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Introduction

Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws.

—Plato

THE FINANCIAL CALAMITIES of recent years offer strong evidence that there is such a thing as immorality in the market economy and that it is very destructive. In this book I aim to present a new approach to business ethics, based on objective morality, which exposes and revivifies the implicit and broad cultural understandings of the meaning of moral excellence. The conception of virtuosity that I present is, in a sense, quite idealistic. However, business needs to be, and needs to be seen as, a noble activity. Business ethics can play an important role in providing a broader, deeper, and more systematic account of business than many current discussions allow. It is in light of the imperative of nobility in business that the notion of virtuosity provides, or ought to provide, both a source of vision and a standard of excellence for market participants, whether they are individuals or organizations operating locally or globally.

By market participants I mean to include more than just for-profit enterprises and the people running them. Many not-for-profit enterprises, whether they are houses of worship, public arts organizations, housing cooperatives, or charitable foundations, are truly “businesses” in the wider sense. They must operate according to the same standards of diligence and discipline as for-profit businesses in order to attain their objectives. Conversely, many for-profit enterprises often benefit financially by operating as if they were nonprofit concerns, that is, by acting not purely for the pursuit of profit but rather with the expectation of profit coming about as an off shoot of attaining excellence and contributing to social betterment.

Cultivating cultures of virtuosity within our economic communities, and honoring the often unspoken timeless cultural understandings about the nature and importance of goodness, truth, and even beauty, provides the moral glue for such communities; this is how, I believe, many of the problems facing business ethics can be fruitfully addressed. Further, I think that confronting such challenges requires the engagement of a deeper and universal “invisible law” superseding not only written legal codes and the visible legal orders that enforce them, but also superseding parochial ethical standards established by organizations that are normally assumed to specify the obligations of business.

Consider how odd it would be to speak of the accomplishments of a virtuoso musician apart from any regard for her mastery of any particular music, that is, in isolation from any structure or form imposed by the “rules” of composition. Such rules, of course, are behind any great composition and even provide a necessary background for meaningful improvisation. If one were to counter that so-called free-form music arises from a conscious disregard for any compositional format laid down through rules, my response is to agree wholeheartedly; I would say in reply that the vapidity of such music (which typically caters to and sanctifies the spontaneous whims of a performer yet fails to enrich or inspire listeners) is a good example of what is missing in business ethics when we strip moral virtue away from its primordial grounding in norms and the guidance they provide.

Virtuous conduct, in business and elsewhere, does not take place in a vacuum. Particularly in the world of business, which operates in the shadow of law and its many institutions, norms provide an intricate web within which moral actions make their moves. It would be a grave error to suppose that, working as an investment banker, one can simply be admonished to “be courageous” while remaining oblivious to the finely textured normative matrix that rules and principles establish. At the same time, deliberation and judgment with those norms require virtue, along with some grasp of the broader meaning of the moral life beyond technical legal compliance. One does not know whether a compass functions well and points true apart from the pull of the invisible magnetic field. One cannot say whether a person is virtuous apart from the promptings of the invisible moral order.

Accordingly, I term the approach that combines the quest for moral and performative excellence in business culture together with these deeper and broader kinds of philosophical considerations grounded in human nature virtuosity: the invisible law guiding the invisible hand.

The portrait I render in Virtuosity in Business blends conceptual colors extracted from the virtue tradition with intellectual hues drawn from the natural law tradition. The resultant chromatic mixture is intended to afford a nuanced picture of business ethics to be painted, one that is equally attuned to questions of virtue, disposition, authenticity, and character, on the one hand, and matters of moral law, justice, human rights, and sage corporate governance, on the other. Since these seemingly disparate facets of virtue and law are in fact deeply interwoven, a broadened sapiential approach such as the one offered here holds promise to illuminate the kind of discussions of business ethics needed to meet the challenges the postcrisis, globalized economy poses for business today.

Virtuosity in Business seeks to explore ways that our thinking about business and economics can be illuminated with the help of a quartet of bold images:

1 The market participant as virtuoso artist. So conceived, the businessperson's or business firm's competitive performance, like that of a musician, is dictated by creativity, authenticity, self-knowledge, inner discipline, and a relentless pursuit of excellence. Such characteristics cannot be prescribed by rules or regulations, nor can they be effectively instilled simply by threats of sanctions for noncompliance, but instead require an engagement with higher and more noble ideals that spring from our nature as humans in search of fulfillment.

