Topic: Ethics in economic life

Author: Anna Rabiega

Addressee:

high school / technical school student

Core curriculum:

• old curriculum:

extended level:

22. Contemporary democracy in Poland and in the world – problems and threats.

The student:

3) discusses and gives examples of public life pathologies (e.g. corruption, nepotism, clientelism) and explains why they have a destructive effect on public life.

• new curriculum:

standard level:

II. Civil society.

The student:

8) recognizes manifestations of public life pathology and identifies their negative impact on public life; presents mechanisms of corruption and analyses – with the use of media materials – its proven example.

extended level:

VIII. Models of governance.

The student:

18) recognizes manifestations of threats to the functioning of democracy; compares the specificity of authoritarian and totalitarian states;

21) shows the meaning of clientelism in governance on the basis of literature (e.g. chapters VIII and XIII of work “Nierówna przyjaźń. Układy klientalne w perspektywie historycznej” by Antoni Mączak or chapter IV of work “Democracy” by Charles Tilly and the article “Clans, cliques, and captured states” by Janine R. Wedel).

The general aim of education:

The student uses his/her knowledge to interpret the events of social life, including political life.

Learning outcomes:

The student:

• explains what ethics and morality are.

• analyses the relationship between ethics and economics.

• explains what codes of ethics are and distinguishes between different types of ethical dilemmas.

Key competences:

• communicating in a foreign language,

• digital competence,

• learning to learn,

• social and civic competences.

Teaching methods:

• discussion,

• Oxford debate.

Forms of work:

• group work,

• whole‑class activity.

Material & equipment needed:

• computers with loudspeakers/headphones and internet access,

• multimedia resources from the e‑textbook,

• interactive whiteboard/blackboard, felt‑tip pen/a piece of chalk.

Lesson plan overview (Process):

Introduction:

1. The teacher presents the goal of the lesson: You will analyse the importance of ethics in economics.

2. The teacher asks a willing/selected student to read the ethical dilemma contained at the beginning of the abstract (Exercise 1). The teacher asks students to relate to it: how would they behave; how would they justify their behaviour.

3. Classes conducted using the method of the Oxford debate concerning the issue “Ethics and economics are inextricably linked fields – all economic activities should take into account ethical principles of conduct”. During one of the previous meetings the teacher should describe the topic to the students, assign them appropriate roles and explain the method, if necessary. The teacher may also suggest watching the animation (Exercise 2). When preparing the debate, students should use the information contained in the abstract (including interactive schemes) and other sources, and cooperate during preparation of arguments.

Implementation:

1. The teacher invites students to the debate. At first, the teacher asks them to prepare the room, i.e. to arrange chairs and tables properly. The teacher writes down the topic of the debate on the board and invites students to take appropriate seats according to the roles assigned to them: Marshal, Secretary, four speakers of the Proposal, four speakers of the Opposition and the audience.

2. Students discuss the topic and the teacher supervises the debate and assists the Marshal and the Secretary if necessary.

3. The teacher discusses the results of the debate with the students. The teacher asks about their impressions, evaluation of arguments and speeches.

Summary:

1. Willing/selected students summarize the classes, telling what they have learned and what skills they have practiced.

2. Homework proposal:

a. Present your point of view on the topic analysed in today's classes. Remember to include the right arguments.

b. Listen to the abstract recording to review the material and new vocabulary. Then do the vocabulary exercise at the end of the chapter.

The following terms and recordings will be used during this lesson

Terms

Texts and recordings

Business ethics

Economics and economy are not deprived of ethical challenges related to morality. Besides, literature often finds that economics is not a mathematical science focused on maximizing profit, but a social science that is supposed to serve human development.

Ethics (from the Greek ethos – „custom”) is a branch of philosophy dealing with the study of morality and the creation of thought systems from which moral principles can be derived. Ethics can also be called moral philosophy. Aristotle, one of the fathers of European culture, included it in practical philosophy. In his opinion, ethics makes sense when it is closely related to life, when it helps manage human behavior in specific, real situations.

Ethics should not be confused with morality.

The word “morality” (derived from the Latin “mos”, in the plural “mores”) meant “accepted customs”, “concerning customs”. Morality is from a formal point of view a set of directives in the form of commanding sentences such as „do not kill”, the validity of which cannot be proved or denied. Morality considers the behavior of people from the point of view of good and evil, it points out to norms and patterns of behavior prevailing in a given culture or social group. It can be considered at the level of an individual and at the social level, professional group or community. A moral action is born of the conviction of what is good and what is bad.

