The big idea: Some people smirk at the phrase 'business ethics' — as if it were like 'dry water'. Business ethics asks whether a company can chase profit AND still be good — or whether that's asking the impossible.
The clash
- Business is about making money.
- Ethics is about doing right.
- When they clash, which wins?
The real tension is profit vs responsibility: a firm answers to its owners for profit, but also to workers, customers and society. When those pull apart, business ethics is the study of what a company OUGHT to do.
Hold onto this: The sneer 'business ethics is a contradiction' assumes profit and doing right must always clash. The whole debate is about whether that assumption is actually true.
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The sharpest version of the sceptical view came from the economist Milton Friedman.
Friedman: the business of business is profit: Friedman argued that a company's ONE social responsibility is to make a profit for its owners, within the law.
His reasoning
- Managers spend other people's money.
- Being 'socially responsible' with it — giving it to causes — is really taxing the owners without asking.
- So a firm should obey the law and then maximise profit.
- 'Doing good' is a job for individuals and governments, not companies.
Checkpoint — Friedman: In one line: Friedman says a firm's only job is lawful profit for its owners — being 'socially responsible' spends money that isn't the manager's to give. Hold that — the next view attacks the idea that the law is enough.
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Against Friedman stands the view that a company owes duties to everyone it affects, not just its owners.
Stakeholders: everyone the firm affects: On the stakeholder view, a company affects workers, customers, suppliers and communities — its stakeholders — so it owes them fair treatment too.
Real cases make this bite
- Child labour — legal in some places, still wrong.
- Sweatshops.
- Business espionage.
- Fair trade is the opposite move — paying producers fairly on purpose.
The point: 'Legal' and 'right' aren't the same, so profit can't be the whole story.
Go further — higher-level insight: Spot the deeper split. The 'is business ethics a contradiction?' question is really the theory clash from 4.3.1 dressed in a suit. Naming that link is a top-band move.
Friedman
- Answers to a duty (a promise to the owners)
- Trusts the law and market to handle the rest
The stakeholder view
- Runs on consequences and virtue
- Real harm to real people, and the character of a decent firm
Checkpoint — stakeholders: In one line: the stakeholder reply says 'legal' isn't 'right' — a firm owes fair treatment to everyone it affects, so profit can't be its only duty.