2 Business as an existential human endeavor respective of freedom and authenticity. We cannot hope to understand business unless we understand the human condition, since that is the wellspring from which all relationships of commerce and trade ultimately flow. Whether one is a disciple of, say, J. Paul Sartre, one the one hand, or J. Paul II,1 on the other, one must confront fundamental questions of free choice, reason, and authenticity of character. In today's globalized world, where the corporation often arrogantly asserts its metaphysical stature as a distinctive “person,” seeking to earn (if not downright command) our trust, even while frequently violating it, we ought to have some notion of just what such an extension of trust might mean, what the stakes are, and whether we are prepared to abdicate our own human moral responsibility while ceding authority to corporations in the pursuit of ever greater technological and material conquests, as individuals and as a society.

3 The juxtaposition of metaphorical types of capital alongside the familiar notion of financial capital: cultural capital and reputational capital. Such metaphors help us to see connections between economic value and moral value. The metaphors express the economic significance attached to intangible assets such as character, honor, and virtue, which are preconditions of business success, yet at the same time they have intrinsic worth that, somewhat paradoxically, must be honored in order to trigger that success. The way that our culture fosters (or fails to promote) such intangible assets profoundly influences whether business within our culture flourishes or decays. Conversely, the way business fosters (or fails to promote) these intangible assets will profoundly influence whether our culture will flourish or decay.

4 Adopting a sapiential outlook on business ethics that embraces both virtue and the moral law. As virtue theory is asserting itself in business ethics as a moral tradition as worthy as legalistic approaches, it is important to guard against polarization. So I seek to give voice to the possible harmonization of these traditions.

Virtuosity in Business does not aim to supplant but rather to honor ancient wisdom about the primacy of virtue, seeking at the same time to rekindle our passion for pursuing it and for engaging it in our approach to contemporary economic ethics. While the book acknowledges that significant differences exist between cultures of virtue that arise from different societies separated through historical time and geographical space, it recognizes the moral authority of key transcultural truths, for example, the idea that human beings everywhere are deserving of dignity and basic human rights, and that by their nature all humans seek happiness.

The concept of invisible law that I expound throughout the text follows in the footsteps of Aristotelian philosophers who, like Thomas Aquinas, assert that an objective moral order exists. Although the moral order is not directly visible with our eyes, it can be seen with our mind's eye, by human reason. Moreover, we possess, according to our human nature, the free will either to follow it or to abandon it. Proceeding from the ancient Greek notion of the well-ordered soul, I would argue that, guided by reason, virtue is master over emotivism and noncognitivism (to modify Plato's charioteer allegory) as a reliable guide for ethics.² Skeptics hailing from various camps—nihilism, postmodernism, and ethical relativism, to name a few—will of course demur. In a departure from Aristotle's moral realism, such theorists maintain that although the world may supply us with objective facts to discover, the world does not furnish us with any objective values. Rather, values are the product of our own creation. Consequently, for these skeptics we are not able to extract an “ought” from an “is”; we cannot formulate moral prescriptions concerning what ought to be just by observing states of affairs as they actually are. What that means is that no ready-made, objective basis can be given for why you ought to pursue some given aim over any other—choosing the aspirations of being a solitary drunk in preference to the ambitions of a leader of nations, to use Sartre's example. For such a worldview, reason remains simply an instrument placed in the service of any passion or desire that happens to float your boat. As Hume famously put it, “Reason is, and ought only to be, the slave of the passions and can never pretend to any other office than to serve and obey them.”³

However, if we cannot point to any rational ground for choosing some purposes instead of other purposes, what becomes of the possibility for the human exercise of authentic freedom of choice? We are instead left with an amoral fatalism that explains human behavior, on putatively empirical grounds, in terms of multifarious causal influences like oxytocin deficiencies, DNA, an excess of Twinkies, or anything else that might preordain you to opt for a vocation of, say, entering bars (as a self-absorbed drunkard) on the one hand, or passing bars (as a civic-minded attorney) on the other. Thus, I argue in this book that one can look to either rationally based and freedom-respecting theories (such as the virtuosity model, albeit Kantian and other deontological approaches would fill the bill as well) to drive our understanding of and participation in business ethics, or we can abandon the field to irrationally based subjectivist, relativist, and deterministic approaches. In this sense, as well as many others, philosophical currents that originate within the broader intellectual culture feed directly into our understanding of business and economics, even though traditional economic theory and even some current schools of management claim that their disciplines have an exceedingly narrow scope that effectively quarantines them from moral life.

Some approaches to business ethics—utilitarian, econometric, contractuarian, and compliance-driven legalistic theories tend to deliver a relentlessly narrow and negative message about business and economic life. Owing in part to their origins in the tradition of analytical philosophy, there is seldom any effort to provide a synthetic view of what the world means for us, what characterizes our human nature, and how human beings figure into the commercial realm.

