Excerpt

Values as End Goals, Principles as Road Maps

You may not be convinced yet that Bob Miller of Software, Inc. or others in business should be concerned about acting ethically—let alone that they should adopt rational egoism as their moral code. I argue that ethics—“a code of values to guide man’s choices and actions—the choices and actions that determine the purpose and the course of his life”—is absolutely necessary if we want to survive and flourish, in life and in business. Let’s consider Bob Miller’s case. As CEO, why should he care about ethics? Shouldn’t he just focus on his company’s bottom line: maximizing shareholder value? Of course he should focus on the bottom line—the purpose of his, or anyone’s, business is to maximize profits—to make the business survive and flourish. If it wasn’t, no business would survive in competitive markets. A company that gives up profit maximization as its goal would be soon surpassed by competitors that don’t. A business firm either pursues profits and flourishes, or it loses money and goes out of business or is taken over by a more successful competitor. But as we shall soon see, merely focusing on the bottom line is not enough to maximize it.

Like CEOs and company presidents with their businesses, we face a similar choice as individuals in our personal lives: we either make choices and take actions—such as engaging in productive work and healthy recreation—that enhance our lives and thus make us flourish, or we pursue destructive choices and actions—such as indulging in petty crime and drug abuse—that harm us and make us suffer and, eventually, perish. But knowledge of the right—life-enhancing or profit-maximizing—choices and actions is not innate in us. If it were, we would know automatically how to act to enhance our lives and to maximize profits, and we would never commit errors. But as volitional, fallible beings we have to choose our goals and determine the actions to achieve them, and in this we can make mistakes and fail—as we all know from personal experience. For further evidence, observe people such as the pyramid scheme king Bernie Madoff who chose the right goal, profit maximization, but the wrong means, defrauding others—and eventually failed. Even if Bob Miller has chosen profit maximization as the ultimate goal for his company, instead of job creation and other social goals that the ethics consultants suggested, he does not automatically know how to achieve it.

The motivation to survive and to flourish and the lack of automatic knowledge as to how to do it is the fundamental reason why we need the guidance of ethics, in life and in business. Ethics tells us which values are life-enhancing or profit-maximizing, and which principles help us achieve such values. It is not enough to say, “I want to live” or “I want to make profits.” Life and profit-maximization are the ultimate values for individuals and for business firms, but to reach them, we need to achieve countless subordinate values, and we need to know how to go about doing that. So let’s consider first what kinds of values we should pursue and the means of achieving them—principles.

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