The Role of the Business Ethicist

Nicholas Capaldi Loyola University, New Orleans

ABSTRACT. The place of contemporary commerce within human experience is intertwined with the Technological Project (TP), the attempt of the Scientific Revolution to master and possess nature. The TP works best within the framework of the modern free market, which encourages competition and innovation. A free market economy requires a government characterized by the rule of law, which acts as a constraint on government and which safeguards the freedom of autonomous persons. This historically-based and non-technical account of the place of the political economy within human experience is attested in the works of major philosophers, and has the further advantage of not being based on the understanding of hidden and timeless laws. Nevertheless, Business Ethics is currently dominated by a scientism that views commerce according to a-historical and objective norms discovered through various competing sciences in which theory precedes practice. However, the role of Business Ethics is not to say in advance what ought to be the case and then to re-fashion practice accord- ingly, but rather to explicate what is actually the case, and thus to make explicit the underlying and contingent norms from historically attested phenomena. Such an approach to Business Ethics is firmly rooted in the philosophical and humanistic traditions, and escapes the dangers of ideological generalization inherent in today’s democratic socialism.

KEYWORDS. Business ethics, Technological Project, free market economy, explication, ideology, scientism.

INTRODUCTION

he role of the business ethicist is twofold. The first task of the busi- Tness ethicist is philosophical, namely, to locate the role of commercial activity on the map of our total experience or, in other words, to provide a big picture within which commerce functions. The second task of

ETHICAL PERSPECTIVES: JOURNAL OF THE EUROPEAN ETHICS NETWORK 12, no. 3 (2005): 371-383. Doi: 10.2143/EP.12.3.2004488 © 2005 by European Centre for Ethics, K.U.Leuven. All rights reserved. ETHICAL PERSPECTIVES – SEPTEMBER 2005 the business ethicist is practical, namely to explicate the norms inherent in current business practice.

1. PHILOSOPHICAL TASK

I shall begin with a positive exposition and then indicate some mistaken and misguided conceptions of the philosophical task. How does commerce relate to other areas of human experience? Since the Renaissance,1 commerce has played an increasingly significant role in our lives.2 Its increasing importance can be explained by reference to the Technological Project (TP). By the Technological Project3 I mean the program identified by Bacon, Descartes, and Locke. In his Discourse on Method, Descartes proclaimed that what we seek is to make ourselves the “masters and possessors of nature.” Instead of seeing nature as an organ- ic process to which we as individuals conform, Descartes proclaimed the modern vision of controlling nature for human benefit. It is the same project that Bacon had in mind when he observed that knowledge is power. In Locke’s version, “God, who has given the world to men in common, has also given them reason to make use of it to the best advantage of life, and convenience….it cannot be supposed He meant it should always remain common and uncultivated. He gave it to the use of the Industrious and Rational…not to the Fancy or Covetousness of the Quarrelsome and Contentious….for it is labour indeed that puts the dif- ference of value on every thing….of the products of the earth useful to the life of man nine tenths are the effects of labor…”4 The Technological Project is not just a new way of engaging the world, it is also a new way of understanding ourselves. Modern science, and the Technological Project that emerges from it, is different from classical science. Classical science was a matter of careful observation. For example, an agricultural economy needs a calendar and observational astronomy is the basis of the calendar. Modern science requires two very

—372— CAPALDI – THE ROLE OF THE BUSINESS ETHICST different activities in addition to observation. Modern science requires hypothetical modeling of what we hypothesise as the hidden structure of the world (e.g., molecular theory of gases, atomic theory, germ theory, etc.). It also requires experimentation, that is, the deliberate manipulation of the world to test for results or to confirm the hypotheses. Both the for- mulation of hypotheses and experimental design require inner-directed individuals (autonomy) cooperating to produce innovative ideas (scientific and technical thinking) for understanding and controlling natural processes. Descartes’ Discourse on Method provides and advocates a method, a self-imposed form of inner discipline, for promoting this kind of independent thinking. We do not look for an external structure or pattern; rather we formulate models. As Kant was to put it later, in what he called the “Copernican Revolution in philosophy,” structure is what we project onto the world not what we find given to us in experience. The TP operates most efficiently within a modern market economy. A (free) market economy is a system for the exchange of goods and services wherein there is no central allocation of such goods and services. The goods and services are privately owned (i.e. private property). A market economy provides two advantages for the pursuit of the TP. The first is that it promotes competition. Since resources are privately owned and since there is no central command over what people should be doing with those resources, owners of resources are free to experiment and to consider using those resources in novel ways. Innovation cannot, by definition, be planned. To the extent that property is privately owned and not centrally controlled, and to the extent that a free market economy is competitive, there is a greater possibility for innovation. Markets also reward successful innovators and entrepreneurs. Finally, since labour is itself now a commodity, imaginative and creative inner-directed individuals can sell their services to the highest bidder. The second advantage of a market economy, as identified by Adam Smith in the Wealth of Nations, is that it encourages innovation. It is innovative because the division of labour leads to specialisation and specialisation leads to innovation (labour saving devices, etc.) as well as greater

