Business ethics has become a hot topic since profitable companies began regularly laying off workers and giving executives big raises.

The trend has prompted angry letters to newspapers, protest rallies and calls to radio talk-show hosts.

The public generally considers layoffs at struggling companies an appropriate decision that can protect the remaining jobs and the businesses themselves, said John Houlihan, a professor of business law at the University of Southern Maine.

Cuts at healthy companies particularly when paired with executive raises and soaring stock prices are another matter and one over which people are divided, he said.

Many of the letter writers and protesters consider the layoffs evil.

Many business executives and economists who support them believe layoffs at healthy companies and raises for senior executives are ethical because both are in the best, long-term interests of the corporations and the economy.

''On Wall Street and in some business circles, they look at it as a positive, reasonable and necessary thing to do,'' said Thomas Lavelle, spokesman for Fleet Financial Group. Fleet laid off 3,000 people in 1994, including 275 in Maine, despite record profits. It granted big raises to executives doing the cutting.

''If we were not to do this, we feel the job loss would have been greater in time,'' Lavelle said. The competition would take business and top executives away from Fleet.

Lavelle's argument is sound if the long-term threat is real, several ethicists said.

In addition, at least one school of thought supports the morality of such cuts, even if there is no long-term threat to a business.

This philosophy is called ''conventionalist game ethic.'' It argues that if everyone acts in his own economic self-interest and does everything that's legal to increase his wealth, society as a whole will benefit.

The idea is that ''if you perpetuate inefficiency, that'll catch up with you sooner or later,'' said Jeffrey Sosnaud, an instructor of business law at the University of Maine. Efficiency, by contrast, creates wealth and makes a company competitive.

Gov. Angus King has called the 1990s a period of ''economic Darwinism.'' King describes the modern economy as ''a no-holds-barred competition in which only the fit will survive'' and ''an unsentimental, remorseless competition that people aren't used to here.''

King said he is trying to make sure Maine residents have the skills and businesses have the cost advantages they need to defeat the competition in this contest.

The concept of economic Darwinism is not new. Herbert Spencer, a British philosopher and economist, coined the phrase ''survival of the fittest'' in 1867.

Spencer believed that strong competitors naturally and properly drive weaker people and institutions into extinction. He said unfettered competition is the only way for the human race to advance and that government should not stand in the way of the free market.

Spencer outlined his economic philosophy in a book, ''Social Statistics,'' in 1851: ''The poverty of the incapable, the distresses that come upon the imprudent, the starvation of the idle, and those shoulderings aside of the weak by the strong, which leave so many 'in the shallows of miseries,' are the decrees of a large and farseeing benevolence.''

Spencer suggested that his concept was similar to Charles Darwin's theory of evolution. Darwin had been using the expression ''natural selection,'' but agreed that Spencer's ''survival of the fittest'' phrase described his theory well. ''Survival of the fittest'' now is associated with Darwin.

Andrew Carnegie, a contemporary of the two men and a wealthy American steel magnate, also supported the concentration of wealth then taking place in America.

''While the law (of competition) may be sometimes hard for the individual, it is best for the race because it insures the survival of the fittest in every department,'' Carnegie wrote in 1889.

''We accept and welcome, therefore, as conditions to which we must accommodate ourselves, great inequality of environment, the concentration of business, industrial and commercial, in the hands of the few . . . as being not only beneficial but essential for the future progress of the race.''

Another pure-capitalist approach is exemplified by Milton Friedman, the Nobel-winning economist, said Judith Kamm, a business professor and program manager of the Center for Business Ethics at Bentley College in Massachusetts.

Friedman's view suggests that businesses should focus exclusively on owners' interests and operating efficiencies. The focus, in turn, helps society as a whole by creating wealth throughout the economy.

The concept was popular during the 1980s but is being questioned in the 1990s, Kamm said.

''People are now believing that business is an integral part of society and not just a money-generating machine,'' she said.

Many people believe that businesses should serve society by making sure that workers share in the success of a business, have as much job security as possible and receive the training they need to thrive, Kamm said.

The morality of layoffs as with most ethical decisions is open to debate, several observers said, but these questions should at least be considered by senior executives trying to cut costs.

''The one thing I would like to see corporations be aware of is that people are a different resource than the other resources of production,'' Houlihan said.