Thursday, December 27, 2007

Ayn Rand’s Revolutionary Ethics, Pt. 2

Copyright © 2007, Barry L. Linetsky, All Rights Reserved

Ayn Rand set a scientific footing for ethics by demonstrating an unbreachable bond between ethics and reality. The Randian paradigm shift – I would call it a revolution - in ethics is her proof that there is an objective standard by which one judges what is good or evil. That standard is “man's life, or: that which is required for man’s survival qua man" (P. 25).

What man’s life requires is knowable in reality, and reason is required to figure it out. It's the role of philosophy to provide understanding of reality and man’s place in it, and to provide practical guidance for living happily and successfully. Ethics requires the discovery of the nature of man and the conditions that allow him to flourish according to his nature. In a famous formulation, Rand wrote: "Since reason is man's basic means of survival, that which is proper to the life of a rational being is the good; that which negates, opposes or destroys it is the evil” (P. 25).

Because man is devoid of the survival instincts possessed by most other animals, man’s survival requires that he function as a conceptual consciousness, applying reason and purpose to direct his actions toward survival goals. Everything man needs has to be discovered by a human mind and produced by human effort.

This is an existential fact that applies to each of us. We each must discover knowledge and act to bring about and sustain our own survival. This leads to two essentials of the method of survival proper to a rational being, says Rand: thinking and productive work. (As an aside, business is a way of organizing to make the most of both.)

To succeed at the task of survival, man has to choose his goals and values in the context of a lifetime. The longer the range of a person's thinking, the better he can plan and prepare for contingencies. Failure to think long range for oneself leaves a person vulnerable and dependent on the thinking of others, and leaves one’s fate to chance. When people fail to take control of their own life and responsibility for their own welfare, they are left to depend on either the charity of others, or worse, the looting of others. Rand wrote: "Man has to be man by choice - and it is the task of ethics to teach him how to live like man" (P. 27).

Rand holds each person’s life as the standard of value, and his own life as the ethical purpose of every individual life (P. 27). For Rand, a standard is an abstract principle that applies to every individual person. But every individual person has to live his or her own life by applying this principle to the specific purpose of living a life proper to a rational being. Rand wrote: "Man must choose his actions, values and goals by the standard of that which is proper to man - in order to achieve, maintain, fulfill and enjoy that ultimate value, that end in itself, which is his own life" (P. 27).

Rand defined virtue as the act by which one gains and/or keeps values, and she identified Rationality as man's basic virtue and the source or all other virtue. She identified irrationality - the willful and purposeful rejection of reason – as man’s greatest vice. She wrote that irrationality is the rejection of man’s means of survival. It is anti-mind and anti-life because for a man to reject reason - his only tool of survival as a conceptual being – is to set himself on a blind course of self-destruction (see p. 28).

Placing rationality as the central tenet of ethics – as the primary virtue – is merely the identification of facts about reality and about us as human beings. Reason is man’s primary means of survival. It is a fundamental and non-optional requirement of his life that man understand what this requires of him, and that he puts forth the mental effort required to learn to excel at its application.

For Rand, the purposeful pursuit of rationality and the disciplined application of reason to achieve one’s chosen ends against all obstacles has been so rare historically, that it represents for her the heroic in man. Rand’s personal heroic achievement resides in the dedication of her life’s work to defining and demonstrating why this is so.

Her research and thinking on what constitutes virtue for man and her identification of the primary virtues and their functions, led her to overturn and refute all prior attempts to define a valid ethical code by non-rational means. Her unique methodology of taking an inductive and deductive scientific approach to philosophy led her to a unified philosophic system that is Aristotelian in spirit, and which culminates in a rational, individualistic, integrated, this-worldly code of ethics. Rand firmly shifted the basis of a philosophic defense of ethics from altruism to a form of enlightened egoism. She called her total system of philosophy Objectivism, and referred to the Objectivist ethics as a morality of “rational self-interest – or rational selfishness” (P. xi).

While her methodological approach has been vilified and swept aside by those who believe that all virtue resides in altruism and personal sacrifice, and reject out of hand her premise that facts and value are inseparable, it remains that fifty years after the publication of her magnum opus, Atlas Shrugged, there has yet to be a reasoned and valid refutation of her philosophy.

