Module 2 - Ethical Theories and Models 8 Hours

Ethical relativism and absolutism – role of ethical theory in business – Classification of ethical
theories:

1) Consequentiality or Teleological theories – Utilitarianism – Egoism

2) Nonconsequentialist or Deontological theories – Kantian theories

3) Other normative theories: stockholder, stakeholder, social contract, and trusteeship

theories

One viewpoint is that ethics do vary between time and place. Slavery for example is now
regarded as wrong, whereas in Roman times slavery was acceptable. The view that ethics vary
between different ages and different communities is known as ethical relativism.

The opposing view is that ethics are unchanging over time and place. Some courses of action are
always right, others are always wrong. A simple example would be saying that it is always wrong to
steal. The view that there are certain unchanging ethical rules is known as ethical absolutism.

One view is that society is best served by everyone following certain ethical rules, and obeying them
no matter what the results are. The argument is that people will undermine society if they disobey
the ethical rules, even if they do so with the intention of avoiding adverse consequences. This
viewpoint, known as deontological ethics, was developed by Kant.

The opposing viewpoint is that you cannot divorce an action from its consequences, and when taking
ethical decisions you must take account of what the consequences will be. This viewpoint is known
as teleological ethics. If you take this viewpoint, it implies that you have to define what the best
possible consequences are. The different variations of the teleological viewpoint try to do this.

Role of ethical theory

Ethics is concerned with right and wrong and how conduct should be judged to be good or bad. It is
about how we should live our lives and, in particular, how we should behave towards other people.
It is therefore relevant to all forms of human activity.

Business life is a source of ethical dilemmas because its whole purpose is material gain, the making
of profit. Success in business requires a constant, avid search for potential advantage over others
and business people are under pressure to do whatever yields such advantage.

It is important to understand that if ethics is applicable to corporate behaviour at all, it must

therefore be a fundamental aspect of mission, since everything the organisation does flows from
that. Managers responsible for strategic decision making cannot avoid responsibility for their
organisation's ethical standing. They should consciously apply ethical rules to all of their decisions in
order to filter out potentially undesirable developments. The question is however what ethical rules
should be obeyed. Those that always apply or those that hold only in certain circumstances?
Ethical assumptions underpin all business activity as well as guiding behaviour. The continued
existence of capitalism makes certain assumptions about the 'good life' and the desirability of
private gain, for example. Accountancy is allegedly not a value-neutral profession. It establishes and
follows rules for the protection of shareholder wealth and the reporting of the performance of
capital investment. Accordingly accounting, especially in the private sector, can be seen as a servant
of capital, making the implicit assumptions about morality that capitalism does.

Ethical relativism

Relativism is the view that a wide variety of acceptable ethical beliefs and practices exist. The ethics
that are most appropriate in a given situation will depend on the conditions at that time.

The relativist approach suggests that all moral statements are essentially subjective and arise from
the culture, belief or emotion of the speaker.

Non-cognitivism recognises the differences that exist between the rules of behaviour prevailing in
different cultures. The view that right and wrong are culturally determined is called ethical relativism
or moral relativism. Ethical rules will differ in different periods within the same society, and will
differ between different societies. Acceptance of ethical relativism implies that a society should not
impose moral imperatives strictly, since it accepts that different ethical and belief systems are
acceptable.

This is clearly a matter of significance in the context of international business. Managers

encountering cultural norms of behaviour that differ significantly from their own may be puzzled to
know what rules to follow.

Strengths of relativism

(a) Relativism highlights how ethical positions depend on what people observe and biases due to the
limits of their perception.

(b) Relativism also highlights differences in cultural beliefs. For example, all cultures may say that it is
wrong to kill innocents, but different cultures may have different beliefs about who innocents
actually are.

(c) The philosopher Bernard Crick argued that differing absolutist beliefs result in moral conflict
between people. (Relativist) ethics should act to resolve such conflicts.

