Applying Utilitarianism to Business Ethics: The Ford Pinto Case Published on February 6, 2009 by annielundy in Major Companies Comments (2) (2)|0 Liked It
An attempt to unravel the uses and abuses of the theory of utilitarianism. It is interesting to see how the Ford Motor company fared with this case.
Utilitarianism, in a simple definition, can be described as a consequentialist, normative theory and, according to Fieser, means that “correct moral conduct is determined s olely by a cost-benefit analysis of an action’s consequences” (Ethics, 7). To examine the the definitions and concepts of the theory, in relation to business business ethics, c reference to the Ford Pinto Case will be used. It should then illustrate how utilitarian utilitarian methods and cost-benefit analysis impacted on the whole events. Utilitarianism: The basic ethical principle of this theory is of consequences, weighing them up to determine
how every person involved in any event, issue, proposal, project and so forth, would be affected. The aim in doing so would be to decide on a morally right action, one that would result in “the greatest overall positive consequences for everyone” (Hinman, 136). So every aspect must be examined to evaluate potential potential good and bad outcomes; if the goods outweigh the bads, then morally, the the action can be deemed right. If there are more bad consequences predicted, then the opposite applies. As with all ethical and philosophical theories, there are more issues to be considered, nothing is quite so simple. Different forms of utilitarianism utilitarianism have been described over the centuries, like Bentham’s pain – pleasure as bad and good consequences. (Ethics, ( Ethics, 8), but all seemed to attempt to measure and define what ‘utility’ actually means. Read more in Major Companies « McDona McDonald’s ld’s or Starbu Starbucks? cks? Las Vegas Trip on Bailout Package Canceled Canc eled by Wells Fargo » If utilitarians consider morality to be all about consequences, then how are consequences measured, which calls into question question how utility utility can be measured measured and how much much of it is the ideal level to aim for? Hinman states: “utilitarians must answer the question of whom whom these are consequences for?” (137). This question is highly relevant when applied to using utilitarian ethics in business, and in particular, within the context of the Ford Pinto case, to be discussed later. There are many different versions of the theory, all trying to define what consequences are applied to and how they may be applied. One version, rule-utilitarianism, considers that a rule or code of behaviour is morally right if, by its application, the consequences are more favourable that unfavourable to everyone. The actions driven by the rule would result in benefits, or goods for all of society. One example might be a Council’s Urban Regeneration Programme, funded funded by Council Tax. The rule is that everyone must pay, and in doing so, produce an outcome that creates a better environment for the majority living in the urban area. The flaw is that those in the suburbs, who contribute the greatest amount, will will not receive as much favourable consequences, on the premise that they already have plenty of utilities. utilities. So simply following a rule would not always be equally favourable. On the other hand, act-utilitarianism, the most common form used in many circumstances, looks at the consequences of every case individually and works out the benefits before taking a morally right ac tion. Leggett (13) in commenting on Ford’s use o f utilitarian ethics, says:
“The utilitarian approach evaluates each action separately and the consequences that arise from it. This analysis would include any ‘harms’ or ‘benefits’ incurred by any people involved in the case.” Business Ethics: In applying utilitarian principles to business ethics, the cost-benefit analysis is most often
used – it is a good decision making tool. Companies will attempt attempt to work out how much something is going to cost them before taking action that should, ideally, ideally, result in consequences favourable to everyone. That would mean the company could make a profit, while the consumer benefited benefited from their product. Hopefully, products are fit for purpose, safe, and give value for money. No business would attempt a project without evaluation evaluation of
