Monthly Archives: April 2018

Philosophy of the Social Sciences essay

This is an essay submitted for Philosophy of the Social Sciences, as part of my MSc in Philosophy of the Social Sciences.

According to some philosophers, mental states are holistic. When we rationalize action, inferring back from people’s actions to their beliefs and desires requires knowing more about further beliefs and desires. Donald Davidson captures the point in the following words: “When we attribute a belief, a desire, a goal, an intention or a meaning to an agent, we necessarily operate within a system of concepts in part determined by the structure of beliefs and desires of the agent himself. Short of changing the subject, we cannot escape this feature of the psychological; but this feature has not counterpart in the world of physics” (2001: 3). Why does Davidson think that the holism of the mental makes the prospect of understanding people scientifically – the prospect of a science of the social – so difficult? Discuss and critique.

 

 

  1. Introduction

The natural sciences have experienced considerable success in formulating laws that explain and predict the natural world.  The social sciences, in contrast, have struggled to formulate laws that explain and predict human behaviour. In this essay, I aim to consider an important source of difficulty facing the social sciences: what Donald Davidson has labelled “holism of the mental”.  This is the idea that mental states, such as beliefs and desires, with which we usually explain human behaviour, are not directly observable. They must instead be logically implied from actions, and this process depends on assumptions, for example other beliefs and desires that the individual holds.  This leaving the whole endeavour susceptible to error.

Davidson has not written specifically or extensively on holism of the mental, mentioning it within his essays Mental Events (1970) and Psychology as Philosophy (1974) as part of arguments on the impossibility of psychophysical laws; that is, laws in which mental states cause or entail physical states (Davidson, 2001).  Holism of the mental should also not be confused with the parallel idea of semantic holism: that the intended meaning of any term depends on the meanings of all other terms (Jackman, 2017).  As a result, I have focussed on what I understand to be the likely implications of holism of the mental, drawing in part from discussion of mental explanations in Rosenberg (2015). While I will accept that holism of the mental poses difficulties, I will offer some ways in which they may, to some extent, be overcome.  

The essay will be structured as follows: In section 2, I describe Davidson’s view of the role of mental explanations of behaviour, and indicate how the differ from physical explanations.  In section 3, I acknowledge the difficulties posed by holism of the mental. In section 4, I suggest some ways in which progress might nonetheless possible.

 

  1. Mental and physical explanations of behaviour

Davidson’s consideration of laws within the social sciences relies upon the distinction between two kinds of explanations of human behaviour: mental (psychological) and physical.  Mental explanations are the ones most often used, and I will first describe these and explain how Davidson understands these working. I will then describe physical explanations of human behaviour, highlighting how they differ to mental explanations.

Our usual way of explaining human behaviour is with mental or psychological explanations.  These are used intuitively by most people, hence are sometimes referred to as “folk psychology”.  Mental explanations are sets of beliefs and desires (or more generally any such propositional attitudes), that, combined with other beliefs and desires, rationally justify the observed behaviour.  For example, we say that a man carried an umbrella because he believed it might rain and desired not to get wet. Not all behaviour can be rationalised this way, for example mere (unintentional) behaviour, but we designate as action that behaviour we can explain by beliefs and desires.  Mental explanations are subjective (dependent on how we interpret the action) and implied rather than objectively observed.  

Physical explanations are of the type more typical in natural sciences, and involve identifying objectively observed initial conditions, and laws (perhaps but not necessarily physical mechanisms) that determine the resulting outcome.  In the case of human behaviour, we may expect it to result from an initial physiological state (including the state of the brain), via physiological mechanisms. Unfortunately, explanations of this type have been of limited use within social science, as behaviour depends greatly on variation in the state of the brain, and this cannot currently be known precisely enough to form accurate predictions.  

Davidson believes that mental explanations are the appropriate ones for human action (2001, p239); that psychology should take philosophy as its template instead of the natural sciences like neuroscience or even physics.  However, as Davidson recognised, mental explanations have limitations, which I will consider in the next section.

