Question

Bernie Madoff is a former stockbrocker and chair of NASDAQ. He operated the largest Ponzi scheme in American history and is currently serving a life sentence for his fraud. Address ONE of the following in your post and provide a title in the subject line of your post that suggests which prompt you are addressing. (For instance, "CSR", or "Kant").

1. A popular view of Corporate Social Responsibility emphasizes that businesses have a duty to those affected by its decisions (“stakeholders”) beyond just its shareholders or owners. Name two stakeholder groups impacted by the Madoff’s scheme? Explain how they were impacted.
2. Immanuel Kant developed duty-based ethical guidelines, one of which, was the categorical imperative. Apply the categorical imperative to the Madoff affair. Explain.

Answer 1

Kant

Kant states that some duties are absolute and hence have certain obligations associated with them to do certain types of actions. The first formulation of Kant’s categorical imperative is “Act only by that maxim by which you can, at the same time, will that it be a universal law’’. This means that when taking an action one should ask this question – would it be all right if everyone took this action? Clearly if this question is applied to the Madoff affair then it will be not all right if everyone starts running a Ponzi scheme. This act is morally wrong.

The second formulation is that ‘So act as to treat humanity, whether in your own person or in that of any other, in every case as an end in itself, never as a means only’. In other words other people should never be seen merely as a means to an end. In case of Madoff he lured gullible investors and used them as a means to his purpose of amassing huge wealth. Hence this was wrong.

Thus Madoff’s actions were not based on an objective and rational necessary condition that should be always adhered to despite any natural desires and inclinations. In this case Madoff got tempted by his natural desire to amass huge wealth by luring gullible investors and cheating them of their money. Thus, as per Kant’s categorical imperative, Madoff’s actions will be regarded as an immoral action and an irrational action that violates the categorical imperative.