Aristotle on modern ethical dilemmas

Bankers on scales of justice, illustration by Neal Fox

It's bonus season for bankers, including at banks bailed out by taxpayers. Is this just? Great thinkers like Aristotle have mulled such questions for centuries, says philosopher Mark Vernon.

Is it fair and just to pay bankers big bonuses?

You can seek an answer in three different ways, according to the three traditions of moral philosophy that dominate in our times, which are also explored in BBC Four's Justice: A Citizen's Guide to the 21st Century.

The first answer can be summed up in a word: happiness.

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It's associated with the British philosopher Jeremy Bentham, who argued that if you want to know the right thing to do, ask yourself what will increase the happiness of most people, and decrease pain.

Is it the size of the bonuses paid to bankers that so riles the public? The utilitarian could stress that growth, wealth and GDP contribute much to the happiness of all. These depend upon a functioning banking system.

And banks, in turn, need investment bankers to turn a profit. If those bankers are best incentivised by the promise of large bonuses, then so be it. Indirectly, that makes everyone happier.

Jeremy Bentham, 1748-1832

The greatest happiness for the greatest number of people works well as a way of doing justice.

After all, who doesn't want happiness? Make it the subject of your politics and you don't have to worry if people are from the left or right, secular or religious.

But utilitarianism concludes that torture is right. One person suffers, but many live more happily as a result. Many are uncomfortable with this.

The utilitarian would also consider the amount of outrage and unhappiness that large bonuses generate in the population at large. There may come a point when the happiness generated by profitable banks outweighs the unhappiness of protests at the bonuses.

But then again, banks are so fundamental to our economy, and the economy is so fundamental to our happiness, that it seems unlikely this tipping point will be reached - as indeed the British government seems to have concluded.

The second tradition might come to a broadly similar view, but for different reasons.

Protest against bank bonuses outside RBS The tax take isn't enough to head off protests

It too can be summed up in a word - dignity - and is associated with the German philosopher Immanuel Kant.

The starting point now is respect for the rights of investment bankers. They are protected by their contracts of employment, and those contracts state that they should be paid large bonuses when their efforts generate profits.

Further, the bankers secured their jobs in a free market, one that others are perfectly at liberty to enter too.

So, if you think bonuses are wrong because you miss out as a result - perhaps by having to pay more taxes - then one answer would be, change your career. The City awaits you too.

Immanuel Kant, 1724-1804

Individuals have rights, he argued, a universal principle based on reason. After all, if I don't always and everywhere respect your rights, why should you treat me with the respect I'd hope for.

Nowhere does this matter more than when it comes to individual liberty, the exercising of free will.

Only this great strength is also a weakness. We are connected. If your community is crime-ridden or poverty-stricken, no amount of individual freedom will enable you to live well.

Only that doesn't seem very satisfactory. Not everyone can be a banker.

Further, banks exist to serve the community. They are supposed to hold our money and lend it out, in order to facilitate the process of wealth generation - wealth that is for the good of all. This is to say that large bonuses offend our sense of the common good.

So this leads to the third answer, which is encapsulated in a word too: virtue.

The ancient Greek philosopher Aristotle argued that justice is as much about the place you live in, and whether everyone can live in it well. It's called the common good. So, whether or not the common good is served by large bonuses is an issue to consider, according to him.

Another is to think of the virtues that bonuses instil in the bankers. Do bonuses make them better bankers?

Aristotle 384-322 BC

By living well, he meant we all have the chance to achieve excellence in what we do and who we are.

This requires education, emulation of heroes, participation in your community, and contributing to the common good.

But we value our individual liberty. Doesn't caring for others mean giving things up? We also have to debate what the good life is about, and are bound to disagree.

It could well be argued that excessive incentives cloud good judgement, which the good investment bankers needs. Rather, they breed greed, a fault that arguably contributed to the banking collapse of 2008. If you follow this logic, then bonuses should be cut.

Three arguments, then.

Does paying large bonuses increase everyone's happiness, because the banks do well? Should we respect the rights of the bankers, who are owed the cash?

Or do we need to think more about the common good, and what banks are for?

Mark Vernon, the author of Philosophy For The Curious and Ethics For The Curious, will tackle more modern dilemmas throughout the week. Tomorrow, should Christian B&Bs accept gay couples?