 

  1. Difficulties posed by mental explanations

In the previous section I described mental explanations, which Davidson believes are the appropriate ones for explaining human behaviour.  However, mental explanations, though widely used, have struggled to provide law-like generalisations of the sort that have contributed to the success of the natural sciences.  I argue that much of this difficulty is due to the holism of the mental: the fact that beliefs and desires do not operate individually, but collectively, as a whole. This section will discuss the difficulties that holism poses to mental explanations. Firstly, I describe how individual beliefs and desires depend on the other beliefs and desires for their significance.  Secondly, I describe how this allows indeterminism: multiple sets of beliefs and desires can rationalise observed actions, which makes it difficult to choose between them. Finally, I discuss how unconsidered factors, can undermine the logical relationship between beliefs and desires and behaviour.

According to Davidson’s understanding, mental explanations consist of beliefs and desires logically implied from an individual’s behaviour.  This logical process of implication requires us to assume many of their other beliefs and desires. For example, if we see someone choosing chicken from a menu, we would likely imply that they desire chicken, but this logic relies on them being able to read the menu and believing that the item was in fact chicken.  We may practically consider one belief or desire to be the primary reason for an action, but this is only because we have taken for granted other beliefs or desires, and the lack of further beliefs and desires. Holism of the mental means that no belief or desire can be deduced with certainty, each requires the assumption of others.  Furthermore, we can never rule out a belief or desire: we can always explain additional actions by supposing additional beliefs and desires.

Because actions are more correctly explained by an individual’s full set of beliefs and desires, we can often explain action in multiple ways, and our choice cannot be objective.  For example, on seeing a man picking up someone else’s umbrella, one viewer might explain it as him mistakenly thinking it is his own, while another might explain it as him intentionally stealing.  One could interpret this indeterminism as suggesting that no set of beliefs and desires can ever be considered the correct one. I dispute this point; there exist some beliefs and desires that we would maintain even if we had all possible evidence of the individual.  However, we must accept that more evidence may change our view of which alternative is most plausible, and the difficulty that this uncertainty adds to our being sure of our beliefs and desires.

Finally, other factors, beyond beliefs and desires, can have an influence on our behaviour, blurring the scope of mental explanation.   Davidson refers to this problem as that of the mental not being a closed system, as it is affected by non-mental factors (2001, p224). For example, I may believe that there is an apple on the table, and I may desire the apple, but if my belief is mistaken I will not take the apple.  Similarly, if someone else takes the apple before I can, then I will not take it. Sometimes the effect of these factors are captured by ceteris paribus conditions which recognise that people may act differently when circumstances change, however these are generally vague and in practice circumstances will never remain constant.  We cannot expect to have law-like generalisations if we accept that they are susceptible to these other factors.

This section highlighted a number of reasons why our efforts to develop mental explanations have largely failed to provide law-like generalisations necessary for a rigorous science of the social.  However, I do not believe the endeavour is totally hopeless, and in the next section I will suggest some ways in which these difficulties may be overcome, at least to some extent.

 

  1. Hope for improving the power of mental explanations

In this section I will suggest three ways in which the difficulties posed by holism of the mental may be tackled, in order to allow progress within social science.   Firstly, I argue that the holism described above is not complete, and in some cases clusters of beliefs may be isolated, or dependence on particularly uncertain beliefs may be reduced.  Secondly, I suggest that evidence for certain beliefs or desires may be found via physical means, allowing objective measurement. Finally, I suggest that we may extend the scope of mental explanation to cases where other factors undermine intentional action, reducing our need for vague ceteris paribus conditions.

Holism of the mental means that every belief or desire depends for its significance on the person’s total structure of beliefs and desires.  I argue against such a complete interdependence. I accept that some beliefs and desires are fundamental, and influence many other beliefs; for example, our belief that we should generally communicate honestly, or our desire to have the things we think will please us.  However, I argue that there are clusters of desires and beliefs that do not depend on those in other clusters, and some desires and beliefs on which no others rely. In addition, I argue that some beliefs are sufficiently specific that they will seldom, if ever affect the operation of other beliefs and desires.   As a result, if we incorrectly determine some of an individual’s beliefs and desires, it will not necessarily contaminate all other beliefs and desires, or all predictions.

While the beliefs and desires within mental explanations are usually derived logically, I believe that as neuroscience develops, we will have opportunities to objectively identify some.  Already, FMRI analysis is able to determine neural correlates of aspects of our decision-making: that is, measurable physical activity in the brain that differs in a consistent way with our mental states  (Rosenberg, 2015, p68, 117). As we better understand these correlates, we will be able to make physical observations to determine what certain mental beliefs and desires are likely to be. To give an analogy from the natural sciences, the recognition that mercury expands in a consistent function of experienced heat significantly increased chemistry’s ability to accurately measure temperature and therefore experiment (Rosenberg, 2015, p67).  I acknowledge that what we currently know about the way the brain works is vastly outweighed by what we don’t know, and we most likely will not ever have full knowledge. However, it would be surprising if neuroscience’s ability to understand the basis of mental states, remained constant over the next 50 years.

