ABSTRACT. In Section I, I criticize the view,implied by the concept of rational economic man,that feelings are inherently opposed to rationality. Iattempt to show that emotions or feelings are essen-tial to the proper functioning of reason, rationalobjectivity, and practical rationality or rationaldecision making. In addition, I argue that emotionscan help to resolve certain ethical dilemmas. InSection II, I consider business writers who criticizebusiness for overemphasizing the head at the expenseof feelings or the heart. In Section III, I discuss theconnection between material self-interest (as mani-fested in trade) – a concept of rational economic man– and business virtues.

Introduction

The emphasis on material self-interest and therejection of the emotions as a positive factor inbusiness conduct have been traditionally associ-ated with a concept called “rational economicman.”1 Edgar H. Schein suggests that fourassumptions about human nature are entailed bythis concept insofar as it applies to employeebehavior. I shall consider the following threeassumptions.

a. Employees are primarily motivated by economicincentives and will do whatever affords them thegreatest economic gain. . . .2 c. Feelings are, bydefinition, “irrational” and, therefore, must beprevented from interfering with a person’s rationalcalculation of self-interest. d. Organizations canand must be designed in such a way as to neutralizeand control people’s feelings and, therefore, theirunpredictable traits.3

Feelings are excluded, then, from the realm ofwhat is rational; they must be prevented at allcosts from interfering with reason and withthe rational functioning of organizations. Myprimary concern in this paper is to show thatthe belief that feelings are inherently opposed torationality, implied by the above premise ofrational economic man, is incorrect. To this end,in Section I, I consider the following ways inwhich emotions provide indispensable supportfor rationality. The passion for rationality isessential to the proper functioning of reason, andemotions are necessary conditions for rationalobjectivity and practical reasoning (rationaldecision making). In addition, emotions can helpto resolve certain ethical dilemmas. If I amcorrect, insofar as businesspeople are influencedby the notion that feelings or emotions are inher-ently opposed to rationality, their views of objec-tive rationality, rational decision making, and thenature of reason itself are faulty. In Section I, Ialso show that Aristotle’s ethical theory incor-porates Antonio Damasio’s well-defended viewthat emotions are essential for rational decisionmaking; I suggest that Aristotle’s theory is impor-tant for understanding ethical decision makingand business ethics in general.

In Section II of the paper, I consider theprevalence among businesspeople of the neglect

Theoretical Foundations

The Head, The Heart, and Business Virtues Sherwin Klein

Journal of Business Ethics 39: 347–359, 2002.© 2002 Kluwer Academic Publishers. Printed in the Netherlands.

Dr. Sherwin Klein is a professor of philosophy at FairleighDickinson University. He has published articles inancient Greek philosophy, business ethics, and ethics. His publications in business ethics have appeared in the Business Ethics Quarterly, Business andProfessional Ethics Journal, Business and SocietyReview, Journal of Business Ethics, and TheInternational Journal of Applied Philosophy. He hasalso published two books in ethics including, BusinessEthics: Reflections from a Platonic Point of View(N.Y.: Peter Lang Publishing Inc., 1993; reprinted1995).

of feelings. If this is true, the argument in SectionI, which is directed against rational economicman’s disparagement of feelings, has relevance forbusiness. Specifically, the argument in Section Iimplies that the rational objectivity and ethicaldecision making capacity of a businessperson willsuffer if he or she has been conditioned by thenegative attitude towards feelings or emotions,which Section II suggests is prevalent in business.

Since the assumption underlying c) and d) ofthe concept of rational economic man – feelingsare inherently opposed to rationality – is criti-cized in Section I, in the third and final section,I turn to a discussion of the remaining premiseof this concept–premise a) – which I said Iwould consider. Specifically, in the third section,I limit the discussion to the connection betweenmaterial self-interest, as manifested in trade, andbusiness virtues.

The abrupt change of topic in Section III toa discussion of the motivation of material self-interest in the context of trade may suggest a lackof connection between Sections II and III. Thesesections, however, are related. The dismissal anddisparagement of feelings implied by the conceptof rational economic man and accepted by manybusinesspeople qua businesspeople is not onlyincompatible with a proper understanding ofwhat is rational – and, therefore, with the rationalpart of rational economic man (as I show inSection I) – it can hinder people from under-standing an important consequence of theeconomic man part of rational economic man.In Section III, I maintain that trade, even if it ismotivated by material self-interest, helps todevelop business virtues by helping to nurturethe emotions upon which these virtues arebased, e.g., feelings of friendliness, cooperation,trust, and a concern for justice and honesty.If, as suggested in Section II, the neglect offeelings is prevalent among businesspeople, suchan attitude can prevent them from understandingthat a consequence of the motive of economicman (material self-interest) in the context oftrade is the nurturing, rather than stifling, ofthe emotions upon which business virtues arefounded. Moreover, businesspeople’s negativeattitude towards feelings is destructive of thewell-being of business, for the health of business

requires the feelings upon which the businessvirtues are based.

I

In this section, I intend to show that the viewthat feelings are inherently opposed to rationalityis incorrect, and I shall attempt to defend theposition that feelings and rationality are insepa-rable. It might be appropriate to begin by main-taining that the human passion for rationality, asPlato so clearly saw, is itself indispensable to theproper functioning of reason. Israel Schefflerelaborates on the importance of emotions tothe rational life. The rational life, he tells us,presupposes certain emotional dispositions,

for example, a love of truth and a contempt forlying, a concern for accuracy in observation andinference, and a corresponding repugnance aterror in logic or fact. It demands revulsion atdistortion, disgust at evasion, admiration of theo-retical achievement, respect for considered argu-ments of others. Failing such demands, we incurrational shame; fulfilling them makes for rationalself-respect.4

Generally, he suggests that a rational lifedemands a rational character just as a moral lifedemands a moral character. The right emotionsshould be directed towards the right things in theright way. A rational character, says Scheffler,“monitors and curbs evasions and distortions, itcombats inconsistency, unfairness to facts, andwishful thinking. . . . It works for a balance inthought, an epistemic justice. . . .”5

The desire for rational objectivity is implicitin Scheffler’s view of the rational life. In orderto show that feelings are not inherently opposedto rational objectivity and, indeed, cannot beseparated from it, I shall first consider thestandard view of objective reasoning. If a personis asked why he thinks an opinion or belief istrue or false, he is being asked to give reasons orevidence to defend his belief. Reasoning, then,involves justification, support, defense, proof, andthe like. Since evidence can be either pro or con– that is, supporting or refuting evidence –objective reasoning is grounded in an attitude

348 Sherwin Klein

of looking at both sides of the evidence. Onthe other hand, the nonobjective reasoner hasa prejudiced or biased attitude toward theevidence; he is concerned with supporting hispet beliefs.