—373— ETHICAL PERSPECTIVES – SEPTEMBER 2005 productivity. All of this has been confirmed by the implosion of the Soviet Empire and the nascent capitalism of China. In order for a free market economy to function, it requires a limited government known as a commercial republic.5 The government provides the legal context for maintaining law and order and for enforcing contracts. It requires in addition that the government performing this service understands that it should not interfere with the competitive and innovative process of the market. The government exists to protect the (negative) rights of individuals who pursue their own individual interests. It does not exist to further a collective good (which does not exist any- way) or to serve the bureaucracy or to serve a particular faction (Madison in Federalist 10 – a faction is an interest group that seeks to subordinate all other interests to itself6). This is the sense in which the government is limited or subordinate to the requirements of commerce. A Republic is not a democracy, for a democracy involves majority rule and not constitutional rule. Where there are democratic procedures, the procedures operate negatively to block factional domination; the procedures are not designed to operate positively to determine any alleged common good. Such a government is characterised by the rule of law. The rule of law is a characteristic of a legal system that constrains government. It stands in contrast to despotic rule. The rule of law typically divides the powers of government among separate branches, has an independent judiciary, entrenches individual rights (notably due process and the equal protection of the law) behind constitutional walls, and provides for the orderly trans- fer of political power through fair elections. It is a system of rules designed to allow individuals to pursue their self-interests without interfering with that same pursuit on the part of others. The rule of law provides the rules of the game without determining the outcome of the game.7 The common good does not consist of any substantive norms but of a set of procedur- al norms (this is the proper meaning of liberal neutrality). In order for a government to remain limited and not become either authoritarian-totalitarian or subject to mob-rule (i.e. democracy), it is

—374— CAPALDI – THE ROLE OF THE BUSINESS ETHICST necessary that the citizens of that government be special kinds of people; they must be autonomous people. Autonomous people are those who rule themselves (i.e. they impose order on their lives through self-discipline in order to achieve goals that they have set for themselves). Autonomous people are inner-directed and therefore capable of participating in the TP in a creative and constructive way. In fact, the ultimate purpose of the TP is not to create wealth but to allow autonomous people to express their freedom. Wealth is a means to achievement and freedom, not an end in itself. In this sense, the technological project is the spiritual quest of modernity. Autonomous people want to run their own lives, and they do not want the government or any other institution to control them. They are jealous of their liberties and want the government to be restricted to its proper spheres. They are focused on taking care of themselves and not looking for others to take care of them. Autonomous people want recognition of their autonomy. This recognition can only come from other autonomous people who understand what self-discipline requires. Autonomous people seek to promote autonomy in others in order to encourage this recognition. They believe in helping others “learn how to fish” for themselves. The ultimate self-interest of autonomous people is never in conflict with the ultimate self-interest of others.

Technological Project Market Economy (private property) [Bacon, Descartes, Locke, etc.]8 [Hume, Smith]9 innovation competition + specialization Republican (limited) Government [Montesquieu,10 Madison,11 de Tocqueville12] checks and balances (competition) enforce contracts Rule of Law [Hobbes, Hegel, Hayek, Oakeshott13] individual rights [Hobbes, Locke, Constant14] toleration [Locke, J.S. Mill] Culture of Personal Autonomy [Hobbes, Locke, Kant,15 Hegel, Mill16] personal autonomy is the modern counterpart of Christian agapé (love) Humanity is made in the image of God (understood as free will, creativity, and love) Personal autonomy Technological Project as the spiritual quest of modernity17 Figure 1: Major themes and philosophers within the Technological Project

