Four Perspectives on Business Behavior

                                                                                                     Need for business people to pursue goals other than maximum profits for owners

1. Free market purists hold that socially valuable business behavior will be reliably produced by the profit motive alone, as long as markets are competitive and government stays out of the way.  (Only rules barring force and fraud should be enforced by the government.)

2. The self-restraint approach acknowledges that there are some situations (public goods, externalities, knowledge gaps, monopolies, etc.) wherein the profit motive is not enough to produce 'good' behavior.  But this approach insists that self-restraint on the part of private individuals and firms is more likely to produce good results than unwieldy government regulation.

3.  The regulatory approach sees the same problems in free market purism as the self-regulation approach, but has a different view of what the best remedy is.  This approach insists that competitive pressures will undermine efforts at self-regulation, because unscrupulous firms and individuals will have a competitive advantage over responsible ones.  So government regulations are necessary to "establish a level playing field" in which business managers can afford to do the right thing.

4.  The last approach agrees with the regulatory approach about the need for government to enforce rules, but also sees a need for further self-restraint on the part of individuals and firms. Because regulations always lag behind changes in technologies and practices, because they tend to leave loopholes for the unscrupulous, and because they can be properly framed in the first place only if powerful business groups refrain from undermining the political and regulatory process, business people must do more than obey laws and regulations; they must also be morally responsible.