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Economic ethics

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Economic Ethics combines economics and ethics, uniting value judgements from both disciplines in order to predict, analyse and model economic phenomena. It encompasses the theoretical ethical prerequisites and foundations of economic systems. The school of thought dates back to the Greek philosopher Aristotle, whose Nicomachean Ethics explains the connection between objective economic principle and the consideration of justice.[1] Natural law and religious law is evident in academic literature concerning economic ethics. [2] The consideration of moral philosophy, or the idea of a moral economy, for example, is a point of departure in assessing behavioural economic models. [3] Ethics presents a trilemma for economics, namely in standard creation, standard application, and who the beneficiaries of good (by these standards) should be.[4] This, in conjunction with the fundamental assumption of rationality in economics, creates the link between itself and ethics, as it is ethics which, in part, studies the concepts of right and wrong. [4]

History

Ancient Economic Thought

Ancient Indian economic thought centred on the relationship between the concepts of happiness, ethics and economic values, with the connections between them constituting their description of human existence.[5] The Upanishads' fundamental idea of transcendental unity, oneness and stability is a deduction of this relationship. [6] Ancient Indian philosophy and metaphysics indicates an understanding of several modern economic concepts. For example, their regulation of demand when it exceeded supply as a means of avoiding anarchy, achieved at the time by stressing that non-material goods was the source of happiness, is a reflection of Marshall’s dictum of the insatiability of wants. [5] The Rig Veda illustrates some apprehension of economic inequality per Chapter X, 117, 1-6 which states that, 'The riches of the liberal never waste away, while he who will not give finds no comfort in them,’ indicating that generating personal wealth wasn't considered immoral although keeping this wealth to one's self is a sin. [5] The Arthasastra formulated laws that promote economic efficiency in the context of an ethical society. The author, Kautilya, posits that building infrastructure is a key determinant of economic growth when constructed in an ethical environment, which is the responsibility of the king. [7]

Ancient Greek philosophers often combined economic teachings with ethical systems. Socrates, Plato and Aristotle subscribed to the idea that happiness is the most valuable good humans can strive for.[5] The belief that happiness couldn’t be achieved without pleasure posed complications to the relationship between ethics and economics at the time. Callicles, for example, held that one who lives rightly should gratify all their desires by way of their courage and practicality which presented an anomaly for the issue of scarcity and the regulation of consumption as a result.[5] This was reconciled by the division of labour, where basic human wants such as food, clothing and shelter, were efficiently manufactured given each individual limits their production to their most productive function, thus maximising utility. [8] Xenophon's Oeconomicus, inspired by Socrates' concept of eudaimonia, necessitates that since virtue is knowledge one should understand how to use money and property well rather than merely acquire it for personal gain.

File:Xenophon's Oeconomicus.jpg
Book cover of Xenophon's Oeconomicus

[9]

Influences

Religion

Philosophers in the Hellenistic tradition became a driving force to the Gnostic vision, redemption of the spirit through asceticism, that has founded the debate regarding evil and ignorance in policy discussions.[1] The amalgamation of ancient Greek philosophy, logos and early Christian philosophy in the 2nd and 3rd centuries AD had led believers of the time to, morally, become astray, leading to the solution that they were to act in one’s best interest, given appropriate reason, to prevent ignorance. [1] The Old Testament of the Bible served as the source of ethics in ancient economic practices. Currency debasement was prohibited given its fraudulent nature and negative economic consequences, which was punished according to Ezekiel 22: 18 – 22, Isaiah 1:25 and Proverbs 25: 4-5. [10] Relationships between economic and religious literature have been founded by the New Testament. For example, James 1:27 states that, “looking after orphans and widows in their distress and keeping oneself unspotted by the world make for pure worship without stain before our God and Father,” which supports the academic argument that the goal of the economic process is to perfect one's personality. [11]

The concept of human capital valuation is evident in the Talmud. For example, an injured worker was considered a slave in the labour market while, for compensation purposes, their worth before and after injury as well as potential decline in income and consumption was evaluated. [2]The idea of opportunity cost is grounded in the ‘S’kbar B’telio’ (literally meaning, 'lost time') concept in Talmudic literature. In ancient Israel, a Rabbi wasn't to be paid for his work, as it would imply that one is profiting from preaching and interpreting the word of God, but compensated otherwise for the work completed as a Rabbi as a means of survival, given they are not involved in any other profession. [2]

The Qur'an and the Sun-nah have guided Islamic economic practice for centuries. For example, the Qur'an bans ribā as part of its focus on the eradication of interest in order to prevent financial institutions operating under the guidance of Islamic economics from making monopolistic returns.[12] Zakat is in itself a system for the redistribution of wealth. The Qu'ran specifies that it is intended solely for: the poor, the needy, zakat administrators, those whose hearts are to be reconciled, those in bondage, those debt-ridden, those who strive for the cause of God, and the wayfarer. [13] The use of Pension Loan Schemes (PLS) and other microfinance schemes exercise this teaching including the Hodeibah micro-finance program in Yemen, and the UNDP Murabahah initiatives at Jabal al-Hoss in Syria. [14]

