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Business Ethics ­MGT610
VU
LESSON 08
UTILITARIANISM (CONTD.)
1. Comparative measures of the values things have for different people cannot be
made-we cannot get into each others' skins to measure the pleasure or pain caused.
2. Some benefits and costs are impossible to measure. How much is a human life
worth, for example?
3. The potential benefits and costs of an action cannot always be reliably predicted, so
they are also not adequately measurable.
4. It is unclear exactly what counts as a benefit or a cost. People see these things in
different ways.
5. Utilitarian measurement implies that all goods can be traded for equivalents of each
other. However, not everything has a monetary equivalent.
The critics of utilitarianism contend that these measurement problems undercut whatever
claims utilitarian theory makes towards providing an objective basis for determining normative
issues. These problems have become especially obvious in debates over the feasibility of
corporate social audits.
Utilitarians defend their approach against the objections raised by these problems by saying
that though ideally they would like accurate measurements of everything, they know that this is
largely impossible. Therefore, when measurements are difficult or impossible to obtain, shared
or common-sense judgments of comparative value are sufficient.
There are two widely used common-sense criteria. One relies on the distinction between
intrinsic goods and instrumental goods. Intrinsic goods are things that are desired for their
own sake, such as health and life. These goods always take precedence over instrumental
goods, which are things that are good because they help to bring about an intrinsic good. The
other common-sense criterion depends on the distinction between needs and wants. Goods that
bring about needs are more important than those that bring about wants. However, these
methods are intended to be used only when quantitative methods fail.
The most flexible method is to measure actions and goods in terms of their monetary
equivalents. If someone is willing to pay twice as much for one good than for another, we can
assume that the former is twice as valuable for that person. Many people are made
uncomfortable by the notion that health and life must be assigned a monetary value. Utilitarians
point out that we do so every day, however, by paying for some safety measures but not for
those measures that are considered more expensive.
The major difficulty with utilitarianism, according to some critics, is that it is unable to deal
with two kinds of moral issues: those relating to rights and those relating to justice. If people
have rights to life, health, and other basic needs, and if there is such a thing as justice that does
not depend on mere utility, then utilitarianism does not provide a complete picture of morality.
Utilitarianism can also go wrong, according to the critics, when it is applied to situations that
involve social justice. Utilitarianism looks only at how much utility is produced in a
society and fails to take into account how that utility is distributed among the members of
society.
Largely in response to these concerns, utilitarians have devised an alternative version, called
rule utilitarianism. In this version, instead of looking at individual acts to see whether they
produce more pleasure than the alternatives, one looks only at moral rules at actions of a
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Business Ethics ­MGT610
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particular type. If actions of a kind tend to produce more pleasure or have lower costs, then
they are the moral types of actions. Just because an action produces more utility on one
occasion does not show it is right ethically.
Rule utilitarianism may not completely answer all of the objections raised by critics of
utilitarianism. A rule may generally produce more utility and still be unjust: consider rules that
would allow a large majority to take unfair advantage of a smaller minority.
The theory of the rule utilitarian, then, has two parts, which we can summarize in the following
two principles:
1. An action is right from an ethical point of view if and only if the action would be
required by those moral rules that are correct.
2. A moral rule is correct if and only if the sum total of utilities produced if everyone
were to follow that rule is greater than the sum total utilities produced if everyone
were to follow some alternative rule.
Thus, according to the rule-utilitarian, the fact that a certain action would maximize utility on
one particular occasion does not show that it is right from an ethical point of view.
Thus, the two major limits to utilitarianism difficulties of measurement and the inability to deal
with rights and justice remain, though the extent to which they limit utilitarian morality is not
clear.
Rights and Duties
The discussion of rights and duties begins with a discussion of Walt Disney and its dealings
with Chinese companies. On March 3, 2004, executives of Walt Disney, the world's second
largest media conglomerate, were confronted with a group of stockholders concerned about the
company's human rights record in China. Walt Disney markets merchandise based on its
characters and films, including toys, apparel, watches, consumer electronics and accessories.