Those most likely to criticize Rand as an original thinker and as making an important contribution to our understanding of the field of ethics are those who aren’t seriously seeking truth and knowledge in the field of ethics, but rather have an agenda to hijack the normative language of ethics as a means to emotionally coerce others into agreeing with the social or political agenda they are advancing (usually an agenda that involves the collecting of the sacrifices of others - often through the initiation of physical force or deceit - to pursue their own hidden motives under the guise of benefiting “society” or God).

It’s ironic that those least able to defend their own agenda’s by means of rational arguments are the people most likely to disparage an author while failing to address serious legitimate challenges to their ethical ideas. Far too many thinkers dabbling in the subject of business ethics brush aside the serious challenges that Ayn Rand posed fifty years ago because facing those challenges are felt to be either unnecessary, or insurmountable. It is unfortunate that Rand’s work in ethics has been largely ignored through intellectual dishonesty and evasion in the hope that the advocacy of erroneous conclusions can remain valid. Nothing could be more irrational, and, frankly, more unethical, than such an evasion of reality.

Friday, December 21, 2007

Ayn Rand's Revolutionary Ethics, Pt. 1

Copyright © 2007, Barry L. Linetsky, All Rights Reserved

Ayn Rand was the first philosopher to attempt to establish a wholly scientific, inductive, bottom-up approach to ethics. She first presented her paradigm-shifting theory of rational egoism fully in the now famous 1957 novel Atlas Shrugged, in fictional form, but outlined her approach formally in a paper delivered in 1961 at a University of Wisconsin Symposium On "Ethics In Our Time," in a paper titled "The Objectivist Ethics." It is available in her book The Virtue of Selfishness. It should be required reading for anyone engaging in a discussion of ethics today because in this seminal work, Rand redefined the terms of any serious discussion of ethics. (All page references in this essay are to the Signet paperback Centennial Edition, ISBN 0-451-16393-1.)

Rand pursued an intellectual quest to establish a rational and objectively demonstrable answer to the question of why man needs a code of values and a means to identify valid moral principles. No philosopher before her had succeeded in this task.

“Most philosophers," wrote Rand, "took the existence of ethics for granted... and were not concerned with discovering its metaphysical cause or objective validation” (P. 14). They either tried to establish good or evil, right and wrong, by appeals to either God or Society, thereby taking a theological or sociological approach rather than a scientific approach aimed at establishing objective grounding for ethics as a science.

Ethics as a science, writes Rand, deals with discovering and defining a code of values to guide man’s choices and actions - the choices and actions that determine the purpose of his life. Rand contended that the starting point of any investigation into ethics had to begin with the question of whether and why man needs a code of value at all. It is only then that one can proceed to the central issue of ethics by answering the question: "What particular code of values should man accept?”

Why man needs a code of values is a scientific question for Rand because to answer it, one must appeal to reality. Rand challenged herself to identify a rational and objectively demonstrable approach to ethics, in contrast to the dominant approach which takes the rationale for ethics for granted as a historical fact. Rand wrote: "In the sorry record of the history of mankind’s ethics - with a few rare, and unsuccessful, exceptions - moralists have regarded ethics as the province of whims, that is: of the irrational." (P. 14)

For Rand, it didn’t matter whether one tried to establish the basis for ethics on the will of god or the will of society. Neither, she argued, could be justified by an appeal to reason. "Most philosophers," she wrote, "have now decided to declare that reason has failed, that ethics is outside the power of reason, that no rational ethics can ever be defined, that in the field of ethics - in the choice of his values, of his actions, of his pursuits, of his life’s goals - man must be guided by something other than reason” (P. 15).

That ‘something’, she wrote, was faith, instinct, intuition, revelation, feeling, urge, wish or whim. She defined whim as "a desire experienced by a person who does not know and does not care to discover its cause" (p. 14). "Whatever else they may disagree about," she concluded, "today’s moralists agree that ethics is 'a subjective issue and that the three things barred from its field are: reason – mind - reality" (P. 15).

Respect for, and adherence to reason, mind and reality are prerequisites of science and a scientific approach to living. Those who reject reason in ethics affirm their position that reason and facts have no place in a discussion about what values are, why man needs them, and how man should apply them to achieve his goals. Such people divorce facts from value, placing the former (facts) in the scientific realm, and the later (values) in a place where reason, mind and reality have nothing to contribute. For these folks, value, which is the subject matter of ethics, is a matter of faith or personal feelings or whims, a realm to which they assert that reason and reality have nothing to contribute.

