Done right, business is not just tolerable, it is honorable—and that is the message of Wake Forest University philosopher James Otteson’s new book. Otteson, whose previous efforts include Adam Smith’s Marketplace of Life (2002), Actual Ethics (2007), and The End of Socialism (2014), has, in Honorable Business, explained what makes business morally acceptable, even praiseworthy—when it is conducted honorably. Over the course of about 200 pages, he explains how and when buying low, selling high, and innovating are positively virtuous. As Tyler Cowen argues in his recent book Big Business, “American business … at its best, represents many of humankind’s highest values.” (See “A Love Letter to Tyler Cowen,” Summer 2019.) Otteson explains how.

This thesis might be a surprise to many who think that business is ipso facto dishonorable and who, frankly, have never given it much thought. Otteson draws a clear distinction between business conducted honorably and business conducted dishonorably. Honorable business respects others as free and dignified moral agents. Honorable business does not defraud or coerce, and Otteson does deal with Karl Marx’s objection that exchange is simply “mutual plundering.” The person going about honorable business creates value as the customer defines it.

Otteson’s “early operational definition” says that “honorable business is business that contributes to growing, generalized prosperity in a properly functioning market economy.” The honorable businessperson “embrac(es) and internaliz(es) … a professional identity as a businessperson who sees her purpose as the creation of value for others.”

Business and society / Business, Otteson argues, is an element of a eudaimonic life of contributing to a just and humane society. Eudaimonia is the central concept of Aristotle’s ethics and is often translated (poorly) as “happiness” or (much better) “flourishing.” Wealth, Otteson argues, “is a necessary prerequisite of a eudaimonic life,” which “implies that we need institutional structures—political institutions and economic policies—that enable wealth production.”

Business, therefore, has an important place in a hierarchy of moral value. Otteson conceptualizes this as follows (Otteson’s emphases):

  • We want a just and humane society.
  • A just and humane society depends on a variety of social institutions, including political, economic, moral, cultural, and civic institutions.
  • Included in those required social institutions is a properly functioning market economy.
  • A properly functioning market economy requires honorable business.
  • Honorable business includes industries, firms, and individual businesspeople creating value.

How, then, does one go about doing honorable business and, therefore, contributing to a just and humane society? Otteson offers a five-point code of ethics:

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

I’m especially interested in—and convicted by—his discussion of honoring all terms of promises and contracts. How often have I promised an email or article or follow-up or whatever, only to find that my failings in managing my time, energy, and attention have pulled me off track and led me to go back on my word? I don’t make promises intending to break them; indeed, I fully intend to deliver and can, as humans are wont to do, cook up a good (to me) story for why my missing a deadline isn’t my fault. But here I’ll borrow from Thomas Sowell: sincerity—or simply meaning well—is overrated. Likewise, honorable business requires fidelity. It’s something we in the academy would do well to heed if we want our teaching and academic scribbling to be honorable business rather than the “moral mess” described by Jason Brennan and Phil Magness in their recent book Cracks in the Ivory Tower. (See “Incentives in the University,” Summer 2019.)

Otteson is a renowned Smith scholar, so readers shouldn’t be surprised to see that he takes much of his inspiration from Smith and from what Otteson has elsewhere called Smith’s “economizer,” “local knowledge,” and “invisible hand” arguments. People want to find the “most advantageous” way to do something (the economizer argument). They are better situated than outside observers to understand and act on what F.A. Hayek called “the particular circumstances of time and place” (the local knowledge argument). In pursuing their own good in a commercial society, they are led to pursue others’ good—and unintentionally to create a harmonious social order (the invisible hand argument). In a world with honorable business that follows the five principles discussed above, we expand our capacity to flourish.

Honorable Business is, like other volumes in Otteson’s oeuvre, a spirited defense of liberal individualism against criticisms from scholars concerned about things like the tyranny of choice, the limits to markets, alienation, commodification, and other ills that supposedly emerge from the liberal order. He addresses these criticisms head-on and, by the time he is finished, he has produced a robust case for a commercial society.

Against calls for paternalistic control of things like salt intake, for example, he points out that the case for paternalism crashes against the rocks of the local knowledge argument. He writes in a footnote, “I do have a heart condition that means I need to ingest more salt daily than most people require.” I didn’t know such a thing was possible. I suspect that a lot of people who think it wise for government to control people’s choices are in a similar situation. What else, I wonder, don’t we know about the others we presume ourselves fit to control or at least nudge?

Many critics distrust commercial society because it doesn’t have a purpose of its own—the glory of the nation, for example, or universal brotherhood, or any of a number of other lofty notions that have inspired people to die at barricades and on battlefields since time immemorial. Otteson shows us that while social institutions and organizations are properly agnostic as to our ultimate purpose, we can nonetheless live whole, flourishing, satisfying, ethical, virtuous, eudaimonic lives by conducting Honorable Business.

With surging interest today in nationalism, racism, socialism, and so many other ideas that should have been dispensed with long ago, this book is a timely and important contribution. I hope it will be read by businesspeople and business students around the world for many years to come.