2.1 Key Terms

Philosophers usually begin their books by examining the meanings of the central terms and ideas in their writing. I will do this eventually for phrases like “business ethics,” “institutional insight,” and “moral anthropology.” However, in this first chapter, I want to communicate the departure point of my career-long interest in moral philosophy and the initial theme of this book—the phenomenon of conscience. It behooves us to clarify certain basic terms that I will be using at the outset and throughout this book, specifically “insight,” “moral insight,” and “conscience.”

2.1.1 Insight

Webster’s Unabridged Dictionary defines “insight” as:

  1. 1.

    an instance of apprehending the true nature of a thing, esp. through intuitive understanding: an insight into eighteenth-century life; and

  2. 2.

    a penetrating mental vision or discernment; faculty of seeing into inner character or underlying truth.

The common element between (1) and (2) seems to be a shift from an accepted understanding of a phenomenon to a deeper discernment of its true nature. To have insight is to be able to discern something deeper (“what lies beneath”) or something larger (“a bigger picture”). A contrasting element between (1) and (2) seems to be that (1) refers to “an insight” as an instance, a momentary breakthrough, while (2) refers to a human faculty, an ability, even a gift for discerning the truth of a situation.

As you, the reader, will see in what follows, when I use the term insight in connection with matters of morality or ethics, the common element and the contrasting element become especially relevant. Some philosophers and psychologists have focused their attention on the “moment of breakthrough” element in ethics—Josiah Royce distinctive among them. I will discuss them in the next section. Others have focused their attention on the “human faculty” element in ethics. I will discuss them subsequently in the section called “Conscience.”

2.1.2 Moral Insight

Five decades ago, in Ann Arbor, my philosophical mentor and guide at the University of Michigan, William Frankena, said to me that the deepest truths in ethics were also the simplest. More than once he mentioned a Harvard philosopher and friend of William James—Josiah Royce—as having articulated one of these deep and simple truths more eloquently than anyone else he had ever read. Royce called it the moral insight and defined it as “the realization of one’s neighbor, in the full sense of the word realization; the resolution to treat him unselfishly.” Royce immediately added something, however, that emphasized the fragile nature of this transformative breakthrough:

But this resolution expresses and belongs to the moment of insight. Passion may cloud the insight after no very long time. It is as impossible for us to avoid the illusion of selfishness in our daily lives, as to escape seeing through the illusion at the moment of insight. We see the reality of our neighbor; that is, we determine to treat him as we do ourselves. But then we go back to daily action, and we feel the heat of hereditary passions, and we straightway forget what we have seen! Our neighbor becomes obscured. He is once more a foreign power. He is unreal. We are again deluded and selfish. This conflict goes on and will go on as long as we live after the manner of men. Moments of insight, with their accompanying resolutions; long stretches of delusion and selfishness: That is our life.Footnote 1 (Royce 1885)

For Royce, the moral insight was not to be understood as a once-and-for-all event. Returning to the “illusion” of self is a persistent human trait. Royce’s way of describing the foundation of ethics is notable for this recognition of our tendency to “backslide” from the moment of insight—the moment of truth—into the illusion that our neighbor is “unreal.” Royce believed that the moral insight (a gateway to what later philosophers called the “moral point of view” (Baier 1958)) was the origin of ethics, the spark that gave rise to conscience. But he wished not only to identify this origin, this spark, but also to warn at the same time of its propensity for a kind of forgetting, returning us to the delusional state of self-centeredness.Footnote 2

Recent work in behavioral psychology by Ann Tenbrunsel (Bazerman and Tenbrunsel 2011) and others seems to corroborate Royce’s perspective on the nature of the moral insight:

According to Tenbrunsel, the business frame cognitively activates one set of goals—to be competent, to be successful; the ethics frame triggers other goals—to be fair and not hurt others. And once you’re in, say, a business frame, you become really focused on meeting those goals, and other goals can completely fade from view.Footnote 3 (Joffe-Walt and Spiegel 2012)

Another psychologist, Anthony DeMello, characterizes what Royce called the moral insight as a kind of “waking up” from a sleep state to what he called awareness (DeMello 1990).Footnote 4 For DeMello, awareness frees us for discerning deeper truths about ourselves and a bigger picture than our often self-centered worldview.Footnote 5 A similar idea springs from the book Alcoholics Anonymous (1939) and forms the basis for most 12-step programs today.Footnote 6

2.1.3 Conscience

2.1.3.1 Its Basis

Many thinkers have reflected upon the nature of right and wrong, good and bad, virtue and vice, and our ability to know and apply these moral attributes in practical ways in our lives. Here I will mention the thoughts of four other thinkers: Plato, Jean Piaget, Hannah Arendt, and Joseph Ratzinger. What these thinkers have in common is a desire to understand the human faculty of forming good moral judgments as we decide how to act and to live. Each of these thinkers believes that our faculty of conscience can provide reliable access to ethical knowledge under the right conditions. This contrasts with various brands of moral relativism:

  • Subjectivism—in which moral judgments are not true or false but are simply the deliverances of our considered personal preferences or emotions regarding ethical matters.