For Rand, reason is the faculty that identifies and integrates the material provided by our senses. It operates by the process of thinking. The faculty of reason has to be exercised by choice. Thinking is not an automatic function. To say that ethics is beyond the realm of reason is to assert that our senses and the world with which they interact have nothing to contribute to our understanding of the subject matter that ethics pertains to. It is to assert that ethics is beyond reality. It is to assert that ethics derives from, or pertains to a mystical or extra-sensory realm beyond the grasp of normal human experience. It removes thinking – reason and logic - as a valid methodology for ethical discovery and the pursuit of the right and the good. It removes the illumination of reason from the realm of man’s pursuit of values and the achievement of the good.

If reason and thinking are excluded as valid methodologies of ethical inquiry and discovery, all that's left are methodologies that reject the validity of reason and man's mind, namely, some variation of mysticism or nihilism.

Reason and thinking are required by man to focus his awareness - his consciousness - on reality and deal with it so he can take action and provide for his survival as an individual. Everything a person does to sustain life requires thought, and though is not infallible. We have the responsibility to initiate thinking to acquire and apply knowledge to help us define and pursue our values and successfully live our lives. I will quote Rand at length because it is critical to understand why she holds that reason and ethics are inseparable. She writes:

"[Man] has to initiate [a process of thought], to sustain it and bear responsibility for its results. He has to discover how to tell what is true or false and how to correct his own errors; he has to discover how to validate his concepts, his conclusions, his knowledge; he has to discover the rules of thought, the laws of logic, to direct his thinking. Nature gives him no automatic guarantee of the efficacy of his mental effort.
Nothing is given to man on earth except a potential and the material on which to actualize it. The potential is a superlative machine: his consciousness; but it is a machine without a spark plug, a machine of which his own will has to be the spark plug, the self-starter and the driver; he has to discover how to use it and he has to keep it in constant action. The material is the whole of the universe, with no limits set to the knowledge he can acquire and to the enjoyment of life he can achieve. But everything he needs or desires has to be learned, discovered and produced by him – by his own choice, by his own effort, by his own mind.
A being who does not know automatically what is true or false, cannot know automatically what is right or wrong, what is good for him or evil. Yet he needs that knowledge in order to live. He is not exempt from the laws of reality, his is a specific organism of a specific nature that requires specific actions to sustain his life. He cannot achieve his survival by arbitrary means nor by random motions nor by blind urges nor by chance nor by whim. That which his survival requires is set by his nature and is not open to his choice. What is open to his choice is only whether he will discover it or not, whether he will choose the right goals and values or not. He is free to make the wrong choice, but not free to succeed with it. He is free to evade reality, he is free to unfocus his mind and stumble blindly down any road he pleases, but not free to avoid the abyss he refuses to see. Knowledge, for any conscious organism, is the means of survival; to a living consciousness, every “is” implies an “ought.” Man is free to choose not to be conscious, but not free to escape the penalty of unconsciousness: destruction. Man is the only living species that has the power to act as his own destroyer – and that is the way he has acted through most of his history.
What, then, are the right goals for man to pursue? What are the values his survival requires? That is the question to be answered by the science of ethics. And this, ladies and gentlemen, is why man needs a code of ethics.” (P.p. 23-24).

Rand’s argument leads to the conclusion that "Ethics is an objective, metaphysical necessity of man’s survival - not by the grace of the supernatural nor of your neighbors nor of your whims, but by the grace of reality and the nature of life" (P. 24).

Monday, December 10, 2007

Ethics 50 Years After Atlas Shrugged

Copyright © 2007, Barry L. Linetsky, All Rights Reserved

A major paradigm shift in the field of philosophy, including ethics, came in the middle of the 20th Century with the publication of the novel Atlas Shrugged by American philosopher Ayn Rand. This year marks the 50th Anniversary of the publication of Atlas Shrugged, and hence it is timely to revisit her revolutionary perspective on ethics and the challenge her philosophy poses to those who argue for particular ethical viewpoints with disregard for, or ignorance of, her foundational paradigm-shifting philosophic arguments.

