Business Ethics from Antiquity to the 19th Century

An Economist's View

David George Surdam

• Publisher: Palgrave Macmillan
• Year: 2020
• Print ISBN:
  9783030371647
• eBook ISBN:
  9783030371654
• Topic: Economics
• Subtopic: Business Ethics
• Index: Economics

This book combines elements of economic and business history to study business ethics from antiquity to the nineteenth century. This book begins with so-called primitive people, showing how humans began to exchange goods and commodities from trade as a way to keep peace and prosper. The ancients considered the value and ethics of business, and many of their reflections influenced medieval Catholic thinkers and business participants. Protestants elevated working and profit-making to the respectable and virtuous, and some groups, such as Quakers, came to exemplify good business ethics.

This book draws on the work of economists and historians to highlight the importance of changing technologies, religious beliefs, and cultural attitudes, showing that what is considered ethical differs across time and place.

© The Author(s) 2020

D. G. SurdamBusiness Ethics from Antiquity to the 19th Centuryhttps://doi.org/10.1007/978-3-030-37165-4_1

Begin Abstract

1. You Can’t Live (Well) Without Business Ethics

David George Surdam¹

(1)

Department of Economics, University of Northern Iowa, Cedar Falls, IA, USA

David George Surdam

Email: [email protected]

End Abstract

You can’t live (well) without business ethics. Business ethics matter greatly and affect our lives on a daily basis. Without reasonably high business ethics throughout the marketplace, people throughout the world would not enjoy high standards of material well-being. The necessity for businesspeople and consumers to interact in ethical fashion has drawn the attention of a wide variety of thinkers, including Athenian Greek philosophers, Islamic and medieval theologians, secular scholars, businesspeople, consumers, and legislators. What people considered ethical differed across times and societies. The evolution and development of business ethics across societies and through the ages are fascinating topics.

Some people have told me that a book on business ethics throughout history would be the “world’s shortest book.” The assumption underlying the witticisms is that business ethics are completely lacking. One need not make much effort to find examples of unethical behavior by businesspeople, as major ethical lapses attract much attention. The nightly news frequently publicizes the really spectacular lapses, such as Bernard Madoff’s Ponzi scheme or the sub-prime housing loan debacle.

The nightly news is not the only forum highlighting lapses in business ethics. With the fall of the Soviet Empire, Hollywood has had to cast for new stock villains, and businesspeople fill the niche. Motion pictures and television shows depict businesspeople as being beyond rapacity and duplicity, such as that 1980s’ icon, J.R. Ewing, of Dallas. Apparently, J.R.’s chief negotiating tactic was to bellow, “I’ll pay you any amount of money,” for something he wanted; he must have failed “Negotiating 101.” Children’s cartoons and movies rely upon businesspeople for stock villains (right up there with evil scientists), especially businesspeople engaged in despoiling the environment.¹

In the world of literature, the lack of ethics in business is a common plot device. Mario Puzo’s epigraph to his The Godfather reads: “Behind every great fortune there is a crime.”² The Corleone family ran a business of sorts, but few would laud or emulate their tactics. Arthur Miller’s Death of a Salesman and All My Sons famously depicted businesspeople in an unfavorable light, with the recurring theme of an erring father committing suicide upon realization of his perfidy (Puzo [1969] 1978; Miller 1947, 1998).

The purveyors of fictitious depictions of businesspeople used crude caricatures. As economist Ludwig von Mises wrote in the 1950s, Hollywood’s depiction of duplicitous businessperson portrayed, “all other Americans as perfect idiots whom every rascal can easily dupe. The [trick of feeding cattle salt and letting them drink water before marketing them] …is the most primitive and oldest method of swindling. It is hardly to be believed that there are in any part of the world cattle buyers stupid enough to be hoodwinked by it” (Von Mises [1956] 1972, 71–72).

The media’s spotlight, though, may create a distorted view of business ethics in general. There is an asymmetry operating. Colorful tales of business corruption are attention grabbing. Many tales of business corruption are later debunked, but by then, the stories have assumed legendary status and the corrections are of interest only to a few academics and apologists. The media rarely report on the rather humdrum activity of millions of businesspeople earning dollars honorably and quietly satisfying customers by providing goods and services at reasonable prices and who treat their workers fairly.

