Sunday, April 16, 2017

What is Business?


What is the most influential institution in the Western world? Well, let’s look at some of the candidates. Now by “influential” I don’t mean just “positive influence” but also “negative influence.” Given the cultural forces that are currently at work here in the United States, most of you would say either religion or government. Both are pretty good candidates. But let’s look a bit closer. Who made your clothes? Who produced the food that you ate this morning? Who sold your food to you? Who loaned you the money to go to college? Who built your computer? Who sold it to you? Who printed your books? Who sold them to you? Who brewed the beer that you drank last Saturday night, and who sold it to you? Who produced your cigarettes and who sold them to you? Who owns the Reds and the Bengals? Who built your home? Who financed it? Get the point? For better or worse, I would argue that corporations are the most influential institutions in the Western world, especially in the United States where corporations also wield a lot of political clout too.

I am full-time tenured professor at Mount St. Joseph University. It’s not a “real corporation” but it is subject to the same “laws of economics.” The college pays me to teach philosophical inquiry. Although I sell of my services to the university, you and your parents are the ultimate buyers. If any university wants to stay in business it must price itself competitively, effectively market its services to prospective students, and retain its students for at least four years. It also helps if it can also attract transfer students from other colleges. In short, higher education is a vast and highly competitive coterie of businesses; that is to say it is an industry. This industry is comprised of not only competing colleges, teachers and administrators, but also competing companies that sell books, computers, sports stadiums, and insurance. Many small colleges go bankrupt every year. Mount St. Joseph University is doing pretty well, which bodes well for your future and the future of my paychecks.

Given the extraordinary influence that corporations exert over our lives, it makes sense to ask whether these institutions are subject to moral evaluation. Are there better and worse kinds or corporate behaviors? I believe that there are two relevant lines of inquiry: economic inquiry and moral inquiry. From an economic standpoint, a good corporation is a profitable one. From a moral standpoint, a good corporation is one that conforms to moral principles such as: liberty, beneficence, non-maleficence, liberty, and justice. But what happens when there is a conflict between economic profitability and morality?

Because corporations serve these two masters, in this course you will have to know something about both economics and ethics. It wouldn’t hurt if you also knew something about history, psychology, sociology, and even biology. Let’s start with a bit of speculation down these lines.

A few years ago I was personally involved in a major business transaction. I bought a new electric guitar. I saw it in a music store and negotiated the price with the owner for about six months. The instrument was made in a factory in Japan owned by Yamaha Corporation, a multinational corporation. Yamaha had sold it to that store owner, and after an hour or so of intense bargaining that store owner sold it to me at a price that was agreeable to both of us. Why did I buy it? Simply put, I bought it in order to increase the pleasure I experience from playing music. When I decided to expend a portion of my MSJ paycheck on that guitar, I put it on a Visa card, which was issued by yet another corporation. When I got home, my wife was surprised, which is another story.

As one looks closely at the dynamics of this simple transaction, it becomes obvious that most, if not all, of the goods and services that permeate our social life today stem from of a complex web of interwoven business transactions forged between individuals, groups of individuals, and even government. As an evolutionary philosopher, I believe that economic behavior is the product of millions of years of biological evolution. But it has also been shaped by a few thousand years of cultural evolution. Let’s speculate.

Deeply buried in the evolutionary past of our species, the first business transaction took place. Unfortunately, the details of this momentous historical event remain shrouded in mystery as the archaeological, anthropological and historical evidence has long since disappeared. Don’t expect scientists to unearth the definitive documents outlining the terms of that first contract. It was probably something much less than a verbal contract. It may have even predated the human species. Moreover, we’ll never really know for sure, whether that transaction involved an exchange of "goods," "services," or both. (As we speculate as to the terms of that first transaction, we might argue that, given the human procreative urge, prostitution is probably the oldest service profession. However I’ll resist that temptation for now!) Given the dearth of evidence, one might argue that this aspect of human history must remain, forever, a mystery and that one historical explanation is as good as another. Undaunted by the dearth of artifacts, economists, philosophers, and more recently evolutionary psychologists have been compiling evidence that might lead to a rough profile of what that first transaction must have entailed. What follows is my own speculative reconstruction of that even based on recent advancements in evolutionary psychology, philosophy, and economics.

There is an old theory that says that human beings single-handedly invented business. We can probably attribute this line of reasoning to a religious doctrine known as the "doctrine of special creation." In that case we might argue that only human beings forge contracts. But if human beings are uniquely endowed in the "Great Chain of Being," it is certainly not rooted in our capacity for economic exchange. In light of contemporary research on other species we can be fairly confident that the first economic transaction predated the appearance of Homo sapiens. Other "Great Apes" living today such as chimpanzees, bonobos, gorillas, and orangutans routinely exchange goods and services: “You scratch my back and I’ll scratch yours.”

Although other primates obviously barter goods and services, they do not buy and sell guitars made in Japan. Therefore, one might reasonably ask, "What kinds of psychological traits must have been present when that first transaction transpired between primates?" And, “why is it that we humans are capable of international trade, while other species are not?” I would argue that there are essentially two necessary conditions: self interest and the capacity to cooperate. Both involve enormous complexities rooted in evolutionary biology.

 Business Ethics is largely about sustainable human behavior. Is the abundance of products and service currently available on the global market have been produced in a world dominated by murder, theft, and/or breach of contract? Or, does economic development require moral foundation? If so, what is the nature of that foundation?  

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