According to Charlie Munger, are ethics and business success compatible?

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Okay, regarding this question, I can give you a relatively layman's explanation.

Does Charlie Munger Believe Morality is Compatible with Business Success?

The answer is: Absolutely compatible. Moreover, Munger believes that for achieving "long-term, sustainable, enormous success," morality is not just compatible; it is an indispensable cornerstone.

You can think of it this way: In Munger's view, unethical business practices are like "cheating." It might help you get a high score on a small test, but you can never become a true scholar this way. And once caught, you get kicked out of school. The business world is the same.

Here are a few points in plain language explaining Munger's core views:

1. Trust is the Most Efficient "Lubricant"

Munger has a famous concept called the "Seamless Web of Deserved Trust."

An analogy: You go to a familiar restaurant to eat. You trust that its ingredients are fresh, the chef is clean, and the prices are fair. So, you don't need to inspect the kitchen every time or worry about being ripped off. Because of "trust," the transaction between you and the restaurant becomes very simple and efficient.
Scaled to the business world: A moral, trustworthy company finds that customers want to buy its products, talented people want to work for it, partners want to do business with it, and banks are willing to lend to it. Everyone is willing to deal with it because they trust it. Once this network of trust is established, it drastically reduces the company's "transaction costs," creating a huge competitive advantage that is very hard for others to imitate.

Conversely, a company with a bad reputation faces resistance and obstacles in everything it does, naturally increasing its costs.

2. Unethical Behavior is the Stupidity of "Being Penny Wise and Pound Foolish"

One core tenet of Munger's investment philosophy is "avoiding stupidity," not pursuing "extreme cleverness." In his view, sacrificing morality for short-term gain is one of the stupidest behaviors.

It's like driving the wrong way on a highway: You might arrive a few minutes earlier by taking a shortcut, but your risk of a catastrophic accident is enormous. Taking such a devastating risk for a trivial gain is, in Munger's eyes, unforgivable stupidity.
A business example: A company using substandard materials might save some costs in the short term, making its profit statement look good. But once exposed (which is almost inevitable in today's information age), the company's reputation collapses instantly, customers flee, and it faces huge fines, lawsuits, or even outright failure. This is a classic case of "being penny wise and pound foolish."

3. Reputation is an Asset Built Over Decades but Destroyed in Minutes

Both Munger and Buffett have repeatedly emphasized that Berkshire Hathaway's most precious asset is its reputation.

Buffett famously said: "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."
Munger completely agrees with this view. A good reputation attracts the best business opportunities. Many excellent family businesses are willing to sell to Berkshire precisely because they believe Buffett and Munger will treat their employees and brands well, unlike some predatory acquirers who dismantle and sell off assets. This kind of opportunity, created by morality and reputation, cannot be bought with money.

4. The "Golden Rule": "Do Unto Others as You Would Have Them Do Unto You"

Munger's moral view is actually quite simple, often echoing ancient wisdom. He frequently says he only wants to do business with people he would be happy to have his family marry into.

The standard is simple: Would you let your daughter marry a cheat? Of course not. So why would you do business with a cheat?
Therefore, he demands that he and his company must also be the kind of entity others would want to "marry into." Conduct business with integrity, fairness, and honesty towards all. When you hold yourself to this standard, you naturally attract equally principled partners, creating a virtuous cycle.

To summarize:

So, in Charlie Munger's eyes, morality and business success are not opposites at all.

Short-sighted, speculative success might be achieved through unethical means, but this success is fragile, fleeting, and fraught with risk.
Long-term, sustainable, truly great success must be built on the solid foundation of morality and integrity. Morality is not a constraint on business; it is the strongest moat and the most enduring driving force.

For him, being a moral person and being a successful businessperson are one and the same.