Business Ethics

The Acton Institute acknowledges firms that seek to operate within an ethical structure both internally and externally. Of course, ethics in any field must be rooted in a sense of morality and justice that is associated with human action. A firm’s embrace of a set of business ethics, then, aids it in affirming the dignity of employees as well as acting justly with customers and competitors.

FEATURED ARTICLE:
“The Bedrock of Business Ethics”
by Rev. Robert A. Sirico

I studied ethics for years in seminary and represent a tradition that has done some serious thinking on the subject. Even so, what is called "ethics" in many business schools cannot be found in Saint Thomas Aquinas’s Summa Theologica. "Business ethics" as it is usually taught is not ethics in any traditional sense but an ideology committed to "social justice" and other fuzzy abstractions that, to my way of thinking, conflict with the Ten Commandments.

A few years ago, for example, Ben and Jerry’s Ice Cream announced that it was looking for a new CEO who would make only marginally more than the rest of the workers in the firm. Naturally, a problem emerged: No one competent applied. It turns out that if you want to hire a great manager, you have to bid the person away from other employment. To do so requires paying a market wage. Ben and Jerry’s surrendered to reality and increased the salary, which seems perfectly reasonable to everyone except the proponents of mainstream business ethics.

The more you look at such "business ethics," the more you see how problematic the discipline is. So what should be the proper ethical foundation of business?

It is our common-sense understanding of right and wrong. There is no business ethics or social justice as such. There are only ethics and justice. Whether the notions are applied to individuals, families, governments, or societies, it is the application that changes, not the principle.

For example, a free market assigns property rights based on rules agreed upon by most religious traditions: Property that is acquired justly and owned lawfully cannot be stolen by private criminals or public authorities acting arbitrarily. If the property rights rest with the managers, employees, and stockholders, then the primary decision-makers in how those rights are to be exercised (assuming no fraud or theft) are the owners, managers, and stockholders.

On the other hand, the implication of antitrust regulation is that all companies are ultimately owned by the state, which can choose to break them up or permit them freedom. Once you strip away all the jargon, you are left with this fact: Antitrust is a form of redistribution and confiscation of private property that has its genesis in the private interest of the competitors of a successful firm.

This puts antitrust regulation in a different moral category from other forms of law. The situation is as if we retold the Bible’s parable of the talents with the servants who buried or poorly invested their talents, suing the favored son for breaches in competitive etiquette. This "clobber my neighbor" behavior brings to mind a long-neglected vice: envy. Envy, the Roman Catholic Church teaches, is a graver sin than mere jealousy, for it involves more than desiring your neighbor’s goods. It implies a plot to harm your neighbor solely because he has something that you do not have.

Ethics in the economic world ought to resemble ethics in the rest of life. Does that mean that market competition is immune from moral hazards? No. It just means that regulators should not feed the green-eyed monster or institutionalize violations against the Ten Commandments.

This essay originally appeared in Investor’s Business Daily on May 30, 2000. Adapted and reprinted with permission.