Business ethics courses skirt main issue

One of my most memorable moments from teaching business ethics to undergraduates at the Wharton School is of showing them Gordon Gekko’s “greed is good” speech from Wall Street.

I noticed that some students lip-synced the speech perfectly. “That is my favourite movie,” I recall one student gushing. She was seduced by Gekko, and she was not the only one.

In teaching business ethics as applied moral philosophy, as I did, the Gekko speech is that most dangerous of teaching tools: it may open students’ eyes if deployed well; but it just entrenches their preconceptions if it is bungled.

Recall that Gekko justifies greed by its beneficial social effects – “the upward surge of mankind”, no less. This is only a slight bastardisation of the well-known invisible hand argument for a laisser faire economy and for untrammelled profit-seeking within it.

The film clip triggers either passionate defence or instinctive revulsion. Students vehemently disagree on whether unrestrained profit maximisation is justified. But the very act of disagreeing shows there is something to disagree about, namely how to justify business behaviour. To argue about it is to accept not only that business behaviour is in need of justification, but that some justifications are better than others.

What this means is that Gekko’s speech is an instance of moral philosophy. It is bad moral philosophy to be sure, but that is what makes it such a potent teaching tool. Once logic is applied to the moral argument that Gekko makes – which is what moral philosophy is about – it is easy to see what a poor argument it is. That lays the ground for exploring what a better argument – and a more justified conclusion – may look like.

Teaching business ethics as moral philosophy is to guide students in such explorations. One could start by showing that Gekko’s claim is one of many possible types of consequentialism. That raises questions both about the empirical premise (does greed really mark the upward surge of mankind?) and its moral imperative (do we really have to act so as to make mankind surge upward?).

Are other versions of consequentialism not better guides to behaviour? (Which good outcomes should it pursue?) What about non-consequentialist theories? (Are there not things we should do no matter what the outcome?)

This unabashedly philosophical approach is only one way of teaching ethics, and probably not the most common one. One reason is that business ethics lacks a core body of knowledge and an agreed methodology. With calls for business schools to “teach ethics”, this confusion is damaging. Courses can be added, but it is impossible to assess how well they fulfil their purpose without a sense of what that is.

The most ineffective goal one could set is to teach people to be good. Moral motivation is acquired in childhood and professional ethics are strengthened – or undermined – in the workplace. But a university is not suited to making people be good. What it can do is to inculcate analytical skills.

Outside philosophy departments, however, there is resistance to the idea that moral values can be the subject of analytical reasoning. Many “ethics” courses therefore veer away from the main question – how is it morally right to behave – into other analytical approaches, such as sociology; or into the faux-analytical concepts of strategy management and corporate responsibility.

Doing moral philosophy is hard – for instructors and for students. It can hardly be taught without formal training in philosophy. And for business students in particular, the subject is both difficult (though this is no more an objection than it is to finance courses) and completely different from the other courses they take.

But the effort invested can pay high returns. Many of my students called moral philosophy a breath of fresh air after their accounting, marketing and economics classes. For some, it was an epiphany. Those moments are more memorable even than the Gekko screening.

Martin Sandbu is the FT’s economics leader writer and author of ‘Just Business: Arguments in Business Ethics’, published by Pearson Prentice Hall.

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