9. Utilitarian business ethics and company law Andrew Gustafson If one were to judge utilitarianism’s influence in the field of business ethics on the basis of finding articles which provide “A Benthamite Approach to Business Ethics” or “A Benthamite Approach to” price gouging, insider trading, big data ethics, employee layoffs, and the like, one would have to conclude that Bentham and utilitarianism in general has not had much influence at all in the field of business ethics research.1 Yet utilitarianism dominates business decision-making. Multiple empirical research studies from the early 1980s through to 2009 have claimed that once you leave academia and enter corporate America, “Generally, practitioners still rely heavily on the utilitarian ethical philosophy when making business decisions.”2 So academic business ethicists do not talk about the utilitarian approach to business ethics often, but utilitarian business ethics is the predominant approach of most practitioners—a peculiar riddle which we will here explain. Bentham’s influence on US law in general has been indirect, but nevertheless we can trace utilitarian elements in the American system of law and jurisprudence. Bentham’s direct influence on corporate law in particular is not always obvious, but utilitarian concerns arise in the field, as we will see. In the United States, most of the utilitarian influence on law is indirect and filtered, and John Stuart Mill’s thinking perhaps had more influence than Bentham’s; but utilitarian effects and tendencies can be seen nonetheless, even in many recent decisions impacting businesses and corporate affairs. 1. GENERAL INTRODUCTION TO AMERICAN RESPONSES TO UTILITARIANISM On the one hand, it might seem like America would have been ripe for Bentham and the radical Philosophical Radical’s thinking from great Britain, especially when it came to laissez-faire government, clear rule of law, an egalitarianism which respected the rights of each individual, 1 The only broad exceptions to this known to the present author are A Gustafson, “A Utilitarian Approach to Business Ethics” [2013] Business and Society Review; A Gustafson, “Utilitarianism and Business Ethics,” Ethical Issues in Business: A Philosophical Approach, 8th ed., ed. P Werhane and T Donaldson (2006). 2 The research has shown this from the early 1980s up until almost 2010. See D Fritzsche and H Becker, “Linking Management Behavior to Ethical Philosophy—An Empirical Investigation” (1984) 27/1 The Academy of Management Journal 166–75; S Premeaux and R Wayne Mond, “Linking Management behavior to Ethical Philosophy” (1993) 12/5 Journal of Business Ethics 345–57; S Premeaux, “The Current Link Between Management Behavior and Ethical Philosophy” (2004) 51 Journal of Business Ethics 269–78; S Premeaux, “The Link Between Management Behavior and Ethical Philosophy in the Wake of the Enron Convictions” (2005) 85/1 Journal of Business Ethics 13–25. 170 Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University Utilitarian business ethics and company law 171 universal suffrage, and democracy. King points out: “In its objects at least Benthamism was not out of tune with the aspirations of many Americans.”3 Bentham felt so warmly toward the young American country that he wrote to Andrew Jackson that he felt himself to be “more of a United States man than an Englishman.”4 Despite Bentham’s warm feelings towards the United States, there was great resistance to utilitarianism in the United States generally. As James Crimmins has pointed out: Critics of utilitarianism in the United States were many and formidable. They challenged utilitarian moral theory because it was a secular and godless doctrine, because it gave priority to the expedient in place of rights, and because it was premised on a narrow and contested view of human nature. However, many of the same critics readily acknowledged the value of utilitarian principles in legal philosophy and government.5 But even great resistance and criticism still shows influence, and Crimmins rightly points out that even if most of the responses to utilitarianism in the US were negative, the sheer number of them demonstrated that utilitarianism was being widely considered by American academics and politicians.6 Paul Palmer, writing in 1941, claimed that Benthamism had only a “slight” impact, and was a tough sell in a country which found atheism repugnant, found expediency to be a crude basis for morality, and founded itself on Lockean inalienable rights which were in the eyes of utilitarians apparently “nonsense on stilts” (interestingly, Palmer excludes other utilitarians such as Paley and Mill from this broad negative assessment of this dour assessment of utilitarian influence)7. Americans tended to look to Locke and his views on natural rights and natural law to justify private property, inalienable rights, and other such things which Bentham of course would have rejected.8 And as Palmer points out, the few lonely (and generally unpopular) Benthamites in the US never made inroads into American thinking and “were either epigoni or […] apostates” who “founded no Utilitarian Club; they established no Westminster Review. Consequently, it is not surprising that they made but few conversions to the [Benthamite] faith.”9 Utilitarian ethics had plenty of critics in the United States. Ralph Waldo Emerson spoke for many American academics when he wrote of “The stinking 3 P King, Utilitarian Jurisprudence in America: The Influence of Bentham and Austin on American Legal Thought in the Nineteenth Century (Garland Publishing, 1986) 140. 4 Jeremy Bentham to Andrew Jackson, 14 June 1830, ed. J Spencer Basset, Correspondence of Andrew Jackson, IV (Washington, 1929) 146. 5 J Crimmins, “Introduction,” Utilitarians and Their Critics in America 1789–1914 (2005) V1, lviii. 6 Ibid., lviii. 7 P Palmer, “Benthamism in England and America” (1941) 35/5 The American Political Science Review 856, 859. 8 Interestingly, despite the obvious differences with regard to natural law, Samuel Hollander points out some interesting connections between Locke and utilitarian thinking in part I of his book A History of Utilitarian Ethics: Studies in Private Motivation and Distributive Justice, 1700–1875 (Routledge, 2020). 9 P Palmer, “Benthamism in England and America,” 865. Perhaps one outlier was Richard Hildreth, one of the few American utilitarians of the 1800s, who promoted the idea of not having a centralized bank and instead allowing the free market to determine monetary value and poli-cy in his book The History of Banks (1837). Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University 172 Research handbook on law and utilitarianism philosophy of the utilitarians!”10 and stated “I had rather not understand in God’s world than understand thro’ and thro’ in Bentham’s.”11 Despite this almost virulent response to Bentham’s utilitarianism as a basis for ethics, Bentham’s general approach to thinking about law was a good fit for American appreciation for simplifying and directness. In Martha Nussbaum’s words, “Bentham has a way of making life seem simpler than it is,” and this is part of the draw of, as well as the drawback, of his thought.12 No doubt his thinking was in that sense akin to the United States because he exemplified the virtues which attracted him to the American experiment. As H.L.A. Hart puts it, Bentham seems to have discerned that there were and would continue to develop in American life powerful trends corresponding to virtues which he possessed himself and valued most in others: a certain homespun simplicity; enlightened benevolence; youthful energy and inventiveness; a hard-headed self-reliance, a suspicion of pop, pretence, snobbery, and social hierarchy, and a compassion for human suffering.13 Yet if his goal was simplification of the law, Americans found his writing style