Generally, objective reasoning entails openmindedness. A prejudiced or dogmatic person isunwilling to consider counter evidence. Thus, arational person will not acquire habits which biasor warp her judgment. But it is not enoughto be willing to consider counter evidence, onemust be passionate about seeking it, as Socrateswas. Open mindedness, as the prime requirementfor rationality, is essentially to be open to criti-cism. Socrates recognizes that rational conversa-tion progresses by falsification. One may findsome evidence to defend a belief, but if there islegitimate counter evidence, the belief (logicallyspeaking) must be modified. As Plato says, toshow that one knows something, one must beable to run the gauntlet of legitimate objections.The rational person bends over backwards todefend opposing points of view. Open minded-ness, then, helps the reasoner to develop the habitof searching for all the relevant evidence – tothe degree to which this is possible and givensuch constraints as time and the importance ofthe issue at hand.6

It is difficult to believe that objective ratio-nality is possible without support from requisitefeelings or emotions. A lack of sympathy andempathy, for example, prevents open mindednessand cultivates prejudice and dogmatism. Thisrequires some elaboration.

Given the above analysis of the standardview of objective reasoning, a parallel can beshown to exist between it and a moral sensegrounded in sympathy and empathy. The modernAmerican philosopher John Dewey is particularlycritical of exclusive dichotomies, and basing thesource of moral conduct on either feeling orintellect is no exception. Dewey suggests theintimate connection between reason and feelingin a moral context. Sympathy (and one shouldinclude empathy) has been emphasized by moralsense theorists because it “carries thought outbeyond the self and extends its scope . . . [and]saves consideration of consequences from degen-erating into mere calculation.”7 It helps “to put

ourselves in the place of others, to see thingsfrom the standpoint of their purposes andvalues.”8 Sympathy is important, then, if we areto attain an objective, rational point of view.9 “Aunion of benevolent impulse and intelligentreflection,” says Dewey, “is the interest mostlikely to result in conduct that is good.”10

Just as emotional openness to others supportsthe rational openness required by rational objec-tivity, so insensitivity, callousness or indifferencetoward qualities of persons or actions that aremorally relevant causes one to neglect or distortmorally relevant data which a rational moralagent should consider. Moreover, even if reasondoes reach a correct conclusion on moral matters,such lack of feeling undermines any inclinationto act in accordance with one’s moral judg-ments.11 One must conclude that if a busi-nessperson believes in rational economic man’sposition that feelings are inherently opposed torationality, he or she is guided by a flawed notionof both a rational and a moral person. Certainly,the result of this position is an inadequatebusiness ethic.

Rationality is rooted in habits which properlyguide reflection and control biases. Practicalrationality, however, is more than open minded-ness; it also involves the ability to determine andachieve ends associated with human flourishingor happiness. It is often thought that whenwe are functioning rationally, we use practicalreasoning to choose correct, efficient meansfor achieving desired ends. But if a desired endturns out to make us unhappy, the end is said tobe irrational. Therefore, practical rationalityimplies both determining the correct means forachieving desired ends and aiming at those endswhich promote what Aristotle calls human flour-ishing (eudaimonia).12 The fact that we call endsrational or irrational suggests that a dichotomywhich associates rationality exclusively withmeans and (irrational) desires and feelings withends is wrong.13 In what follows, I attempt toshow that a dichotomy between practical ratio-nality and emotions is false. Emotions or feelingsare not inherently opposed to rationality; indeed,emotions and rationality are inseparable.

It can be shown that practical rationalitynecessitates a connection between emotions and

The Head, The Heart, and Business Virtues 349

reason. To take seriously the position of rationaleconomic man that emotions should be separatedfrom reason and banished from personal decisionmaking, is in effect to destroy practical rationalityor rational decision making. In Descartes’ Error,14

Antonio R. Damasio uses the well-known caseof Phineas P. Gage and his own patient, whomhe calls Elliot, to show that emotions are neces-sary conditions for the proper functioning ofpractical reason. In both cases, damage to thefrontal lobe radically changed their character andpersonality. Before the damage, both Gage andElliot were noted for their fine character, senseof social and moral responsibility, and soundpractical judgment as well as for their intellectualabilities. While their intelligence and skillswere unaffected by the damage, their character,personality, and decision-making abilities wereradically altered. They displayed little sense ofresponsibility and moral judgment, and theircapacity to make advantageous decisions waswoefully inadequate.

Elliot was subjected to a battery of tests afterhe had suffered damage to the ventromedialsector of his frontal cortices. The tests showedthat his mental functions were all normal orabove normal. His failure to make practical deci-sions was not due to lost knowledge of socialrules or principles. Moreover, he was able toimagine alternative options and determine theconsequences of these choices. He was also ableto conceptualize means for achieving social goalsas well as being able to predict the probableresults of social situations.

Gages’s and Elliot’s capacity for normalemotions was severely impaired because of thedamage to their frontal lobes. Thus, although intest conditions Elliot was able to perform abstractintellectual operations well, Damasio reasons thathis inability to attach emotional value to any ofthe options that came to mind or to the conse-quences of these options caused him to choosebadly or not at all in real life situations.

