Profit at any cost?

In the relentless pursuit of profit, the question emerges: can a business ever truly be ethical? This question strikes at the heart of modern capitalism, where the aims of wealth creation are often irreconcilable with ethical responsibility. On one hand, the Shareholder Theory, popularised by economist Milton Friedman, insists that the primary duty of a business is to maximise profits for its shareholders, viewing ethical concerns as secondary. Conversely, , R. Edward Freeman’s Stakeholder Theory challenges this notion, arguing that businesses should prioritise the interests of all stakeholders—employees, customers, communities, and even the environment. However, perhaps a nuance neither perspective fully considers is the notion that ethics, as a construct, is inherently human. Given that businesses are material entities driven by economic mechanisms, it is questionable whether they can truly be expected to bear ethical liability at all.This essay will explore these competing theories, using ethical frameworks such as Kantian Deontology, Utilitarianism, and Aristotle’s Virtue Ethics, to evaluate whether businesses can genuinely balance profitability with moral obligations or in other words, can a business ever be truly ethical? 

Milton Friedman’s Shareholder Theory asserts that the primary ethical duty of a business is to its shareholders in order to maximise profit. His argument hinges on the idea that as owners of the company, their primary duty is to serve their own financial interests. This can be considered compelling because it aligns with the capitalist structure; by focusing solely on maximising profits, companies can operate efficiently, without the burden of navigating conflicting moral obligations to various stakeholders. Under the framework of Kantian ethics, duty is doing what is considered to be the right thing to do regardless of the consequences to you. In the corporate world this would be choosing to do the most ethical practice even at a cost to profit generation. The death of Barbara Bolton in 2020 by hypothermia due to her refusal to put her heating on, fearful of the high energy bills being demanded of her by her energy supplying company, calls this idea into question. According to Kant, the energy company would have a moral duty to ensure that people have access to essential services like heating, regardless of their ability to pay. Even if assisting financially struggling customers negatively affects the company’s profit margins, he would argue that it is the ethically correct action, as it prioritises the well-being of individuals over financial gain. In Kant’s formulation of the deontological categorical imperative, he emphasises that if a maxim is able to be universalised, only then is it ethical. If all businesses universally followed the principle of prioritising profit over ensuring access to basic human needs, the result would be widespread suffering, as vulnerable individuals who cannot afford vital services would be left without them, failing the universalisability test, rendering them unethical. Thus businesses cannot be ethical because their duty to profit overshadows their care for human life and basic needs. The drive for financial gain will always conflict with moral obligations, making it challenging for businesses to uphold ethics in practice.

However, some argue that businesses can be ethical through mechanisms like Corporate Social Responsibility (CSR) and whistleblowing. CSR refers to the practices and policies undertaken by businesses to have a positive impact on society. This can encompass environmental sustainability, implementing eco-friendly practices, reducing carbon footprints, and reaching net zero targets; ethical labour practices, and transparency: providing clear and honest communication about business practices, including supply chain management and product sourcing. The rationale behind CSR is that businesses have an obligation to consider the interests of all stakeholders—not just shareholders—contributing to broader societal wellbeing as this approach can foster trust, enhance brand reputation, and create long-term value for both the company and the community. For example, the company TOMS shoes operates under a one for one model: for every pair of shoes sold, TOMS donates a pair to a child in need. They also provide funding to organisations working on mental health, safe water access, and other community needs, focusing on creating a positive impact. Under a utilitarian framework that emphasises the greatest good for the greatest number, this initiative would deem TOMS indeed ethical. CSR based actions could score highly on Bentham’s hedonic calculus: companies might improve working conditions (propinquity, intensity and extent of pleasure), have long-term positive effects on communities (duration and fecundity), and promote environmental protection that benefits future generations (purity and fecundity). Thus, engaging in CSR would render businesses ethical because it maximises overall utility. 

Whistleblowing, the disclosure of unethical or illegal activities within an organisation by an employee or insider, promotes accountability, transparency, and a culture of integrity within organisations along with a deterrent for corporate misconduct. Knowing that whistleblowers may report unethical behaviour can deter individuals from engaging in such practices. This creates an environment where employees are less likely to tolerate or participate in wrongdoing. In Mill’s view, it could also align with utilitarian ethics if it protects higher mental pleasures that promote intellectual and moral development such as justice, truth, and safety. By exposing corporate wrongdoing, whistleblowing defends moral and intellectual goods, which contribute to the overall improvement of society. Even if it causes short-term harm (such as financial losses for the company), it promotes long-term utility by protecting the well-being and rights of people.  Whistleblowers within Volkswagen exposed the company's use of software designed to cheat emissions tests for diesel vehicles. This revelation led to significant legal repercussions, including billions in fines and a damaged reputation, however since, they are now pioneering zero emissions driving and on track to become carbon neutral by 2050. Therefore the willingness to embrace whistleblowing as a mechanism for integrity and transparency suggests that businesses can indeed embody ethical practice. 

Finally, it is important to consider that ethics, as a construct, is inherently human. Since ethics is rooted in human consciousness and moral reasoning, it raises intriguing questions about the applicability of ethical principles to non-human entities, such as businesses who are material entities driven by economic mechanisms. However, I argue that businesses are not independent entities of people. It is not possible to have a business without a person or many people behind it and humans indeed are able to possess consciousness, reasoning and thereby be accountable to ethical standards. Aristotle’s virtue ethics posits that the most ethical action is the one that aligns with the concept of achieving eudaimonia, or human flourishing, through the practice of virtues. According to Aristotle, ethical behaviour is not merely about following rules or maximising outcomes; it is fundamentally about developing a virtuous character and making choices that reflect the mean between extremes.The application of virtue ethics to business highlights the significance of virtuous leadership – leaders set the tone for ethical behaviour within their organisations by embodying virtues such as integrity, fairness, and compassion. When leaders prioritise ethical principles and foster a culture of accountability, they encourage employees to act in accordance with these values. In this way, businesses become reflections of the virtues practised by their leaders and employees, reinforcing the idea that ethical accountability lies within the individuals involved. Businesses can be ethical when their leaders practise moral virtues. 

However, while businesses may implement policies or practices that reflect certain virtues, these actions are often driven by external pressures such as market demands, regulatory requirements, reputation (which subsequently impacts profit) rather than an intrinsic commitment to ethical behaviour. In this way, businesses don’t have the correct motives in adopting these principles – it is still for self serving, self interested reasons and not out of virtue meaning businesses can never truly be ethical in that respect. 

In conclusion, despite mechanisms like CSR and whistleblowing, which may suggest a commitment to ethical engagement, these practices often respond more to external pressures than to intrinsic values. The application of virtue ethics highlights that ethical behaviour is rooted in human character; however, when faced with a choice between profit and ethical responsibility, businesses are likely to prioritise financial gain. Ultimately, if asked to abandon CSR for profit, many businesses would do so, revealing that the relentless pursuit of profit often compromises their ability to genuinely uphold ethical standards. Thus, it can be concluded that businesses, as currently structured within modern capitalism, may find it challenging—if not impossible—to be truly ethical.