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The important things to be noted by the foregoing philosophical account of the place of commerce in the landscape of human experiences are: (1) that each part of it was articulated by more than one major philosopher from the 17th century to the present, all of whom had a positive attitude toward commerce; (2) that the exposition does not rely upon technical or contrived vocabulary; (3) that the account does not make reference to or invoke any hidden structure; (4) that there is no notion here that understanding this narrative entails a specific set of timeless public policies. There is an alternative but misguided conception of the philosophical task. It originates in classical philosophy but its modern origin lies in the Enlightenment Project to be described below. The misguided alternative view presupposes that (1) there is an objective external framework of norms, (2) our initial intellectual task is to apprehend those norms, and (3) our secondary task is to conform our behavior and all social structures to those norms. Theory logically precedes practice (T/P). Moreover, theory takes the form of a deductive argument in which we argue from first principles to specific applica- tions. There is thus a seamless web connecting theory and practice. The ultimate structure of these first principles is a comprehensive metaphysics (hence, there is no real separation between ethics and politics). Only those who understand the ultimate big picture can truly determine what the right thing to do is in a particular set of circumstances. Philosophers with the proper vision and training, therefore, are the true ethics experts. The origin of the contemporary misguided idea of an ethics expert derives from the Enlightenment Project.18 This movement, which is not to be confused with the whole of the Enlightenment, asserted the doc- trine of scientism, namely that physical science was the whole truth about everything. Among the French philosophes (e.g. La Mettrie, Holbach), who were the primary proponents of this view, the success of physical science solved all potential philosophical problems since philosophy was no more than the logic of science. Furthermore, it was assumed that there could be a social science based on the model of physical science. Just as physical

—376— CAPALDI – THE ROLE OF THE BUSINESS ETHICST science led to the wonders of modern physical technology, so there would be a corresponding social technology, and social experts who would solve all social (ethics, economic, political, aesthetic, etc.) problems. This purely secular and naturalistic conception of expertise was espoused in the nineteenth century by Comte (as positivism) as well as Marx, and it survives in various forms of positivism, behaviourism, analytic philosophy, artificial intelligence, etc. This intellectual movement or collection of movements: (1) dominates the intellectual world; (2) finds its locus in universities; (3) permeates all professions based on university education including journalism, the ministry, law, and medicine; (4) explains why the only two growth areas in the discipline of philosophy are bioethics and business ethics; and (5) is inevitably statist because social technology requires planning by experts who need the full resources of government power and taxation to solve all social problems. This mistaken view can be summarised as follows: 1. Theory precedes practice a. ‘experts’ need have no actual experience of what they direct b. they ‘see’ the truth ‘behind’ the practice (e.g. Rawlsian veil of ignorance) c. they can teach ‘how’ to do it not ‘what’ to do – triumph of methodology over substance d. disdain and condescension expressed toward mere practitioners 2. Intellectual elitism 3. The university becomes the locus of ethical expertise primarily because of its connection with scientific and technological research. 4. Utopian a. impatience with practice that refuses to conform to theory, rather than a reconsideration of the theory b. all problems can eventually be solved by discussion among experts c. statism becomes the preferred mode for the implementation of ethics expertise

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d. overcomes the dividing line between ethics and politics by adopting the view that there is no such thing as free will – everything is a matter of environmental determinism; hence the need for primarily external sanctions e. prevalence of democratic socialism among intellectuals [Schumpeter,19 Hayek]. What exactly is wrong with this alternative? Very simply, it does not work and no one knows how to make it work. It is not simply the case that there are significant moral disagreements about substantive issues. Many if not most of these controversies do not appear to be resolvable through sound rational argument. On the one hand, many of the controversies depend upon different foundational metaphysical commitments. As with most metaphysical controversies resolution is possible only through the granting of particular initial premises and rules of evidence. On the other hand, even when foundational metaphysical issues do not appear to be at stake, the debates turn on different rankings of the good. Again, resolution does not appear to be feasible without begging the ques- tion, arguing in a circle, or engaging in infinite regress. One cannot appeal to consequences without knowing how to rank the impact of different approaches with regard to different moral interests (liberty, equality, prosperity, security, etc.). Nor can one appeal to preference satisfaction unless one already grants how one will correct preferences and compare rational versus impassioned preferences, as well as calculate the discount rate for preferences over time. Appeals to disinterested observers, hypothetical choosers, or hypothetical contractors will not avail either. If such decision makers are truly disinterested, they will choose nothing. To choose in a particular way, they must be fitted out with a particular moral sense or thin theory of the good. Intuitions can be met with contrary intuitions. Any particular balancing of claims can be countered with a different approach to achieving a balance. In order to appeal for guidance to any account of moral rationality one must already have secured content for that moral rationality.