If you are seriously interested in business ethics, and have not yet read Atlas Shrugged, you are doing yourself an injustice. If you have heard about Ayn Rand and have not read Atlas out of prejudice, then you are committing a grave intellectual error. The bottom line is that today, any serious discussion of ethics must, at some point, deal with issues Rand raises not only about ethics, but about other related philosophic issues about reality, knowledge, and politics. If one is truly seeking ethical guidance in the form of a rational, principled philosophy, consideration of Ayn Rand’s arguments are foundational, even if in the end one chooses to reject them.

What Rand offered in Atlas Shrugged was a complete rethinking of philosophy as a discipline and its role in human life in all its dimensions, including science, economics, business, politics, and psychology. What is even more astounding is that she presented her discoveries and formulations in the form of art – fiction – which she later followed up in her non-fiction philosophic essays. Her great achievement was her ability to reformulate two thousand years of western philosophy in a way akin to sweeping out the trash that settled into dark corners and cluttered up people’s minds.

Rand was able to challenge to the core a plethora of widely embraced cultural “truths” and paradigms that have been leading thinkers away from truth, understanding, achievement and well-being. In the face of a world gone mad by its acceptance of irrationality, and in the face of an intellectual culture that had virtually abandoned reason as a valid means of acquiring knowledge, Rand offered a rational and meaningful alternative to millions of people where theretofore no viable alternative existed.

Against a vision of nihilism and sacrifice and tribal bloodshed as man’s only hope for survival, she offered a different vision of personal and social renaissance through the efficacy of the human mind to know reality, to reach valid conclusions through reason and logic, to understand the requirements of personal happiness, to achieve that state through the discovery and application of objective ethical principles, and to live in a state of freedom through the organization of individuals into a society that understands the need for, and respects the principle of individual natural rights.

What differentiated Rand from others was that she didn’t just assert her vision and the premises that underlie its foundation. She offered proof – proof that any person, with appropriate effort, could understand and think through for themselves. What she offered was a competing, unified theory of rational philosophic principles that had a stronger theoretical and practical appeal to that which existed (and still exists) as an alternative. She presented philosophy, including ethics, not as a set of disconnected mystical or arbitrary ideas to be accepted on faith or by appeal to experts, nor as interesting irresolvable paradoxes and unanswerable questions to aimlessly ponder, but as a rational, coherent, objective system of thought grounded in reality and logic, with the purpose of serving the well-being of each individual. She demonstrated that man requires freedom of thought and action to live happy and successful lives proper to human beings, as against others who disingenuously argued that it is natural and right for man to live under the authoritarian rule of others who claim through mystical or intuitive means to know what is best, and that ethics requires conformity to authority and the sanctioning of coercion and personal sacrifice to achieve the ends of the dictatorial-minded.

Atlas Shrugged is a world-shaking book about philosophical ideas in action (see http://en.wikipedia.org/wiki/Atlas_shrugged for an overview). While most people have not heard of the book nor its author, that’s not to be taken as an indication of its popularity or its influence. A 1992 U.S. Library of Congress survey found it to be the most influential book in the United States, second only to the Bible. In 2006, fifty years after its publication, sales of the novel in bookstores topped 130,000 copies! When I checked amazon.com on November 14, 2007, the paperback version ranked an astounding #330 in books.

Today, more than ever, every person that takes business seriously and is searching for rational philosophic guidance against the forced imposition of the irrational, needs to read and heed the philosophic wisdom embedded in Atlas Shrugged.

Tuesday, November 27, 2007

What Is Ethics? It's Not Obvious To Most.

Copyright © 2007, Barry L. Linetsky, All Rights Reserved

Ethics is the branch of philosophy that studies and defines a code of values to guide human choices and actions in the pursuit of life. It begins by asking the question as to why man needs values, defines a standard of value, and then defines a code of values or ethical principles to guide the action of individuals in pursuit of their own life.

As such, ethics is a requirement for living a successful life. To live the kind of life proper to Man, one must pursue values that support one’s life and well-being. It is the role of ethics to provide rational guidance in this realm, so that each person can achieve, fulfill and enjoy that ultimate value, that end in itself, which is his own life.

In her 1961 essay “The Objectivist Ethics,” American philosopher Ayn Rand defined ethics this way: “What is morality or ethics? It is a code of values to guide man’s choices and actions – the choices and actions that determine the purpose and course of his life. Ethics, as a science, deals with discovering and defining such a code.”