With reference to practical reasoning aboutsocial and personal problems, Damasio distin-guishes between two beliefs – the “high reasonview,” which he criticizes, and his own position,the “somatic-marker hypothesis.” The formerposition maintains that the rational process which

leads to the best results suppresses emotions. This,we said, is the view of rational economic man.To use business parlance, one should consider thealternative possibilities and perform a cost/benefitanalysis of each of them. For example, saysDamasio, according to this view, one should“consider the consequences of each option atdifferent points in the projected future andweigh the ensuing losses and gains.”15 Against thisview of practical rationality, he raises the fol-lowing objection, one familiar from critics ofutilitarianism and, more generally, ethical con-sequentialism. At best, a decision will take aninordinately long time; at worst, you will notmake a decision because you will get lost in thecomplexity of your calculations. He also notesthat there will be an excessively large numberof items to hold in memory for comparison. “Inthe end,” says Damasio, “if purely rational cal-culation is how your mind normally operates,you might choose incorrectly and live to regretthe error, or simply give up trying, in frustra-tion.”16 Ironically, Damasio suggests that this“cool” strategy defended by rationalists relatesmore to the way the Gages and Elliots processdecisions than to the way normal people usuallyoperate.17

Damasio’s position, the somatic-markerhypothesis,18 includes emotional reactions in therational process which controls the number ofalternatives considered; these emotional reactionsmake the decision-making process manageableso that we can arrive at a decision. Damasiosuggests that on this view, before we apply anykind of cost/benefit analysis to the many alter-native possibilities – he calls them scenarios –we should pay attention to the unpleasant gutfeelings which are associated with options thatfleetingly cross our mind, options which we senselead to bad results. A somatic marker functionsas “an automated alarm signal” which limits thealternatives among which we will make a choice.Somatic markers can also be positive, in whichcase they function as “beacons of incentive.”19

As secondary emotions,20 they are learnedresponses to possible alternatives.21 Rationalchoice, e.g., by means of cost/benefit analysis, ismade much more manageable after somaticmarkers drastically limit the choices.22 Moreover,

350 S. Klein

he maintains that “Somatic markers probablyincrease the accuracy and efficiency of thedecision process.”23

The above theory is made more complicatedby the fact that negative and positive somaticmarkers must be considered together. Thus, forexample, taking a pay cut or having workinghours increased will probably be associated withan unpleasant feeling, but if we believe thatwhat we are doing will lead to a future advan-tage, the positive somatic marker will overridethe tendency to decide against the painfuloptions.

If emotions are necessary to guide the processof practical reasoning, they can guide this processpropitiously or they can distort it. Clearly, then,for the purpose of ethical reasoning, emotionsmust be properly developed. Damasio agrees; hemaintains that most somatic markers used inrational decision making are developed by edu-cation and socialization.24 Without discussing theissue of character development, or the specificsomatic markers that character education shouldand should not develop,25 Damasio nonethelessrecognizes that emotional reactions (somaticsignals) can bias reasoning. He gives examples ofobedience, conformity, and self-esteem drives. Ifmoral character is an indispensable aid to moralreasoning, the negative and positive secondaryemotions as somatic markers that are developedby moral education should aid rather than biasmoral reasoning.

From an ethical standpoint, then, the issueconcerns the development of moral character ormoral virtue. Aristotle’s ethical theory is one ofthe most respected of the traditional virtue-basedethical theories; it should be helpful, then, as amodel for business ethics and specifically, givenour concerns, for understanding ethical decisionmaking. I shall briefly – given the limitations ofthis paper – show how Aristotelian ethical theoryincorporates the Damasian position.

Aristotle believes that moral education is aneducation of the emotions. Aristotle maintainsthat we should be brought up to delightin and be pained by the things that weought [Nicomachean Ethics (NE) 1104b12–13].Generally, we believe that we experience plea-surable or painful sensations when we are stirred

by related emotions. Aristotle uses the term“passions” to refer to emotions that are accom-panied by pleasure and pain (NE 1105b22–23),and he believes that pleasures and pains are theessential concerns of moral upbringing.

Aristotelian moral virtues pertain to characterstates, and these states relate to “the things invirtue of which we stand well or badly withreference to the passions” (NE 1105b25–26).Aristotle’s view of moral virtue is well known.Our passions or emotions can be extreme; thatis, they can be either deficient or excessive.Moral virtue involves an habituation to an inter-mediate or mean position with reference to ouremotions.26 When a morally virtuous person acts,he or she makes choices which reflect emotionsthat are balanced or duly proportioned. Oneshould look, he tells us, to the person who pos-sesses practical wisdom (the phronimos) to discoverhow the mean can be determined.27

The moral person is armed with a knowledgeof virtue – a knowledge of different meansbetween extremes (excess and defect) – whichare indeterminate with reference to particulars;the mean cannot be determined mathematically– it is imprecise – and it is relative to individ-uals. Phronesis (practical wisdom) makes a correctjudgment in particular cases by choosing theright times, occasions, objects, people, motive(choosing virtuous actions for their own sakes),and manner – (NE 1106b20–23).28 The phron-imos’s judgments are based upon perceptionsor insights and are not easy to make (NE1109a24–29).

Since the phronimos’s wisdom depends so muchon experience, one might tend to neglect theimportance of the moral virtues. Knowledge ofhuman virtue (right principles of conduct),however, is essential for, says Aristotle, “likearchers who have a mark to aim at,” this knowl-edge provides a goal for guiding conduct (NE1094a24–25).29 Thus, like an archer, a morallyvirtuous person will score a better hit by recog-nizing the direction in which he or she must lookand the things to which she must pay attention.Practical wisdom is impossible without moralvirtue because the latter provides a dispositionto aim at proper human goals – those which con-stitute human flourishing – and to consider the

The Head, The Heart, and Business Virtues 351

particularities of a given problem in the light ofthese goals. Without this ethical disposition,practical wisdom would be aimless. The notionof aiming at proper goals helps Aristotle todifferentiate between practical wisdom andcleverness.

