Sunday, October 29, 2017

Best Book Ever on Business Ethics

A book on business ethics must be a very short book.

— Arthur Dobrin

An old joke goes: A businessman is counting the daily receipts and observes that a customer has mistakenly paid $1,000 instead of $100. It sinks in with the businessman that he faces an agonizing ethical question: Should he tell his partner?

While most B-schools require students to take ethics courses, there's no evidence the training works, if you read the news of corporate fraud.

Students in those courses must read professors' papers with titles such as Managing for Stakeholders, A Note on Rights, and Ethics at the Frontier.

But the best book on business ethics for my money is, thankfully, a very short book (130 pages). 

It's titled Groundwork of the Metaphysics of Morals

Written by philosopher Immanuel Kant in 1785, Groundwork argues that making the right ethical choice is easy, if you know how to make a rational decision.

When you make any decision, you act on a "maxim," Kant says. 

If you trade stocks at high frequencies just to earn rebates, for example, it's because you value your own gain above that of your clients. "I love money" is your maxim. 

All decisions have a maxim behind them.

Morality is merely a set of maxims. But moral maxims differ from other maxims (like valuing money) because they apply equally to everyone.

According to Kant, your choice between two actions, one right and one wrong, is easy. You just have to ask: "Would I want everyone to make the same choice?" If you can answer "Yes," it's the right one.

Kant calls such a maxim a Categorical Imperative. You can’t take or leave a Categorical Imperative as you want in the moment. Making a choice you'd deny to everyone else isn't selfish; it's irrational.

Like reason itself, morality is universal ("categorical"). Neither depends on what might satisfy your selfish desires; and neither ever stops applying to you—even when you don’t care.

Here's a delightful podcast on Kant's Categorical Imperative, courtesy the BBC.
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