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Subject Area: Political Theory

Business Ethics as Casuistry - Leonard P. Liggio, Literature of Liberty, Autumn 1981, vol. 4, No. 3 [1981]

Edition used:

Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.

Part of: Literature of Liberty: A Review of Contemporary Liberal Thought, 20 vols. 19781-982

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


Business Ethics as Casuistry

Peter Drucker

  • Claremont Graduate School

“What is ‘Business Ethics’?” Public Interest 63(Spring 1981):18–36.

Business ethics has rapidly become a fashionable subject in American intellectual circles, effectively replacing yesterday's package of “social responsibilities.” There have been numerous seminars on the subject, speeches, articles, conferences, and books—not to mention the many earnest attempts to write “business ethics” into the law. But what precisely is business ethics? Is it nothing more than a revivalist preacher's call to repent or is it a field worthy of serious philosophical consideration?

In one sense, the term “business ethics” has little real meaning for a moralist in the Western tradition. Whatever their divergences, ethical authorities from the Old Testament prophets to F. H. Bradley or Edmond Cahn agree on one point: There is only one ethics—that of individual behavior—which applies to everyone alike. In other words, the same laws of conduct apply to king, priest, merchant, and peasant.

By and large, the only “hedging” concerning right and wrong allowed by traditional moralists involves differences grounded in social or cultural mores—and then only with respect to “venial offences.” For example, even in the most licentious society, fidelity to the marriage vow is considered virtuous. However, the sexual license of an extremely “permissive” society (17th century England or late 20th century America) might constitute an “extenuating circumstance” for the sexual transgressor.

Viewed from this perspective, “business ethics” is not ethics at all. Business ethics frequently asserts that acts which are not immoral or illegal when done by ordinary folk suddenly become immoral or illegal when done by “business.” No one, for example, would characterize as immoral a pedestrian in New York's Central Park who hands over his wallet to a mugger. Yet, a company paying money to union goons who threaten serious harrassment is quickly labeled. “unethical.”

The new business ethics also denies to business the traditional right of adaptation to cultural mores. It is now considered “grossly unethical” for an American business in Japan to retain as a “counsellor” a distinguished civil servant who has retired from government service. Yet, in Japan, a company which did not follow that practice would be considered immoral, because Japanese civil servants must retire soon after the age of 45 and find some means of livelihood in private industry.

If business ethics is not ethics, than what is it? ‘It is casuistry,’ Prof. Drucker replies. Casuistry in the 17th century asserted that rulers, by virtue of their office, had to strike a balance between the ordinary demands of individual ethics and their “social responsibility” to their subjects and kingdom. Today, we might say “their stockholders and company.”

A special ethics of “power”, whether in the 17th century or the 20th, inevitably becomes politicized, since it raises social responsibility to the level of an ethical absolute. In giving primacy to political values and goals, casuistry subordinates ethics to politics.

Equally important the casuist, no matter how he starts, inevitably becomes an apologist for the powerful. Catholic ethicians of the Counter-Reformation (like today's proponents of business ethics) began by making moral demands on rulers. However, if a ruler's ethics are subordinate to his social responsibility, ordinary rules do not apply to him. The door then opens to justifications for all manner of moral laxities. Thus, the disciples of Bellarmine and Borromeo could demonstrate that almost any behavior of a ruler was licit.

The supporters of business ethics could easily perform the same service for executives today. For example, the “electrical apparatus conspiracy” of the late 1950s could be seen as an attempt by General Electric, Westinghouse, and Allis Chalmers to preserve competition and save jobs. As a matter of fact, after the cartel was broken up, Allis Chalmers had to go out of the turbine business, thereby diminishing competition and causing the loss of several thousand jobs.

Prof. Drucker is confident that, as with casuistry, the special pleading inherent in business ethics will go full circle, making it eventually a tool of the business executive. He is also confident that, like the casuistry of old, business ethics will come to be despised as the moral sham it really is.