Business Ethics – Capitalism fails without Morals

KGB minders   KGB Minders

In 1986 we met a Russian Logician at an international conference on Argumentation in Amsterdam. She had two KGB minders with her at all times – to monitor and control what she said and to whom, and to make sure she returned to Russia. She was a brain they did not want to lose, nor did they want her to be corrupted by the West. Logic and maths were thought to be independent of ethics and values and ideology – more ‘safe’ for the USSR than philosophy, but there were also philosophers at this conference and I was one. I was speaking about reasoning and the importance of reasoning (argumentation) and about my concept of reasoning being allied to ‘reasonableness’. And ‘reasonableness’  is an ethical/ moral concept. The KGB minders were extremely nervous of my mentioning ethics or morality – they did not like the idea that logic could be related in any way to morality, and I began to wonder why?  What was so dangerous to USSR Communism in talking about Ethics?

Capitalism produces more wealth than Communism

Since the fall of communism in  1989 it is hard for younger folk to imagine and older folk to remember the fear that millions lived under. As some would see it, it was not ideology or ethics or values that finished communism, but economics. It simply appeared that Communism did not produce wealth as effectively as Capitalism.  The Russians, as the Chinese now, wanted better standards of living.

Black Markets are Parasitic

One of my arguments in 1985 that still holds today is:  many communists  and indeed many people misunderstand the nature of Capitalism. In 1985 the Russian ‘businessman’ was a criminal operating in a vicious black market. But black markets are parasitic. In 1985 in Russia the black market needed the communist state and economy to feed off – it could not exist on its own. Many folk mistook ‘the business’ operated in the black market for Capitalism. 

Capitalism is predicated on Moral Values

But the most fundamental features of capitalism – without which THERE IS NO CAPITALISM are  these moral values:

Trust and Honesty

We have contracts to ‘replace’ the need for trust and laws to try to force honesty, but legislation cannot actually  ensure that promises will be kept. Only morals ensure that promised are kept. And morals are held by individual people.

Credit is a Promise – and a Promise is an Ethical / Moral Undertaking

Credit, investment, earning interest, earning returns etc  (even simply the act of putting your money in a bank) are all totally reliant on the moral undertaking of a promise. Capitalism and capitalist business only works, and therefore only produces wealth when the individual people involved in all the transactions are moral and trustworthy. This is probably true for all economic systems, but deeply true for capitalism.

The Foundation of Capitalism is Morality

And it is not just in its deep foundation that Capitalism is a moral undertaking. The arguments for being Ethical in Business go much further .

More of these thoughts later.


2 responses to “Business Ethics – Capitalism fails without Morals”

  1. It is unfortunate that the greed motive, previously thought to improve products and services and increase gain, actually encourages unethical behavior, such as corner-cutting and misadvertising, which increases gain and rewards immoral behavior. Even more unfortunate that this lesson from capitalism then affects hunan interaction at every level.


  2. This suggests that capitalism has failed us all given the lack of ethics and morals present in the current capitalist system. If communism cannot deliver and capitalism cannot deliver, what is the alternative?


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