Ridley Hall, Cambridge

Virtues in Business by Richard Higginson

Executive Summary

In recent years there has been a resurgence of interest in character and the virtues. 'Follow the rules' and 'calculate consequences' are being seen as increasingly unsatisfactory answers to the question how we should make moral decisions. In contrast, the virtue approach focuses on what we are, believing this will ultimately take care of what we do. This approach has much to commend it from a Christian perspective.

Imagine you are the Managing Director of a medium-sized firm, trying to win an important contract in a developing country against considerable competition. Through conversation with an agent it becomes clear that you will only win this contract if you are prepared to pay the government minister who will decide who gets the contract a substantial sum of money. This sounds very much like 'an inducement improperly influencing the performance of a function meant to be gratuitously exercised' - the standard definition of a bribe.

What will you do? Well, it depends whether you're Derek, Chris or Victor. (You'll see the significance of my choice of names in due course!)

Derek the Deontologist

If you're Derek, you will refuse to make such a payment. You believe that paying bribes is wrong - full stop. It would be a violation of your moral duty to fill the coffers (probably the Swiss back account) of this grasping government minister. You believe you must stick to the moral rules, even though you recognise there's a cost involved. Your company almost certainly won't win this particular contract.

In terms of moral theory, Derek is a Deontologist. I've called him Derek because I like alliteration. D for Derek, D for Duty and D for Deontology. The word 'deontology' is derived from the Greek for 'necessary' - 'what ought to be'.

The foremost exponent of the deontological approach was the German Enlightenment philosopher Immanuel Kant, to the extent that this approach is often known as the Kantian approach to ethics.

Kant lived from 1724 to 1804. He was a lecturer in Koenigsberg in what was then East Prussia. He lived a very restricted life (he never travelled more than 26 kilometres from Koenigsberg) and a very regular life (he always went for a walk at exactly the same time every day, so that the people of the town set their watches by when they saw him!). He was a prolific writer and a seminal thinker.

Kant believed that the highest good was the good will. To act from a good will is to act out of duty. He thought that what one's duty is can be established by one's reason, and that the rational being utters the commands of morality to him or herself. Our moral obligations are worked out and owned by ourselves as autonomous beings. They should not be followed because our parents say so, or the church says so, or even because we are virtuous people and want to do them. Rational justification is all-important.

Kant made a distinction between two types of moral statement, hypothetical imperatives and categorical imperatives. An example of a hypothetical imperative is 'You ought to deal honestly as a tradesman, otherwise you will gain a bad reputation'. In essence it says: If you do (or don't do) such a thing, you will regret the consequences. It appeals to prudence. In contrast, categorical imperatives appeal to disinterested good will: duty for the sake of duty.

There are two main ways in which Kant talked about or formulated the categorical imperative:

1. Universalisability : 'Act only on maxims which you can will to be universal laws' ¹ We should act only in a way that we can consistently will all other people to behave. This will root out our all-too-human tendency to make special exceptions for ourselves. Kant takes the example that we might contemplate making a promise to pay back borrowed money, with no intention of doing so. But if we ask: 'am I willing to make a universal law of this?' the answer is clearly no. If everybody made promises to pay back borrowed money, not intending to keep them, you end up in a situation where nobody's word is trusted - and there would be no promises at all. Our act of breaking our word would therefore not work to our advantage. Dishonesty depends for its effectiveness on a prevalent honesty, but if widely practised, it will lead to that prevalent honesty breaking down. It therefore embodies a contradiction Kant thought was irrational.

Derek, as a good deontologist who was read Kant's Metaphysics of Morals on his mother's knees (!), doubtless justifies his decision not to pay bribes for similar reasons. If everyone is willing to pay bribes, there is no advantage to be gained from paying them. A situation of stalemate results. Alternatively, the rules of bargaining for contracts might be rewritten so that a payment to the relevant government minister becomes an up-front part of the deal. But that turns out very expensive for all the firms involved - everyone, that is, except for the greedy government minister. What Derek and Kant are pointing to is the ultimately self-defeating nature of immoral actions.

Kant believed that once one had decided a particular moral statement or rule is universalisable, it should never be broken. He thought this even about a lie told from benevolent motives to direct a would-be murderer down a false path. Kant is therefore an advocate of an absolutist approach to ethics - absolute rules which should never be broken.