(d) In the global economy, where companies conduct businesses in many different countries and
cultures, adopting a relativist approach presumes more flexibility and therefore greater success.

Criticisms of relativism

a) Put simply, strong relativism is a based on a fundamental contradiction. The statement that 'All
statements are relative' is itself an absolute, non-relative statement. However it is possible to argue
that some universal truths (certain laws of physics) exist, but deny other supposedly objective truths.
(b) A common criticism of relativism, particularly by religious leaders, is that it leads to a philosophy
of 'anything goes', denying the existence of morality and permitting activities that are harmful to
others.

(c) Alternatively some critics have argued for the existence of natural moral laws. These are not
necessarily religious laws. The atheist scientist Richard Dawkins has argued in favour of natural laws.

(d) Ideas such as objectivity and final truth do have value

(e) If it's valid to say that everyone's differing opinions are right, then it's equally valid to say that
everyone's differing opinions are wrong.

Ethical absolutism

Absolutism is the view that there is an unchanging set of ethical principles that will apply in all
situations, at all times and in all societies.

Absolutist approaches to ethics are built on the principle that objective, universally applicable moral
truths exist and can be known. There is a set of moral rules that are always true. There are various
methods of establishing these:

(a) Religions are based on the concept of universally applicable principles.

(b) Law can be a source of reference for establishing principles. However, ethics and law are not the
same thing. Law must be free from ambiguity. However, unlike law, ethics can quite reasonably be
an arena for debate, about both the principles involved and their application in specific rules.

(c) Natural law approaches to ethics are based on the idea that a set of objective or 'natural' moral
rules exists and we can come to know what they are. In terms of business ethics, the natural law
approach deals mostly with rights and duties. Where there is a right, there is also a duty to respect
that right. For those concerned with business ethics there are undeniable implications for behaviour
towards individuals. Unfortunately, the implications about duties can only be as clear as the rights
themselves and there are wide areas in which disagreement about rights persists.

(d) Deontological approaches (see below). Many absolutists would accept that some ethical truths
may differ between different cultures. However they would also believe in certain basic truths that
should be common to all cultures (for example 'thou shall not kill').

Strengths of absolutism

(a) Fundamentally the statement that absolute truth does not exist is flawed. If it does not exist,
then the statement that it does not exist cannot be true.

(b) Absolutism lays down certain unambiguous rules that people are able to follow, knowing that
their actions are right.

Criticisms of absolutism
(a) Absolutist ethics takes no account of evolving norms within society and the development of
'advances' in morality, for example development of the belief that slavery is wrong.

(b) From what source should absolutist ethics be derived? Should it be religion, universal laws,
human nature? Whatever source is used, it is then possibly subject to human interpretation with
the result that different views may exist on the same issue and there will never be universal
agreement.

(c) What happens when two absolutist positions appear incompatible? For example is it permissible
to tell a lie in order to save an innocent life?

(d) A theory can be true according to a relative framework as well as true according to an absolute
framework. What differs is the nature of the framework and not the truth of the statement.

Deontological ethics

Deontological Theory: Determine the ethics of an act by looking at the process of the decision
( The means)

Deontology is concerned with the application of absolute, universal ethical principles in order to
arrive at rules of conduct, the word deontology being derived from the Greek for 'duty'.

Deontology lays down criteria by which actions may be judged in advance, the outcomes of the
actions are not relevant. The definitive treatment of deontological ethics is found in the work of the
eighteenth century German philosopher, Immanuel Kant.

Immanuel Kant (1724– 1804) is considered one of the leading founders of the principle of
universalism. Universalism, which is also called deontological ethics, holds that the ends do not
justify the means of an action— the right thing must always be done, even if doing the wrong thing
would do the most good for the most people. Universalism, therefore, is also referred to as a
nonconsequentialist ethic. The term “deontology” is derived from the Greek word deon, or duty.
Regardless of consequences, this approach is based on universal principles, such as justice, rights,
fairness, honesty, and respect.

