COULD "ENLIGHTENED SELF-INTEREST" MAKE A CASE FOR ETHICAL BUSINESS?

Abstract

At first glance, game theory could support with logical, ideologically neutral arguments, the rationale of acting ethically in business. Apparently, this is what we learn from the Prisoner's Dilemma, the Peasant's Dilemma, Tit for Tat, and other strategic games, suggesting that the winning business strategies combine the competitive aggressiveness and a disposition for cooperation with other players of the economic game. Consequently, it is only rational to adopt an ethical behaviour in business activities, respecting the legitimate rights and interests of different categories of stakeholders. Nevertheless, this view is arguable, since game theory is grounded on the obsolete concept of homo economicus and ultimately suggests that the best strategy in business is the cooperation of the competitors. On the other hand, except utilitarianism, the rest of the major ethical theories deny the moral character of those actions that are motivated by self-interest. This study concludes that game theory cannot offer a solid ground for business ethics.

Headnote

Abstract: At first glance, game theory could support with logical, ideologically neutral arguments, the rationale of acting ethically in business. Apparently, this is what we learn from the Prisoner's Dilemma, the Peasant's Dilemma, Tit for Tat, and other strategic games, suggesting that the winning business strategies combine the competitive aggressiveness and a disposition for cooperation with other players of the economic game. Consequently, it is only rational to adopt an ethical behaviour in business activities, respecting the legitimate rights and interests of different categories of stakeholders. Nevertheless, this view is arguable, since game theory is grounded on the obsolete concept of homo economicus and ultimately suggests that the best strategy in business is the cooperation of the competitors. On the other hand, except utilitarianism, the rest of the major ethical theories deny the moral character of those actions that are motivated by self-interest. This study concludes that game theory cannot offer a solid ground for business ethics.

Keywords: competition, cooperation, game theory, homo economicus, profit maximization, self-interest.

First time in Oxford, at New College, most often the first question I had to answer after being introduced to new folks was: "What's your specialty?" After saying "Business ethics", the distinguished fellows used to react - in different ways, of course - with a blend of embarrassment and sympathy. I could not avoid hearing again that popular joke: "Business ethics? You must have the shortest textbook in the world." I had to face similar reactions in other parts of Europe. Even though nowadays business ethics might not be very popular amongst the European academics - the situation is considerably different in the U.S. - initially it came up as an academic discipline, almost ignored by the business environment. Many things have changed in the meantime. Now, especially in the corporate world, business ethics became a very serious business. Too serious, I dare say, thinking of the so-called "management of ethics", that brought fourth cohorts of "experts" in corporate ethics, people who claim their "expertise" entitles them to enforce upon people the way they see the difference between right and wrong.

One can easily see a sharp difference between two ways of conceiving business ethics. The academic trend is definitely more philosophical, regarding the ethical issues in business as topics of one amongst several "applied ethics". The academics try to find their way towards real business coming from the basic concepts and analytical frames of moral philosophy: Utilitarian, Kantian or Aristotelian ethics, to mention only the most influential. They consider the debatable issues from the viewpoint of general public - in other words, they see business world as outsiders or distant stakeholders. In contrast, the "experts" that belong to the business environment pay much less attention to the abstract philosophical analysis, seeing business ethics as a very practical matter, and focusing on clear cut rules to be implemented in effective ways in the daily practices of a successful business. They adopt the perspective of the insiders of business environment, considering the sensitive ethical issues not as philosophers, but as managers.

This difference of vision and methodology between these two approaches of business ethics led to a different attitude towards the ideological controversies. Whereas the "professors" are prone to emphasize the ideological conflicts and to take sides for one party or another, the "experts" try to stay apart from ideological debates and to develop an objective, pragmatic perspective. This is not that easy to do, and the real choice must be made between acknowledging openly the ideological conflicts, trying to argue with convincing reasons for one party or another, and ignoring these conflicts, but taking sides unconsciously and fooling yourself about your objectivity. This is the case when we try to analyze from an ethical perspective the relationship between competition and cooperation in business.

