Ethical Issues in Modern Business - Essay Example

Ethical Issues in Modern Business Balancing individual needs against the needs of society as a whole is not a new ethical issue. History has over and over again given us examples of this dilemma. Nor is this issue only prevalent in a free market society. The liberties found in a democratic state allow the entrepreneurial spirit to flourish. Where competition is allowed to exist, amazing advances will be made. To be competitive companies need to be profitable. Problems arise when this drive for profitability, the bottom line so to speak, becomes all the important. Capitalism and consumerism are both responsible for ensuring our priorities are just. Each has a responsibility to ensure advancement and profitability is not at the expense of our societal morality. Before delving more deeply into the issues involved a clear understanding of the principle doctrines surrounding the premise needs to be established. Capitalism is the economic base of a free society. The concept being that private or corporate ownership is a fundamental principal of it. The success or failure of the company is directly tied to the profitability of the entity. As profits increase, reinvestment is made leading to increased productivity and company wealth, within which context; capitalism naturally leads to a personal stake in the company, regardless of whether it is a privately owned company or a corporation. One’s livelihood is directly tied to its success or failure. When in a cultural climate such as this, success is often perceived as material acquisitions and possessions which may lead to devastating consequences. Too often when the goal becomes merely the ‘bottom line’ the path to achieve it becomes secondary and ethical improprieties become frighteningly commonplace. The second key term to define is consumerism. It appears an innocuous term initially. On the surface it is the societal fueling of capitalism. As the consumer buys, companies profit yielding gain and thereby there is further reinvestment of capital. This cyclic compliment of supply and demand defines the free market society. However, when looking deeper into the concept of consumerism it leads to the overwhelming need of the consumer to have, to possess, to buy – materialism supersedes actual need. This accepted reality of a capitalistic society results in the confusion of needs versus wants. How these two principles interact has become the center of much publicity. The ethics of American business and the public’s demand for materialistic gain comes to the forefront in the form of corporate scandals uncovered. Has our cultural greed fed this? Understanding the problem becomes the first step in dealing with it. Lets evaluate briefly, a few cases involving corporate ethics and illegalities is necessary to determine how to how best to balance capitalism and consumerism with responsibility. In recent years the biggest corporate scandal that comes to mind is the Enron case. Enron Corporation during the late 1990’s until its fall in October of 2001 exemplifies the corporate greed spawned by capitalism gone bad. This giant company, as later exposed, used fraudulent accounting practices to hide debt and appear more profitable. These practices were not only unethical but highly illegal as well. Additionally, it came to light that to increase corporate profits Enron had manipulated the energy market to drive up prices and therefore its profitability. This greed was not just on a corporation level - top executives feed their own personal materialism as well profiting individually from corporate illegalities. The upper echelon of the company, those in the positions of power, made these choices or at very least were privy to them. Their own personal greed led to this at the expense of lower level employees livelihoods - in the present sense their jobs, but also their futures in terms of the retirement investment plans that were devastated when this scandal came to light. There have been numerous other corporations that have resorted to illegal activities to increase their profitability. A few examples follow: In July of 2002 Merck “recorded $12.4 billion in consumer-to-pharmacy co-payments that they never collected.” (Forbes, 1) K-Mart Corporation in January 2002 was accused of illegal accounting practices to hide losses and appear more profitable to stockholders. Halliburton in May of 2002 was charged with illegally booking revenues from customer’s that had not agreed to the cost over-runs. In February of 2002, Global Crossing was charged with price fixing by falsely manipulating the market to appear more profitable. Additionally, corporate leadership destroyed documentation of these illegal activities. Bristol-Myers Squibb in July of 2002 forced their distributors to take overstock material in order to boost their sales figures. (Forbes, 1) Sadly, as these companies are by no means the only ones involved in unethical or illegal practices, it becomes necessary to examine the extent of the improprieties to understand that it is not an isolated case of corporate greed, but rather a systemic problem needing to be addressed. To understand the full extent of the ethical conflict that can be found in capitalistic society individual issues need to be identified and examined. With technological advancement, opportunities abound. They are only limited by one’s imagination. These opportunities must be weighed against the possible damage they may cause. The consumer’s demand for excess can lead to ecological disaster. Before it became “unfashionable” to wear fur, animals were bred for the sole purpose making us “look good”. Corporations become complacent on the ecological impact the production of their goods or services may have. Examples of this include the fishing industry, ivory poachers, encroachment on rainforests; All done in the name of capital gain. Too often, unless something is defined as illegal corporate strategy will justify their actions instead of doing what is morally right. This is often exemplified when ecological issues are at stake. Capitalism does not set out with the purpose to harm the environment but on its way, it is possible to impact it. Encroachment into natural areas happens and wildlife habitats are affected. Planning and being ecologically sensitive are imperative. Profitability