Markkula Center of Applied Ethics

"Has business ethics teaching and research had any discernible impact on business practice in the US and around the world?"

Transcription of a debate and discussion held at Santa Clara University February 21, 2003
Sponsored by the Markkula Center for Applied Ethics and the Institute on Globalization

Participants
Manuel Velasquez (MV), Dirksen Professor of Business Ethics
Santa Clara University
Velasquez has been at Santa Clara since 1977 and teaches in the area of business ethics and the social, legal, and political environment of business. He's the author of the best-selling textbook, Business Ethics: Concepts and Cases.

R. Edward Freeman (EF), Olsson Professor of Business Administration
University of Virginia Darden Graduate School of Business Administration
Freeman is the director of the Olson Center of Applied Ethics. His work on stakeholder theory has become a staple of both academic writing and business decision models.

Mary Gentile (MG), Consultant
Initiative for Social Innovation Through Business of the Aspen Institute.
Gentile was formerly a senior research fellow in the Leadership and Responsibility Program of the Harvard Business School. She is co-author of Can Ethics Be Taught?

David Friedman (DF), Professor of Law
Santa Clara University
Friedman's main teaching and research interests are in economics and law, law and technology, micro economics and the history of economic thought. He is a prolific author of books and articles
Moderator

Kirk O. Hanson (KH), Executive Director, Markkula Center for Applied Ethics
Santa Clara University
Hanson, who is University Professor of Organizations and Society, was formerly the director of the Sloan Program at Stanford University Graduate School of Business

Kirk Hanson: Twenty-five years ago, the world changed for business ethics. I was a researcher at the Harvard Business School 25 years ago this month when I got a call from the famed George Leland Bach, a professor who had a huge influence on business education in the United States. Lee said, "We decided to hire someone to do business ethics. Do you want to do it?" No interview. Nothing. You can tell how serious they were at the time. They weren't sure what a business ethicist was, but maybe I looked like one.

My experience was echoed by the appointment of several others in that same year of 1978: Lauren Ash, Kenneth Goodpastor at the Harvard Business School; Tom Dunfey at Wharton. Others in the room undoubtedly had experiences at about the same time.

Prior to 1978, business ethics in the United States was the province of a few lonely pioneers, and most of them at Jesuit institutions. Perhaps, we'll look back at this period and say, just as the book says the Irish saved civilization, we will say Jesuit universities saved business ethics. But the names of Thomas Donaldson and Patricia Werhane, Gerald Cavanagh, Walt Klein and others at Jesuit universities clearly had a huge influence on us as we began to move in the field.

But in 1978, the secular business schools discovered business ethics. It was the double whammy of the illegal contributions to the Nixon reelection campaign in 1972 and the overseas bribery scandals of the period 1975 to 1978 that ripened the vine on which business ethics began to grow.

The business school accrediting bodies began to address the subject of business ethics and came to require some attention to the social, legal, ethical, and political environment of business. The debate is once again active in the year 2003 in the wake of Enron, WorldCom, Arthur Andersen, Tyco, and others.

What should business schools teach about business ethics is the question being asked yet again today. Before we answer that question, we must ask what impact has 25 years of teaching business ethics in most business schools in the United States really had? This panel will examine that question.

Manuel Velasquez: Has business ethics teaching had any discernible impact on business practice in the US? The cynical answer is no. The cynic has a lot of ammunition to back up his or her claim.

Look at Enron whose Jeffrey Skilling was educated at Harvard's MBA program and whose Andrew Fastow graduated from Northwestern's MBA program. Look at WorldCom whose CFO Scott Sullivan was a graduate of an MBA program. Global Crossing's Gary Winnick had a business degree as did Tyco's Dennis Koslowski, and the key managers at Arthur Andersen, at Adelphia, at Haliburton, at ImClone, at Sunbeam, at K-Mart, at Rite Aid, at Computer Associates, at America Online, at Dynegy, at Cendent, at CMS Energy, at Dollar General, at Duke Energy, at Oracle, Merck, Merrill Lynch, Lucent, Micro Strategy, Network Associates, Peregrine Systems, Far More, PNC Financial Services, Qwest Communications, Reliant Energy, Vivendi, and yet other companies whose managers engaged in financial frauds, big and small.

With the weight of this evidence, it's hard to claim that business ethics teaching in business schools has much of an impact on business practice in the United States. We don't seem to be talking about a few rotten apples, but about a disease that seems to have infected the entire orchard, the whole crop of American businesses. Or has it?