It is hard to underestimate the importance of competition in market economy, but its moral evaluation divides people who adhere to opposite ideologies. Some people worship the virtues of competition - the engine of economic growth, providing people with a constantly increased variety of goods and services, of a higher quality, safety, and reliability, at constantly more convenient prices. Not denying these virtues, their opponents emphasize the shortcomings and bad consequences of tough competition: periodical crisis, irrational waste of resources - spent to satisfy the superficial and eccentric wants of a crowd blinded by consumerism - the unfair distribution of income, which very often ignores the social utility of different occupations, tragic bankruptcies, unemployment, and social instability.

This kind of quarrels, driven by ideological motives, and even more complicated by the cultural and ethical relativism, makes very difficult the task of those who strive to build business ethics as a rational, demonstrative discourse. Apparently, the strongest theoretical ground of such an attempt seems to be the theory of games.

Prisoner's Dilemma

Trying to stay apart from these embarrassing obscurities, certain theorists tried to found the basic ethical principles on rational arguments, which ignore the cultural specificity or irrational ideological commitments, appealing only to logical demonstrations, which could claim to be universally valid, like scientific theories. One of the possible ways to support the ethical behaviour in business with solid, rational arguments is the so-called game theory. Not at all surprising, since for some people economic competition really means some kind of a game.

In a capitalist system, firms must compete effectively in an open market and make a profit. [...] business has often been described as a game, in which the aim is to make as much profit as possible while staying within the rules of the game, which are set mainly by government. (Boatright, 2009, p. 12)

Most often, the beginning of the demonstration appeals to the famous Prisoner's Dilemma, the most widely analyzed strategic game. In short, two felons are picked up by the police for questioning. Although the police suspect they have committed a major offence, there is only enough evidence to convict them on a minor charge. In order to sustain a conviction for the more serious crime, the police will have to convince one of them to testify against the other. Separated during questioning, with no possibility to communicate, the criminals weigh their alternatives (see the figure below), each one of them knowing that the other faces quite the same options. If neither confesses, they will both get light sentences on the minor charge. If both confess and plead guilty, they will be both convicted for the major crime, but they will both get moderate sentences, due to their cooperative attitude towards the investigators. But if one confesses and the other stays silent, the confessing criminal will secure immunity from prosecution and will walk, while the silent criminal will pay the maximum penalty.

In the two-person Prisoner's Dilemma, participants face a series of choices in which they have to choose between cooperating and competing. If both individuals make the cooperative choice, both make a moderate reward. If both make the competitive choice, both suffer a moderate loss. Yet if one cooperates while the other competes, the competitor obtains a large reward, and the co-operator suffers a large loss. If we look at the figure from the viewpoint of, say, Prisoner A, it appears that no matter what Prisoner B chose, A is better off if he competes with B and confesses. If B does not confess to the police, A gets a lighter sentence if he does confess than if he keeps quiet: if he talks, A will walk; if he does not confess, A will get one year. If B does confess, his partner still gets a lighter sentence if he confesses than if he does not - five versus ten years. So, clearly, A should confess. Precisely the same conclusion is valid from the viewpoint of the other prisoner, B. Now, this is the dilemma: If both criminals confess, each one gets five years. If neither of them confesses, they both get only one year. It is really a perplexing situation.

There is no rational solution to the Prisoner's Dilemma. From a purely self-interested point of view (one that takes no account of the interests of the other prisoner) it is rational for each prisoner to confess - and if each does what it is rational to do from a self-interested point of view, they will each be worse off than they would have been if they had chosen differently. The dilemma proves that when each of us individually chooses what is in our own best interest, we can each turn out to be worse off than we would each have been if we had both made a choice that is in our collective interest. This is what David McAdams calls dominant strategy: "a move that maximizes that player's own payoff regardless of others' moves. [Each prisoner has a dominant strategy to confess.]" (McAdams, 2014, p. 37)

