Edited by Peter Rona and Laszlo Zsolnai
Economics as a Moral Science:
- Covers ethical issues of economics from individual and organizational to societal and global level
- Deals with both theoretical issues as well as practical ones related to business and globalization
- Brings together a group of top scholars from Cambridge, Oxford, Leuven and elsewhere on the much debated issue of the ethical content of economics
The book is reclaiming economics as a moral science. It argues that ethics is a relevant and inseparable aspect of all levels of economic activity, from individual and organizational to societal and global. Taking ethical considerations into account is needed in explaining and predicting the behavior of economic agents as well as in evaluating and designing economic policies and mechanisms.
The unique feature of the book is that it not only analyzes ethics and economics on an abstract level, but puts behavioral, institutional and systemic issues together for a robust and human view of economic functioning. It sees economic “facts” as interwoven with human intentionality and ethical content, a domain where utility calculations and moral considerations co-determine the behavior of economic agents and the outcomes of their activities.
The book employs the personalist approach that sees human persons – endowed with free will and conscience – as the basic agents of economic life and defines human flourishing as the final end of economic activities. The book demonstrates that economics can gain a lot in meaning and also in analytical power by reuniting itself with ethics.
See a preview of each chapter.
Table of Contents & Abstracts
1. Why Economics Is a Moral Science (Peter Rona)
The paper argues that the attempt to relocate economics from the domain of the moral sciences to one closer to that of the natural sciences necessarily meant that free will, intentionality and moral judgment were excluded from its purview. However, the resulting surrogate reality has proven to be less than satisfactory because economic life is simultaneously about what should be as well as what is. Because economic life is lived with a purpose in mind, economic ‘facts’ are interwoven with intentionality. Attempts to reconstruct economics as a moral science show how utility calculations and moral considerations co-determine the behavior of economic agent s, and throw light on the deep connection between virtue ethics and all levels of economic activity as well as the deleterious consequences when that connection is impaired or severed.
2. Issues and Themes in Moral Economics (Laszlo Zsolnai)
This chapter summarizes the main issues and themes of the book and shows its contributions to the development of moral economics. Zamagni suggests that we can harness market interactions by re-defining the market in a non-individualistic way, as a network of mutually beneficial relations, along the lines suggested by the civil economy paradigm. Bouckaert underlines that thinking of economics as a relational dynamic opens a space for human creativity without losing the embeddedness in a system of meaning and purpose. Following Amartya Sen economic reason can be understood as reasonableness of preferences, choices and actions. Zsolnai argues that reason requires that economic activities are achieved in ecological, future-respecting and pro-social ways. But Peter Rona warns that the corporation was born as the device for severing the unity between the act and responsibility. He concludes that positivist economic theory, when combined with the function performed by the corporate veil destroys the unity between the action, the actor and the moral responsibility for the action with the result that the corporation must do without the basis for a morally authentic life. Helen Alford suggests that economics needs to be more reflective about its underlying ideas. Whereas the tradition of jurisprudence is well established in the legal field, economics has no equivalent tradition of self reflection.
The Moral Foundations of Economics
3. Economics as if Ethics Mattered (Stefano Zamagni)
After discussing the main reasons why the thesis of the axiological neutrality of economics is indefensible, the paper provides a thorough critique of the standard economic approach to human behavior. It then takes position in favour of the adoption of the relational paradigm in economic discourse. The paper supports the introduction of the principle of reciprocity within economic theory in order to expand its grasp on reality. Reference to the civil economy paradigm and to its salience is offered. The paper argues that virtue ethics has the capacity to resolve the opposition between self-interest and interest for others, by moving beyond it. The virtuous life is good not only for others but also for the actor. The paper suggests that the discipline of economics needs the relational perspective. The economic world is inhabited by a plurality of types of subjects: some are anti-social (the envious or the malicious) while others are pro-social (who act with the public interest in mind). The personal dispositions of agents matters. Gift as gratuitousness always counterposes its logic of overabundance to that of equivalence, typical of contracts.
4. Teleological Reasoning in Economics (Luk Bouckaert)
The prime example of a teleological approach to economics can be found in the first part of Aristotle’s Politics. He defines economics as the art of creating the material and social conditions for the survival of the oikos or household. Simultaneously, he integrates economics in a social matrix that subordinates economics to politics and ethics. Modern philosophy and economics is anti-Aristotelian and anti-teleological. Modern economic actors are supposed to be driven by autonomous preferences and free choices. The market functions as a causal equilibrium mechanism that promote welfare for everyone as an unintended byproduct. Although Adam Smith interpreted this unintended teleological effect as an ‘invisible hand’, he was one of the first moral philosophers to underpin this order with a non-teleological substratum. After him, the deconstruction of teleology pursued its logic giving way to the idea of economics as a process of ‘creative destruction’ (Schumpeter). The paper explores how thinking economics as a relational dynamic opens a space for human creativity without losing the embeddedness in an ecological system of meaning and purpose.
