The growth of corporations would not have been possible without the corresponding growth of financial markets. Stock markets, for example, allow owners of stock a reasonable guarantee of liquidity for their holdings, thus making available to corporations the capital of those who are not necessarily interested in long term investments. Futures markets, to take another example, allow sellers and purchasers of commodities to make more accurate plans for the future by locking in some of their costs now. Speculators play a valuable role by providing liquidity and smoothing the rise and fall of prices as new information becomes available.
Financial markets have also generated much criticism, from charges that speculators make merely "paper profits," to claims that insider trading is unfair to outsiders, to suspicions that junk bonds deserve their name.
I am aware of no particular book that combines a thorough understanding of the functions of financial markets with a good moral discussion of the controversies surrounding them. "Gekko Echo," by David Kelley and Jeff Scott, shows how financial innovations in the 1980s —including leveraged buyouts and "junk" bonds—created wealth. Fenton Bailey's Fall from Grace and Daniel Fischel's Payback are good accounts of the Michael Milken saga. While weak on understanding Milken's moral standing, both are very good at explaining the enormous value and impact of junk bonds and at documenting the often malicious and arbitrary behavior of Milken's opponents in business and government.
There are, however, many books that explain how markets work, and the information they contain can be useful for setting straight many of the misconceptions about the role of markets.
Business/Consumer and Employer/Employee Relations
The core of business is the relationship between a business and its customers. While both sellers and buyers can defraud each other (e.g., sellers can misrepresent their products, and customers can knowingly write bad checks), most discussion of the moral problems in the business/consumer relationship focuses on more complex issues of advertising, the use of bluffing and bribery in negotiation, the setting of prices (e.g., worries about price fixing, "monopolistic" and "cutthroat" pricing), and drawing the line between caveat emptor and product liability.
In a free market, the relationship between employers and employees is a voluntary exchange of values on terms acceptable to both sides. However, the thrust of much of the business ethics literature has been that employees are in an inherently weaker bargaining position compared to employers, and so there has been a push for governments to mandate special favors for employees. These have included granting monopoly power to some unions, pushing for affirmative action for women and members of minority groups, and making mandatory such benefits as minimum wages, paid vacation time, and health insurance. Other issues include privacy rights (e.g., whether employers have the right to test employees for drug use), how to protect whistle blowers (employees who expose their company's illegal activities), and how to deal with problems of sexual harassment, bosses who take credit for their subordinates' achievements, and so on.
Robert Jackall's Moral Mazes: The World of Corporate Managers is an eye-opening sociological study of the world inside several large corporations. Jackall is overly cynical in his conclusions about the nature of corporate life, but he presents much good data on the often turbulent world inside corporations, including many examples of feudal thinking, backstabbing, and the usual office politics. Tibor Machan's Commerce and Morality is a philosophical anthology that collects several solid articles by philosophers and political scientists discussing the moral dimensions of managing, advertising, employer/employee relations, and affirmative action.
In a free market, the relationship between employers and employees is a voluntary exchange of values on terms acceptable to both sides. However, the thrust of much of the business ethics literature has been that employees are in an inherently weaker bargaining position compared to employers, and so there has been a push for governments to mandate special favors for employees. These have included granting monopoly power to some unions, pushing for affirmative action for women and members of minority groups, and making mandatory such benefits as minimum wages, paid vacation time, and health insurance. Other issues include privacy rights (e.g., whether employers have the right to test employees for drug use), how to protect whistle blowers (employees who expose their company's illegal activities), and how to deal with problems of sexual harassment, bosses who take credit for their subordinates' achievements, and so on.
Robert Jackall's Moral Mazes: The World of Corporate Managers is an eye-opening sociological study of the world inside several large corporations. Jackall is overly cynical in his conclusions about the nature of corporate life, but he presents much good data on the often turbulent world inside corporations, including many examples of feudal thinking, backstabbing, and the usual office politics. Tibor Machan's Commerce and Morality is a philosophical anthology that collects several solid articles by philosophers and political scientists discussing the moral dimensions of managing, advertising, employer/employee relations, and affirmative action.
Other Sources
Many anthologies exist for classroom use that include essays on the whole range of issues in business ethics. Some anthologies are noticeably biased against business in their selection of articles, but most attempt to include essays that represent all of the major sides of the debate. The best in this regard is the first edition of W. Michael Hoffman and Jennifer Mill Moore's Business Ethics: Readings and Cases in Corporate Morality. (The second and third editions are not as good.) A useful supplement to anthologies of theoretical essays is a collection of real-life cases. Tom Beauchamp's Case Studies in Business, Society, and Ethics is a good collection of 35 real-life cases representing the range of often difficult issues that business practice raises. An excellent introduction to the economic issues is David R. Henderson's The Fortune Encyclopedia of Economics. A surprising number of criticisms of business are based on ignorance of the economic facts involved, and Henderson's anthology collects brief, well written articles by experts on the full range of business and economic issues.
Very little in the business ethics literature captures the passion and commitment that most business professionals feel for their life's work, and very little in the literature communicates the sense that business is something that could be celebrated in poetry and song. This is a consequence of the "Business ethics is a contradiction in terms" attitude that underlies to some extent all writings in business ethics. Two books that fall outside the mainstream and that communicate a richer feel for the spirit animating successful business are Paul Hawken's Growing a Business and Cameron Hawley's Executive Suite. Hawken's book is an engaging, non-technical and non-philosophical account of entrepreneurship. Hawken is not an Objectivist in principle, but his discussion of the commitments and characteristics necessary for successful business practice is directly on target. Hawley's Executive Suite is a fictional account of a struggle by five men for the presidency of a corporation, after the sudden and unexpected death of the energetic and charismatic man who had taken over a nearly bankrupt company and built it into a giant in its field. Hawley deftly profiles core characters of the main contenders for the presidency and shows a good sense for the actual machinations of corporate life as well as for the virtues of character that make business success possible.
Subscribe to:
Posts (Atom)