Causes of Ethical Failure

It is a simple matter, after the fact, to assess whether harm was done and accuse those who decided to act of having intended to create the outcome, or having failed to prevent it, of unethical behavior. While it may be entirely logical to conclude that the action caused harm, it cannot be taken for granted that this was the result of an ethical failure.

The notion of "ethical failure" is in contrast to the notion of "unethical behavior," in the same way that failing to act ethically is not to be equivocated with acting unethically - it is a false dichotomy. While it is not inconceivable that an individually would choose to act in an unethical manner, instances of unethical behavior are exceedingly rare, and it is often the result of poor analysis that one cannot identify the positive intention that precipitated negative consequences, and therefore assume the intentions were unethical.

Having considered the matter at some length, I have identified six causes of ethical failure. I don't expect that this is an exhaustive list, but it seems a good start:

1. Malicious Intent

The first cause of ethical failure as an intention to act in a way that causes harm. As noted above, this is a common accusation that seldom bears true, but the possibility that an individual would act with the sole intention of causing harm to others.

2. Ignorance

Ignorance is the cause of ethical failure when an action is undertaken without thoroughly examining the situation or considering the possible outcomes of the action. It seems to me that this is the most common cause of ethical failure, and the most difficult to address, given that human beings are not omniscient and cannot be expected to have perfect knowledge.

3. Indifference

Another cause of ethical failure is indifference, which primarily manifests itself as a disregard for the interests of third parties who may suffer harm as a result of the actions undertaken to generate a benefit for others. Indifference is differentiated from ignorance (above) in that the actor is aware that the action will cause harm, but proceeds regardless of this knowledge.

4. Prioritization Error

Errors of prioritization occur in situations in which an action has multiple impacts (benefits for some and damage to others) as well as opportunity costs (undertaking one action eliminates the possibility of undertaking others) and while the individual is neither ignorant of nor indifferent to the outcomes, an error is made in prioritization of the impacts.

5. Probability Error

In a situation in which outcomes are uncertain, and in which the actor has undertaken due diligence to identify the impact of an action, errors in the assessment of probability may occur. Generally, the potential for benefit is overestimated while the potential for harm is underestimated, and a decision to act is made upon a poor assessment of the probability of known outcomes.

6. Execution Error

Given that everything involved in the decision to act was attended, there remains the potential for errors to arise in the execution of a planned action. I am not entirely certain that this properly classified as a separate cause of ethical failure, or merely a temporal issue: if a decision to act is made, and new information is uncovered, is the insistence on pressing forward on the original plan a separate matter, or merely the discovery of an error at a later time (conditions have changed after the decision is made, but during the course of action).

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Again, this is unlikely to be a comprehensive list of the causes of ethical failure, and each of these items bears more intensive consideration, but it's a fair start at exploring the notion of ethical failure.

Goodwill versus Manipulation

It has been reasoned that when a person undertakes a unilateral action for the benefit of another party, he seeks to increase his goodwill in the context of a relationship, or his esteem outside the context of a relationship, thereby making others more inclined to regard him as a "good" person and less resistant to the notion of entering into a relationship that benefits his interests. But does this mean that the notions of goodwill and esteem are wrong or evil, or that a person who seeks to establish a positive reputation has sinister motives for doing so?

Not necessarily.

The notion of "society" is a complex web of connections and relationships among individuals who become, to some degree, dependent on one another. The notion that ethics is important at all derives from the function of ethics in guiding human interaction in the context of society. In this sense, establishing a positive reputation is a means toward facilitating the entry into relationships, is a means toward establishing relationships, is a means toward participating in relationships, is a means toward establishing and preserving society itself. It is therefore socially beneficial for an individual to pursue the self-interested objective of seeking to gain esteem and thereby improve his reputation.

However, a line is drawn between a genuine interest in improving one's esteem and performing an action that is used to obligate others to act in one's own benefit in a direct and specific way. The former is regarded as goodwill, the latter as manipulation.

