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Glossary for Ethics & Policy

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A comprehensive approach to ethics and policy is necessarily based on a vocabulary of fundamental, often unstated, assumptions and employs precise, though not necessarily popular, terms. Many of the terms used here, therefore, have precise, though evolving, meanings. As Percy Greaves wrote of the works of the great Austrian economist, Ludwig von Mises: "It is, therefore, not so much a question as to whether the definition is the popular one or not, but rather does it lead the reader to a better understanding of the highly complex ideas the author is trying to elucidate." Greaves, Percy L., Jr. Mises Made Easier: A Glossary for Ludwig von Mises' Human Action. Dobbs Ferry, NY: Free Market Books, 1974. Although Humpty Dumpty probably said it best, when—after defining "glory" to mean "a knock-down argument"—he said: "When I use a word it means just what I choose it to mean—neither more nor less." Annotated Alice: Through the Looking Glass.

Appreciative Inquiry is an approach to awareness, imagination, leadership, judgment and action that emphasizes the empathy, patience, integrity, and courage necessary to progress toward a desired future condition with a solid appreciation one's history, current reality, and possibilities of human action.

Business ethics program: See corporate responsibility program.

Community embraces the notion of membership in a system composed of parts that differ in structure or function from one another, but which communicate and enhance one another's goals. A system that is more differentiated and integrated than another is said to be more complex.

Community-driven development RESERVED

Community of Inquiry is where judgment and communication skills develop best. It is essentially an appreciative, reflective, participatory community engaged in self-correcting inquiry with regard to its problems and its options. The environment it creates is such that it requires coherence between ideas and words, between thinking and action, or between actions themselves. In our view, it is only in such an environment that the members can become responsible for their choices and actions. Only then can their individual selves grow within a system of significant social relationships.

Compliance: The standards, structures, and systems that serve the specific role of ensuring that the decisions and activities of an organization and its employees and agents are in accordance with the relevant governmental, industry, and professional requirements.

Corporate responsibility program: A tool that owners and managers of businesses—of all sorts and sizes—employ to inspire, encourage, and support responsible business conduct, which has at its core engaging enterprise stakeholders in order to foster and meet their reasonable expectations.

Culture includes, at its most obvious level, behavior and traditions. At its more fundamental levels, it includes values, beliefs and assumptions about the way the world works. Values are embodied in the cultures that embrace the acting individual, national, regional, and organizational.

Declaration of Integrity- A declaration of integrity is a public agreement among business enterprises in an industry or a locality that they will abide by an agreed-upon set of norms, values, and standards with a view to improving the business climate of the industry or community. See, e.g., St. Petersburg Declaration of Integrity and the Defense Industry Initiative. It differs from an Integrity Pact in that the government is not directly involved and has broader application than government procurement. Such a declaration, however, does not have the immediate risk of loss of an ability to bid on a contract that characterizes an Integrity Pact. A declaration of integrity, augmented with appropriate infrastructure, might be particularly valuable where a community foundation intends to fund community-driven development project.

Dynamic Responsibility- The world of embracing problems and challenges; knowing when to renegotiate promises made; and fostering change in the society around us. (From "The Joy in Taking Responsibility: Remarks to the Corps of Cadets, Valley Forge Military Academy & College")

Essential Human Capacities are comprehensive thinking (critical, creative and systems thinking); communicating ideas and feelings; and cooperating in inquiry and action.

Ethical Intervention is a form of human action intended to influence the human actions of others. It is an exercise of authority within five modes or levels of intervention into the judgments and actions of others. Which mode or level is appropriate depends upon the context:

  • Inspiration-Setting the example so that others will contribute their fullest capabilities to achieve some purpose. (the lowest degree of overcoming the Essential Human Capacities of the others)
  • Facilitation-Supporting others, and guiding them where they are willing and it is necessary, so that they are able to exercise their capabilities as fully as possible.
  • Persuasion-Appealing to reason to convince other members to act toward some purpose.
  • Manipulation-Offering incentives other than the intrinsic value of acting toward the achievement of some purpose.
  • Coercion-Forcing others to act where they have little or no desire to do so on their own. (The highest degree of overcoming the essential human capacities of the others)

Ethical symptoms, problems, dilemmas, and conditions. The essential differences between symptoms, problems, dilemmas, and conditions are often ignored, but are helpful to fully grasping a situation. Ethical symptoms are the evidence of fundamental conflicts within a community. Symptoms, by themselves, are not solved. An ethical problem is a situation raising an opportunity for choice where there is a perceived gap between a vision of what is right and good and the current reality of the situation provided there is a reasonable expectation that human action will fill it. An ethical dilemma, by way of contrast, is a situation demanding a choice between two or more options that are equally desirable or undesirable. Ethical conditions are situations that are fundamentally wrong and/or bad, which cannot be changed at all, or, if they can be changed, cannot be changed ethically. For example, the historic wrong of slavery is an ethical situation that cannot be undone at all, since all who were slaves are gone. Whether the effects of such wrongdoing can be undone ethically is the real ethics & policy issue, since those who enslaved are gone as well.