Of course, this is a hypothetical and atypical case, but there are many everyday illustrations of the general rule that the Prisoner's Dilemma proves. Anyone who has spent some time in rush hour traffic knows that, while it may be in your individual interest to take your car to town (since the buses also get held up by the traffic, are crowded, uncomfortable, and they do not run very often anyway) it would be in the interest of everyone if you could all collectively decide to go by bus, since then the bus company could afford to run a much more frequent service, and without the heavy traffic, you would get to work in half the time, with your clothes in perfect condition, your wallet and cell phone in your pockets. (cf. Brehm et al., 1999, pp. 276 - 277)

"Enlightened self-interest"

However, Prisoner's Dilemma is not the best description of the underlying logic of competition and cooperation in business. Whereas the two criminals have to solve a one-off situation, business partners find themselves in repetitive situations, expecting to play the same game indefinitely. This fact radically changes the logic that should guide the rational decisions of each player.

Grasping the essence of this change in rational analysis, Peter Singer came up with another story, that he called "The Peasant's Dilemma." Living in a small rural community, two farmers - Max and Lynn - are neighbours. Max's crop is ripe and must be harvested as soon as possible; Lynn's crop still has to wait. Max starts to work, but rainclouds are building on the horizon. Unless Max gets some help, it will rain before he can bring in the harvest. The grain that he has not harvested will spoil. So Max asks Lyn, his neighbour, whose crop is not yet ripe, if she will help him to harvest his crop. In return, he offers to help her when her crop is ready. Max will be better off if Lyn agrees to help him. But will Lyn be better off if she helps? She will, if this means that Max will help her, because she often also has trouble getting her harvest in before it rains. But can she rely on Max's promise to help her? How does she know that, after she has helped him to harvest his crop, he will not stand by and laugh when she asks him for help? Lynn correctly thinks it is unlikely that Max will behave this way. Maybe he is not a man of his word, but he is not stupid; he knows very well that if he cheats his neighbour now, he will never get help in the years to come. Therefore, over the long run, it is in Max's best interest to keep his promise, to be sure he can count on Lynn's help when, very likely, he will need it in the future. Playing the game several times puts each player in a new situation: they both know the previous moves of the other player, making decisions based on that knowledge. Of course, surprises are never excluded and any decision involves a certain degree of chance, but this can be estimated with more precision. (Singer, 1997, p. 159)

Looking for a better understanding of different strategies to play repeatedly Prisoner's Dilemma, Robert Axelrod set up two tournaments, in which first 14, then 52 computer simulated strategies competed. Each strategy was supposed to play 200 times against all the other strategies, as well as against itself. The moves of the game have been renamed and redefined. Instead of "confess" or "keep silence", the players had to choose between "compete" or "cooperate". The goal of the game was also different: instead of time in prison (the lesser, the better), each player aimed at getting as many points as possible, adding 1 point for mutual cooperation, 3 points for mutual attack, 5 points for the player who chose to compete whereas the rival chose to cooperate, and 0 points for the player who made the opposite choice (the "sucker's pay off").

Both tournaments have been won by the simplest and almost childish strategy, invented by Anatol Rapoport and named by its creator Tit for Tat. It was built on only two rules: 1. On the first move, always cooperate; 2. Then repeat the previous move of the other player. If the opponent takes the offer for cooperation, both players keep on cooperating, each of them making a substantial number of points; as soon as the opponent chooses to compete, Tit for Tat responds aggressively in its turn, both players making a poor score. Anyway, the player applying Rapoport's strategy never attacks first.

Axelrod's conclusions support with rational arguments the so-called "enlightened self-interest": a long-term winning strategy cannot be based on a permanent aggressive attitude, ready to squeeze out of any situation maximum of benefits, causing extreme damages to the other competitors; it consists of a clever combination between readiness to cooperate for mutual benefit and the ability to retaliate when the competitors decide to play rough. In contrast with enlightened self-interest, narrow minded egoism, that is guided by a constantly aggressive strategy, seeking to obtain as often as possible a win-lose situation, may be occasionally and on short-term a winning strategy; yet over the long run, it leads inevitably to failure, since it permanently creates enemies who, sooner or later, will retaliate, breaking down the aggressor. Therefore, narrow minded egoism can and should be rejected not only because it is unethical - some people do not see anything immoral in serving their own interests, by any available means, even against the legitimate needs and rights of the other people. Plain selfishness should be denied because is a stupid and irrational strategy, that on long-term turns out to be always self-destructive. On the contrary, enlightened self-interest seeks to get and keep as long as possible a win-win situation, making all the players to obtain something, and this strategy consolidates stable relations of cooperation, more or less profitable for everybody.

