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Thursday, August 31, 2017

Moral justification of making profits

Sheryll May P. Briones


For every study claiming that ethical behavior pays, there will always be another claiming that it does not. The reality is nuanced. There are companies that have made money through moral indifference and companies concerned with social responsibility that have not made much money at all. Other firms have lost billions as a result of ethical miscalculations, just as some can attribute a proportion of profits to their moral character, or exist solely for it. The issues of profit, its moral meaning, justification and role, need careful examination. Mistakes to be avoided in making moral sense of profit include the assumption that profitability establishes company’s moral rectitude (Camenisch, 1987)
A business is any undertaking whose goal or was established to make a profit. Profits on the other hand is the excess of inflows over the outflows or simply the difference between the benefits obtained during the period over the sacrifices you’ve made. Simply speaking, business exists because of profit. Miksen (2015) said that a company’s ultimate goal is to gain and increase profits. Many companies grow profits ethically, while others maximize profits unethically via marketing frauds, slashing employee expenses, lowering product quality or impacting the environment negatively.
Questions involving moral justification for profits requires us to look into the definition of what values, morals and ethics are in relation to a business organization. How are values, morals and ethics different from each other? How do they relate to business and what has profit got to do with it. According to Mcnamera (2012), values are things that have an intrinsic worth in usefulness or importance to the possessor or principles, standards or qualities considered worthwhile or desirable. Values are driven by culture, religion, habit, circumstance or environment. From the definition of it, we may say that values are something good, but the definition of what is good or not is relative. Mujtaba (2005) further states that, values are core beliefs or desires that guide or motivate our attitude and actions. Moral values, on the other hand, are relative values that protect life and are respectful of the dual life value of self and others (Mcnamera, 2012). Morals are judgements, standards and rules of good conduct in the society. They guide people toward permissible behaviour with regard to basic values. Mjutaba (2005) defines ethics the branch of philosophy that theoretically, logically and rationally determines right from wrong, good from bad, moral from immoral and just from unjust actions, conducts and behaviour. Some people define ethics simply as doing what you say you will do or walking the talk. A person who knows the difference between right and wrong and chooses right is moral. A person, whose morality is reflected in his willingness to do the right thing, even if it is hard or dangerous, is ethical. Ethics are moral values in actions. Simply stated, values are professed statement of one’s beliefs, ethics is delivering on one’s professes values and morals are actions of good conduct as judged by the society that enhance the welfare of human beings.
A business with an understanding of values, morals and ethics, the management could then develop a framework for effective decision-making with formalized strategies.
In the perfect world, all business would be ethical (Ong, 2014). A business has an underlying objective to create wealth by meeting human demands at a profit. The survival of a business through the fulfilment of this objective is thus dependent on its ability to secure monetary gain. Ethical businesses recognizes the power of conducting business in a socially responsible ways and they realize that doing so leads to increases in profits and customer satisfaction and at the same time decreasing employee turnovers. However, among the key performance indicators of the best performing companies in the world, is financial rather than altruistic. These measures may lead to companies doing unacceptable means to achieve it such as slashing employee benefits, fake advertising and sacrificing quality. It shall also be noted that instilling ethical policies in the company involves or entails cost which would most likely lessen our gain.
Business ethics is concerned with applying a moral framework to the way organizations do business, from dealing with human resources issues to sales and marketing policies.  Ethics defines the good as being that which corresponds to the nature and the bad that which does not correspond (d’ Estaing, 2001). We may then conclude, ethically speaking, that there is a good and a bad profit. However, keep in mind that profit, in itself, is neither good nor bad for it is only the result of an activity you been involved to. The question on what is good or bad shall not be directed on profits but in the processes a company has undertaken to obtain it. Profits are just results.
Incorporating ethical frameworks into business has to be done with a great amount of respect and appreciation for others’ views. We shall give importance to respect. Stakeholders, consumers and employers, come from various social and economic backgrounds; therefore any attempt to institutionalize an ethical principle must be balanced with a sense of respect from other that you serve. Business ethics can thus be a fruitful venture for small business owners who are willing to take the time to incorporate ethical principles with care and patience.
Most ethical companies reinforce that ethics should take precedence over profits. They consciously think decisions through and are focused on the long term benefits. Unethical companies are typically focused on short term gains. They are typically followers. They are lacking innovation (White, 2014). Many of the ethical issues in profit maximization center on customers. Profit maximization dictates that you attract customers and create sales. However, ethics demands honesty and sometimes being honest in the short-run could make you miss sales.
There is a long list of potential intangible benefits available to firms that act ethically-including better commitment, ease of business improvements resulting from increased levels of trusts between businesses and stakeholders, avoidance of opportunistic behavior between owners and managers, employees’ moral satisfaction leading them to reduce their salary demands and strong moral identity attracting higher quality recruits.
Companies behaving unethically often lead to bad publicity and would fail to appeal to potentially high level customers at the same time higher quality staff. This will ultimately increase costs the company incurs.
According to Stolyarov II (2006), the goals of a life properly lived have two folds: survival and flourishing. Survival is the goal of sustaining one’s biological existence and prevents one’s downward slide toward poverty, ruination and death.Flourishing on the other hand is the extension of one’s control over external reality which is the ability to harness ever more elements in the service of one’s life. Simply stated, flourishing is your desire for growth and improvement while survival is existence.
In the process of living, every man will gain benefits from the external reality at the same time will be incurring certain expenses. If he breaks-even, then he has accomplished the goal of survival. Surviving results to no gain or a loss, but how long are we going to sustain this? As time goes by, without improving, the resources you have will gradually deplete. He is no worse than yesterday but at the same time he is no better off. In order to accomplish the goal of flourishing, he must have gains or profit. He must be able to utilize what he have in such a way that he would be better off tomorrow than yesterday and today. Flourishing is improving and we all seek improvement.
It shall be kept in mind that making profits is the only way to flourish. We could just not live to merely survive. We could not simply live, just for the sake of being alive. In life profits could come in different forms, they could be intellectual, physiological, technical, material social and monetary. Monetary profits has always been an issue in ethics. It has always raised moral dilemmas and conflicts. In the context of business, profits are said to be unethical if it is excessive or are obtained via unjustifiable means. When we say excessive, we are referring to profiteering, which involves making profits in times of scarcity.
Companies which ignore profit, or which do not pay attention to it, collapses (d’ Estaing, 2001). Businesses are establish with the purpose to earn it. It shall be emphasized that flourishing is one of the two goals in life, and businesses are no different from it. You cannot just establish a business just for the sake of existing. Consumer’s needs are always changing and a business needs to be better tomorrow than today to cope with it. Failure to do so may lead to a company’s collapse.
The problems with profits is not the profit itself. The problems is whether the outcomes justify the means. How were you able to obtain it? It is the process that should be questioned or the means that shall be criticized and not the profit itself. To have profit and to strive to flourish are inherent in all humans. The drive to be better than yesterday is innate. Harper (2001) said that what is ethical and unethical often depends on what part of the world you came from and your cultural or religious backgrounds, rather than universal.
The most sustainable companies seem to have a strong set of core values and an entrenched clearly defined purpose beyond profit. They understand why they exist, which takes precedence over how theyexist and drives what they sell to exists. They understand the importance of long-term thinking and the benefit of taking a broader view of what holds value to their business (Landolt, 2006). In other words, they are not blinded by short-term gains. They tend to think things through and plan every move in order for them to achieve it. Long term sustainability is not possible without being ethical. There may be short term gains for being unethical but sooner or later, the market will catch up. Build a long term relationship where customers know and feel that they are being taken cared of and that profit is not your only goal. With these, you would paradoxically be making profit.
In the biblical system of ethics, profit is godly if it is obtained in God’s way, and this means that not making profit may also be a in against God, one’s neighbor and oneself (Naselli, 2011). Profit maximization is a must for any business to survive and flourish in a competitive market. The problem lies with what you do to ensure profit. The way you do it shall be the one questioned for ethics.
Adam Smith established by rational valuation that profit making was an inherent part of human conduct as it worked itself out in the social environment of human culture. If human flourishing is moral, if improvement of individuals is moral, then so is the pursuit of profit. Profit, by definition, cannot be destructive in one’s life. Under laissez-faire capitalism everyman has sovereignty to decide the value he will assign to each type of profit. The ways he will pursue it and the exchanges he will make with other consenting individuals in order to flourish.
Ultimately, business always have the responsibility of profiting. Before we can expect businesses to be ethical, we need to accept the profiteering agenda underpinning all businesses and understand that ethical businesses can be a profit making strategy on its own terms (Ong, 2014). Thus if becoming ethical were so strategically beneficial, all businesses would have practiced it. So the strategic case for ethical business alone is insufficient. We need to have the right mix of strategy and morality.
In my opinion, Profit in itself is NEVER unethical nor is beyond the bounds of morality. All businesses are established to seek it. There cannot be a business whose ultimate goal is not profit. We all seek profit, we all need to flourish, to grow, to improve. The question on morality shall not be on profit and profit alone. What shall be questioned as to fairness and ethics, shall be the means, process the ways we have undertaken to earn it. 