Such theories of business ethics fail to render any satisfactory account of what Aristotle referred to as eudaimonia, which designates an especially deep form of happiness, and the principal exemplar of the common good. Eudaimonia is a state that we will attain only through association with others. Accordingly, there is a need to put culture in the picture, to establish connections between business and the broader culture.

As cultural understandings change, so too do the challenges for business. The expected standards of excellence for business performance today derive from a different set of concerns than have ever existed before. These stepped-up expectations are apt to trigger reputational sanctions and rewards that often attach directly to the moral probity of market participants. Today, reputational penalties and benefits are as important, if not more significant, than legal penalties that were predominant in previous decades. In the aftermath of the recent financial crisis and the rash of corporate scandals leading up to that crisis, broad shifts of moral viewpoints toward business have occurred. In wide-ranging shifts across continents, social investment funds, employees, customers, corporate executives, elements of global civil society such as activists and NGOs, as well as members of the general public have dramatically recalibrated their interpretations of what virtue and excellence means for businesspeople today and, correspondingly, what the underlying moral responsibilities of business enterprises are.

Not so long ago, companies were basically expected to focus on producing goods and services at reasonable prices. In contrast, today we find corporations being held responsible for a host of moral issues encompassing environmental rectitude, human rights, alleviation of poverty through entrepreneurship, and quality of life. In companies throughout the world, sustainability issues, gender issues, diversity issues, and questions of the clash between work and family are all included in the agenda of corporate social responsibility.

Among the challenges that I take on in Virtuosity in Business is crafting a narrative that reaffirms the ancient notion of virtue as something built into human nature together with the confirmation of objective moral precepts that demand respect for human dignity, being just and fair, and advancing the common good. Yet I acknowledge the reality that cultivating virtue in the competitive world of business and wisely applying open-textured precepts is an ongoing process, requiring commitment by reasonable people of good will who are sincerely motivated to seek excellence in themselves and others. I believe that the task of undertaking such commitments is assisted when people are able to live in a culture that keeps faith with time-honored values, fundamental truths, and settled wisdom even while confronting complex situations that severely test fidelity to those philosophical constants and would have perhaps been incomprehensible to ancient philosophers. Virtuosity in Business provides such a portrait.

The concepts that inform Virtuosity in Business are at once simple and complex. The simple idea is that both moral virtue and moral law constitute the basic operating system of business ethics. Without knowing core moral rules and principles (norms) it is not possible to distinguish what matters and what doesn't ethically in a specific business context. However, just knowing what the rules are is insufficient. Just as genuine virtuoso artists are driven by their desire for self-imposed excellence and their inclinations for musicality, authentic virtuoso businesspeople will pursue fineness and possess a disposition to be ethical, to want to do the right thing for its own sake. Our determinations about whether we trust businesspeople and the companies within which they work enough to want to do business with them, and on what terms, are in large part based on our judgments about their character and sincerity, their display of honesty, and many other virtues upon which we depend. These very simple ideas, however, require elaboration and justification. Hence, Virtuosity in Business is framed within a more complex rationale and set of concepts. The book's architectonic is constructed as follows.

Chapter 1 (“Virtue and Character”) begins with a conception of the human person as a rational being, and this discussion forms a point of departure for examining how such a being attains virtue and character Anchoring the analysis in ancient thought, including ideas from Confucius, Lao Tse, Plato, and Aristotle, the chapter extends insights about moral virtue and the character it produces to contemporary concerns raised by the recent economic crisis, such as executive compensation and the choice of a meaningful career path.

Chapter 2 (“Authenticity and Freedom”) expands and deepens this discussion with a conception of persons as rational beings endowed with existential freedom. This chapter shows how notions of authenticity and freedom derived from Sartrean existentialism can provide an illuminating and useful point of view on the nature of the moral character of businesspeople in the contemporary world. In spite of all that may undermine or seduce us, in spite of inevitable ambiguity, we are required to take responsibility for our character and actions and to make decisions in view of our own projects and that of others, and other broad concerns. However, in doing this, we often find traditional sources of moral guidance unhelpful or incomplete. Nevertheless, it would be a mistake to suppose that there are never any good reasons for making a big existential choice. For instance, sometimes deciding to be this rather than that sort of a person is morally wrong. The chapter shows how a Sartrean perspective offers some important insights about the way our roles, and this includes the roles we occupy in business organizations, can be implicated in bad faith.

