Why Ethics Can Save Us

“It’s probably fair to say that the #1 constraint in South Africa today is [its] trust deficit” according to Patrick Kuwana. “We all know the economy is running on a huge trust deficit; as every new corruption disclosure affirms.” Hardly new information; but, business is foremost a relational discipline. If there is no trust, no transactional activity takes place.

Should we be surprised though? The Art of War, by Sun Tzu, is prescribed reading in many business schools around the world. This gives executives, licence to equate doing business with making war. Just as political correctness does not allow us to say ‘greed’ out loud (a la Gordon Gekko); we can, and do, insist on our pound of flesh in business.

Companies squeeze suppliers, sweat assets, pass costs on to customers and use aggressive sales tactics. Downsizing is a mantra; but we call it re-engineering, rationalisation or right-sizing. Reducing headcount sounds much better than putting human beings out of work.

Well, say the old hands, just get some strategy consultants to draw up a set of values that can be posted on the walls. Ask them to include the usual suspects - integrity, fairness, honesty, excellence, passion. After all, employees either have ethics or they do not, and that there is little that one can do about it. Ethics can’t be taught, right? Think again.

Cue Warren Buffett, who famously said that one should look for three things in a person: intelligence, energy and integrity. He then added: “But if they don't have the last one, don't even bother with the first two.” Pretty good advice, whatever your opinion of Warren Buffett may be. Let’s get some of that ‘integrity’ in and we’re good, right?

Not so fast. Within national government just 14% of chief audit executives say ethics is an important part of their organisational culture, compared to 41% last year, the latest Corporate Governance Index has found. And, how many South African institutions have blinded themselves to their own ideals? How often has the-ends-justifies-the-means principle been used to explain away acts of corruption, brutality and social cruelty?

Acquiring trust capital predictably involves some hard yards. Significantly, the 2020 Edelman Trust Barometer states that ethics accounts for 76% of trust capital; while competence delivers 24%. It’s precisely in this way that we are linked to each other’s survival. To be unreasonable in ways that hurt, or hinder, others is to reduce the value of all.

Psychopaths may simply be unable to obtain as much happiness through caring about others as they obtain by antisocial acts. Other people find collecting coins an entirely adequate way of giving purpose to their lives. There is nothing irrational about that; but others become more aware of their situation in the world and more reflective about their purposes. To this third group the ethical point of view offers a meaning and purpose in life.

For a start, applying ethics is really about thinking oneself through the ‘grey’ tunnel that connects ‘black’ and ‘white’. It attempts to reconcile legal absolutes and moral relativity. Ethics are, both, a compliment and combatant to societal and organizational norms. They keep us accountable to our own rules.

Alas, the rules keep changing. Not because of social evolution, but because of self-interest. Some believe we can never get people to act morally by providing reasons of self-interest; because if they accept what we say, and act on the reasons given, they will only be acting self-interestedly, not morally.

For example, “Is ignoring corruption the moral equivalent of murder?” It rests on the twin concepts of ‘killing’ and ‘allowing to die’. We cannot avoid concluding that corruption in developing countries leads to poverty, malnutrition and death for many. Absurd? Not really. The duty to avoid killing is much easier to discharge than the duty to save. Therefore it seems easier to ignore corruption, than to confront it. Seemingly, to do nothing trumps taking risk.

Moreover, bleeding the systems is much easier under the delusion of ‘victimless crime’. Suppose I continue to amass wealth corruptly. My actions may have no identifiable victims. But, some people will die. It is impossible to tell how many. Surely this impossibility makes my decision no less reprehensible than it would have been had I shot them? So, if we can prevent something bad - without sacrificing something of comparable moral value - we ought to do it.

That should draw a line under the whole ethics ‘thing’ then. Apparently not. With the recent rise of ESG (Environmental, Social & Governance) issues, business ethics face a curious irony: the more entrenched the discipline becomes in business schools, the more bewildering - and off-putting - it appears to actual managers.

Managers welcome concrete assistance with primarily two kinds of ethical challenges: first, identifying ethical courses of action in grey-area situations described as ‘not issues of right versus wrong’, but ‘conflicts of right versus right’; and, second, navigating those situations where the right course is clear, but real-world competitive and institutional pressures lead even well-intentioned managers astray.

