Ethical Business: Essential or Optional?

Nowadays, it became a commonplace practice among many corporate spokespersons and social scientists to suggest that companies are inheritably interested in conducting business ethically, as the main precondition for them to remain competitive (Melville-Ross 2013). In its turn, this implies that ethical business is not only optional but also essential. However, when subjected to closer analysis, this idea will appear lacking any rationale, whatsoever.

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The reason for this is apparent – the very notion of ‘ethical business’ is utterly inconsistent with the foremost principles of the functioning of a free-market economy. What it means that there can be no ethically sound (in the conventional sense of this word) commercial enterprises, by definition, which in turn implies that ethical business is neither essential nor optional – it is impossible (factually), especially through the time of economic recession that we are all experiencing nowadays.

In my paper, I will explore the validity of this suggestion at length while exposing the discursive fallaciousness of what is often regarded as the main proof that ‘ethical business’ is indeed thoroughly possible and highly desirable – the concept of Corporate Social Responsibility (CSR). I will also argue that the idea that ethical business is essential is a part of the Neoliberal agenda to remove any governmental control over the functioning of large corporations, which in turn suggests that the concerned notion only makes sense when discussed within the instrumental framework of a particular company’s PR-strategy.

Even though there are several varying definitions of CSR, they are all based on the assumption that, while striving to remain commercially competitive, businesses should proceed with reaching this particular objective in a thoroughly ethical and socially beneficial manner (reader 1994).

The main theoretical premise of CSR is that, by choosing in favor of conducting their operations in the socially responsible (ethical/environmentally friendly) way, companies can contribute towards increasing the rate of these operations’ long-term commercial feasibility. In its turn, this premise reflects the idea that, due to being rational agents, both: the affiliates/owners of a particular commercial company, on one hand, and the rest of community members, on the other, are equally interested in ensuring the long-term sustainability of their shared environmental niche. Hence, the main postulate of CSR – social welfare and corporate profitability- is not only closely interrelated, but they derive out of each other (Mackey 2014).

This postulate, however, is merely theoretical and as such, it has very little practical relevance. The main reason for this is that the very idea that a particular company should benefit from investing in social projects, as the mean of proving itself a socially responsible commercial entity, is inconsistent the fact that as of today, the debt-burdened economies of Western countries have grown utterly stagnant and consequently – vulnerable to financial crises, such as the one of 2008.

What it means is that the interest rate-‘fuelled’ economy of the West, as we know it, simply does not have any sustainable future, by definition – something that can be illustrated, in regards to the fact that the budget-deficits of Western countries (including Britain) continue to increase in the exponential progression to the flow of time. Given the fact that the main purpose of just about any commercial organization is to generate profits, and the fact that due to the above-mentioned, it is specifically the short-term commercial objectives that are now being considered the only legitimate ones by most businesses, the notion of ‘ethical business’, cannot be referred to as such that stands much ground.

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As Doane pointed out: “Investments (in CSR) are particularly unlikely to pay off in the two to four-year time horizon that public companies, through demands of the stock market, often seem to require… investments in things like the environment or social causes become a luxury” (2005 p. 25).

Moreover, there is no good rationale to believe that the situation, in this respect, will improve any time soon. The reason for this is that, due to the ongoing process of outsourcing, the actual generation of wealth has now been relegated to the Second and Third world countries, which in turn renders more and more people in the West nothing but a ‘social burden’ – even if they happened to be formally employed. Consequently, this exposes the erroneousness of the very idea that with the help of CSR it would be possible to continue keeping Western countries on the path of being turned into ‘welfare states’ – the main precondition for making possible the legitimization of the ‘ethical business’ concept, in the first place.

What also does not allow us to refer to the notion of ‘ethical business’ (in the sense of being socially responsible) as the methodologically legitimate one is that it is the subject of many different and even mutually contradicting interpretations. After all, it will not be much of an exaggeration to suggest that there can be as many definitions of what the term ‘social responsibility’ stands for, as there are people on this earth. However, the larger is the role of the element of interpretation, within the context of how the would-be deployed business-policies are being designed, the lesser is the likelihood for the deployment of these policies to prove an asset.

This allows us to come up with yet another explanation for the fact that, despite being conceptually erroneous, CSR continues to be referred to as a thoroughly appropriate approach to increasing the operational effectiveness of commercial organizations – the concerned practice provides a legal cover for these organizations to indulge in tax avoidance. This suggestion is consistent with the findings of many empirical studies, which aimed to assess the commonly overlooked effects of CSR.

