At a recent meeting of the Gulf Coast CEO Forum, an organization comprised of local CEOs with a focus on business leadership, we were treated to a lecture by Dr. James Otteson, Presidential Chair in Business Ethics at Wake Forest University. In addition, he is the executive director for BB&T Center for the Study of Capitalism. His talk embraced the above topic and the Morality of Capitalism. I will do my best to summarize his talk.

He commenced his address by challenging us to place business in its proper moral context by investigating the value and purpose of “Honorable Business.”

According to Aristotle, human beings have a hierarchy of purposes.The ultimate end for humans is “eudaimonia”, a contented state of being happy, healthy and prosperous. Achieving “eudaimonia” requires a connection between business and the “humane and just society.”

In the proper moral context of business. we want a “humane and just society.” An HJS depends on specific social institutions including a properly functioning market economy, which includes honorable business providing productive value.

Before 1800, the life of man was brutally short. The average person was no better off than in 100,000 B.C. with daily earnings of $1-3.Today it is $145 per day in the US, and $45 in the rest of the world, a 15-fold real increase, 50-fold in the U.S. What caused this?

Culture and Institutions.

There are two ways to get what one wants:

Extractive behavior: theft, slavery, imperialism.

Cooperative behavior: voluntary exchange.

Around 1800, there was a cultural shift: extractive behavior became unacceptable and cooperative behavior became acceptable, even praiseworthy.

Institutions began to reflect this cultural change. The key to prosperity is more cooperation. The “company” is a powerful node of cooperation and thus honorable business is a key to prosperity.

Is money all that matters? No, but wealth enables other things that do matter to us.

Dr. Otteson went on to produce a series of graphs that compared the markets of the freest economies and the least free economies for a range of subjects; development, poverty, life expectancy and the environment. In all sections, the most free substantially outperformed the least free. Should we seek to equalize wealth or income? After all, Bill Gates is substantially wealthier than Michael Jordan; is this fair?

What matters is the absolute quality of each individual’s life. Life is a journey, not a race.

Sure all wealth comes from business but genuine prosperity comes from Honorable Business, which leads to increasing wealth and enables “Eudaimonia”

I have attempted to convey the content of Dr. Otteson’s address, with his permission, as I felt it was not only thought-provoking but timely as our country will be called upon to make an important choice in November.

It was not planned, but after writing this column we went to see The Big Short, which for me underlined the appropriateness of Dr. Otteson’s remarks. 

Ian Black is the founder of Ian Black Real Estate