It is noted that a relationship is based in mutual obligation, and mutual consent. A manipulative individual seeks to convince another person that they are in a relationship, even though the other party has not consented to participate, nor have they been in a position to negotiate the terms of that relationship, or of the exchange. It is most common, in instances of manipulation, for the manipulator to perform some trivial act at minimal cost to himself and demand, in return, that another party undertake considerable effort to repay the favor.

In the strictest sense of ethics, an individual is not responsible for fulfilling any unspoken expectation of others, but is held responsible for acting upon the communicated expectations of others in the context of a consensual relationship or mutual obligation. And so, when a person is the subject of manipulation, they are within their right to ignore the insistence of the other party that an obligation that was previously unspoken must be fulfilled due to the unsolicited action they have taken.

However, the act of presenting a demand for compensation is ethically separate from the action performed for the benefit of others. The original act that was done for the benefit of other parties is not inherently unethical, even if it is done with the specific motivation of benefiting one's own reputation or esteem, as it is taken for granted that an individual is expected to act in their own interests, and they are entitled to do so. But when that action is used as a rationale or justification for demanding that another party enter into a relationship, as a means of negating the voluntary consent, this demand (but not the original action) is unethical.

As such, an action undertaken to generate goodwill cannot be categorized as unethical - it may be considered ethical, or at worse, it can be considered to be ethically neutral.

Charitable Action and Esteem

In the context of relationships, there arose the notion of gratuitous action: an individual undertakes an action for the benefit of the other party, while having no expectation that the other party would undertake any action in return. However, the topic was set aside, as it is not unique to relationships: there are charitable actions performed for the benefit of others outside the context of a relationship as well.

The motivation to act in the benefit of others was previously matrixed against the motivation to act in self-interest, arriving at the classification of such actions as benevolent (the actor also benefits), charitable (no appreciable consequence to actor), or altruistic (the actor suffers harm).

In the context of a relationship, an action that benefits the other party is done for the sake of strengthening the relationship - and the relationship being of value to the actor, an action that might be characterized as charitable or altruistic could be argued to be merely benevolent, in that the motivation of the actor in providing an unsolicited benefit is to gain for themselves the preservation or reinforcement of a valued relationship.

Outside the context of a relationship, the same argument may be made: a person who acts for the benefit of others may not gain an immediate benefit for himself, but his service of another party gains their favor and thus increases the likelihood that the other party will be inclined to enter into a relationship with the actor in the future.

Even when a relationship with the benefactor of an action seems improbable, there remains the notion of esteem: a person who acts to benefit others without an apparent benefit to himself is seeking to improve his reputation as a "good" person, hence increase the likelihood that others will be inclined to enter into a relationship with the actor in the future.

This is clearly the motivation of conspicuous acts of charity: when a business performs charitable acts, it takes measures to ensure that these actions are publicized in order to gain the benefit of esteem. The same can be said of any individual whose charitable action is overt - the motivation to be charitable is to gain the benefit to their personal reputation as a means of increasing their esteem.

As such, any overt act of charity or altruism is not selfless, but is performed in self-interest, even though the benefit to self may be vague, will not be realized immediately, and may not be realized at all. The motivation of a charitable person is to gain esteem, a line of credit that they may draw upon in future.

It's noted that, in order to generate esteem, an act of charity or altruism must be overt. If no-one is aware of a charitable act, it produces no esteem for the actor. It could be argued that an anonymous act of charity is "truly" charitable, as the actor gains no benefit, or it could be argued that even an anonymous act of charity is done for the sake of self-esteem or self-actualization.

I don't intend to explore the notion of anonymous charitable action further. Since it is internal to an individual, its would seem to be of little relevance to social ethics.

