Business Philosophy

by John Wyatt
copyright 2002

Since my mother was an honest woman, I lacked those material benefits enjoyed by the children of thieves and wealthy businessmen. Does this mean profit and virtue are incompatible? As I matured, I decided that if philosophy is applicable to business then it should be able to answer my question. The importance of reconciling virtue with profit was illustrated during one performance review.

I hate performance reviews, and this was one of the worst. My boss explained the need to further reduce costs on our contract, though we were already well below budget. The additional profits would feed our bonus pool. He revealed places where I could cut corners, and he assured me that we could always get contracts for upgrades. My response was “It’s only money.” The ensuing silence showed the magnitude of my error. I had blasphemed against his god.

This company measured virtue in dollars. We were already below budget, but a little profit was less virtuous than a lot of profit. My boss showed me his own review, which was simply a formula calculating the increase in profits over last year. The company had no other criteria for judging the worth of its management.

Our customer, the U.S. Government, had their own criteria. They judged our virtue by our adherence to the law, as measured by the paperwork. Less than the required percentage of female and minority employees could have serious repercussions. Surprisingly, failure on a contract, while embarrassing, was not immoral. The next contract still goes to the lowest bidder, regardless of prior performance. I expect society would want a higher standard of ethical behavior on our part, which raises these questions: what is virtue, and who should it serve?

Plato would tell us that virtue is having the three parts of our souls in harmony: our bodily appetites, our spirited drive, and our reason. Aristotle would tell us that virtue is the mean between the vices of excess and deficiency. Hegel might say that I had a higher duty to the company than to my personal ethics. John Stuart Mill would say that I should weigh the greatest benefit for the greatest number. Without a healthy profit, the company may not be able to survive difficult times, resulting in the loss of many jobs. Ayn Rand would say that love of money is the root of all good. Most religions, however, say that money is the root of all evil. The Tao would say that any virtue that can be measured is not a virtue; therefore virtue and profits are mutually exclusive. I would say that those things we hold dearest we elevate to god-hood, then accept as Universal absolutes – making God in our own image. With all these conflicting definitions of virtue, how can philosophy possibly answer my question: what is virtue and who should it serve?

What I have learned most from philosophy is that I must seek my own answers to such questions. I believe that companies and governments are illusory;  they are like the shadows in Plato’s cave. In corporate law, a corporation is an artificial person – an illusion created for legal purposes. People are the real objects casting the shadows. People come and go, but the job descriptions remain and those who fill them bring their own skills and beliefs. At the top is the Ideal Form – the purpose for which the company exists. This purpose is to satisfy the customer; therefore I believe that delivering poor quality simply to increase profit is unethical.

Some will say that individuals should subordinate their ethics to corporate ethics, but that implies that the shadows on the cave wall are higher forms than the objects casting the shadows. We must not cast these shadows then call them our Gods, subordinating our personal ethics to the group illusion. I think that Plato’s tripartite soul provides a good analogy: to be virtuous a company must balance its appetite for profit, its spirit of competition, and its reasoning ability to chart the best course for all of its stakeholders. In this context I believe that, in a socially responsible company, profit and virtue can co-exist.

In the over two thousand years since Euclid, questions of geometry and mathematics have always yielded the same answers. One plus one always equals two. The shortest distance between two points is always a straight line. Ethics is not so exact. In problems of ethics the same question will not always yield the same answer. I asked if profits and virtue are incompatible, but each person must answer that question for themselves; and the answer says more about the person than it does about the question. In life, the journey towards knowledge never ceases until we stop asking questions.