Business Ethics Exam 2

What, according to the Aristotelian approach to ethics, is the connection between human nature and morality?

To live morally is to fulfill our nature as rational beings by cultivating virtues that lead to human flourishing.

Does the Aristotelian approach allow us to reflect on and criticize our own current inclinations? How?

Yes. It builds virtue as a habit, not a feeling. Reason becomes a guide, and it builds community

According to Mill's approach to ethics, what is the connection between human nature and morality?

Morality is grounded in human nature through our capacity to experience pleasure and pain, and our ability to reason about the consequences of actions. Morality is about promoting human happiness, which Mill sees as the natural end of human life.

According to Kant's approach to ethics, what is the connection between human nature and morality?

The connection between human nature and morality lies in our capacity for rationality and autonomy. Morality is not based on desires or outcomes, but on the ability of human beings to act according to universal moral laws that they legislate for themselves through reason.

According to the Aristotelian approach to ethics, political and other social institutions are supposed to be organized so that they contribute to the moral development of human beings. What are the implications of this view for economic institutions?

According to Aristotle, economic institutions should help people develop moral character and live virtuously. This means they must promote fairness, discourage greed, and support the well-being of the whole community.

According to the Aristotelian approach to ethics, political and other social institutions are supposed to be organized so that they contribute to the moral development of human beings. What are the implications for government regulation of market activities?

Government regulation of market activities should aim to promote moral development and human flourishing, not just economic efficiency or freedom.

What are the two main justifications for free markets that we examined? Briefly explain each approach. Are these approaches compatible, i.e., if one is correct, can the other be correct as well?

One justification is utilitarian: free markets maximize overall happiness by efficiently allocating resources. The other is libertarian: markets respect individual freedom by allowing voluntary exchanges without coercion.

These approaches can be compatible if market outcomes are both efficient and respect rights, but they may conflict when maximizing utility requires limiting freedom

Hausman & McPherson reject the claim that competitive markets are always good because preference satisfaction is necessarily a good thing. Explain the argument for the claim that competitive markets are always good and why Hausman & McPherson reject it. What does all of this have to do with paternalism?

The argument claims that competitive markets are always good because they efficiently satisfy people’s preferences, which are assumed to reflect their well-being. Hausman & McPherson reject this by arguing that not all preferences are morally valuable or informed, and satisfying them doesn’t always promote genuine welfare or justice.

This connects to paternalism because if some preferences are misguided or harmful, it may be justified to regulate or override them to protect individuals or promote moral development. Hausman & McPherson argue that some paternalistic interventions in markets can be ethically defensible when they correct for flawed preferences or promote the common good.

Libertarians think that each of us has the right to do whatever we want with the things we own, provided we respect other people's rights to do the same. Further, they think that such rights are so important and inviolable that respecting them is more important than achieving any outcome. Why do they think these things? Are these plausible claims?

Libertarians believe these rights stem from the idea of self-ownership and individual autonomy, which they see as morally foundational and not to be overridden by collective goals. These claims are plausible if one prioritizes freedom and non-interference, but critics argue they can lead to unjust outcomes when rights conflict or when respecting them harms others.

Milton Friedman provides a Libertarian argument for shareholder primacy: the doctrine that managers should run a company in a way that maximizes shareholder value. What, on Friedman’s view, is the basis for managerial obligations to shareholders?

Friedman argues that managers have obligations to shareholders because they are agents of the owners, and their role is to honor the voluntary contract by maximizing profits within legal and ethical boundaries. He believes that using corporate resources for social goals without shareholder consent is undemocratic and violates individual freedom.

According to Friedman, when a corporate executive acts to promote social objectives she is illegitimately coercing or deceiving the stockholders of the corporation. Why does he say this?

Friedman says this because the executive was hired to maximize shareholder value, not to spend company resources on social goals that shareholders may not support. Using corporate funds for social objectives without shareholder consent violates the implicit contract and undermines individual freedom and property rights.

Evaluate this argument: would corporate executives really be doing the right thing if they were to pursue profit and the ultimate effect would be to harm the prospective well-being of others?

No, because pursuing profit while knowingly harming others violates basic ethical principles like justice and respect for persons. Even if profit is a goal, moral responsibility requires considering the broader impact of corporate actions on human well-being.

What are Sandel's beliefs?

Sandel believes justice requires moral reasoning and that markets should not decide everything. He emphasizes community, civic virtue, and the limits of meritocracy and individualism.

What are Hausman’s beliefs?

Hausman emphasizes that economic analysis should be integrated with moral philosophy, especially when shaping public policy. He supports limited paternalism when it helps correct flawed preferences and promote genuine well-being, rather than assuming all market choices are inherently good.

What are McPherson’s beliefs?

McPherson supports using economic analysis to improve public policy, but insists that values like fairness, freedom, and moral responsibility must guide how we interpret data and design institutions. He also defends limited paternalism when it helps correct irrational preferences or promotes genuine well-being.

What are Srinivasan’s beliefs?

Srinivasan critiques liberal individualism and defends a feminist approach that questions how beliefs and preferences are formed under oppression. She emphasizes that philosophy should be both rigorous and imaginative, engaging with non-ideal realities to promote justice.

What are Friedman’s beliefs?

Friedman believed in free-market capitalism, minimal government intervention, and the primacy of individual freedom. He argued that a business’s sole social responsibility is to increase profits for its shareholders, as long as it stays within legal and ethical boundaries.

What are Stone’s beliefs?

Christopher D. Stone argued that businesses, like natural entities, should be understood as part of a broader moral and legal ecosystem—not just as profit-maximizing machines. He believed that corporations have social responsibilities and that legal systems should evolve to hold them accountable for environmental and ethical impacts, not just shareholder interests.