When I was in law school we were taught that when a business had to decide whether or not to break the law, if the penalty was a simple fine, you would just decide which was least expensive and pay that cost. So, if the fine were cheaper than your profits, break the law and pay the fine. I was always troubled by that, the assumption that a fine was just a part of doing business.

My perception is that this is major current of thought in modern business. Profit makes right, not as catchy as might makes right, but still probably what a great many businessmen have been taught, believe and put into action.

What does this have to do with my title? Excellent question. According to the research of Lawrence Kohlberg, children at around the age of ten progress to a higher level of moral understanding moving from consequence thinking to considering the intent behind the action. I quote:

At approximately the same time–10 or 11 years–children’s moral thinking undergoes other shifts. In particular, younger children base their moral judgments more on consequences, whereas older children base their judgments on intentions. When, for example, the young child hears about one boy who broke 15 cups trying to help his mother and another boy who broke only one cup trying to steal cookies, the young child thinks that the first boy did worse. The child primarily considers the amount of damage–the consequences–whereas the older child is more likely to judge wrongness in terms of the motives underlying the act (Piaget, 1932, p. 137).

So, catch my thought? When a businessman considers the costs of performing illegal or unethical acts only in the sense of money, he is reverting to the very first stage of moral development, that of less than a 10 year old child.

Now, there are six stages in Kohlberg’s theory:

1) Obedience and Punishment Orientation

2) Individualism and Exchange

3) Good Interpersonal Relationships

4) Maintaining the Social Order

5) Social Contract and Individual Rights

6) Universal Principles

Now, you could make a good argument that this kind of business thought (Milton Friedman, etc) actually falls into the second level where self interest and avoidance of punishment become primary concerns.  However, making moral decisions at the second level of Kohlberg’s six stages is just about as insulting as reasoning at the first.

My second point is when business is considered only as a money making endeavor, all the other levels of moral development don’t just become irrelevant, they become a block and a hazard to making maximum profit.

People who hold values from the other four stages might very well have difficulty succeeding in a corporation.

Let’s look at level 3, Good Interpersonal Relationships.

They believe that people should live up to the expectations of the family and community and behave in “good” ways. Good behavior means having good motives and interpersonal feelings such as love, empathy, trust, and concern for others.

It might be difficult to evade taxes, shift jobs overseas, to fire employees who are too old, if you try to live up to these expectations. Now, that generally that is not much of a problem, because if you want to do these things, you can get people (once again, Milton Friedman) to tell you that what you are doing is right and true. Not only is doing these things not wrong, they are in the long term good for everybody and in the long term will contribute to a more successful and happier society.

Now, as someone who professes and teaches ethics, I might point out that using wrong doing and “ends justify the means” thinking is more likely to produce more wrong doing and “ends justify the means thinking” than it is to produce a “good” or “successful” society.

Level 4 thinking means a person begins to consider “society as whole” as a factor in moral decision making. Breaking the law, damaging the environment, treating people badly, acting in the interest of a foreign government or corporation or trading partner to the detriment of your own country, etc. are acts that damage society as a whole. A businessman willing to maximize profit at all costs with this level of moral development has to believe that the long term benefits of illegal and unethical actions will produce in the long term a better society or embrace simple villainy as a way of life.

At level 5, you are essentially talking a language modern business on the Friedman model may have serious difficulty understanding. A “good society” might very well be one where real people with real influence might seriously believe that it is easier for a camel to pass through the eye of a needle than for a rich man to enter the kingdom of heaven. What makes for a good society might in some people’s minds to be things other than money. If the “free market” solves all societal problems in the long term, other thought is just childish rubbish that must be tossed aside as part of the debris of history.

One of the reasons for the absence and continuing decline of moral values in American business is the lack in this society of individuals at the 6^th level of moral development. Nothing could be more detrimental to the profit model of societal success than the proposition that there are universal principles by which a society should function. I read a lot and I promise you that the great thinkers, leaders and holy men of history have not been friendly to profit as a primary goal of the good society.

Kohlberg’s six levels of moral development give us insight into how we might consider thinking about ethical problems. Presumably it is better to think at a higher level than a lower one. If you accept that thought than an alarm bell should go off anytime a belief system calls for ignoring higher values and using the earlier ones.

(The quotes for this article are from  W.C. Crain. (1985). Theories of Development. Prentice-Hall. pp. 118-136.) With my grateful thanks!

James Pilant