For example, according to Hoi, Wu, and Zhang, “Using a large sample of U.S. public firms over the period 2003–2009, we find that firms with… excessive CSR activities in a given year, have a higher probability of engaging in tax sheltering” (2013 p. 2027). Therefore, the adoption of CSR by companies and organizations does make a certain sense. However, it differs rather drastically from the originally intended one – something that undermines the conceptual legitimacy of the notion ‘ethical business’ even further.

Finally, the fact that this notion does not hold much water can be illustrated, concerning yet another theoretical postulate, concerned with the assumption that, to prove a success, the adoption of CSR should appeal to both: manufacturers and consumers. The surrounding socio-economic reality, however, points out to something opposite. Specifically, to the fact that, contrary to what the promoters of CSR claim it to be the case, the idea of sustainable (ethical) consumption has very little to do with the de facto realities of modern living (Marais 2012).

After all, as the relevant statistical data indicates, when it comes to buying a particular item, most people do not bother with making any ethical inquiries into what were the qualitative aspects of this item’s production (Carrigan & de Pelsmacker 2009). This simply could not be otherwise – the most fundamental laws of economics predetermine the perpetual continuation of this situation.

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Therefore, rather than being a practically applicable principle of business, CSR is, in fact, more of a pretentiously sophisticated buzzword. This, of course, raises a legitimate question – if the very conceptual premise of CSR is rather fallacious, then how come this practice continues to be praised, as something that is indeed being capable of helping companies to prove themselves the agents of social progress? The answer to this question can be formulated as follows: CSR is nothing but just another form of PR-strategy, which serves as the justification for the advocates of Neoliberalism to persist with promoting the idea that there should be no governmental control over the functioning of businesses (Brooks, 2010).

After all, the assumption that business can be ethical, without being forced to be such by the governmental authorities, raises a certain question about why do these authorities need to be there, in the first place?

It is understood, of course, that the majority of ordinary citizens will never consider this particular idea even slightly appealing. The reason for this is that people intuitively know that there can be no limits to the corporate sense of greed and that, when allowed to operate in the ‘self-regulative’ mode, privately-owned companies will necessarily end up aspiring to attain a monopoly and to consequently become thoroughly unaccountable, in the social sense of this word (Golob, Podnar & Lah 2009).

Therefore, to put a ‘friendly face’ on the process of private businesses becoming the masters of their own, which in turn results in the lowering of living standards within the society, the advocates of Neoliberalism came up with the idea of CSR – something that is supposed to serve as the proof of the sheer essentiality for businesses to operate in the highly ethical mode. This, however, does not mean that, as a result of it, the functioning of the affiliated companies is to become much more ethically sound per se.

In light of the above-stated, the paper’s initial thesis as to the fact that there is simply no discursive ground for business to be ethical appears thoroughly justified. Whereas the notion of ethical soundness is essentially societal, the activities concerned with the generation of monetary profit, as the main objective of just about any commercial enterprise, can only prove successful for as long as the affiliated practitioners are willing to apply an additional effort in ensuring the continued effectiveness of the deployed moneymaking strategies.

As practice indicates, however, taking any extra steps in this direction most commonly involves turning a blind eye on the morality-related issues, within the context of how a particular company addresses competitive challenges. It is understood, of course, that many commercial organizations do try to try to conduct their operations by the conventional codes of societal and environmental ethics.

However, it is namely the consideration of ensuring good publicity, as something that has the value of a ‘thing in itself’, which motivates the affiliated senior managers to think ‘ethically’ more than anything else does. And, as we are well aware of, the very notion of ethics presupposes that one’s behavior cannot be simultaneously ethical and ego-driven, by definition. This once again points out to the fact that far from being essential, ethical business can hardly be optional, as well.

I believe that the provided line of argumentation, in defense of the suggestion that the very idea of ‘ethical business’ is not logically sustainable, does correlate with the initially provided thesis. There is indeed very little rationale to believe in the optionality of business and its essentiality, to say the least. What has been mentioned earlier, regarding the practical implications of CSR, confirms the validity of this suggestion better than anything else does.

