Magazine article Executive Speeches

Business Ethics: Everybody's Favorite Oxymoron

Magazine article Executive Speeches

Business Ethics: Everybody's Favorite Oxymoron

Article excerpt

Murray Weidenbaum is the Mallincrodt Distinguished University Professor at Washington University in St. Louis where he is also the honorary chairman of the Weidenbaum Center on the Economy, Government, and Public Policy. His remarks were presented as The Stanley B. Lyss Lecture at Temple Shaare Emeth in St. Louis, Missouri, on January 30, 2003.

It is a great honor to be asked to speak in the Stanley Lyss Lecture series on ethics--and I very much appreciate the opportunity. Nevertheless, my pleasure is accompanied by a funny feeling that I have drawn the short straw. Rabbi Stiffman has assigned me the topic of business ethics. I guess it could have been worse. He could have asked me to speak on military intelligence. It turns out that I am a bit of a contrarian on both topics.

The fact is that the level of business ethics is under serious attack and for very good reason. Almost every day we seem to read about new revelations of corporate malfeasance, accounting fraud, and business conflicts of interest. The wrongdoers are widespread. They have come in every shape, size, and variety. They cover every race, creed, and ethnic group. In the process, many innocent people have lost their reputations, their jobs, and much of their life savings.

That is very discouraging. It should not surprise us that some people have lost faith in the private enterprise system. Personally, I still strongly believe in the benefits of the private enterprise system. But that does not mean that I support the status quo. I strongly believe that we should throw the book at those business officials who let us down and broke or skirted the law. Some laws need to be strengthened and some traditional practices of business need to be overhauled. Yet I think that it is essential that, in examining the changes that are needed, we look at the donut and not just at the hole--or should I say--the bagel.

I will start with the most basic example of why I still trust the business system. I can go 10,000 miles to the other end of the globe and count on people who never saw me before and probably never will meet me again to provide me with goods and services in hotels, restaurants, and stores--and they can confidently expect that someone else they never have met will pay them. Less dramatically, I can order from a catalogue and expect the item I requested to arrive without my seeing the person who will send me the item and who will get paid for it by someone else.

Most of the time, the system works fairly well. Of course, like any human activity, the business system does not work perfectly. But, compared to the millions of transactions that occur daily, very few lawsuits are generated in the process. For most of the business transactions I enter into, I can count on the system working.

The acid test is that all of the alternative economic systems--feudalism, socialism, communism--have fallen by the wayside. Capitalism does work, despite the presence of greed and other undesirable attributes. Over much of the twentieth century the capitalist nations fed the communist countries. On a more mundane level, when I consider the wide prevalence of bribery and favoritism as a way of life in so many parts of the world, the comparison is quite favorable to the level of ethics in American business, warts and all.

By the way, as someone who has worked in government and the private non-profit sector as well as in business, I have some experience and hence strong views on the subject of the comparative levels of ethics. I have found saints and sinners in each category. I did not find the average levels of ethics in business, government, and university life to be very different. But there is a great range of ethical behavior in each sector of society. Perhaps the evil doers in business--as well as in government--can do more harm than a professor at a blackboard, but I will not pursue that aspect tonight.

Some historical perspective is also useful. …

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