Ethics, as a science, seeks to determine the ‘summum bonum’ of human life. It passes judgments of value upon human actions with reference to the moral ideal. Judgments of facts are judgments of what is; judgments of value are judgments of what ought to be.
The day is gone when business was regarded as an institution solely for the purpose of making money. So long as man made money and kept him out of jail he was considered successful. There was no place of ethics in business.
But as we advanced into the twentieth century a new philosophy of management emerged which deeply influenced managerial behaviour. The old fashioned slogan that, the business of business is business or that we have no business beyond business will not do any more.
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The concept of social responsibilities is more than a window-dressing slogan. Business managers have a natural and intimate stake in the viability of society, in the stability and growth of its economy; in the orderly functioning of its free and democratic institutions under the rule of law.
Spokesmen for industry are increasingly articulating a philosophy of moral responsibility. At the same time the fact must be faced that labour is a cost in doing business and that there is need to remain competitive.
Thus the modern manager is continuously confronted by the necessity, on the one hand, of investing the power he wields with moral values if he is to hold it for any length and on the other, of keeping business productive and paying its way if he is to enjoy any opportunity to act responsibly.
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It has always been taken for granted that business was amoral. But until recent years, it did not occur to businessmen to articulate the fact that what they did had moral goals. Now just the opposite is true.
An explicit moral attitude is expressed again and again in literature and some leaders of business take the un-ambiguous position that the corporation is a moral community.
A change in the social and moral climate of our times has made it impossible to be content with letting matters rest at this point of maximizing profits. Now-a-days, individual institutions and national cultures are inter-related and the ways in which business has been characterised in the past are no longer adequate.
Thus, for a long time it was termed as a form of private capitalism. In recent years businessmen have come to realise that they must find a way of interpreting themselves in a manner which would make our industrial system consistent with democracy and socialistic pattern of society.
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Thus the term free enterprise system has come into use to characterise business and industry. But the free enterprise system does not still connote the idea of a movement in which people bind themselves together to transcend personal interest in order to achieve a common goal. So, the search for a moral philosophy continues.
Behind this search is one major cause— the growth of a new professional management class, as distinguished from the owner-manager of former days. Recent years have witnessed a real explosion in management education with large enrolments in management institutes affiliated with universities.
Association with a university immediately projects any calling on a technical and moral plane, with the challenge to meet the standards already established in the older professions of law, medicine, engineering and teaching.
With the concept of a profession comes also self-consciousness, a desire to develop standards of technical performance as well as an ethical code, both of which give dignity and stature to those who enter the calling.
This view is admirably highlighted by B.M. Selekman in his book “A Moral Philosophy for Management” thus: “No vocation becomes a profession unless it develops a body of knowledge, discipline, a method and a code of professional ethics, transmittable and transmitted to successive generations largely through educational institutions and apprenticeship. And so inevitably, schools of business and practitioners of management become concerned with ethical and moral codes.”
The assumption of moral and social responsibility raises searching questions for professional managers. It calls for a quality of character.
The manager must be willing to assume and execute authority. As such they must be competitive, full of drive and firm with those who do not pull their oar in the enterprise.
At the same time they must exercise authority without becoming punitive, capricious, unjust, and cynical or at the worst, corrupt—pitfalls which always lie hidden to trap those who wield power. It must be remembered that we cannot achieve moral goals unless the business survives. Survival and morality must go hand in hand.
However, business viewed as a power system and as a power organisation is beyond ethics. B.M. Selekman has aptly pointed out that as a power organisation business is just like science, neither moral nor immoral—it is amoral. For power is energy mobilised to achieve certain ends.
This energy in itself is neutral as far as ethical values are concerned. It is only as power becomes involved with human beings, which moral considerations develop. In meeting other power groups business is always confronted with the task of keeping its power—i.e., authority, at a high level of productivity.
And one test of its productivity is profitability. No matter how high its moral intentions, a company may not survive long unless it can produce goods and services which the community will buy in a competitive market at a price which cover moral cost of production.