Recently I heard a colleague tell someone: “Everyone—except the naïve idealists—knows that one cannot be 100% moral in business; success in business requires compromising moral principles from time to time.” In other words, he was arguing that in theory it is good to be moral, but it’s not always practical.
This is a disheartening view for someone teaching at a business school, but it is common also among businesspeople—and it is wrong. Why? To answer, first we need to define “moral” and “practical.” “Moral” means consistent with moral principles or morality. To act morally, a person must follow moral principles. According to the Greek philosophers, morality is a guide to a good life; it tells us how to do the right thing to achieve our values and goals. “Practical” means effective or successful in achieving goals. Practical action gets things done. In business, practical action maximizes long-term profits.
There is no conflict between the moral and the practical. Morality is a guide to a good life—it is a guide to achieving practical goals. But why do we need such a guide in the first place? Why not just focus on getting things done and maximizing profits? We need a guide for achieving a good life because we do not know automatically what goals are good for us and how to achieve them. Unlike animals that automatically pursue goals that are good for them (within the limits of their knowledge) such as food and mates, we have to first learn what are good, practical goals that enhance our lives and then acquire knowledge about reaching them.
A cat sees a mouse, catches and eats it—it does not need a guideline for determining whether hunting mice is good or how to go about it; it acts instinctively. But humans cannot safely act on impulse: we need to acquire knowledge of proper goals and means and then apply it. We hold the knowledge we acquire in any field in the form of principles. Principles are generalizations that we induce from observation; they serve as a guideline to action. For example, principles of agriculture, engineering, and nutrition tell us how to achieve goals: better crop yields, sound buildings and bridges, and good health—none of which can be achieved by acting on impulse.
Principles of morality are fundamental. According to Ayn Rand, morality is “a code of values to guide man’s choices and actions—those choices and actions that determine the purpose and course of his life.” Consider the principle of honesty: whether you choose to follow it or select a career as a con artist, will determine the purpose and course of your life. Similarly, if you follow the principle of self-interest, the purpose and course of your life will differ dramatically from those who follow the principle of self-sacrifice. If we want to achieve a good life, we need to identify and choose the moral principles that support it.
Why do many people think that the moral and the practical conflict? The confusion stems from the prevailing view of morality: altruism. Most are not aware of the morality of self-interest. Instead, they believe that to be moral, one must put others’ interests ahead of their own. Yet, they realize they must be practical and achieve at least some of their values, such and food and shelter, to survive. If you practice altruism on principle, you will have to give up all your values—which is impractical, if you want to live. Naturally, the goal of business—profit maximization—is incompatible with altruism.
The impossibility of following altruism in business (and in life in general) leads many to accept the false alternative of pragmatism: rejecting all principles and doing whatever they feel is practical to “get things done.” The problem with this approach is that it prevents us from achieving long-term profitability and other goals. As fallible beings without automatic knowledge, we need the guidance of moral principles. Compromising them for so-called “practical” ends will not lead to achievement of values but to their loss, as those compromising principles such as honesty by deceiving investors or cutting corners in product quality will eventually find out.
It’s the pragmatists—those who reject principled morality—who are naïve; they will fail to achieve values in the long term. Those who understand that morality—proper, pro-human morality of rational self-interest—is practical will achieve success. The moral code of rational egoism is the guide to a good life—including success in business.