Finally, rather than settling for vague ceteris paribus conditions that make mental explanations untestable in practice, I believe that considering the factors that undermine intentional action will allow social science to develop.  If we can understand specifically when lack of willpower prevents us from acting rationally, or when environmental factors will outweigh or alter our behaviour, we will be able to make falsifiable predictions and develop them into useful law-like generalisations.  For example, rather than seeing wealth maximising behaviour as something that people do just sometimes, we will be able to define a restricted set of contexts when we can genuinely expect people to act that way.

 

  1. Conclusion

In this essay, I described Davidson’s model of distinct physical and mental explanations for human action.  I considered how the idea of holism of the mental presents difficulties for a science of human behaviour in contrast to the natural sciences.  Although I accept these difficulties, I argued that we should not be too pessimistic, and suggested a number of ways in which I believe mental explanations can become more objective, based more on empirical evidence rather than entirely on logic and assumption.  Holism of the mental makes the mind a bit like a crossword. The task seems daunting at first, before you are confident of any letters, but solving even a few clues does make further progress easier. Human behaviour may never be as predictable as the movement of the planets, but there is good reason to expect progress.

 

References

Davidson, Donald, 2001. “Essays on Actions and Events”, Oxford University Press, Oxford

Elster, Jon, 1985. “The Nature and Scope of Rational Choice Explanation”, reprinted in Readings in the Philosophy of Social Science (1994), edited by M. Martin and L.C. McIntyre, MIT Press, pp. 311-322.

Herstein, Gary, 2005,  “Davidson on the Impossibility of Psychophysical Laws”, Synthese, Vol. 145, No. 1 (May, 2005), pp. 45-63

Jackman, Henry, 2017. “Meaning Holism”, The Stanford Encyclopedia of Philosophy (Spring 2017 Edition), Edward N. Zalta (ed.), URL = <https://plato.stanford.edu/archives/spr2017/entries/meaning-holism/>.

Latham, Noa, 1999.  “Davidson and Kim on Psychophysical Laws”, Synthese, Vol. 188, No. 2 (1999)

Lepore, Ernest and Kirk Ludwig (eds.), 2013, A Companion to Donald Davidson, Oxford: Wiley-Blackwell.

Malpas, Jeff, 1992, “Donald Davidson and the Mirror of Meaning”, Cambridge University Press, Cambridge

Malpas, Jeff, 2015.   “Donald Davidson”, The Stanford Encyclopedia of Philosophy (Fall 2015 Edition), Edward N. Zalta (ed.), URL = <https://plato.stanford.edu/archives/fall2015/entries/davidson/>.

Pettit, P. (2002). “Three Aspects of Rational Explanation”, in Rules, Reasons, and Norms, Oxford: Oxford University Press, pp. 177-191.

Rosenberg, Alexander, 2015. “Philosophy of Social Science (fifth edition) ”, Westview Press, Colorado

Philosophy of Economics Essay

This is an essay submitted for Philosophy of Economics, for my MSc in Philosophy of the Social Sciences.

In Haybron and Alexandrova’s “eminent domain” case, is it paternalistic to build the shopping centre? If yes, does this count against using cost-benefit analysis to guide public decision-making?

1 Introduction

In this essay, we are asked to consider a case study, proposed by Haybron and Alexandrova (H&A), in which a government makes use of “eminent domain” powers, that is, in which property owners are forced to sell their properties.  This is done in order to build a shopping centre that it believes (based on cost-benefit analysis) will benefit citizens enough to compensate the owners. H&A argue that the government’s decision, made on behalf of the people and then forced upon them, is potentially paternalistic and inappropriate.  I will consider this argument, and its wider implications on using cost-benefit analysis within public decision-making.

