8.6 Business Ethics and Technology

Perhaps more than in any other field of human endeavor, success in business is quantified in terms of a single outcome--profit. As a result, there is always pressure to cheat the customer or trading partner by failing to disclose information in order to improve the monetary return. Business people, whether honest or not, have always been regarded with some suspicion, and every treatise on morals has had something specific to say about the ethics of doing business.


For instance, the New Testament Greek word that is usually translated as "sincere" literally means "without wax" and refers to the practice of holding pottery up to the sun to determine whether a dishonest peddler had filled cracks with wax to make the pot appear sound when it was not. Every society that has used coins as a medium of exchange has had difficulties with those who debased the coinage either by shaving off a portion or by mixing inferior metals with the "precious" ones. Suppliers to the military have been notorious throughout history for cheating the state. The Roman army, the British Navy, and the United States Marines have all had to deal with high-priced but cheaply made goods, with rotting food supplies, with late or missing deliveries, overbilling, kickbacks, bribes to commanding officers, clothing that fell apart, and weapons that did not work.

Modern consumers face the same kind of problems with misleading or false advertising, industry cartels or monopolies, the selling of used goods as new, and such high-pressure sales techniques as the "loss leader" or "bait and switch." They must also deal with goods that do not work or fall apart but carry no warranty, or whose manufacturer goes out of business rather than repair the item, replace it, or even deliver it in the first place. The scam may even involve advertising goods that do not exist, collecting some money, and leaving town. Nor are software goods immune, for there is no means other than the collective will of the market to enforce their quality, and in such a rapidly changing industry, there are no effective guarantees that they will even work. Yet, large vendors have been successful selling badly flawed goods, even in the face of the ability of the target audience to become informed of those flaws.

In most sectors of the economy, such problems arise with only a small percentage of all commercial transactions, and only over a short time, for if they were pervasive or enduring, there would be no economy to speak of. When they do arise, they attract considerable publicity for the same reason. Like any social institution, trade and commerce can exist at all only if the people can trust them to be reliable; the instances where they cannot be trusted tend to undermine the entire economy and society. The software industry is so immature that its customers have so far been willing to put up with inconveniences they would not tolerate from any other group of manufacturers, but this situation cannot be counted on by vendors to continue. Its customers will surely begin to demand the same kind of functional warranties for software as they do for waffle irons. If its workers can more to a more professional model they may simultaneously be more able and willing to deliver such guarantees.

Unbridled Competition

Less publicly obvious but equally problematic are the practices of cutthroat competition intended to damage or destroy other businesses in the same field. In the name of such competition, product or business plans may be stolen, employees bribed or lured over to the competition, merchandise duplicated despite copyright or patent, and damaging information circulated about competitors. Alternately, a company with a large enough bank account might force competitors out of business by selling at a loss in the targeted marketplace, buying off the alternatives, or using market muscle to force vendors to carry, display, or bundle only the dominant product.

To some extent, these difficulties stem, on the one hand, from concentration on market share and profit as the exclusive measures of business success and, on the other hand, from the frequent separation of any sense of ethical behavior from the world of business. The prevalent world view of the industrial age has been that business is done in a jungle, that it is necessary to destroy competitors before one gets the same treatment from them, and that any means justifies the end of higher profits. For the most part, absolutist ethics had no place in business because an action that maximized profits in one situation might not in another. A business person might seriously claim to hold to an absolutist ethic as part of a religion but live a business life as though mutual responsibility and ethical obligations were outdated or did not even exist--and do this without seeing any contradiction. A common slogan has been "business is business." The implication is that it carries its own rules, whatever ethical code the doer of business might in all other aspects of life assent to. In short, such a world view is focused on money, not on the actions or process by which it is obtained. It is also consistent with a kind of economic Darwinism--only the profitable survive to make more money.

