Recently, I heard a colleague tell someone: “Everyone—except the naïve idealists—knows that one cannot be 100% moral in business; success in business requires compromising moral principles from time to time.” In other words, he was arguing that it is good to be moral in theory, but it’s not always practical.
This is a disheartening view for someone teaching at a business school, but it is common, also among businesspeople—and it is wrong. Why?
To answer, we need to be clear about the meaning of ‘moral’ and ‘practical.’ ‘Moral’ means consistent with moral principles. To act morally, a person must follow moral principles, such as honesty and justice. According to Aristotle and the other Greek philosophers, morality is a guide to a good life; it tells us how to act to achieve our values and goals. ‘Practical’ means effective or successful in achieving goals. In business, practical action maximizes long-term profits.
The moral and the practical do not conflict. Morality is a guide to a good life—a guide to achieving practical goals.
Why do we need such a guide? Why not just focus on getting things done and maximizing profits? We need a guide because we do not know automatically what goals are good for us and how to achieve them. Unlike animals that automatically (within the limits of their knowledge) pursue goals that sustain their lives, such as food and procreation, we have to first learn what goals are life-enhancing and then acquire the knowledge to reach them.
A cat sees a mouse, catches and eats it—it does not need a guide to determine whether hunting mice is good or how to go about it; it acts instinctively. But humans cannot safely act on impulse: we need to acquire knowledge of proper goals and means in order to act successfully.
We hold knowledge in the form of principles. Principles (in any field) are generalizations that we induce from observation; they serve as a guide to action. For example, principles of agriculture, engineering, and nutrition tell us what goals to set and how to achieve them: better crop yields, sound buildings and bridges, and good health—none of which can be achieved without knowledge and by acting on impulse.
Moral principles are fundamental. As Ayn Rand defines it, morality is “a code of values [a set of principles] to guide man’s choices and actions—those choices and actions that determine the purpose and course of his life.”
Consider the principle of honesty: whether you choose to follow it or select a career as a con artist, will determine the purpose and course of your life. Similarly, if you follow the principle of self-interest, the purpose and course of your life will differ dramatically from that of following the principle of self-sacrifice. If we want to achieve a good life, we need to identify and choose the moral principles that support it.
Why do many people think that the moral and the practical conflict?
The confusion stems from the prevailing view of morality, altruism, and misunderstanding of self-interest. The common belief is that to be moral, one must put others’ interests ahead of one’s own. Yet, people realize they must be practical and achieve at least some of their values, such and food and shelter, to survive. If you practice altruism on principle, you will have to give up all your values—which is impractical, if you want to live. In business, if you want to succeed, you must pursue profit maximization, which conflicts with altruism.
The impossibility of following altruism in business (and in life) leads many to accept the false alternative of pragmatism: rejecting all principles and doing whatever they feel is practical to “get things done.”
The problem with this approach is that it prevents the achievement of long-term profitability and other goals. As fallible beings without automatic knowledge, we need the guidance of moral principles. Compromising them for so-called ‘practical’ ends will not lead to achievement of values but to their loss, as those compromising principles such as honesty by deceiving investors or cutting corners in product quality will eventually find out.
It’s the pragmatists, those who reject moral principles as impractical, who are naïve; they will fail to achieve values in the long term. Those who understand that morality—proper, pro-human morality of rational self-interest—is practical will achieve success (in conditions of relative freedom and barring accidents). The moral code of rational egoism is the guide they need to a good life, including success in business.
Photo by Frank Busch on Unsplash
Originally posted September 15, 2013