Patricia Werhane

As the editors of this volume write in summary, capitalism remains an efficient and effective producer of human wealth. Competing with such necessarily thin, portmanteau definitions, a systems thinking approach suggests that capitalism is alternately a complex adaptive system itself fully integrated with—if not structural to—global, contemporary human society. As such, it is susceptible to criticism on account of increasing and disparate income inequalities; an array of unaddressed crises in climate change attributed to ‘free’ industrialization; a one-size-fits-all to commercial organizations; as well as institutionalized racism, sexism, multiple additional forms of categorical discrimination, and widespread corruption. In the face of such polemical processes, a question arises as to what is the future of this global capitalism as it spreads throughout the planet? In this paper we discuss three possible scenarios for the future of global political economies. We imagine: firstly, the spread of Western models of capitalism will continue, largely unabated, despite any flaws. Secondly, that the world might experience a violent revolution and an interruption to this sort of enterprise, with an emergence of neo-Marxism, or some equivalent anarchy. And/or, thirdly, the future of viable forms of free enterprise rest in the reformulation of this model as a set of social imaginaries lodged specifically within, and operating in conjunction with local mores, norms, and social frameworks, each of which might produce a unique form of enterprise. To contextualize this discussion, we begin with a foreword offering a review of the structural significance and agency of the imaginaries, that tend to dominate the discourses on this topic in the field of business ethics; and by advancing a summary of conditions that we consider as indicative, significant and structural for any possible analysis or paradigmatic reformulation exercise. To that extent this article is an original and speculative position paper drawing on, reviewing, and interpolating existing literature. Empirical evidence illustrates two of the contrasting imaginaries in the interests of clarity.

In this article Werhane and Simone de Colle discuss the implications of focussing on the moral motivation accounts offered by main ethical theories for improving the design of corporate ethics programs. Virtue ethics, deontological ethics and utilitarianism offer different criteria of judgment to face moral dilemmas: Aristotle’s virtues of character, Kant’s categorical imperative, and Mill’s greatest happiness principle each provide criteria to answer the question “What is the right thing to do?” The paper then deals with the problem of moral motivation, and points out the relation between moral motivation and the concept of rationality in the different approaches in addressing the question whether acting morally is seen as an expression of rational behavior. This analysis of moral motivation provides a useful framework to improve the understanding of the relationships between formal and informal elements of corporate ethics programs. The authors suggest that the concept of moral imagination can provide a unifying approach to enhance the effectiveness of corporate ethics programs, by providing an intangible asset that supports the implementation of their formal components into management decision making.Original publication: De Colle, Simone and Werhane, Patricia H. “Moral Motivation Across Ethical Theories: What Can We Learn for Designing Corporate Ethics Programs?” Journal of Business Ethics (2008) 81:751–764. ©2008 Reprinted with permission.

Despite her fairly rigorous anti-foundationalist stance in her writings on Wittgenstein, in another of her early works, Persons, Rights and Corporations (Werhane 1985), a selection of which is reproduced in this chapter, Werhane endorses a foundational point of view by arguing that human beings, just because they are human, have basic inalienable rights, which cannot be abrogated despite what is often one’s own best intentions. She adopts this acutely Lockean position with regard to a theory of rights not only to defend what she finds the critically important idea that all human beings, just because they are human, have “basic rights,” but also, in order that she may defend the rights of employees against various common law principles, such as the widespread American practice of employment-at-will.Original publication: Excerpt from “Introduction,” in Werhane, Patricia H. Persons, Rights, and Corporations. Englewood Cliffs NJ: Prentice Hall. 1985, pp. 4–26. ©1985 Reprinted with permission.