However such attitudes and practices contain the seeds of their own future destruction, for they can effectively help achieve the desired ends only if they are kept secret. Consider the White House whose dirty tricks become exposed, the stockbroker caught stealing information and manipulating prices, the chip manufacturer whose FPU cannot do proper arithmetic, or the soft-drink company that continues to market bottles it knows will explode when tipped over. The common thread in all such events is information release. Automobile companies can no longer cover up their release of a lemon, and a software manufacturer whose newly released product still contains bugs will have the fact trumpeted on electronic bulletin boards all over the world within days.

What could once be effective only by being kept secret can no longer be hidden in the information age, and is therefore much less likely to work. Too many people have too much access to information and there are too many disgruntled employees ready to blow the whistle for any modern corporate executive to suppose that damaging information or questionable business practices can be withheld. Such whistle-blowers might not only become celebrities, but also sell their memoirs for a tidy sum, and have the protection of the law to keep their jobs besides. There are too many reporters with the time, patience, and computerized access to government and other public files and a desire to win a Pulitzer prize. Moreover, board members can now be held personally liable for the companies they direct, and this gives them a direct stake in doing what is, if not broadly right, at least narrowly legal. The net result is that the past can seldom be hidden and the present likewise is becoming an open book. While not everyone will necessarily care about the deleterious information, and it may be blunted by effective advertising, it is usually available.

Honesty Revisited

The model of universal information availability therefore forces a reexamination of business practices. In the process, it could be discovered that honesty in business may be not only the best policy also but the only one that a fully informed public will accept. A tycoon of the industrial age could sometimes oppress the work force, ignore safety standards, bribe officials, lie about the competition, create a monopoly, produce shoddy goods, and overcharge the public. All this could escape condemnation or even notice if the tycoon could simultaneously pose as a god-fearing, church-going philanthropist and benefactor. It would be impossible in ideal information age to operate this way, because such practices would quickly become common knowledge.

In addition, the perceived failure of moral relativism to provide society with useful and consistent answers to ethical problems has opened the way for a possible return to moral absolutism, and this is true in business as a part of the total society. In the conventional mid-twentieth century view, right and wrong had little meaning, so to have a different view of them in the various fragmented compartments of life created no philosophical problems, even if it did create social ones. In an absolutist view, right and wrong do have consistent meanings, and these meanings are true in all contexts, including business. Commerce is a part of life, and governed by the same rules; it does not constitute a world of its own. Its leaders will be expected to be privately and publicly clean, and it may become impossible to pretend that one's personal morality is irrelevant to one's fitness to lead a corporation in the public interest. Indeed, the corporation, which as a fictitious person is accountable for the ownership of property and the making of commercial transactions, will be held accountable for its moral integrity as well. Thus both business leaders and their corporate entities are increasingly being held responsible for the results of their decisions--in the workplace, the environment, the marketplace, and the personal space where products are used.

This trend is seen in two developments: first the widespread interest in developing codes of ethical conduct for professions and conflict of interest guidelines for politicians, and second in the proliferation of "ethical" mutual funds targeted to those who wish guarantees that they are investing in industries that do not, say, pollute, produce tobacco or alcohol products, or traffic in weapons, pesticides, or child labour. It is not that there is general agreement on which such activities are or are not ethical; the interesting thing here is the revival of interest in the idea of ethical behaviour--even in the absence of agreement on what is it and where it comes from.

Moreover, the private lives of business leaders are no longer seen as a thing apart from their public ones, but as part of a seamless whole. Such things as insider trading, bribery of officials, sexual exploitation of employees, false and misleading advertising, bait-and-switch selling tactics, and the theft of secrets through industrial espionage are all becoming harder to do and much harder to conceal from public scrutiny. That scrutiny may not in itself change anything--whether the public cares about such things is a separate issue--but the information will be available.

The public is paying closer attention to such arrangements as the "golden parachutes" out of takeover situations by the senior officers of a company, to insincerity in labor negotiations by both parties, to age and gender discrimination, to advertising innuendos, to high executive compensation, and to predatory pricing policies. In an information age, one might also suppose that there could be less tolerance of strikes, because they could be seen as communication breakdowns and therefore as violations of the reigning social paradigm.