There are today over 200,000 companies operating in the U.S. The three dozen or so companies that have engaged in fraud, though large, prominent and well-known, comprise only a tiny fraction of a percent of this total. For every company that has engaged in fraud, there are a dozen, a hundred, a thousand others that have not. The managers toiling away in these companies are, I would argue, like most of us, ordinary, law-abiding citizens, susceptible to similar ideals and incentives.

Consider, moreover, that the teaching of business ethics, as Kirk mentioned, did not become institutionalized in business schools until the early 1980s. This means that the generation of managers now in their 20s and 30s, who got their business degrees since 1985, is really the only generation of managers who could have been affected by the teaching of business ethics in business schools.

Significantly, this is not the older generation, the Jeff Skillings and the Andy Fastows, who comprise upper management at most large American companies and who are running the companies that have been accused of fraud. If we are looking for the impact that business ethics has had on business managers, we are looking in the wrong place if we look at the top management of the large firms that have been accused of fraud.

So what has been the impact of business ethics teaching on American companies? The major impact, I believe, is that business ethics has become legitimized in American companies since we began sending our students into their ranks.

Like many others, I undertook several field studies of companies during the late 1970s and early 1980s. Back in those days, when I walked into a company with my yellow notebook and started talking to managers about ethics, the inevitable response was a blank stare, or an embarrassed sideways look, or a pitying look followed by silence.

Ethics, what is that? Why in the world would you think that I, a manager, would care enough to have any opinions about ethics?

It was during this period that Fred Bird conducted his wonderful studies of ethics and managers, entitled aptly enough, The Moral Muteness of Managers. Fred found that managers, for the most part, avoided thinking or talking about ethics.

Fast forward now from the '70s and '80s to what has happened in the last four or five years when I've gone into companies clutching a tape recorder or my laptop. The most astonishing change that I have seen when I walk into a company is that for a significant percentage of the managers I meet, ethics is no longer a foreign language. Ethics has been legitimized.

I have no evidence that managers behave differently, but my own experience is that large number of managers are now able and willing to consider and discuss the ethics of their actions. And, if my impressions are reliable, the younger manager is the one who feels the most comfortable talking about ethics in his or her company.

So have we made a difference as teachers of ethics? Yes, I think we have made a difference, but it's a small difference. A difference that I have described as the legitimation of ethics in business, and a difference that is still often evident mostly at the younger and lower levels of organizations. But, that's to be expected, since it is these levels for the most part that our students still inhabit.

There's another difference that I think we've made, and it is evident to those of us, who like myself have been teaching business ethics for a couple of decades. Back in the 1970s and 1980s when I first came to this area as a young instructor, I was enthused by the wealth of cases of blatant wrongdoing that greeted me. This is back in the days of the Love Canals, the Ford Pintos, the Johns Manvilles, the Lockheeds, the Reserve Mines, the Nestles, the AT&Ts, and on and on and on.

It took no effort on my part to find dozens of cases where businesses were involved in fascinating and deliciously monstrous wrongdoing-the kind of wrongdoing that kept my students listening and interested while I walked them through the somewhat dry theories of business ethics.

As the years have gone on, I have found it has become harder to find the same kind of dramatic cases that kept my students entertained in those early days. It is not that there are no cases of wrongdoing, as the Enrons and the Arthur Andersens remind us. It is, rather, that in those areas where wrongdoing was once common and blatant, it is now no longer so.

Twenty-five years ago, it was not hard to find glaring cases of companies that were involved in environmental pollution. Today, it is harder. Twenty-five years ago, it was not hard to find cases of companies that were grossly cheating and injuring consumers. Today, it is harder. Twenty-five years ago, it was not hard to find cases of companies that were discriminating dramatically against minorities. Today, it is harder.

The point I am making is that in a number of areas, such as the environment, race relations, and consumer relations, business has cleaned up its act. The blatant, unethical behavior that was common in these areas is no longer so common.

My suggestion, then, is that we have made a second kind of difference. Businesses have changed and they have changed at least in part, because we, through our teaching and through our writing, have called attention to the wrongs that were once common in certain areas. We're not rid of unethical behavior in business, of course, and whatever impact we have had has been possible because other institutions-the media, the law, the public outrage-have worked alongside us.