For Rand, it was the role of philosophers to define and rationally defend such a code. The validity of a code of ethics was, for her, a matter of life and death not only for individual people, but for mankind as a species. She was irate at the failure of philosophers in this regard, and made it her mission to challenge the lethargy and status quo of academia.

Ethics has been contentious through the ages, not because of a disagreement that Man requires a set of guiding principles to define good and evil and guide his choices and actions, but because leading thinkers have not agreed on what the standard of value should be. In general two choices have been offered: the standard of value is the will of god (or other metaphysical entity, real or imagined); or the standard of value is Man’s life.

It is this disagreement about the standard of good and evil, right and wrong, which leads to major disagreements in ethics. Without the ability to discuss the grounds for different viewpoints in a rational way, no acceptable peaceful resolution can be found. The wider framework for a reasoned and scientific discussion of these more fundamental issues is to be found in the discipline of Philosophy. To the extent one is committed to appeal to god rather than reason, one deals in the realm not of philosophy, but of theology. In this realm, faith, not reason, determines the standard of value.

Rand defined philosophy as the science that studies the fundamental aspects of the nature of existence, man, and of man’s relationship to existence. Unlike the natural sciences that deal with particular aspects of existence, philosophy deals with wider aspects that pertain to everything that exists. At its best, philosophy is a unifying science of understanding.

The task of philosophy, wrote Rand, “is to provide man with a comprehensive view of life. This view serves as a base, a frame of reference, for all his actions, mental or physical, psychological or existential. This view tells him the nature of the universe with which he has to deal (metaphysics); the means by which he is to deal with it, i.e., the means of acquiring knowledge (epistemology); the standards by which he is to choose his goals and values, in regard to this own life and character (ethics) – and in regard to society (politics); the means of concretizing this view is given to him by esthetics.” (From her essay “The Chickens’ Homecoming,” quoted in The Ayn Rand Lexicon, p. 359.)

Here are a couple of other definitions of ethics to set the context for further discussion.

The Shorter Oxford English Dictionary defines ethics as the “science of morals.” It defines morals as “pertaining to the distinction between right and wrong, or good and evil, in relation to actions, volitions, or character,” and “concerned with virtue and vice, or the rules of right conduct, as a subject of study.”

The Mirriam-Webster On-line Dictionary defines ethics as “a set of moral principles: a theory or system of moral values.”

An online business glossary defines ethics as: “A system of principles based on ideas of right and wrong, whether true or false; rules of practice in respect to human actions”
(Small Business Glossary, http://www.smallbusinessnotes.com/glossary/defethics.html).

Author Elaine Sternberg, in her book Just Business: Business Ethics in Action, defines ethics this way: “As commonly used, ‘ethics’ and ‘morals’ refer variously to moral codes, to the actions enjoined by them, and to the study of either or both…. When used more strictly, however, the term ‘ethics’ refers simply to a branch of philosophy, that which seeks to identify and clarify the presuppositions of human conduct having to do with good and evil.”

My view is similar to that expressed by Sternberg.

Ethics is, first and foremost, the branch of philosophy that identifies principles to guide human actions as we pursue our lives. As a branch of philosophy, ethics must adhere to the principles of the discipline, and those partaking in the subject must adhere to the basic requirements imposed by reality and reason.

As a normative science, ethics begins with observations of reality combined with logical reasoning to provide prescriptive guidance for man to achieve goals and ends appropriate to his nature as Man. In essence, it provides mankind with intellectual ammunition to help us determine, at the highest level, what’s for us and against us in our struggle with nature to live our lives successfully. That which can be shown in principle to support successful and prosperous human life is ‘the good’ and that which can be demonstrated to be harmful represents ‘evil.’ The standard of value is human life.

It should be pointed out that not everybody agrees that ethics is a normative science and that it refers to a branch of philosophy. As Sternberg indicates, there is common usage around the term “ethics” that is descriptive and non-normative. For example one could research and report on the normative practices of various groups of people or cultures and speak about their ‘ethics.’ Hence, talk of ‘business ethics’ can be both prescriptive (business leaders should behave this way) and descriptive (our survey shows that most business leaders behave this way). This latter approach is how the humanities typically approach ethics, and can be seen in areas such as anthropology, sociology, or history. This is what might be called a ‘journalistic’ approach to ethics, as differentiated from ethics proper.

