Utilitarian, Rawls’, and Kant’s Models in Business Essay

Abstract

Ethics are an important part of modern business practices. The most popular ethical models currently in place are the utilitarian model, Rawls’ Justice model, and Kant’s duty-based model, also known as the categorical imperative. All three models have their strengths.

Introduction

Ethics deals with what is considered right and wrong. Within a business organization, individuals make decisions. The process of decision-making is influenced by the company’s corporate culture. Often, an ethical decision will involve rejecting the route that would lead to a quick short-term profit. Nowadays, ethics are an important concept in business, as they directly affect not only the corporate climate but sales and profits as well.

Having a sound ethical policy in place attracts customers and ensures that workers remain happy and do not leave the moment an opportunity arises. A company with an unethical code of conduct, however, risks tarnishing its reputation and lose its employees and customers (Hoffman, Frederick, & Schwartz, 2014). There are three popular ethical theories commonly applied in business – the Utilitarian model, Rawls’ model, and Kant’s model. While each model offers a framework for business decision making, none of the theories is perfect, as there are instances in which it could not be applied. This paper will examine each theory and how it could be used in business practices.

Utilitarianism

The utilitarian approach to business ethics does not divide justice from morality but rather sees one as part of the other, with neither having priority. Utilitarians view pleasure and pain as the feelings that drive individual human beings, and their morality system is aimed at maximizing happiness and minimizing pain (McGee, 2010).

The utilitarian model influenced the Universal Declaration of Human Rights, particularly on the rights to property, education, and social welfare. In business practices, utilitarian ethics are used as an argument for the promotion of equal education and welfare, for government company bailouts, taxes, and against scamming. All these practices are considered legitimate from a utilitarian point of view, as they do more good than harm.

This is not a perfect system, however. Numerous critics have pointed out loopholes in the framework. It could allow implementing intuitively wrong acts. For example, from a utilitarian point of view, employing child labor in China to work in an American company would greatly increase the happiness and profits of thousands of company’s stockholders (Des Jardins, 2014).

Rawls’ Justice

Rawls’ Justice system is built on two pillars, which define its principles of justice as a means of achieving social equilibrium:

• Equal basic rights and liberties for everybody.
• The social and economic benefits should be extended towards the least advantaged members of society.

While these principles sound socialistic, Rawls believes that a capitalistic society might serve the disadvantaged better by providing incentives to increase productivity and prosperity. In business practices, Rawls’ Justice Model is the base principle behind the practice of ‘fair play’ and anti-monopoly laws (Corlett, 2016).

The critics of Rawls’ model point out that the system unjustly restrains freedom and power, among other things. This factor is very important to business, as the model can effectively curb the growth of large and powerful companies from becoming larger, even if there is room to grow without actually hurting anyone (Des Jardins, 2014).

Kant’s categorical imperative

According to Kant’s duty-based ethics, there are three maxims for the categorical imperative that should drive a person’s decision-making. The first one states that an action could be considered ethically correct only if it could be made into a universally applied law. The second maxim states that people should not be treated as a means to an end. The third maxim asks the people to act as if they were the citizens of an ideal kingdom, both governors, and servants at the same time (Rivera, 2006).

These principles form the base of most modern corporate cultures, as they describe the mechanisms for business decision-making, treatment of the employees and customers alike, and the general attitude towards the company in general for both the executive officers and the employees.

The weakness of Kant’s model is in its absolutist nature. It proposes a model that could be adhered to in a perfect world, while in reality, nothing is as simple and categorical. For example, many companies often revise business contracts, due to shifting economic conditions. At the same time, most business institutions feel committed to the practice of contract-making. If Kant’s model were to be applied to this scenario, contract re-negotiation would be deemed immoral and unethical, while in reality, it is a standard business practice (Des Jardins, 2014).

Conclusion

Although the three ethical models were developed by the brightest philosophical minds of their own time, it is obvious that neither can be used to answer all the ethical dilemmas that arise in business practices. To conduct business that is ethical and morally just, the entrepreneur should be knowledgeable in all three theories, and choose the more appropriate one, depending on the situation.

References

Corlett, A.J. (2016). Equality and liberty: Analyzing Rawls and Nozick. New York, NY: Springer.

Des Jardins, J.R., & McCall, J.J. (2014). Contemporary issues in business ethics. Boston, MA: Cengage Learning.

Hoffman, M.W., Frederick, R.E., & Schwartz, M.S. (2014). Business ethics: Readings and cases in corporate morality. New Jersey, NJ: John Wiley & Sons.

McGee, R.W. (2010). Analyzing insider trading from the perspectives of utilitarian ethics and rights theory. Journal of Business Ethics, 91(65), 105-115. Web.

Rivera, F. (2006). Kantian ethical duties. Cambridge, 11(1), 78-101. Web.