Business has often historically understood itself to be amoral (think “the business of business is business” or “it’s not personal, it’s just business”). But what if business is only amoral in appearance, and not in reality? What if it has been scaling values all this time without being aware of the sort of values it has been promoting?
A similar question was raised by Dave Brat – chair of the Department of Business and Economics at Randolph-Macon College, a liberal arts school in Ashland, Virginia – who has recently come to prominence by toppling House Majority Leader Eric Cantor in a GOP Virginia primary. His paper, The Philosophy of Economics: A History of Science, Method and Ethics, sets out an historical argument for how economists mask the important role that values and normative assumptions play in their empirical analyses and policy recommendations. Since the Enlightenment era, economists have presented themselves as “empirical folks” who are objective, bias-free and values-free.
Citing Gunnar Myrdal, who won the Nobel Prize in economics in 1974, Brat points out that standard economic terms or phrases such as “population optimum,” “just distribution of income,” “value,” “we ought to impose X tax system,” and “we should be in equilibrium,” should be eliminated if we are truly sincere about building a values-free science. Economics has split itself in name from its sister discipline, philosophy, only to secretly borrow many of its premises and values. Another source Brat cites is Arjo Kalmer’s Conversations with Economists, which interviews economists from two competing schools of thought: New Classical and Neo Keynesian. What Kalmer finds is that their ultimate differences lie in what they take to be valuable and most important in constructing their economic models: New Classical school favors parsimonious, precise arguments, whereas the Neo Keynesians favor “relevance” to real-life experience even if it requires more ad-hoc rather than precise methodologies.
What Brat argues is that economists should be upfront and transparent about the “normative, ethical and philosophical” elements in their arguments and the implications of them. Rather than deliberate and debate about economics as if it were an entirely neutral or values-free field of study, economists should accept and be transparent about how the science is influenced by values in important ways.
It’s an interesting argument, and it holds true just as much for business as it does for economics. True, many businesses today are touting their values more, but even business goals that seem to be free of any moral language – such as “maximizing shareholder value,” “optimizing performance,” or “speeding up go-to-market times” – are in fact not amoral. Take the premise that “the business of business is just business.” Such a premise, while seemingly simple, implies a lot. It says that business is unconcerned with the environment, with society at large, with the well-being and engagement of its employees, and that the sole goal of business should be itself (e.g. profit). That claim is not only a value-judgment as to what is a worthy goal, it is an empirical claim that business exists as a separate sphere from other spheres and that it can succeed independently of the demise or success of those spheres.
As such, there is no amoral discourse in business, only different types of moral discourses. The pitfall that business falls into, then, is that it does not confront the hidden values at play in its argumentation and methodology, and so its awareness of the nature of the values that drive decisions has become less and less salient. Indeed this has happened so much that many business leaders don’t realize that Adam Smith, the father of capitalism, was trained as a moral philosopher, not as an economist.
So what should businesses do to counteract this? We should acknowledge that there are implicit values at play in any business framework, and be rigorous about the values that are truly driving our decisions and behavior. As Dov has argued, what has been so poisonous for business is the widespread buy-in to situational values as opposed to sustainable values: whereas the former supports expediency for the situation at hand (e.g. I will take an unethical shortcut if it increases profit margins, or I am working for this job only for a paycheck), the latter is about the values that sustain interdependent relationships, such as trust, integrity, honesty, and respect. It’s this sort of introspection about the kinds of values we’ve internalized that sharpens our capacity to reason morally, and strengthens our moral muscle to behave well, even in the face of challenging situations.
Given the disparity between the kinds of values, businesses have some important soul-searching to do after they’ve uncovered the real drivers behind how they operate. Are they the “just get it done, I don’t care how” companies that are driven by situational values, or are they companies animated by sustainable values that care about how they behave and relate to their employees, customers, communities, and supply chain partners? When our research has shown that businesses with sustainable values significantly outperform those with situational ones, identifying and consciously choosing which values are actually informing our business decisions and behaviors is critical. Ultimately, companies need to figure out what it is they truly stand for and what their corporate character is really made of.
In our increasingly interconnected and hyper-transparent world where how businesses behave has never been more “out there” for all to see, they would do well to remember the lesson inspired by Dave Brat: nothing businesses do is separate from moral judgment, since their decisions and behavior are driven by their values. The important question, then, is whether they truly know the kind of values that are doing the driving.
Categories: Ethics & Compliance