In section 2 I will consider paternalism in general, defining it and describing the harms that make it a concern.  I will argue that this definition is broader than sometimes thought, and includes cases with benefits that outweigh the harms, which I will argue are justified.  Sections 3 and 4 examine H&A’s case study, which I will argue displays paternalism in two ways: the decision to use eminent domain (section 3), and the way in which costs and benefits of the project are estimated (section 4). I will argue that both these aspects involve paternalism, and therefore inflict harms, but are nevertheless justified. In section 5 I will generalise these conclusions to provide guidance as to when cost-benefit analysis is appropriate and how it should be done.

 

  1. Paternalism

Throughout this essay, I will adopt Dworkin’s definition of paternalism[FN: H&A consider a definition of paternalism by Shiffrin (2000, p218), and propose their own (H&A, 2013, p163). However, the arguments in this essay do not depend on which of these accounts is adopted.], which suggests that a government acts paternalistically towards citizens when

  • It interferes with their liberty or autonomy
  • Without their consent
  • It believes this will improve their welfare or promote their interests (Dworkin, 2017)

Paternalism imposes harms. First, it undermines the liberty of the citizens – their freedom to make their own choices.  Second, it can damage their ongoing ability to make decisions and exercise their will. Third, the decision maker can, despite good intentions, be incorrect in their assessment of what will enhance the individual’s welfare.  Examples of paternalism are requiring cyclists to wear helmets, or requiring companies to reduce the sugar content of drinks[FN: I note that some of these laws do not represent pure paternalism, but also seek to reduce the cost incurred by the rest of society.].

While the harms of paternalism are real and should not be ignored, I argue that paternalistic action can have benefits which may outweigh those harms and make it justified.  It is certainly conceivable that a government has knowledge or capabilities that will genuinely and significantly improve its citizens’ welfare (however defined), compared with what they could do themselves.  

It might be challenged that this definition is broader than paternalism is usually envisaged, and in particular includes government decision-making done on behalf of citizens, that could not be decided individually.  For example, national defence policy could not left to each individual to decide. However, I believe the definition’s breadth is appropriate, for two reasons. First, it is difficult to draw a clear distinction as to what individuals could or couldn’t decide; some might argue that citizens indeed could defend themselves.  Second, government decision-making on behalf of citizens still inflicts the harms of paternalism, which should be recognised. However, the paternalism of much of legitimate government action does support the argument that paternalism is justifiable where the benefits outweigh the costs.

I argue that collective action problems are a case where paternalism is particularly likely to be justified.  Collective action problems are ones where individuals, acting rationally, are likely to reach a suboptimal outcome; that is, one where an alternative exists, which is preferred by each individual.  For example, each citizen may highly value a national defence, but would not individually choose to contribute; government is a way to ensure, albeit paternalistically, that the optimal outcome is achieved.

 

  1. The decision to use eminent domain

In the previous section, I defined paternalism, and argued that while harmful, it could nonetheless be justified, where the benefits outweigh the costs.  I suggested collective action problems are an example where paternalism provides benefits that may outweigh its harms. In this section I wish to argue that government decision to use eminent domain, such as in the H&A case study (described in the introduction), addresses a collective action problem: individual property owners have an incentive to not sell unless they are paid above their fair value.  I will argue that in this case paternalism is likely to be justified. I will also suggest ways in which the harms of paternalism can be reduced.

The use of eminent domain is paternalistic, according to Dworkin’s definition; it interferes on property owner’s freedom, they have not consented, and it is being done because the government believes it will maximise the welfare of all citizens.  I also argue that it inflicts the harms of paternalism described in the previous section. For example, the government may incorrectly assess how people feel about property owners being forced to sell. In the case study, H&A suggest that citizens “would be appalled” to see other people forcibly removed from their homes (p8), however, no evidence is given for this.  It is possible that only a vocal minority of citizens are concerned, or that they are merely expressing outrage despite actually preferring the shopping centre to be built.

However, the use of eminent domain also has benefits, which may well justify its paternalism.  It addresses a collective action problem, in which property owners have a good reason to resist selling, hoping to get compensation beyond how they value it.  Disallowing eminent domain can stop much-valued (or even essential) projects, and allow some to profit by strategically buying property that the government needs.  Cost benefit analysis, which will be considered in the next section, can be used to estimate the benefits.

In order to ensure the use of eminent domain is justified and to reduce the harm, I would suggest a process of public deliberation to gain a clearer consensus on what arrangements citizens felt were preferred.  This would consider an acceptable method of determining compensation; for example, people may wish non-market considerations to be taken into account, or a premium to be paid. Similarly, people may have views as to how essential and/or valuable the project should be to society before it is able to justify use of eminent domain.  These steps would increase individual liberty and improve the government’s understanding of what people value.