The most important lesson of the Prisoner's Dilemma, then, is that when people deal with each other repeatedly so that each can later retaliate against or reward the other party, cooperation is more advantageous than continuously trying to take advantage of the other party." (Velasquez, 2006, p. 40)

Applying these strategic principles, derived from the analysis of certain logical games in the business world, most of the authors emphasize the requirement of ethical behaviour in economic relationships. The legitimate interests and rights of different categories of players of the economic game should be respected, since both abstract theory and real life practice prove that over the long run this fair treatment of the others promises to bring forth the best results. "What the Prisoner's Dilemma argument shows is that even those who have no concern for the welfare of others - even self-interested individualists - still have a good reason to bring ethics into their business dealings." (Velasquez, 2006, p. 41) In other words, sometimes it is clever not to take the bishop and enjoy a small, temporary advantage, compromising irreversibly your position on the chessboard; a shrewd chess player will sometimes sacrifice his rook or even his queen if this is the best way to win the game.

Plenty of normative consequences can be easily derived from these premises. It is not smart to disregard your consumers, misleading them by dirty tricks to pay a lot of money for a lousy, hazardous, and unreliable product. Sometimes, this policy can pay on short-term, but sooner or later the customers will realize they have been duped and they will stop buying your merchandise, putting your company out of business. On the contrary, any effort and sacrifice should be made to protect the company's reputation and consumers' loyalty. The employees should be well treated, fairly paid, offered a safe and friendly work environment, and stimulated to find a full meaning and an intrinsic satisfaction in their activities. Otherwise, the valuable employees will leave, attracted by the competitors who offer them better contracts. The same line of reason applies to the fair treatment of serious suppliers, local communities, natural environment, etc. In short, treating ethically different categories of stakeholders works over the long run for the benefit of a competitive company, and the apparent losses that ethical behaviour in business can bring forth are, in effect, real investments in good reputation and positive public image - factors that become more and more competitive advantages. In Boatright's cynical expression,

Businesses are economic organizations that operate within a framework of law. They are organized primarily to provide goods and services, as well as jobs, and their success depends on efficient operation. On this view, it may be helpful and even essential to observe certain ethical standards, but doing so is merely a means to the end of profit making. (Boatright, 2009, p. 12)

Apparently, we got a rigorous and objective proof of the basic principle of business ethics: "Good ethics is good business". There is no need to appeal to emotional, subjective, and persuasive philosophical, moral or religious arguments that might be effective for the "bleeding hearts" and the poets, but not at all for the pragmatic, rational, and cold-hearted business persons. From a strictly rational perspective, one can demonstrate that the winning business strategy requires keeping certain moral standards - not as a token of respect for the intrinsic value of the other people involved in the economic game, but as the dry conclusion of a strictly rational analysis. On second thought, we might find out that the whole argument is inconclusive, because this demonstration, grounded on the theory of games, has several serious flaws.

The end of "Homo economicus"

One first week point of the arguments proposed by the game theorists is the stubbornness with which they stick to the obsolete concept of "homo economicus," that plays a crucial part in the classical economics. According to this vision, the "player" of the economic game is thought of as perfectly rational, entirely selfish, and fully informed about everything he needs to know about the market; consequently, homo economicus normally makes the best decisions, optimally serving his best interests.

As a key element of all the strategic games, selfishness cannot be taken as a universal and permanent trait of humans. Too many empirical facts deny the credibility of this premise; so often, many people act altruistically, not trying to maximize their personal benefits, but striving to act in favor of other people. Maybe generosity is not as frequently present in our world as we would like to see, but it definitely occurs on many occasions, including the business trades, deals, and negotiations. The defense of certain theorists that "homo economicus" is nothing more than a theoretical fiction - just like "ideal gas" in chemistry or "mass point" in classical mechanics - useful for an abstract description of a pattern that idealize some essential traits of concrete phenomena in the real world simply does not stand, as long as it does not suggest reliable predictions of the real behavior of people doing business.

Perhaps the perfectly informed player of the economic game could be a credible idea in Adam Smith's days, in a still primitive market economy, based on a rudimentary technology, but no one can take it seriously nowadays. Not even the most noted experts in economics could claim they possess all the necessary information for a perfectly rational prediction and decision. The available data are overwhelming and no one has the ability to collect and to process even a small fragment of it. The amount of information goes beyond the average person's capacity to store it; in addition, processing the available data cannot be fully objective. That is why, as Nate Silver put it, "We can never make perfectly objective predictions. They will always be tainted by our subjective point of view." (Silver, 2012, loc 275)

The most resistant trait of the supposed "homo economicus" proved to be his rationality. But this "chess-player" image of the individual involved with the economic game is under siege and starts to crush lately. The most conclusive arguments against the ghost of "homo economicus" came from a relatively new field of research, behavioral economics. Daniel Kahneman, Nobel Prize winner for Economics and one of the founders of this spectacular discipline wrote in his remarkable book "Thinking Fast and Slow":

My economist colleagues worked in the building next door, but I had not appreciated the profound difference between our intellectual worlds. To a psychologist, it is self-evident that people are neither fully rational nor completely selfish, and that their tastes are anything but stable. Our two disciplines seemed to be studying different species, which the behavioral economist Richard Thaler later dubbed Econs and Humans. (Kahneman, 2011, loc 4531)

Indeed, the famous opposition defined by Richard Thaler, coauthor of another fundamental book that initiated behavioral economics, Nudge, between Econs and Humans emphasizes how inadequate turns out to be the fictitious character that classical economists keep on placing in the center of their theories:

If you look at economics textbooks, you will learn that homo economicus can think like Albert Einstein, store as much memory as IBM's Big Blue, and exercise the willpower of Mahatma Gandhi. But the folks that we know are not like that. Real people have trouble with long division if they don't have a calculator, sometimes forget their spouse's birthday, and have a hangover on New Year's Day. They are not homo economicus; they are homo sapiens. (Thaler & Sunstein, 2008, loc. 173)

Real people never act like machines; their intellectual skills are limited in scope and energy, and they interfere with their instincts, emotions, habits, and momentary moods. Consequently, "Individuals make pretty bad decisions - decisions they would not have made if they had paid full attention and possessed complete information, unlimited cognitive abilities, and complete self-control. (Thaler & Sunstein, op. cit. loc 151)

Nassim Taleb, another outstanding contestant of the hyper-rational vision of economic theories, gives us a surprising, half-joking, but credible explanation of this essential and permanent incapacity of humans to be fully rational and for a long time:

What are our minds made for? It looks as if we have the wrong user's manual. Our minds do not seem made to think and introspect; if they were, things would be easier for us today, but then we would not be here today and I would not have been here to talk about it - my counterfactual, introspective, and hard-thinking ancestor would have been eaten by a lion while his non-thinking, but faster-reacting cousin would have run for cover. Consider that thinking is time-consuming and generally a great waste of energy, that our predecessors spent more than a hundred million years as non-thinking mammals and that in the blip in our history during which we have used our brain we have used it on subjects too peripheral to matter. Evidence shows that we do much less thinking than we believe we do - except, of course, when we think about it. (Taleb, 2010, loc 385-387)

In other words, behavioral economics makes a very strong point: As Humans, and not as Econs, we make irrational decisions not accidentally, due to a momentary lack of attention or fatigue, but we are not made to think and act as one hundred percent rational strategists, as game theory uses to suppose. As a result, "we are really far less rational than standard economic theory assumes. Moreover, these irrational behaviors of ours are neither random nor senseless. They are systematic, and since we repeat them again and again, predictable". (Ariely, 2008, loc 169)