2. Treating human beings as ends: 'Act so that you treat humanity, whether in your own person or in that of another, always as an end and never as a means only' ² This is a frequently cited principle, the intention and effect of which is to safeguard individual human dignity. He is not saying you cannot treat other people as means at all. If you hire a taxi to get home from the station, you are using the taxi-driver as a means to your end. But if you speak to him with respect, treat him with dignity and - perhaps most important as far as he's concerned - pay what he charges you, then you're treating him as an end also.

This principle is highly relevant to the stakeholder debate in business. Does a company exist fundamentally to serve the interest of the shareholders, or to serve the interests of all its stakeholders? Kant's principle of treating human beings as ends has been cited on the stakeholder side of the debate. R. Edward Freeman and William M. Evan wrote an article called 'A Stakeholder Theory of the Modern Corporation: Kantian Capitalism' ³ In it they argued that the interests of stakeholders should never simply be subordinated to those of shareholders, because 'all stakeholders should be treated as ends in themselves, never merely as means.'

Kant's two formulations of the categorical imperative might seem to have nothing to do with each other. But I believe they are united by his underlying conception of the human being as rational. It is reason which gives human beings their dignity, in his view. And it is reason to which one is appealing when insisting that people should think about situations in a universal context, not simply a local or partial one.

Chris the Consequentialist

Let's go back to our bribery dilemma. Chris is another Managing Director who takes a different attitude to Derek. Chris weighs the situation up, decides that a pragmatic approach is called for and pays the bribe. The government minister duly has his coffers swollen and Chris's firm wins the contract.

In terms of moral theory, Chris is a Consequentialist. He calculates the consequences - that's why I've called him Chris! You could even say he's culturally contextual. He's sensitive to the particular context and culture in which he's operating.

The foremost exponent of the consequentialist approach is the English Utilitarian philosopher Jeremy Bentham.

Bentham lived from 1748 to 1832. He was a notable Reformer, campaigning for greater democracy and more humane forms of punishment. If you go to University College London, curiously, you can see him sitting in a cupboard - he asked for his skeleton to be preserved dressed in his own clothes.

Like Kant, Bentham had every confidence he could establish an objective standard of morality. But he used his reason to devise a very different ethical system. Unlike Kant, he thought it neither realistic nor necessary for human beings to distance themselves from what they found pleasant. His famous book An Introduction to the Principles of Morals and Legislation begins:

'Nature has placed mankind under the governance of two sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do, as well as to determine what we shall do.' ⁴

Bentham's view was that because the maximisation of pleasure and the minimisation of pain are our central preoccupation, it is futile to base an ethical system on any other principle. But he then moves swiftly from the starting-point that we all desire our own happiness to the premise that we should wish to see happiness distributed as widely as possible. He sets out a system of Utilitarianism (utility being the concept of usefulness) not as a maximising of individual pleasure - that would be hedonism - but as the attainment of the greatest possible amount of happiness for the greatest possible number of people. The task of a country's laws was to increase the likelihood of achieving this - hopefully making individual happiness coincide with universal happiness as much as possible.

Bentham devised the idea of a hedonic calculus, listing all the criteria of pleasure to be taken into account when assessing the consequences of an action or piece of legislation. These criteria are intensity, duration, degree of certainty it will occur, capacity to gender further pleasure, how free of accompanying pains, how many people it affects, etc. He listed criteria of pain in the same way, and listed the things which (in his opinion) bring pleasure and pain. It is unlikely Bentham thought that an exact calculation of future effects could be calculated in this way, but he thought the calculus gave a good general outline, and should always be kept in view.

Bentham was followed by John Stuart Mill, who produced a more sophisticated if less consistent version of Utilitarianism. But in either form, Utilitarianism is clearly distinguished from Kant's deontological approach by its unashamed concern with the consequences of human actions. Although Utilitarians have usually recognised a very real place for moral rules (since these embody human wisdom about what usually makes for the happiest consequences), they tend to be readier to break or set aside rules in unusual circumstances. Thus while Kant thought the duty to tell the truth was absolute, Mill thought it a rule that allowed for occasional exceptions. Rules become relative.