Below is a selection of your comments

Remarkable approach to something that could otherwise seem to be just a technical matter, while it urges everyone to face the question of ethics and morality in every single moment of our lives. And it is so nice to find philosophy put at stake - not as useless, but as a necessary counterpart to positive science and technical knowledge.

Patrizia Piredda, Oxford

Your take on Bentham is completely distorted. Bentham was writing about maximizing "benefit," not "happiness." They are not necessarily one and the same thing. Also, since the benefit of one person is no more important than the benefit of any other person, a more rational decision would be to pay out dividends on stocks than concentrate banks' profits in the hands of a small number of bankers. Although the degree of benefit is also a consideration, it is better to benefit 100,000 people at a benefit factor of five (if you were to quantify benefit) than it is to benefit 1,000 people at a benefit factor of 10, though these numbers are arbitrary and just to illustrate a point about how Utilitarianism works.

Jesse Gruber, Akashi, Japan

This offers a good insight into the philosophy of bonuses, but the common people are angry that bankers are rewarding themselves for "making a profit" and "securing a job in a free market" when the only thing which kept them in their jobs, and their workplaces in profit, was not the hard, honest and good work they provided this country, but the government bailout which this country provided them. When they start losing this country more money than they are making, you have to question their proficiency. Street sweepers are important, but if they left behind more mess than they cleaned up you wouldn't continue to employ them, nor would you reward them.

Alan Whitver, Walton-on-Thames

It doesn't make me happy knowing that banks bailed out by the taxpayer are planning large bonuses for their best, when health care workers who supported this tax bailout, are subjected to a pay freeze, increment freeze, threatened pay cut and likely redundancies, not to mention intense pressures and staff shortages. If bankers don't like it, call their bluff and let them go overseas; there are others who would willingly take those jobs. Social responsibility is the order of the day.

Elizabeth Page, Exeter

Mark has overlooked one of our most influential - if currently unfashionable - philosophers: Jesus of Nazareth. A good starting point, for example, would be his response to a request (in Luke 12:13) that he tell someone who (quite legally and honestly) had come into a large sum of money to share it. His answer focuses not in this case on fairness but on the psychological and spiritual dangers of such wealth, both to the wealthy and to those around them. We live in an economic system that both encourages excessive consumption (via its effects on GDP) and enables it (via easy access to credit), and in a culture that reinforces this. We should remember the need to "be on our guard against all kinds of greed, for our life does not consist in the abundance of our possessions".

David Stephens, Oxford

What about the concept of fairness? This would mean that some people could earn enormous sums of money without others feeling hard done by, if the lower paid thought they'd earned it by their achievements or physical or moral bravery. Similarly people would not resent benefits, if they felt those people genuinely needed help. Fairness does not involve an artificial levelling, but it does preclude bad laws, corruption, political cynicism and favouritism.

Brian King, Stroud, England

There are lots of professions that pay big sums of money either in salary or in bonuses. Why are we still bashing the bankers? Why aren't we having a go a premiership footballers? Why is it more acceptable to pay hideous sums of money for kicking a ball around, but an appalling state of affairs if a banker gets an annual bonus?

Sophia Howell, Surrey, UK

Sophia, the reason footballers are not under pressure is because most of us are not affected by their salaries: which are paid for by gate money, topped up by wealthy people who want to own a football club. The main losers are the fans, who pay more at the gate. But the banking collapse has cost a lot of people their jobs, or their comfort. While many of us contributed to this by spending too much and borrowing more than we could repay, it is undeniable that the banks encouraged this: it is entirely understandable, therefore, that people are angry when they see their income frozen or cut, while bankers get large bonuses.

Janet McIntyre, London, UK

Virtue and the common good are the most critical areas that should be served. Doing so generates wealth for more people, and not just in monetary terms. It garners goodwill and trust, which are treasure troves unto themselves, and has an immense power to improve our communities and our lives.

Robert Pfeiffer, Wichita, United States

I do not agree that happiness is promoted by limitless increases in wealth. Recent studies cap the increased income=greater happiness formula at well below what top line bankers receive. If we are going for a happier society then income increases should go to the many and not the few.

Jan E, Seattle, Wa, US

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