References:
D’Estaing, O. (2001). The Ethics of Profit. Retrieved from: http://bahai-library.com/destaing_ethics_profit
Feloni, R. (2016). Is there such thing as “too much” Profit? Retrieved from: https://amp.businessinsider.com/there-is-such-thing-as-too-much-profit-heres-why-2016
Frank, R. H. (2004) What Price the Moral High Ground? Ethical Dilemmas in Competitive Environments. Princeton University Press
Harper, J. (2001). Business Ethics-A Contradiction of Terms?. The World of English. Retrieved from: www.woe.edu.plcontract/business-ethics-contradiction-terms
Joyner, B. E. & Payne, D. (2002) Evolution and Implementation: A Study of Values, Business Ethics and Corporate Social Responsibility. Journal of Business Ethics
Kokemuller, N. (n.d.) Ethical Issues in Maximizing Profit. Retrieved from: www.yourbusiness.azcentral.com/ethical-issues-maximizing-profit-25711.html
Miksen, C. (n.d.) Ethical Issues in Maximizing Profit. Retrieved from: www.smallbusiness.chron.com/ethical-issues-maximizing-profit-34328.html
Mujtaba, B. (2005). Understanding Ethics and Morality in Business. Smart Business. Retrieved from: www.sbionline.com/article/understanding-ethics-and-morality-in-business-there-are-distinct-differences-between-ethics-and-morality
Naselli, A. (2011). Are Profits Moral. Retrieved from: http://andynaselli.com/author/any-naselli
Salahi, A. (2006). Definition of Excessive Profit. Arab News. Retrieved from: www.arabnews.com/node/282026
Stolyarov II, G. (2006). Profit is Moral. Retrieved from; www.quebecoislibre.org/06/060813-2.htm
Weiss, A. (2013). The Purpose of Business. Retrieved from: www.contrarianconsulting.com/the-purpose-of-a-business



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