Business ethics for the future

I'm Don Mayer. I teach at the University of Denver, and this is lecture eight, Business Ethics for the Future.

In this final lecture, I will refer back to some key points from the first seven lectures about business ethics and what has been called corporate social responsibility. Humanity faces a number of key issues for the future: climate change, growing inequality, the impact of artificial intelligence, rampant disinformation on social media, and an evident decline in democratic values around the world. These issues will not be addressed effectively without ethical leaders in business and in politics, and with ethically minded citizens that can discern truth from falsehood and reject false narratives about themselves, the market, and the public good.

To begin with, while most people see ethics as highly subjective, there are certain constants in the way that others will judge you or your business. Your reputation matters, and you can count on most people to judge you more critically than you judge yourself. The core values of trustworthiness, respect, caring, fairness, responsibility and citizenship are deemed important by most people in the United States and other industrialized democracies. Those who deem ethics to be hopelessly subjective overlook the fact that humans are social creatures who have thrived on this planet primarily through cooperation. If you want others to cooperate with you, you must demonstrate that you are trustworthy and care about others in ways that your core values would have you act. We also know that legal compliance is not the same as ethical excellence, and that people's goodwill is a valuable asset for any business. That goodwill depends on your good conduct. You cannot be ethical just by obeying the laws. At many times and in many places, the laws do not reflect the will of the people, but may be arbitrary and unfair, created and maintained by those with superior wealth and power. Complying with laws that allow exploitation of other human beings is no claim to ethical excellence. The US divisions of Cargill, ADM, and Nestlé all profit from slave labor in the Ivory Coast, and it is legal for them to do so. Many companies legally undermine competitive free markets by seeking and using monopoly power, fixing prices, polluting the air, ground and water, and rent seeking, asking for all kinds of favors from local, state, and federal governments. We also know that making huge profits is not the same as real success, in terms of contributing to the public good. A good business will have a purpose that keeps everyone in the organization focused on more than just making money. Paul O'Neill's Alcoa, for example, stands in stark contrast to the Wall Street securitizers who were okay with selling a toxic investment, knowing that they would not have to live with the consequences. Acting on the core values of honesty, caring, responsibility and fairness would have made this unthinkable and undoable. But the ethos of the business world, not the ethics, often does put profits before people. Short-termism is everywhere in our personal lives, and especially in businesses that are tethered to the number for quarterly earnings calls. Living in the short term can blind us to our long-term interests, individually and corporately. Many in business spend most of their time putting out brush fires, patching things up, just getting by, when long-term thinking would require investing time and money in long-term goals. Robert Jackall's example of the coking battery speaks volumes. It flips around the old saying, "Never put off till tomorrow what you can do today." In his example, procrastination actually becomes an internal political strategy driven by short-termism. Even in this example, shareholders are shortchanged in the long run by those short-term motivations. Silence is not golden, as the common practice of killing the messenger or the whistle-blower will sweep difficult issues under the carpet. Organizations where no one dares speak the truth to power are morally-deficient and usually financially inefficient as well. Corporate social responsibility has sought to nudge businesses into a more active social and environmental awareness. That corporations are still tethered to the old narrative that profits is the only metric that matters, and that we can get there by rationally maximizing the self-interest of the corporation. Yet behavioral psychology gives us some key insights