At best, business is dismissed as amoral. Or at worst, it is accused for being fundamentally immoral. Many people disdain business as the realm of lowly materialism and businesspeople as grubby profit-seekers who lack—and don’t require—any moral virtues. But those people are wrong. Business, the activity of producing and trading goods and services, demands a great deal of moral virtue, and businesspeople are not lowly materialists but moral creators. (This is also the theme of Deirdre McCloskey’s new book, Bourgeois Virtue, which makes the case for business and capitalism as virtuous).
We disdain business, yet we benefit from it, without appreciating the benefits. When we need food or household goods, we assume there are supermarkets around where we can find a vast array of produce, dairy products, meats, dry goods, cooking utensils, cleaning supplies, toiletries, etc. When we don’t want to or don’t have time to cook, we expect to find restaurants that serve savory meals. We expect to find a mechanic’s shop to have our car serviced, an airline to fly us for a vacation, a hair salon to get a haircut, and a dry cleaner to get clothes cleaned. These goods and services and thousands of others (and the buildings that house them) do not just appear somehow to meet our needs and desires. They are created by businesspeople, through companies.
Have you contemplated the value chains required to create products or services and to make them accessible to us? A staggering amount of organization and coordination is required, all done by businesses trading with each other, and ultimately with us, the end consumers. Consider the value chain for produce, for example. Farmers (who are businesspeople) make choices as to which crops to grow, based on the anticipated demand and other factors (such as soil conditions and climate). Before they can even start their farming operation, however, they have to acquire land and equipment such as tractors, possibly obtaining financing from other business firms, such as banks. Someone has to design and manufacture those tractors and other tools and make them available for sale. And someone has to establish and operate the banks. Once the farmer has the land and the equipment, he needs to acquire seeds and fertilizer, again provided by other businesses. Once the farmer grows his crop (protecting it against weeds and pests), he must find middlemen (distributors, wholesalers) who then deliver it to retailers—often globally—such as supermarkets—who have sufficient quantities of goods such as produce available when we want to buy them.
Without farmers, retailers, and every other business participating in the produce value chain, we would have to depend on ourselves to grow our own food (of limited variety and quantity, determined by our resources and geographic location) and perhaps barter with our neighbors. The same is true of every other product and service we depend on businesses to create and sell.
The value chain of produce is relatively simple (more complex products have more complex value chains), but it illustrates the central virtue of business and businesspeople: productiveness, or the process of creating material values—on which our survival and well-being depends. To dismiss business as morally meaningless materialism or condemn it as immoral is completely unjust and contrary to our self-interest. The act of creating and trading material values, even the simplest products such as fruits and vegetables, requires thinking (designing and planning by adhering to facts) and action (acting on one’s rational conclusions).
Productiveness requires also numerous other moral virtues: honesty (not faking facts to gain values), justice (trading value for value), integrity (walking the talk), and abstaining from initiating physical force and fraud. Productiveness—creating and trading material values from food grown by farmers to sophisticated computers and tools and to medicines that cure debilitating diseases—is morally necessary and nothing short of heroic. Instead of disdain and condemnation, businesses and businesspeople deserve our gratitude. We should not only buy but appreciate their products and services that make our lives infinitely better than those of our ancestors (and contemporaries) living in primitive economies where individual rights were not recognized, markets were not free, and business firms—and people—could not flourish.
First published October 9, 2014 at How to be Profitable and Moral: A Rational Egoist Approach to Business and posted here with the kind permission of the author.
Jaana Woiceshyn teaches business ethics and competitive strategy at the Haskayne School of Business, University of Calgary, Canada. She has lectured and conducted seminars on business ethics to undergraduate, MBA and Executive MBA students, and to various corporate audiences for over 20 years both in Canada and abroad. Before earning her Ph.D. from the Wharton School of Business, University of Pennsylvania, she helped turn around a small business in Finland and worked for a consulting firm in Canada. Jaana’s research on technological change and innovation, value creation by business, executive decision-making, and business ethics has been published in various academic and professional journals and books. “How to Be Profitable and Moral” is her first solo-authored book.