Chapter 3 (“The Art of Business”) augments the analysis with a conception of rational and free persons as creative artisans. However, rather than painting an idealistic, Quixote-like portrait, this chapter seeks to come to terms with the practical implications of taking virtue seriously in the hard-nosed world of competitive business, an environment that often threatens to “crowd out” the virtues. Just how far can the metaphor of artistic excellence take us in a field where the relentless pursuit of profits seems to be the order of the day? Some commentators, particularly Kantians, are perplexed by the assertion that a businessperson or firm can choose something both for its own sake and for the sake of something else. Can a businessperson or company authentically choose to conduct an honest transaction for its own sake—because it's the right thing to do—and also for the sake of boosting its reputation with clients, thus enhancing its profitability both in the near-and long term? I argue that choosing a virtuous action for its own sake and for the sake of other ends makes sense at face value, given that the pursuit of those further ends does not undermine the choice of the virtuous act undertaken in the first place. The plausibility of this account is maintained once we place profitability in proper perspective. That is, we must recognize that for the virtuous businessperson or firm, profitability, albeit an important goal, is not the narrow sine qua non of all business activity that some extremists tout it to be. Instead, profitability is a reasonably predictable result flowing from the pursuit of virtuosity—excellence in providing a valuable good or service for the common good.

Chapter 4 (“Trust, Personhood, and the Soul of an Enterprise”) augments the conception of moral personhood with that of the business enterprise as a moral actor. This chapter shows how, due to legal and regulatory issues of corporate responsibility, and as an outgrowth of motivational and marketing tools, our traditional analysis of conduct and character has been shifting from the individual level to the corporate one. The chapter explores questions raised by that trend: If a corporation is capable of assuming a real personality, assembled by artful PR specialists, then is the signal being sent that the people working in the firm do not have to act like real or ethical people? What happens if people begin to act in the image of the invented corporate person to diffuse and limit responsibility?

These discussions set the stage for Chapter 5 (“Discerning a Higher Law”), which examines the challenges of interpreting ethical pronouncements for business enterprises and the people in them as conceptually derivative from an objective moral law. Arguments from a moral realist frame of reference are put forward for the idea of a higher moral law from which obligations to honor human rights and other moral precepts specified in corporate and international instruments can be drawn. Replies are given to the views of moral skeptics, relativists, and nihilists who oppose the robust brand of moral realism that I offer.

Chapter 6 (“Polycentered Phronsis”) is orchestrated with the help of metaphors from music theory, with the aim of showing how many ethical issues facing the leaders of multinational corporations are polycentric in nature. That is, they involve a number of distinct centers, each of which defines rights and obligations of a multiplicity of affected parties, and resolving matters around one center typically creates unpredictable repercussions around one or more of the other centers. Polycentricity is a normative phenomenon especially unsuited for adjudication, often requiring recourse to alternative processes of contract (or reciprocal adjustment) and managerial direction. The chapter explores how such concerns about the limits of adjudication (and its various moral counterparts) apply to virtuosic decision making connected to human rights obligations of multinational companies. The focus is on ethical scenarios, such as controlling child labor in less developed countries such as Bangladesh, India, and Pakistan, setting wages in developing countries like Honduras, and conducting business transactions with rights-violating regimes, such as the government of Sudan.

Chapter 7 (“Moral-Cultural Undertones of the Financial Crisis”) begins with a brief account of the emergence of the financial crisis, drawing on the received views of leading economists, businesspersons, and legal experts. It offers a critical exegesis of the three chief conceptual models that have framed these received reactions to the calamity: the paradigms of economics, business management, and legal regulation. Second, it argues that in light of the limitations of these three mental models, an alternative moral mental model is of particular importance. Third, it applies the book's moral framework, based on virtue, dignity, and the common good, to the financial crisis, distinguishing that framework from mainstream “business ethics” models. Current business ethics models are deficient for dealing with the financial crisis for these reasons. First, they tend to be based on the idea that if it's not illegal, it's acceptable. Second, they fail to seriously engage moral right and wrong because of their immersion in moral relativism. Third, they are dominated by window dressing, political-correctness, and antibusiness agendas. The chapter continues by identifying the existence of a moral-cultural malaise lurking beneath the financial crisis. This general condition is characterized by a postmodern moral relativism and rejection of traditional values (both economic and moral), a rise in speculative culture, and egoistic individualism. Moral reform focused on virtue, dignity, and the common good, rather than legal regulation, is the appropriate response to these factors. The chapter also introduces the concept of market ecology and relates it to the idea of the common good. I highlight a number of key moral malfeasances connected to the financial crisis to illustrate the harm such practices inflict on the ecology of the market so conceived. The chapter concludes that instead of looking only to the adoption of new legal regulations, visionary corporate governance ought to take greater cognizance of cultivating virtuous, dignity-respecting behavior directed at the common good, which will create favorable background moral conditions for sustaining the ecology of the market.