Chris, as a keen (if probably unconscious) consequentialist, believes that the importance of winning his contract justifies making a bribe. He does not view this simply in selfish terms. After all, the future of his firm might depend on his landing it. If he doesn't win the contract, he might have to make many of his employees redundant. When Carl Kotchian, President of Lockheed in the 1970s, was charged with offering $12m in bribes to high Japanese officials to facilitate sales of Lockheed's TriStar plane, he defended himself by saying that the TriStar payments would provide Lockheed workers with jobs and thus redound to the benefit of their dependents, their communities, and stockholders of the corporation. While it is possible to counteract by arguing that the payment of bribes has undesirable long-term consequences, many businesspeople would say that is not something they can afford to consider. They need to deliver short-term results if their firm is to survive and they are to stay in a job. Hence the pressure to win crucial contracts at any cost.

Because businessmen and women are practical people who are concerned about results, they often show a strong utilitarian bias. Over the last 200 years Utilitarianism has been very influential on the social and political scene. In raising questions about whether people benefit and how many benefit from a particular practice or institution, the spirit of Bentham and Mill has waged war on selfish privilege and inefficient bureaucracy. There is an echo of Bentham's hedonic calculus in what we now call costs-benefits analysis. Think of a company's board wondering whether to relocate a plant. Alternative sites are considered or the option of staying in the same site considered in terms of benefits and costs - working out the consequences for employees, customers, shareholders, local communities, etc. This way of thinking is so deeply instilled in us we hardly realise we're doing it.

An Ethical Impasse

You may be wondering what I think of these two ethical approaches. Personally, I think the debate between them is evenly balanced. Within the Bible, there are some strands of moral thinking which are deontologist and others that are consequentialist. (My early book Dilemmas sets out the detailed evidence for claiming this. ⁵) But my overall judgment is that neither Kant's approach nor Bentham's approach will suffice. Both, if taken to their logical extreme, end up in uncomfortable places. Deontologists like Derek insist on purity of means but end up ignoring some horrific ends which sometimes result from their readiness to stick to the rules whatever the cost. Consequentialists like Chris insist on the desirability of results but end up ignoring some horrific means used to arrive at them. The fact is that ends matter and means matter. That's why moral dilemmas - including some business ones - are so horribly difficult.

In addition, there are some problems that are shared by both approaches.

1. Both seem rather abstract and curiously divorced from the way most people actually operate ethically. I find that few people - businesspeople included - warm instinctively to one approach or the other. Neither comes over as true to life. From both Kant and Bentham, you get the picture of a rather faceless human being equipped by theory to make moral choices that lack psychological connection with either the person's past or their future. In his influential book, After Virtue: A Study in Moral Theory (1981), Alasdair MacIntyre protested at the domination of these two approaches over the last 200 years.
2. Though the arguments of both deontologists and consequentialists may be internally self-consistent; the problem comes with their starting-point. One side plumps for duty as the underlying premise, the other for happiness. The choice of starting-point seems rather arbitrary, and no authority for arbitrating between the two is recognised.
3. Both approaches are highly individualist, in the sense that individuals are pictured making moral decisions in their own - working things out logically as best each person can. They see ethical thinking as a task performed by morally autonomous individuals, whereas MacIntyre sees it as a task for the community within which individuals find themselves. Many businesspeople will make important moral decisions in collaboration with colleagues and fellow-directors.
4. 4. Both approaches are overwhelmingly concerned with what we as individuals should do. The emphasis is on solving moral quandaries, on deciding between alternative courses of action. But that's only part of what it means to live a moral life. In MacIntyre's view, there's insufficient attention to what we are and the sort of people we wish to become. Moral decisions are not made in a vacuum. They emerge out of the complex personal histories, psychologies and sociologies that each of us represent.

The alternative approach which MacIntyre develops is an ethics based on virtue and the virtues. He is concerned with the formation of individual character, nurtured by immersion in communities dedicated to shared goals and ideals. This is not a new approach in ethics. It's an approach MacIntyre identifies with the Greek philosopher Aristotle. He says:

'...it was because a moral tradition of which Aristotle's thought was the intellectual core was repudiated during the transitions of the fifteenth to the seventeenth centuries, that the Enlightenment project of discovering new rational secular foundations for morality had to be undertaken.' ⁶

Victor the Virtuoso

To earth all this theoretical discussion in business reality, let's return to the dilemma with which we began. Along with Derek the deontologist and Chris the consequentialist, we have a third Managing Director, Victor, who is bidding for the contract. Victor - as you would expect from a man whose name begins with V! - is a man brimming with virtue. But he isn't operating on his own. At his right-hand side is his Finance Director, Victoria, a woman whose virtues match his own. They represent a company with a very distinctive ethos and that ethos shines through their every action.

