Moral Capitalism?

Under the headline “Can’t a Capitalist Be Moral?,” U. of Chicago business school professor Luigi Zingales writes at that firms are unable to create better market systems, so it is left to business schools to “lead the effort to impose some minimal norms for business – norms that discourage behavior that is purely opportunistic even if highly profitable.” Zingales goes on to suggest that b-schools engage in more overt disapproval of actions that compromise healthy markets in the long run:

Asking business schools to stigmatize all behavior that does not maximize welfare would be absurd. They shouldn’t be expected to shame or criticize a company for using the market power that it has legitimately acquired … [or] … for taking advantage of the tax loopholes present in the system ….There is a difference, however, between taking advantage of existing tax loopholes and lobbying aggressively to have those tax loopholes created or expanded. What about marketing policies targeted to prey on addiction or to induce young customers to smoke? Is making money the only metric we should reward and admire in business leaders?

Zingales is making a reasonable although hardly original observation about the teaching role of business schools in relation to the purpose of the firm and a given market. Where he ends up is with a strikingly minimalist assessment of b-school ethics classes (I teach one of those animals at Vanderbilt) that locates them in two piles:

Some classes simply illustrate ethical dilemmas without taking a position on what people are expected or not expected to do. It is as if students were presented with the pros and cons of racial segregation, leaving them to decide which side they wanted to take. Other classes hide behind corporate social responsibility, saying that social obligations rest on firms, not individuals

Teaching an ethics class to people in their late twenties with professional experience (the prototypical MBA student at well-regarded b-schools) is not appropriately framed as an attempt to make students “more ethical” by telling them what to do and not do in specific situations. Instead, and what Zingales misses in his simplistic caricature, a reasonable goal for an ethics course involves giving students tools (analytical, lexical, and contemplative) that improve their abilities to recognize and decipher the moral content in situations and to generate options that are rooted in ways of thinking about that content.

Sure, I want my students going forward to make more ethical decisions as managers and executives, but I want them to do so because they recognize the presence of an ethical dimension to some particular context, and can draw on informed notions of moral reasoning to work their way through the situation. This we can and do teach in business schools, some of us anyway.

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One Comment on “Moral Capitalism?”

  1. Ted says:

    Indeed, and your students are fortunate, Bruce. As you say, simply making them aware of the ethical dimensions is fundamental, and hopefully doing so opens the door to allowing ethical considerations to become part of decision making processes (and even cost/benefit analyses), We have long recognized the limitations of the Friedman dictum that employees’ sole obligation is maximizing returns–and yet, we still talk about how to segregate business decisions from other (social, moral) aspects of life (e.g., in saying “it’s nothing personal, it’s just business” we try to set business decisions apart from other considerations).


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