Theory of Egoism (Ethical Egoism)

Definition:
An action is morally right if it is done to pursue the individual’s own interests or desires, whether short-
term (pleasure, comfort) or long-term (career success, health, reputation).
Adam Smith (1793) – The Invisible Hand
Adam Smith argued in The Wealth of Nations that when individuals act in their own self-interest, they
unintentionally contribute to the overall good of society—this is known as the “invisible hand”.
Example: A baker bakes bread to earn profit (self-interest), but this also provides food for others (social
benefit).
Smith believed that free markets, with competition and access to good information, would naturally
balance out selfish behavior and lead to efficient, fair outcomes.
Enlightened Egoism
This is a refined version of egoism. It suggests:
An individual should pursue their own long-term interests, but in ways that also consider and respect
others, because cooperation and reputation are essential for long-term success.
Key ideas:
• Self-interest isn’t about being selfish or harmful.
• Helping others can be part of smart self-interest (e.g., building trust, maintaining a good image).
• Ethical behavior can be aligned with personal gain when seen in the long run.
Example: A company donates to charity. It helps society and builds goodwill, brand loyalty, and employee
satisfaction—serving long-term business interests.
Criticism: Markets Don’t Work Perfectly
In theory, egoism + free markets = societal benefit.
But in reality:
1. Imperfect competition – Monopolies, cartels, and dominance can harm consumers.
2. Asymmetric information – People often don’t have all the facts to make good decisions (e.g., misleading ads,
hidden fees).
3. Externalities – Self-interested actions can harm others (e.g., pollution).
4. Short-termism – Many actors focus on immediate profit, not long-term well-being (e.g., exploiting labor,
cutting safety).
So, while egoism can lead to good outcomes in theory, it requires ideal conditions that rarely exist in the real
world.
Capitalism is an economic system in which:
Private individuals or businesses own the means of production and operate for profit, rather than the state
controlling economic activity.
What is Compassionate Capitalism
 Definition:
Compassionate Capitalism is an economic philosophy where profit is pursued alongside social good, human
dignity, and environmental responsibility. It promotes the idea of “profit with a human face” rather than
“profit at any cost.”
Key Principles:
1. Altruism in Business
o Companies should act with genuine care for others—not just shareholders, but workers, consumers,
communities, and the planet.
o Emphasis on doing good while doing well.
2. Stakeholder Capitalism
o Move from shareholder-only focus (maximizing profits) to stakeholder focus—caring for:
▪ Employees (fair wages, safe work)
▪ Communities (no exploitation or harm)
▪ Environment (sustainability)
▪ Customers (honesty, fairness)
3. Corporate Responsibility
o Corporations must account for external costs (e.g., pollution, inequality).
o Social responsibility becomes core strategy, not just CSR (Corporate Social Responsibility) window dressing.
4. Ethical Decision-Making
o Compassion and ethics should guide how products are made, how workers are treated, and how profits are
used.
The Compassionate Corporation
A Compassionate Corporation:
• Builds inclusive, respectful workplace cultures.
• Invests in employee well-being, not just productivity.
• Minimizes harm to the environment.
• Is transparent and acts with integrity.
• Supports community development (e.g., education, health).
Example: A company that limits executive pay, shares profits with workers, uses renewable energy, and
avoids exploitative suppliers.
According to utilitarianism, an action is morally right if it results in the greatest amount of good for the
greatest number of people affected by the action
Also called the ‘greatest happiness principle’
• Based on cost-benefit analysis

Act Utilitarianism
 Definition:
Looks at each individual action and judges it morally based on how much pleasure (or happiness) and how
much pain (or suffering) it produces in that specific case.
Key Features:
• Decision is made case by case.
• An action is right if it produces more pleasure than pain in that moment.
• Focuses on immediate consequences.
Example:
Imagine lying to a friend to avoid hurting their feelings.
• Act utilitarianism says: If this one lie reduces more pain than it causes, then it is morally right in this case.
Strengths:
• Highly flexible and responsive to context.
• Tailors decisions to specific situations.
Criticisms:
• Can justify morally questionable actions (e.g., lying, stealing, or even harming someone) if they lead to
greater happiness overall.
• Can be unpredictable or unfair, especially to individuals.
Rule Utilitarianism
Definition:
Looks at general types or classes of actions, and judges morality based on whether the underlying rule, if
generally followed, would produce more pleasure than pain for society in the long run.
Key Features:
• Focuses on the moral rules behind actions, not just outcomes in one case.
• Considers long-term, society-wide effects.
• Tries to avoid injustice by having consistent principles.
Example:
Telling the truth—even if a lie might seem helpful in a particular situation.
• Rule utilitarianism says: If everyone lied, trust would disappear and society would suffer.
• So even if lying feels right now, the rule "always tell the truth" creates more long-term happiness overall.
Strengths:
• Encourages fairness, consistency, and justice.
• Protects individual rights better than act utilitarianism.
• Easier to follow—rules provide clear guidance.
Criticisms:
• Can become rigid—sometimes following the rule causes more harm than breaking it.
• Less responsive to unique situations.

