Introduction
Virtue ethics as a viable framework for business ethics is perhaps the most underused of the three great moral theories; it being generally overshadowed by utilitarian and deontological competitors. However, as this essay shall argue, such a framework is a highly useful and underutilised way to critique and reform capitalism, which, with its myriad excesses and failures, have come to define so much of the modern era. Moreover, virtue ethics possess strengths that are absent from deontological and utilitarian ethical frameworks. It is concerned with the formation of character through the attainment of virtue rather than reducing ethics to an intellectual exercise of locating the correct action, and its teleological pursuit of flourishing as the end goal of man otherwise known as eudaimonia, constitutes the unique perspective of virtue ethics.
To begin, there will be an outline of Aristotelian virtue ethics and their possible application as a framework for business ethics. With the core tenets of virtue ethics established, different types of capitalism will be discussed in relation to their varied compatibility with virtue ethics. The most salient discussion on the types of capitalism will be framed by the shareholder versus stakeholder debate. As such, the arguments of Friedman and Freeman will be analysed for the purpose of locating a view of capitalism compatible with virtue ethics. The work of Alasdair MacIntyre, a modern virtue ethicist deeply critical of liberal capitalism, will be utilised to exhibit the flaws of the shareholder paradigm and the strengths of the stakeholder counterpart. Furthermore, MacIntyre’s critique of capitalism for engendering pleonexia will also feature prominently. Finally, possible solutions and actionable reforms will be considered before ultimately finding in favour of MacIntyre’s prescription of a return to the more intimate non-market community of the polis as an answer to the degeneration of virtue and community by capitalism.
What are virtue ethics?
To understand virtue ethics, we must concern ourselves with the definitions of its most preeminent advocate Aristotle. In contradistinction to the Enlightenment’s moral systems, Aristotle’s ethics are, in essence, teleological, as it posits eudaimonia as the ultimate goal of human existence. This term eudaimonia does not equate to mere happiness as we define it today, but specifically means well-being or flourishing, a flourishing that involves ‘living well and doing well’. Moreover, virtuous activity in accordance with reason, is for Aristotle, the epitome of a flourishing human life, with virtue simply being excellence in any given trait or practice. Human flourishing then, is an activity of the soul that spans an entire lifetime and is comprised by the continual habituation to the virtues. As the ultimate telos of human life, it is the one intrinsic good for humans and thus not an instrumental good which is always a good that is in service to another ultimate good. The logical conclusion of this ethical framework is that materialistic or hedonistic goals such as the pursuit of wealth and pleasure cannot deliver human flourishing in themselves as they are merely instrumental goods that lack intrinsic value. They may well help attain eudaimonia, but they are not self-sufficient goals. This ultimately applies to business activities which are evidently instrumental because humans engage in business for the sake of profit and product provision, which are not a suitable end in themselves. The hierarchy of goods within Aristotle’s virtue ethics, with eudaimonia occupying the apex, requires that all other endeavours must be viewed as subsidiary in relation to it. This entails some profound implications for business as such, as though a business, like any other human activity, will commonly pursue numerous objectives, all of these disparate objectives must in the end be subsidiary to flourishing. Therefore, it is clear that any business ethics that applies the virtue ethics framework would require all business activity to aid human flourishing. This would entail the critique of any definition of business interests that proved an impediment to these goals.
Furthermore, virtue, as defined by Aristotle, is a characteristic, or rather a habit that has become ingrained through routine. The virtues can be split into two distinct categories, the intellectual and the moral; the intellectual virtues are associated with the intellect and are cultivated through education whereas moral virtues are character traits cultivated through habituation. Intellectual virtues can indeed be taught but moral virtues require habituation. In this sense, Aristotle contradicts Plato’s claim that knowledge is sufficient for virtue. Aristotle is sceptical of this reductionist view of virtue as a merely intellectual matter without any praxis. This lack of praxis may help explain the failure of utilitarianism and deontology to prevent corruption as it neglects the agent and produces only formulaic commands or actions. After all, we can envision someone intellectually comprehending the right thing to do in a situation, but that he will put this into action is by no means a foregone conclusion.