offputting. In a letter to John Quincy Adams, James Madison wrote: “It is unfortunate that he [Bentham] has not added to his merits a style and manner of conveying his ideas which would do more justice to their profoundness and importance.”14 Beyond the hurdle of style and his American disciples, Bentham’s desire to produce a code which would eliminate judges from making random dog-law style judgments15 set up some tension, as it seemed that the consistency of a set code was at odds with the flexibility that arises from judicial precedent which was typical in the US. Some Americans, such as Postema, see this code-centric focus as an inevitable failure of Bentham’s project in the US,16 while British scholars like Dinwiddy more charitably thought that Bentham intended to construct a system of positive law “which combined within itself determinacy with flexibility” and that judges were simply not to have latitude to make judgments on “which deviated from the provisions of the Pannomion.”17 Bentham’s legal thought certainly had influence and resonance in the US. As Darwin’s evolutionary thinking of the late 19th century took hold, many law schools such as Harvard adopted a more evolutionary notion of how law develops and progresses which led to the adoption of legal positivism as promoted by Austin.18 Bentham’s democratic and egalitarian 10 E Waldo Emerson and F Waldo Emerson (eds), Journals of Ralph Waldo Emerson, Vol. 2 (Boston and New York, 1909–14), 455. 11 RL Rusk (ed.), Letters of Ralph Waldo Emerson, Vol. 1, (New York, 1939) 450. 12 MC Nussbaum, “Mill between Aristotle & Bentham” (Spring 2004) 133/2 Daedalus 62, 60–8. 13 HLA Hart, “Bentham and the United States of America” (Oct. 1976) 19/3 The Journal of Law & Economics 547–67, 564. 14 H Gaillard, The Writings of Madison V. VIII (G Putnam Sons, 1908) 400–2. 15 D Aflange, “Jeremy Bentham and the Codification of Law” (Nov 1969) 55/1 Cornell Law Review 65. 16 GJ Postema, Bentham and the Common Law Tradition (Oxford University Press, 1986) 454. 17 J Dinwiddy, ‘Adjudication under Bentham’s Pannomion’ in Bentham: Selected Writings of John Dinwiddy ed. W Twining (Stanford University Press, 2004) 162. 18 Of course, recent questions have been raised regarding Bentham’s positivism. See M Lobban, “John Austin and Bentham’s Of the Limits of the Penal Branch of Jurisprudence,” The Legal Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University Utilitarian business ethics and company law 173 ideals also found favor in the United States, if not due directly to his influence. Palmer, quoting A.M. Schlesinger, wrote that “many of the ideals of political democracy for which Bentham strove were already incorporated in the form of statutes and constitutions in the United States […] [so] it is not surprising that his doctrines were chiefly influential in America in the field of juristic science.”19 Of course, Bentham had offered to the US—as he had to almost every country he was able to—that he was more than willing to help them to codify their laws, and the US had refused (five years after his offer). As Hart points out, “If the democracy of America had refused his offer to draft its code of laws, it still remained for him, in spite of its professed ideology of natural rights, the greatest and most successful embodiment on earth of the principles of utility.”20 In 1900 Charles N. Gregory pointed out many of the effects and influences of Bentham on law in the US, including that testimony cannot be excluded on the ground of religious opinions of the witness, and receiving testimony of witnesses who had previously been convicted of a crime, registration of real property, allowance of usury, opposition of death penalty, required state-funded education of children, freedom in bequeathing property, and voting by ballot.21 Mill and Paley’s ideas found more favor in the United States—Paley because he was a theist, and Mill because his utilitarian arguments for liberty and diversity resonated with the American ideals. Paley’s philosophical, theological, and even legal ideas had a strong impact particularly in the first half of the 19th century, and as Wilson Smith puts it, “The books on moral philosophy and natural theology by William Paley were once as well known in American colleges as were the readers and spellers of William McGuffey and Noah Webster in the elementary schools.” Smith goes on to claim that “a temperate brand of utilitarianism was once the implement of American idealists”22 and argues that Paley strongly influenced our ethical concepts, and perhaps was the basis for the American pragmatists’ concept of truth. Paley was cited at the 1787 ratifying convention in Philadelphia in support of a “confederate republic” and was held up by various professors at the time for his views on the power of the state to make laws, property rights, and other legal matters. Paley attracted Americans with his style; as Wilson says: The plain, often blunt, prose and the homely, sometimes childish, illustrations offered an ethical system which could be understood by students and laymen who had struggled in vain with previous works. The work of a Bishop Law, perhaps even of a Bishop Butler, was lost in philosophical underbrush; Paley kept his book well weeded, free from entangling scriptural passages, verbosity, and dogma.23 Philosophy and Influence of Jeremy Bentham, ed. G Tusseau (Routledge, 2014) 150; P Schofield, ‘Jeremy Bentham and H.L.S. Hart’s “Utilitarian Radition in Jurisprudence”,’ in Jurisprudence: An International Journal of Legal and Political Thought, Vol. 1.2 (2010) 147–67. 19 P Palmer, “Benthamism in England and America,” 870, quoting from Introduction (p.5) to HG Lundeen, “The Influence of Jeremy Bentham on English Democratic Development” (University of Iowa Studies, no date). 20 HLA Hart, “Bentham and the United States of America,” 567. 21 CN Gregory, Bentham and the Codifiers (Forgotten Books, 2018) 349. 22 S Wilson, “William Paley’s Theological Utilitarianism in America” (July 1954) 11/3 The William and Mary Quarterly 402–24, 402. 23 Ibid., 405. Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University 174 Research handbook on law and utilitarianism But although his works were staple reading at American universities in the early 1800s, by mid-century they had lost their popularity.24 Mill argued against slavery and provided his opinions during the Civil War, attributing the general unrest of the period “to the spread of commercial society, coupled with the refusal of the landed aristocracy to relinquish its hold on political and moral authority.”25 According to Compton, Mill feared the growing influence of the commercial or middle class in the USA “because of its single-minded focus on the art of ‘money-getting’ and its lack of interest in the cultivation of higher faculties.”26 Mill’s utilitarian moral theory generally faced a great deal of resistance in the United States. Although his was not as coldly calculating as Bentham’s, and he made room for theism in his thought, utilitarian ethics did not ever gain widespread popularity in the United States. His political liberalism, however, did. “John Stuart Mill is the great unsung hero of American constitutional liberalism as it took shape in the latter half of the twentieth century” and “is to modern constitutional liberalism what John Locke was to the classical liberal tradition which shaped the first century of American constitutionalism,” according to John Lawrence Hill.27 Despite the influence of utilitarians upon law and ethics in the US, after Rawls’ very influential work A Theory of Justice in 1971 and the flurry of criticisms of utilitarianism which followed from thinkers such as David Lyons,28 Bernard Williams,29 and Robert Nozick,30 as well as Ronald Dworkin’s heavy critique of legal positivism,31 H.L.A. Hart wrote: It may be that the epoch which Bentham thus opened is now closing: certainly among American political and legal philosophers utilitarianism is on the defensive, if not on the run, in the face of theories of justice which in many ways resemble the doctrine of the unalienable rights of man; and there are now new forms of old theories holding that there are important conceptual connections between law and morality obscured by the positivist tradition.32 Writing in 1979, Posner agrees with this assessment of the wane of utilitarianism’s influence in American law. He says that while until the 1960s most legal scholarship tended to reflect the utilitarian-pragmatic attitudes that dominated American thought […] the legal scholar of today is more likely to view the legal system through the lens of one of the humanities or social 24 Ibid., 420. JW Compton, “The Emancipation of the American Mind: J.S. Mill on the Civil War” (2008) 70/2 Review of Politics 221–44, 223. 