Morality, Etichs and Law

Every individual... neither intends to promote the public interest, nor knows how much he is promoting it... he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.

Adam Smith, The Theory Of Moral Sentiments, Part IV, Chapter I, pp.184-5, para. 10.
(The above quote defines the basics of modern capitalism.)

Capitalism is defined as an economic system that emphasizes private ownership of the means of production or a privately controlled economy. In a capitalist society companies live by the profit motive. They exist to make money.

Today, corporate America faces the worst recession since the Great Depression, precipitated by unethical business practices, corporate greed, and fraud. The collapse of several financial industry giants since early 2001 has put companies including Goldman Sachs under intense scrutiny. The conflict between short-term profit and long-term viability, the lack of legislation and failure of self-regulation has never been questioned more. The writing is on the wall. It’s not just about profits anymore, but also the effect of these profit-making tactics on the society - a key stakeholder.

As Thomas Friedman points out, corporate decisions have to be made based on sustainable values and not situational values. Although the concept is simple, the implementation is not. For ethical decisions to be based on sustainable values, they have to be clearly defined and incorporated in enterprises and leaders. In this highly interconnected world, there is immense interdependence among individuals and institutions. However, this interdependence of businesses makes ethical decisions difficult and conflicting. Integration of ethical guidelines in business is challenging as the understanding of ethics vary depending on the profession and culture. Although ethical business practices prove to improve the value of an organization in the long-term for all its stakeholders, management ethics is usually a deviation from enterprises’ fundamental business operations.

In a capitalist society, professional ethics is defined and dictated by preferences of the trade itself. The welfare of the larger public usually takes a backseat. Although, stringent legislation is imposed by the state from time to time to reinforce integrity and the safeguard the society, it takes the freedom away from the “free-market”. For sustainable values to become the backbone of corporate decision-making, strong codes of ethics and moral have to be intrinsic in nature. Leaders have to create a sustainable yet flexible code of morals and ethics, which takes into consideration desperate times and desperate measures.