5. Economic Rationality Versus Human Reason (Laszlo Zsolnai)
First the paper analyses the rationality assumptions of mainstream economics and shows that they are empirically misleading and normatively inadequate. It argues that the world ruled by self-interest based rationality of economic actors leads to ‘unreason’ from a wider ecological and human perspective. The paper illuminates that human reason requires a different way of economic functioning which implies a redefinition of the final goal economizing. It is argued that the main goal of economic activities should not be profit-making but providing right livelihood for people. Amartya Sen suggests that economic reason can be understood as reasonableness of preferences, choices and actions. Reason requires that economic activities are achieved in ecological, future-respecting and pro-social ways. Intrinsically motivated economic agents who balance their attention and concerns across diverse value-dimensions are able to do this and show the viability of true economic reason under the circumstances of present day “rationally foolish” economic world.
6. Rediscovering a Personalist Economy (Hendrik Opdebeeck)
The paper suggests that we can rediscover the personalist philosophy in searching for new models for business and economic actions. At the core of Jacques Maritain ’s “Humanisme intégral” (1936) is the idea that man is a person who is spiritual in nature, endowed with free will, and thus autonomous in relation to the world. For Maritain the community is central: the true goal of the temporal order is thus more than the mere tallying up of individual needs. It concerns the good life of the entire community—the common good or bonum commune. But the temporal bonum commune is not the ultimate goal, as it is subordinated to what transcends temporal welfare—the attainment of freedom and spiritual perfection of the human person.
7. Happiness and Human Flourishing (Knut J. Ims)
The chapter explores the concept of human flourishing drawing on two traditions, the Aristotelian–Thomistic virtue ethics tradition, and the new research tradition of positive psychology. These traditions may seem very different in origin, but they have some fundamental similarities. Martin Seligman , one of the founders of positive psychology has summed up human flourishing using the acronym PERMA , where each letter indicate one element; Positive emotions, Engagements, Relationship, Meaning and Accomplishment. Seligman emphasizes the problems of hedonic pleasure and “happyology” in describing human flourishing.
8. Understanding Financial Crises: The Contribution of the Philosophy of Money (Antoon Vandevelde)
The paper underlines that the origin of money lies more in the religious and legal sphere than in the economic realm. Money was used in the exchange between men and goods and in order to compensate for manslaughter, rather than for facilitating the satisfaction of material needs. ‘Vergelding’, the conversion of guilt into debt was a means to prevent revenge and violence. But soon unease cropped up: the possibility to express everything that is valuable in monetary terms was felt as a form of violence against the soul of men and things. Aristotle has tried to fit money in a teleolog ical view of the world, but he was faced with the ambivalence of money. Money was deemed to be good as a unit for calculation and as a means of exchange, but it was distrusted as a value reserve. However, it is impossible to separate the three functions of money, as many utopian reformers of the monetary order have tried. The paper emphasizes that nowadays we experience the violent potential of money in the coercion to pay back our debts. Debts have to be repaid, otherwise the debtor will be destroyed as an autonomous subject. The conflict between various categories of debtors and creditors is the most prominent form of “class struggle” we face in our society. It is also a clash between various conceptions of distributive justice.
9. Economics and Vulnerability: Relationships, Incentives, Meritocracy (Luigino Bruni)
The paper warns that a significant body of philosophical work in virtue ethics is associated with a critique of the market economy and economics. The market depends on instrumental rationality and extrinsic motivation ; market interactions therefore fail to respect the internal value of human practices and the intrinsic motivations of human actors. By using market exchange as a central model, mainstream economics normalizes extrinsic motivation, not only in markets but also in social life more generally; therefore economics appears as an assault on virtues and on human flourishing.
Companies and Their Management
10. Ethics, Economics and the Corporation (Peter Rona)
The paper analyzes the capacity of corporation for moral agency and concludes that corporations do not have such capacity. Instead, morally unacceptable corporate propensities are better addressed by crafting legal rules that accord with the quiddity of the corporation. Unlike theories that find the source of this incapacity in the purported duty of corporations to maximize shareholder value , and unlike stakeholder theories, the paper proposes, that the incapacity has three sources. First, the interposition of the corporation between the individual or group actor destroys the unity of the actor and the act. Second, corporations, with their power to define roles through binding rules replace the moral self of the actor with the prescribed role. Third, the prevailing economic theory adopts the methodology of the natural sciences and condenses corporate decision making into the quantitative methodology of corporate finance with the result that the numerically expressible trumps qualitative judgment unless the latter is bolstered by binding legal rules.
