CAN MORAL NORMS BE APPLIED TO society are served in the most socially beneficial ways.
CORPORATIONS? To be profitable, each firm has to produce only what
the members of the society are served in the most
Two views have emerged in response to the question
socially beneficial ways.
of whether moral notions can be applied to
corporations.
- A corporation is morally responsible for THE LOYAL AGENT’S ARGUMENT
something only if some of its members are
1. As a loyal agent of his or her employer, the
morally responsible for what happened; that
manager has a duty to serve the employer as
is only if they acted with knowledge of their
the employer would want to be served.
own free will.
2. An employer would want to be served in
- The central point is that when we apply the
whatever ways will advance his or her
standards of ethics to business, we must not
interests.
let the fiction of “the corporation” obscure
3. Therefore, as a loyal agent of the employer,
the fact that human individuals control what
the manager has a duty to serve the employer
the corporation does.
in whatever ways will advance the employer’s
- So, these humans are primary carriers of
interests.
moral duties and responsibilities that we
attribute in secondary sense to the
corporation.
- In the loyal agent’s argument, we replace the
employer with government, and manager
with officer.
QUICK REVIEW
- First, the argument tries to show that ethics
- One view says corporations, like people, act does not matter by assuming an unproved
intentionally and have moral rights and moral standard. The assumed standard is “the
obligations, and are morally responsible. manager should serve the employer in
(companies act as moral agents) whatever way the employer wants to be
- Another view says it makes no sense to served.” To be acceptable, then, the standard
attribute ethical qualities to corporations since would have to say something like this, “the
they do not act like people but more like manager should serve the employer in
machines, only humans can have ethical whatever moral and legal way the employer
qualities. (companies act as machines) wants to be served.”
- A middle view says that humans carry out the - Second, the loyal agent’s argument assumes
corporation’s actions so they are morally that there are no limits to the manager’s
responsible for what they do and ethical duties to serve the employer.
qualities apply in a primary sense to them; - An agent’s duties are defined by what is called
corporations have ethical qualities only in a the “law of agency.” Law of agency is that
derivative sense. part of commercial law that specifies the
duties of persons —“agents”— who agree to
act on behalf of another party —the
1.2.5: OBJECTIONS TO BUSINESS ETHICS
“principle.”
1. In a free market economy, the pursuit of - By freely entering an agreement to act as
profits will ensure maximum social benefit, so someone’s agent, then, a person accepts a
business ethics is not needed. legal and moral duty to serve the client loyally,
2. A manager’s most important obligation is obediently, and in a confidential manner as
loyalty to the company, regardless of ethics. specified in the law of agency. But, the law oof
3. As long as companies obey the law, they will agency states that when determining whether
do all that ethics requires. a client’s or an employer’s orders are
“reasonable” and should be followed, the
IN SHORT, PROFIT BENEFITS ALL. Some have argued agent must take “business professional ethics”
that in perfectly competitive free markets, the pursuit into account. The law of agency specifically
of profit will by itself ensure that the members of indicates than an agent never has a duty too
CORPORATIONS? To be profitable, each firm has to produce only what
the members of the society are served in the most
Two views have emerged in response to the question
socially beneficial ways.
of whether moral notions can be applied to
corporations.
- A corporation is morally responsible for THE LOYAL AGENT’S ARGUMENT
something only if some of its members are
1. As a loyal agent of his or her employer, the
morally responsible for what happened; that
manager has a duty to serve the employer as
is only if they acted with knowledge of their
the employer would want to be served.
own free will.
2. An employer would want to be served in
- The central point is that when we apply the
whatever ways will advance his or her
standards of ethics to business, we must not
interests.
let the fiction of “the corporation” obscure
3. Therefore, as a loyal agent of the employer,
the fact that human individuals control what
the manager has a duty to serve the employer
the corporation does.
in whatever ways will advance the employer’s
- So, these humans are primary carriers of
interests.
moral duties and responsibilities that we
attribute in secondary sense to the
corporation.
- In the loyal agent’s argument, we replace the
employer with government, and manager
with officer.
QUICK REVIEW
- First, the argument tries to show that ethics
- One view says corporations, like people, act does not matter by assuming an unproved
intentionally and have moral rights and moral standard. The assumed standard is “the
obligations, and are morally responsible. manager should serve the employer in
(companies act as moral agents) whatever way the employer wants to be
- Another view says it makes no sense to served.” To be acceptable, then, the standard
attribute ethical qualities to corporations since would have to say something like this, “the
they do not act like people but more like manager should serve the employer in
machines, only humans can have ethical whatever moral and legal way the employer
qualities. (companies act as machines) wants to be served.”
- A middle view says that humans carry out the - Second, the loyal agent’s argument assumes
corporation’s actions so they are morally that there are no limits to the manager’s
responsible for what they do and ethical duties to serve the employer.
qualities apply in a primary sense to them; - An agent’s duties are defined by what is called
corporations have ethical qualities only in a the “law of agency.” Law of agency is that
derivative sense. part of commercial law that specifies the
duties of persons —“agents”— who agree to
act on behalf of another party —the
1.2.5: OBJECTIONS TO BUSINESS ETHICS
“principle.”
1. In a free market economy, the pursuit of - By freely entering an agreement to act as
profits will ensure maximum social benefit, so someone’s agent, then, a person accepts a
business ethics is not needed. legal and moral duty to serve the client loyally,
2. A manager’s most important obligation is obediently, and in a confidential manner as
loyalty to the company, regardless of ethics. specified in the law of agency. But, the law oof
3. As long as companies obey the law, they will agency states that when determining whether
do all that ethics requires. a client’s or an employer’s orders are
“reasonable” and should be followed, the
IN SHORT, PROFIT BENEFITS ALL. Some have argued agent must take “business professional ethics”
that in perfectly competitive free markets, the pursuit into account. The law of agency specifically
of profit will by itself ensure that the members of indicates than an agent never has a duty too