In Chapter 8 (“Symphony of Soft Law”), I argue that corporate governance must focus on the role of soft law in today's global environment. Soft law is a novel mechanism for constraining corporate behavior. In reconciling financial and social imperatives, firms must consider its impact on reputation capital. I analyze the emergence of the corporate social responsibility (CSR) paradigm and its connection to global corporate governance. By examining its history, I first illustrate how the CSR movement has rendered firms' reputations accountable to the movement's demands, and then I trace the conceptual expansion of CSR to the related notions of “corporate social responsiveness” and “corporate social performance.” I examine alternative conceptual models of global corporate governance including the “monophonic” model, the “polyphonic” model, the “integrative social contracts” model, and finally, the “reputational capital” model. I also examine specific types of global civil regulations in detail, and I discuss the bases for why global corporations accept the emerging soft-law regime. After highlighting the chief characteristics of civil regulations in light of the underlying regulatory aim to bind firms and markets to worldwide norms, I discuss the dominant forms of civil regulation within the triad of voluntary self-regulation, interfirm and cross-industry initiatives, and coregulation and multistakeholder partnerships. I then build on these discussions to analyze the role that reputation-accountability mechanisms play in securing firms' compliance with global civil regulations. After distinguishing reputation accountability from legal accountability, I explain the operational components of reputation accountability, the process by which key constituents of transnational firms enforce the “rule of reputation,” and the strategic and operational implications firms face as a result of such enforcement. Finally, I take on arguments in opposition to the emerging paradigm of global civil regulation.

There are serious questions concerning what endures morally. Assuming that there is merit to the philosophical accounts of human nature about rationality, freedom, creativity, and sociability—and therefore about virtuosity as well—we are faced with significant challenges going forward. What sort of position are we in to evaluate the possible future cultures and political and economic arrangements into which we are evolving without knowing what it will be like to live in them? It is hard enough to figure out what tradition teaches us for today. It is far harder to figure out what valuable lessons tradition has for tomorrow. So Chapter 9 (“Theme and Variations”) and the Conclusion wrap up the book's performance with a discussion of economic culture and the transgressive influence it has on market ecology, in an attempt to take these interpretive challenges into account.

Thus, I offer Virtuosity in Business as a means to highlight the significance of emerging expectations for industries, corporations, and other market participants, even as it qualifies such expectations. While predicated on moral objectivity, Virtuosity in Business recognizes variety in individual and cultural values and preferences. The challenge is to find the right balance between a conception of virtue as universal and global, while recognizing the relevance of local cultural moral understandings and practices. Once again, the music analogy is helpful. Although music is often described as a “universal language,” which we find “spoken” in all cultures, significant differences exist among the types of music that cultures create and the variant modes through which they perform it.

Many of the same qualities that sanctify the performance of a virtuoso musician on the stage turn out to sanctify the ostensibly much different kind of performance of a virtuoso businessperson or business enterprise. Remaining mindful of the many aspects in which musical and business performances remain (appropriately) dissimilar, however, should not deter us from reflecting on some of the striking points of similarity. One of the chief reasons for undertaking this kind of comparison is that it helps us to envision businesses and businesspeople in a new light, something sorely needed in these times of profound disillusionment with economic institutions and actors. It would be a stretch to suggest that the more mundane aspects of doing business, say, running a convenience store, are tantamount to delivering an aria at the Met. To think this way, however, is to miss the point, and those too quick to dismiss the value of positing a virtuoso metaphor for economic life, perhaps deeming business to be utterly irredeemable, pass up an opportunity to gain deeper insight into what business might be if we changed our thinking about it and began to see it as a human endeavor ordained to the common good, instead of as the ruthless profit-maximizing war of all against all that business is often taken to be.

Putting the doubts of detractors aside for a moment, what points of comparison can we make between the art of music and the art of business? In both instances we can discern a pursuit of excellence in the face of fierce competition, the need for discipline, the self-governing spirit that eludes capture by any excessively legalistic regime of rules, the heavy dependence on reputation; qualities such as these are characteristic of successful musical flourishing (indeed, enduring artistic achievement in general), and they are intricately woven throughout the business world as well. These are the components of what I call virtuosity, which provides the warp and woof of economic life. Turning our attention to these human-centered features promises to provide a fresh dose of inspiration that, given the current unease about business within contemporary culture, we cannot afford to miss. It is my wish that not only business ethicists but market participants of all kinds, from rank-and-file employees to managers and executives, who are working within any firm, industry, or national economy will benefit from the reflections provided here.

This, then, is the “invisible law” that guides the “invisible hand” of business in a free-market economy.