Nature of Relationships

There are many kinds of relationships, each of which has its own nature. Even relationships of the same general kind may entail different responsibilities in different instances. So deriving general principles of ethics that apply to all relationships between all parties is complex and any conclusion would be wrought with inaccuracies. However, there seem to be some basic principles:

Primarily, relationships entail a sequence of transactions between two parties, as previously considered. In some instances, the serial transactions and the recurring obligations that arise are the only basis for the relationship, and the only responsibility of one party to another.

On the opposite end of the spectrum, a relationship may be based on a general notion that does not yield a definite and specific course of action: parties may enter into a relationship in which each is expected to act in the interests of the other, without a clear indication of what actions may be necessary in future, or which interests they are expected to serve, or what situations may arise, etc.

The more the two parties communicate their expectations, the clearer the course of action that each party must undertake to preserve the relationship. The notion that one party should understand, without communication, the expectations of the other, is the source of much debate and strife - though from an ethical perspective, a party is held responsible only for fulfilling those expectations of which he is aware. This is derived from the nature of a single transaction.

It's worth noting that a given culture may attempt to define the nature of certain relationships - that in a given country, religion, or group of people, a term such as "marriage" defines the terms of a relationship - but even this is mutable. Not all cultures define "marriage" in the same way, nor does every individual within a culture have the same understanding of the concept. It seems to me that deference to a cultural definition is not an acceptable substitute for communication, and that in entering into a relationship, the two parties bear the responsibility of negotiation of the terms their specific relationship, even if they are of the same culture.

There also seems to be, in the context of relationships, an expectation of gratuitous action - that is, that one party will act in the interests of the other while expecting nothing specific in return. My sense is that this is not a condition of the relationship, and can happen outside a relationship, and that the nature of this action is not affected by the existence of a relationship, so the notion of gratuitous action merits separate consideration.

Also similar to transactions, relationships are established by mutual consent. In some instances, it may be argued that a person is forced or compelled to participate in a relationship (for example, relationships of proximity are largely involuntary), though it would seem that the nature of involuntary relationships merits separate consideration from the voluntary relationship, which is more common.

Relationships are also maintained by mutual consent. If, at any time during the relationship, one party wishes to discontinue the relationship, then the relationship is ended. In some instances, there may be a sense of lingering obligations to another party to complete certain transactions in recompense for the other party's past action, but "breaking" the relationship otherwise liberates both parties from the obligation to future actions or any further involvement with one another.

Given this consideration, a basic definition of a "relationship" is derived as a set of terms by which two parties obligate themselves to act in one another's interest. This still strikes me as vague - but given that a relationship is a concept that may manifest itself in an infinite number of ways, the notion is inherently vague.

One-Time Commercial Transactions

In the consideration of business relationships, it seems to me that I left several loose threads in regards to isolated transactions. While it is reasonable that there are expectations in an ongoing relationship, and that violations of these expectations are violations of trust by virtue of their being grounded in experience, it is not clear whether these same ethical standards apply to a one-time (or first-time) commercial transaction.

Primarily, the nature of most transactions is voluntary. It may be argued that a person is "forced" to enter into a transaction against their will, but my expectation is that this is highly unusual, and the logic behind such an assertion highly dubious. In the context of business, both buyer and seller enter into the transaction voluntarily and may opt-out prior to obligating themselves to the transaction.

The obligation arises in the promise to perform an action in exchange for the promise of another party to perform an action in return. Before promises are exchanged, no obligation exists. It can even be argued that there is a period after the exchange of promises, but before either party has acted, in which the transaction can be voided - though this merits consideration.

The motivation of entering into a transaction is to obtain something of value. The fact that obtaining this objective requires the actor to provide something of value in return is a necessary condition of the transaction - the value each party receives from the other is their motive for undertaking an action at all.

The primary source of ethical consideration in transactions occurs when one party fails to deliver on its promise to the other party after the point at which they become obligated by the promise or initiation of action inherent in the transaction. A seller who accepts payment and does not deliver goods has acted unethically, as they have obtained the payment based on a false promise. A buyer who accepts goods and does not deliver valid payment has likewise failed to deliver on their ethical obligation.