  • Cultural relativism—in which moral judgments are not true or false but are the deliverances of our cultural or sub-cultural predispositions on ethical matters (from sources as varied as family, religion, voluntary associations, geographic regions, racial groups, gender, national identities, etc.).Footnote 7

Accounts of conscience typically seek to anchor our moral judgments in specifically human capacities: based on philosophical reasoning, social scientific observation, or theological reflection. Plato, for example, used his argument from analogy between the republic (city state) and the human soul to suggest that conscience in individuals is our faculty of knowing how to keep a proper balance between the rational, the passionate, and the appetitive parts of our souls (analogous to the knowledge class, the military class, and the merchant class, respectively, in the macrocosm of the city state). Injustice consists in a disordering of the parts of the soul, similar to the disordering of the parts of a city whose military class pursues the demands of the merchant class and thus makes insatiable demands on the acquisition of new land and new resources. The contributions of prudence and temperance that would be made by the knowledge class get left behind. Such imprudence and intemperance in individuals, of course, can lead to what we often call the seven deadly sins.Footnote 8 The central point for Plato was that there was a pathway to knowledge about matters of ethics and morals, a non-relativistic pathway based on an account of human nature. Socrates modeled this pathway in his dialogues.

Jean Piaget, the Swiss psychologist who in 1932 wrote his classic The Moral Judgment of the Child, thought he saw a universal pattern in child development of three developmental stages leading to a mature conscience: egocentrism (an ethic of self), heteronomy (an ethic of compliance with others’ rules), and autonomy (an ethic based on reasoned principles).

In a series of New Yorker articles that appeared in 1977, Hannah Arendt, a political theorist and philosopher, wrote of the “banality of evil” in contrast to our often-dramatic preconceptions. The context was her observation of Adolf Eichmann during his trial in Jerusalem in the early 1960s:

The question that imposed itself was, could the activity of thinking as such, the habit of examining whatever happens to come to pass or to attract attention, regardless of the results and the specific content of the activity, could this activity be among the conditions that make men abstain from evildoing, or even actually “condition” them against it? The very word “conscience,” at any rate, points in that direction, insofar as it means “to know with and by myself,” a kind of knowledge that is actualized in every thinking process.Footnote 9

Arendt’s idea—that evil resided in a kind of thoughtlessness—was rooted in her conviction that thinking was the key not only to our relationship to ourselves but to our relationships with others. Reminiscent of DeMello (above), Arendt reminded us of our propensity to substitute counterfeits for conscience:

Clichés, stock phrases, adherence to conventional, standardized codes of expression and conduct have the socially recognized function of protecting us against reality; that is, against the claim on our thinking attention which all events and facts make by virtue of their existence. (p. 196)

DeMello would have agreed wholeheartedly with Arendt’s observation that “[a] life without thinking is quite possible, . . . but it is not fully alive. Unthinking men are like sleepwalkers” (p. 195).Footnote 10 Like Plato and Piaget, DeMello and Arendt seem to believe that the faculty of conscience among human beings is universal if only it can be saved from the soul’s disorder (Plato), or underdevelopment (Piaget), or thoughtlessness (Arendt), or lack of awareness (DeMello).

In 1991, Joseph Ratzinger (today Pope Benedict XVI Emeritus) in a widely reprinted essay (Ratzinger 1991), offered an extended reflection on the nature of conscience. He looked to Plato’s theory of anamnesis or recollection for an understanding of the way conscience works in human nature. In Ratzinger’s view, conscience functions like a memory from within in guiding human action, an inner sense of right and wrong, good and bad, virtue and vice that was written in our hearts when we were created.Footnote 11 He might agree with Royce that it offers us a moral intuition born of the moral insight. Ratzinger writes:

This anamnesis of the origin, which results from the godlike constitution of our being is not a conceptually articulated knowing, a store of retrievable contents. It is so to speak an inner sense, a capacity to recall, so that the one whom it addresses, if he is not turned in on himself, hears its echo from within. He sees: ‘That's it! That is what my nature points to and seeks.’Footnote 12

I have found this account of conscience to be satisfying philosophically as a form of intuitionism and theologically as a basis for natural law.Footnote 13 Conscience does often seem like an inner sense analogous to memory, much as Socrates suggested in the Meno that mathematical knowledge is innate and “recollected.” The idea of intuition has a long and well-developed tradition in ethics, especially in the modern period. Theologically, natural law theory views conscience as our sense of the Creator’s intention for human behavior that must underlie positive law. For this reason, it is invoked in such documents as the U.S. Declaration of Independence and the U.N. Universal Declaration of Human Rights as more basic than specific laws in specific societies.