So, do this virtuous duo pay the bribe or not? The likelihood is that they won't. But their reasons for restraint will be different from those of Derek. It won't be that they see paying bribes as a dereliction of duty. It's more that it simply doesn't match the people they are. Bribing people is not part of their make-up. Whereas Derek deliberates long and hard and then decides not to do it, Victor and Victoria never give it serious consideration at all. Aristotle would have been proud of them. Whereas Kant thought acting virtuously often meant acting against your inclinations, for Aristotle it meant acting from your inclinations formed by the cultivation of the virtues.

Does this nobility of character mean that Victor and Victoria are consigned to the role of losers, that there isn't any place for them in the tough world of business, and that their company will rapidly go bust? Very possibly. But what people of virtue and character sometimes display is a capacity to think creatively, to 'get out of the box', so that they aren't just limited to two stark choices: to pay or not to pay. What might thinking creatively mean in this instance? I'm not sure, but it might mean an unwillingness to operate through the agent and accept the choices he's dictating to them. It might mean a determination to make direct contact with the government minister and redouble efforts to convince him that theirs is the firm he should do business with. Victor and Victoria could end up being victorious after all!

Aristotle had much to say about a variety of virtues. His Nichomachean Ethics includes a table of no less than 13 virtues. They include wittiness, proper ambition, and righteous indignation. Each is presented as a mean, a middle way between excess on one side and deficiency on the other. Courage, for instance, is the middle way between rashness and cowardice. The virtue of prudence or practical wisdom helps to find this middle way and ensure that each virtue is rightly formed. It is a wisdom that transcends the routine application of rules.

The idea that there are four cardinal virtues pre-dates Aristotle. It goes back to his predecessor Plato. Plato named justice, prudence, temperance and courage as the four virtues on which all others hang or hinge. He links them to the workings of the human soul. Although Aristotle doesn't follow Plato's scheme precisely, it proved influential, and the Roman statesman Cicero in the 1 st century AD organised his treatment of moral obligations in society under the heading of the cardinal virtues. It was not until the 4 th century that we see Christian theologians adopting this way of thinking. St Ambrose, Bishop of Milan, used the four cardinal virtues in his treatise instructing the clergy De Officiis Ministrorum. St Augustine followed soon after.

The Christian Tradition

This raises the question what as Christians we are to make of the virtue approach to ethics, a tradition which has its origins in classical culture before Christianity and is in process of being recovered today. Interestingly, the four cardinal virtues are found nestling together in a little-known verse in the Apocryphal book Wisdom of Solomon, which was probably written by a Hellenistic Jew living in Egypt in the 1 st century BC (8:7):

'And if anyone loves righteousness,
her (wisdom's) labours are virtues;
for she teaches self-control and prudence,
justice and courage;
nothing in life is more profitable for mortals than these.'

If we look at the mainstream Scriptures, there does seem much to support an approach to ethics based on character and the virtues. Some ethical material in the Bible takes the form of specific instruction and offers guidance on particular moral issues. But there is also much that is concerned with the development of human character, individually and in community, and which identifies certain qualities as fundamental to living in a way which is pleasing to God (eg Micah 6:8).

In the New Testament, there are several passages where these qualities or virtues are strung together in lists (eg Col 3:12-15, 2 Peter 1:3-11; Gal.5:19-26).

What these demonstrate is that the business of being a Christian involves acceptance of a certain obligatory shape to one's life. Individuality is certainly not extinguished in being a follower of Jesus, but there is a recognisable Christian character. Acquiring this character is seen both as a gift and a task. The qualities are described as fruit of the Spirit, stressing that they emanate from God; yet we are also urged to 'walk by the Spirit' (Gal.5), 'to clothe ourselves' (Col.3) and 'to make every effort' (2 Peter 1). The fact that the nine qualities in Gal.5:22-23 are described in the singular as fruit suggests that they are interrelated, and that it is the Christian's responsibility to 'grow' them all. It's not a case of some individuals being responsible for the manifestation of certain qualities and other individuals for different qualities, as is the case with Paul's teaching on the gifts of the Spirit. Let's also note the primacy given to love in the New Testament. It was given special prominence by Jesus in his twofold command to love; it comes first in the list of the fruit of the Spirit and is the climax of the list of virtues in 2 Peter; and it's exalted above all in Paul's wonderful chapter 1 Corinthians 13.