The notion of failure to deliver an agreed-upon value when the value provided is a currency payment is relatively straightforward - though there is one wrinkle in the case of methods of payment whose value is received at a later time (the payer may tender counterfeit currency, a bad check, a fraudulent payment card, etc.) So long as the payment is accepted by another party (generally, a bank into which it is deposited), it can be said to be validated, and the obligation fulfilled unless it is later discovered to be fraudulent.

The notion of failure to deliver an agreed-upon value when the value provided is a material good or service is less straightforward. This is generally experienced from the buyer's role, in which an item received either does not have the qualities they expected, or does not deliver the ultimate value they expected (in that a good is used as a resource in later actions).

The ethical responsibility of the capability of an item to deliver the expected value is not entirely borne by the individual who provided the item, nor by the individual who accepted it, but is subject to the communication that occurs between them prior to entering into the transaction agreement.

It reasonable to hold the provider of the item responsible for the items failure to deliver any value that was communicated to the recipient in an unsolicited manner. If the provider indicates "this is a gold ring" and it later turns out to be brass, he has deceived the recipient into providing greater value than would have been given if the true nature of the item were known.

It is likewise reasonable to hold the provided responsible for providing complete and valid information in instances where expectations are communicated. If the recipient asks if the brass ring is gold and the provider says "yes," he has likewise provide false information. Even if he claims not to be aware, when he knows the ring to be made of brass, he has misled the recipient.

However, it is not reasonable to expect the provider of an item to know the interests or desires of the recipient that are not communicated to him, as he has no sense of the recipients beliefs about the quality of the item, nor any knowledge of the use to which the recipient intends to put the item, until it is communicated to him by the recipient.

In this sense, the recipient bears responsibility for initiating communication related to the item he will receive. There is no ethical transgression on the part of the provider for failure to provide information that has not been requested by the recipient - and the suggestion that the provider "should have known" what the recipient might have wanted to know bears little validity in the majority of instances.

The exception to this would be in the instance of a repeated transaction. In such instances, the provider of the item can reasonably be expected to understand, even without explicit communication, that the recipient expects the item to have the same qualities as a functionally identical item that was previously received from the same provider.

As a final note, it is worth mentioning that the notion of "caveat emptor" has largely been inverted in the competitive marketplace. The sellers of items often guarantee satisfaction while being unaware of the buyer's expectations, and refund purchases without arguing the reasons. This can be attributed to the seller's interest in retaining the buyer's business (outside the immediate transaction) or avoiding damage to their own reputation, which is a matter that bears separate consideration. However, the motivation of the seller to assume this responsibility is external to the immedaite transaction.

Trust and Business Relationships

It's been considered that the notion of a relationship between two parties adds complexity to their interactions, and that in its most basic sense, a relationship arises from a series of interactions (11/28) that create individual periods of obligation that overlap, giving the sense of an ongoing commitment between two parties. However, the notion that a relationship is something "more" than a series of transactions is not uncommon.

I'd like to explore this notion further, though at the same time to isolate it from the broader sense of relationships. The "relationship" between members of a community is of interest to ethics in a political sense, but is largely out of scope in the context of business (except in the relationship between business and community), and domestic and social relationships also seem to be beyond the scope of business ethics.

It's also my sense that any party who interacts with another party in the context of business could be said to have a relationship (stockholder, employee, executive, competitor, etc.), and these may merit separate consideration. For the present, I'll focus on the ongoing relationship between vendor and customer.

Not all commercial transactions take place in the context of a relationship. There is the notion of the one-time sale, in which the obligation of the buyer and seller end at a specific time, and the lack of a repeat purchase leaves both parties with the impression that they are "done" with the other.

Granted, there are various stipulations and expectations inherent in such a transaction, which may vary according to the nature of the good or service that is purchased, and there are instances in which a buyer may be dissatisfied with the transaction and seek redress. But provided that all goes well and both parties are satisfied, the transaction is completed.