2.1.3.2 In Action

So much for the non-relativistic basis of conscience. It appears to be an inner sense that is not arbitrary, that involves a kind of awakening to our human nature, a remembering of who we are. But once we get in touch with this inner sense, how do we translate it into the complexities of our daily lives? The biblical path might be the ten commandments. Other approaches might be more anthropological, such as the work of Jonathan Haidt in his book The Righteous Mind (2013). For Haidt, conscience is akin to a social intuition found through empirical moral foundations theory in social psychology. He identifies five innate foundations or patterns of processing moral decisions in research on human social groups over many millennia: care/harm, fairness/cheating, loyalty/betrayal, authority/subversion, and sanctity/degradation. Some societies or parts of societies have tended to emphasize one or two of these patterns to the exclusion of the others (e.g., care and fairness to the exclusion of loyalty, authority, and sanctity).Footnote 14 These foundational frames will recur, however, and conflicts will seek to “right the ship” so that all five are represented in some way. Table 2.1 below is the diagram Haidt offers in his book.

Table 2.1 Diagram of the five foundations of moral decision making (Haidt, p. 146)
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My own work—in some ways similar in outcome to the work of Haidt—offers four avenues of ethical analysis: interests, rights, duties, and virtues. It is at the intersection of these avenues that moral insight (and truth) is to be found. The source of these “avenues” is not the theory of evolution or anthropology but instead the history of philosophy and the patterns of moral reasoning that have recurred in the history of ethics. Like Haidt’s approach, the “four avenues” approach seeks to discipline moral dialogue using several distinct “voices” or “points of view” that deserve consideration as a person or group confronts an ethical challenge. I shall have much more to say about the “four avenues” approach in Chap. 5.

The principal take-away from this exposition and comparison is simply that once the human nature of conscience is granted and moral relativism is set aside, the pathways to structures of ethical decision making can be discerned with the help of social science and philosophy. The task is always to bring to bear the moral point of view on the decisions that we make both personally and (as we are about to see) institutionally.

2.1.3.3 Can a Corporation Have One?

University of Chicago philosopher Alan Gewirth, writing three quarters of a century after Josiah Royce, offered an account of the birthplace of ethics or conscience in terms that in many ways echo the moral insight. Gewirth asks us to imagine an “agent” (actor) and a “recipient” in a “transaction” in which the freedom and well-being of the recipient is at stake. This analysis proves very fruitful in addressing the foundations of business ethics (Gewirth 1978). What Royce would call the “realization” of one’s neighbor, Gewirth would call respecting the freedom and well-being of one’s recipient(s).

Ethics, in the views of these two philosophers, derives from (paradigmatically)Footnote 15 relationships between human persons who seek to take each other’s freedom and well-being seriously. Agents need to be accountable to the recipients in their transactions. (See red rectangle within Fig. 2.1 below.)

Fig. 2.1
figure 1

Gewirth’s view of the central idea of ethics

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I have added to the rectangular diagram of the transaction between agent and recipient two other trapezoid-shaped boxes that are intended to represent the varieties of agents and the varieties of recipients in a general theory of ethics. This will allow me later (in Chap. 3) to explore groups or institutions as moral agents and moral recipients. For now, it is enough to observe that the core idea of the field of ethics is the encounter between two human persons, and the insight on the part of each that the other is real and calls for respect.Footnote 16

2.2 Ethics

2.2.1 Three Ways of Thinking About Ethics

Much of my early work in the field of business ethics was spent clarifying the central ideas of business ethics, corporate responsibility, and corporate conscience. The natural way to proceed in this domain seems to me to be to start with the notions of “ethics” and “responsibility” in their unmodified meanings—only then to introduce modifiers like “business,” “corporate,” “organizational,” “institutional,” etc.

One article in which I took this approach early on was “The Concept of Corporate Responsibility” (1983) published in what was then the newly founded Journal of Business Ethics. There I wrote:

Since business ethics is a part of philosophical ethics generally, we expect and find that its divisions correspond to the divisions most frequently made in philosophical ethics, namely, descriptive ethics, normative ethics and analytical ethics (sometimes called metaethics). Each division may be briefly described in the order just given. (p. 3)

Since there are three main divisions within the field of ethics generally—descriptive, normative, and analytical (see Table 2.2)—it seemed reasonable to anticipate that business ethics would have a similar tripartite division.

