Should Ethics Be a Required Business-School Course?

Since I'm an ethicist, and a business-school graduate, you'd think I'd be in favor of including one or more required ethics classes in business school curricula.

But I'm not.

By the time a student gets to business school, he or she should have a pretty well-developed moral compass. One required class (or even more) won't fix that. An amoral student will simply learn what's expected from the professor in order to earn that all-important A.

Does that mean that ethics is irrelevant to a business-school education?

By no means.

University of Chicago Business School Professor Luigi Zingales agrees. In an article ("Do Business Schools Incubate Criminals?") published at Bloomberg View (here) and Huffington Post (here), he argues that "ethics should become an integral part of the so-called core classes -- such as accounting, corporate finance, macroeconomics and microeconomics -- that tend to be taught by the most respected professors."

A few weeks ago, I made a reference to the late University of Chicago economist Milton Friedman's 1970s comment that the corporation's responsibility is "generally ... to make as much money as possible." (full blog post, here) I allowed that Friedman qualified that much-quoted line, by adding, "while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom."

I saw a lot of wiggle-room in that qualification.

Prof. Zingales chooses a similar Friedman quote (from his Capitalism and Freedom):

There is one and only one social responsibility of business -- to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.

Zingales considers the qualification "a very big caveat, and one that is not stressed nearly enough in our business schools." -- on that we certainly both agree.

Zingales notes,

Lobbying to secure a competitive advantage from the government certainly does not represent "open and free competition." Similarly, preying on customers’ addictions or cognitive limitations constitutes deception, if not outright fraud. Not to mention using clients’ confidential information for personal gain, manipulating a major interest-rate benchmark such as Libor [the London Inter-Bank Offered Rate], or selling financial products you know to be flawed. 

So why is such unethical (and, frequently, criminal) behavior so common? What's gone wrong?

In Zingales' view, "our business schools are partly to blame" for a general decline in ethical standards in business. Why? Because economists have taken to teaching their subject as though it were a natural science: economists "liken themselves to physicists, who teach how atoms do behave, not how they should behave."

But (as Zingales continues) atoms' behavior do not have moral implications, while our behavior does.

Students may then make an unethical, if logical, leap: "if teachers pretend to be agnostic [on matters of ethics], they subtly encourage amoral behavior without taking any responsibility [for that behavior]."

Adam Smith (who was, if you recall, a professor of moral philosophy at Glasgow University before writing The Wealth of Nations) would be appalled to think that economic behavior could be divorced from ethical behavior. I'm glad that Prof. Zingales is working to bring the two together again.

Not a moment too soon.