John Tomasi's Free Market Fairness treats both traditions with depth, nuance, and unremitting fair-mindedness, and then points us toward a synthesis. Social democrats and libertarians equally need to read this book.

This book originated as lectures for a course on political philosophy that Rawls taught regularly at Harvard in the 1980s.

This essay articulates a crucial and neglected element of a general theory of the ethics of bureaucratic organizations, both private andpublic. The key to the approach developed here is the thesis that the distinctive ethical principles applicable to bureaucratic organizations are responses to the distinctive agency-risks that arise from the nature of bureaucratic organizations as complex webs of principal/agent relationships. It is argued that the most important and distinctive ethical principles for bureaucratic organizations express commitments on the part of bureaucrats (...) that function to reduce the agency risks that are inherent in such organizations. This approach to the ethics of bureaucratic organizations is shown to be more illuminating than those that concentrate exclusively or primarily on determining the conditions for corporate responsibility or on the idea that the ethical obligations distinctive of bureaucracies are role-derived. (shrink)

The Herald of Free Enterprise, a ferry operating in the English Channel, sank on March 6, 1987, drowning nearly two hundred people. The official inquiry found that the company running the ferry was extremely sloppy, with poor routines of checking and management. “From top to bottom the body corporate was infected with the disease of sloppiness.”1 But the courts did not penalize anyone in what might seem to be an appropriate measure, failing to identify individuals in the company or on (...) the ship itself who were seriously enough at fault. As one commentator put it, “The primary requirement of finding an individual who was liable . . . stood in the way of attaching any significance to the organizational sloppiness that had been found by the official inquiry.”2 In a case like this it can make good sense to hold that while the individuals involved may not bear a high degree of personal responsibility, together as a corporate enterprise they should carry full responsibility for what occurred. Although the members may not fully satisfy the conditions for being held personally responsible—although there are mitigating circumstances that excuse them in some mea-. (shrink)

The primary appeal of stakeholder theory in business ethics derives from its promise to help solve two large and often morally difficult problems: (1) how to manage people fairly and efficiently and (2) how to determine the extent of a firm's moral responsibilities beyond its obligations to enhance its profits and economic value. This article investigates a variety of conceptual quandaries that stakeholder theory faces in addressing these two general problems. It argues that these quandaries pose intractable obstacles for stakeholder (...) theory which prevent it from delivering on its large promises. Acknowledging that various versions of stakeholder theory have made a contribution in elucidating the complex nature of firms and business decision making, the article argues that it is time to move on. More precise explications of the nature of modern firms focusing on the application of basic moral principles to different business contexts and situations are likely to prove more accurate and useful. (shrink)

Consider a stylized contrast between medical and business ethics. Both fields of applied ethics focus on a profession whose activities are basic to human welfare. Both enquire into obligations of professionals, and the relations between goals intrinsic to the profession and ethical duties to others and to the society. I am struck, however, by a fundamental difference: whereas medical ethics takes place against a background of almost universal consensus that the practice of medicine is admirable and morally praiseworthy, the business (...) profession is embedded within the framework of firms in a capitalist market economy, and for the last century and a half there has been sustained debate about the moral and economic justifiability of such an economy. To be sure, even under socialism there might be an “ethics of socialist managers,” and there would be some overlap between such an ethic and contemporary business ethics. Nevertheless, many of the characteristic problems of business ethics — e.g., what are the obligations of a corporation to its shareholders? — arise only in the context of a private property-based market economy. This raises a deep problem for business ethics: can one develop an account of ethical practices for an activity (i.e., business) while ignoring that the context in which this activity occurs (i.e., capitalism) is morally controversial? It is as if the work in medical ethics proceeded in the midst of widespread disagreement whether medicine was a good thing. Another way of thinking about the problem is: if one teaches business ethics, does this commit you to accepting that business can be ethical? And doesn’t this commit you to accepting that capitalism is justifiable?1 I suspect that this is a serious problem for many teachers of business ethics. Many were trained in academic philosophy, and within academic philosophy there are many who think — or at least suspect — that capitalism is basically unjust, or perhaps that only a greatly modified capitalism would be acceptable.. (shrink)