In this paper Werhane takes issue with a communitarian analysis of the self as a personality created solely by reference to the context of one’s community. A communitarian notion of the self explains how individuals change and develop their identity, or identities, throughout the course of their lifetimes. This can arise commonly as the result of new experiences and the exposure(s) to differing social relationships, education, cultures, religions and ideas. However, such a description of the self, Werhane argues, cannot explain the existence of the subject or locus of all these activities. For Werhane, this “I,” or subject ego, persists throughout these changes. It is that subject self, an idea that is derived from what Kant (1999 (1787) calls the “transcendental unity of apperception,” and appealing to the writings of Walzer and Levinas, that Werhane argues accounts for human choices and the ability to step back and study ourselves and, thus, for the ability to make the choices that may steer oneself in another direction.Original publication: Werhane, Patricia H. “The Compatibility of Freedom, Equality, and a Communitarian Notion of the Self,” Liberty, Equality, and Plurality, ed. Larry May, Christine Sistare and Jonathan Schonscheck (Lawrence, KA: University of Kansas Press, 1997), pp. 105–15. ©1997 Reprinted with permission.

Following the later writings of Ludwig Wittgenstein, in this article Werhane argues that language is inexorably rule-governed. Indeed, it could not be otherwise if it is a form of communication through which we are intended to understand each other. This is not to conclude or interpret that such rules are a strict set of rules that we must follow; rather that the rules themselves are dynamic. These rules, like grammar, may even be abandoned. But the routine communicability of a shared language depends on a level of consistency in its use and a reliance on a mutual understanding of the rules of grammar or the values of any changes in that grammar.Original publication: Werhane, Patricia H. “The Constitutive Nature of Rules.” Southern Journal of Philosophy (1987) XXV: 239–254. ©1987 Reprinted with permission.

Attacking the traditional claim instigated by David Hume that there is a clear distinction between facts and values, or the descriptive and the normative, Werhane argues that this distinction between descriptive—or, what is—and normative—or, what ought to be—is misleading. In business ethics, at least, not only do these two concepts themselves overlap, but also the language in which we refer to these positions also frequently overlaps. Descriptive or behavioral business ethics has normative intent, and normative business ethics depends on descriptive case analyses for their subject matter. Thus, there is an interdependence between behavioral and normative business ethics that is sometimes ignored in the academic literature.Original publication: Werhane, Patricia H. “The Normative/Descriptive Distinction in Methodologies of Business Ethics.” Business Ethics Quarterly, (1994) 4: 175–180. ©1994 Reprinted with permission.

Werhane focusses on reconsideration of gender character stereotypes and, in particular, on women in management and leadership, and how women deal resourcefully with the complexity of a systems approach. She tackles an analysis of women leaders, an approach that may be considered somewhat controversial in light of her neglect of gender characteristics in earlier writings. Here Werhane argues that women in executive or managerial positions are more likely to be flexible. Women in such roles are usually inclined to be collaborative rather than directive and are better at understanding the complex relationships that develop, particularly in a global economy. Women are less fearful to hire their successors, and as transformational leaders, women are often better than their male counterparts in systems thinking.Original publication: Werhane, Patricia H. “Women Leaders in a Globalized World.” Journal of Business Ethics 74 (2007): 425–435. ©2007 Reprinted with permission.

This article, written with Calton, Hartman and Bevan, develops the position that poverty, globally, can be alleviated if not eradicated if Western industrial companies and other commercial institutions will form partnerships and collaborations in the emerging economies. These efforts are not intended to arise from any form of philanthropy. Indeed, the authors here argue both (i) that charity simply makes those people it sets out to assist even more dependent and (ii) that there is evidence to suggest that globally – even in the poorest communities – what is free is not valued nearly as much as those goods or services for which one has to pay, even if only a few cents. Indeed, the collaborations proposed here are not dependency relationships but partnerships which are truly equitable business relationships that create value-added for both parties.Original publication: Calton, J.M., Werhane, P.H., Hartman, L.P. & Bevan, D. “Building Partnerships to Create Social and Economic Value at the Base of the Global Development Pyramid.” Journal of Business Ethics (2013) 117.4: 721–33. ©2013 Reprinted with permission.