11. Are Business Ethics Relevant? (David W. Miller, Michael J. Thate)
This paper suggests that “the relevance of business ethics” has often been a question of utility, which considers profits, cultural concerns, and social capital regarding organizational health. There are, however, underlying suspicions regarding the relevance of business ethics. In corporate contexts, “ethics” is often conflated with compliance, and becomes the domain of compliance and risk management. This statement is not to disparage compliance officers or their departments. Rather, the point is that there are limits of assigning “ethics” and the valuation of actions as “ethical” to a place or office within corporate contexts. Such approaches will necessarily be reactive to and driven by law, code, and policy. Another suspicion concerns the relevance of one’s personal ethics within an “ethical field.” An ethical field is where diverse ethical agents, with differing ethical contexts and convictions, inhabit space. The effect and influence of one’s ethical actions or convictions depends on where one lives within a given ethical field. This field approach to ethics stresses that an agent’s ethical actions and convictions are enmeshed within social relations. And, of course, power relations within any given field are always asymmetrical. The paper emphasizes that religious ideas can help shape and inform the ethics of peoples and business cultures. Attentiveness to these dynamics is an impactful way to engage business school students and business people to think afresh about ethics as both character and culture. Thinking about ethics through the lenses of the “Right”, the “Good”, and the “Fitting” can help guide people through ethical grey zones, informing them toward richer and wiser ethical decisions.
12. Economy of Mutuality (Kevin T. Jackson)
The paper develops a triad of business archetypes. In each archetype, alternative emphasis goes to elements of profitability and financial independence on the one hand, and poverty alleviation and solidarity on the other. Archetype 1: Business enterprises conducted primarily as for-profit institutions to the end of financial sustainability. Financial self-reliance is a precondition of a firm’s survival and for remaining capable of continuously expanding products or services to new clientele. Archetype 2: The social and financial missions of business enterprises are merged; a coordination of social and financial functions is at the heart of the “promise” of the company as a sustainable enterprise. Archetype 3: Businesses are run with principal allegiance to social missions – outreach to the poor, environmental rectitude, and other facets of sustainability. The paper argues that the trio of archetypes also serves as alternative teleological exemplars of the purpose and nature of business. Archetype 1 presupposes the essence of business as profit maximization. Under Archetype 2, business is a means for creating varieties of value for a broad range of stakeholder s. For Archetype 3, the purpose of business is serving the common good, with profits secondary and derivative.
13. Economic Wisdom for Managerial Decision-Making (Mike Thompson)
The paper argues that Aristotle’s “phronesis” can be explained as social practice wisdom, a discursive system linking mind and social practice to produce wellbeing and human flourishing. It uses the contemporary conceptualization of phronesis and its related metatheoretical construct of wisdom principles to bring a practical dimension to wise decision-making. The paper first reviews progress in the understanding of wise leadership within leadership studies and the principles of wisdom proposed by McKenna. Against this taxonomy it then recontextualizes the numerous calls in leadership literature for qualitative, research. It presents samples and interprets the resulting theory based in original material from interviews with 184 managers generated by the Wisdom Project. The paper concludes that an economic wisdom is present in the minds of managers. Economic wisdom could offer resources for management education and development across all business domains to address the challenges of the VUCA world with a more realistic, holistic and planet-friendly approach.
Economic Policy and Economic Development
14. Catholic Social Thought and Amartya Sen on Justice (Johan Verstraeten)
The paper suggests that Sen’s “Idea of Justice” is not only the most inspiring and reasonable response to Rawls ’ “Theory of Justice” but also an important challenge for Catholic Social Thought. The paper shows that Catholic Social Thought and Sen’s Idea of Justice have much in common. It argues that despite the emphasis on individual freedom in Sen’s capability approach, the convergence between his approach and Catholic Social Thought is strong. There are several points of resemblance: the role of indignation and emotion, the implications of a realistic anthropology (“seeking institutions that promote justice rather than institutions as themselves manifestations of justice”), freedom as responsibility, human rights as rooted in our shared humanity, valuing religious wisdom in justice theory.
Possible connections between the virtue of charity and the economy are explored using key sentences from the third chapter of the encyclical Caritas in veritate by Pope Benedict XVI. Without gratuitousness and the unconditional gift operating within normal economic activity, the economy cannot achieve its proper end; while society needs three different sectors to function properly – state, market and civil society – solidarity and reciprocal gift, nevertheless, need to be found in all three. This thinking can be connected with economics on a philosophical level by using the approach of personalism, and on a theological level through practical experience and by using the idea of a theological virtue as a “powerful social resource”.