Kant believed that there was a supreme principle of morality, and he referred to it as The Categorical
Imperative.  The CI determines what our moral duties are. (Ref:
https://www.washoeschools.net/cms/lib/NV01912265/Centricity/Domain/437/Lesson
%2013%20Kant.docx)

Kant’s principle of the categorical imperative(an unconditional moral obligation which is binding in
all circumstances and is not dependent on a person's inclination or purpose.), unlike utilitarianism,
places the moral authority for taking action on an individual’s duty toward other individuals and
“humanity.” The categorical imperative consists of two parts. The first part states that a person
should choose to act if and only if she or he would be willing to have every person on earth, in that
same situation, act exactly that way. This principle is absolute and allows for no qualifications across
situations or circumstances. The second part of the categorical imperative states that, in an ethical
dilemma, a person should act in a way that respects and treats all others involved as ends as well as
means to an end.
Kant’s categorical imperative forces decision makers to take into account their duty to act
responsibly and respectfully toward all individuals in a situation. Individual human welfare is a
primary stake in any decision. Decision makers must also consider formulating their justifications as
principles to be applied to everyone.

Kant's approach to ethics is based on the idea that facts themselves are neutral. They are what is.
They do not give us any indication of what should be. If we make moral judgements about facts, the
criteria by which we judge are separate from the facts themselves. Kant suggested that the criteria
come from within ourselves and are based on a sense of what is right, an intuitive awareness of the
nature of good.

Kant spoke of motivation to act in terms of 'imperatives'.

A hypothetical imperative lays down a course of action to achieve a certain result. For instance, if I
wish to watch a play in a theatre I must purchase a ticket.

A categorical imperative, however, defines a course of action in terms of acting in accordance with
moral duty without reference to outcomes, desire or motive. For Kant, moral conduct is defined by
categorical imperatives. We must act in certain ways because it is right to do so – right conduct is an
end in itself.

Kant arrived at three formulations of the categorical imperative. These were published at different
times, and do overlap. The term maxim means an expression of a general rule of conduct.

(a) Principle of Consistency / The formula of universal law

'So act that the maxim of your will could hold as a principle establishing universal law.'

The command states, crudely, that you are not allowed to do anything yourself that you
would not be willing to allow everyone else to do as well.  You are not allowed to make
exceptions for yourself.  For example, if you expect other people to keep their promises,
then you are obligated to keep your own promises.

This is close to the common sense maxim called the golden rule found in many religious
teachings, for example The Bible: 'In everything do to others what you would have them do
to you, for this sums up the Law and the Prophets.' (Matthew 7:12)

The difference between Kant's views and the golden rule is that under the golden rule, one
could inflict harm on others if one was happy for the same harm to be inflicted on oneself.
Kant however would argue that certain actions were universally right or wrong, irrespective
of the personal, societal or cultural conditions.

Kant went on to suggest that this imperative meant that we have a duty not to act by
maxims that result in logical contradictions. Theft of property for example implies that it is
permissible to steal, but also implies the existence of property. However if theft is allowed
there can be no property, a logical contradiction. Kant also argued that we should act only
by maxims that we believe should be universal maxims. Thus if we only helped others when
there was advantage for ourselves, no one would ever give help to others.
(b) Principle of Human Dignity
'Do not treat people simply as means to an end but as an end in themselves.'

The point of this rule is that it distinguishes between people and objects. We use objects as
means to achieve an end. A chair is for sitting on, for instance. People are different.

We regard people differently from the way we regard objects since they have unique
intellects, feelings, motivations and so on of their own. Treating them as objects denies their
rationality and hence rational action.

Note, however, that this does not preclude us from using people as means to an end as long
as we, at the same time, recognise their right to be treated as distinct beings. Clearly,
organisations and even society itself could not function if we could not make use of other
people's services.

