Business Ethics and Professional Ethics


A book on business ethics by Dr. Jukka Kilpi






Ethics of Promise
and Promising



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An insolvent breaches her promises. Does she commit a moral wrong? How should the society respond to the default? What is the justification for discharge of debts in bankruptcy? The ethics of bankruptcy seeks to answer these questions.

We start by charting the development of the institution of bankruptcy. Traditionally, the debtor has been punished for her impecuniousness. The penalizing policy is still alive in many countries, although it has given way to debtor protection in the English-speaking world.

Whether a bankrupt should be punished or exonerated depends, in the ethical sense, on the moral wrongness of her actions and on the consequences of reprisals. The effects of laws may be estimated empirically, but a moral inquiry is needed to decide whether an insolvent's breach of promise is an evil: we have to find out why promises ought to be kept.

This inquiry contrasts and compares the Humean doctrine of promises as useful conventions with the Kantian view of autonomous agency constituting promissory obligations. Kant's ideas are disentangled from some of his more dubious metaphysics, while the notion of autonomy is preserved and used to support the normative thesis of the ethics of bankruptcy.

The revised Kantianism yields a theory of promissory autonomy, which overcomes some of the difficulties afflicting Humean conventions. According to promissory autonomy, my promise is a demonstration of my autonomous will which shapes the future through the imposition and observance of moral obligations: it is an expression of a free will restricting its own freedom.

After defining the source of moral obligations in promising, we look at the responsibility of promisors who go broke. In addition to promissory autonomy, ethical concerns raised by forgiveness, utilitarianism, and distributive justice are discussed. The moral aspects of insolvents' contractual, fiduciary, and tortious liability are studied, and their criminal liability is reviewed in the light of fraud, recklessness, negligence, and deterrence.

An account of commercial credit completes the evaluation of bankrupts' wrongdoing. The outcome is that an honest insolvent has done no wrong, and that punitive bankruptcy laws cause unnecessary harm. Discharge of debts is justified as a moral right because it re-establishes the bankrupt's status as an autonomous person, and it is justified as a social practice because its consequences are beneficial.

Next, the ethics of bankruptcy assesses law reforms in the United Kingdom and Australia, and the efforts to convene an internationally enforceable bankruptcy. It appears that debtor protection has received less attention than would be ethically appropriate. We also take on failed high-flyers, and the finding is that their lifestyle and leverage do not make their dealings unscrupulous.

The final section examines corporate moral personhood. A new philosophy of the corporation as a nexus of contracts is suggested. Moral responsibility for corporate actions is accounted for with an emphasis on the autonomous agency, leading to a justification for the limited liability corporation in line with the principles applied to insolvent natural persons.

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The Ethics of Bankruptcy Hardcover

The Ethics of Bankruptcy Paperback