Tag Archives: ethics

The Nature of Business

“Ask yourself, what is this thing in itself, by its own special constitution? What is it in substance, and in form, and in matter? What is its function in the world? For how long does it subsist?” Marcus Aurelius

After teaching business ethics for many years, I realized that a person’s view of what business is affects their view of what business should do just as much as their beliefs on morality.

The thought struck me as I was watching the film Goodfellas. In this segment a restaurant owner has willingly partnered with the mob for “help” with his business. Watching the movie, we may sympathize with the owner, but we also need to realize (as the owner soon does) the essential difference between business activity and criminal activity is trading for value.

This is the distinction criminal characters deliberately ignore throughout the movie. For example, in this clip, between 24 and 42, the narrator explains how the mob boss can use a legitimate business as collateral, the restaurant, to take out loans he has no intention of repaying. The narrator explains this is how you buy a 200-dollar case of booze on credit and sell it for 100 dollars and keep the cash. The punchline? “It doesn’t matter, it’s all profit!”


Nonsense.

Profit is a value adding activity that takes place through trading. What this clip is describing is no more profit than mugging an old lady and claiming the quarter you got was pure profit.

Consistently in conversations, films, and novels, business is equated with immorality or downright evil.

So, what’s the problem? The problem is misidentifying the nature of things. It makes a good thing look bad and a bad thing look good. When criminals use the phrase “I’m just doing business” it morally elevates their actions while simultaneously degrading the moral value of business. It tempts those in business to view criminal activities as port of their skill portfolio. This is not the road to success.

Those who think there is no difference between business and crime, as long as it makes money, risk making the same mistake the restaurant owner makes in Goodfellas. Spoiler alert: It’s not a good ending.

To succeed and thrive we must know what we are doing. Our goals and purposes are not determined independently, so too should our choice on how we pursue those goals. Business is a way of pursuing our goals and the goals of those we serve. Business is solving problems – that’s the value creation. The solution is valuable enough that other people are willing to pay for it – that’s the trade.

Creating value others are willing to trade for is the essence of business. This should be repeated to owners, employees, customers, governments, and society. If it is not, there is the real risk they will believe business is like crime, and act accordingly.