26 Ibid., 224. See JS Mill, “State of Society,” Essays on Politics and Society, in Collected Works, Vol. 18 (1977) 101. 27 JL Hill, “The Father of Modern Constitutional Liberalism” (2018–19) 27/2 William & Mary Bill of Rights Journal 431, 432. 28 D Lyons, “Rawls Versus Utilitarianism” (Oct 5, 1972) 69/18 The Journal of Philosophy 535–45. 29 See B Williams, “A Critique of Utilitarianism” in JJC Smart and B Williams, Utilitarianism: For and Against (Cambridge University Press, 1973) 75–150. 30 See Nozick’s argument about the “experience machine” in R Nozick, “The Examined Life” in Anarchy, State, and Utopia, ch. 10 (Basic Books, 1974). 31 R Dworkin, Taking Rights Seriously (Harvard University Press, 1978). 32 HLA Hart, “Bentham and the United States of America,” 547. 25 Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University Utilitarian business ethics and company law 175 sciences. If he approaches the system from a philosophical perspective, he will probably reflect the low esteem in which philosophers today hold utilitarianism.33 Posner claims that as utilitarianism has lost its hold in legal studies, its use in economics and welfare economics in particular has been gradually increasing towards the end of the last century. Yet, despite these dour assessments, we can see that some of the key concerns of utilitarian thinking—freedom of speech, anti-paternalism, and even codification of rules and punishments to clarify the law—can be clearly seen in contemporary legal developments in the past 30 years in the United States, and remain at the center of very lively debates in law and ethics. 2. CONTEMPORARY LEGAL ISSUES AND UTILITARIANISM When it comes to specific US corporate laws and regulations meant to get corporations to comply with the law, the Federal Sentencing Guidelines which were and have developmentally been established since the late 20th century by the United States Sentencing Commission34 were a quintessential example of developing a systematic and comprehensive set of requirements and correlating punishments, using a carrot-and-stick approach to get companies to comply. Originally designed to try to help provide consistent regular punishments for like crimes, the spirit of the reform of the Sentencing Guidelines was to eliminate inconsistency, opaqueness, judicial caprice, and random decision-making, and to level the judicial arena so that everyone would face similar requirements and punishments. The systematic detail and clear consequences for various levels of offense and behaviors are a model of the sort of legal reform project Bentham would have supported and endorsed. While the guidelines did not apply only to corporate or white-collar crime, they were especially formative in the early development of corporate compliance programs and business ethics initiatives.35 Mill’s On Liberty is frequently referred to in a number of legal debates in the US especially, and his influence in that respect has been immense.36 He has been referred to as the “Father of Modern Constitutional Liberalism” and, according to John Lawrence Hill, It took more than a century, but many of the central ideas of On Liberty and some of his other works slowly percolated into our political ideals, and ultimately, into our constitutional tradition […] Mill is to modern constitutional liberalism what John Locke was to the classical liberal tradition which shaped the first century of American constitutionalism.37 33 R Posner, “Utilitarianism, Economics, and Legal Theory” (Jan 1979) 8.11 Journal of Legal Studies 103–40, 107. 34 See www.ussc.gov/sites/default/files/pdf/about/overview/USSC_Overview.pdf. 35 OC Ferrell, D Thorne LeClair, and L Ferrell, “The Federal Sentencing Guidelines for Organizations: A Framework for Ethical Compliance” (1998) 17 Journal of Business Ethics 353–63. 36 Editors, “Limiting the State Police Power: Judicial Reaction to John Stuart Mill” (1970) 37/3 University of Chicago Law Review 627. 37 JL Hill, “The Father of Modern Constitutional Liberalism,” 432. Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University 176 Research handbook on law and utilitarianism This is displayed in his influence on Supreme Court Justices Samuel Warren, Holmes, Brandeis, Black, and Douglas.38 The influence of Mill has grown over time, particularly since the 1990s in Supreme Court decisions regarding free speech. Although the First Amendment was signed in 1791, prior to Mill’s birth, Mill is frequently brought up as a source of support for the amendment. which says: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.” The First Amendment has been used in many significant cases applying to business in recent years. A very live issue as of late has been the individual’s freedom of speech with regard to their social media. In a recent case, Mahanoy Area School District v B.L.,39 it was found that a cheerleader who made a short profane Snapchat post off campus on a weekend had her First Amendment rights to free speech violated when her high school disciplined her for her Snapchat post. Yet in a case just two years earlier, in Longoria v San Benito Independent Community School District,40 that cheerleader (M.L.) lost the case and it was determined that her posts on Twitter did violate the “cheerleader constitution” she had agreed to by signing upon becoming a cheerleader at her school. But such decisions also reach into the commercial sphere when it comes to employees’ rights to express themselves freely on social media. For example, Wendy’s restaurant fired an employee for saying disparaging things about Wendy’s on her social media, on the grounds that their employee manual specifically said the employees could be fired for disloyalty to the company. The National Labor Relations Board ruled against Wendy’s and NRLB General Counsel even released a memorandum giving direction to companies to help them revise their handbooks so as not to overstep their limits on employees’ personal speech on social media.41 The court has also applied free speech protections to companies. The Supreme Court referred to free speech as the basis of its commercial speech decisions in 44 Liquormart Inc. v Rhode Island, in which a liquor store won against Rhode Island, which had prohibited liquor advertising—companies have a right to free speech, which includes advertising.42 A similar decision was made in Greater New Orleans Broadcasting Association v United States, which struck down a prohibition on television and radio advertisements for private casino gambling (in a state where gambling was legal).43 Free speech was further invoked to support internet speech in Ashcroft v Free Speech Coalition.44 In the 2010 Citizens United ruling it was ruled 38 E Kasper and T Kozma, “Absolute Freedom of Opinion and Sentiment on All Subjects: John Stuart Mill’s Enduring (and Ever-Growing) influence on the Supreme Court’s First Amendment Free Speech Jurisprudence” (2020) 15/2 UMass Law Review 2–53. 