Aristotle speaks of virtue as a ‘mean’ that lies at the optimal midpoint between excess and deficiency. This is not the application of a universal moral principle but is rather much more contingent on the circumstance of a particular agent. It equates to something more like moral advice rather than the austere moral edicts typical of enlightenment moral theories based on moral principles. It simply advises the cautionary avoidance of extremes in our emotions and actions through moderation. An example of such a virtue is the attainment of courage, which is the golden mean between cowardice and brashness. Virtue ethics are thus ‘agent-focused’ rather than ‘action-focused’ (Mpekansambo, 2013, p.18). Thus, when transcribed to business ethics, business practices that could potentially hamper the development of the virtues, or encourage the development of vices, should be prohibited by a virtue ethics account.
Finally, Aristotle conveys the moral virtues as inherently communal and thus they pertain to the character and habits of the individual embedded in his community, with emphasis on becoming an upstanding person rather than adhering to abstract moral principles. As he states: “He who is unable to live in society, or who has no need because he is sufficient for himself, must be either a beast or a god” (Aristotle, Politics). In this sense, humans need a community in order to fully actualise themselves and achieve the good life. To flourish we need friendship and solid relationships within our polis. Implicit in this is that a suitable political infrastructure is a prerequisite for human flourishing. It follows that being isolated or alienated from the community would have dire consequences for the individual and greatly hamper their attainment of virtue and flourishing. There is no conflict in the virtue ethics framework between the individual and the community. Thus, any business that puts self-interest above the common good of the community within which it is embedded and dependent, is a non-viable model for virtue ethics. Ultimately, going forward, these core tenets of virtue ethics will reappear as conceptual critiques of capitalism as it is practiced, though there will be a transition from Aristotle to Alasdair MacIntyre, a modern virtue ethicist.
Capitalist systems
Before we delve into the shareholder capitalism versus stakeholder capitalism debate, it must first be acknowledged that there are a multitude of differing capitalist systems across the globe, that possess different levels of compatibility with a virtue ethics framework. Capitalism can be defined as an economic system that is typified by a profit motive, where goods and services are exchanged in a competitive market and there is private ownership of the majority of the infrastructure of production. It is an empirical fact that there is not one universal type of capitalism and that it morphs and melds to the society in which it develops. This has led to a diverse array of capitalist cultures across the globe. While each country may possess its own particular flavour of capitalism, there are, in a broad sense, two primary types of capitalism that a country can practice. These are individualistic and collective forms of capitalism. Individualistic capitalism is common to the anglosphere and is characterised by its laissez-faire approach to markets. This goes hand in hand with liberal values, with its elevation of personal rights and autonomy above communal considerations. Within this framework there is a generally much more circumscribed role for the state which is seen as merely the means to protect individual rights and enforce contracts, provide some public services, and enforce laws more generally. Furthermore, this means minimal government interference in the market as any legal restrictions are seen as impeding economic freedoms. Though the majority of modern economies are mixed economies, the dichotomy of individualism and collectivism is still salient. Economies where the government is less involved are individualistic and economies where the state is more dominant, such as Chinese and German, are collective. Both tendencies have strengths and weaknesses. More liberal markets tend to produce more entrepreneurs through their exaltation of individual agency and creativity but can cause much social corrosion and exploitation through their disregard for the community. More collective markets protect the larger community and social relations but can stifle individual ingenuity. For virtue ethics, clearly, a synthesis of both styles is optimal. After all, a core benefit of virtue ethics is that, through its search for the mean, it may avoid the excesses of collective and individualistic economic models. However, given the profound erosion of community and virtue that is taking place disproportionately in liberal capitalist markets and continues apace after the 2008 financial crisis, that particular model is prima facie more difficult to reconcile with virtue ethics. With this in mind, let us look at two models that instantiate these individualist and collective capitalist trends in business ethics debates today.