Ethics is a set of rules to guide the human actions of an individual human being so that they are consistent with his or her values. The function of ethics is to serve coordination or cooperation of our choices and actions to mutual benefit through self-discipline. See Robert Nozick, Invariances: The Structure of the Objective World.

Ethics & compliance program: See corporate responsibility program.

External costs are those burdens, damages or other costs of a human action that do not fall on the person or firm responsible for the action. Such costs are often neglected in the economic calculations that determine whether or not an action is or will be considered ethical or profitable. An example of an external cost would be the impact of operations on the environment. See Greaves, Percy L., Jr. Mises Made Easier: A Glossary for Ludwig von Mises' Human Action. Dobbs Ferry, NY: Free Market Books, 1974.

Hope is intersubjective, personal, and communal. We hope together; hope is a function of human and asocial action, not of impersonal processes and trends. See Robert Solomon. Ethics and Excellence: Cooperation and Integrity in Business. New York: Oxford Univ. Press, 1992.

Human Action is purposeful behavior; an attempt to substitute a more satisfactory state of affairs for a less satisfactory one; a conscious endeavor o remove as far as possible a felt uneasiness. Man [sic] acts to exchange what he considers will be a less desirable future condition for what he considers will be a more desirable future condition. Thinking and remaining motionless are actions in this sense. Human action is always rational (q.v.), presupposes causality and takes place over time. Greaves, Percy L., Jr. Mises Made Easier: A Glossary for Ludwig von Mises' Human Action. Dobbs Ferry, NY: Free Market Books, 1974.

A discipline is a body of theory and practice that requires both reflection and action to be put into practice. The discipline of responsible business contact is a study that will last a lifetime. It requires an understanding that an enterprise is a system and part of yet wider systems. It recognizes that there are bodies of experience embedded in traditions, laws and regulations, industry best practices, and emerging global standards that practitioners will spend precious time acquiring and sharing. Ultimately, the practitioner of such a discipline generates new knowledge to further the discipline itself.

Discipline of Responsible Business Conduct- As a discipline, responsible business conduct comprises a body of theory and technique that addresses how the responsible business enterprise pursues the purposes it shares with all its stakeholders. As a technique, the discipline is a body of standards, structures, systems, practices, policies, and procedures that business enterprises have found to be effective in recognizing their stakeholders, fostering reasonable expectations, and guiding their employees and other agents.

Economic progress- The most satisfactory definition of "economic progress" is a steady rise in the ability of an economy to invest more capital for each job and thereby to produce jobs that yield better living as well as a better quality of work and life. Peter F. Drucker.

Enron, WorldCom- Business scandals and failures are not new, but it is a sign of how closely connected the global economies are that these two companies in the United States have become symbolic of much that is wrong with businessmen and women. Referring to Enron and Worldcom has become shorthand for much that is wrong in corporate life. Researchers calculate that loss of confidence following the collapse of Enron and WorldCom will cost the U.S. economy $37 billion to $42 billion in reduced Gross Domestic Product. Enron, in particular, went from being considered the seventh largest company in the United States to bankruptcy in a matter of months, as confidence in its leadership faded.

Essential Human Capacities. The primary assumption underlying the materials in this Web site is that there are Essential Human Attributes—choice, consciousness, and compassion—which characterize what it means to be human from the perspective of ethics and policy. The attributes are exercised through the essentially human capacities of thinking, communicating, and cooperating in inquiry and action. Thus, an "essentially human" process would consider cognition, including reason, intuition, and imagination, in the form of critical and creative thinking; communicating in symbols and concepts; and social cooperation in inquiry and action as capacities "essential" to individuals acting within a society. Moreover, the process would be seen to be "not essentially human" to the extent that the Essential Human Capacities of any of those involved or affected by a judgment are not employed or are unreasonably degraded. See Essential Interdependence Paradigm.

