I recently reviewed student comments on the business ethics course I taught this year. They were overwhelmingly positive, which of course is heart-warming to an instructor. But what really struck me was the view of ethics these MBA students reported having prior to taking my course, how that view changed while taking it, and what value they derived from the course.
The students commented that previously, they were skeptical about the practical value of ethics in business. Many of them had had some previous training in business ethics, either at university or at work. Most had absorbed the culturally dominant view of ethics that training reflected. That view, known as altruism, is that ethics is a guide to serving others’ needs and requires sacrificing one’s own.
No wonder the students had been skeptical about the value of ethics before. They understood that for business to be successful, it had to pursue self-interest: return on shareholders’ investment, through producing and trading goods and services. Pursuing self-interest is in direct conflict with the altruist morality that requires self-sacrifice.
The students also wrote that their view of ethics and its value in business changed during the course. This happened because in it, they learned about an alternative view that most had never heard of: rational egoism. Rational egoism, developed by Ayn Rand on the foundation of Aristotle, is diametrically opposed to altruism.
The students had been right to recognize that business success cannot be achieved by self-sacrifice, yet they did not know how to pursue success ethically. Traditional business ethics teaching provides two alternatives. Business can either pursue self-interest, which is argued (falsely) to require exploiting others for the sake of profits, such as deceiving customers or investors or abusing employees. Or, business can sacrifice its profits (at least some of them) for others, for example, by hiring and compensating employees based on need versus performance, or by providing products at cost or for free. The latter is typically taught as the ethical alternative.
Rand’s rational egoism provides a third alternative for businesspeople and others. It rejects any sacrifice, whether others to oneself or oneself to others, as destructive to human flourishing. Instead of starting with the premise that ethics is a guide to serving others, Rand asks: Why do we need ethics at all?, and offers the rational egoist moral code as the answer.
Following Aristotle, Rand explains that we need ethics to live a good life (which, in the context of business, extends to operating business successfully). Since we don’t have automatic knowledge of how to live, or how to operate a business, we need a guideline as to what goals to choose and how to achieve them. That guideline is ethics, a set of principles by which to reach our goals—ultimately, a good life. The only way to discover such principles is to observe reality and to think—to use reason. Therefore, such ethics is rational.
As Ayn Rand and Aristotle recognized, human survival and flourishing require pursuing self-interest: achieving values, not losing them. Rational ethics is therefore rational egoism. It rules out any sacrifice and bans initiation of any physical coercion from human relationships. The only means we can deal with each other is mutual trade, based on persuasion.
To learn more about how rational egoist principles apply to business and what the students learn in my business ethics courses, read my book, How to Be Profitable and Moral: A Rational Egoist Approach to Business. The students wrote that after learning about these principles, they radically changed their view of business ethics and felt confident in handling any ethical dilemmas they would face in their careers.
Yet, these students are a small minority that gets exposed to rational ethics and egoism. While my business school has allowed me to teach rational egoism in the last 30 years, most do not cover it, and continue to offer altruism as the only alternative to cynical exploitation of others. This is a huge impediment, not only to business students’ confidence in handling moral dilemmas, to the long-term profitability of business, and to the prosperity of all of us.
Fortunately, there are alternatives to business school courses. Ayn Rand’s writings on ethics and courses on them are widely available, many of them for free through the Ayn Rand Institute website and the Ayn Rand University app, and I have written about applying rational egoism to business. If you are a student of business, in any stage of your career, I encourage you learn about rational egoism—if success in business is your goal.