Shareholder view
We may define business as an organisation whose purpose is to seek profit in the marketplace. They respond to the needs of customers in a market context with the goal of profit-making. What the ultimate goal of business should be is still a contentious issue amongst contemporary business ethicists. Two popular but divergent paradigms for framing business goals within anglosphere capitalism can be seen in the thought of Milton Friedman and R. Edward Freeman, otherwise known as the shareholder versus stakeholder debate. The fundamental divergence of both views is down to whether there is a separation of moral and business concerns. Advocates of the shareholder theory, typified by Friedman, believe that the sole concern for a business is the profit motive. Thus, the only ethical duty for management is to perform well in so far as they increase profit for the company shareholders. Conversely, advocates of the stakeholder theory do not perceive such a clean break between ethics and business as they argue that ethical matters and business are deeply enmeshed and that we must therefore grant moral consideration to the broader community that the business affects, namely its stakeholders.
In examining Friedman’s argument, it is clear that “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game” (Friedman, 2020[1970]). Friedman essentially asserts that businesses should possess a value monism, that is, that they are driven by the single aim of profit. It follows then that the actions of the business should not come under moral scrutiny and that the ends of profit maximisation will ultimately justify the means that secure it. This clearly creates hazards for the workers who would be susceptible to exploitation, and the environment that would be vulnerable to unethical polluting practices carried out by businesses myopically pursuing profit. This is a deleterious consequence of business ethics theories that allow for the pursuit of only one value. It also opens the door to utilitarian justifications because the end goal of profit is seen to justify potentially immoral practices that affront our intuitions of virtue and even basic human rights.
Friedman states that “a corporation is an artificial person and in this sense may have artificial responsibilities, but ‘business’ as a whole cannot be said to have responsibilities, even in this vague sense” (Friedman, 1970[2020]). This implies a lack of corporate social responsibility, which is a direct consequence of his shareholder argument. Yet this disregard for the wider community neglects the role of the community and the crucial advantages it bequeathed to the business. It is as if Friedman’s libertarian views overly rely on an atomistic, individualistic, extremely Hobbesian view of the world that permits disreputable conduct for the sake of survival, which in the business context equates to profit at all costs.
A virtue ethics solution to the problems inherent in this shareholder view would point towards the incoherence in the separation of business and general social matters. By employing acquisitiveness as the sole value, the shareholder view seems to deny that a business should be subject to the same restraints as non-business entities, as if businesses operated in a vacuum and were not subordinate to a common good. Businesses, under a virtue framework, would not occupy a realm separate from the common good, but would rather serve the common good by aiding human flourishing. Business activities are one subsection of human activities and so defined must serve the ultimate human goal of flourishing. In this sense, they would serve the intrinsic good of eudaimonia and not solely the instrumental good of profit. Business goals would not be singular as they are human goals that aim towards flourishing and are thus multiple. A virtuous business would aim towards the provision of products and services that enable human flourishing. It would also provide career opportunities for people to actualise their potential and achieve virtue. In this sense, profit remains a goal but is only instrumental as the profit that is accrued is a direct result of the company making provisions for human flourishing while leaving a core tenet of capitalism as profit motive intact.
Indeed, business is yet another human activity that can provide an infrastructure for the achievement of virtue. As MacIntyre conceptualises it, businesses contain practices and through the achievement of excellence in these practices, a business can, through its provision of a vocation for employees, be instrumental for the actualisation of their employees’ potentials. This attainment of excellence is not just a benefit for the individual “but it is characteristic of them that their achievement is a good for the whole community who participate in the practice” (MacIntyre, 2007, p.190-191). Businesses in this sense are instrumental for the achievement of virtue as they are no different from any other community in which we seek excellence. This illustrates a significant flaw with the transient and turbulent job markets typical of the shareholder paradigm, which, in its sole goal of profit, gives little consideration to the actualisation of employees. They are often viewed as disposable labour while the complete removal of a factory to a cheaper market is also a commonplace occurrence under neoliberalism, destroying the practices that employees are invested in. Conversely, through the possession of multiple goals that aim at the ultimate good of human flourishing, profit motives can be kept in check and remain subsidiary to human well-being. This would preserve and protect the dignity of workers and the duration of careers that equate to vital practices for actualising virtue.