Culture

Economic ethics attempts to incorporate morality and cultural value-qualities in order to account for the limitation of economics being that human decision making isn't restricted to rationality. [15] This understanding of culture unites economics and ethics as a complete theory of human action. [16]Academic culture has increased interest in ethical economy as a discipline. An increased awareness of the cultural externalities of the actions of economic agents, as well as limited separation between the spheres of culture, has purposed further research into their ethical liability. [16] For example, a limitation of only portraying the instrumental value of an artwork is that it may disregard its intrinsic value and thus shouldn't be solely quantified. [17]An artwork can also be considered a public good due to its intrinsic value, given its potential to contribute to national identity and educate its audience on its subject matter. [17]Intrinsic value can be quantified given it is incrementally valuable, whether sacred by association and history or not. [18] [19]








References

  1. ^ a b c Richards, Donald G. (2017). Economics, Ethics, and Ancient Thought: Towards a virtuous public policy. New York, USA: Routledge. ISBN 978-1-138-84026-3.
  2. ^ a b c Wilson, Rodney (1997). Economics, Ethics and Religion: Jewish, Christian and Muslim Economic Thought. London, United Kingdom: Macmillan. ISBN 978-1-349-39334-3.
  3. ^ Bhatt, Ogaki, Yaguchi, Vipul, Masao, Yuichi (June 2015). "NORMATIVE BEHAVIOURAL ECONOMICS BASED ON UNCONDITIONAL LOVE AND MORAL VIRTUE". The Japanese Economic Review. 66, No. 2: 226–246.{{cite journal}}: CS1 maint: multiple names: authors list (link)
  4. ^ a b Hicks, Stephen R. C. (2019). "Ethics and Economics". The Library of Economics and Liberty. Retrieved 29 January 2020.{{cite web}}: CS1 maint: url-status (link)
  5. ^ a b c d e Price, B.B (1997). Ancient Economic Thought. 11 New Fetter Lane, London: Routledge. ISBN 0-415-14930-4.{{cite book}}: CS1 maint: location (link)
  6. ^ Aurobindo, Sri (2001). The Upanishads--II : Kena And Other Upanishads. India: Sri Aurobindo Ashram Publication Department. ISBN 81-7058-748-4.
  7. ^ Sihag, Balbir S. (4 February 2016). "Kautilya's Arthashastra: A Recognizable Source of the Wealth of Nations". Theoretical Economic Letters. 6: 59–67 – via SciRes.
  8. ^ Michell, H. (2014). The Economics of Ancient Greece. 32 Avenue of the Americas, New York: Cambridge University Press. p. 25. ISBN 978-1-107-41911-7.{{cite book}}: CS1 maint: location (link)
  9. ^ Alvey, James E. (2011). "The ethical foundations of economics in ancient Greece focusing on Socrates and Xenophon". International Journal of Social Economics. 38: 714 733 – via Emerald Insight.
  10. ^ North, Dr. Gary (1973). An Introdution to Christian Economics. pp. 5, 6.
  11. ^ Welch, P.J., Mueller, J. J. (June 2001). "The Relationships of Religion to Economics" (PDF). Review of Social Economy. 59: 185–202 – via JSTOR.{{cite journal}}: CS1 maint: multiple names: authors list (link)
  12. ^ Kuran, Timur (1995). "Islamic Economics and the Islamic Subeconomy". Journal of Economic Perspectiv. 9: 155–173 – via American Economic Association.
  13. ^ "9: 60 (At-Tawbah)". The Noble Quran. 2016.{{cite web}}: CS1 maint: url-status (link)
  14. ^ Abdul Rahman, Abdul Rahim (2007). "Islamic Microfinance: A Missing Component in Islamic Banking" (PDF). Kyoto Bulletin of Islamic Area Studies. 1: 38–53 – via Kurenai.
  15. ^ Koslowski, Peter (2000). Contemporary Economic Ethics and Business Ethics. New York: Springer. pp. 5, 6. ISBN 978-3-642-08591-8.
  16. ^ a b Koslowski, Peter (2001). Principles of Ethical Economy. The Netherlands: Kluwer Academic Publishers. p. 4. ISBN 0-7923-6713-8.
  17. ^ a b Towse, Ruth (2011). A Handbook of Cultural Economics. UK: Edward Elgar Publishing Limited. p. 173. ISBN 978-1-84844-887-2.
  18. ^ Groenewegen, Peter (1996). Economics and Ethics?. London: Routledge. p. 43. ISBN 0-415-14484-1.
  19. ^ Kohen, Ari (2006). "The Problem of Secular Sacredness: Ronald Dworkin, Michael Perry and Human Rights Foundationalism". Journal of Human Rights. 5: 235–256 – via University of Nebraska.

Economic Ethics


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