Some Kind of Wonder-full…

Ethics and Economics

We were having a discussion in a seminar, questioning why the vast majority of people don’t really care (or care enough) about the trials of humanity in the South. The tutor suggested that the problem wasn’t an ethical one, which suprised me.

When we discussed this further, he agreed that, to him, if humanity on the other side of the world are not having their basic needs met, it is an ethical problem, in that the potential within them (for the betterment of the whole world) is being wasted, when people are allowed to die like flies.

However, he suggested that there is also an economic dimension. By giving these people too much of a helping hand, we would create competition to Western monopolies. So, we just need to pay enough lip service (to keep public opinion at bay), but not too much.

There may be some truth in this idea, though unpalatable.

When I studied the Marshall Plan for my GCSEs – where the USA gave lots of money for the reconstruction of Europe post-WW2 – I thought it was an act of kindness and compassion. An ethical act. But, in reality, it was necessary to raise the standard of living in Europe, just enough to create new markets for America’s up and coming consumer goods industry.

I realise that this somewhat contradicts the point made earlier, but what I am interested in is the basic principle, rather than narratives that are irrefutably true. (In any case, I doubt very much that is possible).

Some people say that climate change only climbed up the political agenda when it began to hit the profit margins of large, insurance companies; others would have you believe, it was down to the campaigning and struggle of [idealistic] individuals. As in everything, the truth is somewhere in the middle.

My point is, that if we want to make the world a better place, perhaps some savvy is necessary. Maybe rather than appealing to people’s ethics (which, it has been suggested, are purely a product of socialization, and therefore historically specific*), maybe we should appeal to their economic sense. Just as in ethics, helping others is mutually beneficial, because the sum total is that society as a whole improves, maybe it is possible to have win-win economics too…?

*This idea requires further investigation and will be tackled in a later post

One for the Bankers: A Conundrum

‘The Root of Evil, Avarice,
That damn’d ill-natur’d baneful Vice
Was Slave to Prodigality
That noble Sin; whilst Luxury
Employ#d a Million of the Poor,
And odious Pride a Million more:
Envy itself, and Vanity,
Were Ministers of Industry;
Their darling Folly, Fickleness,
In Diet, Furniture, and Dress
That strange ridic’lou Vice, was made
The very Wheel that turned the Trade.’

Mandeville, ‘The Fable of the Bees’ (Kaye’s edition), Vol. 1, p. 25

A History of Economic Thought

Economics is essentially the study of human behaivour and the interactions between individuals (and groups of individuals) within a society.

Thus, the economic theory that we come up with has at its foundations assumptions about the nature of humanity itself. Is humanity the “economic man” of self-interest and profit motive? Or are the values of humanity more altruistic, and socially formed?

The nature of humanity is a profoundly ethical and philosophical problem. Our perceptions about this come from all number of places: religion, politics, peer groups and social norms.

Personally, I adhere to the idea that set within each and every human being is ‘the kingdom of God’ or ‘Dharma’. And I use these two phrases – which come from different traditions, Christian and Bhuddist – interchangeably. If the “good seeds” that have the potential to create “good” human society, are contained within every individual, these “seeds” must necessarily be the same. That is, there is a set of core, universal values, that are not relative and moulded by externals. Of course, externals – religion, culture, politics – do mould our sense of values as we grow; however, I would argue that the process of maturatin into adulthood involves actively stripping away these layers of socialization, in order to look deeply, and discover -via intuition – the universal values of the kingdom.

Be that as it may, economists will build theorems upon assumption about the interactions of human beings, and those assumptions will be different based on an economists influences: cultural, philosophical and political.

That is why, in order to grasp not just the theorems of economics, but more importantly the policy prescriptions that they convey, we must have an understanding of a model’s philosophical underpinnings.

I find this link between the philosophy of economics (or history of economic thought) and schools of economic (and, in particular) economic development ideology fascinating; there is certainly value in further studying the link between policy prescriptions and their philosophical underpinnings.

And, though the subject is not central to university courses (which of course focus on the models and theorems), it had a long heritage. Many of the great economists appear to have started out as much as moral philosophers, as economists. John Maynard Keynes, for instance, wrote his Treatise on Probability, not as some fundamental mathematical concept, but to try and provide a critique of consequentialism: (that one ought to do what minimises evil and maximises good – a Benthamite concept).