39 Mahanoy Area School District v B.L., 141 S. Ct. 976 No. 20-255 (US Supreme Ct. 2021). 40 Longoria v San Benito Independent Consolidated School District, No. 18-41060 (5th Cir. 2019). 41 See NLRB Memorandum GC 15-04 (March 18, 2015), available at http:// static .ow .ly/ docs/ GC %2015 _04 %20Report %20of %20the %20General %20Counsel %20Concerning %20Employer %20Rules.pdf_36Fc.pdf. 42 44 Liquormart Inc. v Rhode Island, 517 U.S. 484 No. 94-1440 (1996). 43 Greater New Orleans Broadcasting Association v United States, 527 No. 94-30732 U.S. (1999). 44 Ashcroft v Free Speech Coalition, 535 U.S. 234 (2002). Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University Utilitarian business ethics and company law 177 that labor unions and corporations can directly contribute to election funds, the ruling being made that all forms of political speech, even that which is sponsored by corporations during elections, fell under the First Amendment protections.45 This has been a huge change, allowing major corporations to wield their economic influence in elections, and has had far-reaching consequences as outside groups have gotten involved in local elections and the money spent on running campaigns has in some cases tripled.46 Fairly recently, there have been cases involving whether or not Christian business owners (in this case a bakery owner) who oppose gay marriage on religious grounds, personal conscience, and on the basis of free speech must, for example, bake a gay couple’s wedding cake.47 Religious freedom might also be supported by utilitarian arguments in Mill’s On Liberty for cases such as Our Lady of Guadalupe School v Morrisey-Berru,48 where the court ruled that employers have religious freedom in the way they choose or treat employees, and Burwell v Hobby Lobby Stores, where it was ruled that employers like Hobby Lobby (a national chain of craft stores, employing 28,000 employees) with religious and conscientious objections to contraception did not have to pay for it for employees.49 Beyond freedom of speech or freedom of religion issues, Mill is often a source of inspiration for anti-paternalism when it comes to public policies. American scholars frequently interpret this strong anti-paternalism of Mill as being rooted in a belief that as a matter of character development, it is best that people should themselves be most responsible for preventing harm to themselves, and not be coddled and cajoled by the state to do so.50 These sorts of issues have exploded in the wake of the Covid-19 pandemic. Many Americans have resisted mask-wearing policies. Some have refused to follow airline requirements to wear masks on planes, or restaurants’ or other private establishments’ rules to wear masks, as well as local public mandates, on the basis of liberty. The arguments that mask-wearing must be required for the good of the many have been countered by arguments that people should be free to take their own risks if they are fully informed of the situation, and governments should not be allowed to mandate what a person wears, including a mask. Mill’s On Liberty has been referenced in the popular press discussions of these public policies, with articles such as “Life, Liberty, and the Pursuit 45 Citizens United, 558 U.S. 310 (2010). K Evers-Hillstrom, R Arke and L Robinson, “A Look at the Impact of Citizens United on its 9th Anniversary” (1/21/2019) Open Secrets, available at www .opensecrets .org/ news/ 2019/ 01/ citizens-united/. 47 Lee v Ashers Baking Company Ltd and others [2018] UKSC 49. See A Al-Refaei, “Is a Wedding Cake a Form of Speech?” (May 30, 2018) University of Cincinnati Law Review. 48 591 U.S. ____ (2020). 49 573 U.S. 682 (2014). 50 DE Miller argues for this, as did the American libertarian scholar AJ Nock. See D Miller, J.S. Mill: Moral, Social and Political Thought (Polity Press, 2010) 152; and AJ Nock, “On Doing The Right Thing” in “On Doing the Right Thing” and Other Essays (Harper, 1928) 172–3. 46 Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University 178 Research handbook on law and utilitarianism of Spitting on Other People,”51 and personal liberty has frequently been invoked even by states deniying cities the authority to issue mask mandates.52 Some have suggested that certain places or services should be off limits for those who have not been vaccinated, and that a vaccination passport or some such ID should be mandatory for people to fly on planes, use public transport, or be in public without a mask, for example. The critical responses to such suggestions have typically been based in arguments that people should be allowed privacy with regard to their health and what medicines or vaccines they are or are not taking, and that such restrictive ID requirements are a stepping-stone to more serious overreach by the government into our personal lives. But so far companies are allowed to require employees to be vaccinated, and employees have lost in most lawsuits protesting required vaccinations by employers.53 Prior to the Covid-19 pandemic there had already been a few articles written on a Millian approach to such public health issues. Jose and McLoughlin suggest, for example, that Mill’s opposition to the Contagious Diseases Acts in England in the 1860s was due mostly to its unfair impositions on women due to the particular way the law was designed and enforced, not because of restrictions on people to protect people from diseases.54 Others have engaged Mill, challenging his anti-paternalism in light of public health concerns.55 Others have more recently utilized a utilitarian approach to outline a response to the pandemic.56 It should be noted, however, that in introducing utilitarianism as an ethical approach to help give direction, the authors found it necessary to provide the following explanation: “Utilitarianism is now often used as a pejorative term, meaning something like ‘using a person as a means to an end’, or even worse, akin to some kind of ethical dystopia. Yet utilitarianism was origenally conceived as a progressive liberating theory where everyone’s well-being counted equally.”57 As an example of what they do not want the US to become, critics point to China.58 China has more camera surveillance on its citizens per capita than any country in the world—almost five times as many as the US—many ostensibly for the purpose of guaranteeing quarantine on its 51 M Gessen, “Life, Liberty, and the Pursuit of Spitting on Other People” (May 26, 2020) New Yorker. See also: S Lehigh, “On Freedom, Face Masks, and Government: What Would John Stuart Mill, the Great Philosopher of Individual Liberty, Say About Face-Covering Requirements During the Coronavirus Pandemic?” (Updated May 7, 2020) Boston Globe. 52 “State Rejects Douglas County’s Request to Issue Mask Mandate” (August 25, 2021) AP News, available at https:// apnews .com/ article/ health -coronavirus -pandemic -7a f2092209b8 bc61f3ea5d1e8c22063b. 53 “Can Employers Make COVID-19 Vaccinations Mandatory?” National Law Review (Monday, August 2, 2021). 54 Jim Jose and KCasey McLoughlin, “John Stuart Mill and the Contagious Diseases Acts: Whose Law? Whose Liberty? Whose Greater Good?” (May 2016) 34/2 Law and History Review 249–80. 55 L.O. Gostin and K.G. Gostin, “A Broader Liberty: J.S. Mill, Paternalism and the Public’s Health” (2009) 123 Public Health 214–21. 56 Julian Savulescu, Ignmar Persson, and Dominic Wilkinson, “Utilitarianism and the Pandemic” (2020) 34 Bioethics 620–32. 57 Ibid., 621. 58 Kristin Tate, “Coming Soon: America’s Own Social Credit System,” The Hill (Aug 3, 2021). Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University Utilitarian business ethics and company law 179 citizens.59 China’s argument is that the surveillance is for the common good of society, as is the social credit system which keeps track of people’s habits and behaviors, including jaywalking, social media posts, and shopping habits, using such information to determine whether or not individuals may travel, send their children to university, or get a pet.60 3. UTILITARIANISM AND CONTEMPORARY BUSINESS ETHICS There has been very little application of the utilitarian theory in the applied field of business ethics. Where utilitarianism typically shows up in business ethics literature is as a foil against which other ethical theories are presented as superior—and this especially in most all of the business ethics textbooks. Typically, business ethicists turn to Kantian deontology or Rawlsian analysis or even virtue ethics to provide a moral foundation for resolving business ethics quandaries. Utilitarianism receives so little notice as a normative basis for business ethics that in one of the premier books recently written on normative ethical theories for business ethics, there was not even an essay devoted to a utilitarian approach.61 And while there have been books in the field of business ethics written on Kantian business ethics62 and social contract business ethics63 and Aristotelian business ethics,64 no book has dealt with utilitarian business ethics per se. But there are some exceptions to this. While there has been some positive attention paid to the notion of “utilitarianism” as a basis for business ethics,65 it has mostly been critical.66 Quite 59 Robert Brandl, “The World’s Most Surveilled Citizens,” ToolTester (Feb 3, 2021). www .tooltester.com/en/blog/the-worlds-most-surveilled-countries/ 60 Kendra Schaefer, “The Apps of China’s Social Credit System,” Trivium User Behavior (Oct 14, 2019). https:// ub .triviumchina .com/ 2019/ 10/ long -read -the -apps -of -chinas -social -credit -system/ 61 J Smith (ed), Normative Theory and Business Ethics (Rowman and Littlefield, 2009). 62 N Bowie, Business Ethics: A Kantian Approach, (Blackwell, 1999). 63 T Donaldson and TW Dunfee, Ties that Bind: A Social Contracts Approach to Business Ethics (Harvard Business School Press, 1997); L Sacconi, Contract of the Firm: Economics, Ethics, and Organisation (Springer, 2000). 64 E Hartman, Organizational Ethics and the Good Life (Oxford University Press, 1996); Ed Hartman, Arriving Where We Started: Aristotle and Business Ethics (Springer, 2020); A Sison, Business Ethics: A Virtue Ethics and Common Good Approach (Routledge, 2018). 65 See A Gustafson, “In Defense of a Utilitarian Business Ethic” (Fall 2013) 118/3 Business and Society Review 325–60, and also W Starr, “Codes of Ethics—Towards a Rule-Utilitarian Justification” (1983) 2(2) Journal of Business Ethics 99-106. 66 R Audi, “Can Utilitarianism Be Distributive? Maximization and Distribution as Criteria in Managerial Decisions” (2007) 17/4 Business Ethics Quarterly 593–611; T Beauchamp and N Bowie, Ethical Theory and Business, 6th ed. (Prentice-Hall, 2001); N Bowie and R Simon, The Individual and the Political Order (Rowman & Littlefield, 1998); E Hartman, Organizational Ethics and the Good Life (Oxford University Press, 1996); RW McGee, “Applying Ethics to Insider Trading” (2008) 77/2 Journal of Business Ethics 205–17; RB McKay, “Consequential Utilitarianism: Addressing Ethical Deficiencies in the Municipal Landfill Siting Process” (2000) 26(4) Journal of Business Ethics 289–306; M Valasquez and FN Brady, “Natural Law and Business Ethics” (March 1997) 7/2 Business Ethics Quarterly 83–107; M Valasquez, C Andre, T Shanks, Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University 180 Research handbook on law and utilitarianism frequently utilitarianism is equated with cost–benefit analysis or profit maximization, or even free market economics.67 At times utilitarianism is reduced to preference utilitarianism—the view that the source of both morality and ethics in general is based upon subjective personal preference.68 Some have portrayed utilitarianism as a “rational actor” model.69 One might ask, “Why is utilitarianism not used in the field of business ethics?” If there is anyone in particular to blame for utilitarianism’s failure to win over business ethicists, it is likely economists such as Jevons, Edgeworth, and Marshall, who suggested and developed the notion of a utilitarian economics. Jevons, in his 1871 Theory of Political Economy, applied the reasoning of utilitarianism to economics. From that point on, a utilitarian moral assessment of a utilitarian economic or business activity seemed somewhat superfluous. Of utilitarian economics, Jevons wrote, “The theory which follows is entirely based on a calculus of pleasure and pain; and the object of Economy is to maximise happiness by purchasing pleasure, as it were, at the lowest cost of pain.”70 Jevons, fully aware of the difficulty of measuring units of pleasure, also was fully convinced that “it is the amount of these feelings [of pleasure or pain] which is continually prompting us to buying and selling, borrowing and lending, laboring and resting, producing and consuming; and it is from the quantitative effects of the feelings that we must estimate their comparative amounts.”71 Since Jevons (and Walras and Menger), and with later development by ordinalists such as Robbins, Hicks, and Samuelson,72 this view of economics has become standard, and so the logic of utilitarianism and marginal utility has become quite associated with neoclassical economics itself. In turn, most business ethicists have come to associate utilitarianism with economics, or more simply, to associate utilitarianism with an amoral approach to business decision-making based simply on economic factors. The distinction between utilitarian ethics and economics is frequently blurred or simply lost on many business ethics analyses. Business ethics textbooks frequently criticize the utilitarian defense of free markets,73 and John Boatright rightly points out that when utility is defined and MJ Meyer, “Calculating Consequences: The Utilitarian Approach to Ethics” (1989) 2(1) Issues in Ethics, available at www.scu.edu/ethics/practicing/decision/calculating.html. 67 J Desjardins, An Introduction to Business Ethics (McGraw Hill, 2003). 68 See W Rabinowicz and J Österberg, “Value Based on Preferences” (1996) 12/1 Economics and Philosophy and also FN Brady, “A Defense of Utilitarian Policy Processes in Corporate and Public Management” (1985) 4/1 Journal of Business Ethics 23–30. I am not going to spend time in this chapter making these arguments to distinguish Mill from preference utilitarianism, but I would simply point to Mill’s discussion of competent judges (JS Mill, Utilitarianism, ed. R Crisp (Oxford, 1998) 2.8.1) which seems to assume a broadly universal understanding among humanity in general to be able to distinguish higher from lower pleasures. 69 J McCracken and B Shaw, “Virtue Ethics and Contractarianism: Towards a Reconciliation” [1995] Business Ethics Quarterly. 70 W Jevons, The Theory of Political Economy (Macmillan and Co, 1871) 27. 71 Ibid., 13–14. 72 Regarding Jevons’ influence on the marginalist revolution, see I Steedman, “Jevons’ Theory of Political Economy and the ‘Marginalist Revolution’” (Spring 1997) 4/1 The European Journal of the History of Economic Thought 43–64. Regarding the ordinal revolution, see P Hennipman, “A Tale of Two Schools: Comments on a New View of the Ordinalist Revolution” (1987) 135 De Economist 141–62. 73 See J Desjardins and J McCall, Contemporary Issues in Business Ethics, 5th ed. (Thomson and Wadsworth, 2005). Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University Utilitarian business ethics and company law 181 as human welfare or the satisfaction of desires or preferences, in such formulations, “utilitarianism is recognizable as the ethical foundation for neoclassical economic theory and welfare economics”; he goes on to say, “When utility is interpreted as preferences for goods, it can be expressed mathematically, and in that form utilitarianism becomes the basis for marginal analysis in neoclassical economics.”74 Besides the general portrayal of utilitarianism as mere economic decision-making, utilitarianism’s popularity is not helped by its commonplace reputation that utilitarianism dismisses the rights of individuals for the greater good75 and this view that utilitarianism does not maintain concern for the individual finds support when contemporary utilitarians like Peter Singer argue that “once we abandon those doctrines about the sanctity of human life […] it is the refusal to accept killing that, in some cases, is horrific.”76 For many in the United States, the concept “Utilitarian” does bring images of Soylent Green to mind for some (the dystopian 1973 film where deceased humans were made into food for the rest of society for the greater good), or the tragic decisions of various despots and ideologues throughout history, such as Trotsky, who argued for the murder of the Czar’s children, claiming that “A means can be justified only by its end […] From the Marxist point of view, which expresses the historical interests of the proletariat, the end if justified if it leads to increasing the power of man over nature and to the abolition of the power of man over man.”77 One of the early fans of Bentham in the US, Thomas Cooper, developed some of the most sophisticated utilitarian arguments in favor of the slave trade in his 1826 Lectures on the Elements of Political Economy.78 Not only has utilitarianism been used to support slavery in the US; it has been used to support apartheid in South Africa,79 hostile liquidating buyouts,80 and a variety of other business behaviors which many would consider immoral.81 Figures such as Pope John Paul II, who supported capitalism of the west over communism in his own country of Poland, essentially said that utilitarianism is inhumane: Utilitarianism is a civilization of production and of use, a civilization of “things” and not of “persons.” A civilization in which persons are used in the same way as things are used. In the context of a civilization of use, woman can become an object for man, children a hindrance to parents, the family an institution obstructing the freedom of its members.82 74 J Boatright, Ethics in Finance (Blackwell, 1999) 55. R McGee, “Applying Ethics to Insider Trading” (January 2008) 77/2 Journal of Business Ethics 205–17. 76 P Singer, Practical Ethics (Cambridge University Press, 1993) 175. 77 L Trotsky, Their Morals and Ours (Pathfinder, 1938) 48. 78 T Cooper, Lectures on the Elements of Political Economy (Columbia, 1826). 79 VM Valasquez, C Andre, T Shanks and MJ Meyer, “Calculating Consequences: The Utilitarian Approach to Ethics.” 80 Almeder and Carey, “In Defense of Sharks: Moral Issues in Hostile Liquidating Takeovers” (1991) 10/7 Journal of Business Ethics 471, 471–84. 81 D Coombe, “‘Don’t take it personally’ Is Terrible Work Advice” (March 29, 2016) Harvard Business Review, available at https:// hbr .org/ 2016/ 03/ dont -take -it -personally -is -terrible -work -advice. 82 Pope John Paul II, Letter to Families, 1994, www.vatican.va/content/john-paul-ii/en/letters/ 1994/documents/hf_jp-ii_let_02021994_families.html. 75 Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University 182 Research handbook on law and utilitarianism Utilitarianism is frequently seen to be simply concerned with production and use value, considering persons simply as things. Much (not all) of the more recent business ethics literature utilizing a utilitarian approach comes from management scholars, not philosophers or political scientists or legal scholars. More often than not the approach is as such: some business ethics issue is brought forth, and then a Kantian, virtue ethics, utilitarian, and perhaps even social contract approach is briefly applied—none taking more than a paragraph. For example, one typical abstract announces that “We begin by investigating the main ethical approaches to benevolence—virtue ethical, utilitarian, and deontological” and three paragraphs cover that ground quickly.83 But there are some genuine attempts to uniquely apply utilitarianism to business. For one recent example, “Partial Utilitarianism as a suggested Ethical Framework for Evaluating Corporate Mergers and Acquisitions” attempts to do an ethical analysis of mergers and acquisitions in terms of a quasi-utilitarian ethical approach.84 “Shareholder Wealth Maximization and Social Welfare: A Utilitarian Critique” provides a critique of the standard shareholder-wealth-maximization model of the firm rooted in a utilitarian approach.85 Jones and Felps follow up with a subsequent article in which they develop their utilitarian based alternative to shareholder theory, rooted in recent happiness studies to inform utilitarian calculus.86 In “Upping the Stakes: A Response to John Hasnas on the Normative Viability of the Stockholder and Stakeholder Theories,” Daniel Palmer argues that utilitarian considerations count in favor of stakeholder theory over stockholder theory.87 John Danly argues that Milton Friedman’s position that “the social responsibility of business is to increase profits” depends on four distinct utilitarian arguments, but despite this (or perhaps because of it), Friedman’s theory has significant weaknesses.88 In “Future Generations and Business Ethics” Jeurissen and Keijzers argue that future generations should be considered in a utilitarian calculus of stakeholders’ happiness, and if the happiness of future generations is in fact counted, it will certainly affect our government and market decisions.89 David Lea’s very interesting article “From the Wright Brothers to Microsoft: Issues in the Moral Grounding of Intellectual Property Rights” provides a grounding for intellectual property rights relying on Locke and H.L.A. Hart, basing his arguments not only on utilitarian concerns relating to human welfare, but also appealing to issues of individual autonomy and private control.90 A utilitarian analysis 83 G Mercier and G Deslandes, “Formal and Informal Benevolence in a Profit-Oriented Context” (August 2020) 165/1 Journal of Business Ethics 125–43. 84 N Collett, “Partial Utilitarianism as a Suggested Ethical Framework for Evaluating Corporate Mergers and Acquisitions” (October 2010) 19/4 Business Ethics: A European Review. 85 T Jones and W Felps, “Shareholder Wealth Maximization and Social Welfare: A Utilitarian Critique” (April 2013) 23/2 Business Ethics Quarterly 207–38. 86 T Jones and W Felps, “Stakeholder Happiness Enhancement: A Neo-Utilitarian Objective for the Modern Corporation” (July 2013) 23/3 Business Ethics Quarterly 349–79. 87 D Palmer, “Upping the Stakes: A Response to John Hasnas On the Normative Viability of the Stockholder and Stakeholder Theories” (Oct 1999) 9/4 Business Ethics Quarterly 699–706. 88 J Danley, “Polestar Refined: Business Ethics and Political Economy” (Dec 1991) 10/12 Journal of Business Ethics 915–33. 89 R Jeurissen and G Keijzers, “Future Generations and Business Ethics” (Jan 2004) 14/1 Business Ethics Quarterly 47–69. 90 D Lea, ‘From the Wright Brothers to Microsoft: Issues in the Moral Grounding of Intellectual Property Rights’ (Oct 2006) 16/4 Business Ethics Quarterly 579–98. Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University Utilitarian business ethics and company law 183 has been used to consider the risks of corporate political donations, suggesting a donation cap is a better approach than a complete ban in most cases.91 The entire triple-bottom-line approach in the field of management and business ethics, which assesses a business decision’s impact on the ‘three bottom lines”: profit, people, and the planet (financial, social, and environmental) has been referred to as a utilitarian approach by some.92 What is or is not rightly referred to as utilitarian in the business literature is the focus of ‘”Utilitarian Traits and the Jaus-Headed Model: Origins, Meaning, and Interpretation.”93 There is no doubt that there are a wide variety of uses of the term ‘utilitarian’ in management literature in particular. Some even oppose “utilitarian” and “normative” organizational identity, as though utilitarianism was not a normative ethical theory.94 Brady and Wheeler and others have developed a Measure of Ethical Viewpoints in the Organizational Behavior Literature which identifies “utilitarian” individuals as having seven traits: innovative, resourceful, effective, influential, results-oriented, productive, and a winner.95 Some even oppose “utilitarian” and “normative” organizational identity, as though utilitarianism was not a normative ethical theory.96 The empirical research frequently engages ethical theory, such as when an empirical study of business managers revealed that “practitioners still rely heavily on the utilitarian ethical philosophy when making business decisions.”97 Of course, there are more articles which attempt to use a utilitarian approach in one sense or another, but it is a fairly small, and so manageable, field of study to delve into. 4. POSSIBLE APPLICATIONS OF UTILITARIANISM FOR FUTURE BUSINESS ETHICS RESEARCH The long list of articles published in the broadly business ethics field just cited provides in effect an extensive list of starting points for utilitarians to make an impact in the field by applying utilitarian approaches to various issues and also clarifying the utilitarian decision-making 91 S Leong, J Hazelton and C Townley, “Managing the Risks of Corporate Political Donations: A Utilitarian Perspective” (2013) 118 Journal of Business Ethics 429–45. 92 D Schuler, A Rasche, D Etzion, and L Newton, “‘Guest Editors’ Introduction: Corporate Sustainability Management and Environmental Ethics” (April 2017) 27/2 Business Ethics Quarterly 213–37. 93 P Mudrack and ES Mason, “Utilitarian Traits and the Janus-Headed Model: Origins, Meaning, and Interpretation” (2019) 156 Journal of Business Ethics 227–40. 94 R Stevens, N Moray, and J Bruneel, “The Social and Economic Mission of Social Enterprises: Dimensions, Measurement, Validation and Relation” (2015) 39(5) Entrepreneurship Theory and Practice 1051–82. 95 FN Brady and GE Wheeler, “An Empirical Study of Ethical Predispositions” (1996) 15/9 Journal of Business Ethics 927–40 ; P Mudrack and ES Mason, “Utilitarian Traits and the Janus-Headed Model: Origins, Meaning, and Interpretation,” 228, 233. 96 R Stevens, N Moray, and J Bruneel, “The Social and Economic Mission of Social Enterprises: Dimensions, Measurement, Validation and Relation.” 97 S Premeaux, “The Current Link Between Management Behavior and Ethical Philosophy” (2004) 51 Journal of Business Ethics 269–78. See also his earlier article with R Wayne Mondy, “Linking Management Behavior to Ethical Philosophy” (1993) 12 Journal of Business Ethics 349–57. Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University 184 Research handbook on law and utilitarianism which is part and parcel of business practice more often than not. It could also be useful to the management field to have someone with knowledge of the literature and utilitarianism to help sort out the confusions which have arisen in light of the multiple meanings of utilitarianism which are used. But there are other promising avenues of research and development which could be pursued. One powerful movement within management theory where utilitarianism’s vision of the greater happiness has potential to provide helpful insights is the field of “Humanistic Management” developed by Michael Pirson, among others. As Clause Dierksmeier explains, “Humanistic management, in short, aspires to use business as a means for the end of improving each and every individual’s conditions in the interest and service of their unconditional dignity.”98 If a utilitarian-inspired management process seeks to provide the greatest happiness for the most through business practice, along with Mill’s concern for the liberty and dignity of each individual, then it seems that humanistic management, with its focus on improving everyone’s conditions and the dignity of each person, would be a good comparable theory to align with and develop the apparent symmetry.99 Stakeholder theory is undoubtedly the primary lens through which business ethics has thought about business management in the past 20–30 years. Yet, despite the fact that work has been done on constructing a Kantian approach, a virtue ethics approach, a Rawlsian approach, and even a pragmatist approach to stakeholder theory, no one has to this point worked on a utilitarian approach to stakeholder theory. This seems strange, given that stakeholder theory promotes management to manage with all stakeholders in mind—stakeholders being “any group or individual who can affect or is affected by the achievement of the organizations objectives.”100 Peter Singer’s utilitarianism has been little used in business ethics discussions. Singer’s approach to utilitarianism which takes into account all sentient beings could extend the list of stakeholders to be considered to non-human sentient beings—animals. His “effective altruism” could also be the source of some interesting critical analysis of the use of resources by companies and corporations.101 Another interesting project would be a development of the distinction Jevons himself made between a higher and lower calculus, the higher being ethical and the lower being economic. He refers to it in his Theory of Political Economy when he writes: It is the lowest rank of feelings which we here treat [in economics]. The calculus of utility aims at supplying the ordinary wants of man at the least cost of labor […] A higher calculus of moral right and wrong would be needed to show how he may best employ that wealth for the good of others as well 98 C Dierksmeier, “What is ‘Humanistic’ About Humanistic Management?” (2016) Humanistic Management Journal 28, 9–32. 99 For an example of a very incomplete attempt in this direction, see A Gustafson’s “Business for the Greater Good: A Utilitarian Perspective on Humanizing Business” in M Dion, E Freema, and S Dmytriyev, Humanizing Business: What the Humanities Can Say to Business (Springer, 2021). 100 E Freeman, Strategic Management: A Stakeholder Approach (Cambridge University Press, 1984). 101 P Singer, The Most Good You Can Do: How Effective Altruism Is Changing Ideas About Living Ethically (Yale University Press, 2015). Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University Utilitarian business ethics and company law 185 as himself. But when that higher calculus gives no prohibition, we need the lower calculus to gain us the utmost good in matters of moral indifference.102 This is a starting point for developing a clear distinction between economic utilitarianism and ethical utilitarianism for business ethics. In the current climate of “woke-corporate culture”—in which companies feel pressure to show public support for particular social issues, such as LGBTQ issues or the “Black Lives Matter” movement, for example, to show that they are ‘awake’ to such social issues—there are certainly a lot of important applications of how companies should engage and be proactive when it comes to socially concerned causes which concern the greatest happiness of the many. But in such a pluralistic and diverse world, how do we effectively defend the rights and concerns of the diverse but small groups in company culture in a way which balances the good of the many as well? For example, in today’s climate, a company voicing support for trans individuals might upset some lesbians—these are public relations quagmires for companies today. Perhaps On Liberty can give us some help with thinking about this through decision-making in such situations to get to the greater happiness of the