In this section, I have argued that although paternalistic, use of eminent domain may be justified, where it offers sufficient benefit to outweigh its harms.  I have noted that cost benefit analysis can be used to estimate the benefits of its use. However, cost benefit analysis introduces a further source of paternalism, which I will discuss in the next section.

 

  1. Estimation of costs and benefits

In the previous section, I argued that eminent domain is paternalistic, though justified if it allows a project with sufficient benefit to outweigh its harms.  I noted that these benefits will often be estimated using cost-benefit analysis. In this section, I will consider how we should conduct this cost-benefit analysis.  I will argue that using much of the data we have available is paternalistic. However, I will argue that using this data has significant benefits that make it justified.  I will argue that rather than attempting to minimise paternalism, we should seek to maximise accuracy, taking into account any data that helps us do this.

When a government performs cost-benefit analysis in order to justify a project in which eminent domain has been used, it can use a variety of methods to estimate the loss of value by those who lose their existing property (similar considerations apply to estimating the value to those benefiting from the project).  Firstly, it can use revealed or stated preference, seeing how much the owner has recently sold property for (though they are unlikely to have sold a similar property under similar circumstances), or asking the property owners what they are willing to sell for. Secondly, it can use other market information, seeing how much others are or were willing to buy or sell for.  Thirdly, a number of economists are now recommending the use psychological research into how people’s wellbeing is affected by experiences (this is often referred to as happiness-driven economics – see H&A, 2013 ). For example, research might indicate that people tend to overestimate how upsetting they would find moving.

There is an argument that it is paternalistic to rely on anything other than revealed or stated preferences of the individuals affected.  I find this argument convincing; without ensuring that individuals have consented to having their own views ‘downplayed’, this is likely to result in the harms of paternalism described in section 2.  For example, economists adjusting for psychological evidence are liable to introduce their own biases.

However, I argue that we shouldn’t only pay attention to revealed or stated preferences, ignoring all other evidence.  First, applying stated preferences does not prevent paternalism; for example, a restaurant is not justified in forcing patrons to eat the food, just because they ordered it.  Second, I don’t believe that these people can reliably predict how losing the property will affect their welfare. Nor can we imply this from their past actions. Third, especially when the figures used for cost-benefit analysis are also being used to guide compensation, individuals have a strong incentive to overvalue the property in order to increase the compensation they receive, thus revealing an untrue preference (that they would prefer not to sell at a price above their true valuation).  

I believe that planners should take into account all data they have available, and attempt to generate an accurate cost-benefit analysis.  This should include elements that are subjective, such as psychological evidence. Planners should recognise the uncertainty in their own theories and models, and the fact that these may not reflect how the individuals affected will experience the project.  The existence of this uncertainty is part of the reason only projects that are sufficiently valuable should be justified by cost-benefit analysis, as noted in the previous section. However, planners should not be afraid to downplay revealed preference data, particularly when there is evidence it is unreliable.  

 

  1. Conclusion

In this essay, I have argued that the use of eminent domain and cost-benefit analysis will generally be paternalistic, as citizens will seldom unanimously consented to their use.  However, I do not believe we have a duty to minimise paternalism at all costs. I have highlighted collective action problems as being a particular case where paternalism can potentially make individuals significantly better off, for whatever definition of welfare we choose to apply.  In these cases, individuals have an incentive to reveal untrue preferences, and planners are justified in downplaying these preferences, and enriching their decisions with other information, including psychological and happiness research that people may not take into account sufficiently when forming their own preferences.

This is not to argue that paternalism is harmless.  I have argued for greater public deliberation; scepticism does not mean ignoring the views of people.  We should seek to understand the conditions under which people believe coercion, such as eminent domain, is justified.  We should seek to genuinely understand how people experience the loss of their property. Finally, we should seek to transparently report how we reached the decision to apply cost-benefit analysis, and how we estimated the costs and benefits of the project.  Steps like these would reduce the risk of incorrect decisions and somewhat restore people’s sense of autonomy, while still allowing projects that significantly improve total welfare.