Aristotle’s position is very reminiscent ofDamasio’s view. Damasio maintains that whenfeelings are properly nurtured they “point us inthe proper direction, take us to the appropriateplace in a decision-making space, where we mayput the instruments of logic to good use.”30

Similarly, for Aristotle, moral virtues (properlynurtured feelings) provide the essential somaticmarkers which effectively delimit the area ofplausible alternatives in which a practically wiseperson can make a proper choice; the practicallywise person, then, cannot make a wise choicewithout the virtues of character.

I have attempted to show that emotions areessential to the proper functioning of reason,rational objectivity, and practical rationality orthe process of rational decision making. I shallnow argue for the importance of emotions insolving certain ethical dilemmas – and, therefore,in resolving some ethical dilemmas in business.

Robert H. Frank believes that moral senti-ments or emotions evolved to solve what hecalls the “commitment problem.”31 This problemarises when material incentives at a specific timeprompt people to behave contrary to theirultimate material interests. This problem is clearlyrelevant to business. However, material incentivescan be countered by morally relevant emotionsor sentiments – emotions that relate to moralbehavior, e.g., anger, contempt, disgust, shame,and guilt. By countering material incentives,these emotions can aid us in achieving ourmaterial interests. The following are some ofFrank’s examples:32

1. (theft) Jones believes in rationally pursuingself-interest. If Smith steals his $200 briefcase, itwill cost Jones $300 to convict him. Therefore,it is not in Jones material self-interest to sueSmith. Frank concludes, “Thus, if Smith knowsJones is a purely rational, self-interested person,he is free to steal the briefcase with impunity.”33

But suppose that Jones in not a pure “ration-alist” and would be so outraged by such an

injustice that he would sue Smith anyway. IfSmith realizes this, he will not steal the briefcase.It is emotion, not rationality, that prevents theinjustice.

2. (cheating) Smith and Jones want to own arestaurant and can profitably form a partnership.Smith is a good cook but a poor manager. Jonesis a poor cook but a good manager. Assumingeach of them can cheat without detection, if onecheats and the other does not, the cheater willdo better. But if the victim also cheats, he willdo better than if he does not cheat. However,they can both do much better if they do notcheat. Although a commitment not to cheatwould yield the best result for both Smith andJones, narrow self-interest dictates cheating.34

Emotions, however, can help to resolve thisproblem. If both potential restauranteurs aremoved by shame or guilt and trust one another,the partnership will not exhibit the rationalist’sdilemma.

3. (deterrence) Jones raises cattle on land thatis adjacent to the property on which Smith growswheat, and he is liable for whatever damage hissteers do to Smith’s wheat. Jones can fence inhis land for $200 and thus protect himself frombeing sued. If he does not, the steers can eat$1,000 worth of Smith’s wheat. Jones knows thatif his steers eat the wheat, it will cost Smith$2,000 to sue him. If Jones believes that Smithis motivated by rational self-interest alone, Joneswould dismiss Smith’s threat to sue if Jones’s cattleeat Smith’s wheat. However, If Jones knows thatSmith’s rage and vengefulness will cause him tosue, he may well fence in his property.

4. (bargaining) Smith and Jones have theopportunity to engage in a joint venture whichwill net them $1,000. Jones has no pressing needfor money but Smith does. Since Jones has theadvantage, needing the money less, he canthreaten that if he does not get, e.g., $800, hewill not contract with Smith. It is in Smith’s self-interest to agree. However, if Smith has a fiercesense of fairness, he may well decline Jones’soffer; his outrage at Jones’s unjust offer mightoffset the material incentive. Smith’s stance mightforce a fairer split.

Emotions such as anger or outrage, therefore,can resolve some ethical dilemmas, which may

352 S. Klein

result in an injustice to one of the involvedparties, and shame and guilt can resolve someethical dilemmas for mutual benefit. Emotions,then, are not only necessary for rational objec-tivity and practical rationality, they are alsonecessary for resolving certain ethical quandaries.Frank’s examples of ethical dilemmas which areresolvable by emotions illustrate the danger ofbelieving in rational economic man’s view offeelings.

The following is worth mentioning. Emotionshave often been accused of committing us to theshort-term and, therefore, causing us to neglectour long-term advantages. Although this is some-times true, certain emotions are necessary forachieving long-term advantages. Moral feelingsor sentiments help us to pick potentially trust-worthy partners. In general, moral sentiments areindispensable for gaining the benefits of cooper-ative endeavors. Virtuous people are attracted toone another and join forces for their mutualbenefit. The more virtuous members of a societybecome, the more selfish people are rejected andleft to their own fate.

II

If what I have said in Section I is correct, busi-nesspeople should reject the view that the headrather than the heart should be emphasized. Yetmany observers of business lament business’sneglect of the heart. In this section, I shall brieflyconsider the prevalence of this neglect of feelingsor emotions among businesspeople.

In The Gamesman, Michael Maccoby suggeststhat corporations emphasize mental attributes, asthose essential for work, rather than what he calls“qualities of the heart,” e.g., empathy, compas-sion, generosity, and idealism.35 Although skilledat problem solving, corporate managers are sus-picious of, and limited in the capacity to, love.Progress in one’s formal education, as well as incorporations, requires an emphasis on the headrather than the heart. “Tough-minded realisticthought” is opposed to “softness, feeling, andgenerosity.”36 Morality, for Maccoby, is associatedwith the qualities of the heart. He maintains –correctly I think – that a developed heart

prevents egocentrism and, positively, helps todevelop a sense of justice.37

Maccoby analyzes the reasons for an under-developed heart in his four managerial types –the craftsman, company man, jungle fighter, andgamesman. In the two former types, the reasonis said to be dependency. In the jungle fighter(not the most common corporate type), the heartis hardened by a love of power. Careerism, whichhe calls “the modern pathology of the heart,” isthe principal cause of the undeveloped heart inthe gamesman (whom he considers a dominantupper echelon corporate type).