One of the chief indicators of transactional satisfaction is the willingness of the buyer to repurchase from the same supplier (and conversely, the willingness of the seller to enter into a transaction with the buyer). While there may be some argument that satisfaction does not have to be complete in every way for this to occur, and that one or both parties may be accepting some compromises for the sake of convenience, it would be difficult to assert that parties who seek to repeat a transaction are significantly dissatisfied with their previous encounter.

The significant difference between an initial purchase and a rebuy transaction is that the latter implies a degree of trust. Each party assumes that the repeat transaction will be essentially the same as the one before, and has a reasonable expectation of the other party that the repurchase will be essentially the same as the initial purchase.

In this regard, it is reasonable to assert that the expectations of each party constitute an obligation on the part of the other party to undertake the responsibility to ensure the uniformity of the transaction to previous experience, or to provide information to the other party if it is foreseen that it will be different than before. To withhold or conceal information that would make the other party aware of a difference is a form of deception.

To some degree, the same can be said of the initial transaction, but the responsibility to provide information is not as compelling, as there is no previous experience between the parties. As they are unknown to one another, each assumes a certain level of risk in entering into a transaction, and should things go awry, there is no established trust to be violated. However, once this transaction is completed, it is reasonable for each party to assume future transactions will be measured against this standard.

It seems to me that this is what is meant by the notion of "trust" among parties who are in a relationship. In some situations, it may be arguable that trust creates additional obligations, but at the minimum, trust is based on consistency of transactions between two parties that routinely interact.

Duration of Obligation

With the exception of the imperative to do no harm, obligations are limited in their term. At some point, the obligation is fulfilled. In some instances, an obligation is fulfilled at the completion of an act; in others, it has greater longevity. Ultimately, it seems to reason that the duration of obligation is negotiable, but the duration varies greatly. The example of a commercial transaction is sued to illustrate this notion:

The obligation of the buyer is fulfilled upon receipt of payment. To split hairs, the obligation is not satisfied by merely tendering payment, as a buy who tenders payment in the form of a rubber check or counterfeit currency has not satisfied his obligation. In most instances, the payment is accepted and validated in a short amount of time, and the buyer's obligation is fulfilled.

The obligation of the seller, meanwhile, has greater longevity. In most instances, their obligation to the buyer is not fulfilled by delivering a physical good or performing a service, but persists for a reasonable amount of time afterward. Primarily, if the seller has misrepresented the nature of the good itself, this is fundamentally no different than a buyer who has presented counterfeit currency.

Beyond that, the seller remains obligated until the item has been consumed or a reasonable amount of time has passed, such that age or usage could reasonably be expected to devalue the item for its intended purpose. The qualification of "reasonable" indicates that there is some variance that I will not presently explore. There is also the notion that the seller must share responsibility for any harm that arises from the use of an item that he has provided to a buyer, but this is a separate matter from the sales transaction.

And so, in the context of a single transaction the obligations between buyer seller are limited in their duration. In a basic sense, the buyer's obligation terminates on receipt of payment, and the sellers obligation terminates on the consumption of the goods provided.

An ongoing relationship between buyer and seller can be seen in a basic sense as a chain of transactions, with the obligation of seller to buyer renewing on each purchase (though to be precise, each obligation is entirely separate, so it is not a renewal of the same obligation but the initiation of a separate obligation, similar to the previous one).

It is in this sense that obligations take on persistence: it is understood that the buyer will be inclined (of importance - "inclined" and not "required") to return to the same seller, and that the seller will be inclined to serve the same buyer, so long as each fulfills their obligations in the previous transaction. And given the experience of successful transactions, a level of trust will arise for mutual obligations to be fulfilled. And until such time as the trust remains, the relationship persists.

My sense is I've digressed to a separate topic (relationships) which merits further consideration on its own - but in the context of the duration of obligation, it's significant to note that an "ongoing" obligation arises through repeat transactions - it is not separate and independent of the individual transactions.