  • Descriptive ethics is essentially an empirical enterprise. It seeks (psychologically) to describe the moral beliefs and values of a person in a neutral way—“without judgment,” as we say. Or it seeks (anthropologically or sociologically) to describe the moral beliefs and values of past or present groups (families, various associations, subcultures, whole nations, etc.) in a neutral way—again “without judgment”—based on empirical data about the group(s) under study.

  • Normative ethics, on the other hand, is essentially a prescriptive enterprise. It seeks to articulate and defend principles of right and wrong, good and bad, virtue and vice. In contrast to descriptive ethics, normative ethics is not morally neutral and does not seek to avoid “judgment” (although it does seek to avoid being judgmental). Oxford philosopher Mary Midgley (1981) explains the vital, productive role of normative ethics and moral judgment:

    The power of moral judgement is, in fact, not a luxury, not a perverse indulgence of the self-righteous. It is a necessity. When we judge something to be bad or good, better or worse than something else, we are taking it as an example to aim at or avoid. Without opinions of this sort, we would have no framework of comparison for our own policy, no chance of profiting by other people’s insights or mistakes. In this vacuum, we could form no judgments on our own actions.Footnote 17

    Being judgmental, on the other hand, is the trait of being arrogant or disparaging of individuals or groups—of “rushing to judgment” on the basis of very limited evidence. This of course, leads to misjudgment, which prudent persons must avoid.

  • Finally, analytical ethics (sometimes called metaethics) addresses questions about normative ethics, such as: how are we to understand ethical claims, how are we to justify such claims, and how are we to adjudicate moral disagreements both within and between different societies?

Table 2.2 Three ways of thinking about ethics
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2.2.2 Three Levels of Application of That Thinking

It is both a descriptive and an analytical ethical observation to say that within the field of ethics generally, there are three possible levels of agent and three possible levels of recipient that can come under moral scrutiny using the three ways of ethical thinking mentioned above. Moral agents and recipients can be and (paradigmatically) are human persons; but they can also be understood as organized groups or institutions acting or being acted upon in ethically significant ways. A gang, for example, could do violence to an individual or to another gang. A corporation, as an organized group, might produce life-saving pacemakers for individuals with heart diseases.

At a third level, entire social systems (“societies”) can be understood as actors and recipients over historical time or contemporaneously. World Wars are, of course, one sad category of such third level “transactions,” and science fiction writers have imagined societies from distant star systems interacting in friendly or unfriendly ways with citizens of Earth.

By combining these two tripartite distinctions—the three ways of thinking about ethics and the three levels of application—we can discern an “architecture of the field of applied ethics” and depict it as in Fig. 2.2 below. Note that this “architecture” carries with it an important assumption, namely, that it is ethically meaningful to attribute moral agency (and perhaps moral recipiency) to entities “larger” than human beings. This assumption harkens back to Plato’s Republic and will be the subject of Chap. 3 of this book, but first it will be helpful to consider some early resistance to such an idea.

Fig. 2.2
figure 2

Architecture of the field of applied ethics

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2.2.2.1 Not So Fast!

In 1970, two important articles appeared that were aimed at precluding the application of ethical categories to organizational actors like business corporations, one a logical objection and one a moral objection. The first was a philosophical article that attracted my attention because it jarred my moral intuitions! It was written by a respected moral philosopher named John Ladd at Brown University: “Morality and the Ideal of Rationality in Formal Organizations” (1970).Footnote 18 Ladd described corporations (and “formal organizations” generally) as more like machines than like persons with consciences: “If we think of an organization as a machine, it is easy to see why we cannot reasonably expect it to have any moral obligations to people or for them to have any to it” (p. 507). If someone expects corporations “to conform to the principles of morality,” Ladd wrote, “he is simply committing a logical mistake.”

[I]t would be a [logical] mistake to expect a machine to comply with the principles of morality. By the same token, an official or agent of a formal organization is simply violating the basic rules of organizational activity if he allows his moral scruples rather than the objectives of the organization to determine his decision. (p. 500)

In my view, Ladd went too far when he asserted that amorality in business was a matter of necessity rather than a matter of observation, but his arguments should not be overlooked or ignored. While comparing organizations to machines may be excessive, the comparison serves as a useful warning about how managers and employees in corporations can be confused about the morality of their work lives and their private lives.Footnote 19 It is possible that the objectives of the management of an organization do not in fact include moral principles, but such an absence of conscience can and should be viewed as an institutional failure—hardly as an institutional necessity.