A number of contemporary business writerssupport Maccoby’s position but attribute theheartlessness of American business organizationsto their bureaucratic nature. Roger D’Aprixlaments the bureaucratic nature of corporations.The satisfaction of human needs are subordinatedto the well-being and the survival of the orga-nization. He supports the view of MargaretHenning. Corporate life stultifies our feelings andcreates

an environment in which the basic affections ofhuman beings are primarily taboo. It is a climatein which love is not allowed. It is a climate inwhich kindness is devalued. It is a climate in whichconcern for people is called “soft.”38

Sociologist Robert Jackall supports Maccoby’sview and again attributes the heartlessness ofthe modern corporation to its bureaucraticnature. Since activities are compartmentalized inbureaucracies, managers often do not perceive,or are not concerned with, problems relating tosegments of the whole larger than their own.Thus, the heart is hardened because of a nar-rowing of one’s moral vistas. “The managerialworld,” he says, “is not notable for its compas-sion.”39 Heartlessness is buttressed by an emphasison the goals of personal ambition and survival –a point mentioned by many business analysts.These goals tend to lead to the view that thebureaucratic terrain is a battlefield and thewarriors are divided into winners and losers. Inthis zero-sum game, one must, then, forsake thequalities of the heart for whatever effectivelyresults in survival and success. The stress onsuccess devalues friendships and reduces them to

The Head, The Heart, and Business Virtues 353

relationships of expediency. Jackall echoes thecomplaint made by William G. Scott, David K.Hart and many others that bureaucracies empha-size expediency. Therefore, emotional and moralissues are not considered; what is considered isthat which is consistent with “institutional logicand of advantage to oneself and to one’s socialnetwork.”40 Bureaucratic leaders effectivelyinsulate themselves from the emotional and moralissues that must be dealt with by pushing themdown the hierarchy of the firm, forcing theirunderlings to deal with the dirty work.41

Moreover, the qualities of the heart cannot thrivein a world dominated by appearances. But this,according to Jackall and others, characterizesthe world of formal organizations. Stress is onmanaging appearances, masking intentions, con-trolling one’s emotions, and mastering the nec-essary “public faces.”42

We recall that the position of rationaleconomic man maintains that human feelingsshould be prevented from interfering with therational conduct of business – the “rationalcalculation of self-interest” – and, therefore,(business) organizations should “neutralize andcontrol people’s feelings.” According to thebusiness observers we have mentioned, this is,unfortunately, what business has been successfulat doing. Maccoby’s discussion of the overem-phasis of the head – analytic problem-solvingskills – and the deemphasis and disparagementof the “qualities of the heart” accords withrational economic man’s opinion about the placeof feelings or emotions in business. Similarly,our other business observers’ attribution of theheartlessness of American business to the bureau-cratic nature of American business organizationsaccords with rational economic man’s belief that(business) organizations should “neutralize andcontrol people’s feelings.”

In Section I, I attempted to show thatemotions or feelings provide indispensablesupport for rationality and, therefore, premisesc) and d) (see p. 1) of rational economic manare based upon a faulty assumption – feelingsare inherently opposed to rationality. If thecomments of the business observers we have con-sidered in this section are correct, the argumentdeveloped in Section I, directed against rational

economic man’s negative view of feelings, hasrelevance for business. Specifically, I have arguedthat objective rationality requires the support ofthe type of feelings Maccoby and Jackall, forexample, maintain are neglected in business. Inaddition, ethical decision making requires theproper nurturing of feelings. But if we canbelieve the business observers we have consid-ered, business sorely neglects such character edu-cation. Thus, businesspeople should be shownthat the prevalence of business’s negative attitudetoward feelings or emotions is dangerous, forsuch an attitude will hinder both the rationalobjectivity and the ethical decision-makingcapacity of businesspeople.

Since I have criticized the assumption under-lying c) and d) of the concept of rationaleconomic man, in the next and final section ofthe paper, I turn to a limited consideration of theremaining premise of rational economic man –premise a) (p. 1) – which I said I would discuss:“Employees are primarily motivated by economicincentives and will do whatever affords themthe greatest economic gain.” Although it mayappear that the negative assumption of rationaleconomic man about feelings is related in apositive way to this premise – premise a) – inthe next section, I suggest that the pursuit ofmaterial or economic self-interest in the contextof trade encourages, rather than stifles, the devel-opment of the feelings upon which businessvirtues are based. Business virtues are requiredfor the healthy functioning or well-being ofbusiness, but these virtues are based uponfeelings, e.g., a concern for fairness and honestyand feelings of cooperation, friendliness, andtrust. Therefore, the negative attitude of busi-nesspeople about feelings, suggested in SectionII, is not a natural consequence of material self-interest as manifested in trade, and it is destruc-tive; it undermines the capacity of business tosurvive and flourish. A more natural consequenceof trade is the nurturing of emotions upon whichbusiness virtues are founded. As I said in theIntroduction, rational economic man’s dismissaland disparagement of feelings, which appears tobe accepted by many businesspeople qua busi-nesspeople, is not only incompatible with acorrect understanding of what is rational, it can

354 S. Klein

prevent people from understanding an importantconsequence of the economic man part ofrational economic man.

III

Businesspeople have used laissez-faire theory ofthe neoclassical economist and social Darwinismto argue for the propitious consequences whichsupposedly result from material self-interest.Nonetheless, this emphasis on material self-interest (as the basic human motive) has left manypeople morally queasy about business. Much hasbeen written on this premise of rationaleconomic man. However, I wish to limit mydiscussion of this premise to the connectionbetween material self-interest in the context oftrade and both cooperation and business virtuesgenerally. The popular prisoner’s dilemma,however, supposedly provides an obstacle to theacceptance of this connection between materialself-interest and cooperation.43 It is important toconsider this problem because the prisoner’sdilemma is the type of game that is often chosenas a model for business (see note 34).

