Business Ethics over Time
Ethics in business has changed over time. Read this section to learn more.
Shifts in Cultural and Ethical Standards
We
find an example of changing cultural mores in the fashion industry,
where drastic evolution can occur even over ten years, let alone a
century. The changes can be more than simply stylistic ones. Clothing
reflects people's view of themselves, their world, and their values. A
woman in the first half of the twentieth century might be very proud to
wear a fox stole with its head and feet intact ((Figure)). Today, many
would consider that an ethical faux pas, even as the use of fur remains
common in the industry despite active campaigns against it by
organizations such as People for the Ethical Treatment of Animals. At
the same time, cosmetics manufacturers increasingly pledge not to test
their products on animals, reflecting changing awareness of animals'
rights.
Philanthropist Anne Morgan, wife of banker and industrialist
J.P. Morgan, wearing a fur stole circa 1915.
Bias
is built into the human psyche and expressed through our social
structures. For this reason, we should avoid making snap judgments about
past eras based on today's standards. The challenge, of course, is to
know which values are situational - that is, although many values and
ethics are relative and subjective, others are objectively true, at
least to most people. We can hardly argue in favor of slavery, for
example, no matter in which culture or historical era it was practiced.
Of course, although some values strike us as universal, the ways in
which they are interpreted and applied vary over time, so that what was
once acceptable no longer is, or the reverse.
When Even Doctors Smoked
From
the 1940s to the 1970s, cigarettes were as common as water bottles are
today. Nearly everyone smoked, from judges in court to factory workers
and pregnant women. Edward Bernays, the Austrian-American founder of the
field of public relations, promoted smoking among women in a 1929
campaign in New York City in which he marketed Lucky Strike cigarettes
as "torches of freedom" that would lead to equality between men and
women. However, by the late 1960s, and in the wake of the release of the
landmark Surgeon General's report on "Smoking and Health" on January
11, 1964, it had become clear that there was a direct link between
cigarette smoking and lung cancer. Subsequent research has added heart
and lung diseases, stroke, and diabetes. Smoking has decreased in
Western countries but remains well established in the global East and
South, where cigarette manufacturers actively promote the products in
markets like Brazil, China, Russia, and Singapore, especially among
young people.
Critical Thinking
Are such practices ethical? Why or why not?
Explore
these statistics on cigarette smoking in young adults from the CDC and
these charts on the global state of smoking from the World Bank for
information about cigarette use in the United States and globally,
including demographic breakdowns of smoking populations.
Thus, we
acknowledge that different eras upheld different ethical standards, and
that each of these standards has had an impact on our understanding of
ethics today. But this realization raises some basic questions. First,
what should we discard and what should we keep from the past? Second, on
what basis should we make this decision? Third, is history cumulative,
progressing onward and upward through time, or does it unfold in
different and more complicated ways, sometimes circling back upon
itself?
The major historical periods that have shaped business
ethics are the age of mercantilism, the Industrial Revolution, the
postindustrial era, the Information Age, and the age of economic
globalization, to which the rise of the Internet contributed
significantly. Each of these periods has had a different impact on
ethics and what is considered acceptable business practice. Some
economists believe there may even be a postglobalization phase arising
from populist movements throughout the world that question the benefits
of free trade and call for protective measures, like import barriers and
export subsidies, to reassert national sovereignty.
In some
ways, these protectionist reactions represent a return to the theories
and policies that were popular in the age of mercantilism.
Unlike
capitalism, which views wealth creation as the key to economic growth
and prosperity, mercantilism relies on the theory that global wealth is
static and, therefore, prosperity depends on extracting wealth or
accumulating it from others. Under mercantilism, from the sixteenth to
the eighteenth centuries, the exploration of newly opened markets and
trade routes coincided with the impulse to colonize, producing an
ethical code that valued acculturation by means of trade and often brute
force. European powers extracted raw commodities like cotton, silk,
diamonds, tea, and tobacco from their colonies in Africa, Asia, and
South America and brought them home for production. Few questioned the
practice, and the operation of business ethics consisted mainly of
protecting owners' interests.
During the Industrial Revolution
and the postindustrial era, in the nineteenth and early twentieth
centuries, business focused on the pursuit of wealth, the expansion of
overseas markets, and the accumulation of capital. The goal was to earn
as high a profit as possible for shareholders, with little concern for
outside stakeholders. Charles Dickens (1812–1870) famously exposed the
conditions of factory work and the poverty of the working class in many
of his novels, as did the American writer Upton Sinclair (1878–1968).
Although these periods witnessed extraordinary developments in science,
medicine, engineering, and technology, the state of business ethics was
perhaps best described by critics like Ida Tarbell (1857–1944), who said
of industrialist John D. Rockefeller (1839–1937) ((Figure)), "Would you
ask for scruples in an electric dynamo?"
Ida Tarbell (a) was a
pioneer of investigative journalism and a leading "muckraker" of the
Progressive Era. She is perhaps best known for her exposé of the
business practices of John D. Rockefeller (b), founder of the Standard
Oil Company.
With
the advent of the Information and Internet ages in the late twentieth
and early twenty-first centuries, a code of professional conduct
developed for the purpose of achieving goals through strategic planning.
In
the past, ethical or normative rules were imposed from above to lead
people toward right behavior, as the company defined it. Now, however,
more emphasis is placed on each person at a firm embracing ethical
standards and following those dictates to arrive at the appropriate
behavior, whether at work or when off the clock.
The creation of
human resources departments (increasingly now designated as human
capital or human assets departments) is an outgrowth of this philosophy,
because it reflects a view that humans have a unique value that ought
not be reduced simply to the notion that they are instruments to be
manipulated for the purposes of the organization. Millennia earlier,
Aristotle referred to "living tools" in a similar but critical way.
Although
one characteristic of the information age - access to information on an
unprecedented scale - has transformed business and society (and some
say made it more egalitarian), we must ask whether it also contributes
to human flourishing, and to what extent business should concern itself
with this goal.