"(T)o say that the individual is culturally constituted has become a truism. . . . We assume, almost without question, that a self belongs to a specific cultural world much as it speaks a native language." James Clifford
Showing posts with label naturalistic fallacy. Show all posts
Showing posts with label naturalistic fallacy. Show all posts

Monday, November 25, 2024

Should Philosophers Sell Out to Business?

Should philosophers at universities, by which I mean scholars who hold a Ph.D. in philosophy, try to be relevant?  Nietzsche wrote that no philosopher is a person of one’s own day, but Adam Smith saw in philosophers the potential as observers rather than doers to observe occupations rather than Plato’s eternal moral verities or Aristotle’s prime mover way up high. Opinions on this question can reasonably differ, but under no circumstance should someone holding a MBA and DBA or Ph.D. in business claim to be a philosopher. This is especially true in North America, where doctoral students in business have not typically even taken ethics courses in philosophy. Indeed, I turned down a doctorate in business in part because my area would have been business ethics sans any coursework in philosophy, including ethics. I attempted to take the core graduate course in ethics, but the professor, Kurt Baier, announced at the end of the first class session that only philosophy students could enroll. Baier had the countenance of Schopenhauer, and both, ironically, focused on ethics academically. To be sure, doctoral students in business who already have a Ph.D. in philosophy may be counted as philosophers, and the dual degrees fit an orientation to observing and thinking about occupations rather than just on metaphysics or ontology.


The full essay is at "Should Philosophers Sell Out to Business?"

Wednesday, April 8, 2020

Business & Society and Business Ethics: Two Distinct Fields of Business

As a field of business, business and society (which includes the topic of corporate social responsibility (CSR)) can be viewed as falling within the rubric of the environment of business. Business and government can as well. Indeed, the environment goes beyond stakeholders. Although sometimes deemed as falling within this rubric, business ethics actually does not, as it is internal to a business even as unethical policies and decisions can impact stakeholders. In fact, business ethics and business and society are two distinct fields, even though they share a common border and are often fused as if they were one seamless country.

That some of the CSR literature applies ethical principles to CSR does not mean that describing or analyzing differences between the norms, values, and cultural attitudes and practices of a culture and those of a business involves ethical reasoning from ethical principles. As David Hume pointed out, you can’t get should from is. Going from a current state of affairs to what should be involves ethical reasoning. To obviate such reasoning based on ethical principles and simply say that something that exists should exist is to fall prey to the naturalistic fallacy.

So to claim that a corporation’s culture should be more in line with the society’s overall culture requires more than describing the two cultures and how they differ, as well as analyzing how the differences impact business as well as the wider society and providing suggestions as to how a corporation can move closer to societal norms, values, and mores. To go on to how things should be, reasoning a priori from ethical principles is necessary. That is, once the question of whether an extant, descriptive difference should exist is brought up, the business field of business & society is left behind and the philosophy field of ethics and the business field of business ethics are entered. 

Specifically, the philosophical field applies to ethical questions that go beyond the business side of the equation, whereas business ethics applies to whether a management or corporation should change to be more in line with societal norms, values, and/or mores. This question lies beyond the field of business and society because ethical principles rather than sociological, anthropological, or management theory are necessary. Organizational and societal norms, values and mores fall within the basic (not applied) disciplines and sociology and anthropology. Ethical principles and ethical reasoning fall within philosophy. Sociology and anthropology are social sciences, whereas philosophy is in the humanities. Treating the field of business and society as if it were synonymous with business ethics conflates two social sciences with a field in the humanities.