all relevant factors first, as well as taking other issues or risks into account that might jeopardise success. Ethical business practice, using utilitarianism, would thus consider the good and bad c onsequence for everyone the action would affect, treat everybody as having equal rights, with no bias towards self, and would use it as an objective, quantitative way to make a moral decision. In applied business ethics, within the utilitarian theory, many principles exist which may be used to inform the morality of actions when analysing costs-benefits, or should be, if consequences ar e to favour more people overall. These include harm, honesty, justice and rights. So no harm should be done to to others, people should not be deceived and their rights to life, free expression, and safety should be acknowledged. The contention here is that Ford abandoned these principles, abused the utilitarian theory to suit their needs, stayed within the laws of the time, but behaved unethically. The ‘utilities’ as a consequence, appeared to be money, and they used that to define the value of their needs against the value of human life. Ford Pinto Case and Cost Benefit Analysis: Lacey (580-581) stated that:
“Ford pushed the federal regulators to put some price on auto safety…It was an agency of the U.S. government [National Highway Traffic Safety Administration (NHTSA)] which arrived at this blood-chilling calculation, not the Ford Motor Company. But the way in which which Ford took this government figure [$250,725] and used it for its own purposes pur poses carried a chill…” So the Ford Pinto went on sale with dangerous design faults in the position of the fuel tank and nearby bolts, and the tendency for the fuel valve to leak in rollover accidents. Design and production was rushed and cost of the vehicle kept down to sell it at $2000. It sold well, until 1972 when four people died and one young boy was horrendously burned and disfigured; these are only a few of the incidents that resulted from the Pinto’s flaws, many more followed, costing Ford millions millions in compensation. The cost-benefit analysis demonstrated an abuse of utilitarian principles, and the engineers were fully aware of the flaws, yet the company continued to sell the car as it was, without safety modifications. modifications. They “weighed the risk of harm and the overall cost of avoiding it.” Leggett, (1999). The government figure, mentioned earlier, was made up of 1 2 ‘societal components’ that included $10,000 for ‘victim’s pain and suffering’ and was meant to determine determine the cost to society for each estimated death. Ford decided to predict or estimate 180 deaths, 180 serious burn injuries, 2100 vehicles lost, and calculated $49.5 million overall, a figure that would be a benefit to to the company, if they put things right with the car. The estimated cost of doing so came to $137 million, for 11 million vehicles at $11 dollars per tank a nd $11 per unit for other modifications. So costs outweighed benefits and the value of human life was quantified quantified as an economic commodity. It also emerged that some evidence suggested the ac tual costs to correct matters were over-estimated and would have been nearer to $63.5 million. Though these did not equate to the benefits, there would seem to be a moral duty somewhere for for a huge corporation like Ford, to to bear the cost of $15 million. That way, utilitarian utilitarian ethics, normative principles and the most good and positive consequences for most people overall would have resulted. There seems to be some form of justice or divine retribution in the way the benefits benefits dwindled and the costs grew over the years, as lawsuits and penalties took millions of dollars dollars from Ford. The company did noting illegal in terms of design at that time; they took advantage of the cost-benefit analysis, ignored ethical principles and abused the moral moral aspects in utilitarianism. utilitarianism. As Lacey (577) put it: “The question is whether Ford and Iacocca [Executive vice president] exhibited all due care for their customers’ safety when balanced in the complex car making equation that involves cost, time, marketability and profit.” Conclusion: Utilitarianism, business ethics and the Ford Pinto case present a dilemma, as the theory appears
to be one of moral strength and a good guideline for ethical practice. In relating its consequential content to the Ford Pinto case, it would seem that the application of ethics had been dismissed in favour of profits, reputation and unethical practices. The theory cannot possibly be used to to put a value on human life, as Ford attempted attempted to do. The dangers in utilitarianism lie with the potential potential for abuse, and in abandoning the inherent principles, Ford demonstrated those dangers in action. The decision not to rectify faults represented a denial of doing no harm, not deceiving others, justice and the rights to life and safety. Nor can the theory measure human suffering or loss, as Ford found, to its cost; it cannot predict consequences accurately or quantify benefits and har ms, simply by applying a cost-benefit
