Even in these changing times it would appear some things stay the same. One example would be our insatiable appetite for vice. Indeed, given the bleak financial situation the demand for a bit of instant gratification might well be on the increase. This is the business idea behind the Vice Fund and other similar enterprises. The perpetual flux aside, alcohol, gambling, cigarettes and arms never seem to go out of fashion. Some financial analysts say that as the demand for this type of products is comparatively stable and less sensitive to recession an investment portfolio consisting of ‘unethical stocks’ will fare better than its ethical counterpart. This idea is neatly illustrated in the catchphrase of the US based Vice Fund “When it’s good, it’s very, very good …and when it’s bad it’s better”.
Let’s assume that this is true – that funds focused on companies in the defence, gambling, tobacco and alcohol sectors do give a better return on investment in purely financial terms – but what about the ethical aspects? Does the investor have an ethical responsibility to refrain from maximising their profits or are these funds, given that they are legal, no different to more traditional funds?
At one end of the scale we find Richard Craven, the managing director of the UK discount broker Willis Owen, “Vice doesn’t mean unethical; rather that the products are addictive. They may not be politically correct, but we all know that sex, drugs and rock’n’roll sells. People know exactly what they are getting.” At the other end the position could be that not only is it morally problematic to profit on products that create harmful addictions but also that we, both individually and collectively, have a moral duty not to contribute to the growth of this type of industries.
The middle ground is an often rather vaguely formulated idea that we, when given the choice, should favour socially responsible investments (or ‘ethical funds’ as they are sometimes called). Some cases are more obvious than others, for example most people would agree that even if it was legal one has good reasons not to invest in companies specialising in trafficking and drugs. A more controversial case might be industries that cause large scale, irreparable, environmental damage. But even in the less extreme cases many appear to find it preferable to go for an ethical fund (sometimes, but certainly not always, foregoing a potentially higher profit). In the last few years it has, however, transpired that some of the so called ethical funds are in fact not all that pure. Also, there has been a heated debate on what should count as an ethically correct investment.
Such practical matters aside, it might be worthwhile to contemplate what we mean by profit when pondering whether or not a certain investment is a good one. Is it purely about monetary return or does it include factors such as social, humanitarian and environmental benefits, i.e. matters which finance lingo struggles to provide a full account of. Frequently such aspects are lumped together under the broad heading of altruism. This is somewhat unfortunate as it is often taken to be (in part) prioritised only at the expense of personal gain. But from a philosophical perspective it is not at all clear that such thoughts need to be couched in ‘concerns for the other’. For example, a case can be made that we ought to be highly concerned with how well society helps us to make certain types of choices and if it is organised in such a way that we have the best opportunity to lead the type of life that is the most beneficial to us, i.e. one where we can develop our capacities and flourish as human beings. Thinking about profit as a richer concept could show that picking the ‘virtue portfolio’ might prove the rational choice even if the competing ‘vice portfolio’ gives a slightly better return in financial terms.
Vice fund http://www.vicefund.com/home.aspx
Telegraph article with quote 1 http://www.telegraph.co.uk/finance/2771789/The-Vice-Fund-aims-for-rewards-in-this-life.html
Link to the movie ‘Thank you for Smoking’ (‘the merchants of death’) http://uk.rottentomatoes.com/m/thank_you_for_smoking/
One important consideration here would be the impact of our behaviour on others. For example, if our refraining from investing in vice funds will predictably cause someone less scrupulous to invest more in our place (say because our abstention drives down the price of the funds, making them an even more attractive investment for pure profit-maximizers), then our abstention would seem to do no good at all.
Cf. Vera Bradova on Moral Dupes:
http://www.philosophyetc.net/2008/08/vera-on-sustainability-and-moral-dupes.html
So if ethics is meant to be effective, there could be no obligation to abstain from investing in such a situation. Instead, I think, our obligations would be to pursue collective (i.e. political) solutions to the problem.
Thanks Richard! This is interesting but I am not sure that we need to understand ‘efficacy’ in this sense. On a virtue ethics account, the agent is committed to act virtuously as she has come to realise that this is leading the good life and thus best and most appealing option available to her. When the agent deliberates what to do in a situation she is not under any obligation to maximize happiness in a general sense (although she would not necessarily be wrong in doing so) and the virtuous agent may well claim that she is not to be blamed for other people’s mistakes.
As for the potential collective solutions I would agree that this could be an interesting path to explore. Writing the last paragraph of the blog I had in mind that as it is presumably quite hard to lead a virtuous life in a non-virtuous society a person aspiring to happiness might indeed be quite concerned with e.g. social organisation
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