When I used to discuss selfishness of business in my ethics courses at a business school, students often squirmed and asked whether it was really necessary to use such a “negative” term. While they acknowledged that business must make profits to exist, many were leery of uncompromising profit maximization. They considered it selfish – benefiting mostly the shareholders – and therefore unethical. They thought that maximizing profits, even in competitive markets, is somehow unfair and necessarily involves exploiting others: employees, customers, suppliers – or anyone whose earnings were less than the shareholders’ returns on their investment. Therefore, these students thought it ethical to compromise profits for “fairer” outcomes to everyone.
Like my students then, many business leaders today want to atone for the “selfishness” of their business by sacrificing profits for whichever causes the critics of business demand. Environmental activists, social justice advocates, NGOs (such as the United Nations and the World Economic Forum), and governments scold business for putting profits ahead of people and the planet. They tell companies to prioritize ESG (environmental, social, and governance) goals and DEI (diversity, equity, and inclusion) programs so as to do their part in fighting climate change and advancing social justice. Producing and trading goods and services we need is not enough, they argue; companies must also fulfill their corporate social responsibility.
Why were students then and businesspeople today so uncomfortable with the idea of selfishness that they want to atone for it by compromising profits? They have absorbed, undigested, an invalid concept of selfishness that packages together two incompatible items and is therefore useless in guiding thinking and action.
On the one hand, this package-deal concept includes genuine self-interest that we all must pursue if we are to survive and flourish. Beyond meeting the physical survival needs for food, clothing and shelter, we must gain numerous other values that make flourishing and enjoyment of life possible: education, productive work, energy to power our lives, art, human relationships. For business to survive and flourish, it must make profits.
On the other hand, package-deal selfishness includes ruthless exploitation of others, such as companies defrauding creditors and customers or physically coercing employees to work in unsafe conditions for less than market wages. Those who have concluded that profit maximization is immoral assume it is based on exploitation of others through the initiation of physical force (including fraud).
Combining genuine self-interest with exploitation taints the former with the latter and makes people view selfishness as immoral.
But exploiting others by initiating physical force is not selfish: it is in no-one’s self-interest. Companies cannot maximize long-term profitability by such means, as they will run out of victims when their customers, employees, creditors and other suppliers flee and sue after being defrauded or coerced. It may be possible to continue a scam for a while, as Bernie Madoff and other developers of pyramid investment schemes have done, but repeated frauds and other exploitation are difficult to sustain. The law catches up with the perpetrators and ill reputation spreads rapidly.
Package-deal selfishness presents businesspeople a false alternative: either you maximize profits by sacrificing others through coercion or fraud, or you sacrifice your self-interest – profits – for the sake of others (anyone claiming a need that business must fulfill). Such a false alternative arises from the moral code that dominates today’s culture: altruism. This code holds self-sacrifice as the moral ideal and condemns selfishness – self-interest – as evil. Accordingly, it is the duty of business and its leaders to forsake the selfish pursuit of profits (the owners’ interest) and to prioritize “serving society:” such as the needs of others for social justice and climate action.
Many business leaders see the alternative of self-sacrifice as untenable, but instead of denouncing it, they choose to appease their critics, considering it a practical way to protect their business. They claim to agree with their critics and pretend to act accordingly – while continuing to operate as usual (channel Larry Fink of Blackrock and the many corporate leaders who claim their companies’ electricity comes solely from renewable energy), until eventually found out. Yet, others are persuaded by altruism and feel guilty of being selfish.
Besides unsustainable appeasement, there is an ethical answer to the false alternative between ruthless exploitation of others and destructive self-sacrifice: genuine selfishness, or egoism. Its method of dealing with others is not appeasement nor any kind of sacrifice, but trade.
Selfishness guides business to trade value for value with all parties – wages for employees’ productivity, products and services for customers’ payment, payment for suppliers’ products, and so on – by mutual consent, for mutual benefit, with no deception or fraud. This is the only way business can maximize long-term profits – and the reason it should be selfish.