Certainly the perceptions of business ethics, as measured by trustworthiness, appear dismal. The Gallup poll conducts periodical surveys, asking: “Please tell me how you would rate the honesty and ethical standards of people in these different fields—very high, high, average, low, or very low?” Nurses received the highest combined percentages (85%) of very high or high ratings. Pharmacists and medical doctors ranked second and third in the professions listed. Among the business professionals, funeral directors ranked highest with 44%. Accountants had 39% very high or high ratings. Bankers and building contractors each received 25% very high/high ratings, just between journalists (27%) and lawyers (21%). Real estate agents (20%), business executives (17%), stockbrokers (13%), advertising practitioners (10%), car salespeople (8%), and telemarketers (8%) ranked above or at par with members of Congress (8%) and lobbyists (7%). The Economist reported a poll after the Enron scandal, with its unethical accounting tricks, that showed that a majority of Americans who responded trusted accountants. Some three-quarters trusted people running small businesses (www.​gallup.​com/​poll/​1654/​honesty-ethics-professions.​aspx, viewed January 3, 2016, 1:20 pm. Economist, October 25, 2003, 3–4 and 7).³

A moment’s reflection, however, should demonstrate that the vast majority of business transactions are conducted without complaint. You may be reading this book—that you perhaps purchased at an airport bookstore—as you hurl through the air at 550 mph in a metal object. You need hardly worry about the object crashing to the ground. You have faith in the airline’s safety. Your employer sends thousands of your dollars each year to a group of financial experts to manage on your behalf. You have never met these experts (nor, for that matter, have you ever met the pilot of the jet plane); yet you entrust your life and retirement hopes to them. You go to an espresso kiosk and quaff some beverage. You don’t think about the possibility that you might be drinking adulterated coffee. How often during the year does a typical American file a complaint regarding unscrupulous business behavior? Market forces, consumer and government vigilance, and the businessperson’s own sense of honor and ethical standards usually induce ethical behavior. Social commentator Jane Jacobs describes our modern world as, “a great web of trust in the honesty of business…how much that we take for granted in business transactions suspends from that gossamer web” (Jacobs 1992, 5).

A World Without Ethical Business Behavior

Why do businesspeople’s ethics matter? Aside from generating outrage and providing politicians ammunition for mobilizing public crusades, business practices, ethical or unethical, affect all of us. The American economy is, for instance, incredibly complex, and all of us rely upon our fellow residents to enable us to survive with a modicum of comfort and decorum. Life in America, for the most part, does not reflect Thomas Hobbes’ characterization: “solitary, poor, nasty, short and brutish” (Hobbes, 95–96).

Ethical business behavior provides benefits beyond the direct exchange of goods and services. Commerce was beneficial in myriad ways. Peaceful trade enlarged acquaintance with people from other countries; widened people’s mental vistas and dampened prejudice; and intertwined people. Others disagree, with philosopher Robert Goodin reflecting that the growing industrialization and complexities created new vulnerabilities in relations between people, such as customers and retailers or workers and employers. Over a century ago, Edward Ross, a sociology professor, described modern people’s vulnerabilities: “The sinful heart is ever the same, but sin changes its quality as society develops. Modern sin takes its character from the mutualism of our time. Under our present manner of living, how many of my vital interests I must intrust to other!” The new complexity leaves us vulnerable to the wicked (Ross 1907, 3–4; Weisberg 1986, 57; Goodin 1985, 149–150).

If ethical standards fall low enough, many transactions may cease to be made. Declining trust leads to increased transaction costs of doing business, including the costs of finding someone with whom to conduct a transaction; negotiating a transaction; and monitoring and enforcing transactions. When businesspeople misbehave, they impose direct and indirect costs. Naturally, the defrauded or injured party bears direct costs, but other participants in the economy bear indirect costs. Each act of malfeasance makes other people more cautious, just as each act of honesty and integrity builds (or rebuilds) trust. Law professor Tamar Frankel characterizes this: “Mistrust corrodes the wheels of exchange and commerce and contaminates trusted professional services” (Frankel 2006, 5).

If suspicion of business practices becomes pervasive, transactions become less frequent, commerce is stymied, and economic growth might ultimately come to a standstill. Researchers worry that an absence of economic growth could ignite chronic violence between groups, as occurred throughout much of human history. Do deteriorating economic and social conditions trigger more business malfeasance or vice versa? The International Fraud Report of KPMG cites two major factors “affecting the level of fraud are society’s weakening values and economic pressures” (Frankel 2006, 87; see also Porter, December 2, 2015, B1).

Social commentators often claim that unethical behavior by businesspeople may inspire or pro...

Table of contents

• Cover
• Front Matter
• 1. You Can’t Live (Well) Without Business Ethics
• 2. Overview of Business Ethics
• 3. Primitive Trade
• 4. Ancient Trade in the Near East
• 5. Greek Society
• 6. Roman Society
• 7. Jewish and Christian Attitudes
• 8. Islam and Business Ethics
• 9. Medieval Business Ethics
• 10. Medieval Ethics and Markets
• 11. Early Modern Europe and Resurging Trade
• 12. Birth of a Consumer Society in Eighteenth-Century England
• 13. Quakers and Business Ethics
• 14. Labor Relations Through the Ages
• 15. Slavery Throughout History
• 16. Conclusion
• Back Matter