In Defense of a Utilitarian Business Ethic

• DOI: http://doi.org/10.1111/basr.12013
• Published date: 01 September 2013
• Date: 01 September 2013
• Author: Andrew Gustafson

In Defense of a Utilitarian

Business Ethic

ANDREW GUSTAFSON

ABSTRACT

In this article, I suggest and support a utilitarian

approach to business ethics. Utilitarianism is already

widely used as a business ethic approach, although it is

not well developed in the literature. Utilitarianism pro-

vides a guiding framework of decision making rooted in

social benefit which helps direct business toward more

ethical behavior. It is the basis for much of our discus-

sion regarding the failures of Enron, Worldcom, and even

the subprime mess and Wall Street Meltdown. In short,

the negative social consequences are constantly referred

to as proof of the wrongness of these actions and events,

and the positive social consequences of bailouts and

other plans are used as ethical support for those plans to

right the wrongs.

I believe the main cause of the neglect of the utilitarian

approach is because of misguided criticisms. Here, I

defend utilitarianism as a basis for business ethics

against many criticisms found in the business ethics

literature, showing that a business ethics approach

relying on John Stuart Mill’s utilitarianism supports

Andrew Gustafson is an Associate Professor of Business Ethics and Society, College of

Business Administration, Creighton University, Omaha, NE. E-mail: andrewgustafson

@creighton.edu.

http://www.andygustafson.net

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Business and Society Review 118:3 325–360

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principles like justice, is not biased against the minority,

and is more reasonable than other views such as a

Kantian view when dealing with workers and making

other decisions in business. I also explain utilitarian

moral motivation and use satisficing theory to attempt to

defend utilitarian business ethics from questions raised

regarding utilitarian calculus.

1REVITALIZING A UTILITARIAN BUSINESS ETHIC FOR

SOCIAL WELL-BEING

Let us . . . find ourselves, our places and our duties in

society, and then, gathering courage from this new

and broader understanding of life in all its relations,

address ourselves seriously to the problem of making our-

selves and our neighbors useful, prosperous and happy.

Such is the supreme object of utilitarian economics.

Phelps and Myrick (1922, p. 7)

[T]he utilitarian standard is not the agent’s own greatest

happiness, but the greatest amount of happiness altogether;

and if it might possibly be doubted whether a noble character

is always the happier for its nobleness, there can be no

doubt that it makes other people happier, and that the world

is in general is immensely a gainer by it.

Mill (1998, ch. 2, para. 9, l. 4)

Utilitarianism provides a vision of ethical behavior which holds

the common interests of humanity as of utmost importance when

we make a moral decision. Utilitarianism fits business well if we

conceive of business as a means of transforming culture and

society, and utilitarianism is the ethical perspective which most

easily helps us to address the ethical relationship and responsi-

bilities between business and society. Surely, nothing is more

powerful than business itself in shaping our cities, our work

environments, our playing environments, our values, desires,

hopes, and imagination. Business provides great goods for society

through goods and services, jobs, tax revenue, and many common

outcomes, but it also has wide-ranging effects on a broad spec-

trum of stakeholders. The utilitarian in business asks, how can

326 BUSINESS AND SOCIETY REVIEW

we do business in such a way that it contributes to the greater

good? Drawing here on the utilitarianism of John Stuart Mill, here

I will first put forward some key features of a utilitarian business

ethic—that the right actions are the ones which contribute to the

greatest good for the most—and then in the latter part of the

article, respond to some of the typical criticisms of utilitarianism

in the business ethics literature in hopes of displaying utilitari-

anism’s promise as a guiding vision for ethical business behavior.

Self-interested profit-maximization cost-benefit analysis is often

labeled as “utilitarianism,” and that has often been the target of

business ethicists, looking to get business to consider ethical inter-

ests along with profit. These criticisms are useful and correct, so

long as they are aimed at economic profit maximization, rather

than the utilitarian ethics approach, but sometimes, the distinc-

tion is not clearly drawn. Utilitarianism as an ethical theory is quite

different than mere profit maximization, but the confusion is

common. There is, actually, a severe gap in business ethics litera-

ture regarding a utilitarian ethics approach to business ethics.

Although there have been books in the field of business ethics

written on Kantian business ethics (Bowie 1999), Social Contract

business ethics (Donaldson and Dunfee 1997; Sacconi 2000), and

Aristotelian business ethics (Hartman 1996; Morris 1997; Solomon

1993), no book has dealt with utilitarian ethics and business ethics

per se. Although there has been some positive attention paid to the

notion of “utilitarianism” as a basis for business ethics (Brady

1985; Elfstrom 1991; Snoeyenbos and Humber 2002; Starr 1983),

mostly it has been critical (Audi 2005, 2007; Beauchamp and

Bowie 2001; Bowie 1999; Bowie and Simon 1998; Desjardins 2011;

Hartman 1996; McCracken and Shaw 1995; McGee 2008; McKay

2000; Velasquez 1995; Velasquez et al. 1989).

Ironically, all this criticism comes while we continue to use

greatest good or common good analysis for most of our societal

ethical issues. Considering societal benefit and harm is usually

the basis for much of our discussion regarding the ethical failures

of Enron, Worldcom, and the subprime mess and recent Wall

Street Meltdown. Taxcheating, welfare or insurance fraud, racism,

gender discrimination and harassment in the workplace, under-

mining trust, stealing from the company, dishonest bookkeeping,

and nearly any unethical business practice we can imagine are

argued against and considered wrong in part, at least, because of

327ANDREW GUSTAFSON