Still, it is only right that if you are going to profess to be an ethicist or expert in the realm of ethics, such as business ethics, that you provide a definition of, or delineate what it is you are talking about. I don’t trust people who want to tell me what I must do to be ethical unless they can demonstrate why such action is ethical and why other actions are unethical. I want to know what the standard of value is and what ethical principles are involved. I want to assess the real world consequences of any recommended moral prescriptions. My advice to everyone is: be wary of those practitioners who provide self-serving, non-objective definitions of ethics, and who cannot demonstrate the objectivity of their prescriptive judgments. Don’t be bullied by ethical language and the desire to be perceived as ‘ethical’ in the eyes of others. Ethics is open to human knowledge and human judgment, and, if one pursues it as the science which it is, then ethical conclusions are subject to reasonable proof.

Any discussion that takes us from what is the case to what ought to be the case, if it is not merely someone’s opinion but to which we intend to give the weight of serious principled guidance in pursuit of the good, takes us into the realm of ethics and philosophy, and the full weight of these disciplines come into play.

Wednesday, November 07, 2007

What Is A Business? It's Not Obvious To Many.

Copyright © 2007, Barry L. Linetsky, All Rights Reserved

If we are going to talk about business ethics, we need to begin by understanding what business is. While it may seem intuitively obvious that everybody knows what business is, this isn’t the case. In fact, much of the controversy and confusion about business ethics takes place because business ethics advocates don't know what business is. Often what they are ranting about has very little to do with business ethics. That’s why it is important to begin at the beginning.

To get a good sense of what business is and pertains to, the dictionary is always a good place to start.

The pertinent definition of business from The Shorter OED is: “Trade, commercial transactions or engagements,” and “A commercial enterprise as a going concern.”

Commercial is defined as: engaged in commerce, trading; Of or relating to commerce or trade; Viewed as a matter of profit and loss.

Commerce is defined as: Exchange between men of the products of nature and art; buying and selling together; exchange of merchandise, especially on a large scale between different countries or districts.

Profit is defined as: The advantage or benefit of or resulting from something; The pecuniary gain in any transaction; the excess of returns over the outlay of capital.

Loss pertains to losing and to lose, and in the context of business, to spend unprofitably; to waste, get no return or result for (one’s labour or effort).

So from these definitions we may glean that business as an activity pertains to commercial trade through buying and selling as an ongoing concern to derive a profit. A business is an entity the purpose of which is to engage in this activity.

To demonstrate that there is a broad fundamental lack of understanding of what business is among the educated segments of our society, here are a couple of examples.

The first is from the University of Minnesota College Of Liberal Arts. They write in answer to the questions What is business?:

What is business?
A business can be defined as an organization that provides goods and services to others who want or need them. When many people think of business careers, they often think of jobs in large wealthy corporations. Many business-related careers, however, exist in small businesses, non-profit organizations, government agencies, and educational settings. Furthermore, you don't need a degree in business to obtain many of these positions. In short, every sector of our economy needs people with strong overall skills that can be applied to business-type careers. (http://www.class.umn.edu/business_and_cla_degrees/what_is_business.html)

The fundamental concept of business here is the provision of goods and services to others who want or need them. What is missing is any notion of commerce, trade, being an ongoing concern, and the motivation to earn a profit. Therefore, according to this concept, non-profit organizations and governments are businesses. This is an example of the error of defining a concept without reference to its essential differentiating characteristics, which for business, are commercial trade and profit seeking. It is precisely these attributes that differentiates business in kind from not-for-profits and government agencies.

Here’s another one from the U.S. Army CPI Resource Center. CPI stands for Continuous Process Improvement.

What is Business?
We define a business as any organization (commercial or government) whose aim is to satisfy a set of customer requirements and is required to deliver results and provide value to the receiving customers, organizations and/or institutions. This is obviously a simplistic view of an organization, but in order to grasp the importance of processes it is critical to understand the importance of business processes to business success. It is also important to realize that regardless of the nature of an organization (e.g., commercial, government or others) your operations and processes have to provide value to someone outside of your organization. Starting from the business's place in the world will help you understand how an organization must behave to serve its purpose and ultimately its external customers. (http://www.army.mil/ESCC/cpi/biz1.htm)

Once again, the concept of business advocated here pertains to any organization that has a purpose. The characteristics of commercial trade and profit seeking are not deemed to be essential aspects differentiating business from other forms of organizations.