For Kantians, there are two questions that we must ask ourselves whenever we decide to
act:  (i) Can I rationally will that everyone act as I propose to act?  If the answer is no,
then we must not perform the action.  (ii)  Does my action respect the goals of human
beings rather than merely using them for my own purposes?  Again, if the answer is no,
then we must not perform the action.  

(c) Principle of Autonomy

'So act as though you were through your maxims a law-making member of the kingdom of
ends.'

Autonomous human beings are not subject to any particular interest and are therefore only
subject to the laws which they make for themselves. However they must regard those laws
as binding on others, or they would not be universal and would not be laws at all.

Criticisms of Kant

(a) Contradictions Critics have pointed out a dualism in Kant's views. He sees humans as part
of nature whose actions can be explained in terms of natural causes. Yet Kant also argues
that human beings are capable of self-determination with full freedom of action and in
particular an ability to act in accordance with the principles of duty. Man is therefore
capable in effect of rising above nature, which appears to conflict with the view that man is a
natural animal.

(b) Consequences It is argued that you cannot take actions in a vacuum and must have
regard for their consequences. The Swiss philosopher Benjamin Constant put forward the
'enquiring murderer' argument. If you agree with Kant and hold that Truth telling must be
universal, then one must, if asked, tell a known murderer the location of his prey. Kant's
response was that lying to a murderer denied the murderer's rationality, and hence denied
the possibility of there being free rational action at all. In addition Kant pointed out that we
cannot always know what the consequences of our actions would be.

(c) Self-reform Kierkegaard argued that, whatever their expectations of others, people failed
to apply Kant's duties to themselves, either by not exercising morally laws or not punishing
themselves if they morally transgressed.

Teleological or consequentialist ethics: utilitarianism

The word Teleological is derived from the Greek word ‘teleos’ means end.

Teleology means the doctrine of the final causes of things.

Teleological is related to probable outcome or consequence whereas Deontology is the
science of duty or ethics

Teleological theory : Determine the ethics of an act by looking to the consequences of the
decision ( The ends); Rightness of actions is determined solely by the good consequences
they produce

There are two versions of consequentialist ethics:

 Utilitarianism – what is best for the greatest number (Jeremy Bentham)
 Egoism – what is best for me

Utilitarianism
The utilitarian ethical theory is founded on the ability to predict the consequences of an
action. To a utilitarian, the choice that yields the greatest benefit to the most people is the
choice that is ethically correct.
There are two names associated with utilitarian philosophy: they are “Jeremy Bentham” and
“John Stuart Mill”

According to utilitarian principle, a decision is ethical if it provides a greater net utility than
any other alternative decision. An action is right from ethical point of view if and only if the
sum total of utilities produced by that act is greater than sum of utilities produced by any
other act.

There are two types of utilitarianism, act utilitarianism and rule utilitarianism.

Act utilitarianism adheres exactly to the definition of utilitarianism as described in the above
section. In act utilitarianism, a person performs the acts that benefit the most people,
regardless of personal feelings or the societal constraints such as laws.
Act-based utilitarians, on the other hand, analyze a particular action or behavior to
determine whether the greatest utility or good can be achieved. Act based utilitarians might
also choose an action over a principle if the greatest utility could be gained. For example, an
employee might reason that illegally removing an untested chemical substance from
company storage would save the lives of hundreds of infants in a less advantaged country
because that chemical is being used in an infant formula manufactured in that country. The
employee could lose his job if caught; still he calculates that stealing the chemical in this
situation provides the greatest utility.

Rule utilitarianism, however, takes into account the law and is concerned with fairness. A
rule utilitarian seeks to benefit the most people but through the fairest and most just means
available. Therefore, added benefits of rule utilitarianism are that it values justice and
includes beneficence at the same time
Rule- based utilitarianism argues that general principles are used as criteria for deciding the
greatest benefit to be achieved from acting a certain way. The act itself is not the basis used
for examining whether the greatest good can be gained.
For example, “stealing is not acceptable” could be a principle that rule- based utilitarians
would follow to gain the greatest utility from acting a certain way. “Stealing is not
acceptable” is not an absolute principle that rule- based utilitarians would follow in every
situation. Rule- based utilitarians might choose another principle over “stealing is not
acceptable” if the other principle provided a greater good.

