More generally, much of the civil law governing business is based on the
legal precedents of case law rather than specific statutes or regulations. Case
law is fundamentally ambiguous in a way that statutory. Law is not. In a very
real sense, many acts are not illegal until a court rules that they are. For example, both the attorneys and the auditors in the Enron case were expected to
"push the envelope” of legality by Enron’s aggressive management practices.
Given that many of Enron’s financial practices were quite literally unprecedented, their attorneys and accountants offered advice that they believed could
be defended in court. Until and unless these acts were challenged in court there
was a real sense in which they were perfectly legal. While admittedly "pushing
the envelope” on accounting and tax regulations, what they did was not obviously illegal.
These facts demonstrate that one cannot always rely on the law to decide
what is right or wrong. The manager whose employee suffers from asthma will
need to make a decision and the law won’t decide this for her. Sometimes, the
law itself requires ethical analysis for many of its decisions. Legal decisions in
the Enron case will not be based solely on legal precedent (since, by definition,
"pushing the envelope” is to go into the gray area beyond what is obviously
prohibited by precedent) but upon a judge and jury’s determination that the
acts were unfair and unethical. Because most business decisions never get to
the point where a judge and jury are asked to make a determination, business
managers will be faced with the unavoidable responsibility of looking beyond
the law for guidance in making ethical decisions.
Expressed in these terms, perhaps the major reason to study ethics is because
whether we examine ethical questions explicitly or not, they are answered by each
and every one of us every day in the course of living our lives. Presumably, the
executives at Enron did not wake up one morning and choose to defraud their
stockholders and employees. The actions we take and the lives we lead give
practical answers to these fundamental ethical questions. Our only real choice
is whether we answer them deliberately or unconsciously. Thus, the philosophical answer to why you should study ethics was given by Socrates over 2,000
years ago. "The unexamined life is not worth living.”