Many businesspeople likely disagree with this headline, particularly when it comes to moral principles. Some have told me that they cannot afford to act on principle because business is ruthless: their competitors won’t follow principles, so they cannot do so either. They must be “practical” and do whatever it takes to make a profit.
One of the reasons businesspeople dismiss moral principles is that they see them as burdensome duties to benefit others by sacrificing one’s own interests. This view was reflected in one CEO’s reaction my book title, How to Be Profitable and Moral: “But I don’t want to be moral!” The view that morality demands self-sacrificial duties stems from the dominant moral code of altruism that indeed prescribes self-sacrifice for others.
Altruism is the dominant moral code because it is so widely taught from the Sunday school on that many mistake it as the only moral code.
Many businesspeople conclude, correctly, that altruism is an untenable guideline because business, by definition, must pursue self-interest – production and trade for profit – of its owners. Not being aware of a better alternative, they reject all moral principles as useless.
Rejecting principles, they adopt moral pragmatism as the only alternative. It gives them a permission to pursue “practicality:” doing whatever seems to work, in any given moment. Often their excuse is the business-is-ruthless line: “My competitors are doing it, so I must, too, to survive.”
But this is a mistake because doing whatever one feels like doesn’t offer any guidance for achieving long-term profitability. Instead of principles, it relies on emotions, such as “Do I feel I can get away with this (misleading investors or customers, cutting corners in product quality, mistreating employees, or anything else)?” Sam Bankman-Fried of FTX cryptocurrency exchange who concocted a massive fraud a couple of years ago, is an extreme example.
Instead of moral pragmatism, businesspeople need better principles than the self-sacrificial duties of altruism. They need principles that help project the future consequences of actions and choose actions that promote sustainable long-term success (which the altruist principles don’t, and emotions can’t, do). In other words, they need principles that are utterly practical.
Such principles are encompassed in a less-known moral code that offers an alternative to both altruism and moral pragmatism: rational egoism, developed by Ayn Rand. Rand identified seven action principles, or virtues, as the means of achieving long-term rational self-interest (possible only in the conditions of freedom or partial freedom). Egoism’s primary virtue is rationality. The six others – productiveness, honesty, justice, independence, integrity, and pride – are derivatives in that they elaborate what acting rationally entails.
These virtues to guide successful action requires understanding what they are, why they are in one’s selfish interest, and how they apply in practice. Since Rand and others have written about these virtues extensively and my book and many previous posts cover them in the business context, here I focus only on the first three, to give an indication of this moral code that promotes self-interest, banishes any sacrifice from human relationships, and facilitates win-win outcomes.
I introduce the three principles briefly and use FTX and then Google Deep Mind as contrasting examples. (The latter was inspired by the recent documentary The Thinking Game).
The virtue of rationality counsels using reason as “the only means of knowledge, the only judge of values, and the only guide to action.” It requires adhering to facts through observation and logic (as opposed to going by faith, hearsay, or whim). Rationality is selfish because we need reason and acting on it to achieve our values.
FTX fundamentally violated this virtue by evading facts: that it had no value to offer clients and its claims about superior returns and expertise about cryptocurrencies were baseless. The company acted on whim and lost $8 billion of clients’ money on speculative investments.
Productiveness, the process of creating material values, is a selfish virtue because without the creation of goods and services, human flourishing would not be possible. FTX created nothing and only destroyed wealth that could have been invested in productive endeavors instead.
Honesty demands not faking reality when attempting to gain values. It’s a selfish virtue because faking is futile; it does not change the facts – that company’s products are faulty and its claims fraudulent – and leads to a loss of values, not their gain. Sam Bankman-Fried epitomized dishonesty: he defrauded his investors, all the while claiming to promote “effective altruism.”
In contrast, Google Deep Mind and its CEO Demis Hassabis epitomize the virtues of rational egoism. Deep Mind’s mission is to develop generative AI by creating algorithms that mimic human understanding, which is only possible by adhering to facts (such as how the human mind works and how to create large language models capable of learning rapidly from vast amounts of data).
Deep Mind demonstrates not only rationality but productiveness and honesty. Generative AI is a significant material value because it can be applied so widely to benefit human life, from scientific discovery in various fields to developing better products and services. Honesty – not faking reality – has also been essential to Deep Mind’s continual progress in developing generative AI.
Valid moral principles – those of rational egoism – don’t hurt business but make its long-term success possible and are therefore worth understanding.