Utilitarianism In Business Ethics

Utilitarianism is a teleological ethical theory based on the idea that an action is moral if it causes the greatest amount of happiness for the greatest number of people. The theory is concerned with predicted consequences or outcomes of a situation rather than focusing on what is done to get to the outcome. There are many forms of utilitarianism, having been introduced by Jeremy Bentham (act utilitarianism), and later being updated by scholars such as J.S. Mill (rule utilitarianism) and Peter Singer (preference utilitarianism). When referring to issues of business ethics, utilitarianism can allow companies to decide what to do in a given situation based on a simple calculation. Many people would agree that this idea of promoting goodness

The hedonic calculus has seven different criteria that must be considered to evaluate the balance between good and evil. This appears practical and easy to use in any situation; however, it has its issues. For example, Bentham suggested that all pleasure and pain should be measured equally. This causes a major problem when put into the context of business ethics, as it suggests that the pain experienced by a child forced to work in a factory is equal to a shareholder in a business gaining a little more profit – surely, this is unethical. J.S. Mill noticed this issue, introducing rule utilitarianism, in which he recognised the differences in different types of pleasures. However, this is much more complex than the seemingly practical to use act utilitarianism. Assigning different ‘levels’ to different pleasures and pains can take up a considerable amount of time, when sometimes a quick decision is necessary. Furthermore, with both act and rule utilitarianism, the pleasure and pain of every potential situation must be calculated to decide the most moral course of action. However, it is impossible for one person, or even a group of people, to perfectly calculate every potential outcome – many situations will have extremely different consequences to what was originally predicted. Moreover, especially in larger companies, it is hard to measure far-reaching

Corporate social responsibility means that businesses have wider responsibilities than simply to their shareholders – they also have responsibilities towards other stakeholders, as well as the environment. Scholars such as Robert Solomon believe that businesses should take on these responsibilities, as they have a duty to behave ethically. Solomon believed that a person should follow their own personal values and attempt to stay ethical no matter whether they are at home or at work. Others, such as Milton Friedman and former British Prime Minister Margaret Thatcher, argue against the idea of corporate social responsibility, believing that the only responsibility of a business is to increase its profits for its shareholders. Friedman went on to argue that for a business to take money from their profits to fund corporate social responsibility projects is equivalent to stealing money from shareholders and is therefore unethical. From a utilitarian perspective, the ‘greater good’ may be believed to be the greatest amount of profit, potentially leading to a ruthless attempt to maximise income. This could come in the form of using cheap labour to be able to create maximum profit for the shareholders – and, furthermore, could end up blatantly disregarding human rights. This is a major issue of utilitarianism – basing ethical decisions on goodness for the greatest number of people allows for a