These examples were the first two that I found by Googling “what is business.” Perhaps it is a coincidence that both are from organizations that are not businesses, and therefore the equivocation between “business” and “organization”. I have no grounds to speculate why they have a problem recognizing that while all businesses can be considered organizations, not all organizations can be considered businesses, nor why they wish to portray non-profit and government organizations as businesses. Whatever the reason, it stands as proof that when discussing matters of business and business ethics, it cannot be assumed that just because someone is using the word “business” that they have a proper understanding of what a business is.

If you require more evidence, go to Google and type in "define:business" for a page of definitions of business that Google has compiled from the web. Many of them are guilty of getting the definition of business wrong.

In addition to non-profits and governments, there is one other category that is commonly confused as a business but is not, namely hobbies. One organization that correctly recognized the distinction between businesses and non-businesses, was a free legal advice web site called FreeAdvice. While they draw attention to this point from a tax perspective, nonetheless the distinction is valid and worth keeping in mind:

What is a business?
A business is an activity performed for profit.
The difference between carrying on a business and a hobby is that a business has an expectation of profit, is run in a systematic, continuous and regular businesslike manner, and has ordinary commercial principles governing it (such as business and accounting records). A person who collects and sells baseball cards on a regular basis from a store is engaged in a business, while a casual collector, who will occasionally trade a card or two with friends is probably engaged in a hobby. The distinction is important for tax purposes as losses from a business are tax-deductible, while losses generated from a hobby are not. (http://business-law.freeadvice.com/business-law/profit_business.htm).

The most concise definition of business I was able to find, and which will serve as my definition in this blog, was this one from the Credit Research Foundation: "An organization engaged in producing goods and services to make a profit." (http://www.crfonline.org/orc/glossary/b.html).

Wednesday, September 26, 2007

A Proper Approach to Business Ethics

Copyright © 2007, Barry L. Linetsky, All Rights Reserved

Welcome to Business Ethics For Real, a resource for business people who take business ethics seriously.

Ethical behaviour is an important aspect of achieving personal success and business success. This is the issue that will be explored in this forum, particularly as it relates to business-related issues.

A realist approach to business ethics begins with the facts of reality and an acceptance that an objective reality exists. That which exists, including us, exists in reality. And everything that exists, including us, has a specific nature. To live our lives successfully, we must discover the requirements of how to achieve success based on the nature of human beings and their requirements, and how we must interact with everything else that exists in this world. Achieving success in life is, essentially, a scientific affair. Ethics, too, is essentially a scientific matter.

The task of defining the principles of rational living falls to the science of philosophy; more specifically, to the branch of philosophy known as ethics.

Because ethical principles are universal and apply to all people at all times, they apply to people engaged in productive work as entrepreneurs, professionals, business leaders, managers, and salaried employees, both in the private and public sectors. Ethical principles are applicable to all people engaged in voluntary trade.

While this seems obvious, when it comes to thinking about ethics, most people think that there is a separate ethics for people who are associated with business organizations that is different from the ethics of other types of organizations, such as governments or voluntary associations. That there is a multiplicity of ethics is a prevailing social myth.

"Business" is a higher level concept that describes a relationship between people, as do the concepts "hospital," "university," "union," or "government." Each of these organizations are composed of invididual people working and acting together to achieve particular ends. The type of organizations themselves, while they may have specific purposes that define their reason for being, do not have ethical obligations. Ethical obligations apply only to people, without which there are not businesses, hospitals, universities, unions, governments, etc.

BE4R takes a scientific approach to ethics. If ethics is to be meaningful and valid, its validation must be based in reality. Like any science. to be objective and relevant to humans, ethics must reject mysticism, superstition, and delusional fantasy as a valid foundation for establishing ethical principles. On the critically important topic of ethics, we must have the courage and discipline to move beyond the dark ages of willful ignorance to shining light of a new renaissance of reason and science in defining human affairs.

If ethics is to have any value at all to human life, we can only discover it through the application of reason and logic. And if we are to make use of ethics in business as a means to contribute to human happiness and success in the pursuit of values, ethics must be inextricably linked to reality, and be capable of integration into the goals of business practitioners.

Just as reason and reality are the basic building blocks of business success, so should an approach to ethics be built from the same foundations.

Hopefully BE4R can contribute to an understanding of ethics as it pertains to issues of business and commerce, and become a valuable forum for business executives and practitioners to consider ethical issues from a practical, philosophical perspective.