The Power of Moral Arguments
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Does self-interest explain behavior? Well, no matter how it seems, people do integrate social norms into their interest calculations: Social contexts significantly influence what individuals consider rational. Although people might possess varying degrees of moral character traits, it’s the specific social environment that determines which traits are expressed. Moral behavior, such as donating blood, stems from structural societal incentives rather than individual character traits. These structures lead to significant differences between communities, cities, nations, corporations, and industries. Likewise, company leaders who ignore moral arguments from their social environment are not necessarily bad individuals; they simply can’t align the interests they need to fulfill with those moral arguments. Leaders who find economically rational and morally acceptable solutions are in favorable positions.
Economically optimal strategies cannot always be fully calculated under complex conditions. Thus, economic decisions require an entrepreneurial vision. This vision is morally influenced. Also, discussions reveal different types of validity claims, including normative ones, but how do actors get entangled in their own normative claims, and how do they act in accordance with moral arguments?
When management makes moral promises which they then can’t contradict, this constrains their behavior morally—possibly even willingly. Leaders can get trapped by opponents' arguments, leading to actions they wouldn't typically take. Moral arguments can influence a company’s economic behavior through rhetorical coercion and the withdrawal of legitimacy – which diminishes a company’s survival chances. Companies that legitimize themselves through moral arguments must adhere to these to maintain credibility under scrutiny from employees and the public. Corporate Social Responsibility initiatives often don’t calculate the balance between profit interests and normative demands. Legitimization processes entangle actors in moral arguments, which influence behavior even if such arguments were initially mere lip service. Decisions are often retrospectively presented as economically rational, though alternative, equally rational options emerged during discussions but were later dismissed. Companies define something as in their interest based on moral suggestions, indicating when CSR is expected, such as:
- Moral arguments from an embedded network convince management it’s not excessively contrary to their interests.
- Ignoring moral arguments reduces social capital and employee productivity more than the measures would save.
- Management believes diminished public legitimacy outweighs the benefits of safety measures.
Moral arguments can also withdraw social legitimacy and influence economic behavior. This approach also demonstrates that companies can act against perceived legitimacy and still profit.
Adam Smith wrote that individual self-interest leads to increased overall wealth. But scandals like Enron and the 2008 financial crisis, along with ethnographic studies, suggest that we live in a business civilization where the old notion of stewardship is lost. This happens when we hand too many tasks to the market. While self-interest can be seen as natural, moral behavior can also be explained as genetically hard-wired. Ignoring moral arguments is neither empirically common nor leads to efficient action. Even egoistic, rational self-interest requires social licensing, especially when power is not entirely one-sided. Capitalist behavior, while socially legitimate, has boundaries defined through moral discourses and collective mobilizations. Some companies focus on maintaining a normal profit to meet social and moral expectations, while others prioritize profit maximization over all normative requirements; they view profit generation as their social responsibility. Moral criticism arises because a company acts capitalistically. Subsistence-oriented interests can defend themselves through moral arguments, while short-term profit-maximizing interests are constrained by these arguments, as capitalist societies do not easily grant the right to maximize interests without considering others’ norms.
People can be motivated by either interests or norms depending on the situation. In a free trade zone, society allows amorality, hoping it leads to morally desirable outcomes. Economic actions occur within this metaphorical zone, regulated by the norm: "Here, you need not follow norms; pursue your interests because society hopes it benefits the collective." Capitalism has expanded this zone, but regularly hits a point where the pursuit of individual interests strains moral norms, leading to calls for limitations. This was evident in the reaction to the 2008 financial crisis. People eventually reject the idea that individual interest always promotes collective welfare, as everyday notions of social justice overshadow capitalist and neoliberal ideologies.
Economic actions are morally evaluated. Institutional conditions play a crucial role in how these questions are addressed. In Germany, employee co-determination provides rights that compel actors to legitimize their actions. Owners typically seek to increase their wealth, thereby enhancing societal wealth. Society licenses private property with the expectation that owners will adhere to moral norms. This creates ongoing discourse about what is considered legitimate, with moral arguments influencing decision-makers, employees, and the public. Thus, private property is licensed only if it operates within moral boundaries.
So, self-interested pursuit is foundational to capitalism, yet entities that strictly follow this pursuit are morally condemned. Society's acceptance of private property is conditioned by moral norms, which can be temporarily relaxed through neoliberal arguments but remain fundamentally regulated by societal expectations. The dominance of traditional or capitalist economic ethics and the orientation towards collective or individual interests are not determined solely by the economic system but vary with the specific social context of each business and its management. This variable nature means that the pursuit of self-interest in economic contexts is always in conflict with societal norms and moral arguments.
Source:
Schröder, M. (2011), Die Macht moralischer Argumente: Produktionsverlagerungen zwischen wirtschaftlichen Interessen und gesellschaftlicher Verantwortung, Bürgergesellschaft und Demokratie Nr. 35, Wiesbaden: VS Verlag.