The prisoner’s dilemma posits two prisonerswho are self-interested. If neither gives evidenceagainst the other, each can only be convicted ona lesser charge. If one confesses and the seconddoes not, the first will receive a greatly reducedterm while the second will get a maximumsentence. If both confess, both receive a moderatesentence (but more than if both remained silent).Although cooperation would yield the best result(the least amount of prison time for both), eachreasons that he is better off if he confesses ratherthan remains silent because if one confesses andthe other doesn’t, the one who doesn’t confessis in for the maximum sentence. Thus, theprisoner’s dilemma purports to show thatalthough cooperation yields the optimum result,acting in accordance with one’s own (rational)self-interest results in a lack of cooperation. Thisputative conclusion of the prisoner’s dilemma,however, is not correct.

It was discovered that when the prisoner’sdilemma is played as a computer game more thanonce, the result is cooperation, not defection of

both partners.44 Moreover, more sophisticatedcomputer versions of this game lead to the sameresult. Anatol Rapoport’s tit-for-tat computerprogram shows that cooperation and then recip-rocation of the behavior of the other player leadto a successful result. He attributes the successof this program to the following:

Its niceness prevents it from getting into unneces-sary trouble. Its retaliation discourages the otherside from persisting whenever defection is tried. Itsforgiveness helps restore mutual cooperation. Andits clarity makes it intelligible to the other player,thereby eliciting long-term cooperation.45

In computer simulations of natural selection,we again find that cooperation supported by tit-for-tat retaliation yields success; the meaniesknock one another off until the tit-for-taterswin.46 A zero-sum game is turned into anonzero-sum game.47 Finally, I should mentionthat in the real rather than simulated world,prisoner’s dilemmas can be circumvented bychoosing partners who are known to cooperateand can be trusted.

I began this section by suggesting that manypeople are morally queasy about the motivationof material self-interest. Critics of trade haveargued that it cultivates vices by emphasizingmaterial self-interest. Aristotle is not alone inarguing for the morally unsavory consequencesof trade.48 However, there is reason to believethat trade, even if it is motivated by material self-interest, can aid in developing business virtues byhelping to nurture feelings of friendliness, coop-eration, trust, honesty, and fairness. One of theironies of using the prisoner’s dilemma as a modelfor business is the incorrect assumption that thisdilemma shows that rational self-interest leads tocompetition rather than cooperation.

In a chapter entitled, “The Gains fromTrade,”49 Matt Ridley defends the view thatmaterially motivated trade fosters business virtues.He maintains that even among stone age people,trade developed from division of labor. The abo-riginal Yir Yoront, for example, recognized thatif each tribe did what it was good at and tradedwith similar tribes, everyone would materiallybenefit. It was understood that trade does nothave to be a zero-sum game; cooperation pays.

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Ridley says, “Trade, specialization, the divisionof labour and sophisticated systems of barterexchange were already part of a hunter-gatheringlife.”50 Indeed, he maintains that such practicesmay have been in existence for millions of years.In discussing the Middle Ages, Ridley suggeststhat the medieval merchant recognized thathealthy trade necessitates moral behavior. He saysthat “the merchant’s law” (lex Mercatoria) “wasvoluntarily produced, voluntarily adjudicated andvoluntarily enforced. It was like the customs ofa club.”51 A merchant who had a reputation forcheating was ostracized. Customs developed con-cerning the settlement of bills, disputes, andinterest payments; the concept of credit was alsodeveloped.

Ridley’s discussion of the moral benefits oftrade or commerce is, I believe, a healthy counterto the skewed perspective of the prisoner’sdilemma. This game assumes that rational self-interest does not support cooperation, and thatthe best solution to this dilemma is the safeone because people cannot be trusted. TheseHobbesian assumptions are too pessimistic. Tradewhich is motivated by material self-interest canhelp to nurture feelings, for example, of coop-eration, trust, and friendliness. People who havea reputation for such business virtues act in theirlong-term material self-interest.

As Aristotle suggests, human beings are socialanimals, and traits such as friendliness, coopera-tion, and trustworthiness, so essential to suc-cessful business, may well be rooted in humannature;52 commerce can help to develop thesetraits. Ridley is particularly optimistic when hesays,

Just as trade between countries is the best recipefor friendship between them, so exchange betweenenfranchised and empowered individuals is the bestrecipe for cooperation. We must encourage socialand material exchange between equals for that isthe raw material of trust, and trust is the founda-tion of virtue.53

In a similar vein, Robert C. Solomon says that“The very idea of exchange in business has builtinto it the requirement of mutual agreement, theexpectation of an honest accounting, and a fair[just] exchange.”54 Moreover, he suggests the

frequently mentioned view that without somemutual trust, there could be no exchange orbusiness in general. If such business virtues astrust, honesty, justice, cooperation, and friendli-ness are to be emphasized, so must the emotionsupon which they are based. Rational economicman’s negative view of emotions, therefore, isdestructive of business virtues, for these virtuesrequire a feeling of trust, friendly and coopera-tive feelings, and a concern for justice andhonesty. But the undermining of business virtuesentails the destruction of the necessary conditionsfor the well-being or flourishing of business. Itis ironic that trade, even if it is driven by themotivation of economic man – material self-interest – is supportive of, rather than destruc-tive of, the feelings upon which business virtuesare founded.

Solomon advocates an Aristotelian businessethic; in Section I, I too suggested the valueof such an ethic. As we saw, an Aristotelianbusiness ethic makes the nurturing of theemotions central. Solomon also maintains thatthe Aristotelian businessperson sees herself as amember of a business community. Solomon – Ithink correctly – believes that this emphasis ona social self encourages loyalty, friendliness, andcooperation as well as helping to nurture honesty,fairness, and trust.