  

References

Adler, M. and Posner, E, 2006. “New Foundations of Cost–Benefit Analysis”, Harvard University Press

Dworkin, G., 2017. “Paternalism”, The Stanford Encyclopedia of Philosophy (Winter 2017 Edition), Edward N. Zalta (ed.), URL = <https://plato.stanford.edu/archives/win2017/entries/paternalism/>.

H&A (Haybron, D & Alexandrova, A),  2013, “Paternalism in Economics”, In Paternalism: Theory and Practice. Cambridge University Press. pp. 157-177

Schmidtz, D,  2001, “A Place for Cost–Benefit Analysis,” Noûs, October 2001, Vol.35, pp.148-171

Shiffrin, S., 2000. “Paternalism, Unconscionability Doctrine, and Accommodation”, in Philosophy & Public Affairs, Vol. 29, No. 3 (Summer, 2000), pp. 205-250

Sunstein, C., 1999,  “Cognition and Cost-Benefit Analysis” ( John M. Olin Program in Law and Economics Working Paper No. 85, 1999).

 

Business and Organisational Ethics Essay

This is an essay submitted for Business and Organisational Ethics, for my MSc in Philosophy of the Social Sciences.

 

Adam Waytz argues that offering monetary rewards to whistleblowers is potentially problematic. He suggests that for one thing, “the mere mention of a whistleblower receiving money [might alter] public perceptions of them from heroes to gold-diggers” (Waytz, 2016, p. 3). Should whistleblowing be encouraged through financial rewards? How else might whistleblowing be appropriately encouraged? Discuss this question by employing at least one moral framework that was introduced in the context of this course.

  1. Introduction

In their course of employment, individuals may discover wrongs performed by their company, and will be forced to consider whether to whistleblow, that is, to announce their discovery to the public or government officials.  In this essay, I will consider how whistleblowing should most appropriately be encouraged, and in particular, whether financial rewards should be used. I believe that to answer this question, we must first consider the circumstances under which whistleblowing is ethically appropriate.

In section 2 I will outline an ethical framework and use it to define a corporate wrong.  I will then argue that whistleblowing is necessary when, and only permissible when, an individual is aware of a wrongdoing and does not believe the company will voluntarily stop and remedy the wrong.  In section 3 I will argue that proposals to offer financial rewards to whistleblowers are inappropriate, as they lead whistleblowing to be viewed as a choice rather than a duty. In section 4 I will suggest other policies that will more appropriately encourage whistleblowing when it is required.

  1. The ethics of whistleblowing

In this section I will begin by providing an ethical framework, which allows us to evaluate company and individual action.  I will then use this framework to define the concept of a corporate wrong, which we will depend on throughout this essay. I will then consider employees’ competing duties: to loyalty and confidentiality on one hand, and to not facilitating corporate wrongdoing on the other hand.  Based on these, I will argue that employees have a duty to prevent wrongdoing and ensure remedy, if necessary, by whistleblowing.

The ethical framework I am proposing is deontological, that is, based on rules or obligations, in which individuals and companies are constrained by laws and ethical custom, but otherwise free to act as they please.  This framework draws support from Mill’s On Liberty (1859), and in a business context, Friedman’s Capitalism and Freedom (1982).  I believe that many people would intuitively support such a framework, though there would be likely disagreement on the scope of law and ethical customs that should constrain individuals and companies, for example, how small their environmental footprint must be.  Democratically legitimate laws may be a useful benchmark, but most people would agree that even some actions that are legal would still be unacceptable based on ethical custom. I refer to corporate activities that are illegal or clearly outside most people’s ethical custom, with the term ‘wrongdoings’.  

Throughout this essay I am focussing on cases that are clearly illegal or outside most people’s ethical custom.  In practice, I know that there will often be uncertainty. Employees may not be fully aware of what the company has done, or how it has affected others.  Likewise, employees may not know whether the activity would be illegal or clearly unacceptable to most people. Some things that do not reach the threshold of a ‘wrong’ according to this definition may still be undesirable, for example wasting a bit of paper or a manager losing their temper.  The question of how employees should act in these more uncertain situations is important and difficult, but has intentionally been excluded from the scope of this essay: I am focussing on the question of employee duty in the case of clear wrongdoing.

