The ethics of profit, the profit of ethics

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by Paul J. Voss, The ethics of profit, the profit of ethics, Atlanta Business Chronicle, May 25, 2009, http://bit.ly/1FWUCE5

From an ethical point of view, there is nothing wrong with the word “profit.” In fact, there is nothing unethical about the terms “record profits” or even “multimillion-dollar profits.” One of the aims of business — it bears repeating — is to realize profit. Making profit per se is not an ethically complex issue (even if some misguided anti-capitalists continue to raise it in ethical terms). Rather, we need to consider how individuals and companies realize profits.

The current financial crisis, the most serious in 75 years, dominates the headlines in print, radio, television and the Internet. In many of these stories, reporters use the words “executive compensation,” “deregulation,” “Wall Street” and “profits” in pejorative, unflattering terms. In this epic battle, we all know the villains — those diabolical profit-seekers and their ilk. They are, according to this narrative, greedy, immoral and unethical. But does this stereotype withstand scrutiny and square with reality?

Ethics concerns itself with “ought” questions, as in “Is this something we ought to do?” How ought we allocate scarce resources? How ought we ask our employees to dress and comport themselves? Business ethics plays a crucial role in contemporary commerce and that role will only increase in the coming weeks and months. Companies that ignore the ought questions do so at their own peril.

From an ethical point of view, there is nothing wrong with the word “profit.” In fact, there is nothing unethical about the terms “record profits” or even “multimillion-dollar profits.” One of the aims of business — it bears repeating — is to realize profit. Making profit per se is not an ethically complex issue (even if some misguided anti-capitalists continue to raise it in ethical terms). Rather, we need to consider how individuals and companies realize profits. If the profits (even record profits) came about through hard work, superior marketing, quality engineering, excellent customer service or brilliant innovation, individuals and companies ought to be applauded and commended.

If these people followed the spirit and the letter of the law, if they used thefree market, their imaginations and the efficient allocation of capital to their advantage, we should learn from them, emulate them and seek prosperity ourselves.

If, on the other hand, how one made profits reveals exploitation, disregard for law, destruction of the environment, unfair pricing or any other malfeasance, then proper legal measures will follow and these companies will be punished in the marketplace. No company can continue to conduct business with willful disregard of established law and standard ethical business practices. The world has changed and it will no longer tolerate such abuse of law, misuse of power, disregard for the environment and exploitation of people. In fact, innovations in technology (and the emergent paradigm shift toward beneficial corporate stewardship) make it all but impossible to hide such covert and illegal activities. The free exchange of ideas and information will necessarily bring such illegal excess to bear.

We ought to celebrate the free market, the drive for profitability and the quest for efficiency. We ought to acknowledge and thank those business enterprises that do business the right way and realize the financial reward. The free market, after all, has helped create more wealth for more people than any other economic system in the history of the world. Companies that continue to “do well and do good” in this market have a clear understanding of the ethics of profit and the profit of ethics.

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