Ayn Rand and Contemporary Business Ethics, Part Three

Consequences of the Dualism: Target Inequalities, Part Three

In all most traditional ethical theories, self interest is the target of morality, but it is the self interest of the better off, stronger, more able, richer parties that is specially targeted. The stronger party is in a better position to take advantage of the weaker, so it is the stronger party’s self interest that is in special need of restraint. It is the stronger party that should be sacrificing to help the weaker party, so it is the stronger party’s self interest that must be overcome. In both cases, inequalities of power, ability and wealth come to have enormous moral significance, and great inequalities polarize the moral obligations and claims of the strong and the weak. Those who are stronger are in special need of restraint, and have greater obligations to redistribute

their resources to the weaker. By contrast, those who are weaker are seen as especially deserving of extra rights against harm by the strong, and the greater their degree of weakness the greater their claims against the strong.

Consequently, in most current business ethics, analysis of business dealings takes as its starting point the relative degrees of strength of the involved parties. For example, consider the following examples of alleged sins of omission:

• Large corporations, seeking to increase their profits, will relocate their factories, leaving many individuals unemployed. Analysis: the corporation is ʺstrongerʺ and the many individual employees are ʺweaker.ʺ Solution: The corporation should not relocate, thus sacrificing profit opportunities but benefiting the employees.
• Banks, acting in their self interest, do not make loans to needy individuals in inner cities, and they foreclose on unpaid mortgages of, for example, unemployed individuals. Analysis: Banks are rich; inner city residents and unemployed people are poor. Solution: The banks should sacrifice for the poor by giving them high-risk loans.
• Self interest leads some companies not to pay unskilled labor more than subsistence wages. Analysis: Owners of companies are financially stronger than their unskilled employees. Solution: The owners should sacrifice some profits for the employees.
• Maternity leave: corporations will be uncaring of the needs of their pregnant woman employees. Analysis: Corporations are stronger; pregnant women have special needs. Solution: The women should be given a guarantee of a position once maternity leave is over.
• In each case, the analysis identifies a stronger and a weaker party and then requires a sacrifice by the stronger party to benefit the weaker party. The same procedure is followed for alleged sins of commission:
• Airwaves and the American government’s Federal Communication Commission’s traditional “Fairness Doctrine”: If unregulated, big radio corporations (strong) will manipulate the (weak) public’s political views by presenting slanted coverage. Solution: The F.C.C. should regulate the content of broadcast media to ensure balanced coverage.
• Experimental medical drugs (e.g., Laetrile): To make a profit, pharmaceutical companies (strong) will exploit the fears and desperation of terminally ill patients (weak). Solution: The governmental Federal Trade Commission and/or the Food and Drug Administration should control the marketing of experimental drugs.

• Infant formula: Big western corporations (strong) will take advantage of poor, illiterate, third-world mothers (weak). Solution: Put pressure on the selling companies to limit sales, not to advertise, etc.
• Advertising of risky products (e.g., of tobacco, alcohol): Large companies (strong) will manipulate (weak) consumersʹ values and tastes through advertising. Solutions: regulate or eliminate such advertising; or use the business’s property against its will for public interest messages (e.g., Canadian cigarette packaging).
• Apartment rentals: Rich landlords (strong) will gouge tenants (weak); Solution: Impose rent control to help the needy tenant at the expense of rich landlord.
• Insider trading: Wall Street investors (strong) will take advantage of the little guy investing from Main Street (weak). Solutions: Restrain insider trading; help the little guy by redistributing the big guy’s information (e.g., disclosure laws).
• Wages: Employers (strong) will exploit employees (weak) by paying them only subsistence wages. Solution: Set a minimum wage to help the needy employee at the expense of the rich employer.
• Hiring policies: Businesses (strong) will act as racists and exists with respect to potential employees (weak). Solution: Establish affirmative action policies help members of less‐well‐off groups at the expense of members of better-off groups.
• Product safety: McDonald’s Corporation (strong) will carelessly sell hot coffee to little old ladies (weak) in cars that donʹt even have a safe place to put a cup. Solution: Enforce strict liability.

