Business ethics

The big idea: Some people smirk at the phrase 'business ethics' — as if it were like 'dry water'.

Business is about making money; ethics is about doing right. When they clash, which wins? Business ethics asks whether a company can chase profit AND still be good — or whether that's asking the impossible.

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.

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. Managers spend other people's money; being 'socially responsible' with it — giving it to causes — is really taxing the owners without asking. On this view, 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.

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, and 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. Friedman answers to a duty (a promise to the owners) and 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). So 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.

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.