Abstract:The central problems of political philosophy (e.g., legitimate authority, distributive justice) mirror the central problems of business ethics. The question naturally arises: should political theories be applied to problems in business ethics? If a version of egalitarianism is the correct theory of justice for states, for example, does it follow that it is the correct theory of justice for businesses? If states should be democratically governed by their citizens, should businesses be democratically managed by their employees? Most theorists who have (...) considered these questions, including John Rawls inPolitical Liberalism, and Robert Phillips and Joshua Margolis in a 1999 article, have said “no.” They claim that states and businesses are different kinds of entities, and hence require different theories of justice. I challenge this claim. While businesses differ from states, the difference is one of degree, not one of kind. Business ethics has much to learn from political philosophy. (shrink)

One of the most influential ideas in the field of business ethics has been the suggestion that ethical conduct in a business context should be analyzed in terms of a set of fiduciary obligations toward various “stakeholder” groups. Moral problems, according to this view, involve reconciling such obligations in cases where stakeholder groups have conflicting interests. The question posed in this paper is whether the stakeholder paradigm represents the most fruitful way of articulating the moral problems that arise in business. (...) By way of contrast, I outline two other possible approaches to business ethics: one, a more minimal conception, anchored in the notion of a fiduciary obligation toward shareholders; and the other, a broader conception, focused on the concept of market failure. I then argue that the latter offers a more satisfactory framework for the articulation of the social responsibilities of business. (shrink)

Should the democratic exercise of authority that we take for granted in the realm of government be extended to the managerial sphere? Exploring this question, Christopher McMahon develops a theory of government and management as two components of an integrated system of social authority that is essentially political in nature. He then considers where in this structure democratic decision making is appropriate. McMahon examines the main varieties of authority: the authority of experts, authority grounded in a promise to obey, and (...) authority justified as facilitating mutually beneficial cooperation. He also discusses the phenomenon of managerial authority, the authority that guides nongovernmental organization, and argues that managerial authority is best regarded not as the authority of a principal over an agent, but rather as authority that facilitates mutually beneficial cooperation among employees with different moral aims. Viewed in this way, there is a presumption that managerial authority should be democratically exercised by employees. Originally published in 1994. The Princeton Legacy Library uses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These editions preserve the original texts of these important books while presenting them in durable paperback and hardcover editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905. (shrink)

The use of agency theory remains highly controversial among business ethicists. While some regard it as an essential tool for analyzing and understanding the recent spate of corporate ethics scandals, others argue that these scandals might not even have occurred had it not been for the widespread teaching of agency theory in business schools. This paper presents a qualified defense of agency theory against these charges, first by identifying the theoretical commitments that are essential to the theory (in order to (...) distinguish between agency theory itself and certain incorrect interpretations that have been widely promulgated), and second, by specifying more clearly the different ways that agency theory can be used to analyze relations within the firm. The recommendation that follows from this analysis is that agency theory be used as a critical-diagnostic tool, to identify the points at which both firms and markets will be vulnerable to breakdown in the absence of moral constraint. (shrink)

There is an idea, extremely common among social contract theorists, that the primary function of social institutions is to secure some form of cooperative benefit. If individuals simply seek to satisfy their own preferences in a narrowly instrumental fashion, they will find themselves embroiled in collective action problems – interactions with an outcome that is worse for everyone involved than some other possible outcome. Thus they have reason to accept some form of constraint over their conduct, in order to achieve (...) this superior, but out-of-equilibrium outcome. A social institution can be defined as a set of norms that codify these constraints.1 Simplifying somewhat, one can then say that social institutions exist in order to secure gains in Pareto-efficiency. (shrink)

ABSTRACT:There is considerable overlap between the interests of business ethicists and those of political philosophers. Questions about the moral justifiability of the capitalist system, the basis of property rights, and the problem of inequality in the distribution of income have been of central importance in both fields. However, political philosophers have developed, especially over the past four decades, a set of tools and concepts for addressing these questions that are in many ways quite distinctive. Most business ethicists, on the other (...) hand, consider their field to be primarily a domain of applied ethics, and so adopt methods and conceptual frameworks developed by moral philosophers. In this paper, we discuss some of the salient differences between these two approaches, and suggest some ways in which business ethicists could benefit from taking a more “political philosophy” approach to these questions. Throughout, we underline the importance of seeking greater compatibility among the principles used in normative theorizing about markets, regulations, corporate governance, and business practices. (shrink)

Christopher McMahon links political theory and business ethics and thereby takes the latter to a new level of philosophical sophistication. McMahon argues that legitimate authority, political or managerial, characteristically preempts certain of one’s judgments, so that one may reasonably submit to a directive to do something that contravenes one’s principles. Authoritative preemption does not involve weighing reasons pro and con, as one who is considering breaking a promise must do: it disqualifies competing considerations.