Manufacturers are being held more accountable all the time for the effects of the products they make. For example, the maker of a defective computer printer that requires expensive repairs after a few months will not be able to hide behind the legalese of a ninety day warranty limitation but be required to make good on the product for a much longer period of time. Such openness was forced on the automobile industry by consumer advocates in the 1970s and 1980s and it now routinely conducts recalls for safety and other reasons that it would never have considered in the 1960s. Likewise, tobacco companies have been successfully sued for making, selling, and advertising products with reckless disregard for (and even concealment of) the danger to consumers' lives. The very advertising that glorified smoking as the epitome of the "good life" has been cited in lawsuits as deliberately leading people to their deaths. The bottlers and sellers of alcoholic drinks may be held partially liable for the carnage on the highways caused by the use of their products.

Such surprising (to a 1960s mindset) outcomes leads one to wonder whether the counsellors, politicians, child rearing specialists, educators, and ethicists whose advice produces injurious social outcomes will also be sued for malpractice in the future. After all if their product (bad advice) is found faulty, can they not be held liable as well?

As a result of such considerations, many managers are already concluding that profit now depends very much on at least a public perception of a business as honest, and on the fact that the ordinary citizen has many means of finding out if it is not. That is, the mutuality and dependency so often mentioned in this book extend to the relationship between corporations and their customers. Ignoring that mutuality of interests may have immediate and possibly devastating consequences for a company. A seamless WYSIWYG ("What You See Is What You Get") is clearly an aspect the kind of open society implied by universal information access. Honest guarantees, fast and sure repairs, and a genuine atmosphere of serving the customer are becoming the watchwords of business in the new age. The seamlessness of all aspects of life will not only be reflected in this way; it will require new attention to be paid to the education of children. After all, the child who is taught to see nothing wrong with stealing from a neighbor's apple tree or a classmate's desk is not likely to be honest with advertising and expense accounts as an adult.

Thus, along with the information paradigm come others. Honest guarantees, fast and workmanlike repairs, and a genuine atmosphere of serving the customer may well have to become the watchwords of business in the new age. That is, Caveat emptor is being replaced by Caveat vendor . These trends could be magnified by any more shifts away from the selling of goods and toward the provision of services, wherein the human element is even more important, for the whole product and process is on view to the customer at all times. In sum, if the industrial age created the consumer, the premise of the information age is that it enlightens and empowers the consumer.

Neither will it be easy for industrial or business concerns to cover up their wrongdoings or shortcomings in the future. For the sake of their own professional reputations and personal integrity, their own employees will "blow the whistle" much more frequently than in the past, and they will do so with the full protection of both law and public opinion.

Another Possibility

Lest all this discussion seem impossibly optimistic, it is worth repeating that another outcome of universal information availability is also possible--that no one will care about "damaging" facts. Perhaps the current attention to public and corporate morality is a passing phenomenon, a novelty whose bloom will soon wear off. What is more, the principle of holding manufacturers responsible for defective goods could be carried so far that many companies become afraid to introduce new products, lest they someday become the target of a liability suit for unforeseen defects. Should such fears spread further, technological innovation, along with much of the premise the information age seems to offer, could be thwarted. Or, it could shift to those parts of the world where product liability suits are less common.

On a more theoretical level, a society that has bought into a relativistic morality can have its collective view of right and wrong changed very easily. This could lead it to accept shoddy goods, corrupt or unfaithful politicians, and cheating at business as though they were normal. That this is not at all far fetched can be seen by the radical changes in recent years in views on sexual morality. That is, arbitrary or democratic ethics are clearly unstable--information availability could result in anarchy as easily as it could result in demands for greater integrity.

Thus, while the information age promises to change society, it will not necessarily do so in ways that are all for the better--people have to choose to act on information before it has any effect, and they may decide to do nothing.

The Fourth Civilization Table of Contents
Copyright © 1988-2002 by Rick Sutcliffe
Published by Arjay Books division of Arjay Enterprises