In this article Werhane addresses the issue of the role of moral imagination in systems thinking and makes that link explicit. In her analysis of the social construction of organizations, she adopts a formulation identified from contemporary complexity theory, and considers companies or businesses as forms of complex adaptive systems. These systems are animated by human moral agents, thus concepts of moral imagination are equally applicable to organizational contexts. Organizations may be considered in the same way as individuals; that is to say they are each imbedded in a set of interrelated, broader systems. It is clear that such systems on every level are complex, but Werhane argues further that because they are composed of human beings these systems – all of them – are changeable and always in flux. By employing moral imagination, organizations and larger systems as well as individuals have the potential to readapt to changing relationships as well as to changing social, cultural and environmental conditions.Original publication: Werhane, Patricia H. ‘Mental Models, Moral Imagination and Systems Thinking in the Age of Globalization’. Journal of Business Ethics (2008) 78: 463–474. ©2008 Reprinted with permission.

In this article Werhane explores the chaotic system of public and private health provision in the United States, and the complexity inherent in mixing managerial and medical priorities across a range of interlocking professional and commercial interests. Almost all health care professionals work in organizations, and these organizations are often managed by managerial specialists rather than health care specialists. Thus, the relationships between professional managers and health care professionals are constitutionally complex, not to mention frequently acrimonious. Such confrontations lead to moral stress. Unless they self-insure their patients, who then will have to interact personally with the insurers, health care organizations themselves have to interact with professional insurers as well as national and state Medicare and Medicaid programs, all of which operate with varying, complex and changing regulations. In addition, health care organizations interact with suppliers, non-health care workers and, most importantly, patients, some of whom may be uninsured. Bracketing these contextual arrangements tends to simplify the complex challenges of most health care providers, suppliers or insurers. A systems approach to the context helps individuals, patients, professionals, managers and organizations to imagine and think through these complexities to get a clearer picture of what is at stake. Moral imagination is, thus, useful as a tool in approaching these kinds of frequently problematic analyses.Original publication: Werhane, Patricia H. “Business Ethics, Organization Ethics, and Systems Ethics for Health Care.” In The Blackwell Guide to Business Ethics, edited by Norman Bowie, 289–312. Boston: Blackwell’s, 2002. ©2002 Reprinted with permission.

In this article, written with Tom Wren, the authors set out to reconcile the traditional, normative foundational idea of human rights with a social constructivist point of view. Here, they argue that one can make perfect sense of human rights as social constructions without committing to the universalist position that human rights are a basic set of claims for all human beings everywhere. Rather one should think of human rights as candidates or nominees for universal principles – candidates that are continually vetted and revised just as persons revise mindsets and social constructions. Whether or not this preserves a strong notion of human rights is still the subject of contention and controversy.Original publication: Werhane, Patricia H. and Wren, Thomas E. “Human Rights as Social Constructions.” Listening: Journal of Communication Ethics, Religion, and Culture (2014) 49: 121–36. ©2014 Reprinted with permission.

Using the examples of the Challenger and Columbia space shuttle explosions, Werhane et al illustrate how smart, good-willed people and decent companies create or take part in flawed systems that produce untoward outcomes. The authors argue that the organizational causes of the Columbia failure demonstrated that little had changed at NASA to prevent a reoccurrence of the previous explosion. Some of the causes included poor communication between engineers and managers and accompanying clashing mindsets, hierarchical silos that interfered with organizational integration, faulty risk analysis, habits built from past shuttle successes and resulting overconfidence, and a complacent or “broken” safety culture, all of which created a culture that contributed to both shuttle tragedies.Original publication: “The Role of Mental Models in Social Construction.” In Obstacles to Ethical Decision-Making by Patricia H. Werhane, Laura Hartman, Crina Archer, Elaine Englehardt and Michael Pritchard, 14–42. Cambridge: Cambridge University Press, 2013. ©2013 Reprinted with permission.

Taking the initiative from Freeman’s note in his 1984 book, Strategic Management, that “[o]rganizations are complex phenomena and to analyze them with the organization in the middle … does not do justice to the subtlety of the flavors of organizational life” (Freeman, 1984; 2010, 216), Werhane suggests that there are many possible formulations or models of stakeholder graphics. The “traditional” graphic, with the firm in the center, she suggests, may tend to overexaggerate the importance of the organization, which after all is part of a larger set of economic systems. If one reformulates that graphic and puts other stakeholders in the center, this changes the focus and the mindset of any viewer. If the center is removed altogether, she contends, there is a better – more realistic – image, model or mindset of the company, its stakeholders, and its responsibilities within the global set(s) of economic systems and cultures.Original publication: Werhane, Patricia H. “Globalization, Mental Models and Decentering Stakeholder Approaches.” In Stakeholder Theory: Impact and Prospects, edited by Robert Phillips, 111–129. Cheltenham, UK: Elgar Publishers, 2011. ©2011 Reprinted with permission.