Stakeholder view
As we have seen, the shareholder model of business ethics seems guilty of ‘moral laxity’, as it does not seem to impose sufficient obligations on business management to be viewed as genuinely moral. (Heath, 2007, p.542). This has led to the view, held by many, that businesses possess obligations to multiple groups and not just shareholders. This was made famous by R. Edward Freeman who coined the term ‘stakeholders’ to refer to the large pool of groups and people that benefit or are harmed, whether monetarily, legally, physically or otherwise, by corporate actions. Freeman’s argument hinges on business management possessing fiduciary obligations to these stakeholder groups. (Heath, 2007, p.533).
Indeed, a lynchpin of virtue theory is that man is a communal and political animal that does not operate in a vacuum. This has ramifications for businesses as they are perceived through this lens to be communities within communities, a view that aligns more closely with Freeman than Friedman. The larger community provides the ‘social capital’ that is a prerequisite for the establishment of a business in the first place. It would thus be incoherent to disregard the needs of the community to pursue self-interest, as there are clear moral obligations that occur between business and the community it establishes itself in. In virtue ethics terms, business management would require the virtue of humility so as to acknowledge that their position is not entirely self-made and that it is in large part enabled by the social capital of the community.
Furthermore, Freemans’ stakeholder model rejects this zero-sum game view of businesses and their market behaviour. It is more oriented towards collaboration and the achievement of the common good for all stakeholders. This view is certainly reconcilable with the virtue ethics framework, as both advocate for corporate social responsibility. This could be couched in the language of fiduciary duties existing between a firm and its stakeholders, as Freeman has argued. However, it is perhaps better defined as corporate social responsibility with virtue theory guiding the ways which the firms achieve it. This can help avoid the problems of fiduciary obligations like the exclusivity of fiduciary duty and the concern that management might take liberties with the shareholder capital under the stakeholder paradigm, as has been extensively pointed out by Joseph Heath. Arguably, virtue ethics can circumvent these concerns by recognising that management that seeks to fulfil corporate social responsibility by, for example, giving funds to local schools, would not act beyond their remit and squander excessive shareholder capital. This is because the virtue of generosity does not let us give to charity that which does not belong to us (Mpekansambo, 2013, p.38). They would be generous in the context of the community without being either stingy or extravagant. To be truly generous, the management would need the express consent of the owners, i.e., shareholders. After all a person that is spending someone else’s money on charity without their consent is hardly imbibing the virtue of generosity.
Finally, it should be noted that Joseph Heath’s alternative argument which advocates a ‘market crashes’ approach, built on a critique of Freeman’s argument for fiduciary duty to stakeholders, is also congruent with the higher level of government intervention that a virtue ethics-led capitalism would require. Heath fears that the stakeholder argument risks eliminating the competitive character of business. Therefore, he advocates what equates to ‘good sportsmanship’ as the ethical duty of the corporation is to compete fairly, while still trying to win (Heath, 2007, p.552). In virtue ethics terms this could be formulated as business management competing while exercising the virtue of justice.
