MonoRealism Philosophy Site

The Philosophy of Business

Philosophical Reflections XXXVI

Part A: Earning a Living

Previously we investigated the philosophies of science and law, two specialised branches of philosophy that have great if somewhat indirect significance for people's lives. Science affects our lives and happiness by being the engine of the growth of knowledge and technology, while law affects us by determining how force is applied and controlled in society, which can leave us free to live or not. But while you would hope or demand that scientists and legal professionals follow good philosophies, unless you are one yourself those philosophies do not guide you on how to live your personal life.

Now we turn to a topic of less fundamental significance but of more immediate application to most peoples' lives and behaviour: the philosophy of business.

Although I will concentrate on business in the sense of commercial enterprises, that is an instance of the more general sense of earning a living by production and trade. In that general sense, the philosophy of business directly affects everyone: as every person is either earning their own living, being supported by someone who is earning a living (e.g. children and the recipients of voluntary charity), or existing as parasites on people earning a living (e.g. criminals). You are in business not only if you run a company or small business, but also if you are a worker who sells your thought or labour to someone else: and whatever your circumstances, your life depends on someone, yourself or others, thanked or despised, recognised or ignored, who is doing just that.

Business & Philosophy

Nevertheless, businesses have qualities distinct from individuals. So what is a business, and what need does it have for philosophy?

A business is an enterprise producing goods or services that is created to enhance the productivity of its members by division of labour. There would be little point forming a combined business, as opposed to remaining lone operators, if all did not stand to gain. There are many possible arrangements that can be ordered by how much they increase productivity. The simplest is just an association of people with different specialties, so that the business can provide a better overall service and share some resources: for example, a legal partnership. At a higher level is a group of people who between them can afford shared capital equipment none could afford individually: consider potters sharing an expensive kiln. At a higher level still is a capitalised business where owners or investors have paid for expensive machinery that enables production otherwise impossible: consider businesses early in the industrial revolution putting in power looms or steam engines. At the highest level is an integrated interprise with workers using capital equipment under the tactical direction of managers, themselves under the strategic direction of a CEO with the vision and ability to make high-level integrations involving all the factors affecting the business and its future.

It is this specialisation which makes businesses the greatest engine of material production in modern societies. No matter how brilliant, a lone operator has only so many hours in a day and by doing everything, can devote only a fraction of that time to what they do best. Add employees with the ability to do some of the work even while lacking the vision to do it all; add capital to save even more time and effort; and productiveness can soar. This combination of thought and effort at all levels from the most basic support functions to the highest levels of mental integration, the capital to purchase technologies, equipment and buildings, and the power and precision those things provide, allows enormously productive enterprises that can churn out steel, cars or computers in quantities and at prices that make them affordable to the common man and hence commonplace.

It is this very wealth that gives businesses a need for philosophy beyond the basic need for guiding principles that any directed action has. Because it is far more productive, a business makes far more money than any individual can. In addition, the higher levels of management of such enterprises earn far more than the "average" worker – as they should, given the disproportionate effect their work has on the earning ability of their companies (and the number of workers depending on the quality of their judgment). The brew of envy, all that money being there to loot, and the remnants of Marxist and related anti-business fallacies, ensures that businesses are a target of both public and private individuals who would like to bleed off that wealth unearned while blithely evading how it was created.

This leads to the odd discrepancy between widely perceived "rights" of businesses versus workers – when as we have seen, the latter are simply the most elemental form of business. Thus we have the spectacle of monopolies being subject to arbitrary legal sanction when done by companies but positive encouragement when done by workers (e.g. compulsory unionism, job protectionism); and price fixing being criminal by businesses yet legally imposed on behalf of workers.

While in the short term there is little companies can do to protect themselves from force initiated or sanctioned by the government, with the right philosophy they can at least understand and assert their rights and, in the long term, achieve them. The limitation of philosophy is that it has little power in the short term for overcoming immediate injustices. But in the long term, it has the greatest power for change (witness the Renaissance, the Enlightenment and the American Revolution).

