The title of this post takes its cue from columnists and bloggers who offer advice for the coming year at this time, although a little tongue-in-cheek. Many columns and blogs review the past year and make suggestions for making changes for the better in the next. I will not do the same, however, as the advice on how to be profitable and moral does not change from year to year.
The advice does not change, because it is based on the same fundamentals: rational moral principles. In this post I will address why such principles are not more widely accepted and applied in business, and what implications this has on long-term profitability in 2019 and beyond.
Most students in my business ethics courses have never heard of rational egoism before.
By rational moral principles I refer to the principles that are based on the factual requirements of human survival and flourishing, developed by Ayn Rand from the foundation laid by Aristotle into the moral code of rational egoism.
The first principle of egoism is self-interest, without which humans could not survive nor live “a good life.” Life requires the pursuit of self-interest: gaining values—from food, shelter and medicine to meaningful work and fulfilling social relationships. But self-interest cannot be based on a whim—such as stealing values from others.
Self-interest rests on what human flourishing requires: adhering to reality in one’s thinking and action by the means of observation and logic. That is the principle (or virtue) of rationality. According to Ayn Rand, rationality means using reason, as opposed to emotions, as “the only means of knowledge, the only judge of values, and the only guide to action.”
The rest of the egoist principles are aspects of rationality and elaborate what it requires. The principle of justice means rationality in evaluating and treating other people. Honesty means rejecting irrationality: not faking reality in pursuit of values. Productiveness means a rational as opposed to an arbitrary approach in the process of creating material values. Independence means thinking for and supporting oneself through one’s own work. Integrity means adhering to rational principles when tempted to compromise them. Finally, pride means the continual striving to act as morality requires: to do one’s best, so as to achieve one’s self-interest.
Despite the rational egoist principles being consistent with “common-sense” morality—the pursuit of self-interest (including long-term profitability) without violating the rights of others—they are not widely adopted by businesspeople, or people in general. Why?
One of the biggest reasons is that the majority of businesspeople are not aware of rational egoism and the importance of applying its principles in achieving long-term profitability. For one, rational egoism is not taught widely at schools and universities, thanks to the cultural dominance of altruism. Opposite to egoism, altruism is a moral code that prescribes always placing others’ interests above of one’s own and sacrificing one’s self-interest for their sake. Such a code, of course, is incompatible with profit making and human flourishing.
Most students in my business ethics courses have never heard of rational egoism before, despite having taken other ethics courses. They tell me that all that they were taught in these other classes, even at the business school, was altruism and putting the needs of others ahead of one’s own. Yet, it is rational egoism with its win-win outcomes of self-interest and no sacrifice that resonates with them.
Rational egoism is not widely known by businesspeople also because most intellectuals teaching ethics do not discuss it. They often package it together with the moral code of cynical exploitation, which prescribes trampling on others to get what one wants. They then offer this as an unpalatable false alternative to altruism.
However, these teachers of ethics fail to tell students that exploitation of others through physical force or fraud is in no-one’s—the victim’s or the perpetrator’s—self-interest. The perpetrator can gain some temporary benefits, such as ill-gotten property, but eventually he will either run out of victims or get caught. This obviously undermines human flourishing.
While long-term profitability requires more than egoist moral principles—the ability to identify unfulfilled demand in the market and to meet it before and better than competing businesses—it ultimately rests on adhering to reality by the means of reason, which is the principle of rationality.
My New Year’s wish, as always, is more reason and freedom in the world to enhance human flourishing. To that I add more rational egoism in business (discussed in this blog and in my book), to enhance long-term wealth creation and thus prosperity for all.