Pleonexia
One significant negative attribute of modern business viewed from the virtue tradition is that modern markets are defined by their use of capital to pursue more capital, that is, money for its own sake. This is otherwise defined as the vice of pleonexia, or avarice. The presence of pleonexia is perhaps a direct result of the ascendency of the shareholder model through neoliberalism in the late twentieth century and remains capitalism’s greatest threat to human flourishing. Its development is in stark contrast to more historical and traditional notions of the economy serving the needs of a household or Oikos. Commerce in this context was a limited market that was necessary for the trade and stocking of requisite goods for diurnal living. This type of economy was in a sense self-regulating of desire. As one household exchanged its goods for those of another household, there was “a limit, a mean between too much and too little. The limit is determined by the user value, need and consumption (Meikle, 1996, p.140).” However, in modernity, the market is much larger than merely serving a home economy, and profit is the raison d'être of modern companies. As MacIntyre points out, business in this sense can corrupt character and prove an impediment to virtue. Business with the express purpose of making money for its own sake engenders acquisitiveness which has been presented as a vice in the virtue tradition. Unlike the previous example of food, the desire for money is potentially endless and there is no potential limit to modern consumerism. Consequently, Pleonexia or greed become a prominent trait of those who engage in modern business (Mpekansambo, 2013, p.51).
Furthermore, MacIntrye critiques the emotivism that enables the prevalence of pleonexia in modernity, a lamentable state of affairs that he contributes directly to global capitalism. Emotivism, the moral doctrine that states that what is good is what one simply believes to be good absent any objective good, is intrinsic to the self-interested ‘homo economicus’ of the liberal marketplace. It allows for personal preference to replace the common good as the highest good. But just as Aristotle argued before him, the equating of happiness with the satisfaction of desires is an erroneous one and can often hinder human flourishing. After all, a defining characteristic of someone with virtue is that they act from choice and not desire. Non-virtuous people are overwhelmed by their irrational components because they have not been subordinated to reason, thus they can only act from desire rather than choice. Even though both virtuous and non-virtuous people will possess some mutual desires such as a sexual appetite, the difference will be seen in how much the desire is tempered and what means are employed to fulfil it (Mpekansambo, 2013, p.51). Emotivism corrodes this virtue of temperance by encouraging solipsism and the fulfilment of arbitrary desires.
For this same reason, advertising’s implicit manipulation is also a notable vector for pleonexia. Advertising by its mere existence also serves to perpetuate the values of materialism and acquisitiveness that are needed to uphold the capitalist social order. It serves to put individualism before the common good. Due to the intimate relationship between marketing and liberal capitalism, MacIntyre is concerned with their manipulative tendencies where other humans become mere instruments for the maximisation of profit. A paradigmatic example of this is the presence of marketing departments that exist with the express purpose of manipulating consumers into buying company goods. This is done for the sake of certain capitalists’ personal gain and not in the name of increasing virtue as the advertiser wishes to circumvent and even destroy the virtue of the consumer by appealing to their avarice and the corrosion of their temperance. Through subconscious appeals to status and envy, whether sexual or materialistic, the advertiser is content to hamper the development of virtue, overwhelm the appetitive drives of the consumer, and ultimately stimulate pleonexia. Through its implicit positioning of consumerism as the highest value and the primary method for achieving happiness, which focuses solely on the accumulation of external goods of wealth and products over those internal goods of excellence of character, advertising has become a direct impediment to human flourishing. Indeed, from the virtue ethics perspective of Waide, advertising deprivileges the cultivation of non-market values. Waide explains that “each product contributes its few minutes each day, but we are bombarded for hours with the message that friends, lovers, acceptance, excitement, and power are to be gained by purchases in the market, not by developing personal relationships, virtues and skills (Waide, 1987, p. 75).
