by itself, entail that truth does not exist.
Why should we assume that, if ethical truth exists, everyone must know it?'
However, the most telling criticisms of the theory point out that it has incoherent consequences.
For example, it becomes impossible to criticize a practice of another society as long as
members of that society conform to their own standards. How could we maintain that Nazi
Germany or pre-Civil War Virginia were wrong if we were consistent relativists? There must
be criteria other than the society's own moral standards by which we can judge actions in any
particular society. Though we should not dismiss the moral beliefs of other cultures, we
likewise should not conclude that all systems of morality are equally acceptable.
Finally, new technologies developed in the closing decades of the 20th century and the opening
years of the 21st century are again transforming society and business and creating the potential
for new ethical problems. They bring with them questions of risks, which may be unpredictable
and/or irreversible. Who should decide whether the benefits of a particular technology are
worth the risks? How will victims of bad technology be compensated for their loss? How will
risk be distributed? How will privacy be maintained? How will property rights be protected?
Table of Contents: