Friday, July 10, 2009

Morality of Profits

According to Kant, when one wills something, one must also will that which is necessary to bring about what is willed. In considering the morality of a maxim, one must consider the fashion by which the maxim shall be carried out. This means that the morality of an end is determined partially by the morality of the means by which it is brought to pass. In considering the morality of profits, one must consider the individual moral worth of any means by which said profits are to be obtained. As such, certain profits may be considered moral, while others must be deemed immoral. I shall consider profit by industry, profit by investment, and profit by gambling, in order to determine their moral worth.

Industry can be considered in two forms; which are employment (working as an employee) and business (a business dealing in profits or services, which may or may not have employees other than the business owner.) It is an aspect of market theory that in economic exchange, assuming both parties have full information about the transaction at hand, each party trades what they believe to be of lesser value for something of greater value. When one works for wages, it is because he values the wage, or at least what it can purchase for him, more than the time he sacrifices for the wage. The employer assumes the employee has the ability to perform the tasks required of him, and will work hard to further the ends of the business. Based on these assumptions, the employer is willing to pay the wage required in order to purchase these services. This exchange takes place as each follows the maxim of seeking his own happiness.

That the employee put forth effort into the task at hand is a requirement for the morality of employment can be assumed, due to the employers desire that effort be made. If effort is not put forth, the employee can be considered synonymous with the one who makes a false promise. In obtaining the job, the employee effectively promises to work hard. If he does not, he is neglecting the promise given. In effect, if one earns a wage without putting forth the effort required, he is cheating his employer.

Can one imagine a world where all wage earners cheat their employers? Such a world could be conceived, but one could not find employment in such a world. This is because employers, acting on the assumption that they would be cheated, would perform tasks themselves instead of employing others to perform them. Furthermore, the apparatus of market efficiency would be limited by the inability to hire others to perform tasks, and the standard of living would be much lower. To cheat one’s employer is to will a much lower standard of living, and possibly a decreased level of personal happiness. Kant would perceive this as irrational, because seeking our own happiness is basic to rational behaviour. Thus, profit by withholding honest effort, or cheating one’s employer, is immoral, but profit by hard work is morally acceptable.

In a similar vein, we consider profit by industry in the case of business owners. The morality of operating a business depends on allowing and following fair market practices. Market theory implies that trade takes place to further the interests of both parties. While Kant sees seeking one’s one happiness to be morally neutral, seeking to increase the happiness of others is of greater moral worth. In this light, business in an industry which forwards the happiness of mankind can be considered of high moral value. On the other hand, a business in an industry which feeds on addictions and vice should be considered as morally reprehensible as the vices in which it trades. Examples of this include the trade of pornography, alcohol, tobacco, drugs, and gambling (more on gambling forthcoming.) Honesty in business is assumed for business in an acceptable industry to be morally acceptable. In the examples of business in morally reprehensibly industries, complete honesty and fair trade is not enough to redeem the business from the immorality of the industry in which it trades.

Several things should be considering in determining the morality of profit by investment. First and foremost is the nature of the investment. Businesses in which the profits are obtained immorally extend that immorality of profits to the investors. An investor in a pornography business, for example, holds as much moral responsibility as the actual business owner or the operators of the business, regardless of whether or not the business needs the investment in order to function. This is because purchasing stock in a company is purchasing a piece of the company, and by extension makes one a partial owner of the business. The morality of that investment, then, should be considered on the same grounds as the morality of the business itself.

Before turning to other forms of investments, I would like to discuss the morality of gambling. Gambling takes many forms, but in every form, money is placed on the likelihood of an event taking place. If one correctly chooses, one makes a considerable profit. If one is wrong, one loses money. The implications of the categorical imperative on gambling are readily evident. One cannot will a world in which everyone can always correctly guess the outcome of events at stake, because this would make gambling, by its very nature, completely impossible.

Only in very limited circumstances can gambling be considered morally acceptable. For example, if one were to begin a lottery in which tickets cannot be purchased, but are paid for by advertisers. No money is risked by those who have a chance to gain from the lottery; instead a certain amount of time must be spent perusing the offers of advertisers. In such a circumstance, one need not will accuracy every time in order to profit; the odds of winning would eventually allow each participant to win, without any of them losing any money. It could be said, though, that this situation isn’t actually gambling, because it fails to fulfill the given definition of money being placed on the likelihood of an event taking place. In all other circumstances gambling is morally unacceptable.

Having considered the morality of gambling, we now turn to an additional form of investment: options on the stock market. In purchasing an option, one obtains the right to buy or sell stock of the company in question at a set price on a set date. For example, one purchases the right to sell 100 shares of General Motors at $54 per share at the end of April. If by the closing date of the option, the price of General Motors has dropped below $54 per share, one could quickly buy 100 shares at below $54 per share, and then exercise the option, selling them at $54 per share, and making an immediate profit. If prices haven’t dropped below $54 per share, the option expires worthless, because of course one wouldn’t buy for higher than $54 per share and then immediately sell for only $54 per share. In effect, a bet is being placed on the motion of the share price, but an actual investment in the company would not be made. Because this has all the attributes of gambling, and lacks the attributes of actual investment, trading in options can be considered as lacking moral worth.

In conclusion, we can determine that some forms of profit are acceptable, while others have no moral worth. Profit by employment has moral worth, assuming honest work, but lacks moral worth in the absence of actual effort put forth. Profit by business, and by extension, actual investment, has moral worth based on the morality of the business. The morality of the business is based on the industry in which it trades and the honesty with which it conducts business. Profit by gambling, and by forms of investment similar to gambling, lack moral worth, in that one cannot will a profit, because doing so is to will that others lose money.

Note: This was written five years ago as a paper for a freshman philosophy class, and I have not changed it in any way.

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