This article is the precursor to Werhane’s full development of her theory of moral imagination. In this piece she espouses and develops the view that as managers we often get stuck or routinized in mental models or mindsets that we have adopted almost uncritically. That is to say, such managers may operate in a way that they are oblivious to important consequential information, or they fail to question their judgment or think to ask, “why are we doing this?” as detailed in Dennis Gioia’s (1992) confessional article in which he acknowledges not recognizing ethical issues while in the role of Recall Coordinator at Ford Motor Company. Using Gioia as well as other examples, Werhane argues that each of us can often be preoccupied with a single way of looking at our experiences, as through the lens of an ingrained and routinized mental model, and thus we either totally miss or even misinterpret important data. By the use of moral imagination, she argues, managers are able to work their way out of such ethical mires.Original publication: Werhane, Patricia H. “Moral Imagination and the Search for Ethical Decision-Making in Management.” Ruffin Foundation Special Issue: Business Ethics Quarterly (1998) 8: 75–98. ©1998 Reprinted with permission.

In this article Werhane and Simone de Colle discuss the implications of focussing on the moral motivation accounts offered by main ethical theories for improving the design of corporate ethics programs. Virtue ethics, deontological ethics and utilitarianism offer different criteria of judgment to face moral dilemmas: Aristotle’s virtues of character, Kant’s categorical imperative, and Mill’s greatest happiness principle each provide criteria to answer the question “What is the right thing to do?” The paper then deals with the problem of moral motivation, and points out the relation between moral motivation and the concept of rationality in the different approaches in addressing the question whether acting morally is seen as an expression of rational behavior. This analysis of moral motivation provides a useful framework to improve the understanding of the relationships between formal and informal elements of corporate ethics programs. The authors suggest that the concept of moral imagination can provide a unifying approach to enhance the effectiveness of corporate ethics programs, by providing an intangible asset that supports the implementation of their formal components into management decision making.Original publication: De Colle, Simone and Werhane, Patricia H. “Moral Motivation Across Ethical Theories: What Can We Learn for Designing Corporate Ethics Programs?” Journal of Business Ethics (2008) 81:751–764. ©2008 Reprinted with permission.

In this article, written with Hartman, Moberg, Parmar, Englehardt and Pritchard (2011), the authors argue that one of the problems of obedience to authority as depicted in the Milgram experiments, and later reiterated in many managerial scenarios such as the 2016 Volkswagen scandal, is the lack of moral imagination as well as lack of moral courage. Thus, corporate wrongdoing, such as falsifying software in diesel autos as VW did with its ‘defeat’ technology, results in a harmful, deceitful and expensive outcome both for shareholders and stakeholders, particularly individual customers. Questioning or challenging a corporate culture – or even a single managerial directive – that seems wrong requires a well-developed moral imagination as well as well-honed arguments as the basis of any such questions or challenges.Original publication: Werhane, P.H., Hartman, L.P., Moberg, D., Englehardt, E., Pritchard, M. & Parmar, B. “Social Constructivism, Mental Models, and the Problem of Obedience.” Journal of Business Ethics (2011) 100: 103–118. ©2011 Reprinted with permission.

Werhane challenges the arguments of leading economists, including Milton Friedman, that Smith extols the virtue of self-interest above other virtues, especially in the marketplace. Werhane is careful to explain that for Smith self-interest is a complex notion referring variously to (a) the object of a person’s interests which may be interests in others, in sports, in history, etc. and (b) a person’s interests in herself as the object of her interests. Moreover, this complex self-interest is by no means invariably a vice such as greed or avarice; a self-interested person could simply be someone who was not particularly interested in others without any necessity to consider harming them. In a marketplace setting, or at least in contexts wherein free exchanges may take place, a position that Smith clearly defends against overregulation and feudalism, each of us will be interested in our personal well-being. But Smith cautions that the market works, and works well, only if we (i) treat each other fairly, (ii) engage in fair competition, and (iii) avoid monopolies.Original publication: Werhane, Patricia H. “The Role of Self-Interest in Adam Smith’s Wealth of Nations.” Journal of Philosophy (1989) 86: 669–680. ©1989 Reprinted with permission.