Nevertheless, there was a second important article written in 1970 aimed at resisting the demands of ethics and social responsibility applied to business organizations. It was an article by Nobel Laureate Milton Friedman, entitled “The Social Responsibility of Business is to Increase Its Profits” (1970). Friedman argued that special management attention to ethics or social responsibility was redundant and unnecessary. Why? Because the structure of the market itself was such that Adam Smith’s “invisible hand” took the self-interested decisions of businesspersons and corporations and through competition led them to the common good. In fact, Friedman argued, business leaders were ill-equipped to make decisions with social responsibility as the principal motive and therefore should not do so! In other words, whatever ethical values the business system requires are already programmed in, making supplementary efforts unnecessary, even morally suspect.

My response to Milton Friedman in those days was that he was too reliant on market forces to provide all the moral guidance that businesses needed in our society today. Because markets are imperfect, they can incentivize less-than-honest treatment of employees, customers, local communities, and the environment. Unless we believe that external laws and government regulations are the cure-all for such market failures, some amount of congruence is to be expected between the moral sensibilities of individuals and the moral sensibilities of organized groups.

2.2.2.2 Right, Left, and Center

If we “zoom out” a bit from the Ladd/Friedman objections to the idea of corporate conscience, one way of seeing their objections is as follows, in Fig. 2.3.

Fig. 2.3
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Influences on corporate conscience

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Two major historical control mechanisms that have sometimes been thought to provide “surrogates” for corporate responsibility are what we can, following Adam Smith, call the “invisible hand” of market competition or, following a more socialist agenda, the “visible hand” of legal and governmental control of capital. If one is skeptical, as I have been, that either of these two “hands” (invisible or visible) provides a satisfactory surrogate for the consciences of our intermediate institutions, including corporations, then one will resist both models in favor of a third model in which the locus of moral responsibility resides with corporate leadership (conditioned, of course, by both markets and law).

2.2.2.3 History as a Descriptive Argument for “Corporate” Conscience

Another line of argument against those who would resist applying moral predicates to business organizations is that we have in fact done so for nearly two centuries in ordinary discourse, in education, and in law. Granted, such language can be criticized by Ladd as logically inappropriate or by Friedman as ethically reckless, but it seems to have functioned both meaningfully and coherently since the Industrial Revolution.

There have been at least three books in the last 15 years that offer serious scholarship on the history of business ethics and corporate responsibility reaching back into the nineteenth century:

  • From Higher Aims to Hired Hands: The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession by Rakesh Khurana, (Princeton: Princeton University Press, 2007)

  • Corporate Responsibility: The American Experience by Archie B. Carroll, Kenneth J. Lipartito, James E. Post, Patricia H. Werhane, and Kenneth E. Goodpaster (Executive Editor), (Cambridge: Cambridge University Press, 2012) and

  • The Moral Background: An Inquiry into the History of Business Ethics, by Gabriel Abend (Princeton, NJ: Princeton University Press, 2014).

Khurana’s book emphasizes the rise of business schools in universities by analogy with law schools and medical schools—an effort to fashion management as a profession. The authors of Corporate Responsibility: The American Experience, in my opinion as Executive Editor of the project, display the tenacity of Americans regarding corporate responsibility:

During the past two centuries, corporations have demonstrated amazing productivity, innovation, and adaptability—and when they have displayed questionable ethical or social behavior, our persistent response as Americans has been to improve them, either internally or externally, rather than to overturn the system in favor of more socialistic models. Despite challenges to corporate legitimacy, Americans have sought to deepen corporate responsibility.Footnote 20 (Goodpaster 2013)

Gabriel Abend, in his history of business ethics (The Moral Background) applies the language of ethics to individuals and to institutional actors in our social environment.

Finally, the 14th Amendment to the U.S. ConstitutionFootnote 21 has been interpreted by the U.S. Supreme Court as applying to corporations as persons, not just to individual persons. As recently as 2010, in Citizens United v. Federal Election Commission (558 U.S. 310), the U.S. Supreme Court held that the First Amendment prohibits the government from restricting politically independent expenditures by corporations, associations, or labor unions, affirming again the legal rights (and responsibilities) of organizations.

2.3 Conclusion

Let us now revisit, in Chap. 3, the (perhaps) controversial attribution of Gewirth’s categories of “moral agent” and “moral recipient” not only to individual human persons but to organizations and whole social systems as well. This is implied in my account of the Architecture of the Field of Applied Ethics (see Fig. 2.2) and provides the occasion for a new insight beyond the moral insight.