Solutions
In terms of what substantive reforms virtue ethics can offer to capitalism, there are a wide array of possibilities. The first solution is reform. As seen in the shareholder versus stakeholder debate, a capitalism where businesses must acknowledge their ethical duty to stakeholders is certainly compatible. Thus, the more collective forms of capitalism that bridle levels of individualism that become mere self-interest, are the preferable model to pursue. The primary issue with pursuing a stakeholder model is how management interprets this responsibility and arbitrates on what stakeholders are entitled to. As we have seen, management that exercises the virtues has the potential to be more prudent and make pertinent decisions. The success of the shareholder capitalism paradigm has created an environment, where a virtuous business would be vulnerable to a non-virtuous business gaining an advantage by engaging in unscrupulous moral behaviour. For this reason, it would be necessary to legislate to ensure that there is not excessive competition that incentivises unethical business behaviour, or too little competition that might engender sloth. Thus, monopolies and large conglomerates should have no place in a market run under a virtue framework. Consequently, the virtue framework is certainly far more interventionist in economic terms in contrast to liberal free market economies and for this reason aligns more closely to collective models of capitalism than the individualist strains that reign in Britain and America.
The second solution is more radical. This is MacIntyre’s diagnosis, and it is much more pessimistic, leading him to a complete denouncement of all capitalist societies in favour of the more ancient form of social organisation, the polis. MacIntyre believes obstinately that market forces should be subordinate to local communities as only the latter can provide the intimate social framework for the pursuit of virtue and the common good. Therefore, he advocates the Greek model of the Polis as the most viable social formation for the pursuit of moral behaviour. MacIntyre does not provide the finer details in his formulation of a possible alternative economic system, but he states that: “The institutional forms through which such a way of life is realized, although economically various, have this in common: they do not promote economic growth and they require some significant degree of insulation from and protection from the forces generated by outside markets” (MacIntyre, 1999, p.145). On the whole, MacIntyre prescribes a significantly more drastic reform that borders on revolution, one that would see a complete rejection of our modern globalised markets which are hostile to virtue, and a return to the smaller traditional communities akin to those of the ancient Greek city-states, where communities would be safeguarded from the onslaught of consumerism and advertising, and thus pleonexia. This view, while much more radical than the government and market reform approach, may well be what is necessary if we take human flourishing seriously.
Conclusion
To conclude, it is evidently clear that virtue ethics are a useful framework for business ethics and, moreover, for the reform of capitalism. From Aristotle’s ancient tenets that see human life as teleological and in pursuit of eudaimonia or flourishing, a clear hierarchy emerges where all human activities must be subordinated to this end. The attainment of the virtues through daily habituation is crucial to the achievement of flourishing and, finally, there must be a community in which to enact and practice the virtues. All of these fundamentals of virtue ethics have been seen to conflict with capitalism in some sense. Indeed, it is liberal capitalism in particular, with its exultation of the individual’s pursuit of their desires on the market, and its Hobbesian anthropology of conflicting wills pursuing their own ends over an objective good for the community, that leads in the end to a culture hostile to virtue. It is thus a laudable development that the stakeholder paradigm has gained traction in business ethics debates, and that a general weariness with the excesses and recklessness of shareholder capitalism is bringing about a larger concern for the community affected by a business. The stakeholder paradigm and corporate social responsibility are conceptual improvements, but for business practice to nurture true human flourishing, a deeper commitment to the cultivation of virtues via a commitment to virtue ethics by management is necessary. Without the virtue ethics approach, the vital importance that business plays as a practice within which to exercise virtue goes unappreciated, communities are seen as interchangeable social capital, and the rampant promotion of consumerism goes unchallenged without an ethical critique of pleonexia. In terms of solutions, we have seen that there are reforms made that could regulate the market to be in line with virtue ethics principles which are at least plausible. However, as seen through MacIntyre’s critique and advocation for a return to the polis, there is evidently another more revolutionary way forward. Though this may be difficult for us moderns to entertain, it is entirely possible that the pursuit of the virtues has been rendered almost impossible for the vast majority of citizens in any capitalist-style economy or social organisation. Therefore, it is perhaps the most candid approach to admit, as MacIntyre has done, that the “tradition of the virtues is at variance with central features of the modern economic order and more especially its individualism, its acquisitiveness and its elevation of the values of the market to a central social place”.
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