Despite the fact that even Karl Marx acknowledges a large debt to Smith for Smith’s introduction of the concept of free enterprise as an economic antidote to feudalism, Smith has nonetheless stood accused of being antilabor. For Marx, a worker is defined by and identified with her work and productivity. It is Marx who initiates the idea that workers are often treated as just that – workers – not persons. Interestingly, as Werhane demonstrates, Smith recognizes this alienation in Book V of The Wealth of Nations where he points to the torpor of assembly lines and the negative effect of repetitive work. What is important for Smith, in counter-distinction to Marx, is that free enterprise itself – the ability to choose jobs, to get paid rather than be chattel or slave, to have one’s productivity measured and valued, and to have the ability to quit, albeit easier said than done in a less-than-full-employment market – divides the worker as a person from her labor and gives her a sense of freedom rather than alienation.Original publication: Werhane, Patricia H. “Freedom, Commodification, and the Alienation of Labor in Adam Smith’s Wealth of Nations.” Philosophical Forum (1991) 22: 383–398. Reprinted with permission.

Werhane, joined by her co-author David Bevan, argues that Smith was not, as some have thought, a radical individualist allegedly eschewing social relationships as sidelines in our individual development. Referring to texts in The Theory of Moral Sentiments, the authors demonstrate that according to Smith, “we are utterly social by nature and indeed, cannot manage without one another” (Bevan and Werhane 2015, p. 331). Without extensive social interactions each of us would be mute and we would have no sense of ourselves as individuals. Smith contends that as human beings we develop our personalities, our values and ourselves as conscious moral beings only when we have social contacts with others. This “inexorable sociality,” as the authors call it, allows exchanges and self-development out of which emerge our consciences. But the conscience is not merely an inevitable outcome of sociality. It emerges when each of us realizes that we are more than how others see us. We then begin stepping back from our social selves to act as impartial spectators of our own behavior and values as well as those of others.Original publication: Bevan, D. & Werhane, P. “The Inexorable Sociality of Commerce: The Individual and Others in Adam Smith.” Journal of Business Ethics (2015) 27.2: 327–35. ©2015 Reprinted with permission.

Both Adam Smith and the 19th century Social Darwinist Herbert Spencer, though in quite different ways, have been enormously influential in what is understood today to be free enterprise or capitalism. In this article Werhane examines the contributions of both, noticing that it is Spencer, not Smith, who advocates a “night watchman” theory of the state. As a social Darwinist, Spencer argues that those who are strongest should succeed and there should be no obstacles for those achievements: those who cannot compete should be allowed to wither away, thus strengthening the species, and thus it is from Spencer that later scholars glean the idea of meritocracy – that those who deserve to lead, to be wealthy or to be in power earned that right. Moreover, and of revelatory interest in Werhane’s commentary, Spencer defended workplace democracy, because it would allow the individual freedom of each individual participant that hierarchical organizations do not.Original publication: Werhane, Patricia H. “Business Ethics and the Origins of Contemporary Capitalism: Economics and Ethics in the Work of Adam Smith and Herbert Spencer.” Journal of Business Ethics (2000) 24: 185–198. ©2000 Reprinted with permission.

