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Business Ethics

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Business Ethics ­MGT610
VU
LESSON 03
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
might be.
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
corporate artifacts.
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
happened.
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
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Business Ethics ­MGT610
VU
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?
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Table of Contents:
  1. INTRODUCTION:Business Issues
  2. INTRODUCTION (CONTD.)
  3. THEORY OF ETHICAL RELATIVISM
  4. MORAL DEVELOPMENTS AND MORAL REASONING
  5. MORAL REASONING:Arguments For and Against Business Ethics
  6. MORAL RESPONSIBILITY AND BLAME
  7. UTILITARIANISM:Utilitarianism: Weighing Social Costs and Benefits
  8. UTILITARIANISM (CONTD.):rule utilitarianism, Rights and Duties
  9. UNIVERSALIZABILITY & REVERSIBILITY:Justice and Fairness
  10. EGALITARIANS’ VIEW
  11. JOHN RAWLS' THEORY OF JUSTICE:The Ethics of Care
  12. THE ETHICS OF CARE:Integrating Utility, Rights, Justice, and Caring
  13. THE ETHICS OF CARE (CONTD.):Morality in International Contexts
  14. MORALITY IN INTERNATIONAL CONTEXTS:Free Markets and Rights: John Locke
  15. FREE MARKET & PLANNED ECONOMY:FREE TRADE THEORIES
  16. LAW OF NATURE:Theory of Absolute Advantage, Comparative Advantage
  17. FREE MARKETS AND UTILITY: ADAM SMITH:Free Trade and Utility: David Ricardo
  18. RICARDO & GLOBALIZATION:Ricardo’s Assumptions, Conclusion
  19. FREE MARKET ECONOMY:Mixed Economy, Bottom Line for Business
  20. COMPETITION AND THE MARKET:Perfect Competition
  21. PERFECT COMPETITION
  22. MONOPOLY COMPETITION:Oligopolistic Competition
  23. OLIGOPOLISTIC COMPETITION:Crowded and Mature Market
  24. OLIGOPOLIES AND PUBLIC POLICY:Ethic & Environment, Ozone depletion
  25. WORLDWATCH FIGURES:Population Year, Agriculture, Food and Land Use
  26. FORESTS AND BIODIVERSITY:The Ethics of Pollution Control
  27. THE ETHICS OF POLLUTION CONTROL:Toxic Chemicals in Teflon
  28. THE ETHICS OF POLLUTION CONTROL
  29. THE ETHICS OF POLLUTION CONTROL:Recommendations to Managers
  30. COST AND BENEFITS:Basis of social audit, Objectives of social audit
  31. COST AND BENEFITS:The Ethics of Conserving Depletable Resources
  32. COST AND BENEFITS:The Club of Rome
  33. THE ETHICS OF CONSUMER PRODUCTION AND MARKETING:DSA Comments
  34. THE ETHICS OF CONSUMER PRODUCTION AND MARKETING:Should Consumers Bear More Responsibility?
  35. THE CONTRACT VIEW OF BUSINESS' DUTIES TO CONSUMERS
  36. THE CONTRACT VIEW OF BUSINESS' DUTIES TO CONSUMERS:The Due Care Theory
  37. THE SOCIAL COSTS VIEW OF THE MANUFACTURER’S DUTIES
  38. ADVERTISING ETHICS:The Benefits of Advertising, The harm done by advertising
  39. ADVERTISING ETHICS:Basic Principles, Evidence, Remedies, Puffery
  40. ADVERTISING IN TODAY’S SOCIETY:Psychological tricks
  41. ADVERTISING IN TODAY’S SOCIETY:Criticism of Galbraith's Work
  42. ADVERTISING IN TODAY’S SOCIETY:Medal of Freedom
  43. ADVERTISING IN TODAY’S SOCIETY:GENERAL RULES, Substantiation
  44. ADVERTISING IN TODAY’S SOCIETY:Consumer Privacy, Accuracy
  45. THE ETHICS OF JOB DISCRIMINATION:Job Discrimination: Its Nature