Essential Interdependence Paradigm. This framework of the individual within society, which employs and accounts for the Essential Human Capacities, is called the Essential Interdependence Paradigm. It stands in contrast to any number of other paradigms that treat the individual as a subordinate part of society (see, e.g., Giddens 1971; Etzioni 1988) or which make unreasonable assumptions regarding human capacities, especially knowledge. The Essential Interdependence Paradigm refers to the processes and policy considerations necessary to the use and development of those capacities of agents acting within society, which are "of the essence" of humanity and which, correspondingly, are "essential" to living the good life in society, irrespective of how one defines it. It includes what is called an Essentially Human Judgment Process and the impact of pursuing such a process within a community over time. This framework can be expressed verbally as follows:

Essentially Human Judgment Process. Where a judgment process (as far as is reasonably possible) employs—and accounts for the effects of a proposed judgment on—the Essential Human Capacities of all persons affected by a judgment, there results Quality Judgment. The judgment process itself will consider (a) the time available to employ the process, (b) the time frame(s) within which the judgment is to be effective, and (c) the differing time value orientations of all those affected.

Where Quality Judgment is implemented by persons for whom the project is a meaningful activity and there is a balance of challenge and ability; an opportunity for concentration and involvement; sufficient feedback to permit a clear vision, an accurate, insightful view of current reality, and reasonable expectations of the possibilities of action; and a sense of the possibility of control of one's life, there results Quality Action. The action process itself must provide enough time for the actors (a) to employ their Essential Human Capacities in reaching augmenting Quality Judgments, (b) to implement the resulting Quality Judgments, and (c) to reflect on the experience in order to consider its long-term impacts and learn from it.

If the norms of Quality Judgment and Quality Action are followed over long enough periods of time, there results change in behavior, and, if the changed behavior becomes the custom of the community, there result autonomous agents of good character, who embrace uncertainty and change as opportunities for learning and growth and who comprise a community having shared vision and core values consistent with the development and maintenance of the Essential Human Capacities.

Evolving World Ethics. We are evolving members of an evolving world, which is part of an evolving universe. Ethics, as a discipline, gives insufficient guidance if it does not take into account this fundamental consideration. Ethics, then, must be dynamic, systemic, and inclusive in nature.

External Stakeholders- The external parties that have a stake in an enterprise's success, including customers and consumers, suppliers and service providers, civil society organizations, non-governmental organizations, government agencies, local community representatives, media, and the environment. External stakeholders share the objective of having business succeed in a manner that strengthens both the economy and civil society. They provide valuable feedback to the enterprise on values and political, economic, and social considerations that an enterprise should integrate into its ethical identity.

Good Corporate Governance- This is the process by which the leadership of a an enterprise, especially a limited liability enterprise, sets standards and procedures for its employees and agents, fosters reasonable expectations among its stakeholders, and meets those expectations. Good corporate governance expresses itself through a sound set of core beliefs, standards and procures, and expectations. It requires understanding the relevant context of the enterprise, its organization culture, and its strengths and weaknesses. It exercises those strengths and reforms its weaknesses through infrastructure, including a Corporate Responsibility Program. Good corporate governance is more likely when there is a transparent relationship between the government and private sector.

Good Public Governance- This is the process by which the leadership of a country makes and implements decisions concerning the market. There are eight characteristics of good governance. They are consensus building, participation of all interest, accountability, transparency, responsiveness, effectiveness and efficiency, equality and inclusiveness and finally the rule of law. Good public governance occurs when there is a transparent relationship between the government and private sector,among other conditions.

Industry Standards- These are standards that different enterprises in a specific industry develop and agree upon with one another, or are so common as to be considered a custom of the industry or profession. Such standards go beyond laws and regulations to promote free, fair and honest competition among the members of the industry.

Integrity Pact- This is an agreement between a group of businesses that obligates them to participate in a government tender or procurement process in a legal and transparent manner. Under an integrity pact, the parties may pledge not to offer, pay, accept, or seek bribes of any kind during the tender. The key component of an integrity pact is transparency. A business in the pact also abides by any and all sanctions placed on it by the other members of the pact.

Internal Stakeholders- The internal parties that have a stake in an enterprise's success, including, the shareholders, board of directors, executive management, and employees.

LCE/SME- Most of the standards and best practices, which have emerged and are emerging were developed for or by the large,complex organization (LCE). Very little attention has been given to standards and best practices for the small to medium enterprise (SME). This is a function of the impact on economies and communities by LCE and the relatively fewer resources available to the SME to develop separate corporate responsibility programs.

Learning Organization- This is an enterprise adept at generating, acquiring, and sharing knowledge about its relevant context, its organization culture and the expectations of its stakeholders, and at using that knowledge to live the lives its owners, managers, employees, and agents truly want to live. A Learning Organization is a community characterized by a culture of Organizational Learning that anticipates and embraces change, complexity and uncertainty and is adept at reacting, responding, and adapting to them. See Organizational Learning and Learning Organizations: An Overview

Money laundering- This is the process by which one conceals the existence, illegal source, or illegal application of income, and disguises that income to make it appear legitimate. Andrew J. Camelio, and Benjamin Pergament, "Money laundering," American Criminal Law Review 35, no. 3 (1998) [cited 7 June 2003] [database on-line]; available from Questia, http://www.questia.com/.