But just as with individuals, in addition to the most broad aims of defining and defending the rights of businesses, philosophy also determines the values and virtues businesses need to pursue in their day to day activities.

Earning Virtue

In ethical systems based on altruism and centred on the supposed virtues of giving, the matter of earning one's own living is relegated to at best the morally neutral and at worst the morally maligned. But if human life is your standard of value (as it must be in an objective ethics, as your life is the only objective link between "is" and "ought"), one can see that the matter of earning your own living is not only virtuous in its own right, but requires all the virtues. Note that this is why even the ethics of altruism depend upon it, albeit unacknowledged or evaded: without production, there is nothing to give.

The justification of why your own life is the foundation of value and why virtues are the actions required to achieve it is a detailed question at the root of ethics, the topic of earlier Philosophical Reflections (9-12), and I won't repeat the details here. But in summary: first, the conditional nature of life is what links what is (reality) to what ought to be (ethics): the life of any organism requires certain types of actions appropriate to its nature if it is to stay in existence and prosper. Second, reason is the fundamental tool of survival of thinking beings like us: that is why we possess it (and furthermore, we are the only kind of being to whom ethics can pertain, as ethics pertain to choice and choice – free will – is only possible to thinking beings). And third, the unbreached application of reason implies and requires virtues such as rationality, honesty, integrity, justice, independence, productiveness and pride: as these are what in practice make the actions of a thinking being consistent with reality and its demands.

Thus, while earning your living might be considered just doing what you have to do to get by, the preservation, improvement and enjoyment of your life is the most fundamental value there is, and therefore choosing to take the actions it requires is the most fundamental act of virtue. And since achieving any value requires rationality, integrity and the other virtues, business and earning your living are not some activities outside the purview of ethics, but intimately demand and require ethics.

Getting & Making

Of course the mere possession of money is not proof of virtue. One can become rich without being completely virtuous or indeed virtuous at all. But here we must identify the key difference between making money and merely having or getting it. It is only the making of money that is the result of virtue.

To make money is to produce, to create things or services that are of such value to other people that they are willing to trade their products with you in turn, with the result that both of you are richer than you could otherwise be. The fundamental here is production: to the extent that you produce, you create wealth even if you are on a desert island and trade with nobody. However your production is maximised by specialising in what you do best, so wealth is maximised by free trade between productive specialists. That is why despite the repeated failure to learn from history shown by protectionists of every ilk – whether at the scale of guilds or nations – reducing trade barriers within or between countries has always resulted in dramatically increased wealth overall.

Getting money without making it, on the other hand, produces nothing, it merely takes it from others. A morally neutral example is someone who inherits wealth. Whatever virtue was required to produce that wealth cannot be claimed by the heir, who can only be judged by their own actions. An immoral case is a "successful" thief: he may be rich, but he has produced nothing, merely stolen it from the people who did. This is the difference between a life based on the initiation of physical force, which is less than a zero sum game, and the life of a thinking being, which enriches all involved.

Of course, many people are a mixture. They might be successful at making money in business by virtues such as productiveness, yet be dishonest when they think they can get away with it.

But fundamentally, making money requires a virtuous character, whatever moral deficiencies might dilute it. Any such moral deficiencies are not what make success possible, but rather undermine it. This is not something peculiar to business. Virtues are virtues because they are consistent with the needs of human life, with reality: and setting oneself against reality might work for a short while or out of sheer luck, but as a policy it cannot succeed. A dishonest businessman managing to be successful does not prove dishonesty is wise, any more than managing to cross a busy highway blindfolded makes that a wise policy or a good idea. Yes, dishonesty, like theft, can acquire money (at someone else's expense, not to mutual benefit) in the short term. But as policy, in the long term, and in terms of what happiness success can bring, true success in business, as in life, demands a virtuous life.