But, I would like to believe that we have been at least a small part of the reason why business has cleaned up its act in those areas where unethical behavior was once so blatant and so common.

We've made, then, two kinds of differences. First, we have helped to develop a generation of younger managers for whom ethics is a legitimate consideration in business. And, second, we have helped to lessen the frequency of unethical behavior in areas where once it was common.

R. Edward Freeman: I agree with a lot of what Manny said, even though my answer to the question is a no, or perhaps hell no. I just don't think we had much to do with that. Has 25 years of teaching and research in business ethics as an academic field had much of an impact on business? I don't think it has.

I want to make four points about that pretty quickly. One, business ethics as an academic discipline has developed outside the mainstream conversation of business. I think Kirk's opening anecdote and experience, which, I think, a number of us shared, illustrates that. No one was very serious about this. Maybe hire a philosopher-they're sort of fun to laugh at, fun to see in the hall every now and then-but no one was really serious about having one around.

The role of business ethics in business schools has been for the most part teaching stuff that nobody else wanted to do, or teaching stuff that the people in philosophy departments wouldn't come down from their lofty perches to actually deal with in the real world. That pains me to say as a philosopher.

The dominant view of business that has developed in business ethics is not a view of value creation where humans figure out ways to do stuff together that none of us can do alone. That's what business really is. The dominant view of business here-I think that Manny has made this point unintentionally-is that business sucks. Business is morally questionable, and the job of business ethics is to ferret out the scandals.

But the people who ferret out the scandals aren't business ethics professors. They're journalists. They're people out engaged in the world. They're whistleblowers. They're journalists. They've had a much more important impact, I think, than business ethics professors have.

So the first point I want to make is that business ethics as a discipline has developed outside the mainstream conversation of business. For the most part, you can teach business ethics and not really know very much about business. You can't expect to have much of an impact if that's true.

Second point, related: We do have this intellectual separation between business and ethics. Some of you have heard me talk about this ad nauseam. We divide profits versus ethics, self-interest versus pure altruism, shareholders versus stakeholders, and all of those dualities strike me as not very useful for thinking about what business is. As long as we separate out the ethics from the business, then it strikes me we won't have much of an impact.

Now, when you separate these out, it's easy to say, "Well, go get 'em, business ethicists. Bring ethics to business." What no one is willing to look at is, it goes the other way as well. We live in a world in which ethical theory has developed absolutely in absence of any concern with value creation.

Pick up any book on political philosophy, pick up any book on political theory, and you will not find any conversation about value creation in trade. It's as if human beings, first of all, ask, "Is the state justified and what should the state allow us to do?" That's the wrong question, it seems to me.

Value creation and trade is as important to the human condition certainly as being the citizen. So ethical theory has sort of a paucity of concern with business, and business has had a separation from ethics.

Reason three. Values are hot today. I talk to a lot of managers, and they want to talk about values and ethics. Unlike Manny's experience, actually, the people I talked to back in the '70s were willing to talk about ethics, as well. I think we're better at it now, but they wanted to talk about that then. Certainly, today, they do.

Who's leading the conversation? Is it people in this room? With all due respect, no. It is Tom Peters talking about respect and dignity. It's C.K. Prahalad and Gary Hamel talking about competing, our capabilities, and finding room for values. It's Jim Collins and Jerry Forest talking about core ideology and a sense of purpose. It's Jim Collins talking about humility and leadership. Those are the people who are leading the conversation about the role of values in business. It is not business ethicists.

There are a whole bunch of people like Ken Blanchard, the one-minute ethics manager, Steven Covey and a stack of books, which I call the "Leadership Lessons from" genre, (to which I hope to contribute a version, Leadership Lessons from Gilligan's Island someday. The secret of little buddy leadership. The motto is when things go wrong, do something stupid, it might work out.)

So values are hot, but the business ethics people aren't the ones leading the conversation. They can't be because business ethics is disconnected from business. It's developed outside the business mainstream.

The last point, lest I be seen as arguing disingenuously against myself, I actually think that there are some ideas that have developed that have had a real impact on business. I think that the people in this room that have worked on developing stakeholder theory and employee rights and other things have had a real impact.

But that theory is at a critical point now. It can go the way of endless philosophical debates about who really are stakeholders, for instance, or it can engage itself in the process of value creation and trade. Until business ethicists as teachers and researchers engage themselves fully in the process of what value creation and trade really is all around the world, I believe that we will have not very much impact at all.