Employees are subject to two potentially conflicting obligations.  Firstly, they are often bound to confidentiality by a legally enforceable contract.  Even where not bound by contract, ethical custom dictates a duty of confidentiality and loyalty to their employer.  Secondly, employees are prevented by ethical custom, and potentially by law, from engaging in or facilitating wrongdoing.  Importantly, in many cases being aware and not reporting wrongdoing would be considered facilitation, and also wrong. One might argue against this view, that it is unfair to blame a single individual for not reporting a wrongdoing, at significant cost to themself, when others were also aware of it.  While I agree that it is unfair to blame one and not the others, I argue that society is better served by giving all a duty to speak up, especially for more significant wrongdoing, and this is reflected in the existence of laws and professional ethical standards that require reporting any known wrongdoing.        

In order to balance these two obligations, I would suggest that the employee first consider whether the company is likely to prevent the wrong and remedy past wrongs without external pressure.  For example, the employee may believe the wrong to be an honest mistake. If so, the employee should first raise the issue internally. Where this is not likely, or the employee has already tried, I believe that they have a duty to report the wrong externally, either to the public or a regulator.  While I recognise that this will involve breaching confidentiality and loyalty to the company, I believe that this is permissible, as the company is acting outside its legitimate powers and cannot expect to have this its rights enforced. Indeed, some jurisdictions already recognise that requirements for confidentiality should not overrule the duty to report wrongdoing [FN, For example, the UK Government’s website advises that “A confidentiality clause or ‘gagging clause’ in a settlement agreement isn’t valid if you’re a whistleblower” (GOV.UK, 2018)]  

In this section I have established the concept of corporate wrongdoing, and argued that where an employee cannot stop and the wrong and ensure it is remedied internally, they have a duty to whistleblow.  Having now established the duty to whistleblow, in the next two sections I will consider appropriate policies to encourage whistleblowing where necessary.

  1. The inappropriateness of financial rewards to encourage whistleblowing

In the US, bodies such as the Securities and Exchange Commission (SEC) offer financial rewards to whistleblowers (FCA, 2014).  These rewards aim to provide a positive incentive to potential whistleblowers, and pay between 10% and 30% of financial sanctions imposed on wrongdoing companies (Gaafar, 2016).  By basing the reward on the financial sanctions imposed, I believe these rewards are not merely compensating the whistleblower for their costs incurred. The UK Financial Conduct Authority (FCA) has considered introducing such awards but decided against it (FCA, 2014) and Australia’s parliament has recently proposed introducing financial rewards for whistleblowers (Khadem and Ferguson, 2017).

I believe that offering rewards for whistleblowers is inappropriate, as it changes the nature of the decision to whistleblow to one where the employee is permitted (by society) to decide what to do.  This stands against the argument in the previous section, that an employee has a duty to stop the wrongdoing, where possible without breaching confidentiality, and where not, by whistleblowing. By giving the employee a new (and likely powerful) reason to whistleblow, it distorts the employees motives, as well as public perception of the whistleblower as a “golddigger” (Waytz, 2016).  The employee may feel entitled, or even virtuous, for not whistleblowing, despite what I have argued may be a duty.

Some would argue that financial rewards are nonetheless justified if they lead to increased whistleblowing and therefore greater social good.  For example, one might believe that the employees that work for companies that are most likely to be committing serious wrongdoings are more likely to be incentivised by financial rewards than a sense of duty.  I would caution against this conclusion. I believe there are fairer ways to prevent wrongdoing by such companies than by rewarding employees who work in these companies. Whistleblowers motivated by rewards may also bring more opportunistic and unnecessary whistleblowing, in cases that would have been better dealt with internally (FCA, 2014, p3).  

I therefore would argue that financial rewards are an inappropriate way to encourage employees to carry out their duty to whistleblow where necessary.  In the next section I will propose a number of more appropriate policies to encourage whistleblowing.

 

  1. Appropriate policies to encourage whistleblowing

The FCA argue that we should “create a culture … where speaking up becomes normal business practice and people are more prepared to report concerns, which will help to improve behaviour in firms and ultimately improve outcomes“ (FCA, 2014, p2).  This supports my argument from section 2 that whistleblowing is a duty, in cases that internal reporting is unlikely to lead to the wrongdoing being stopped and remedied. In this section I will propose a number of policies that I believe are appropriate, individually and as a group, for building this culture and encouraging whistleblowing where necessary.

In the previous section I argued that financial rewards are not appropriate for encouraging whistleblowing, however I do believe society should aim to minimise the harmful consequences of employees carrying out their duty to whistleblow.  This can be done through a mix of legal protections against retaliation by their employer, and payments to the employee that are directly linked to their economic costs incurred. By ensuring that any payments are purely compensatory, they cannot be the reason for the whistleblowing, but we can reduce the disincentive and personal cost.

