WHY ETHICS MATTERS: A DEFENSE OF ETHICS IN BUSINESS ORGANIZATIONS
Manuel Velasquez
Abstract: I argue that Plato was right in claiming that justice is more profitable, more rational, and more intrinsically valuable than injustice, and that this is particularly true for business organizations. The research on prisoners' dilemmas and social dilemmas shows that ethical behavior is more profitable and more rational than unethical behavior in terms of both the negative sanctions on unethical behavior when interactions with stakeholders are iterated, and the positive rewards of habitually ethical behavior when stakeholders can identify those who are predisposed to be ethical. In addition, the psychological research on justice shows that justice is intrinsically valued, both from an outcome and from a process perspective, and so crucial for business organizations, particularly in terms of organizational effectiveness. n an article in the Harvard Business Review Amar Bhide and Howard H. Stevenson write that "Treachery, we found, can pay," and "There is no compelling economic reason to tell the truth or keep one's word."^ Bhide and Stevenson are not the first to suggest that unethical behavior may be more profitable than ethical behavior. Over two thousand years ago, exactly the same claim was made by Thrasymachus, a character in Plato's Republic who concluded that while justice is for the simpleton, injustice is for the wise: [Socrates:] Well, then, Thrasymachus... suppose you begin at the beginning and answer me. You say that being perfectly unjust is more profitable than being perfectly just? [Thrasymachus:]Yes, that is what I say, and I have given you my reasons... I affirm injustice to be profitable and justice not... [Socrates:] And would you call justice a vice? [Thrasymachus:] No, I would rather say it is a sublime simplicity. [Socrates:] Then would you call injustice malignity? [Thrasymachus:]No; I would rather say discretion. [Socrates:] And do the unjust...