Mary Gentile: The question that we're considering is, Has business ethics teaching and research had any discernible impact on business practice in the US and around the world?

To answer this question requires no shortage of hubris, of course, but I'll try to suggest some ways of thinking about it that I hope will be useful.

As one who formerly taught business ethics and who currently devotes most of my professional career to working with business educators on issues of what I call social impact management, I have to start by saying that all of my work is built upon the premise that business education has significant influence upon and is a potential lever for changing business practice.

Let me also start by saying that I know, and you in this room know, that you have had an important impact on the lives and the thinking of some of your students who have gone on to become business managers and leaders. You know that.

But the question remains, is this enough? I do not believe it is. There are many reasons why I believe it is not enough, but I'll name just a few here tonight.

Let me start with the students themselves. The Aspen Institute's Initiative for Social Innovation through Business, Aspen ISIB, is an organization with which I do a lot of work. They conducted a survey of MBA students' attitudes at 13 business schools to assess whether or not business education made a difference in their view of the world and responsibilities of business and business leaders.

We learned that MBA programs do in fact affect student values. We learned, among other things, that student priorities shift during the two years of the program from customer needs to product quality as their highest priority and to the primacy of shareholder value as their highest priority. The good news was that these schools had an impact.

The bad news was that the students were moving in a direction that was not likely to help them address the kinds of conflicts that the press, our own faculty, and the general public are raising today.

In fact, in our most recent round of the survey, which we just finished in November, the students report that the kinds of value conflicts that they anticipate in their business careers are most likely to arise around the conflicting demands of multiple stakeholders. It is precisely that kind of conflict that they don't believe their business education is preparing them very well to manage.

So now let's turn to faculty. I'm sure you've all seen Pfeffer and Fong's essay in the inaugural issue of The Academy of Management's Learning and Education Journal, titled "The End of Business Schools: Less Success Than Meets the Eye," where they argue that the MBA, let alone business ethics, has little impact on the career success of its graduates and that B school research has had little impact on business practice.

This essay's argument has been picked up in the mainstream press, and op-eds have been appearing in the New York Times, the Washington Post, the Boston Globe, to name a few, raising the question of just what impact business schools have been having on managers and how responsible these schools may be for the current rash of scandals and value-based challenges facing global corporations.

Business school faculty have been talking among themselves. I'm sure you're receiving the same e-mail that I am. Academic listservs and informal e-mail exchanges have been heating up, revisiting the familiar debate about just what should or even can be taught in business schools. They're asking whether B schools are to blame for what's been happening of late—Enron, Tyco, World Com, Arthur Andersen, CEO compensation excesses, the great options debate, conflicts of interest at the heart of market analysis and audit systems, and so on.

Of course, this is a "damned if you do, damned if you don't" kind of debate. If B schools are to blame, well, that's very disgraceful. On the other hand, those that argue that B schools are not to blame defensively suggest that they can't influence student values that much anyway. After all, they're adults, aren't they? But, that argument is hardly much to take comfort in.

So I would like to shift the debate a bit. Instead of asking whether we've had an impact (as I indicated earlier, the answer to that is of course at an individual level and not enough at the broader level), I'd like to say, can we have an impact? And if so, how?

I'm going to use my remaining time tonight to suggest some of the things that I've seen work and not work in the hope that they might trigger some ideas. I believe you in this room have the platform and the capacity and the desire to make education matter in this way.

On the teaching front I think we should shift the classroom discussion from debates focused on ethical dilemmas to conversations about innovation and implementation. It's not that I don't think ethics is important. It's desperately important as this audience understands in a visceral as well as an intellectual way. Our market system is premised upon a free flow of incredible information and upon trust that commitments will be honored. But an exclusive focus upon the ethics curriculum is not the answer to this problem because once we ask, Can ethics be taught? we've already defined the subject that needs teaching as something other than business. I agree with you completely on that, Ed.

I, like you, have taught and observed hundreds of ethics classes, and there's a perverse irony to them. In such classes, students often become engaged in elaborate analytical parsings of moral dilemmas that too often serve as a schooling in rationalization as opposed to a schooling in responsible management.

Instead of asking, Is it ethical to do this deal or set this drug price? I'd like to see us ask, How can we balance the needs of business and the community in this deal? Or how can we maintain the incentives for costly R&D alongside care for the patients who need this drug? I'd like us to focus on "how" rather than "whether" in our teaching and in our research.