Let’s look at Affirmative Action (AA) for instance; a strategy to achieve equality in the workplace through the BBBEE and Employment Equity Acts, given that less than 300,000 people in South Africa pay 40% of the country’s tax bill. In practise this means that not enough people earn enough money to pay tax; and such inequality is unacceptable.

One way of overcoming this is to go beyond equality of opportunity and give preferential treatment to members of previously disadvantaged groups. This is sometimes also called 'reverse discrimination'. It may be the best hope of reducing long-standing inequalities; yet it appears to offend against equality itself. Hence it is controversial.

So, if an organization should adopt new goals and use AA to promote them, employees who would have been hired under the old procedure cannot claim that the new procedure violates their right to be hired, or treats them with less respect than others. They simply were the fortunate beneficiaries of the old policy. Now that this policy has changed others benefit, not they. If this seems unfair, it is only because they had become used to the old policy.

AA cannot justifiably be condemned on the grounds that it violates the rights of previously advantaged employees, or treats them with less than equal consideration than others. There is no inherent right to employment, and equal consideration of the interests of applicants is not involved in hiring. Thus, AA isn’t contrary to any sound principle of equality.

That said, the really creative part of business ethics is discovering ways to do what is morally right and socially responsible; without ruining your career and company. In practice, ethics rests on reciprocity. It is unfair to require an individual to take a significant risk (or incur a significant cost) out of respect for the interests, or moral rights, of others; if that individual has no reasonable grounds for trusting that the relevant others will do the same.

Thus, the central role of such social contracts is in devising ‘minimalist’ - as opposed to ‘perfectionist’ - views of the moral expectations that can be placed legitimately on companies; and then to evaluate them against certain universal, but minimalist, moral principles. The old chestnut of doing the ‘right thing’, versus doing ‘things right’.

Whatever the point of departure, current consensus holds that business ethics is not a matter of concern for managers alone. It is everyone’s responsibility. A covenantal ethic, defines, as everyone’s primary obligation, the effort to see that all parties in a commercial endeavour prosper on the basis of created and shared value.

Moderation, pragmatism, minimalism: these are key words for business ethicists. In each of these approaches, what is important is not so much the practical analyses offered; but the commitment to converse with real managers in a language relevant to the world they inhabit, and about the problems they face.

Some business ethicists, however, have two basic problems with enlightened self-interest. First, they disagree that ethical behavior is always in a company’s best interest, however enlightened. Second, they object that even when ‘doing good’ is in the company’s best interest, acts motivated by such self-interest really can’t be ethical.

Well, ethics is not an ideal system that is noble in theory, but no good in practice. The reverse of this is closer to the truth: an ethical judgment that is no good in practice must suffer from a theoretical defect as well, for the whole point of ethical judgments is to guide ethical practice.

Some people think that ethics is inapplicable to the real world because they regard it as a system of short and simple rules like 'Do not lie', 'Do not steal', and 'Do not kill'. They believe ethics isn’t suited to life's complexities. That there are no vanilla options; and behaving ethically can cost dearly. Put simply, ethics has to ‘hurt’ for it to be meaningful.

In support of this view Garrett Hardin has offered a metaphor: we are like the occupants of a crowded lifeboat adrift in a sea full of drowning people. If we try to save the drowning by bringing them aboard, our boat will be overloaded and we shall all drown. Since it is better that some survive than none, we should leave the others to drown. In the world today, according to Hardin, ‘lifeboat ethics’ apply.

Beware hubristic whispering and the assertion of principles that functions as a mask for personal preference. Rather insist on the vital distinction between morality and moralism; and moral judgments in lieu of causal understanding. The only real doubt is whether ethics will work at scale across our society; particularly in the critical institutions of learning, legislation and business. In the absence of more promising alternatives it seems worth a try.

Circling back to the proposition of ‘why ethics can save us’; we should conclude with one last open-ended question. “Why should I act morally?” is a question that asks for reasons to go beyond the personal basis of action; and acting only on judgments one is prepared to prescribe universally.

The ethical point of view does, as we have seen, require us to go beyond a personal point of view to the standpoint of an impartial spectator. Thus looking at things ethically is a way of transcending our inward-looking concerns and identifying ourselves with the most objective point of view possible. From the evolutionary perspective we need to leverage our endowed ability for critical reasoning; and to do so at scale. Ergo, ethics is a life skill for everyone.