It is worthy to emphasize that behavioral economics contradicts the speculative concept of "homo economicus" with empirical facts and ingenious lab and field experiments. Boatright, for instance, shows with an empirical argument that "strictly rational" behaviour, ignoring any ethical standard except the pursuing of self-interest, is a fictitious, hypothetical invention:

People are also motivated in their market behaviour by considerations of fairness. This is illustrated by the "ultimatum bargaining game", in which two people are given a certain amount of money (say $10) on the condition that one person proposes how the money is to be divided (for example, $5 to each) and the second person accepts or rejects the proposed division. The first person can make only one proposal, and if the proposal is rejected by the second person, the money is taken away and each person receives nothing. Economic theory suggests that the second person would accept any proposal, no matter how small the share, if the alternative is no money at all. Hence, the first person could offer to share as little as $1 or less. But many people who play the game will refuse a proposal in which they receive a share that is considered too small and hence unfair. (Boatright, 2009, p. 14)

To conclude, perhaps the only logical decision that the two criminals in the Prisoner's Dilemma could and should make is to confess instead of choosing the best possible results for both - if and only if they are both selfish and strictly rational characters. What if they are different persons? And in the economic game we should expect to deal not primarily with thieves and crooks, but mainly with decent persons, who do not get involved with one-off situations, but expect to establish and consolidate long-term relations, mutually profitable.

Is ethical behavior in business the only logical conclusion of game theory?

David McAdams recently published a whole book dedicated to the Prisoner's Dilemma: "Game-Changer," that tries to show how one could modify the strategic context for his own advantage when playing once or repeatedly the famous strategic game. The author is not at all concerned with the ethical issues in business, but his conclusions and recommendations are quite relevant for our topic. McAdams defines and elaborates six methods to improve one's chances to win a Prisoner's Dilemma Game. The most interesting is the third method: "merge or collude". To put it bluntly, the basic idea is that competitors should try to avoid the costly fight between them, finding a way to cooperate for their mutual benefit.

Surprisingly enough, those who appeal to the game theory to prove the rationality of ethical behaviour in business fail to see that all these logical calculations of enlightened self-interest lead to one main conclusion: the best strategy for shrewd competitors on the market is to cooperate for mutual benefits instead of trying to destroy each other. In other words, as Hobbes taught us a long time ago, the war of everybody against all the rest is a self-destructive strategy. Instead of competing against the other players, trying to attract the consumers through better offers, the companies would make larger and safer profits over the long run by secretly sharing the market and making an agreement to control costs, prices, and production, so that to keep a favourable ratio between offer and demand. Taking this viewpoint, the common enemy of all companies are the consumers, the employees, the suppliers, local communities, the state - in a word, different categories of stakeholders. Cynically, but logically one business leader said, "We believe the competitor is our friend and the customer is our enemy. [...] We should be trusting," he added, "and have competitive friendliness among the companies." (Velasquez, 2006, p. 202)

No doubt, this approach is morally wrong and even the "friendly competitors" realize that - not after getting a deeper understanding of the game theory, but considering certain ethical values and principles that essentially contradict the rational strategies suggested by enlightened self-interest. Why, then, do those who preach that enlightened self-interest suggests that, according to game theory, one should find the right balance between competition and cooperation? That "good ethics is good business"? I think their logic is correct only insofar they limit the scope of their analysis, applying a "rational" strategy at the micro level of one company, plus its network of directly involved stakeholder groups. From this narrow perspective, an intelligent business leader can easily understand that, over the long run, it is more profitable for the company to treat ethically right the consumers, the employees, the suppliers, etc. - in short to emphasize cooperation between managers and stakeholder groups. Conclusions radically change at the macro level of a whole market, industry, or social system.

Enlarging the perspective and considering a huge number of variables, game theory would lead to completely different conclusions and suggestions, proving that any temptation of the competitors to falsify their competition will be beneficial for the players only on very short term; over the long run, nevertheless, the replacement of real competition with mutually beneficial cooperation between the main actors will turn out self-destructive, leading to the bankruptcy of the whole market and terrible losses for everyone.