will still exist but tempered with ethical responsibility benefits us all. Safety is another area the needs to be addressed. This includes safety of the consumer, the workers producing the goods and services, and safety of the public in general. Profits can not dictate safety. Cutting corners in manufacturing at the expense of safety, use of inferior quality parts, failing to acknowledge when potentially dangerous situations are present should not be overlooked in order to protect the bottom line. This needs to be incorporated into the ethical foundation of the capitalistic framework. As shown examples of unethical business practices are not limited to accounting activities and manipulation of facts and figures. The problem runs much deeper. It is easy to say a company is ethical in their business practices if they do not break any laws, but there is more than legalities involved. Corporate America manipulates the public. Their insightful approach to advertising in the capitalistic society fuels consumerism. This is achieved in four basic ways: “Creating new psychological "needs" in people; Stimulating impulse buying; Creating and marketing fads and styles to spur temporary "usefulness" of material goods (or social obsolescence); and Making short-lived or hard-to-fix goods. Many products are designed to have uneconomically short lives, with the intention of forcing consumers to repurchase too frequently.  This is technical obsolescence, often called planned obsolescence.” (Con: Profit from Waste, 1) American society is so consumed with “keeping up the Jones” and equating success and happiness with material possession. What you have begins to supersede what you are. Advertising has long understood this and successfully utilizes the above tactics to sell their products and constantly bombard to buy, buy, and buy through television, press, radio and the internet. Everywhere we turn someone is selling something. Make no mistake - if the public did not fall prey to these tactics they would not be employed. The lure of personal possessions and the misconceptions of what are truly needs and what are merely wants has allowed this to occur in a capitalistic society. Society has created these artificial values replacing things with social responsibility, both individually and as a culture. This is a very important point to understand the depth of the problem. “It is crucial to recognize that advertising and mass media programs sponsored by and related to it do not to any significant extent create values or produce attitudes but rather reflect existing and exploit prevailing attitudes. In so doing they undoubtedly re-enforce them and contribute to their propagation, but they cannot be considered to be their taproot.... Advertising campaigns succeed not if they seek to change peoples attitudes but if they manage to find, by means of motivation research and similar procedures, a way of linking up with existing status-seeking and snobbery; social, racial, and sexual discrimination; egotism and unrelatedness to others; envy, gluttony, avarice, and ruthlessness in the drive for self-advancement -- all of these attitudes are not generated by advertising but are made use of and appealed to in the contents of the advertising material.” (Dowd, 1) As Dodd explains, consumerism fosters the manipulation by advertising. Does this excuse advertisers from employing theses techniques? No - but each of us as consumers has an obligation to understand that ultimately the consumer controls capitalism through their purchasing decisions. Understanding the false demands created and refusing to accept them; refusing to submit to what corporate America decides our needs are; keeping focused on what is really important in life; and demanding socially and ecologically responsible decisions in a capitalistic society can and will yield positive results. One, as consumer, needs to be proactive in seeking the above. Capitalism, as a whole, is not bad. Free enterprise fosters competition which has led to unprecedented technological advancements. The key is to balance the inherent competitiveness of capitalism with responsibility and social mores. The ethical implications of technological advancements of a capitalistic society include: weighing technological advancement against safety; weighing the benefits of the product or service against the ecological impact; and finally deciding “when enough is enough”. Societies as a whole needs to set these limits not allow them to be set for them. What we wear too often says who we are. Designer jeans, designer sheets, and designer shoes – does what name you display on your backside determine who you are? Of course not, but consumerism has blinded us to this. What kind of car you drive becomes more important than how you treat your neighbor. Where you live becomes more important than how you live. The balance of your checkbook determines your worth. The responsibility for these sad realities lies directly at our feet. How much is truly enough? Looking at these individual examples gives frightening insight into the larger problem. We created it and we must control it not allow it to control us. Free enterprise responsibly carried out benefits us all. Let’s not lose sight of the ‘all’. Works Cited Alok, Ray. “Corporate Scams in US: Roots and Remedies.” Business Line Internet Edition. 26 Jul. 2002. Accessed 31 Oct. 2005. . “Consumerism: Profiting from Waste.” University of Wisconsin. 2004. Accessed 31 Oct. 2005. . “Corporate Scandals.” Now-Politics and Economy. 5 Aug. 2005. PBS. 31 Oct. 2005 . Dowd, Doug. “Consumerism as a Social Disease.” ZNet Mag. 28 Sep 2005. Accessed 31 Oct. 2005.. Fieser, James. “Business Ethics.” University of Tennessee. Undated. Accessed 31 Oct. 2005. . Goleman, Zack. “Consumerism, Capitalism, and Conformity.” The UbysseyMagazine. 9 Nov. 2004. Accessed 31 Oct. 2005. . “A Guide to Corporate Scandals.” Economist.com. 15 Jul. 2002. Accessed 31 Oct. 2005 . Patsuris, Penelope. “The Corporate Scandal Sheet.” Forbes.Online. 26 Aug. 2002. Accessed 31 Oct. 2005.. The Ethics of Consumerism and Capitalism I Introduction A. Definitions 1. Capitalism 2. Consumerism B. Thesis II Case Studies in Illegal Activities A. Enron B. Others III Un-Ethical Business Practices A. Advertising/Marketing B. Environmental C. Safety D. Others IV Conclusions Read More