Business Ethics from the 19th Century to Today

Workers struggled to improve their working environments and to get better compensation. Employers and workers sometimes resorted to illegal and unethical activities, including threats of and actual violence. Large-scale employers enlisted their political allies to tilt the balance of power in their favor. Despite opposition, the rights of workers expanded during the nineteenth and twentieth centuries. Although not strictly illegal, using such political influence was certainly dubious. Union workers sometimes made their gains at the expense of non-union workers. Gains in wages were more likely attributable to increasing labor productivity than to union activity.

The nineteenth century was a time of rapid changes for Americans and Europeans in particular. New inventions revolutionized economies. The American ideal of yeoman farmers faced challenges, as a nascent manufacturing sector burgeoned. Telegraphs and railroads pioneered the first large-scale private enterprises, quickly eclipsing in size and extent the textile manufacturers of England and the United States. Changing technology benefited the many but often at a severe cost to some people. The changing technology also inspired new forms of business organizations, including variations of limited liability firms.

Americans of the mid-nineteenth century struggled with a volatile economy. Attitudes toward bankrupts changed from moral reproach to widespread acceptance. Purveyors of quack medicines have thrived for millennia. The desire to be cured of illness and debility has proved enduring. Food vendors, too, faced temptations to adulterate their products, often with their customers’ knowledge and consent. Wars raised different aspects of business ethics. The Civil War corruption was a continuation and amplification of previous corruption and a harbinger of the widespread shenanigans of the Gilded Age.

The industrialists of the last decades of the nineteenth century engaged in various controversial practices, and muckrakers gained prominence by highlighting alleged business malfeasance. Historians noted, however, that many of the allegedly unethical practices were not necessarily illegal at the time. These practices demonstrate cases where something that is legal may still be unethical. Then again, some allegedly unethical practices proved beneficial to consumers, workers, and some businesses. The United States proved especially keen to prevent cartels and monopolies unlike contemporaries in Germany and Japan.

John D. Rockefeller remains a pivotal figure in American economic history. Muckrakers painted a dismal portrait of Rockefeller and his associates. Standard Oil reduced the price of refined oil to consumers, albeit by consolidating the industry and by initially relying upon rebates from the railroads. The firms receiving rebates often shared the benefits with consumers in the form of lower retail prices. Many of Rockefeller’s tactics were not illegal but were certainly ruthless. Standard Oil, however, operated in an environment of increasing competition.

Retail pioneers in the mid-1800s revolutionized shopping by offering good-quality products with stated prices and without chicanery, instead of the old merchants’ insistence upon charging different prices to individual consumers after protracted haggling. The new-style retailers also created dream worlds of consumption. Despite these benefits, critics found plenty to criticize about these palaces of consumption, including concerns regarding the chastity of women shoppers and clerks. The pioneering retailers often treated their workers better than employers in other industries.

By the 1920s, Americans accepted big business. They enjoyed the tide of new consumer goods, especially electric appliances. The new gospel that “ethics pays” gained credence during the early decades of the twentieth century. A concurrent movement was industry self-regulation. Many businesspeople smugly congratulated themselves over the elevated level of business ethics; they characterized the unscrupulous as petty vendors, who would never prosper because of the forces of competition and industry self-regulation. Complacency regarding business ethics largely dissipated during the Great Depression.

Many people have desired to become wealthy with a minimum of effort. Shrewd con artists exploited such desires. The get-rich schemes reveal dubious ethics on the part of both scammers and putative victims. Ponzi schemes not only provide insights into private scammers but also afford a comparison between business and government ethics. State governments displayed questionable ethics in running their lotteries; the federal government’s social security program also had its ethical blemishes. Businesspeople might insist that government ethics attain the level of business ethics.

Many societies have entrenched disparities between rich and poor because of royalty and birth. These people maintain their superior position relative to the masses by inter-marriage and governmental edicts. In America, many of the wealthy initially attained their wealth by providing goods and services people wanted, but some accumulated wealth with the connivance of government officials. What is an optimal distribution of income and wealth? Do the wealthy have ethical duties toward the poor or the poor to the rich? Many industrialists voluntarily donated large sums to various philanthropic causes.

Children were not always deemed as “special.” Up until 1800, many European and American parents loved their children in different ways than do modern parents. As families struggled for survival, parents expected children to work at much younger ages than today. European and American teenagers began using their earnings from their after-school job for their own consumption, instead of contributing to their families’ upkeep; entrepreneurs quickly catered to children’s desires. What duties producers and employers owed young consumers and workers became pressing questions?

Business ethics elicited comment throughout history. Wherever people interacted via trade and commerce, there was discussion and disagreement over what constitutes ethical behavior. The Enron scandal took down Arthur Andersen, an accounting firm long renowned for its integrity. The unethical Enron officials relied upon misleading accounting practices and cozy relations with prominent politicians and regulators. The perpetual race between fraudsters and enforcers continued into the new millennium. Pathways to corruption are certain to be repeated by future unethical businesspeople.