Capitalism, defined by the Oxford Dictionary…

“An economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.”

Given this definition, “for profit” stands out as the baseline motivational state of the system. There is no direct or implied motivation toward “public good”, “ethics”, or anything of the such.

Ethics in Business, (aka. Business Ethics) would then have its baseline in social policy and regulations, such as environmental policy. The motivational state for extending ethical behavior beyond the minimum would then occur primarily due to one of two primary means.

1.) Charity and moral character of business leadership – A leadership team which demands ethical behavior above and beyond the law / regulations. Ex. Coal company permitted to release a certain amount of CO2 spending a portion of net profits on working toward zero emission technology.

2.) Ethics which lead to greater profit – There are many cases in which optional moral choices lead to an increase in profit. Ex. Installing solar panels taking advantage of government subsidy to do so, reducing energy cost.

The baseline motivational state of capitalism as an institution would therefore mandate obeying all applicable laws and applying ethics in a manner consistent with means 2 above.

Therefore capitalism as defined, by default, will have a pressure mechanism which would inevitably drive applied ethics downward toward the baseline state, and in many cases below the baseline. A practical example would be a medium size construction company employing mostly illegal labor to remain competitive. Under capitalism, competition is portrayed as a positive force, and clearly it is in terms of driving innovation and producing efficiency, but it can easily be a negative force as well, particularly in the area of ethics.