One can say that morality is a set of norms practiced by people, while ethics is an orderly reflection on these norms. For this reason, it makes sense to clearly distinguish, for example, the ethics of an official from the official's morality, or the ethics of an entrepreneur from the morals of entrepreneurs. Ethics sets the norms of conduct, morality in turn may be subject to reliable description and diagnosis. It is also necessary to distinguish ethical principles from moral norms. Ethical principles are general assertions resulting from worldview, culture, religion, as well as from the nature of work and profession. On their basis, moral norms are created, which define specific duties and prohibitions. The application or non‑compliance with moral norms is the basis for the assessment of human behavior. This way, it also determines his intentions towards the other person, the society, state or natural world.

Principles and norms play an important role in life, because once we internalize them, they become standards of out behaviour.

Paul A. Samuelson, a well‑known American economist, once said that “The market has neither a heart nor a brain. It just does what it does”. This statement, although it sounds a little heartless, is based on rational premises. There are, after all, laws governing economic life, the violation of which may bring serious consequences. An example may be a situation in which the demand for a given product is high and its supply is small. A natural activity of an entrepreneur, aimed at gaining a market advantage, would be to maximize profit and the price could many times exceed the value of all production costs. If there were any first‑aid products (e.g. medicine or food), then the moral assessment of such an entrepreneur would be definitely negative: ruthless, greedy, etc. On the other hand, if such a businessman was full of social sensitivity and decided to lower the prices, he would probably decrease his financial strength and lose his market position (competition law). The result could even be his bankruptcy or his company being taken over by somebody less moral or socially responsible.

Counteracting such consequences is difficult because it requires an equal distribution of the social burden in an economy, i.e. not one entrepreneur has to be socially sensitive, but everyone. In the scale of one country, this could be achieved, for example, by introducing appropriate legal regulations, but - as we know from history (especially about the communist countries) - excessive state interference in the economy can cause catastrophic consequences. On a global scale, i.e. when there is the existence of transnational enterprises, it is not possible at all. Is the concept of business ethics relevant in business, or can we consider it as an element of fashion or advertising?

Running a business is not done in a vacuum – it is a part of social life. In every society, there are rules regarding acceptable behaviors and hierarchies of beliefs (values) considered desirable and valuable. These social values determine the directions of the activity of an individual and entire communities. They can be established legally, but they can also have a different character, such as religious, moral, ethical rules.

Business ethics is therefore an element of general ethics and constitutes the embodiment of the norms, assessments and ethical standards, aimed at a specific sphere of economic activity. In other words, ethics in economics formulates the ethical foundations and canons of human action in economic life, establishes a set of rules specifying the scope of management and indicates the moral standards of conduct of business people. According to Wojciech Gasparski, business ethics is „a discipline practiced at the interface between ethics as a branch of practical philosophy and managerial activity related mainly to the economy, trade and other types of economic activity”.

When we look at the business ethics from the perspective of duties, the ethical attitude will be connected with the observance of the basic rules that are considered to be virtues of enterprises, e.g. diligence, patience, frugality, perseverance. Taking the economic interests into account results in focusing on effective achievement of goals as well as optimization of a specific activity. Autocreation is emphasized here, that is, the calling of a man to be self‑realized in a particular profession. The value by which people can feel accomplished is work. Considering responsibility and conscience means emphasizing personal values, i.e. focusing on personal dignity and the dignity of others, on reliable and honest relations with each of the partners. The main value here is humanization in the economic sphere – responsibility and ability to respond to the needs of others (producers, customers).

Business ethics proves the need to re‑evaluate the goals of many contemporary entrepreneurs. Maximizing profit should be the company's goal, but one that does not restrict or violate the freedom of other stakeholders. This idea is close to the concept of Corporate Social Responsibility (of a business). It is a concept of business management, based on a conscious, sustainable activity oriented not only on financial profit and economic aspects, but also taking into account the needs and requirements of broad social and environmental interests in the company's surroundings.