In this article, Werhane addresses those concerned with ethical reporting and decision-making, and demonstrates extensively how in taking a particular perspective we affect or color the reporting of an event or experience. Werhane uses the Japanese film, Rashomon (Kurosawa 1950), as the focus of her deconstruction. This film tells the story of an event as reported through the experience of four different participants. Each resulting narrative depicts the event and its outcomes differently such that one account seems to contradict another. Werhane employs the film as an analogy for ethical scenarios and management case study narratives. Any particular version of a narrative can become informally fixed as the prototype for subsequent versions even when the information as depicted in the prototype narrative has not been verified. This clearly affects, or even distorts, the reporting of many facts set out in the original event. How the company was involved, either positively or negatively, who was responsible for any fault or incident, and how the case is taught are all nuanced by this Rashomon effect. The Rashomon effect continues to be relevant as a means of critically considering the way in which information is presented.Original publication: Werhane, Patricia H. “The Rashomon Effect.” In Perspectives in Business Ethics, edited by Laura Pincus, 189–97. New York: Irwin/McGraw-Hill, 1997. ©1997 Reprinted with permission.

Radin and Werhane, the latter of whom is known for her range of writings on the subject of employee rights, trace these rights to John Locke, the seventeenth century philosopher, and his defense of the inalienability of the basic human rights to life, liberty, work and ownership of property. They summarize a defense of employee rights as derived from a Lockean point of view, including rights to free speech, to due process and to fair treatment as well as to safety in the workplace and to fair wages.Original publication: Radin, T.J. & Werhane, P.H. 2003, “Employment-at-Will, Employee Rights, and Future Directions for Employment” Business Ethics Quarterly, vol. 13, no. 2, pp. 113–130. ©2003 Reprinted with permission.

In the wake of the global financial market collapse of 2007–2008, Werhane and her co-authors Hartman, Archer, Bevan and Clark reconsider the issue of trust. Trust is considered here as invaluable and essential metaphorical glue in the smooth running of any globalized economy. The causes and effects of such a breakdown in this dynamic are identified, and the generally institutional barriers to any remedies are discussed with positive and negative examples. The paper proposes a range of organizational and cultural transformations which include adopting: (i) a preference for collaborative, rather than authoritarian, leadership; (ii) a more dynamic approach to corporate responsibility; and (iii) a more egalitarian and democratic approach to managing and communicating with stakeholder constituencies.Original publication: Werhane, P., Hartman, L., Archer, C., Bevan, D. & Clark, K. 2011. “Trust After the Global Financial Meltdown.” Business and Society Review, vol. 116, no. 4, pp. 403–433. ©2011 Reprinted with permission.

In this paper Werhane analyzes what Michael Walzer (1973) has called the “dirty hands problem.” Here Walzer refers to the impossibility of being a perfectly ethical company while operating globally across complex political economies. Particularly at issue for Werhane are the ethical divergences arising from varying and competing cultural and religious norms in the complex array of transnational settings. Whether manufacturing in China and South East Asia, trading with Arab states, or procuring materials from African countries, every transnational company faces a range of potential moral risks. These could include colluding with corrupt and/or repressive governments while offering employment and technological transfer opportunities to a foreign country or in a different culture. Werhane does not come to any firm prescriptive conclusions on whether to operate in or avoid these situations. The emphasis here is the importance – for managers and companies – of being aware of the possibility of these trade-off challenges and weighing the effect of adding positive contributions versus dealing with “dirty hands.”Original publication: Werhane, Patricia H. “The Principle of Double Effect and Moral Risk: Some Case-Studies of US Transnational Corporations.” In Responsibility in World Business: Managing Harmful Side-effects of Corporate Activity, edited by L. Borman-Larsen and O. Wiggen, 105–20. New York: United Nations University Press, 2004. ©2004 Reprinted with permission.

In this article Werhane raises the question of whether non-persons such as organizations and corporations have basic rights, as recently argued in the United Nations Guiding Principles, referred to as the Ruggie Principles (2011). Developing a complex view of organizational rights as secondary moral rights, Werhane argues that the corporate obligations to respect human rights spelled out in the Ruggie Principles entail a conclusion that corporations themselves have moral rights too. However, such rights must be considered strictly as secondary moral rights since organizations are not independent of their human constituents.Original publication: Werhane, P.H. 2016, “Corporate Moral Agency and the Responsibility to Respect Human Rights in the UN Guiding Principles: Do Corporations Have Moral Rights?”, Business and Human Rights Journal, vol. 1, no. 1, pp. 5–20. ©2016 Reprinted with permission.