With reference to the virtues to whichSolomon alludes, Aristotle would have consid-ered friendliness or friendly feeling as essentialfor cultivating the other virtues mentioned andfor developing an ethical corporate culture.According to Aristotle, feeling friendly is likewishing a person well – having good will.However, feeling well-disposed or friendly topeople is not as deep as a solid friendship.Although it is too much to expect of a corpo-rate culture to cement solid friendships amongall its members, it is reasonable to hope that anethical corporate culture will nurture friendlyfeelings among its constituents. By analogy withwhat Aristotle says about civic friendship, cor-porate friendship (based upon friendly feeling)will thrive in an environment in which moralcharacter and excellence are valued; loyalty,cooperation, trust, honesty, and justice aresupported and nurtured by such a friendly envi-

356 S. Klein

ronment. What Aristotle says about friendshipwith respect to justice is particularly interesting.“Friendship seems too to hold states together,and lawgivers to care more for it than for justice. . . ; and when men are friends they have noneed of justice, while when they are just theyneed friendship as well, and the truest form ofjustice is thought to be a friendly quality” (NE1155a22–28).

Notes

1 Clarence C. Walton says, “The modern corpora-tion is in many respects the twentieth-centuryequivalent of Adam Smith’s eighteenth-centuryhomo oeconomicus” [Ethos and the Executive: Values inManagerial Decision Making (Englewood Cliffs, NewJersey: Prentice-Hall, Inc., 1969)], p. 72. Classical freeenterprise theory assumes, among other things, thateach person is primarily motivated by economic self-interest, and given economic freedom, this pursuit ofnarrow self-interest best ensures economic progress.The entailed notion of economic man is conceptu-ally related to the idea of rational economic man. Aneconomic man will act rationally in that she willknow what is good for her and what is not, and shewill act on the basis of this knowledge.2 I shall not discuss assumption b): “Since economicincentives are under the control of the organization,the employee is essentially a passive agent to bemanipulated, motivated, and controlled by the orga-nization” [Edgar H. Schein, Organizational Psychology,3rd ed. (Englewood Cliffs, New Jersey: Prentice-Hall,1980), p. 53].3 Schein, p. 53.4 Israel Scheffler, In Praise of the Cognitive Emotionsand Other Essays in the Philosophy of Education (NewYork: Routledge, 1991), p. 4. 5 Scheffler, p. 5. 6 Open mindedness is also related to being logical,that is, drawing out implications from relevantevidence and detecting errors in inferences. 7 John Dewey, Theory of the Moral Life (New York:Holt, Rinehart and Winston, 1960), pp. 129–130.8 Dewey, p. 130. 9 However, unregulated by reflection, sympathydegenerates into sentimentality. The sentimentalperson is a simplistic parody of the moral person.

We may note in passing that Plato and Aristotlebelieve that emotions generally play an important partin objective reasoning. In this paper, I stress the

importance of Aristotelian ethics for business ethics.However, in this context, I could have also argued forthe importance of Platonic ethics. In the Republic(402a), Plato suggests that there is a kinship betweenhis proposed character education and rationality.For Plato, a rational person’s thinking exhibits duemeasure or proportion; a rational mind is a properlybalanced mind. Platonic character education createsa prereflective affinity for rationality by nurturing adistaste for excessive appetites and emotions. Similarly,Aristotle’s famous doctrine of the mean (which is alsoPlatonic) is directed against excessive passions. Morepositively, proper character development disciplinesemotions and appetites; it creates a correct emotionalbalance or proportion. Thus, for Plato, fine characterreflects the due measure or proportion exhibited byobjective reason; fine character provides a necessarycondition for a balanced reason.10 Dewey, p. 163. In general, to say that morality iseither a matter of feeling (or emotion) or reason is asmuch a reductionist mistake as to argue that busi-nesspeople are nothing but economic creatures. 11 See, for example, Dewey, p. 128.12 Plato and Aristotle (I think correctly) believe thatbesides nurturing empathy and sympathy, emotionsin general should be habituated so that humanactions are guided towards the correct target, humanflourishing.13 Any attempt to radically separate knowledge anddesire or feeling fails. If the desire for X is rational,then X is both attainable and will bring some satis-faction. Thus, to desire X when it is unattainableand/or unsatisfying is irrational. Desire, then, containsboth cognitive and affective or feeling elements; itmoves us only in conjunction with knowledge.14 Antonio R. Damasio, Descartes’ Error (New York:G. P. Putnam’s sons, 1994).15 Damasio, p. 171.16 Damasio, p. 172.17 Damasio also suggests that sociopaths or psy-chopaths – who, of course, are unfeeling and uncaring– “are the very picture of the cool head we were toldto keep in order to do the right thing” (Damasio,p. 178). 18 Damasio says, “Because the feeling is about thebody, I give the phenomenon the technical termsomatic state (‘soma’ is Greek for body); and becauseit ‘marks’ an image, I called it a marker” (Damasio,p. 173).19 Damasio, p. 174.20 Damasio distinguishes between primary and sec-ondary emotions. Primary emotions are automaticresponses which therefore do not necessitate the

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intervention of consciousness or feeling; feeling,he suggests, involves the consciousness of emotion.(However, Damasio also posits a type of nonemotionalfeeling he calls “background feelings.”) Secondaryemotions do involve consciousness and are mediatedby mental images. It is these emotions, rather thanprimary emotions, that patients with prefrontaldamage, e.g., Gage and Elliot, cannot generate; thatis, they cannot produce emotions which, in theirnormal condition, they exhibited to certain mentalimages conjured up by certain situations and stimuli.In consequence, they cannot have the related feelings.21 Damasio suggests that sometimes when we act incharacter, we are not conscious of the mechanisminvolved in choice. In Damasio’s language, there is acovert mechanism of positive and negative reactionsthat causes us to function intuitively rather than byrational analysis.22 Not only is reason alone incapable of limiting thepossible choices to a manageable number, by itself, itcannot determine when to start or stop cost/benefitanalyses.23 Damasio, p. 173.24 Damasio suggests that some cultures are “sick” andtherefore can pervert moral reasoning.25 Since secondary emotions as somatic markers caneither aid or bias practical reasoning or decisionmaking, it would have been helpful if Damasio hadanalyzed somatic markers so as to provide the readerwith a list of helpful vs. prejudicial emotional reac-tions. Possibly, Damasio does not think that Descartes’Error is the place for such a discussion, for apart froma few brief and undeveloped hints, the reader is notprovided with such a list; nor does Damasio discusshow such a list can be generated.26 However, Aristotle says that there are someemotions, e.g., spite, shamelessness, and envy, whichdo not admit of a (virtuous) mean (NE 1107a 9–11).27 Readers of Aristotle have objected to the vague-ness of his position. Indeed, as Aristotle develops hisview of moral virtue, the vagueness is compounded.If we are looking for rules or principles for deter-mining these moral means, we will be disappointedfor he provides none. He does not provide moral rulesbecause he believes that the practically wise persondoes not make practical decisions by appealing torules. 28 For example, what is best for an ideal corporationwould not suit most firms. The mean must be adaptedto different types of people as well as to peculiar cir-cumstances, conditions, (etc.) of specific corporationsso that what is demanded is both attainable and themorally best that is possible under the circumstances.