A case in point. Last year, I served as one of the judges for the JP Morgan Chase's first running of the Walter B. Shipley Business Leadership Case Competition in honor of their retired CEO. Students from three top B schools put themselves in the place of the World Bank board of directors. They had to decide whether to loan funds to the governments of Chad and Cameroon, so they might participate in a petroleum drilling and pipeline project with a consortium of oil companies.

Students struggled with a variety of thorny problems—the environmental impacts of the pipeline, the dislocation of indigenous people, the risk the governments of these countries would use the funds to fuel further armed conflict rather than to ameliorate the poverty of their people, and so on.

On the other hand, if they didn't fund the project, a chance to make significant improvements in two very poor countries would be missed, and the government of Chad might partner with Libya instead, giving rise to more upheaval. So this was a case where not doing the project appeared to have as many risks as doing it.

The Case Competition was a success by most measures, but for our purposes here, what was most interesting was that the students were forced to apply both qualitative and quantitative analyses, critical thinking and judgement, and a cross-functional approach to what was clearly a finance case study, not an ethics one.

In this situation, perhaps because they knew this was a business leadership competition, the students were able to do all the financial calculations without being ruled exclusively by them. It was a case that was written for second-year finance courses to teach about project financing and how to structure those kinds of deals. They understood the project had to be financially viable, but they put together diverse teams of students who also brought different backgrounds and interests in the environment and developing country politics and international multilateral institutions.

They approached the decision as a question of how to maximize the benefits to all affected stakeholders rather than whether or not to do this deal. They were empowered to look beyond the usual constraints of business classroom decision making. In other words, when asked to find truly creative solutions to what have heretofore been zero-sum choices, students were more likely to do so.

So turning now to the research front, if faculty are going to begin to teach about these questions, they will need to be doing research on them as well. This will require another major shift in questions. For too long, the research around business ethics or corporate responsibility has focused on the refrain, Does social responsibility pay?

Recently, Jim Walsh at Michigan B School and Josh Margolis at Harvard Business School conducted a comprehensive review of relevant literature on this question over the past 30 years or so. By now, you probably won't be surprised to hear that they found we were asking the wrong question again.

Yes, there are numerous studies that look at, Does social responsibility pay? Yes, most of them show a positive or at least a neutral correlation. But, no, they've not convinced the practitioner. As Walsh and Margolis point out, much of that has to do with both the difficulties and sometimes the flaws in the study designs and with the stance of advocacy that may cast doubt on the findings before they're even reported.

Perhaps, David Vogel at Berkeley stated it most succinctly, however, when he wrote last September in the Wall Street Journal, and I quote, "There's evidence that corporate responsibility pays. But managing earnings also pays. Like corporate responsibility, corporate irresponsibility has paid, especially for certain executives."

So instead of asking, does corporate responsibility pay—it may or it may not, just like corporate irresponsibility—we need to be asking in our research, How can businesses create both positive financial returns as well as positive societal returns? We can do this by looking at the social impact for good and ill that businesses already have, as well as at their financial performance.

Lest we face a barrage of complaints that the question I propose is an overly normative one, let me suggest that it's no more normative than asking, How can business maximize shareholder wealth? Perhaps we'll find, just as we did with the students when we required them to balance business and wider societal outcomes in the JP Morgan Chase competition, that asking the question is the beginning of making the answer possible.

It's probably become obvious that I do not think the impact that we're all aspiring toward lives exclusively within the business ethics domain. I believe that these teaching and research questions need to be framed as marketing and finance and strategy questions. They need to be taught within those courses as well. I believe they need to use the tools of business analysis as well as moral analysis.

Rather than reducing the importance of the business ethics department and dedicated ethics courses, however, I believe this approach increases their significance. Instead of asking, should we teach in dedicated courses or integrate throughout the curriculum, the answer to me is clear. We must integrate.

What we can ask, then, instead is, What in fact is it that dedicated courses do best? What do they do that cannot be done in integrated courses? I believe they're necessary as well.

For example, they can serve as curriculum development engines. They can serve as test laboratories for new teaching materials and approaches. They can provide venues for the in-depth comparative analyses that may not happen in the other courses. I believe business ethicists need to be researching in partnership with colleagues in other domains and publishing in those journals as well. I was excited to talk to a lot of you today who are doing just that.