Conclusions

As I showed in another paper, the enlightened self-interest is not only logically inconsistent, but also entails strong objections from the most important schools in moral philosophy, that should be briefly mentioned. (Craciun, 2012)

From the viewpoint of Kantian duty ethics, the motive of an act makes that act ethically worthy of praise or blame. No matter the consequences, if one respects the interests and rights of the other people only for the sake of maximizing his own benefits over the long run, the agent does not act ethically. "Enlightened" or not, selfish motivation - from the Kantian perspective - is incompatible with morality. As long as businesspeople seek to treat fairly the consumers, the employees, the suppliers, etc. only insofar rational analysis proves this fair treatment promises to maximize their own profit over the long run, they do not act ethically; they merely apply an intelligent, shrewd, and effective strategy, acting as effective managers. How could be the categorical imperative compatible with the "supreme law" of business activity, as stated by Michelman? "Once the firm enters the competition, it must abide by the rules of that competition. And all these rules are comprehended by the single Rule: Let the maxim of your action be that which advances the profitability of your firm." (Michelman, 2000, p. 439)

No less virtue ethics, inspired by the Aristotelian moral philosophy, would recognize the ethical value of enlightened self-interest. Less preoccupied with individual acts, virtue ethics focuses on the harmony and nobleness of character; therefore, Aristotelian ethics also rejects selfishness, no matter how rational, as one of the defining traits of a moral person. Self-interest is contrary to generosity, justice, courage, or truthfulness and friendship, the essential virtues, whose constant development through practice leads to the rise of a firm character, able to follow spontaneously the path of good, incapable of committing wrong deeds. The same Michelson does not hesitate to say: "Virtue, being displaced by rationality, has no place in this competition; and the individual is obliged to make a choice between virtue and money." (Michelman, 2000, p. 442) On the contrary, Stephen Young thinks that "a solution to this generalized moral degradation in business environment is to expect from businesspeople some moral character. It is up to the leaders to make ethics work, and character will offer the leaders their direction, as well as the determination to act." (Young, 2009, p. 298)

The only moral philosophy that might support the moral legitimacy of the strategies suggested by game theory is Utilitarianism - more precisely Bentham's original utilitarian ethics. From the viewpoint of case-by-case utilitarianism, the moral worth of human acts does not depend at all on the agent's motivation; it entirely depends on the beneficial consequences of human actions, according to the famous principle: "the greatest happiness for the greatest number". This is the sole approach that supports self-interest, as long as - assuming a selfish motivation of all players of the economic game, including employees, consumers, suppliers, etc. - all of these participants get maximized benefits with minimal costs. Yet not even classical utilitarianism would recognize the morality of a cooperative coalition of the competitors against different stakeholder groups, since such a pervert cooperation would be beneficial exclusively to the minority of unscrupulous investors and managers, but obviously detrimental to the consistent majority of those social categories that appear as losers of the game.

Even though it claims to be ideologically neutral and above ethical debates, game theory is not and cannot be a good guide for morality in business. On the contrary, the selfish calculations approaching market economy as a non-zero sum game suggest rather unethical strategies, meant to compromise the fundamental trust that should be the foundation of free enterprise system, since it recommends cooperation between competitors, allied against the stakeholder groups. On the other hand, most of the major ethical theories claim that self-interest is incompatible with morality. Respect for the interests and rights of other people not because they were recognized as intrinsic values, but only as means to enhance personal benefits over the long run might be called an effective management, but not ethical business. As one prominent theorist writes,

It is widely believed that acting morally is in the interest of business, and thus prudence seems to be one strong motive - perhaps the main motive - for acting ethically. However . . . prudence often dictates a different business decision than does morality. (Beauchamp et al., 2008, p. 4)

References

REFERENCES

For the Kindle versions, instead of pages, locations are indicated in text.

With the approval of the editors, this paper inserts fragments from a previous paper, indicated below.

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