The teleological approach to ethics is to make moral judgements about courses of action by
reference to their outcomes or consequences. Right or wrong becomes a question of benefit
or harm rather than observance of universal principles.

According to Utilitarianism, our obligation or duty in any situation is to perform the action
that will result in the greatest possible balance of good/evil.

Utilitarianism can be summed up in the 'greatest good' principle – 'greatest happiness of the
greatest number'.

This says that when deciding on a course of action we should choose the one that is likely to
result in the greatest good for the greatest number of people. It therefore contrasts sharply
with any absolute or universal notion of morality. The 'right' or 'wring' can vary between
situations and over time according to the greatest happiness of the greatest number.

Utilitarianism underlies the assumption that the operation of the free market produces the
best possible consequences. Free markets, it is argued, create wealth, this leads to higher
tax revenue, and this can pay for greater social welfare expenditures.

Problems with utilitarianism

There is an immediate problem here, which is how we are to define what is good for people.
Bentham, a philosopher who wrote on utilitarianism, considered that happiness was the
measure of good and that actions should therefore be judged in terms of their potential for
 promoting happiness or relieving unhappiness. Others have suggested that longer lists of
harmful and beneficial things should be applied.
The utilitarian approach may also be questioned for its potential effect upon minorities. A
situation in which a large majority achieved great happiness at the expense of creating
misery among a small minority would satisfy the 'greatest good' principle. It could not,
however, be regarded as ethically desirable.
However, utilitarianism can be a useful guide to conduct. It has been used to derive wide
ranging rules and can be applied to help us make judgements about individual, unique
problems

Criticisms:-
 Lack of predictability about benefits and costs.
 Measurement of utility becomes difficult as it changes from time to time, place to
place.

Problems with utilitarianism also include the following:

1. No agreement exists about the definition of “good” for all concerned. Is it truth, health, peace,
profits, plea sure, cost reductions, or national security?

2. No agreement exists about who decides. Who decides what is good for whom? Whose interests
are primary in the decisions?

3. The actions are not judged, but rather their consequences. What if some actions are simply
wrong? Should decision makers proceed to take those actions based only on their consequences?

4. How are the costs and benefi ts of nonmonetary stakes, such as health, safety, and public welfare,
mea sured? Should a monetary value be assigned to nonmarketed benefi ts and costs? What if the
actual or even potentially harmful eff ects of an action cannot be mea sured in the short term, but
the action is believed to have potentially long- term eff ects, say in 20 or 30 years? Should that action
be chosen?

5. Utilitarianism does not consider the individual. It is the collective for whom the greatest good is
estimated. Do instances exist when individuals and their interests should be valued in a decision?

6. The principles of justice and rights are ignored in utilitarianism. The principle of justice is
concerned with the distribution of good, not the amount of total good in a decision. The principle of
rights is concerned with individual entitlements, regardless of the collective calculated benefi ts.

Even given these problems, the principle of utilitarianism is still valuable under some
conditions: when resources are fi xed or scarce; when priorities are in confl ict; when no
clear choice fulfi lls everyone’s needs; and when large or diverse collectives are involved in a
zero- sum decision, that is, when a gain for some corresponds to a loss for others.

Teleological or consequentialist ethics: egoism

Egoism states that an act is ethically justified if decision-makers freely decide to pursue their
own shortterm desires or their long-term interests. The subject to all ethical decisions is the
self.

Adam Smith argued that an egoistic pursuit of individual self-interest produced a desired
outcome for society through free competition and perfect information operating in the
marketplace. Producers of goods for example have to offer value-for-money, since
competition means that customers will buy from competitors if they don't. Egoism can also
link in with enlightened self-interest, such as a business investing in good facilities for its
workforce to keep them content and hence maintain their loyalty.