29 If our emotions or passions, like our appetites, areextreme, to use Aristotle’s image, our aim is goingto be off. Our emotions or passions cause us tointerpret situations in a certain way. Thus, forexample, a person who is cowardly will interpretcertain situations as threatening when they are not,and an extremely angry person will see insults wherenone were intended. Phronesis depends upon virtueand virtue relates to emotions. The phronimos willhave emotions – emotions aimed at a mean – whichcorrectly interpret a situation, and he or she willrespond appropriately to it. From the standpoint ofmoral education, the process of perceiving correctlydepends upon moderating our passions so that ouremotions are not extreme – excessive or deficient.30 Damasio, p. viii.31 Robert H. Frank, Passions within Reason: StrategicRole of Emotions (New York: W. W. Norton and Co.,1988), see, for example, P. 47.32 See Frank, pp. x, 47–49, 53–54. 33 Frank, p. x.34 This is a clear example of the prisoner’s dilemma.I mention this problem because the prisoner’sdilemma is the type of game that is often chosen asa model for business. [See, for example, Robert C.Solomon, Ethics and Excellence: Cooperation and Integrityin Business (New York: Oxford University Press,1993), p. 57.] The prisoner’s dilemma is discussed inSection III.35 Michael Maccoby, The Gamesman: The NewCorporate Leaders (New York: Simon and Schuster,1976), p. 175.36 Maccoby, p. 178.37 Maccoby, p. 182. William Scott and David Hartagree with Maccoby that virtue does not triumph inmodern organizations; what triumphs is “organiza-tional stagnation, the spoiling of idealism, officialinsensitivity, despotic repression, and the blighting ofhuman aspirations” [William G. Scott and David K.Hart, Organizational America (Boston: HoughtonMifflin Co., 1979), p. 27]. They argue that organiza-tional health is achieved through the organizationalimperative – the individual’s good is derived from themodern organization. 38 Roger M. D’Aprix, In Search of a Corporate Soul(New York: Amacom, 1976), p. 45. 39 Robert Jackall, Moral Mazes: The World of CorporateManagers (New York: Oxford University Press, 1988),p. 68.40 Jackall, p. 124.41 “Social insulation permits and encourages a loftyviewpoint that, on its face, ‘respects the dignity ofworkers,’ but seems devoid of the feel of the texture

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of workers’ lives and of the gut-level empathy thatsuch knowledge can bring” (Jackall, p. 126).42 Jackall, p. 46.43 Insofar as material self-interest is a type of narrowself-interest, the problem of the prisoner’s dilemmaapplies. 44 If the prisoner’s dilemma leads to cooperationwhen played more than once, it cannot – in its oneshot form – possibly be a model for business. Businessdealings are most often not one shot deals.45 Quoted in Matt Ridley, The Origins of Virtue:Human Instincts and the Evolution of Cooperation (NewYork: Viking Penguin, 1997), pp. 60–61. 46 These meanies are reminiscent of the type ofbusinessperson Maccoby calls the jungle fighter; theAmerican prototype is the robber baron. He foundmost jungle fighters he interviewed to be cunning,secretive, exploitive, narcissistic, manipulative, andsadistic. These meanies who betray people and areuncooperative become liabilities to their companiesbecause they create “hostility and undermine thecommunity” (Maccoby, p. 79). Of Carnegie and hispartner Frick, he says it was inevitable that these“deadly jungle fighters” would turn on one another(Maccoby, p. 78). He relates the story of a junglefighter he calls Bill Bass who eventually crashed.Maccoby heard people say to him, “We really enjoyedscrewing you” (Maccoby, p. 84). People like BillBass are incapable of inspiring trust but are excellentat moving others to seek revenge against them(Maccoby, p. 85).47 There is a negative side of tit-for-tat revenge. Ifthere is accidental defection, for example, a contin-uous series of mutual recriminations results. However,a version of this game called generous tit-for-tat, inwhich about one third of the time single defectionswere forbidden – this was done randomly – was effec-tive in breaking the cycle of mutual recrimination.

Moreover, more sophisticated strategies such as Pavlovwere developed to compensate for other drawbacks.

It is also worth mentioning that noncooperativeversions of the prisoner’s dilemma are played out inbusiness. If competing businesspeople do not coop-erate – in, for example, some specific area of business– each will set prices as low as possible for fear he orshe will be undercut. This will be perceived as therational option. In such prisoner’s dilemma scenarios,noncooperation is mutually disadvantageous, for if theparticipants cooperate, they could agree on a higherprice.48 Aristotle says, “There are two sorts of wealth-getting . . . ; one is a part of household management,the other is retail trade: the former is necessary andhonorable, while that which consists in exchange isjustly censured; for it is unnatural, and a mode bywhich men gain from one another” (Politics 1258a38–1258b1).49 In The Origins of Virtue.50 Ridley, p. 199.51 Ridley, p. 202.52 Civic friendship is a consequence of Aristotle’snotion that human beings are social animals. Humanbeings have a natural tendency to live together incooperative communities in which members benefitfrom one another’s work and communicate aboutcommon goals to one another.53 Ridley, pp. 264–265. 54 Solomon, p. 207.

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