Part intellectual autobiography and part exposition of complex yet contemporary economic ideas, this lively conversation with renowned scholar and public intellectual Kenneth J.
Arrow focuses on economics and politics in light of history, current events, and philosophy as well. Reminding readers that economics is about redistribution and thus about how. Commercial Society. The authors discuss the connections between the ethical, economic, and entrepreneurial dimensions of a life well-lived. The Oxford Handbook of Ethics and Economics.
Economics and ethics are both valuable tools for analyzing the behavior and actions of human beings and institutions. Adam Smith, the father of modern economics, considered them two sides of the same coin, but since economics was formalized and mathematicised in the late s and early s, the fields have.
Power and Principle in the Market Place. In the global financial crisis, the need to develop a new kind of economy with a closer relation between ethics and economics has become an important challenge to the international society.
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Click here to sign up. Download Free PDF. Ben Fine. A short summary of this paper. The editors of the special issue made comments and suggestions for revisions that I duly undertook. Then, to our mutual surprise, the editor of the journal itself refused to publish the piece as it had been decided that the special issue was to focus on operationalising the capability approach. Consequently, the piece was put aside although it was, and remains, posted on the SOAS web site, Fine Being of a critical, or is that cynical, realist bent of mind, I assumed that this was a general circular doing the rounds in an attempt to circumvent criticism of the putative knowledge bank that it should be more inclusive in its thinking and participants.
I decided not to reply to prevent the World Bank from free-riding on my token participation in determining its agenda that I was sure would not be considered seriously. But, at least in part, I appeared to be wrong. I received another email reinforcing the invitation to suggest a theme. However, my cynicism did not desert me, and I responded to the effect that if they genuinely wanted my suggestions, I would make them but not if this was a general circular.
To my surprise, I was informed that I had, indeed, been selected as an individual to make a proposal. I did so, suggesting that the study of development should be assessed in the context of the relationship between economics and the other social sciences, a subject on which I was then, and have remained, seriously engaged1.
My suggestion was declined, and I thought no more of it other than that I had, indeed, been used for legitimizing purposes2. That is until I began to hear rumors, exaggerated or not, through the grapevine of what lay behind all of this.
First, the organizing committee for the conference had included some more progressive economists, and this is why I had been suggested to propose a theme. Second, however, it seems my participation had been vetoed from the highest level. As chance would have it, I was invited by the theme organizer to participate in a stream on Economics and Ethics. I explained the history of what had happened so far, that I felt I had no expertise as such on the topic, but that I did have this paper on Sen that could be bent in the direction of the theme if so wished.
It was a surreal experience. There must have been a thousand or so delegates, luxuriously accommodated in a hotel on the hills overlooking Oslo where, down below, protestors demonstrated their opposition. Video links to more or less empty rooms in the developing world signified commitment to wider participation. I attended three workshops; one, naturally, on ethics and economics; one on gender and development; and one on labor standards.
Attendance declined, respectively, from about fifteen through little more than double figures until the last session where the presenters, three or four, threatened to outnumber the audience.
This would appear to say something about the priorities of participants. After the conference, I was asked to revise my paper for consideration for publication in the conference volume, and did so taking full and careful consideration of the strict word limit3 and comments given including those from one of the two editors of the conference volume.
All to no avail, the paper was not included. It is the one that follows. Introduction Economics as a discipline, in teaching, research and policy, is very poor at ethics. There are six inter-related reasons for this. First, whilst the rigid distinction between positive and normative economics and theory and fact has long been recognized in principle to be invalid, the discipline has continued in practice as if nothing were wrong with the separation s between the two.
Second, economics is negligent of, and backward in, methodology, and so unlikely to interrogate its own ethical or other foundations. Third, economics also neglects its own history as a discipline, and so its own shifting ethical approaches and content.
Fourth, economics has been isolated from the other social sciences so that their contribution to ethical questions has been ignored.