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As of today, the notion ‘ethical business’ serves mainly the purpose of allowing transnational corporations to divert people’s attention from the actual issues of relevance, within the context of how these corporations operate. This notion is best described in terms of yet another Neoliberal myth, which is there to help to legitimize the continued deregulation of the economy-sector in the West so that there would be no obstacles in the way of the rich growing even richer and the poor becoming even poorer.

Therefore, it will be thoroughly appropriate to conclude this paper by reconfirming the soundness of the initial thesis – business cannot be innately ‘ethical’, by definition. The same applies to the associated options, in this respect – they are instrumental at best and can never regard indicative of the commercial operators’ willingness to prioritize acting on the society’s behalf.

Reflection write up

  • The main reason why I have made a point of referring to the listed sources is that, except Melville-Ross’s article (found on the UK website), they are all scholarly, which in turn contributed rather substantially towards establishing the validity of the paper’s argumentative claims. My other motivation, in this respect, had to do with the fact that most of the mentioned authors appear to promote a critical outlook on the notion of ‘ethical business’, in general, and the concept of CSR, in particular, which is fully consistent with my stance on the issue.
  • During the group discussion, I did end up facing much criticism, on the account of my claim that ethical business is impossible, at least for as long as the socio-economic paradigm of Capitalism is in question. This, however, did not cause me to change my mind, concerning how I perceive the discussed subject matter. After all, those who strived to refute my claims have failed at proving the concept of CSR thoroughly objective, in the dialectical sense of this word. I take it as yet another indication that there is indeed very little reason to think that business can be innately ethical.
  • Most individuals in the group did agree that the manner, in which I proceeded to defend my argumentative stance was rather convincing. In particular, I was given credit for articulating the opposing points of view on the discussed subject matter. At the same time, however, my arguments were criticized for being much too abstract and politically biased – a few group members accused me of being a ‘commie’. It is understood, of course, that I did not bother to address this particular accusation, as having been emotionally rather than rationally driven.
  • I think that the element of biasness did play a major role in how the group members went about assessing my arguments. For example, one of the individuals suggested that my claim that there is no end in sight to the on-going economic recession in the West is unpatriotic because it goes in line with what this person defined as ‘Russian propaganda’. This, however, did not result in undermining the integrity of the presented considerations, on my part – not the least because of the chosen references, in support of the paper’s line of argumentation.
  • During the discussion, a few group members pointed out to the fact that even though a number of my arguments are indeed valid, the paper does very little to enlighten readers on what is going to be the way of the future, regarding the discursive development of the notion ‘ethical business’. Therefore, if I were to expand the paper, I would include the part that discusses the practical implications of people’s eventual realization of the fact that the notion of ‘ethical business’ is best regarded as utterly misleading. I would also elaborate on what must be done to address the tendency of more and more businesses trying to defy the governmentally imposed laws and regulations.

References

Brooks, S 2010, ‘CSR and the strait-jacket of economic rationality’, The International Journal of Sociology and Social Policy, vol. 30, no. 11, pp. 604-617.

Carrigan, M, & de Pelsmacker, P 2009, ‘Will ethical consumers sustain their values in the global credit crunch?’, International Marketing Review, vol. 26, no. 6, pp. 674-687.

Doane, D 2005, ‘The myth of CSR’, Stanford Social Innovation Review, vol. 3, no. 3, pp. 23-29.

Golob, U, Podnar, K, & Lah, M 2009, ‘Social economy and social responsibility: alternatives to global anarchy of neoliberalism?’, International Journal of Social Economics, vol. 36, no. 5, pp. 626-640.

Mackey, S 2014, ‘Virtue ethics, CSR and “corporate citizenship”’, Journal of Communication Management, vol. 18, no. 2, pp. 131-145.

Marais, M 2012, ‘CEO rhetorical strategies for corporate social responsibility (CSR)’, Society and Business Review, vol. 7, no. 3, pp. 223-243.

Melville-Ross, T 2013. ‘Ethical business: companies need to earn our trust’, The Guardian. Web.

Reder, A 1994, In pursuit of principle and profit: business success through social responsibility, Putnam, New York.

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StudyCorgi. (2020, October 29). Ethical Business: Essential or Optional? Retrieved from https://studycorgi.com/ethical-business-essential-or-optional/

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"Ethical Business: Essential or Optional?" StudyCorgi, 29 Oct. 2020, studycorgi.com/ethical-business-essential-or-optional/.

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