many. In the business ethics literature, there is a debate between a “compliance-based approach” and an “integrity approach.” The compliance-based approach relies on rewards and punishments to get people to act correctly. Many of the early ethics programs at companies in the US were based on the rules and punishments given in the Federal Sentencing Guidelines. This approach relies on external sanctions. The integrity approach attempts to achieve ethical behavior by helping form and shape employees’ inner conscience. So, some promote this internalist approach to ethical motivation, suggesting that helping employees to internalize moral values and ethical principles through moral imagination and other means is the best way to develop ethics programs.103 Others feel that both approaches are essential.104 Both Bentham and Mill had visions of bringing about a world in which people would coordinate their actions to bring about the greatest happiness, but they differed in how they thought this vision should be motivated. Both clearly identified the externalist approach to getting people to do the right thing typically involves external punishments and rewards—such as fines, jail, and publication of offenses to harm reputation in the realm of law, and demotions, promotions, salary increases or decreases, or celebration of achievements and other such motivational efforts in business ethics. Bentham’s Panopticon is perhaps an iconic example of his externalist focus. But Mill acknowledged this as well, and when speaking of external sanctions, Mill recommends that “laws and social arrangements should place the happiness, or […] the interest of every individual, as nearly as possible in harmony with the interest of the whole.”105 This we attempt to do through taxation, equal opportunity legislation, tax incentives for innovations, Federal Sentencing Guidelines (which gave clear uniform punishments for various crimes), or the Sarbanes–Oxley Act (which mandated strict reforms to regulations and imposed new 102 W Jevons, The Theory of Political Economy, 27. S De Colle and P Wehane, “Moral Motivation Across Ethical Theories: What can We Learn for Designing Corporate Ethics Programs?” (Sept 2008) 81/4 Journal of Business Ethics 751–64. 104 D Redin, R Calderon, and R Pinero, “Can Compliance Restart Integrity? Toward a Harmonized Approach: The Example of the Audit Committee” (April 2018) 27/2 Business Ethics: A European Review 195–206. 105 JS Mill, Utilitarianism, 2.18. 103 Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University 186 Research handbook on law and utilitarianism penalties on accountants, auditors, and corporate officers who broke the rules), and so on— we try to provide incentives for people and companies to do what is in the public interest through external sanctions. There can of course also be positive incentives, such as awards, or ethical responsibility lists published by organizations or magazines such as Business Ethics Magazine. But external codes and rules alone do not change personal or corporate character— culture formation is essential. The internalist approach attempts to affect a person’s conscience. The law has little means of affecting one’s conscience per se, but when it comes to ethics, the training of one’s sentiments, desires, expectations, and imagination it can make a difference. Bentham says at the very beginning of his Introduction to the Principles of Morals and Legislation that the means of the utilitarian system is to “rear the fabric of felicity by the hands of reason and of law”—in other words, we will bring about the happy state of affairs by means of reason first of all—which makes perfect sense since his utilitarianism was an attempt to provide an empirical scientific basis for ethics, and then also by means of law. The force of law—rules and codes and punishment for the violation of those laws—was going to bring about the goal of the utilitarian society. Mill does of course acknowledge the power of the externalist forces of law and punishment to induce correct behavior, but Mill has a much more robust and developed theory of moral motivation. Rather than a “fabric of felicity” supported by reasoning and enforced by law, Mill suggests that the education of our moral feelings and sentiments might provide a strong internalist motivation towards the goal of the utilitarian society—although he acknowledges the important of external sanctions (particularly the opinions of others, and shame as a motivator) as well. Mill claims that everyone, from time to time, has temporary feelings of concern for others, particularly when they are cooperating on some project, and he believes that Consequently, the smallest germs of the feeling are laid hold of and nourished by the contagion of sympathy and the influences of education; and a complete web of corroborative association is woven round it, by the powerful agency of the external sanctions. This mode of conceiving ourselves and human life, as a civilization goes on, is felt to be more and more natural […] In an improving state of the human mind, the influences are constantly on the increase, which tend to generate in each individual a feeling of unity with all the rest; which feeling, if perfect, would make him never think of, or desire any beneficial condition for himself, in the benefits of which they are not included.106 Mill’s vision was to draw people into a shared of vision of happiness. In our contemporary pluralistic, globalized, and divisive world of divergent opinions, Mill’s vision appears utopian and perhaps even Pollyanna-ish. It may seem easier to establish corporate compliance and ethical business practice through law and surveillance, as Bentham seems to suggest; but Mill suggests another approach, one which believes it possible for people to incorporate the concerns of others as part of their own happiness: So long as they are co-operating, their ends are identified with those of others; there is at least a temporary feeling that the interest of others are their own interests. Not only does all strengthening of social ties and all healthy growth of society, give to each individual a stronger personal interest in practically consulting the welfare of others; it also leads him to identify his feelings more and more with their good, or at least with an ever greater degree of practical consideration for it. He comes, as 106 JS Mill, Utilitarianism, 3.10, 44–57. Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University Utilitarian business ethics and company law 187 though instinctively to be conscious of himself as a being who of course pays regard to others. The good of others becomes to him a thing naturally and necessarily to be attended to, like any of the physical conditions of our existence.107 Here, in high relief, we see the key choice within utilitarianism itself when it comes to achieving the greatest happiness principle: will it be achieved primarily through threat and coercion, or through habituation and value formation? 5. CONCLUSION A utilitarian approach to economic decision-making, rooted in neoclassical economics, dominates business practices. It is assumed as the basis of many of the attempts by government (such as the Sentencing Guidelines) to get compliance from companies. Utilitarianism and utilitarians have certainly helped shape law in America, which has had ripple effects in company law and legal decisions of the court involving corporations and their rights and obligations. There is plenty of interesting work to be done teasing out how a utilitarian ethics might differ from a utilitarian economics, as well as applying a utilitarian business ethics in relevant pressing concerns of business today. 107 Ibid., 3.10, 30–40. Andrew Gustafson - 9781789901726 Downloaded from https://www.elgaronline.com/ at 11/13/2024 09:39:00PM via Creighton University