In each case, we identify a stronger and a weaker party. We take the interests of the two parties to be in fundamental conflict. We then propose solutions that at least restrain the self interest of the stronger party in the name of protecting the weaker party, and in some cases actively sacrifice the interests of the stronger party to benefit the weaker. Since in relation to consumers, businesses are perceived as the stronger party, business ethics today focuses on giving consumers extra protections and limiting the powers of businesses. Since in relation to employees, employer are perceived as the stronger party, business ethics today focuses on giving employees special protections and limiting the powers of employers. Since in relation to small business, big business is perceived as stronger, business ethics focuses on giving small business a boost and on taming the dreaded multinational corporation.

We thus get a business ethic that sounds like the following: The moral big corporation will give much of its profits to charity; it will restrict its profit-making opportunities in poor third world countries; when advertising it will be less persuasive with respect to the helpless consumer; in order to give the little guy a chance to compete it wonʹt use its size advantage; when employing, it will sacrifice some profitability if its employees need it. And if businesses wonʹt sacrifice their interests voluntarily, then weʹll ask the government to force them to. The government will see its job as helping the weak against the strong by giving them extra rights, limiting the rights of the strong, or transferring wealth from the strong to the weak.

Current business ethics thus bases itself on and fosters a general adversarial culture: business vs. consumer, employer versus employee, big business versus small business, and business versus government.

It is against this sort of ethic that defenders of free enterprise have argued. However, they have generally not done so by attacking the ethic directly but rather by showing the impractical political and economic consequences of interfering with free markets.

Libertarians and some conservatives have argued, often well, that the proposed solutions in the above cases undermine incentive, violate individuals’ liberties and property rights, violate the principle of equal rights, and so on. This, however, has had little effect on moral opposition to free enterprise—since most of those concerned with ethics have held that practical concerns are less significant than moral concerns, that the interest individuals have in their property and their incentive to acquire more are merely self interests, and that such self interested concerns can and should be limited, restrained, and overridden.

As long as self interest is seen as amoral or immoral, arguing the practicality of the profit motive and property rights will have limited success. One’s opponents may come to agree that free markets are efficient, but they will still be willing to sacrifice individual liberties and profits— those are merely self‐interested considerations, after all—in the name of higher, moral considerations.

What is needed, then, is a defense of individualism, self interest, on moral grounds. Until we have such a defense, calls for self‐sacrifice—either voluntary or enforced politically—will be the norm in business ethics and in regulatory policy.

I have argued that opposition to self‐interest stems from taking conflicts of interest to be fundamental to ethics, and that this stems from pessimistic economic, psychological, and biological premises. These premises make self interest seem incompatible with long-term human survival. It is those economic and psychological theories that we need to address.

Here I turn to Ayn Rand’s alternative. Rand has not often had a positive reception from the ethics community for a number of reasons. The major one is that she championed self interest loudly and forcefully. For an ethics community committed to the view that morality means restraining and sacrificing self interest this could mean only one thing: She must be urging the strong to do whatever they feel like to the weak. That view, given the long history of ethics, could simply be rejected out of hand.

But such a rejection evaluates Rand’s advocacy of self interest from within a set of premises about economics and human nature that she rejects. She rejects the belief that ethics starts by taking conflicts of interest as fundamental. She rejects the view that ethics starts by reacting to scarce resources; she rejects the view that ethics starts by reacting to the nasty things some people want to do to each other; and she rejects the view that ethics starts by asking what to do about the poor and unable.

It is a philosopher’s starting points that matter most. So what are Rand’s?

ABOUT THE AUTHOR:

Stephen Hicks Ph.D

Stephen R. C. Hicks PH.D. is the Senior Scholar for the Atlas Society, Professor of Philosophy at Rockford University, and the director of the Center for Ethics and Entrepreneurship at Rockford University. In 2010, he won his university's Excellence in Teaching Award. Professor Hicks has written four books; Explaining Postmodernism: Skepticism and Socialism from Rousseau to Foucault, Nietzsche and the Nazis, Entrepreneurial Living, and The Art of Reasoning: Readings for Logical Analysis.

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