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Application of Aristotle’s the Golden Mean in Today’s Business World

26 Jul 2016History Essays

Aristotle was the last of the famous Greek Triumvirate. The first one was Socrates probably the most enigmatic figure in the history of philosophy. The second was Plato, a poet who was regarded as Socrates’ brightest students. And the last was Aristotle, the most famous student of Plato. Aristotle was born at Stagira, in Thrace, in 384 B.C. His father was a physician which is an indication that science was his main philosophic background.

One of his greatest contributions to humanity is not his being the famous tutor of Alexander the Great who inspired him to become the world’s greatest conqueror. His greatest contribution to humanity is his philosophy of the Golden Mean.

Happiness has always been an elusive goal for man. During the time of the Greek philosophers, the concept of happiness and how it can be attained has been the focal point of discussion. The Golden Mean embodies Aristotle’s answer to how happiness can be achieved by man. Aristotle thought that happiness should not be equated with material pleasure or sexual gratification. While there are many people during his considered the attainment of these two things as man’s ultimate goal and man’s happiness, Aristotle thought otherwise. He argued that happiness should be the ultimate goal of man as it also represents the realization of the good of the human being. It is the end goal of human existence. He emphasized that happiness can only be achieved by finding the right balance between two extremes.

Aristotle cites as an example two extremes which should be avoided by man. The first is cowardice which is the extreme of deficiency. The second is recklessness which is the extreme of excess. Cowardice is exemplified in the action of a man who fails to help a loved one inside a burning building. Recklessness, on the other hand, is shown when a man without any protection for himself enters a burning building to rescue a loved one. Both are considered extreme actions which should be avoided as they do nothing to a man’s search for happiness. The first is considered extreme because it is very unusual for a man who knows that a loved one is inside a burning building but fails or refuses to do something about it such is an act of cowardice as he only intends to save himself. On the other hand, it is worse when a person decides to enter a burning building when he fully knows that he will not be able to get out of the burning building alive.

Aristotle emphasized that there is no exact middle in every situation. The middle will always depend on the situation. In the situation mentioned, the mean would be to call for professional help. However, if the fire has just started, it would be wrong to just stay and watch the building burn to the ground.

This is considered Aristotle’s most important contribution because it re-affirms how important achieving balance is in life. It must be stressed that the Greeks during the time of Aristotle have struggled to find the right balance in their life. Achieving balance is more difficult in the modern world. Unlike during the time of Greek philosophers, the modern society is faced with more obstructions that will hinder the achievement of balance. Life is much faster. Competition is much stiffer. Temptations are greater. Indeed, achieving the right balance in ones personal and professional lie has become much more difficult.

This is a time of financial uncertainty and corporate distress. Because of the desire of business owners to remain competitive, the corporations have started to prioritize profits above anything else. In the desire to become number one, the Board of Directors and corporate officers have forgotten about the principles of ethics and honesty.

It must be stressed that directors act as fiduciaries to the corporation, and once elected they are enjoined to serve the best interest of the corporation and the shareholders. A fiduciary is one who owes to another the duties of good faith, trust, confidence and candor or one who must exercise a high standard of care in managing another’s money or property. This fiduciary duty arises out of the board’s fiduciary relationship with the corporation and shareholders.

The directors owe a duty of loyalty to the corporation and its shareholders. It is the consequence of the fiduciary relationship existing between the directors of the corporation and the corporation and the directors of the corporation and its stockholders. As fiduciaries, they are expected to act with utmost candor and fair dealing for the interest of the corporation and without taint of selfish motives. The directors of the corporation are expected to first serve the interest of the corporation and their interest later. They are enjoined not to manipulate the affairs of the corporation to the detriment and disregard of the standards of morality and decency. As corporate insiders, the directors cannot utilize any inside information they have acquired for their own benefit.

The directors of the corporation also owe a duty of obedience to the corporation. The duty of obedience mandates that every director of the corporation must do and perform only those acts designed to achieve its mission. The director must constantly check whether his action is within the scope of his authority and in pursuance of the goals of the company as indicated in its articles of incorporation. Further, obedience does not only mean compliance with the rules of the corporation but it also means informing the corporation of any act done in violation of the rules of the corporation.

The directors and corporate officers also owe a duty of diligence. The rule is that every director of the corporation is required to manage the corporate affairs and perform his functions with reasonable care and prudence. As an officer of the corporation, the responsibility of the director towards the corporation is not limited to willful breach of trust or excess of power but extends to negligence. This means that even if there was no unlawful intent or evil motive in performing a corporate act, he can still be held liable if it can be established that he acted negligently. This liability of a director for his negligent acts rests upon common law rule which renders the agent liable who violates his authority or neglects his duty to the damage of the principal.

