Resolution of The Moral Crisis

Resolution of The Moral Crisis

Resolution of the Moral Crisis in Management

A business ethic, to be acceptable to society, must be compatible with prevailing economic ideology and theory. An ideology is a system of beliefs intended to influence action or opinion. "It is a system of thought through which runs some central theme, such as women, government, God, mankind, the white race, the family, or property."15 The ideologies of a society organize prevailing views of the world into a "logical" system.

There is an intimate relation between ideology and business ethics. A business ethic must be consistent with the moral code of society, and the ideologies shared by the members of society are the source of this moral code. Science is itself a kind of ideology since it is ultimately based on a system of beliefs which help man to organize his views of the world into a logical system. Indeed, science is one of modern industrial society's most powerful ideologies. Therefore, any business ethic which is accepted by the general public and the business community must be fitted into the society's system of ideology and the picture of the business and economic world provided by the science of economics.

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The end of laissez faire and the rise of the general-welfare state have undermined the profit ethic by contradicting the basic assumption that the best individual and social result ensues when individuals pursue their self-interest in untrammelled freedom. The new dispensation emphasizes cooperation rather than competition, social interdependence rather than rugged individualism, and the human rather than supernatural source of social and economic arrangements. The hard-driving profit maximizer who eschews all values not definable in money terms is out of step with such a welfare-oriented ideology.

The classical economics has also fallen in stature during the twentieth century. The rise of big business has wrecked havoc upon the nicely worked out deductions of Adam Smith and the other classical economists by invalidating the assumptions upon which they were based. The key element in their analysis-the competitive market made up of many small buyers and sellers who freely interact-has disappeared in most industries. The large company has brought about oligopolistic markets in which price competition gives way to advertising, sales promotion, product differentiation, and artificial obsolescence. It has also brought about the separation of ownership and control and the development of a professional management elite with functions, values, operating methods, and motives quite different from those of the nineteenth-century entrepreneur. Today few academic economists defend the unalloyed profit motive except as a useful fiction, and a group of younger economists is actively developing the new field of managerial capitalism to bring theory more into line with reality.

It is because of the uncertain state of contemporary economic ideology and economic theory that there is a moral crisis in management. The pace of change in the economy and society in recent years has been so rapid that there has not been time for the development of a new ideology to replace laissez faire or a new economic theory to replace the classical economics. This is understandable, given the nature of ideology and science. All ideologies are inherently conservative. Men do not like to give up ideas to which they have grown accustomed about the nature of their world.

They will do so only if it is clear that a once satisfactory ideology has become a "sacred cow" which no longer is in touch with reality and has lost its purpose. Economics, like other social sciences, follows a very uneven course, backtracking and going off on fruitless tangents at times. There is a natural reluctance on the part of economists to give up parts of the body of received economic theory which have the sanctification of long usage. But once it becomes clear that changes in the empirical world which are inconsistent with economic theory are permanent, forces inevitably are brought to bear to change the erroneous assumptions and deductions.

We are at a turning point in business ethics because the inadequacy of the profit ethic is becoming clearly recognized, and an ideological and scientific foundation is being laid for the ethic of social responsibility. At first only a few free-thinking executives dared take issue with the prevailing business ideology. Today ethical soul-searching is becoming a conventional practice among top managers.

They seek a philosophy to aid them in understanding who they are and what they should do. Social scientists, management consultants, business statesmen, and other intellectuals concerned with modern business and its problems are busy forging the concepts, ideas, theories, and other ideological and scientific elements needed to support the ethic of social responsibility which already is practiced widely. Economists are revising the theory of the firm; sociologists are becoming interested in the broad relations between the corporate organization and society; thoughtful executives are placing their ideas before the business community; and management consultants are focusing attention upon the nebulous and philosophical problems of how to guide corporations through the choppy seas of social change.

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In the long run it is inevitable that business ethics will become congruent with existing management practice. Men cannot long accept a status quo that is not rationalized by generally accepted ideology and theory. But before the gap between management practice and ethical beliefs is bridged many individuals must contribute to the emergent process of resolution of the moral crisis in management. The purpose of this book is to point out the true nature of this crisis. It has been produced by ground swells of social change that are unavoidable in a highly dynamic industrial society like ours with a cultural heritage of freedom and mobility. It is important that the true nature of the crisis is understood so that appropriate steps may be taken to resolve it. It would be disastrous, for example, if the remedy sought were more government controls over business. In the long run a deeper understanding of the relations between the manager, corporation, and society is the most effective means to a satisfactory resolution of the moral crisis of management.

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