Fifth, mainstream economics has always been and is now almost absolutely intolerant of heterodox alternatives from which ethical differences might be teased out. Sixth, in sum, with method, methodology, history of economic thought, interdisciplinarity and heterodoxy sidelined to marginal status, this has all meant that economics is extraordinarily lacking in circumspection around the ethical meaning and implications of its standard concepts such as production, consumption, utility and the market, let alone development itself.
This is the debate in ethics between egoism and altruism. Strong forms of egoism hold that individuals should be self-responsible and ambitious in their pursuit of happiness, that they should treat other individuals as self-responsible trading partners, and that those who are unable to be self-responsible should be treated through voluntary charity.
Strong forms of altruism argue the opposite, holding that morality is primarily a matter of helping those who are in need, that charity is more moral than trade, and that the most moral individuals will be motivated by a spirit of self-sacrifice. She is now in semiretirement, enjoying the good life of travel, building her dream home, managing her investments, and spending time with her family and friends. Which woman is more morally admirable?
Or consider the debates over rent control and minimum wages. Economists, by a large majority, agree that such policies are not merely zero-sum, as their advocates intend, but rather negative-sum. In this encyclopedia, Walter Block see rent control argues that rent controls cause landlords a loss—and also cause housing shortages that harm some of the poorest renters the most. Linda Gorman see minimum wages argues that minimum wages cause employers a loss—but also destroy jobs for unskilled laborers.
These unintended consequences are well known among economists, but there is little sign that rent controls and minimum wages will be abandoned anytime soon. Why so? In the case of rent controls, part of the explanation involves the political dynamics of urban areas, in which many voters are renters: renters believe that rent control is good for them, and politicians sometimes listen to their constituents.
Yet another major part of the explanation has to do with an altruistic ethic that says that the self-interest of landlords and employers counts for little morally and may be sacrificed to help tenants and employees.
The thinking is that landlords and employers are richer, and tenants and employees are poorer, and thus rich people should be willing to sacrifice profits to help out the poor if necessary. The moral difference between egoists and altruists on these economic policy issues is between those who see employers and employees as win-win trading partners and those who see employment as exploitation; and between those who see landlords and tenants as trading value to mutual benefit and those who see poor tenants vulnerable to being taken advantage of by rich landlords.
It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Smith is working out a middle ground between traditional ethical theories that have been altruistic in principle and his new at the time economic theory that is optimistic about the power of egoistic individuals in a free market.
And because the good of society as a whole is the standard of value, it follows that self-interest and capitalism must be restrained or sacrificed.
His analysis led him to see that self-interested individuals would mostly engage in win-win transactions—that the profit motive, property rights , divisions of labor, competition, and other features of capitalism would lead to individual prosperity and social harmony. But Smith retained the traditional ethical belief that the good of society as a whole is the moral standard of value. Both ethical and economic analysis quickly become complex, and the three questions noted above provide a starting point for integrating the two fields.
Our contemporary debates over environmental values and policies can help illustrate the complex interplay. Environmental debates are about two categories of human action: resource use and waste disposal. For example, whether we are running out of trees and whether we should drill for oil in Alaska are issues of resource use; and whether toxic chemicals are poisoning a water supply and whether greenhouse gases are causing global warming are issues of waste disposal.
Some issues, such as recycling, are issues of both resource use and waste disposal. We end with the case of recycling of metal drink containers as a working example.
Part of the motivation for recycling may be a belief that the world is running out of a natural resource—in this case, aluminum. In part this belief depends on strictly scientific information: How much aluminum is available from the Earth? How much are we currently using?
As mining and processing techniques improve, what effect will that have on the available stock of aluminum? Depending on the scientific data, one might conclude that aluminum is becoming more plentiful or scarcer see natural resources. Another part of the recycling issue integrates economic considerations. Recycling can increase the available stock of aluminum and save space in landfills, but it also has costs: the costs of making and installing recycling bins for empty cans, the monetary and pollution costs of having recycling trucks travel through neighborhoods and businesses to collect the recyclables, the time cost of putting the cans in the right bins, the cost of reprocessing the cans to extract the raw aluminum, and so on.
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