Friday, October 5, 2018

Connecting the Dots: Zuckerberg's Facebook Stock

Why did Mark Zuckerberg unload $2.3 billion of his Facebook stock? The complete answer likely involves more than meets the eye, at least relative to what business reporters and editors had to say publicly in 2013. What was not said is itself a story worth publishing. Beyond Zuckerberg’s stratagem, what the media didn't say might be more significant than what made it through the filters.
Part of the answer concerning Zuckerberg’s sell-off involves his need for cash at the time to pay taxes that would be due from his exercising an option to purchase 60 million Class B shares in 2013. This move likely implies a belief that Facebook stock would not go much higher. Had Zuckerberg strongly believed at the time that Facebook was yet to cash in on advertising revenue beyond that which the market had already factored into the company’s stock price, the CEO would not have exercised the options in expectation of a wider spread. Even with the taxes coming due, the billionaire could probably have found an alternative way to come up with the cash. 
Like a deer frozen in an oncoming car’s headlights, the media did not analyze Zuckerberg’s motives beyond his public statements. Instead, the herd animals let themselves be led along, prancing in the tracks of positive correlation, which is does not in itself connote causation. That two things tend to occur together does not necessarily mean that one caused the other to act some way. For instance, we see umbrellas on rainy days. This does not mean that umbrellas cause rain, or that rain rather than manufacturing causes umbrellas. To assume causation from two things tending to occur at the same time is to commit what David Hume calls the naturalistic fallacy. 
So the media’s report that Zuckerberg’s stock sale and exercise came as the CEO was donating $1 billion worth of shares to the Silicon Valley Community Foundation to “boost his philanthropic efforts in education,” and Facebook was selling 27 million shares to raise an expected $1.46 billion for general purposes all count only as positive correlation; causation cannot be assumed.[1] In other words, we cannot conclude that Zuckerberg decided to sell off a chunk of his stock and exercise an option because he had decided to donate some stock and Facebook was raising more capital. In other words, the additional information conveniently provided does not get us any closer to a full answer. Worse still, Zuckerberg and his PR staff might have been throwing the media a tantalizing, diverting bone. This would have been in keeping with claims that Facebook's management was unethical.
One reporter took the bait, writing that with cash and marketable securities of $9.3 billion as of September 30, 2013, Facebook may not have needed another $1.46 billion.[2] Off reporter’s radar screen was the possibility that Zuckerberg had designed his philanthropy and the company’s additional stock offering as luring camouflage that would use even criticism of his company to keep the eye off his own trades and especially what they imply about his view of the company’s future. That shares of Facebook dropped only 1% to $55.05 in trading on the news suggests that investors were swallowing what Zuckerberg and the media were serving as dessert.
What of the market insiders? Were they also biting? As John Shinal puts it, “More important, insiders have detailed knowledge of a public company’s near-term prospects and thus are in a better position to know when to sell.”[3] I suspect that “people in the know” may have connected the dots. Two months earlier, a poll revealed that as the most important social media site for teenagers, Facebook fell from 42% in the autumn of 2012 to 23% a year later.[4] Can we suppose this poll somehow missed Zuckerberg’s attention? The media certainly did not connect the dots.
The theory behind my analysis is not financial; rather, I consider Mintzberg’s theory of the organizational life-cycle to be more revealing in this particular case. The theory suggests that just as empires rise and fall, so too do companies. Once past their peak, a “hardening of the arteries” sets in.
The organizational lifecycle. When Zuckerberg decided to sell a block of shares and exercise options, he already had a picture of Facebook already on the downward slope without much chance of revitalization. Image Source: www.sourcingideas.blogspot.com
The aging (i.e., a decreasing willingness or ability to adapt to a changing environment, and increasing dead weight internally) can be delayed as the downward slope bides its time; but like entropy as a final destination, the end is inevitable for humans and our organizational artifices. I suspect that Zuckerberg had come to view his company as past its prime, given the leading indicator shown in the poll. If I am right, the game has already changed to keeping the illusion alive long enough for the Facebook insiders to get out under the black shimmering cover of the Styx.


Sources:

1. Scott Martin, “Zuckerberg’s in Mood to Sell,” USA Today, December 20, 2013; John Shinal, “Facebook Shares May Underperform,” USA Today, December 20, 2013.
2. John Shinal, “Facebook Shares May Underperform,” USA Today, December 20, 2013.
3.Ibid.
4. Bianca Bosker, “Facebook’s Rapidly Declining Popularity with Teens in 1 Chart,” The Huffington Post, October 23, 2013.

Tuesday, August 8, 2017

Does Opportunity Justify Economic Inequality?

From 1993 to 2010, the incomes of the richest 1 percent of Americans grew 58 percent while the rest had a 6.4 percent increase.  In 2010, the first year of an economic recovery, the top 1 percent of Americans captured 93% of the income gains. Beyond the danger to the American republics in there being an economic elite so far removed from the vast majority of the population is the question of whether the trend is baleful, economically speaking. It is not clear that even such an income gain being snagged by so few registered in the minds of the general populous as a problem. The key to any concern would seem to be whether opportunity for the many is compromised as a result of extreme economic inequality.

In 2011, inequality was not exactly the top priority of American voters: only 17 percent thought it is extremely important for the government to try to reduce income and wealth inequality, according to a Gallup survey. That is about half the percent who said reigniting economic growth was crucial. However, 29 percent said it was extremely important for the government to increase equality of opportunity. More significant, 41 percent said that there was not much opportunity in America, up from 17 percent in 1998. The question is whether the concurrent increase in economic inequality was viewed as causing the decrease in opportunity. According to David Hume’s naturalist fallacy, a correlation does not itself mean a causal relationship exists. The fact that economic inequality was increasing as opportunity was decreasing does not in itself mean that the increasing inequality was reducing opportunity. There might be a causal relationship, but more is needed to support it than a correlation.

According to the New York Times, comparisons across countries “suggest a fairly strong, negative link between the level of inequality and the odds of advancement across the generations. The link makes sense: a big income gap is likely to open up other social breaches that make it tougher for those lower down the rungs to get ahead. And that is exactly what appears to be happening in the United States, where a narrow elite is peeling off from the rest of society by a chasm of wealth, power and experience.” Additionally, that elite can use its wealth as power to reserve the opportunities itself. For instance, donations to universities (and lobbying government officials) could be used to keep financial-aid-based admissions down to a certain level such that there are plenty of spots available for children of the well-off. Appeals seemingly in the interest of the masses can even be utilized, as in wanting to reduce subsidized student loan programs because students are suffering from too much debt.