Improving the processes around reporting potential wrongdoing will help reduce the unintended harm that can result from public disclosure.  For example, public whistleblowing may lead to employees losing jobs or shareholders losing share value, where the wrongdoing is an honest mistake or perhaps merely a misunderstanding.  Where companies have procedures that allow individuals to report wrongdoing internally, and see that it is resolved satisfactorily, including with appropriate reporting and remedy, employees will have less need to whistleblow.  Similarly, ensuring regulators are trusted and have sufficient power to act will reduce the need for whistleblowing in more public forums where the harm may be greater.

We can also improve our narrative around whistleblowing.  I believe that at present, the media too often emphasise the whistleblowers as angry or greedy, rather than merely wanting to do the right thing.  Rather than second-guessing how the whistleblower should have handled things differently, we could take a more charitable interpretation of their actions.  Emphasising the extraordinary heroism of a whistleblower is better than criticism, but we should be working to portray whistleblowing as the right and normal thing to do.  The FCA are working towards this, with an annual report on all cases of whistleblowing, aiming to portray it as a relatively common activity that often leads to socially beneficial resolution (FCA, 2014, p2).  This has the added benefit of discouraging wrongdoing by companies.

Finally, if we want to promote whistleblowing as an obligation rather than a choice, I would argue that we should seek increased penalties against employees that do not prevent corporate wrongdoing where they have the chance.  This can be done through professional bodies and legal proceedings. Care must be given to recognise that employees face uncertainty in understanding whether wrongdoing has occurred and whether whistleblowing is necessary to prevent it.  Justice also requires care to ensure individuals are not scapegoated, particularly where other employees also knew about the wrongdoing. However, I do believe an appropriate part of ensuring that employees fulfil their obligations is to ensure that they will incur consequences if they do not.    

 

  1. Conclusion

In this essay I have argued that some actions by a company are illegal or clearly outside ethical custom: I refer to these as wrongdoing.  When employees are aware of corporate wrongdoing, I have argued they have a duty to prevent it, where necessary, by whistleblowing. I have argued that providing financial rewards to whistleblowers is inappropriate, as it promotes the idea that whistleblowing is a choice rather than a duty.  I have instead proposed a number of alternative policies that are consistent with promoting whistleblowing as a duty: minimising economic harm to the whistleblower, improving reporting processes, reframing the public narrative around whistleblowing and penalising employees that do not observe their duty to whistleblow.

 

References

Friedman, Milton, 2002. “Capitalism and Freedom”, University of Chicago Press, Chicago

McConnell, Terrance, 2003, “Whistle-blowing”, in R.G. Frey and Christopher Heath Wellman., (2003) Companion to Applied Ethics, Cambridge, UK: Blackwell Publishing Ltd.

Mill, John Stuart, 2003. “On Liberty”, Yale University Press

Waytz, Adam, 2016.  “Whistleblowers are Motivated by Moral Reasons Above Monetary Ones”, [online] ProMarket, The blog of the Stigler Center at the University of Chicago Booth School of Business, Available at: https://promarket.org/whistleblowers-motivated-moral-reasons-monetary-ones/, [Accessed 22 April 2018]

Gaafar, Leila, 2016.  “Money talks: should the UK introduce financial incentives for whistleblowers?” [online] WilmerHale, Available at: https://www.wilmerhale.com/blog/wireuk/post/?id=17179883237 [Accessed 22 Apr 2018]

Khadem, N. and Ferguson, A. 2017. “Bring in bounty rewards for whistleblowers, federal inquiry says”, [online] Sydney Morning Herald, Available at: https://www.smh.com.au/business/the-economy/bring-in-bounty-rewards-for-whistleblowers-federal-inquiry-says-20170913-gygmmg.html [Accessed 22 April 2018]

FCA, 2014.  “Financial Incentives for Whistleblowers”, [online] prepared by Bank of England / Financial Conduct Authority, Available at: https://www.fca.org.uk/publication/financial-incentives-for-whistleblowers.pdf [Accessed 22 April 2018]

GOV.UK, (2018), “Whistleblowing for employees”, [online] Available at: https://www.gov.uk/whistleblowing [Accessed 22 April 2018]