Criticisms of egoism

One criticism of pure egoism is that it makes short-term selfish desires equivalent to longer-
term, more beneficial, interests. A modified view would give most validity to exercising
those short-term desires that were in long-term interests. A more serious criticism has been
that the markets do not function perfectly, and that some participants can benefit
themselves at the expense of others and also the wider environment – hence the debate on
sustainability . Most fundamentally egoism is argued to be the ethics of the thief as well as
the short-termist.

Stockholder theory (shareholder theory)

This theory also referred as ; ‘shareholders theory’, that expresses the relationship between
the owners and their agents.
 Shareholders are the real owners of the company and managers are agents who run
day-today activities.
 Owners and managers should be with mutual consent that owners provide salaries
for managers and in return, managers perform activities for owners.

The theory that focuses on the interests of shareholders is known as stockholder theory,
since it is mostly discussed in American literature.
Stockholder theory states that shareholders alone have a legitimate claim to influence over
the company. It uses agency theory to argue that shareholders (as principals) own the
company. Hence directors as agents have a moral and legal duty only to take account of
shareholders' interests. As it is assumed that shareholders wish to maximise their returns,
then directors' sole duty is to pursue profit maximisation.
Problems with stockholder view
Modern corporations have been seen as so powerful, socially, economically and politically,
that unrestrained use of their power will inevitably damage other people's rights. For
example, they may blight an entire community by closing a major factory, inflicting long-
term unemployment on a large proportion of the local workforce. They may use their
purchasing power or market share to impose unequal contracts on suppliers and customers
alike. They may exercise undesirable influence over government through their investment
decisions. There is also the argument that corporations exist within society and are
dependent upon it for the resources they use. Some of these resources are obtained by
direct contracts with suppliers but others are not, being provided by government
expenditure.

Stakeholder theory

A stake holder will mean any individual or group who can affect or is affected by the
corporation.
Narrowly, a stakeholder means ‘those groups who are vital to the success and survival of
corporation.
As normative theory, stakeholder theory stresses that regardless of fact whether the
management achieves financial performance or not, managers should promote interests of
all stakeholders

Stakeholder theory proposes corporate accountability to a broad range of stakeholders. It is

based on companies being so large, and their impact on society being so significant that they
cannot just be responsible to their shareholders. There is a moral case for a business
knowing how its decisions affect people both inside and outside the organisation.
Stakeholders should also be seen not as just existing, but as making legitimate demands
upon an organisation. The relationship should be seen as a two-way relationship. There is
much debate about which demands are legitimate, as we shall discuss below.
What stakeholders want from an organisation will vary. Some will actively seek to influence
what the organisation does and others may be concerned with limiting the effects of the
organisation's activities upon themselves.
Relations with stakeholders can also vary. Possible relationships can include conflict,
support, regular dialogue or joint enterprise.

Donaldson and Preston suggested that there are two motivations for organisations
responding to stakeholder concerns:

Instrumental view of stakeholders

This reflects the view that organisations have mainly economic responsibilities (plus the legal
responsibilities that they have to fulfil in order to keep trading). In this viewpoint fulfilment
of responsibilities towards stakeholders is desirable because it contributes to companies
maximising their profits, or fulfilling other objectives such as gaining market share or
meeting legal or stock exchange requirements. Therefore a business does not have any
moral standpoint of its own. It merely reflects whatever the concerns are of the
stakeholders it cannot afford to upset, such as customers looking for green companies or
talented employees looking for pleasant working environments. The organisation is using
shareholders instrumentally to pursue other objectives.
Normative view of stakeholders
This is based on the idea that organisations have moral duties towards stakeholders. Thus
accommodating stakeholder concerns is an end in itself. This suggests the existence of
ethical and philanthropic responsibilities as well as economic and legal responsibilities and
organisations focusing on being altruistic.
The normative view is based on the ideas of the German philosopher Immanuel Kant. Kant
argued for the existence of civil duties that are important in maintaining and increasing the
net good in society. Duties include the moral duty to take account of the concerns and
opinions of others. Not to do so will result in breakdown of social cohesion leading to
everyone being morally worse off, and possibly economically worse off as well.