Morality is concerned with the norms, values and beliefs embedded in social processes which define right
and wrong for an individual or a community.
• Ethics is concerned with the study of morality and the application of reason to elucidate specific rules and
principles that determine right and wrong for any given situation.
These rules and principles are called Ethical Theories
5P framework

Consider:
• Customers
• Employees
• Investors
• Regulators
• Society or the environment
Principles – What do we owe to the various stakeholders?
• Apply moral principles:
o Honesty, fairness, responsibility, respect, justice.
• Consider:
o What duties or obligations do you have toward each group?
o Are human rights or legal duties involved?
o What ethical theories apply? (e.g., utilitarianism, deontology)
5. Power to Decide (or Practical Judgment) – Which alternative reasonably balances competing
obligations?
• Weigh all considerations and make the most ethically balanced decision.
• You may not fully satisfy all stakeholders—but aim for the most justifiable, fair, and principled solution.
• Consider long-term consequences, integrity, and public trust.

Ethics of Duty (Deontological Ethics)

Core Idea:

Ethics of duty focuses on what one ought to do, based on moral duties and rules, not on consequences.

An action is morally right if it follows a moral rule or duty — regardless of the outcome.

Rights and Justice Ethical Framework

Core Focus:
Moral rights and fair treatment for every individual, regardless of the consequences.
People have certain fundamental rights that must be respected at all times—these rights are not to be
violated, even if doing so would produce better overall outcomes.
Core Principle:
Respect for human beings
• Every person must be treated as a moral equal, with inherent worth.
• People have inalienable rights (e.g., right to life, freedom, privacy, property).
• These rights are not given by governments or based on utility—they are intrinsic to being human.
Ethics of Duty (Kantian Ethics) — In Simple Words:
Kant said we should do the right thing because it is the right thing, not because of what we get from it.
He gave us three rules (called maxims) to test if an action is truly moral.
Maxim 1: Consistency (Universal Law)
"Act only according to that rule which you would want everyone else to follow too."
Simple Meaning:
• Before you do something, ask:
“What if everyone in the world did the same thing? Would that be okay?”
• If your action wouldn’t work or would lead to problems if everyone did it, don’t do it.
Example:
If you lie to get out of trouble—imagine if everyone lied. No one would trust anyone. So lying fails the test.
Maxim 2: Human Dignity (End, not Means)
"Treat people as ends in themselves, not as tools to get what you want."
Simple Meaning:
• Never use people like objects.
• Respect others’ choices, rights, and humanity.
• People are valuable because they are human—not because they are useful to you.
Example:
If you pretend to be nice to someone just to borrow their notes—you’re using them. That’s wrong.
Maxim 3: Universality (Would others agree?)
"Act as if your decision would be made into a universal rule and made public."
Simple Meaning:
• Ask yourself:
“Would I be okay if everyone knew what I’m doing?”
“Would others agree this is fair?”
• If you’d be ashamed to tell people or hide your decision, it’s probably wrong.
Example:
If you cheat on a test but wouldn’t want it on the front page of a newspaper—it’s not ethical.

John Rawls’ Theory of Justice — In Simple Words

Rawls believed that a fair and just society is one that treats everyone equally but also helps those who are
worse off.
He proposed two key principles to guide how resources, rights, and opportunities should be shared in
society.
Principle 1: Equal Basic Liberties
“Each person should have the same basic rights and freedoms as everyone else.”
What it means:
• Everyone should enjoy the same basic rights like:
o Freedom of speech
o Right to vote
o Freedom of religion
o Right to personal safety and property
 Example:
No one should be denied the right to speak freely or practice their religion just because of their class, gender,
or race.
Principle 2: Fair Inequalities (Two Parts)
Rawls accepted that inequality (in wealth, income, or jobs) will exist, but it must be fair. That’s where these
two ideas come in:
a) Difference Principle
Inequality is okay only if it helps the least advantaged.
What it means:
• Society should be arranged so that poor or disadvantaged people benefit the most from economic growth or
social systems.
Example:
If a CEO earns 100x more than a worker, that’s only fair if their leadership also improves life for the poorest—
e.g., by creating jobs or funding welfare.
b) Fair Equality of Opportunity
Everyone should have a genuine chance to get any job or position, regardless of their background. What it
means:
• People shouldn’t be blocked by poverty, class, race, or gender from achieving success.
• Talent and effort should matter more than where you're born.
Example:
A child from a poor family should have access to good education, so they can compete fairly for
opportunities—just like a rich child.

Type of Justice What It Means Simple Example

Distributive Fair distribution of resources, benefits, and Equal access to education and
Justice responsibilities healthcare

Retributive Fair punishment for wrongdoing,

A thief receives a fair jail sentence
Justice proportionate to the offense

Compensatory Fair compensation for harm or loss caused to A worker injured on the job gets
Justice someone compensation