Many people think that in economics, and in other words – in business, there is no room for ethics. They often claim that people are naturally driven by their own interest, and not the interests of other people or the public good, and that ethics and economics are mutually exclusive areas and ethics has no practical application in the economy. This state of affairs makes it seem necessary to disprove the myth that ethical behavior is a barrier to successful business. Naturally, you also need to be aware of the fact that neither professionally conducted ethics trainings nor the best structured law will exclude all imperfections of the free market economy and do eliminate all unethical activities in business. However, they may contribute to - albeit slowly but surely – changes in the mentality and perceiving the advantages and benefits of ethical behavior of business entities.

There are many examples of the coexistence of ethical and economic aspects. One of them is performing professions in a position of trust. The term „a profession in which the public repose confidence” appeared in the Constitution of the Republic of Poland (Article 17, paragraph 1). It is a profession consisting in the performance of tasks of a special nature from the point of view of public tasks, requiring extra care for the implementation of public interest. This kind of professions:

• are connected with belonging to the professional self‑government;

• create a special bond of trust between a person who performs the profession and provides services and the client;

• relate to access to information regarding the privacy of an individual or a business secret;

• guarantee that this information constitutes, to the extent resulting from the provisions applicable to a given profession, professional secrecy, the disclosure of which may occur only in the cases specified in the statutory provisions.

A few examples of these professions are: attorneys, notaries, doctors, pharmacists, nurses, psychologists, tax advisors and architects.

The ethical aspect of economic life has accompanied man since he first decided to exchange and offer his goods to other people. Moral standards are binding for contemporary managers, entrepreneurs and sellers, as they were once for merchants and bankers. Professional ethics is a set of rules and norms specifying how the representatives of a given profession should behave from a moral point of view. Two ways can be distinguished in ethical education:

• an attempt to discipline employees by introducing appropriate regulations (e.g. codes of ethics, codes of good practice),

• developing the ethical sensitivity of decision‑makers (e.g. by promoting patterns and fair play awards).

A code of ethics is a catalog of standards of ethical behavior defining the manner of conduct and behavior of employees. It is a logically ordered set of ethical principles, the purpose of which is not to create new standards, explain the deviations from general ethics or replace one's own ethical beliefs, but to adapt general ethics to the specifics of a given profession. Ethical codes are divided into two types:

• general, which are addressed to all the representatives of a professional group, e.g. the code of medical ethics, the code of ethics of the civil service, etc.,

• specific – they regulate the activity of an organizational group specialized in a given field, e.g. a vet code of ethics, a code of ethics of a tax office, a city office.

Ethical dilemmas in business refer to terms such as “grey area” or “corruption”.

Corruption – the abuse of a public office or professional position in order to achieve private benefits.

The 1999 Civil Law Convention on Corruption defines it as „requesting, offering, giving or accepting, directly or indirectly, a bribe or any other undue advantage or prospect thereof, which distorts the proper performance of any duty or behaviour required of the recipient of the bribe, the undue advantage or the prospect thereof”.

Unfair competition is a deceptive business practice that causes economic harm to other businesses or to consumers. The following actions are, among others, considered unfair competition:

• misleading indication of the enterprise,

• misleading indication of goods or services,

• infringement of trade secrets,

• urging for the termination or non‑performance of the contract,

• imitation of products (e.g. production of counterfeits),

• dissemination of false information about the competition,

• unfair promotion and advertising,

• making it difficult for other entrepreneurs to access the market,

• bribery of a person holding a public office,

• unfair or forbidden advertising.

The activities of unfair competition may also occur as unfair or aggressive market practices:

• Providing a new price that is lower than the old one. The previous price is crossed out, but it is not consistent with reality – in fact it is overstated and the product has never been sold at such a price.

• Inaccurate claims as to the change of location or termination of the business, e.g. „Store closing sale!”

• Persistent and unwanted solicitation, e.g. by telephone.

Business ethics in a market economy refers to the relationships between an enterprise and its clients, business partners, employees and other enterprises. These relationships must be in accordance with applicable law and accepted rules of conduct in running your own business.

It is worth paying attention to the direct links between the company's ethics and financial results. Ethically‑active companies have a better chance of attracting and keeping effective employees, important clients, suppliers, significant investors. This in turn translates into:

• access to more reliable information allowing to make better decisions,

• higher quality of products and services offered on the market,

• higher level of employee efficiency,

• lower level of losses related to employees' bad will (theft or neglect),

• less need to control employees,

• increasing the flexibility of stakeholders in a crisis situation.