Criticisms:
 It is not applicable in practice by corporations
 This theory extends the rights of stakeholders for too much

Social contract theory

This theory holds that the natural state of human beings is freedom, but that human beings
will rationally submit to some restrictions on their freedom to secure their mutual safety and
benefit.

Social contract theory is one of the evolving normative theories of business ethics. This is
based on ‘principals of social contract’. The social contract theory stresses that all businesses
are ethical duty bound to increase the welfare of society.
Welfare activities:
Social contract theory aims at doing some welfare activities to society and they include;
1. Avoiding pollution, depletion of natural resources
2. Protecting worker’s interests, and so on.

Criticism:-
The social contracts theory is no contract at all it is just like a promise from one person to do
something in consideration of other’s agreeing to do.

Trusteeship theories

Trusteeship is a Socio-economic Philosophy which was developed by Mahatma Gandhi as a

part of his non-violence revolution.

Gandhi believes that economic equality is a basic requirement of a just and non-violent
society. Economic equality is opposed to monopolization or concentration of wealth. He
takes economic equality or equitable distribution of wealth as a great ideal. But the problem
is: how to materialize this ideal into practice. In other words to bring economic equality
without any coercive measure or encroaching upon individual freedom is a great challenge.
Trusteeship seems to provide a possible solution to this problem.
It is a concept where one voluntarily gives up or relinquishes one’s right on wealth earned by
him and dedicates it to the welfare of the poorer section of the society. Gandhi had a firm
believe that every capitalist being a human have in them the element of goodness which
every individual necessarily possess. So, if they realize that without the labour of the poor it
would not possible for those to acquire wealth, then the capitalist would function only as
trustee for the poor. They would then keep all the surplus money or wealth in trust for the
welfare of the poor which would establish economic equality in society. Gandhi described
trusteeship very simply by the following words “Supposing I have come by a fair amount of
wealth either by way of legacy or by means of trade and industry. I must know that all that
wealth does not belong to me. What of others. The rest of my wealth belongs to the
community and must be used for the welfare of the community”.
A Trustee is one who holds property in trust for the benefit of others. A trustee is legally and
morally bound to manage the trust properly in responsible and productive manners for the
benefit of the trust’s beneficiaries. A trustee may have a share of the benefit of the trust like
the other beneficiaries. A trustee cannot leave his property to his children as a heir except
the public. Gandhi thought that the very idea of ownership is at root a form of violence. So if
the capitalist or the rich people realize that their surplus property is actually not their
property and if they willingly keep their surplus money in trust then it will definitely
guarantee social and economic equality. Gandhi desired the capitalist to become trustees of
the nation by running their business with integrity for the welfare of the people.

By economic equality Gandhi does not mean that everyone will have literally the same
wealth. The real meaning of equality implies the principle “from each according to his ability
to each according to his need”. Every individual in a society must contribute something to
the social life and in return would be able to live a descent life. Each person should get what
he/she really requires provided such needs are natural. But in practice it is found that man’s
craving for material goods has no limits. This craving for unnatural things and comforts gives
rise to competitive acquisitiveness. In this process there is concentration of wealth in the
hands of a few individual. They manipulate to acquire wealth disproportionate to their
actual needs. Exploitation gives rise to accumulation. When a few people who are in an
advantageous situation go on accumulating wealth, majority of the people go unprivileged.
Gandhi finds that the deprivation of the millions is due to the capitalistic system of economy
and rapid industrialization. The capitalistic system is responsible for the wide economic gap
between the people in the society. In his system majority of the people are deprived of the
basic needs of life whereas a minority group lives very exuberantly multiplying their wants
beyond their natural needs. Rapid industrialization has helped the capitalistic system to
create great economic disparities in the society. It has also given rise to unemployment and
ecological imbalance. Gandhi was thoroughly dissatisfied with capitalistic system,
industrialization and possessiveness which mean accumulation of wealth with a selfish
motive.