So are we having an impact? Not enough. Can we? Most definitely. I believe we have a moment right now to make that impact. In the most recent issue of "Across the Board," the Conference Board magazine, Al Vogel, their editor, argues that the time has come for what he calls corporate citizenship. He argues that there is an environment now in the business world among practitioners and a receptive audience, finally. If he's right and we have the attention of practitioners, I think we need to take advantage of it.

David Friedman: I'm the only outsider on this panel since I neither teach business ethics nor teach people to teach business ethics. I suspect I was invited in the hopes that I would come out against ethics, thus making it a more interesting discussion, and while I'm not willing to do that, I would like to address some reservations about the project of teaching business ethics.

I want to start by arguing that it's really two different projects, easily confused. One of them is the project of teaching people about the norms of the society they're going to be a part of, whether that's American business or some foreign country where they're doing business.

It seems to me that it's clearly useful, if you're going to interact with other people to understand what their norms are so that if other people violate those norms, you will know not to trust them, and you will know not to violate their norms unless you want to not be trusted. However, this proposition has absolutely nothing to do with right or wrong. A norm is a norm, whether or not you agree with it.

One can easily enough imagine cases where part of what you are learning is: People who drink wine when somebody else is watching demonstrate themselves to be untrustworthy; they're bad Muslims. Therefore, you should not do that. So that, as I say, is a useful project, but it is one that has nothing to do with moral philosophy.

The second project and the one that I'm suspicious of is the project of teaching people what right and wrong are. The old name for that was preaching. The problem with that project is that the people who are teaching, in fact, know no more about that subject than the people they're teaching it to.

Despite several thousand years of endeavor by moral philosophers, we have not yet in my view come up with anything that comes close to being a knockdown argument for why one position on right and wrong is right and another is wrong. Consequently, anybody who claims to be showing people, here's how you ought to act and this is why, is either mistaken or engaged in fraud. I disapprove of fraud in terms of my own moral standards, and therefore I think it's a bad idea.

Now to be fair, it's also possible to do something else when talking about right and wrong to students, and I think that Professor Velasquez clearly is attempting to do it in his book: that is, to take the agnostic position that he the teacher doesn't actually know anything about right and wrong, but he will present a whole lot of positions.

He covers such a wide range that it even includes mine, to my astonishment. He will present a whole lot of moral philosophies for each one, and he'll say these are the arguments for and these are the arguments against, and these are the counter-arguments and these are the counter-counter-arguments. He will thus provide his students with information and ideas by which they can think through right and wrong for themselves.

There are two problems with this. One of them is that it's very hard to be agnostic. Although I'm sure that Professor Velasquez honestly tried, at some point after this panel is over, I can suggest to him some respects in which he may not have entirely succeeded.

But beyond that, insofar as you do succeed in the project, you have, I think, created an interesting course, and it's clearly a course that somebody's who's going to get a Ph.D. in philosophy ought to take at some point. It is probably a course that some people might find fun to take; I might have enjoyed it, for example.

But, I don't think it's in any sense part of the core learning of becoming a businessman to know the moral history of philosophy for the last millennium or two and what the arguments are on every side because in fact when the dust clears, people have their own views of right and wrong. You may be able to help them think through those views a little bit more, but that's about what you can do.

I'd like to illustrate my point from Professor Velasquez's book. His book starts out in Chapter 1 with a discussion of how the Merck Corporation made an ethical decision to possibly lose money developing medicine to cure river blindness, which afflicted very poor people who probably couldn't pay much for it.

He argues, not only was this a morally right, but this was a right decision for their profit, for maximizing their bottom line. I think you argue in general that acting ethically on average does in fact maximize profits. That's the claim I found in here.

You offer as an example of that the Merck executive who said, "I went to Japan a long time ago and discovered they love us in Japan, and why do they love us in Japan—because we were the people who introduced streptomycin to Japan and that helped wipe out TB, and therefore we now have a large share of the Japanese market."

Fine. Could well be that acting ethically is often, perhaps even usually, the sensible thing to do for maximizing your profit. But Professor Velasquez then goes on to make a very important distinction, which is precisely the distinction I just made. He distinguishes between descriptive ethics, which is basically sociology and anthropology-it is how people behave-and normative ethics, which is how you ought to behave.

