Conventional ethical theories hold that ‘making money’ is at best more morally neutral and, at worst, a ‘root of all evil.’
On the big screen, talk shows, and in the media, the act of creating goods and services for a profit is looked at as intrinsically wrong, though necessary for survival.
Professor Jaana Woiceshyn, in this remarkable primer on business ethics, dismisses such claims and shows that with proper business ethics based on an objectively validated rational moral code, one can, and in fact, must be moral to make profits in the long run.
The false ethical alternative of altruism vs. “cynical egoism.”
Woiceshyn tells us that business people generally encounter two broad categories of ethics choices.
In the first choice, one must sacrifice profits for the greater good of others, whether they be employees, customers, competitors, society, etc. (This is altruism, which means not benevolence, but other-ism: always placing the needs and desires of others over one’s own).
In the second choice, one must exploit others — run roughshod over competitors and customers and do whatever it takes to make money in the short-run (exploitation, or what she calls “cynical egoism”). In other words, one must sacrifice others or sacrifice one’s business.
Applying Ayn Rand’s philosophy of Objectivism, Woiceshyn shows that this is a false alternative.
Running a successful business does not require violating the rights of others, but the opposite. Such exploitative actions are, in fact, self-destructive.
Neither does running a business require sacrificing profits in the long run, though in the short run such business decisions may temporarily lower profitability. An action – such as building a new factory or implementing a new training program may lower profits in the short run due to the costs of implementation, but in the long run, they may result in higher overall profitability. Such actions are not sacrifices but investments.
Furthermore, in the long run businessmen who exploit others to gain profits in the short run, do end up losing profits and destroying their businesses in the long run (think Bernie Madoff).
Rationality as the fundamental requirement for a profitable and moral business
Such profitable results are possible when the right moral principles are engaged consistently; that is, on principle. The practices that the right moral principles require of entrepreneurs are thinking and acting rationally.
To Woiceshyn, the entrepreneur’s rationality is the most crucial attribute required that explains every action a businessman performs: whether scoping out opportunities; selecting over alternative businesses scenarios; setting up production, logistics, accounting, and distribution systems; hiring, training, managing, rewarding, and firing employees; reinvesting and distributing profits; dealing with losses, shareholders, regulators, and the political environment, etc.
A theoretical guide and a real-world reference to “sticky” business situations
How To Be Profitable and Moral is a “thinking manager’s guide” to running a business profitably and morally.
Filled with intriguing examples and real-world illustrations that concretize ethical principles, How To Be Profitable and Moral, is required reading for business students, entrepreneurs, and anyone interested in how a business should operate both in moral theory and economic practice.