When confronted with an ethical dilemma, most of us like to think we would stand up for our principles. But we are not as ethical as we think we are. In Blind Spots, leading business ethicists Max Bazerman and Ann Tenbrunsel examine the ways we overestimate our ability to do what is right and how we act unethically without meaning to. From the collapse of Enron and corruption in the tobacco industry, to sales of the defective Ford Pinto, the downfall (...) of Bernard Madoff, and the Challenger space shuttle disaster, the authors investigate the nature of ethical failures in the business world and beyond, and illustrate how we can become more ethical, bridging the gap between who we are and who we want to be. Explaining why traditional approaches to ethics don't work, the book considers how blind spots like ethical fading--the removal of ethics from the decision--making process--have led to tragedies and scandals such as the Challenger space shuttle disaster, steroid use in Major League Baseball, the crash in the financial markets, and the energy crisis. The authors demonstrate how ethical standards shift, how we neglect to notice and act on the unethical behavior of others, and how compliance initiatives can actually promote unethical behavior. They argue that scandals will continue to emerge unless such approaches take into account the psychology of individuals faced with ethical dilemmas. Distinguishing our "should self" from our "want self", the authors point out ethical sinkholes that create questionable actions. Suggesting innovative individual and group tactics for improving human judgment, Blind Spots shows us how to secure a place for ethics in our workplaces, institutions, and daily lives. (shrink)

This groundbreaking book revisits the writings of classic theorists in an effort re-evaluate the importance and influence the psychology of esteem has on the economy. The authors explore ways the economy of esteem may be reshaped to improve overall social outcomes and offer new ways of thinking about how society works and may be made to work.

Intentional collective action -- Collective moral responsibility -- Collective guilt -- Individual responsibility for (and in) collective wrongs -- Collective obligation, individual obligation, and individual moral responsibility -- Individual moral responsibility in wrongful social practice.

This handbook is a comprehensive treatment of business ethics from a philosophical approach.

Property-Owning Democracy: Rawls and Beyond features a collection of original essays that represent the first extended treatment of political philosopher John Rawls' idea of a property-owning democracy. Offers new and essential insights into Rawls's idea of "property-owning democracy" Addresses the proposed political and economic institutions and policies which Rawls's theory would require Considers radical alternatives to existing forms of capitalism Provides a major contribution to debates among progressive policymakers and activists about the programmatic direction progressive politics should take in the (...) near future. (shrink)

After two generations of emphasis on governmental inefficiency and the need for deregulation, we now see growing interest in the possibility of constructive governance, alongside public calls for new, smarter regulation. Yet there is a real danger that regulatory reforms will be rooted in outdated ideas. As the financial crisis has shown, neither traditional market failure models nor public choice theory, by themselves, sufficiently inform or explain our current regulatory challenges. Regulatory studies, long neglected in an atmosphere focused on deregulatory (...) work, is in critical need of new models and theories that can guide effective policy-making. This interdisciplinary volume points the way toward the modernization of regulatory theory. Its essays by leading scholars move past predominant approaches, integrating the latest research about the interplay between human behavior, societal needs and regulatory institutions. The book concludes by setting out a potential research agenda for the social sciences. (shrink)

Incorporated groups include businesses, universities, churches and the like. Organized to act as single centers of agency, they also routinely satisfy the three conditions that make an agent fit to be held responsible: they face significant choices, can recognize the relative value of different options, and are able to choose in sensitivity to such values. But is it redundant to hold a corporate agent responsible for something, when certain members are also held responsible for the individual parts they play? No (...) it is not, for it is often possible for a corporate entity to be fully fit to be held responsible, when this is not true of the individual members; they may be able to make excuses that are not available at the corporate level. Does the case made for corporate responsibility extend to unincorporated collectivities like nations or religions? Not strictly but it does explain why it may be sensible to treat those collectivities as if they had corporate responsibility in certain domains. (shrink)