So when Christian theologians came to adopt the cardinal virtues - finding significant mention of all of them in the Scriptures - they felt they couldn't just leave those virtues on their own or as they found them. They added the three so-called theological virtues found in 1 Corinthians 13: love, faith and hope. They also tried to integrate the cardinal and theological virtues. A common explanation was to say that justice, prudence, temperance and courage are the virtues needed to express, faith, hope and love in the varied and demanding circumstances of this world. Augustine saw the four cardinal virtues as different forms of love and related them all to love of God:

Temperance is love 'keeping itself entire and incorrupt for the sake of God'
Courage is love 'bearing everything readily for the sake of God'
Prudence is love 'distinguishing with sagacity between what hinders it and what helps it'
Justice is love 'serving God only, and therefore ruling well all else' ⁷

The treatment of the virtues has found more favour in the Roman Catholic tradition than the Protestant churches. However, it's an approach that wielded relatively little influence for two centuries following the Enlightenment. It's in the last quarter of a century, following the publication of After Virtue, that the virtues have been making a comeback. As a philosopher who has converted to Roman Catholicism, MacIntyre's focus on virtue and character has been paralleled in Protestant theological circles by Stanley Hauerwas, the larger-than-life theologian from Texas who has written a stream of books with titles like Character and the Christian Life and Vision and Virtue. It has also started to find favour among writers on business ethics. Prominent among these is Robert Solomon, writer of the article on 'Business ethics and virtue' which follows the standard chapters on 'A Kantian approach to business ethics' and 'Utilitarianism and business ethics' in Blackwell's A Companion to Business Ethics. ⁸ Its inclusion shows how respectable virtue ethics is becoming. Solomon has set out his views in much more depth in his book Ethics and Excellence, published in 1992.

However, I'd be the first to admit that writers on business ethics only have a limited impact on business. What's also significant is how many companies set out their core values in mission statements or codes of ethics that look intriguingly like a list of virtues. The word 'values' is much more likely to be used than 'virtues' (essentially, qualities that the company puts value on) and they may not correspond precisely to the cardinal virtues. Typical values which are espoused are fairness, care, excellence, honesty and trust. But there's plenty of common ground between the two. In the survey I've done of these statements, the word that crops up more than any other is integrity. My favourite, rather breath-taking example of this is Ford: 'Our integrity is never compromised'. Even if integrity is seen as something a company aspires to rather than achieves, it's significant that companies want to be known for their integrity. Robert Solomon gives a special place to integrity in Ethics and Excellence. He says 'Integrity is not so much a virtue itself as it is a complex of virtues, the virtues working together to form a coherent character, an identifiable and trustworthy personality.' ⁹ This is surely correct: integrity is to do with consistency and wholeness, with everything holding together so that there's no divergence between the way someone acts in private and the way they act in public. Integrity is also the central theme in a paper recently produced by the Skills Council for Financial Services called Integrity in Practice: An Introduction for Financial Services. One of its authors is Christopher Jamison, a Benedictine monk from Worth Abbey in Sussex.

So we live in interesting times in the business world. There's this curious mixture of a post-modern flux where anything goes, where we even have people writing business books praising the seven deadly sins, and an appeal to shared values and the classical tradition. My conviction is that Christians ought to be well equipped to make a contribution to the ethical debate that is happening in business. But there is work to be done in teasing out what we think. That's what the conference on The Virtues of Business was all about.

Notes

1 Immanuel Kant, 'Foundations of the Metaphysics of Morals', Critique of Practical Reason and Other Writings in Moral Philosophy (ed. Lewis W. Beck), University of Chicago Press, 1949, p.80.

2 Op.cit. , p.87.

3 Published in Tom L. Beauchamp and Norman E. Bowie (eds.), Ethical Theory and Business, Prentice Hall, 1993, pp.75-84.

4 Chs. I-V of Bentham's Introduction may conveniently be found in John Stuart Mill's Utilitarianism, Collins Fontana, 1962. See p.33.

5 Published by Hodder & Stoughton in 1987. See especially ch.3.

6 Alasdair MacIntyre, After Virtue: A Study in Moral Theory, Duckworth, 1981, p.117.

7 See 'On The Morals of the Catholic Church' in Basic Writings of St Augustine (ed. W.J.Oates), Random House, 1948, vol.1, pp.331-332.

8 See Robert E.Frederick (ed.), A Companion to Business Ethics, Blackwell, pp.30-37.

9 Robert Solomon, Ethics and Excellence: Cooperation and Integrity, OUP, 1992, p.168.