Moral Imagination is the capacity to empathize with others and discern creative possibilities for ethical action. The moral imagination considers an issue in the light of the whole and looks toward what might be with a firm grasp of what has been and is.

An Organization is essentially a community of stakeholders for whom a set of structures, systems, practices, and procedures provides hope, identity, and purpose.

Organizational Aspirations are the Core Purpose, Core Values, and Vision of Desired Future of an Organization.

Organizational Capability includes the skills, knowledge, understandings, and attitudes of an organization's stakeholders.

Organizational Capacity includes the structures and systems that support bringing Organizational Capability to bear to achieve organizational aspirations.

Organizational culture can be understood in the same way as the culture of a society, nationality or country. It is shaped by the enterprise's origin and history, as well as the values, norms, and attitudes of its leaders and stakeholders. The culture is reflected in the organization's decision-making and communication procedures, production methods, and policies regarding servicing customers and clients. Organizational culture is the primary predictor of Business Ethics Program sues or failure. There are a number of measurable elements of culture, which should be a part of the regular evaluation of the Corporate Responsibility Program by owners and mangers.

Organizational Ethics is a set of values, whether formal or informal, to guide the members' choices and actions and the structures, systems, practices, procedures, and protocols to effect them.

Organizational Excellence is essentially indefinable. Part of the success of democracies and free markets is that, as institutions, they bring together diverse sets of skills, knowledge, understanding, and attitudes to create more complex wholes to serve a community better than any single part could do individually. What will constitute Organizational Excellence is peculiar to any given organization. It has to do with satisfying stakeholder needs, reasonably and emotionally, But it is more. It is activity of the soul of the organization as a function of Organizational Integrity.

Organizational Integrity is the achievement of organizational aspirations by an organization in harmony with the further evolution of it and its environment.

Organizational learning is the process of gaining knowledge and developing skills which empower us to understand, and thus to act effectively within, social institutions such as businesses, government departments, schools, or charities. A learning organization builds collaborative relationships in order to draw strength from the diverse knowledge, experience, capabilities, and ways of doing things that people and communities have and use. Addleson

Organizational Values are those things the organization acts to gain and/or keep. The essential values of an organization are its purpose, its core values, and its vision of a desired future. There are other organizational values, both aspirational and operational, which reflect other objectives of the organization and its stakeholders.

Parade of Horribles- This is one way to encourage an enterprise and its owners, managers, employees, and agents to embrace the discipline of responsible business conduct. Some practitioners can spend hours displaying headlines and telling stories of enterprises that failed and senior executives who went to prison for breaking the law. See, e.g., Enron, WorldCom.

Policy is the organization's formal and informal expression of its values and ethics, in order to provide the capacity, continuity, and culture necessary for the organization and its stakeholders to achieve the things they value.

Pragmatic, Ethical, and Moral Decision-making. A pragmatic judgment is either ego- or ethnocentric and is pursued solely from the perspective(s) of the individual judgment maker(s). The question asked in this context is, what must I do, in a particular situation, to realize certain values or goals? An ethical judgment involves the values themselves; it is a question of what is a good life for an individual and for a community. As Mises (1966), declared: "Ethical doctrines are intent upon establishing scales of value according to which man should act, but does not always act. They claim for themselves the vocation of telling right from wrong and of advising man concerning what he should aim at as the supreme good." A moral decision is one justified by reference to a source other than reason. Whether it is god, an authority, or society, where there is a decision made justified by reference to another, it is a moral decision.

Purpose Statement- This is a statement of the fundamental reasons for an enterprise's existence beyond profit. A purpose, unlike a vision of a desired future, is broad, essential, enduring, and even spiritual. It inspires and guides employees and agents. It is pursued, but nearly fully captured. Researchers suggest that the way to surface the purpose of an enterprise is to describe what it is the enterprise does, or intends to do, and ask "why is that important?" five times.

Relevant Context- All enterprises-whether large or small-strive to meet enterprise goals and objectives in a context of legal, economic, political, environmental, socio-cultural, and technological elements. Each element in an enterprise's "relevant context" brings pressures to bear-threats, opportunities, demands, constraints, and uncertainties-which its owners, managers, workers, and agents must recognize and address if they are to act effectively, efficiently, and responsibly.