Much of this merchandise is manufactured in China in factories that contract with Disney to
produce the merchandise according to Disney's specifications. The Congressional-Executive
Commission on China, a group established by the U.S. Congress in 2001, reported in 2003,
however, "China's poor record of protecting the internationally recognized rights of its workers
has not changed significantly in the past year. Chinese workers cannot form or join independent
trade unions, and workers who seek redress for wrongs committed by their employers often
face harassment and criminal charges. Moreover, child labor continues to be a problem in some
sectors of the economy, and forced labor by prisoners is common." In its March 2003 Country
Reports on Human Rights Practices, the U.S. State Department said China's economy also
made massive use of prison or forced labor.
In general, a right is a person's entitlement to something; one has a right to something when one
is entitled to act a certain way or to have others act in a certain way towards oneself. An
entitlement is called a legal right. Entitlements can come from laws or moral standards; the
latter are called moral rights or human rights. They specify, in general, that all humans are
permitted to do something or are entitled to have something done for them.
In our ordinary discourse, we use the term right to cover a variety of situations in which
individuals are enabled to make such choices in very different ways. First, we sometimes use
the term right to indicate the mere absence of prohibitions against pursuing some interest or
activity. Second, we sometimes use the term right to indicate that a person is authorized or
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empowered to do something either to secure the interests of others or to secure one's interests.
Third, the term right is sometimes used to indicate the existence of prohibitions or requirements
on others that enable the individual to pursue certain interests or activities
The most important rights are those that impose requirements or prohibitions on others,
enabling people to choose whether or not to do something. Moral rights have three important
features defining them:
1. Moral rights are closely correlated with duties.
2. Moral rights provide individuals with autonomy and equality in the free pursuit of their
interests.
3. Moral rights provide a basis for justifying one's actions and invoking the aid of others.
4. Moral judgments made on the basis of rights differ substantially from those based on
utility.
First, they are based on the individual, whereas utilitarianism is based on society as a whole.
Second, rights limit the validity of preferring numbers and social benefits to the individual. On
the other hand, although rights generally override utilitarian standards, they do not always do
so. In times of war, for example, civil rights are commonly restricted for the public good.
Besides negative rights, which are defined entirely in terms of the duties others have not to
interfere with you, there are also positive rights. Positive rights imply that others have a duty
not only to refrain from interference, but also to provide you with what you need to pursue your
interests. Privacy is an example of a negative right; the rights to food, life, and health care are
positive. In general, more liberal theorists hold that society should guarantee positive as well as
negative rights; conservatives wish to limit government to enforcing negative rights. Positive
rights were not emphasized until the 20th century. Negative rights were often employed in the
17th and 18th centuries by writers of manifestos (such as the Declaration of Independence and
the Bill of Rights), who were anxious to protect individuals against the encroachments of
monarchical governments. Positive rights became important in the 20th century when society
increasingly took it on itself to provide its members with the necessities of life that they were
unable to provide for themselves.
There are other rights as well. Those most closely connected to business activity are
contractual rights, sometimes called special rights and duties or special obligations. These
rights attach only to specific individuals, and the duties they give rise to attach only to specific
individuals. In addition, they arise out of specific transactions between parties and depend upon
a pre-existing public system of rules. Without the institution of contracts, modern businesses
could not exist. There are four ethical rules governing contracts:
1. Both parties to a contract must have full knowledge of the nature of the agreement.
2. Neither party must intentionally misrepresent the facts.
3. Neither party must be forced to enter the contract.
4. The contract must not bind the parties to an immoral act.
Generally, a contract that violates one or more of these conditions is considered void.
One of the most powerful groundings for moral rights (and therefore the ethical rules governing
contracts) comes from Immanuel Kant. His principle, called the categorical imperative,
requires that everyone be treated as a free and equal person. It states, "I ought never to act
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Business Ethics ­MGT610
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except in such a way that I can also will that my maxim should become a universal law." A
maxim, according to Kant, is the reason a person has for doing what he plans to do. Therefore,
an action is morally right if the person's reason for doing it is a reason he would be willing to
have every person in a similar situation act upon. For Kant:
"An action is morally right for a person in a certain situation if, and only if, the person's
reason for carrying out the action is a reason that he or she would be willing to have
every person act on, in any similar situation."
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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