To complete this essay the following areas need to be looked at: –
1) What is utilitarianism
2) The advantages of utilitarianism
3) The disadvantages of utilitarianism
4) How utilitarianism relates to business
Utilitarianism is concerned with providing the greatest good to the greatest number. In this context Utilitarianism states that good is measured in terms of happiness. Utilitarians are concerned with looking at the consequences of actions rather than the actual act itself. It states that you should not worry about the act at all so long as the end result is happiness for the most amount of people then that action is good. You must maximise the benefit and minimise the costs.
In terms of business the “Socially” responsible course for a business to take is the one that will produce the greatest net benefits socially or impose the lowest net costs. Jeremy Bentham (1748 – 1832) one of the most famous Utilitarianists and considered by many to be the founder of Utilitarianism believed you could determine which action was “good” by comparing the beneficial and harmful consequences of each.
The right course of action from an ethical point of view would be to choose the policy that would produce the greatest amount of Utility -that is the greatest amount of good in terms of happiness. Velasquez summarised the utilitarian principle holds that ‘An action is right from an ethical point of view if and only if the sum total of utilities produced by that act is greater than the sum total of utilities produced by any other act the person could have performed in its place.'(Velasquez, 2001). Jeremy Bentham said ‘the greatest happiness of the greatest number is the foundation of morals and legislation.’ (Bentham, 1781-5).
In other words he is saying that any action you take is the good and right action so longs as no other action with result in a consequence with a larger amount of happiness.
Utilitarianism believes that you can measure amounts of pleasure and pain. It believes you can therefore measure and add the quantities of benefits produced by an action and take away the measured quantities of harm the action will have, and thereby determine which action produces the greatest total benefits or the lowest total costs. Put simply its saying that amounts of pleasure and pain can be given a numerical value and added or subtracted to get a final result. The right action is not the one that produces the most Utility for the person performing the action, but the one that produces the most Utility for all persons affected by the action (including the person performing the action). Problems with this are how happiness and utility are measured. If a mass murderer is put to death for a crime, is it right because the most people get utility from the punishment?
Utilitarians believe that as well as looking at the immediate consequences of a action you must also try to look at all foreseeable future cost and benefits and any indirect effects. Therefore Utilitarians when deciding what is the right action they must do 3 things: –
1.Determine what alternative actions or policies are available to them at the time
2.For each alternative action estimate the direct and indirect benefits and costs that the action would produce for each and every person affected by the action for the foreseeable future.
3.The alternative that produces the greatest sum total of Utility must be chosen as the ethically appropriate course of action.
Although this theory was developed in the 19th Century it is still used today a good example is the general election where a government is voted in because they will make the majority of people happy.
Problems of Utilitarianism
The major difficulty with utilitarianism, for many critics, is that it is unable to deal with two kinds of moral issues those relating to rights and those relating to justice. That is the utilitarian principle implies that certain actions are morally right when they violate a persons right. An example of this argument in the context of business is Fords’ Pinto design. Had they decided to change the design adding eleven dollars to the cost of purchasing one, then they would, in effect have forced all the buyers to share in paying the one hundred and thirty seven million dollar cost of the re-design. All the buyers would pay an equal share of the total costs. As the design was not changed it meant that Ford managers were in effect forcing the one hundred and eighty estimated people who would die as a result of its design to absorb all the costs.
It can be seen to be more just to have the costs of the re-design distributed between all the buyers in a eleven dollar mark-up in price than burdened on the one hundred and eighty people likely to be killed. Using utilitarian theory then the managers of Ford were right in their decision as the majority benefited from the car being bought for less that is it brought the greatest happiness to the most people. Ford calculated that they would save almost eighty eight million if they didn’t modify the car. The problem that Ford didn’t take into account when working out the costs and benefits was the negative publicity they would get because of the fault, which irreparably damaged the company. (Velasquez 2001)
The Pinto carried an extra risk to life as a result of the fuel tank remaining where it was. However the buyers of the Pinto were not aware of this extra risk, as they were never told. Did Ford violate the basic right of customers to freely choose for themselves whether or not to accept a riskier car in return for a lower price? This case shows clearly that utilitarianism seems to ignore certain important aspects of ethics. Considerations of justice and rights seem to be ignored by an analysis that looks only at costs and benefits of decisions. (Velasquez 2001)
Objections frequently brought against utilitarianism are that no one has the time to calculate all the consequences of an action before acting. Another objection is that we cannot know the full results of any action and neither can we accurately weigh the different kinds of pleasure and pain that result, how can we measure happiness? The calculation is theoretical and not practical, it is an estimation of likely events and not necessarily accurate.
A third objection concerns the interpretation to be given to the utilitarian principle itself. The principle claims that an action is right if it tends to produce the greatest good for the greatest number of persons affected by it. This cannot always be the case if a mass murderer is put to death, it is ethically right from the utilitarian point of view, but it can also be argued that taking a human life is morally wrong. We do not live in an eye for an eye society though utilitarianism would lead us to believe this is the correct action, as most people would derive most satisfaction or happiness.
A utilitarian is someone who accepts the principle of utility, and is therefore concerned with maximising the utility of the universe. (http://www.utilitarian.org/utility.html) This is generally the opposite of business owners, who are interested in profit maximising and furthering their own interests. But they can act in a utilitarian way while pursuing this. Business problems can however be looked at in the utilitarian way and the most cost effective method taken, such as the Ford Pinto.
Business managers adopting an utilitarian view in ethical matters will generally act within the law, as the penalties of being detected would not be in the businesses best interests. However exceptions to this occur and from the utilitarian view if the penalty is offset by the benefits of breaking the law, then a business will break the law. An example of this is Sunday trading in the UK, some firms deliberately traded on a Sunday despite it being illegal. They did this because their financial returns exceeded the level of fines and legal costs they might of incurred. (Marshall, 1993).
To conclude in one sense, utilitarianism can be seen as a good theory with good intentions as it provides the greatest amount of happiness to the greatest number. However when taken in a literal sense it is impractical as one persons happiness cannot over-ride another persons pain. Many believe that utilitarianism is outdated and has many short-comings, leading back hundreds of years when the minority ruled utilitarian principles were more relevant as the poor had no say in the running of their lives all the decisions were made in favour of the wealthy minority which was unfair. The majority lost out and the theory of utilitarianism would have made their lives better as they were suffering at the hands of the minority.
This is similar to a businesses situation in that generally businesses are trying to maximise profit for shareholders not for the general public. However it is in the businesses interest to be viewed as socially responsible and thus causing as little damage to the environment or community as a whole.
Businesses are charged a pollution tax for the amount of chemicals they put into the environment. From a utilitarian point of view the businesses cost of reducing emissions is far higher than that of the tax. This is why businesses don’t reduce emissions; however as is one of the problems of measuring utility, businesses don’t take into account the damage done to the atmosphere.
The tax imposed is not enough to rectify the damage to the environment; this creates a dilemma, as the greatest happiness for the greatest number of people in the future would be for the business not to damage the environment. But for the shareholders in financial terms the utilitarian approach would be the cost to the business. Reducing emissions would increase the cost of the good to society now, which is greater than damage to the environment, which is taxed anyway, for future generations.
Businesses therefore can use utilitarian principles to help with decision-making, but must be aware of moral issues. The idea of Reebok using child labour is defensible from a utilitarian view; they give jobs to people who need them. They pay them a pittance but that is all they need to pay them, despite it being viewed as morally wrong in the UK, it gives greater happiness to the desperate workers.