Responsible Business Conduct- The choices and actions of employees and agents that foster and meet the reasonable expectations of enterprise stakeholders. This is conduct that reflects an understanding of the relevant context of the enterprise, its organizational culture, and the reasonable expectations of its stakeholders. In one sense, responsible business conduct is very practical and rooted in the particular situation of the individual and enterprise. In another, however, responsible business conduct is a recognition that we are all in this situation together and that one does not cease to be a member of a community simply because one went into business.

Responsible Business Enterprise- An enterprise characterized by good governance policies and management practices, as well as a culture of responsible business conduct, which consistently meets the reasonable expectations of its stakeholders. This is a learning organization adept at understanding its relevant context, its organization culture, and core beliefs. Based upon these understandings, the owners, managers, employees, and agents of such an enterprise are able to build an enterprise that has the appropriate standards, procedures, and expectation; structures and systems, communication and feedback, and enterprise alignment to be able to foster reasonable expectations among its stakeholders-and meet them. By meeting these reasonable expectations, the responsible business enterprise is able to improve its business performance, make a profit, and contribute to the economic progress of its community.

Responsible Officer- This is a high-level person who is responsible for overseeing the Corporate Responsibility Program. He or she should be an owner, director, or senior management. This person may or may not be the ethics officer for the enterprise. Indeed, unless the enterprise is large or complex, the responsible officer often has executive responsibilities and relies on the ethics officer to run day-to-day operations.

Reward System- This is a system of rewards that an enterprise provides to employees that uphold core values and fulfill ethical goals in their day-to-day activities. These rewards may be formal, taking the form of promotions, pay raises, bonuses, and public recognition. These rewards may also be informal, taking the form of a private praise or a special meeting with the president of the enterprise. A reward system reinforces the enterprise's commitment to ethics and encourages its employees and managers to conduct themselves according to the guidelines of the enterprise's code of ethics.

Risk Management- This is a process that helps the owners and managers of an enterprise plan organize and control the day-to-day operations of the enterprise to minimize risks to capital and earnings. Risk management includes, but is not limited to, management of risks associated with accidental losses, financial mismanagement, fraud and embezzlement, corruption, loss of reputation, employee health and safety, and other operational risks.

Self-realization is fulfillment of the potentialities of life with which the individual identifies and of which the individual is an intrinsically valuable part. Maximum realization and maximum diversity are closely related.

SME/LCE- Most of the standards and best practices, which have emerged and are emerging were developed for or by the large,complex organization (LCE). Very little attention has been given to standards and best practices for the small to medium enterprise (SME). This is a function of the impact on economies and communities by LCE and the relatively fewer resources available to the SME to develop separate corporate responsibility programs.

Social Capital is the mutual trust and shared values among individuals within an organization and between an organization and external stakeholders that enables these parties to work together on a cooperative basis. Social capital accrues through performance at the grassroots within an enterprise and through the creation of civil society organizations, such as trade groups, business associations, service clubs, charities, and non-governmental organizations.

Stakeholders of an organization include all those involved in, affected by, or in a position to influence the organization. Stakeholders involved in the organization may include its members (both managers and employees); other agents and partners of the organization; suppliers; shareholders; and customers, the governed, or beneficiaries. Stakeholders affected by the organization may include families of members; competitors; and surrounding communities.

Static responsibility- The world of duty, obligation, and accountability: doing what you are told, doing what you promised, doing what is expected. (From "The Joy in Taking Responsibility: Remarks to the Corps of Cadets, Valley Forge Military Academy & College", April 2001)

State Capture- This is the result of efforts by an enterprise to influence the laws, policies, and regulations of a state to its advantage by providing illegitimate personal gains to public officials.

Systems may be divided along a continuum into three types: ordered, complex, and chaotic. Complex systems are flexible enough to be open to change, yet ordered enough to recognize and adapt to the most beneficial change, if and when it occurs.

Triple bottom line. A Corporate Responsibility Program helps owners and managers address its "triple bottom line": the economic, social, and environmental results or impacts of its operations on its stakeholders. Triple bottom line reporting requires enterprises to evaluate their social and environmental performance to the same degree they evaluate and report economic performance.

Value is that which one acts to gain and/or keep. What one values in the concrete is said "to have value." What one values in the abstract is said "to be a value."

Whistleblower- A member of an enterprise who speaks out for its good or the public and suffers retaliation as a result. See e.g. Alford.

The Whole is not only the complex of interrelated functional aspects of society, economic, political, social institutions. It is also traditions, beliefs, values, ideals, and hopes of its members, who constitute a community with a stake in the good life and a hopeful future.

Another source of ethics definitions

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