One example of a business enterprise which failed to achieve the right balance in his professional life is the business formed by Bernard Madoff. Bernard Madoff is a person who is in the newspapers nowadays because of the white-collar crime he committed. Madoff recently pleaded guilty for committing the Ponzi scheme against a number of his investors (Hays & Neumeister). The Ponzi scheme is a crime which was named after Charles Ponzi, a person who was notorious for using fraudulent investment technique in the 1900s. In simple terms, the Ponzi scheme is a sham investment scheme by virtue of which the business owner encourages other persons to make investment in his business with a promise that the investors will receive huge return on their investment within a particular period. In the case of Madoff, he did not invest the money he received from his investors in a legitimate business. Instead, he used the money he received from his new investors to pay off the interests he promised from his past investors. Ponzi started the ‘rob-Peter-to-pay-Paul’ principle early in the 1980s where he solicited billions of dollars from pension funds, charities and other investors (“What is a Ponzi Scheme”). Madoff eventually admitted that he defrauded hundreds of people in his scheme which had amounted to more than $60 billion. His scheme was finally discovered last year when investors wanted to pull out their investment from Madoff. He however could not produce the money. Despite this however Madoff made an announcement that he will be distributing to his employees bonus earlier than expected. This prompted questions as how could he get the money to pay the bonuses to his employees but he could not get the money to pay off his investors. He later on revealed to his two children that his business was a sham prompting them to report him to the authorities.

He was eventually arrested in December of 2008 and charged for federal securities fraud. The sad part is that despite the evidence against Madoff, he was initially allowed to remain free after posting a $10 million bond. In January 2009, Madoff was even allowed by the court to continue living under house arrest in his Manhattan apartment (“Judge Refuses to Jail Madoff; Financier Accused in Massive Ponzi Scheme Allowed to Remain Free on Bail”). In addition, the court continued to allow Madoff to be placed under house arrest despite having been caught mailing jewelries in violation of the order of the court to freeze his assets.

In more recent news, Madoff was finally placed in jail while waiting for his sentencing in June after he has pleaded guilty to the crime charged against him (“Madoff Must Stay in Prison, Court Says - NYTimes.com,”). At this time, he was held in the Metropolitan Correctional Center in Manhattan while waiting for his sentence. Newspaper reports say that he faces a maximum of 150 years in prison once he is sentenced in June 16. Despite this Madoff’s lawyers continued to ask the court for Madoff to be allowed to be released and to be placed on house arrest while awaiting his sentencing.

Newspaper reports say that his credit card bills speak everything about the lavish lifestyle he and his family once had. In one of his credit card bills, he was charged for $2,800 for eating at an expensive restaurant, $2,000 in a Parisian boutique, $441 at a gourmet bagel shop, $8,400 for spending a night at the hotel. The total amount due was more than $100,000. (“Bernard Madoff Credit Card Bills Reveal Lavish Lifestyle”) There is also evidence that will prove that he treated the investments placed in the name of Bernard L. Madoff Investment Securities, the company that he put up, as his personal bank account which gave him the opportunity to withdraw and transfer funds as he needed for himself and for his family.

Business organizations need to observe certain ethical and moral rules. They have the obligation to the public to ensure that they funds entrusted to them are properly managed. Every penny that will be used for investment must be properly accounted for. Moreover, when a person puts up his own business, he has the duty to be truthful to his clients, employees and his investors. It is his solemn obligation not to do any falsehood to his clients, employees and his investors. It need not be stressed how greedy Madoff was. He and his family lived an extremely lavish lifestyle. He was consumed by his desires for material pleasure and wealth that he forgot about his clients and investors. The pleasure however was temporary. Today, he is spending time in jail for the crimes he committed.

While Madoff was guilty for a crime, it is also worth looking into the negligence or recklessness on the part of Madoff investors. It is true that Madoff defrauded his investors and he should be faulted for it. It is however also true that the investors were also partly responsible for what happened to their money (Vicky Ward) When they invested their money, they did not conduct any diligence. They also did not take appropriate steps to ensure that the money they invested will be protected by Madoff. They only relied on the representations of Madoff that their money will double or triple after a few months. When they ask how Madoff will be able to make good his promises, Madoff only responded that he can deliver without explaining how intends to double or triple the money of his investors. These investors were also consumed by greed. They were attracted to Madoff’s lavish lifestyle. They too thought that they can enjoy the material pleasure and wealth.

References:

  • “Bernard Madoff Credit Card Bills Reveals Lavish Lifestyle.” Associated Press. 2009. Retrieved 29 May 2009
  • "Madoff Must Stay in Prison, Court Says - NYTimes.com." The New York Times. 2009.
  • "Second Judge Refuses to Jail Madoff; Financier Accused in Massive Ponzi Scheme Allowed to Remain Free on Bail." The Washington Post. Washington Post Newsweek Interactive Co. 2009. Retrieved 28 May, 2009
  • Tom Hays and Larry Neumeister. "A 'sorry and ashamed' Bernard Madoff pleads guilty." AP Online. 2009. Retrieved 28 May, 2009
  • Ward, Vicky. “Time to Blame our Own Greed for the Madoff Mess.” The Huffington Post. 2008. Retrieved 29 May 2009
  • “What is a Ponzi Scheme.” (2009). Findlaw. Retrieved 28 May 2009
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