Gandhi’s formulation of trusteeship is based on his basic pre-suppositions. He firmly believes

that by birth all men are equal and that all wealth belongs to the society. Because of this
assumption he holds that the daily wages of all people in the society should be equalized. If
there is some difference with regard to talent, intelligence, physical strength etc., there can
be modest difference in the wages, but that will not give rise to a big gap in the society.
Further people should utilize their talent for the welfare of the society. Since men are born
equal they have a right to equal opportunity. If a person has more than his proportionate
need, he becomes a trustee of that so as to utilize it for common good and not for his selfish
interest. Since Gandhi believes that all wealth belongs to the society, he is against private
accumulation or hereditary inheritance. Trusteeship ensures the transfer of wealth from the
privileged class to the unprivileged class. The privileged class can be impressed upon with
the idea that they should act as trustees and the wealth in their possession should be
utilized in a constructive way to ameliorate the conditions of all. Anybody who has the
wealth or talent can be appealed to act as a trustee. Thus Gandhi holds that what belongs to
an individual is actually the wealth of the community for every person is an integral part of
the society. A person’s relationship to his material possession is like that of a trustee. He has
to manger it without any selfish attachment. The material possession of an individual is not a
personal possession but can be used in the service of others who are less privileged.
Similarly a scientist, a scholar, a technocrat, a doctor, a lawyer etc., the elite class of the
society, should use their talent to alleviate and help people in society which has nourished
them to develop their ability and talent. So talents should not be used for exploiting others
or accumulating property for personal benefit. Talents should be recognized and utilized for
social betterment. So, people having surplus wealth or some talent should act as trustees of
the society.

By promoting trusteeship society can undergo a moral transformation. Society can turn
egalitarian and become nonviolent. Every individual will have the scope for a decent living
and all disparities and discriminations will be annihilated.

This economic model envisaged by Gandhi through trusteeship is supposed to be a new

model going beyond the conflicting economic models of his time. Capitalism founded on
private enterprise leads to unjustified disparities of wealth. This capitalistic model as found
in the west has given rise to colonialism, cut-throat competition and conflicts. The Marxist
model of equality is founded on violence and tyranny. Gandhi rejects both the models as
unsuitable as while the former promotes inequality and exploitation the latter promotes
violence and loss of freedom. The Gandhian model of trusteeship makes a rich person a
trustee so that he will use what he reasonably requires for his personal use and the rest for
the use for the society. In this economic model there will be no scope for class conflict and a
harmonious relation will develop. It will create anew awakening and all exploitations will
stop.

The concept of trusteeship comes from the ideas of Ahimsa and Aparigraha. For Gandhi,
Ahimsa is the greatest virtue. Ahimsa generally means non-killing. Gandhi gave a new
dimension to the highest human value in theory and practice. The usual meaning of Ahimsa
is not merely refraining from causing injuries to creature, it stands for certain positive
attitudes towards other living beings that one must cultivate. In fact in its positive aspect
Ahimsa is nothing but love. This positive attitude inspired Gandhi to think about the concept
of trusteeship.
Aparigraha is the ethical ideas of non-possession of the renunciation of ownership. It also
means non-attachment of worldly objects and things. It simply means honest living and
avoidance of avarice. Gandhi was very deeply influenced by this ethical idea and so he
developed the concept of trusteeship. Gandhi thought that absolute nonpossession is
impossible since one possesses the body. But one should distinguish between needs and
wants, reduce one’s wants to the barest minimum. Gandhi believed that God never creates
more than what is strictly needed for the moment. So acquire things more that what we
need is against the fundamental law of nature.