Acton Institute Powerblog

Acton Commentary: The Problem with “Business Ethics”

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Samuel Gregg, director of research at the Acton Institute, reflects on business ethics in his recent commentary.  Gregg explores the presence of business ethics courses in business schools; however, with the large presence of business ethics courses we still have a lack of ethics present in business.  The lack of ethics in business became a major factor in our current financial crisis.  Gregg further explains that business is not just about management or the business ethics that are taught, but businessmen and women need to also learn stewardship:

Business, however, is about more than management. It also involves stewardship (inasmuch as managers have moral and fiduciary responsibilities to their clients and investors) and entrepreneurship – the actual creation of wealth. Many business leaders would be shocked to discover that studying entrepreneurship remains optional in many business schools today.

This underlines another problem for some business schools. It’s not clear that all business professors are convinced of the morality of economies based on free enterprise, limited government, and rule of law. This ambivalence cannot help but be communicated to their students, which they take with them into the marketplace. It is very difficult for business schools to teach the moral habits associated with successful business when many business professors regard private enterprise and markets as, at best, useful but morally-insignificant phenomena.

Gregg also makes references it Pope Benedict XVI’s new social encyclical, Caritas in Veritate, to demonstrate the need for morality in business:

Hence, though Benedict speaks approvingly of the rise in ethics-consciousness in the worlds of finance and business, he cautions that simply attaching the label “ethical” to a given enterprise tells us nothing about the actual morality of its practices. What ultimately matters, the Pope affirms, is the precise vision of morality – and therefore the understanding of the human person – informing not simply a particular business, but the entire economy (CV 45).

Louie Glinzak


  • In 2003 I chaired the first Business Ethics Conference in the Roman Catholic Diocese of Orange in southern California. One of our speakers was Fr. Robert Spitzer, at the time the President of Gonzaga University.

    In his presentation he spoke of principle based versus utility based ethics. It was a message designed to be taken into the secular world and Fr Spitzer made it clear to those attending that the principles were for him Christian. But how do those winging it in this world make their choices? For believers it is a hard thing to imagine.

    Fr. Spitzer used the whipping boy of those days ENRON and explained how the people in accounting made incremental decisions to fudge and hide numbers not based on right or wrong but how much they could get away with. “Let’s see if they notice this much,” they might have chuckled as they played with the Excel spreadsheet.

    While Father injected, “but they never asked the question, is it right?” I often wonder what was guiding the judgement of those, especially in the mortgage and regulatory fields who perverted the rules of common sense and were blatant enough in so doing to get themselves on You-Tube. As if their actions would have no consequence.

    Daniel Mudd who ran Fannie Mae and was paid millions in bonuses along with Franklin Raines as the institution plowed into an oncoming wave of debt has just been hired by an investment firm. Barney Frank will likely be a Congressman for the Boston suburb that elects him until hell freezes over. Or as Fr. Spitzer might suggest they enter the seventh ring with Judas Iscarot.

  • Roger McKinney

    I don’t think ethics training belongs in business schools. They’ll do a terrible job of it no matter how hard they try. Ethics training belongs in the family and the church.

    Too many people think ethics is a skills issue. It’s not. It’s an attitude/world-view issue. Schools are terribly poorly equipped to change attitudes and world-views and should attempt it.

    So what are we to do about people who lack ethics? Adam Smith had the best plan ever developed: let the free market take care of them. Smith was a true Christian in that he believed only God can change human nature. Some people are intent on evil no matter what. The best we can do is to limit the damage immoral people can do and the free market does the best job of it.

    If the free market doesn’t seem to be doing the job, then the problem almost always lies with state intervention that hinders market forces. And that’s exactly what we see in the US. State intervention causes moral hazards everywhere it exists. For example, state regulatory agencies such as the FDIC and SEC fool people into thinking that the state controls the markets so well that no immoral activity can take place. Look at Madoff. Many investors were lulled to sleep about him because no federal agency had investigated him. They trusted federal agencies to do the due diligence research they should have done on their own.

    If state regulators didn’t exist so that people weren’t fooled into a false sense of security, they would be much more leary of investment pitches like Madoff’s. The market would eliminate Madoff schemes much better than the state can.

  • I read this article at Excellent!

    As for the overall sentiment that something is wrong with our teaching of business ethics, I quite agree.

    The teaching of Business Ethics, however, is a complex matter and the article contains some generalizations and implications that I don’t quite agree with.

    “Business schools have not proved immune from the tide of ethical relativism – and the political correctness that often substitutes for serious moral reflection…”

    This is probably true of business schools, but not of business ethics courses. First of all, if the Business Ethics course is taught by a philosopher from the humanities department (as it should be, in order to be awarded any university credit at all), you will be hard-pressed to find a relativist in charge of the classroom. You may find a post-modern pragmatist, but this is not quite the same thing.

    Second, business ethics textbooks are almost universally solidly within the Western tradition. Kant, utilitarianism, Rawls, and duties toward others are fundamental to the course. Generally, answers to case studies addressed in class that are not supported by these theories are not acceptable.

    Third, the “relativism” that one is often left with (which the article is correct to point out) is due — IMHO — to a crisis within philosophy itself. We (meaning philosophers) simply have no easy answers to many fundamental ethical issues. The main theories we have are partial answers at best.

    As for teaching character and truthfulness — will this be the ultimate function of a course? No. Could Madoff have aced his business ethics course and still have behaved as he did? Naturally. He suffers from severe flaws that have little to do with demonstrating an intellectual grasp of course material.

    So, yes, we have a problem. Perhaps the invention of “business ethics” courses is part of the problem, but it is quite complex.

  • Patrick Piechocki

    I was just assigned a Business Ethics course, first time teaching it…

    Just doing a little research….