Business

Business ethics and social responsibility are major catchwords in the modern business world. Business ethics which is sometimes called corporate ethics is a kind of applied ethics which examines the ethical principles and moral problems that are inherent in the business world. It looks at all aspects of a business concerned with the behavior of the individuals and the organization as a whole. In the recent past the demand for ethical business procedures and conduct has been on the rise and several initiatives and laws have been proposed to ensure that businesses meet the goal. Business ethics is basically considered as the manner in which the business conducts its dealings with the general populace. An organization that fails to adhere to the established ethics or breaks the law is usually fined. In truth, business executives are faced with great dilemmas whenever they have to take decisions that are likely to have either on them or other people. There always the issues of profitability and legality to be weighed against each other in the process of taking the decision. In some instances, the legality of a course of action may not constitute the bottom line of its rightness. As a result, the discussions about business ethics have elicited different points of view as to what the essence of the concept should be understood to be. All people in the business including the owners, officers, stakeholders and employees can be faced with a situation that calls for the application of business ethics. The most common scenarios include harassment, discrimination, social and environmental responsibility issues, administration and worker relations.  How individuals will ultimately deal with the above issues has been used to define business ethics. Social is a subset of business ethics that deals with the relationship of the business with the community it is operating from.  On the other hand, the precise nature of business ethics and social responsibility in the real world has been of profound interest to many scholars. Among the experts who have carried out extensive research on the subjects include Milton Friedman and Peter Drucker.
Comparing the Articles by Peter Drucker and Milton Friedman
    The two writers have both objected to the conventional understanding of the doctrines of business ethics and social responsibility. In his article, What is business ethics, Drucker tries to compare the concept of business ethics and the traditional understanding of ethics in the ancient civilizations. According to him, the definition of ethics as espoused by the various authorities must be based on the rules of morality which determines the behavior of the individual when applied across the board. In this case when business ethics is viewed from the traditional ethics does not pass the required test because it asserts that acts that are not immoral or illegal if done by the ordinary folk become immoral or illegal if done by the business. He cites a good example of the consideration of extortion as considered in business ethics. Generally, a person who is forced to pay extortion fees to prevent any form of harm is not considered to have behaved in an immoral manner. On the other hand, a business will be considered to have behaved in an unethical manner if it submits to extortion. Furthermore, he argues that business ethics denies the organizations the chance to adapt to establish cultural norms in different parts of the world since what is considered as unethical in one country may not be so in another.
    Friedman equally objects to the concept of social responsibility as advocated by the business leaders. He criticizes the business leaders for advocating for social responsibility in a free-enterprise system. To him it amounts to preaching pure and unadulterated socialism when the business leaders claim that the business should take the responsibility of promoting essential social ends apart from making profit. He asserts that discussions about social responsibility have not been flexible enough hence not very rigorous at all. He holds that responsibilities are only attributable to individuals or corporations but businesses as a whole cannot be said to have responsibilities. The responsibility of the individual is also advanced by Drucker as he compares the concept of business ethics to the doctrine of Casuistry which he defines as the ethics of social responsibility. According to the principle of casuistry, those in positions of leadership should balance the demands of ethics which are applicable to them as individuals and their social responsibility to the people, state or organization.
    The two writers both criticize the twin concepts for having their origins in politics rather than from ethics. Drucker says that business ethics articulates a conviction that the responsibilities held by the businesses and the businesses leaders must influence ethics since they have a social impact and this in itself is a political rather than a moral necessary. On the other hand, Friedman says that the role of business executives in fulfilling their social responsibilities forces them to act in a way contrary to the interests of the employers. They may be required to avoid increasing prices in order to prevent inflation which will ultimately affect the profits of the organization. They may also make expenditures which are beyond the basic interest of the organization to meet the social responsibilities. All this requires the leaders to spend money that belongs to other people for the purposes of fulfilling the social interests. All these programs will affect the financial position of the employers, employees and the customers in one way or another which in effect amounts to levying of taxes. The role of imposing taxes is political in nature and should be played by the governments. As a result Friedman holds that a business that engages in social responsibility initiatives actually plays the functions of the three levels of government.
    Drucker also tries to compare the concept of business ethics with the traditional ethics of prudence and self-development. The ethics of prudence do not specify what constitutes right actions but assumes that wrong actions are clear enough and makes it a moral obligation for leaders to exemplify ethics in their conduct. Through prudence every person is expected to achieve the status of a superior man and fulfill themselves. He still believes that although the ethics of prudence can be applied to a society of organization, it can not be termed as business ethics. In an organization, there are different people in positions of authority who have the responsibility to take the right course of action. Equally business executives are required to develop self-discipline and self-respect since they are the leaders in the society. In this case, Drucker asserts that business ethics can only be real if it focused on the ethics of Prudence yet in its current form the discussion of business ethics lacks this element. Similarly, Friedman advocates the same idea when he looks at the role of the individual in serving the general public good. He maintains that a business executive has other responsibilities that should be performed on a voluntary basis. The person may utilize his resources and time to causes he regards as worthy but in this case this cannot be termed as the social responsibility of the business rather it is individual social responsibility.
    In his article, Friedman argues that social responsibility goes against the tenets of a free society since these amounts to taking over the functions of government. He asserts that the concept of social responsibility is a threat to the private competitive enterprise which requires that people be responsible for their own actions and prevents unfair exploitation of other people.  According to him, social responsibility should only be carried out at the expense of those interested in doing the good but should not be taxed on others. In most cases, some stockholders force others stockholders, customers and employees to donate against their wish to causes advocated by the activists. In Friedmans view, social responsibility should only be applicable in cases of individual proprietors reducing their profits for this purpose since it is their own money. Unfortunately, the same costs may easily be passed on to the customers and the workers. The writer says that social responsibility is usually covered for initiatives that may be acceptable on other premises other than those advanced. Most of the activities carried out by corporations only serve to improve the good will of the companies in the community which in itself is detrimental to the foundations of a free society. Friedman expresses deep respect for the businessmen who disdain the tactics used by others in the name of social responsibility while only serving their own selfish interests.
    In his article, Drucker asserts that business ethics is more comparable to Confucian ethics which is not situational. He considers Confucian ethics of interdependence the most appealing and most durable among all the ethical thoughts. In Confucian ethics, the rules and essentials of human conduct are the same for all individuals. In this case, there is no social responsibility as in the ethics of prudence, no cost-benefit consideration or different standards than the individual and their actions.  The Confucian ethics simply applies the various general rules to the five core relations of interdependence that cover the entirety of relations in a civil society. These are master and servant, parent and child, husband and wife, among children and friendship. In all the relations, the right conduct must optimize the benefits for either of the parties while unethical behavior in insincere and creates dissonance, exploitation and manipulation. In the same light, business ethics should strive to address problems in relation of interdependence between any of the players in a business setting. Ducker argues that the problem that surrounds the discussions about business ethics can be resolved based on the ethics of interdependence. Unfortunately, most discussions do not acknowledge the essence of the ethics of interdependence.        
The ethics of interdependence requires the satisfaction of mutual obligations by both parties where every party has to provide what is required by the other to meet its goals and attain fulfillment. On the contrary, the concept of business ethics as currently advocated gives one side the duty of having obligations while the other has rights. This implies that business ethics fails to meet the criterion of any ethics and can simply be described as the usual politics of power. In conclusion, Ducker says that business ethics should not be considered as ethics but should simply be termed as ethical chic or just a media event than a philosophy or morals. This should not be construed to mean that the concept of business ethics is entirely useless given that the modern society demands that the ethics of prudence and self-development should be central especially in the organizations.