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Can Business Be Honorable? This Book Says "Yes"


The thesis of James R. Otteson’s new book Honorable Business: A Framework for Business in a Just and Humane Society, is provocative: it isn’t just that business can be ethical. Business as such can be honorable, praiseworthy, estimable, dignified—if it is conducted honorably, of course.

By “honorable business,” Otteson means “business that contributes to growing, generalized prosperity in a properly functioning market economy.” There is a lot to unpack there, obviously, but Otteson is up to the task.

And what does it mean for someone to conduct business honorably? Otteson offers a five-point code of ethics for the honorable businessperson who, by following these rules, contributes to a just and humane society, which I quote:

  1. You are always morally responsible for your actions.
  2. You should refrain from using coercion and the threat of injury.
  3. You should refrain from fraud, deception, and unjust exploitation.
  4. You should treat all parties with equal respect for their autonomy and dignity.
  5. You should honor all terms of your promises and contracts, including your fiduciary responsibilities.

As someone who is sometimes unreliable about answering email or meeting deadlines, I have to admit that last one stings a little. However, by conducting business honorably, and profitably, the businessperson produces opportunities for people to flourish. Some of these opportunities come about because businesses produce their material prerequisites. Others come about because the office or the shop floor is a setting in which one can practice excellence, even in the mundane and seemingly-trivial.

Otteson is a renowned Adam Smith scholar, so it is no surprise that he builds his positive case for the goodness of business on a Smithian foundation. He explains three specific arguments in Smith: the economizer argument, the local knowledge argument, and the invisible hand argument. Taken together, these form the core of Smith’s argument for what he called “the obvious and simple system of natural liberty.” They also form the analytical core of Otteson’s case for honorable business.

Briefly, the economizer argument says that people look to get what they want for the least trouble and inconvenience. This allows for the fact that people will make a lot of mistakes, of course, and some people have preferences and values the rest of us may not understand or approve of. The local knowledge argument says that every person has knowledge about his or her “local situation”—what Friedrich Hayek would in the twentieth century call “knowledge of the particular circumstances of time and place”—that is unavailable to outside observers. The invisible hand argument says that people promote one another’s good without necessarily intending to do so because in a commercial society, the way to get other people to help you is to help them. The butcher, the baker, and the brewer who keep me fed do so not because they love me in a particular sense—the way they might love their own children—but because I am willing and able to help them provide for those closest to them. In this case, it’s by paying them money for the things that make up the dinner on my table.

Honorable Business is an admirably brief book that contains an important and underappreciated argument. I hope to see it adopted widely by business schools and liberal arts programs, and I hope it helps generations of students and scholars see how they live good, flourishing lives—and help others do the same—by practicing Honorable Business.

This article is based on a more extensive review forthcoming in Regulation. Update: Here’s Dr. Otteson telling his story in a TEDx talk.



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