In my view, the business-government dynamic is crucial to why increasing economic inequality is harmful both politically and economically. Minimizing the harm to reduced opportunity ignores the injustice that comes with the inequality itself. Wealth can easily be made into power, which in turn can be used in political, economic and societal realms in self-serving ways. The primacy of opportunity assumes that anyone can be rich if he or she just works hard enough. Both on account of the way the system is designed and the differences between people, not everyone will succeed even if given the opportunity.

Furthermore, conditioning one’s objection to economic inequality in society on whether one’s opportunity is affected can be viewed as self-centered as well as rather narrow because one is indifferent to the negative effects of the inequality on others apart from any decreased opportunity as long as one believes that one’s own opportunity is not adversely affected. Put another way, too many Americans are willing to look the other way on how the elite can unfairly use their advantage aside from restricting opportunity. The right of the elite to so much wealth is tacitly acknowledged as long as opportunity is still thought to exist.  As long as it does, society has no right to take from the rich even if they compromise the republics themselves. This is a very minimalist notion of social contract—one that the 1% benefit from. This is hardly an accident—political ideology established in society being in the interest of the relatively few beneficiaries of the vast majority of income gain.

Therefore, whether increasing economic inequality causes less opportunity for the masses is a question that can be relegated to the more important question of whether the inequality itself is inherently unfair and/or a threat to the republics, the economy, and even society. How the wealth has been and is gained as well as used are relevant to the ethical question of fairness, and thus to whether the concentration of wealth is legitimate. Crucially, a focus on opportunity misses this point. Besides its ethical dimension, absolute or relative economic inequality could be harmful in building up pressure of resentment and even revolution, as evinced in the Occupy Wall Street Movement (which has been safely marginalized—with its own complicity). As the interests of the elite and the masses diverge and the elite (e.g., Goldman Sachs) gains more and more power, the strangling of the lower and lower-middle classes may ensue—a development that could not be good for a society’s stability. A focus on opportunity recalibrated in terms of being promoted to manage a McDonalds’ restaurant misses this point. In short, we are missing the iceberg coming up in front of our ship because we are satisfied if we can still get a deck chair.

Source:
Eduardo Porter, “Inequality Undermines Democracy,” The New York Times, March 21, 2012. 

Christianity and “Social Capitalism”

The SEC charged Ephren Taylor with a fraudulent $11 million Ponzi scheme in April 2012. According to Reuters, “Taylor fraudulently sold $7 million of notes said to bear 12 percent to 20 percent annual interest rates, to fund small businesses such as laundries, juice bars and gas stations.” He “had conducted a multi-city ‘Building Wealth Tour’ in which he spoke to congregations” on the importance of “giving back.” He called himself a “social capitalist.” In actuality, he used the money on himself and his wife’s attempt to become a singer.

The congregants’ susceptibility to Taylor can be understand from grasping the larger historical trend within Christianity wherein the prosperity gospel—in which it is believed that God rewards “true believers” with material wealth—had replaced the anti-wealth view wherein being rich and saved is like a camel getting through the eye of a needle. In other words, the shift in historical Christian thought from a close coupling of wealth and greed to an outright rejection of such a linkage made it more likely that the lay Christians would view investing in “social capitalism” as sufficient to justify having wealth beyond subsistence living.

Secondly, Taylor’s assumed conflation or mixing of Christianity and social performance in business enabled the congregants to open their wallets presumably for religious purposes in line with a social conscience. It is worth pointing out that camel is not given a pass for using wealth in a socially responsible manner. In other words, if simply having wealth is indicative of underlying greed, how one uses the wealth is not sufficient to undo the linkage and justify having the wealth in the first place.

Moreover, fidelity to a social norm such as corporate social responsibility is not religious. Even though Unitarians maintain that certain social structures are the object of their faith, the religious domain contains a transcendent referent.  That is, faith in a religious sense is oriented to an object that lies beyond the limits of human cognition and perception.  Specific social structures do not qualify because they are in our human domain.

In fact, to advocate a particular social norm is not to justify ethically with ethical reasons.  That is to say, corporate social responsibility is not business ethics.  The difference can be explained by referring to David Hume’s naturalist fallacy, which holds that what “is” the case cannot justify what “should” be. In other words, you can’t get ought out of a melon. You need ethical reasons, such as “it is fair because x,” to justify what one should do. To advocate a social norm is not to provide an ethical reason; more would be needed to provide support for why a certain norm that can exist should exist.

Therefore, I question Taylor’s linking “social capitalism” to religion (and Christianity in particular). The application cannot even be justified under the rubric of religious ethics. In addition, the congregants were too gullible because they had applied or bent Christianity too far from its native turf.

See: God's Gold, available in print and as an ebook at Amazon.

Source:
Jonathan Stempel, “SEC Charges Ephren Taylor II ForAllegedly Bilking Churchgoers In $11 Million Ponzi Scheme,” The Huffington Post, April 12, 2012.