Aristotle on Business

Aristotle on Business

Aristotle on Business

I have developed a theoretical framework which I call ‘an Aristotelian approach to business’. As Aristotle is famous largely as the enemy of business, some justification of this approach would seem to be in order. True, he was the first economist. He had much to say about the ethics of exchange and so might well be called the first (known) business ethicist as well. But Aristotle distinguished two different senses of what we call economics: oeconomicus or household trading, which he approved of and thought essential to the working of any even modestly complex society, and chrematisike, which is trade for profit. Aristotle declared the latter activity wholly devoid of virtue. Aristotle despised the financial community and, more generally, all of what we would call profit-seeking. He argued that goods should be exchanged for their ‘real value’ (their costs, including a ‘fair wage’ for those who produced them), but he then concluded, mistakenly, that any profit (that is, over and above costs) required some sort of theft (for where else would that ‘surplus value’ come from?). Consequently, he called those who engaged in commerce ‘parasites’ and had special disdain for moneylenders and the illicit, unproductive practice of usury, which until only a few centuries ago was still a crime. (‘Usury’ did not originally mean excessive interest; it referred to any charge over and above cost.) Only outsiders at the fringe of society, not respectable citizens, engaged in such practices. (Shakespeare’s Shylock, in The Merchant of Venice, was such an outsider and a usurer, though his idea of a forfeit was unusual.) All trade, Aristotle believed, was a kind of exploitation. Such was his view of what we call ‘business’. Aristotle’s greatest medieval disciple, St Thomas Aquinas, shared the disdain of ‘the Philosopher’ for commerce, even while he struggled to permit limited usury (never by that term, of course) among his business patrons. (A charge for ‘lost use’ of loaned funds was not the same as charging interest, he argued.) Even Martin Luther, at the door to modern times, insisted that usury was a sin and a profitable business was (at best) suspicious. Aristotle’s influence on business, it could be argued, has been long-lasting — and nothing less than disastrous. In particular, it can be argued that Aristotle had too little sense of the importance of production and based his views wholly on the aristocratically proper urge for acquisition, thus introducing an unwarranted zero-sum thinking into his economics. And, of course, it can be charged that Aristotle, like his teacher Plato, was too much the spokesman for the aristocratic class and quite unfair to the commerce and livelihoods of foreigners and commoners. It is Aristotle who initiates so much of the history of business ethics as the wholesale attack on business and its practices. Aristotelian prejudices underlie much of business criticism and the contempt for finance that preoccupies so much of Christian ethics even to this day, avaricious evangelicals notwithstanding. Even defenders of business often end up presupposing Aristotelian prejudices in such Pyrrhonian arguments as ‘business is akin to poker and apart from the ethics of everyday life’ (Carr 1968) and ‘the [only] social responsibility of business is to increase its profits’ (Friedman 1971). But if it is just this schism between business and the rest of life that so infuriated Aristotle, for whom life was supposed to fit together in a coherent whole, it is the same holistic idea — that business people and corporations are first of all part of a larger community — that drives business ethics today. We can no longer accept the amoral idea that ‘business is business’ (not really a tautology but an excuse for being socially irresponsible and personally insensitive). According to Aristotle, one has to think of oneself as a member of the larger community — the Polis for him, the corporation, the neighborhood, the city or the country (and the world) for us — and strive to excel, to bring out what is best in ourselves and our shared enterprise. What is best in us — our virtues — are in turn defined by that larger community, and there is therefore no ultimate split or antagonism between individual self-interest and the greater public good. Of course, there were no corporations in those days, but Aristotle would certainly know what I mean when I say that most people in business now identify themselves — if tenuously — in terms of their companies; corporate policies, much less corporate codes of ethics, are not by themselves enough to constitute an ethics. But corporations are not isolated city-states, not even the biggest and most powerful of the multinationals (contrast the image of ‘the sovereign state of ITT’). They are part and parcel of a larger global community. The people who work for them are thus citizens of (at least) two communities at once, and one might think of business ethics as getting straight about that dual citizenship. What we need to cultivate is a certain way of thinking about ourselves in and out of the corporate context, and this is the aim of ethical theory in business, as I understand it. It is not, let me insist, anti-individualistic in any sense of ‘individualism’ that is worth defending. The Aristotelian approach to business ethics, rather, begins with the two-pronged idea that it is individual virtue and integrity that count, but good corporate and social policy encourage and nourish individual virtue and integrity. It is this picture of community, with reference to business and the corporation, that I want to explore here. One might speak of  communitarianism’ here, but it is not at all evident that one must give up, at the same time, a robust sense of individuality (as opposed to self-interested individualism). Community and virtue will form the core of the thesis I want to defend here. To call the approach ‘Aristotelian’ is to emphasize the importance of community, the business community as such (I want to consider corporations as, first of all, communities) but also the larger community, even all of humanity and, perhaps, much of nature too. This emphasis on community, however, should not be taken to eclipse the importance of the individual and individual responsibility. In fact, the contrary is true: it is only within the context of community that individuality is developed and defined, and our all-important sense of individual integrity is dependent upon and not opposed to the community in which integrity gets both its meaning and its chance to prove itself.

From “Aristotle, Ethics and Business Organizations” by Robert C. Solomon

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