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Not only is there a strident moral diversity defining debates regarding all substantive issues, but there is in principle good reason to hold that these debates cannot be brought to closure in a principled fashion through sound rational argument. The partisans of each and every position find themselves embedded within their own discourse so that they are unable to step out- side of their own respective hermeneutic circles without embracing new and divergent premises and rules of inferences. Many traditional thinkers find themselves in precisely this position. They are so enmeshed in their own metaphysics and epistemology, so convinced that they are committed to ‘reason’ when what they are committed to is a particular set of premises and rules, so able to see the ‘flaws’ in the positions of others who do not accept the same rules, that they quite literally do not understand the alternative positions or even how there can be other positions. More important- ly, they fail to understand the character of contemporary moral debate. What is peculiar about contemporary moral debate is not just the incessant controversy but the absence of any basis for bringing the controversies to a conclusion in a principled fashion.20

2. THE PRACTICAL TASK

What meaning can be given to the practice of business ethics? A business ethicist can be either a scholar of business ethics or a business ethics practitioner. The point of business ethics education, and therefore the role of the business ethics educator, is to understand and explain market activity in the broadest sense. It is a philosophical activity in that it seeks to reveal the role of business activity on the map of our total experience. It is not a theoretical endeavour. It involves knowledge of our tradition of business behaviour. Comparative studies are valuable in getting us to look more carefully at our traditions. Historical studies would show what people have said and thought - manner of thinking. Its purpose is not to expose errors but to understand its prejudices. Business ethics education is an

—379— ETHICAL PERSPECTIVES – SEPTEMBER 2005 explanatory not a practical activity. We do not infer practical consequences from the understanding or explanation. To be a scholar of business ethics is not directly linked to being a business ethics practitioner. Business ethics as a practice is immanent. That is, it is either identify- ing the traditional norm(s) relevant to a particular situation and/or amending existing arrangements by explication of the norms inherent in previous practice. It is very much like the practice of law in the common law tradition. These norms cannot be accessed as a permanent sub-structure; they can never be definitively explicated but are fertile sources of adaptation; they are an inheritance that does not entail its own future development (Wittgenstein’s discussion of rules make this same point). How does one identify the norms? We do so through explication. Explication is a mode of understanding social practices. It presupposes that all social practices function with implicit norms and that to explicate a practice is to make explicit the inherent norms. In explication we try to clarify that which is routinely taken for granted, namely our ordinary understanding of our practices, in the hope of extracting from our previous practice a set of norms that can be used reflectively to guide future practice. Explication attempts to specify the sense we have of ourselves when we act and to clarify that which serves to guide us. We do not change our ordinary understanding but rather come to know it in a new and better way. Explication is a way of arriving at a kind of practical knowledge that takes human agency as primary. It seeks to mediate practice from within practice itself (P/T). Explications are narratives that may or may not contain arguments within them, but the overall explication is not itself an argument. You cannot refute an explication, but you can offer an alternative one. How does one amend existing arrangements? Any process of amend- ment presupposes a general background agreement (consensus explication) on what we are trying to achieve; it commences with a diagnosis of the problem at issue; it then proposes a response; it recommends this proposal by considering the consequences likely to follow from acting

—380— CAPALDI – THE ROLE OF THE BUSINESS ETHICST upon it; it balances these against those of at least one other proposal. The overall process is thus rhetorical. It may and often does contain arguments within it; but the overall process is not itself an argument.

3. IMPLICATIONS FOR BUSINESS ETHICS EDUCATION

Business ethics education is most certainly not political advocacy. Too much of so-called business ethics education is ideological, that is, it focus- es on teaching students how to expound, defend, and implement an abstract principle that has been independently premeditated. It supplies in advance of the historical facts a formulated end to be pursued, and in so doing it provides a means of distinguishing between those desires that ought to be encouraged and those that ought to be suppressed or redirected. Despite its claim to be premeditated, the content of an ideology is always drawn from a previous practice. In this case, the ideology is that of democratic socialism, and it is drawn from the conversation21 of intellectuals. What democratic socialism purports to maintain is that what was previously carried out under the aegis of politics can now be accomplished through intellectual discussion alone. Democratic socialism has mistakenly generalised from a mythical notion of academics to ethics and politics. It misunderstands the nature of politics, and it distorts all forms of education. Business Ethics scholars are not technicians who solve problems. They can undoubtedly help us to understand the process of resolving ethical dilemmas, but they cannot provide an algorithm for accomplishing it. Business schools need to be shown a completely new way of dealing with normative issues – explication. Explication is a humanistic activity, characteristic of philosophy, literature, and history when these disciplines are not mistakenly ‘social-scientised’. It would be ironic indeed if the humanities were preserved in Schools of Business, some of which have come to recognise what liberal arts colleges and universities seem to have forgotten.

