This is a commentary on: Munger, Michael C. and Russell, Daniel C. 2018. “Can Profit Seekers be Virtuous.” In The Routledge Companion to Business Ethics, eds. E. Heath, B. Kaldis, and A. Marcoux. New York, NY: Routledge. 113–130.

Written by Santiago Mejia, Assistant Professor of Law and Ethics at Fordham University, New York.

Abstract

Michael Munger and Dan Russell lay out three conditions that are supposed to guarantee that a profit-seeker, even one who seeks extraordinary profits, can be virtuous. While their account provides a valuable starting point, it would be strengthened by recognizing that a profit-seeker can only be virtuous if she 1) uses her profits virtuously, 2) is not merely motivated by her own narrow self-interest, 3) displays virtues such as justice and beneficence in the exchanges that lead to her profits, and 4) displays virtue in other realms of her life.

“If we make money the object of man-training, we shall develop money-makers but not necessarily men…” (W.E.B Du Bois, 1903)

Pacta sunt servanda – contracts must be kept. This legal doctrine is only acceptable from an ethical perspective if certain conditions in addition to the consent of the contracting parties have been met. These conditions include the requirement that the parties to the contract understand its content; that none of the parties dominates the other; that the background conditions that regulate how difficult it will be for either party to satisfy the terms of the contract should be sufficiently stable and predictable; and that the parties to the contract are identical to the persons bound by it.

The sovereign debt contract common today violate these requirements. Consider Greek debt: The officials in the Greek government and the members of the Greek parliament do not just enter a contract on their own behalf when they decide to issue government bonds, but they force tax obligations on Greek citizens and even their progeny to cover the servicing, and perhaps repayment of the debt. How onerous this tax burden is depends on the economic development of Greece in the next couple of decades, which is neither predictable nor likely to be stable.

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Ethics in financial services is suddenly a major concern for the most prominent US bank supervisor.

In a speech at the Bank of England on 20 January 2015, Thomas C Baxter, Executive Vice President and General Counsel of the New York Federal Reserve Bank, proclaimed, “At the New York Fed, we have made ethical culture a priority for financial services.”

As tangible evidence of this priority, the New York Fed held a workshop on 21 October 2014, on ‘Reforming Culture and Behavior in the Financial Services Industry,’ in an effort to understand the causes of ethical failures and to develop strategies for improving the ethical cultures of large financial institutions.

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