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At the end of March, 2010, Warren Buffet spoke to business students at Columbia University.  A student asked him whether being ethical in business come from the home or a business ethics course.  Warren quickly answered that it is learned in the home.  Jeffrey Skilling of Enron was not simply applying knowledge when he acted unethically in hiding the company’s debt in “unrelated” partnerships; rather, what he knew he applied according to what he valued.  Values are not learned in the way that, say, 5=5=10 is learned; there is a feeling component—an ought—that goes along with one’s sense of what he or she values.  In other words, a person values X because she feels that X is important—not because she knows more about X (although this could be incidentally the case).

A business ethics course ought to be designed such that the students understand ethical principles and how they apply to ethical issues in business as well as to the business system itself.   Although understanding more about ethical principles in ethical decision-making, for example, can help one in being ethical, the understanding itself is not to make one ethical.  The focus, in other words, ought to be on the learning of knowledge rather than on somehow turning people into ethical human beings as if they were robots to be programmed or customers to be convinced.

Some might agree that ethics courses do not make people ethical (and ought not be designed as such), but disagree with the emphasis being on understanding and knowledge. Such “commercial business school”  advocates stress the “how to do” over explanation.  But this is to confuse training with educating.  Following bullet-points on how to make ethical decisions, for example, does not involve synthetic or analytical thought; at most, critical thinking is needed.  I submit that understanding ethical principles and their relevance to business is of value not only educationally (in terms of learning knowledge), but also in terms of business practice.  That is, knowing more about something—studying it in order to explain it—informs one’s approach to it in practice.

For example, explaining the structural conflict of interest in the rating agencies getting a cut on the securities sold that the rate can enable students to understand what a structural conflict of interest is and thus how it can be recognized.  This understanding can come into play in the business world if the former student finds herself in such a conflict or in a position to remove one (e.g., a regulator).  That the rating agencies’ conflict of interest was not addressed by Senator Dodd’s proposed financial reform bill in March, 2010 suggests the practical peril in not understanding what a structural conflict is.  Even if Senator Dodd didn’t want to solve the problem, had enough people understood it sufficiently to recognize it and wanted to remove it, the senator would have faced more pressure to include a fix. 

Perhaps if more business ethics lecturers and professors become less oriented to trying to turn their students into ethical managers, more ethical problems would be recognized and solved.  This is not to imply that every applied ethical issue can be solved, but even here understanding the competing ethical principles that are in play can make such issues less daunting, even in terms of being understood.  In other words, understanding and explanation, rather than how to, are key to education (as opposed to training), even where knowledge involves practical realms of life.  It is far too easy to become short-sighted, either in being obsessed with making others ethical or in reducing knowledge to how-t0 bullet-points on Power Point.  It is much harder to focus on the knowledge instead of shying away from it.  In the wake of Enron and the financial crisis of 2008, the world is calling out for better understanding of such things—not recipes and ideology.

Sadly, most business ethicists in business schools have scant education in ethics per se; most of their education is in management and corporate social responsibility (matching corporations with societal norms—which are not ethical principles).  Such business ethicists have little regard for the basic discipline of philosophy, of which ethics is a field (and business ethics a subfield).  It is of course important that a business ethicist understand the phenomenon of business, but it is also vital that he or she know ethical principles beyond simply “rights, duty and utility.”  In the midst of such a superficial knowledge, it is no surprise that ideology (i.e.,  imposing one’s own values) and how-to’s would take over.   The ethical dimension does not pertain exclusively to the content of such courses; the qualifications of the professors and lecturers as well as their typical agendas ought to be understood from the vantage point of a knowledge of ethics (as well as pedagogy).  This might be a case of the emperors wearing no clothes, even as the modern moralizers swear by their sterling vestments.  Unfortunately, the public does not get a look at the men and women behind the curtain.  If Enron and the financial crisis of 2008 are at all of concern to us in terms of future like occurances, it might be in our interest (as well as being an ethical obligation) to recognize and rectify the nudity going on behind the curtain. Ideally, a clamor would rise up for a better understanding of the ethical principles that are in play (or missing); we would demand such knowledge from those hired to teach it.  Yet there is the matter of the illusion of expertise being projected by the club and the general perception that this is as good as it gets.  But this is crazy, even if it is typically taken for normal.  Things are not always as they seem, and they can be improved even if it is not in their present protectors’ self-interest.