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NOTES

1. Commerce has been around forever, but it has changed significantly since the Renaissance because of its relationship to the “Technological Project” as defined in the text. 2. For a fuller version of this account see Nicholas Capaldi, “The Ethical Foundations of Free Market Societies,” The Journal of Private Enterprise XX/1 (2004): 30-54. 3. The so-called industrial revolution is but an expression of the Technological Project. The more fundamental idea is the notion of transforming the world. See Rene Descartes, Discourse on Method; Francis Bacon, Essays (Amherst, NY: Prometheus, 1995) nos. 13, 16-17, and The Great Instauration and New Atlantis, ed. Jerry Weinberger (Arlington Heights, IL: Harlan Davidson, 1980) 4. John Locke, Second Treatise, Chapter Three (The Right of Private Property), sections 26, 27, 34, and 40. 5. This is a concept found in Montesquieu’s Spirit of the Laws, and it distinguishes modern from ancient republics. 6. See below, note 11. 7. Anti-discrimination laws are examples of the rule of law because they seek to provide equality of opportunity. Affirmative action, understood as quotas, is a violation of the rule of law precisely because it seeks to achieve a specific outcome, equality of outcome. 8. See notes 3 and 4 above. 9. Adam Smith’s The Wealth of Nations was published in 1776. Many of the ideas expressed in that book were previously articulated by Smith’s close friend David Hume. See David Hume, Essays: Moral, Political, and Literary, ed. Eugene F. Miller (Indianapolis: Liberty Classics, 1987). See especially the essays entitle: “Of the Rise and Progress of the Arts and Science;” “Of Commerce;” “Of Refinement in the Arts;” and “Of the Balance of Trade.” Smith’s works were enormously influential on Constant, Kant and Hegel. 10. Montesquieu, for whom there is no entry in the Oxford Companion to Philosophy, published the Spirit of the Laws in 1748. His work greatly influenced Hume, Madison, and Kant. 11. The Federalist Papers were published in 1787. Individual papers were written by Alexander Hamilton, John Jay, and James Madison. Madison’s paper N° 10 is largely influenced by Hume’s essays on political parties in Britain. Hume and Montesquieu are the only thinkers specifically referred to by name in the entire collection. 12. Alexis de Tocqueville ‘s Democracy in America was published in two parts (1835 and 1840). J.S. Mill reviewed both books. His reviews were warmly welcomed by Tocqueville. 13. The best account of the rule of law is given by Michael Oakeshott in the “Rule of Law” in On History and Other Essays (Totowa, NJ: Barnes & Noble, 1983). See his On Human Conduct (Oxford: Clarendon Press, 1975) for an elaboration of the distinction between a civil association and an enterprise association. For a summary of his position see Nicholas Capaldi, “Michael Oakeshott’s Philosophy of Law,” in The Intellectual Legacy of Michael Oakeshott, ed. Timothy Fuller and Corey Abel (London: Imprint Academic, 2005). Oakeshott was greatly influenced by both Hobbes and Hegel’s Philosophy of Right. For Hayek see The Constitution of Liberty, “The Origins of the Rule of Law” (Chicago: University of Chicago Press, 1978) and The Road to Serfdom, “Planning and the Rule of Law” (Chicago: University of Chicago Press, 1994).

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14. Benjamin Constant, “The Liberty of the Ancients Compared with that of the Moderns,” a speech originally given in 1819 is reprinted in Constant’s Political Writings, ed. Fontana (Cambridge: Cambridge University Press, 1988). 15. Kant’s discussion of freedom is crucial. See his essay Perpetual Peace for a microcosm of this entire philosophical narrative. Both Kant and Constant, following Smith, maintain that a world federation (not a world government) fashioned after something like Montesquieu’s commercial republic will lead to world peace. 16. J.S. Mill’s essay On Liberty, especially the discussion of individuality, is now the locus clas- sicus of autonomy. See Nicholas Capaldi, J.S. Mill, An Intellectual Biography (Cambridge: Cambridge University Press, 2004). 17. Philosophical thinking is at its best characterised by coherence. Coherence is a necessary but not a sufficient condition of good philosophical thinking. 18. See Nicholas Capaldi, The Enlightenment Project in the Analytic Conversation (Dordrect: Kluwer, 1998). 19. Joseph Schumpeter, Capitalism, Socialism, and Democracy (New York: Harper & Row, 1950); see especially Chapter XIII, “The Sociology of the Intellectual.” F. A. Hayek, The Fatal Conceit (Chicago: University of Chicago Press, 1991). 20. This argument will appear in a forthcoming festschrift honouring H. Tristram Engelhardt, a forceful proponent of this view. 21. I use the term “conversation” rather than practice because intellectuals do not exempli- fy in their practice what they preach. What is most disturbing is not their failure to practice what they preach but their indifference to the distance between theory and practice.

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