analytical tool. In considering that the ends justify the means, another aspect of utilitarianism, utilitarianism, and determining the pain of actions, volume and not ‘who’ suffers, has significance. significance. In principle, evaluating of good and bad consequences provides one way of ensuring that companies consider the morality of their actions, which may suggest that utilitarianism can be a positive influence for ethical business practice. Reference List As Follows: Fieser, J. Ethics: Consequentialist Theories Internet Encyclopaedia of Philosophy 2006. University of Tennessee at Martin. Martin. 24 April 2007 http://www.iep.utm.edu/e/ethics.htm Hinman, L. M. Ethics: A Pluralistic Approach to Moral Theory: Chapter 5: The Ethics of Consequences: Utilitarianism. 3rd Edition. Edition. Belmont, CA: Wadsworth: 2003 Lacey, R. Ford. London: Book Club Associates Associates by Arrangement with William William Heinemann Ltd. 1988 Leggett, C. The Ford Pinto Pinto Case: The Valuation of Life as it Applies to the the Negligence Efficiency Argument. Argument. Law and Valuation Papers, Spring 1999 at Wake Forest Forest University. 24 April 2007 http://www.wfu.edu/~palmitar/Law&Valuation/Papers/1999/Leggett-pinto.ht http://www.wfu.edu/~palmitar/Law&Val uation/Papers/1999/Leggett-pinto.html ml Home | Jeremy Bentham: His Life and Impact-- jk jk | UTILITARIAN ETHICS: an introductory
explanation | JAMES MILL ON RELIGION | BENTHAM ON BUGGERY, BUGGERY, and other crimes against oneself | The Bentham Brothers, their adventure in Russia | Panoptic Panopticon on, Bentham's Be ntham's design of prisons | Bentham's final resting place | Bentham's Utilitarianism in Victorian England | Bentham, Life and Involvement with University College London | JOHN STUART MILL ON JEREMY BENTHAM |Bentham, a Deeper Look | John Stuart Mill: a brief account | Jeremy Bentham's Will | The Rationale of Reward--Bentham| BENTHAM: THE RATIONAL OF PUNISHMENT IMMORAL | BENTHAM: ON THE RATIONAL OF REWARD | JEREMY BENTHAM: Shorter Britannica Article | UTILITARIANISM - - John Stuart Mill | Taylor Harriet Mill | John Stuart Mill: a fuller account | Beth Betham am and His Works | Be Beth tham am : A Short Accounting | Utilitarianism as adopted by theologians: a review |Utilitariani Utilitarianism, sm, an historical survey | James Mill | Samuel Bentham | THE SPRINGS OF ACTION--Jeremy Bentham |JEREMY BENTHAM ON PLEASURE | Prof. Singer, the utilitarian, 2 articles | UTILITARIAN LINKS
UTILITARIANISM: the ethical theory for all times.
THOUGHT IS WHAT SEPARATES US FROM THE ANIMALS, AND THE CONJUNCTION OF VALUES AND COMPLETENESS SEPARATES US FROM THE COMMON HERD. UTILITARIANISM WHILE JUSTIFYING MANY OF THE COMMON-SENSE ETHICAL BELIEFS, IT GOES BEYOND THAT TO GUIDE US (AND SOCIETY) INTO NEW AND BETTER WAYS. COME ON THIS THOUGHT CHALLANGE, PLEASE.
To him who little is not enough, nothing will be enough--Epicurus
Jeremy Bentham: His Life and Impact-- jk jk
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To him who little is not enough, nothing will be enough--Epicurus Meditate upon pleasure, for without it ones does all to get it back--Epicurus {Mean that pleasure is the prime mover in human behavior. Jeremy Bentham Bentham said the same" "We have to to soverigns, pain and pleasure. To put it in psychological terms: Operant (respondent) conditioning is determined by positive and negative reinforcement and by positive and negative punishment (see http://skeptically.org/scpsy/id9.html). ).
Site # 2 develops utilitarian ethics into a general theory of utopia, one which delves into economics, politics, ethics, and psychology. There is continuity between Epicurus and Bentham, and between Bentham and site # 2. With each step step there is progress. Top of Form
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Since love with its conjunction of loving copulation will yield the greatest amount of pleasure, special attention has been given this topic topic..
In a site dedicated to skepticism, utilitarianism is on the fringe of relevance. The argument for inclusion goes as follows:
A. For For to wha whatt to be be skeptical about in a topic (especially one that is both logical and accepted by well educated people) one must know a more reasonable alternative. B. Among Among the topi topics cs under under the umbrella of skepticism are those about our economic and political systems. C. Utilitari Utilitarianism anism had as its principle early function (by Bentham and his circle) been used to bring moral considerations as a measurement of then current economic policies and political agendas.
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