He says he's going to talk about normative ethics. He somehow misses the fact that all of his arguments for why acting ethically result in your firm doing well are arguments about descriptive ethics, not prescriptive ethics.

If after all, what Merck had been doing was introducing birth control pills to some society where their norms were violently anti-contraception, those actions would have been correct in terms of normative ethics. They would have been wrong in terms of the descriptive ethics of that society. They would have made Merck very unpopular, and they would have ended up with zero market share in that country.

It seems to me that teaching about the norms of the society, whether American business society or foreign society, is indeed a valuable tool in trying to make your company succeed. But, that's about descriptive ethics. Prescriptive ethics, normative ethics, as distinguished from descriptive ethics is useful only for the purpose of getting into heaven, or if you like, having a good conscience on earth.

I've taken advantage. There's a certain advantage to being in a Jesuit school and I have contacts. I arranged for a professional census of heaven. I have determined that moral philosophers are badly underrepresented.

Of course, one could go on to other examples. I can think of a number of cases where we might disagree on the facts. When, for example, Monsanto develops the GM crops that feed millions of people, let us suppose—you may disagree with them—but suppose that Monsanto is right, that they are indeed doing a good thing. They still suffer. Why do they suffer? Because the opponents of GM crops have good access to propaganda methods, lots of moral passion, and they can get the descriptive ethics on their side and complain about Frankenfoods.

Similarly, Dow Corning introduced breast implants. There is essentially zero evidence that they are actually dangerous. However, there is a strong ethical belief, a descriptive ethical belief, that women are supposed to live with the size of breasts God gave them and that this attempt to mutilate their bodies in order to make themselves more sexually attractive in our patriarchal society, or whatever is going on, is wicked. Then, the descriptive ethics come down like a ton of concrete on Dow Corning and cost them a lot of money and make them wish they had never developed the implants.

In each case, the effect really depends not on what is right or wrong. That is an important issue if you are deciding what life to live, but if you're concerned with your company doing well, the question is what do people think is right or wrong.

I think the case for teaching norms is pretty straightforward. I don't know if we know enough about it to do it, but certainly in principle, it's useful information.

But teaching norms is an amoral project. That if you are doing business in 19th century France, the fact that a man is flagrantly unfaithful to his wife is utterly irrelevant to whether you should expect him to keep his contracts or cheat at cards. If you're doing business in 19th century England or 20th century America, that same fact is highly relevant because those are two different sets of norms, one in which that behavior is and one in which it is not a violation of the norms.

So, as far as I can tell, the only real risk in teaching norms is that professors may be tempted to tell their students what they think the norms ought to be, instead of what they are. But, failing that, it seems like a useful project.

What about moral philosophy? Well, the old version of moral philosophy was religion, and nobody ever saw much evidence that preachers behaved any better than other people, which casts some doubt on their expert knowledge. The new version is moral philosophy, and again we don't have very much evidence on that.

I want to speak for a couple of minutes as a casual observer of moral philosophy. As far as I can tell, in my popular history, the project starts with Plato. Plato has these wonderful dialogues in which Socrates makes some superficially plausible argument about something, and couple of plants in the audience ask set-up questions, and Socrates knocks the questions down. Everybody says, "Yes, Socrates, how could it be otherwise?"

The up-to-date version of this project is John Rawls. Rawls sets up a superficially plausible argument about what you would agree to behind the veil of ignorance. He then notices that unfortunately the argument he has set up leads straight as an arrow to utilitarianism. He goes, no, no, no, no, I don't want to be utilitarian. That's not where I'm going.

He then assumes people are infinitely risk-averse, that in considering an uncertain prospect, all you care about is how bad is the worse thing that could happen-an assumption that no human being in his right mind would make about any form of behavior for any good reason.

On that assumption, he concludes, sure enough, behind the veil of ignorance, we will maximize the welfare of the worst-off person, thus, getting him to conclusion that he wanted to get to from the beginning, which doesn't unfortunately follow from his argument. Ad all of that subset of moral philosophers who wanted to get to the same conclusion say, "Oh yes, Professor Rawls, how could it be otherwise?"

It seems to me has been the project for quite a long time. I believe that right and wrong matter. I believe it is sometimes instructive to talk to your friends about what is right and wrong, and to try to think through the differences in your moral beliefs. But, I think the claim that moral philosophers really have an argument in the sense in which biologists and physicists or even mathematicians have an argument has been a bogus claim for several thousand years.


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