DOCSLIB.ORG

Economic Ethics – Discipline and Responsibilities

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Economic Ethics – Discipline and Responsibilities ECONOMIC ETHICS – DISCIPLINE AND RESPONSIBILITIES GEORGI FILIPOV Master in EU Program and projects, EU Integration Europe on the move – NGO in the field of education, youth and culture [email protected] Bulgaria CONTENTS 1. World Economic ethics 2. EU economic ethics 3. Bulgaria and economic ethics In his book “Ethics in Economics”, Jonathan B. Wight explains how important are ethical considerations in Economics’ life. Wight calls for a deeper examination of the origin and evolution of our moral norms. He argues that economic life relies on three interrelated ethical systems: outcome-based, duty- and rule-based, and virtue-based. Integrating contemporary theoretical and applied research on ethics within a historical framework. Some good examples for the meaning of Ethics in the Economic world are: the financial crisis in 2008, the moral limits of the markets, the innovative concept of ethical pluralism and all these lead to better understanding of human behavior and better policy decisions. In the present paper I tend to research on three main spheres of the Ethics in Economics: World Economic Ethics; EU and the Ethics in Economy and Bulgaria. The research will give positive and negative examples in the sphere and will create long lasting bridges for the Economies in the world to accept Ethics in their everyday environment. The essence of Economics involves individuals to make decisions within a social environment. Even the biggest villain still has social feelings. As, Adam Smith – the founder of Economics says: “Choices in economics are often framed by social relations and governed by different ethical norms and viewpoints”. Wight tends to determine the economic actors as homo economicus – socially isolated and morally disinterested egoists. Before we can proceed with the main part of the research it is vital to determine what Ethics mean: “The study of one’s proper interactions with others: it is the analyses of right and wrong.” Very important in Economics is to discover how humans interact in groups. Ethics provides the “institutional framework” within which economic activity unfolds. The biographies of great entrepreneurs show that they often hold complex motives and inspire others for a variety of reasons. Many technological breakthroughs of the 20th century, for example—relativity, computing, DNA, television, and the Internet—were driven by entrepreneurs with non-pecuniary motives. So how does the world acts when hears – Ethics in Economics? 1. World economic ethics Economists have long assumed that ‘value’ and ‘price’ are synonymous and interchangeable. The various contributions explore the different dimensions at the frontier between the rational and the moral in political economy, ethics and philosophy. “Do market prices reflect values? What is the relation between social norms and economic incentives? Do economic agents respond to ethical arguments?” In the declaration Manifesto for a Global Economic Ethic fundamental principles and values of a global economy are set forth, according to the Declaration toward a Global Ethic issued by the Parliament of World Religions. The Manifesto lays out the fundamental principles and values of a global economy. The goal of the manifesto is to start a dialog. It aims to address all stakeholder groups in the business world, to create a cultural and ethical framework across borders. According to the documents - all players should respect and protect the internationally accepted codes of conduct for business, and contribute to realizing them within their sphere of influence. The signatories commit themselves to be guided by both the letter and the spirit of this declaration in their day-to-day business decisions, actions, and conduct. The basic values for global economic activity are: non-violence and respect for life; justice and solidarity; honesty and tolerance and mutual respect and partnership. Intelligibility and fairness, data protection and education for all are among the main principles for Ethics in Economy. One of the main documents which lay the foundations in the field is called Manifesto of Global Economic Ethics. The Preamble of the documents cites: “For the globalization of economic activity to lead to universal and sustainable prosperity, all those who either take part in or are affected by economic activities are dependent on a values-based commercial exchange and cooperation. This is one of the fundamental lessons of today’s worldwide crisis of the financial and product markets. A global economic ethic – a common fundamental vision of what is legitimate, just, and fair – relies on moral principles and values that from time immemorial have been shared by all cultures and have been supported by common practical experience. Each one of us – in our diverse roles as entrepreneurs, investors, creditors, workers, consumers, and members of different interest groups in all countries – bears a common and essential responsibility, together with our political institutions and international organizations, to recognize and apply this kind of global economic ethic. The principles in this manifesto can be endorsed by all men and women with ethical convictions, whether these be religiously grounded or not. Every human being should be equal no matter his sex, age, religion, etc. and he possesses inalienable and untouchable dignity. According to article 1 of the Manifesto: “The ethical goal of sustainable economic action, as well as its social prerequisite, is the creation of a fundamental framework for sustainably fulfilling human beings’ basic needs so that they can live in dignity.” Humanity will benefit only when there is respect for the individual. Good should be promoted against all evil. What you do not wish to yourself, do not do to the others. The principle of humanity makes it possible to do global business: “To be authentically human in the spirit of our great religious and ethical traditions means that in public as well as in private life we must be concerned for others and ready to help. Every people, every race, every religion must show tolerance and respect – indeed high appreciation – for every other. Minorities – be they racial, ethnic, or religious – require protection and support by the majority.” Responsibility creates social policies. They create Business relations. Business it means – Economic activities. Economy in Ethics – World Business Ethics. Sustainable treatment of the natural environment on the part of all participants in economic life is an uppermost value-norm for economic activity. To be an authentic human being means – in the spirit of the great religious and ethical traditions – not misusing economic and political power in a ruthless struggle for domination. Such power is instead to be used in the service of all human beings. Self-interest and competition serve the development of productive capacity and the welfare of everyone involved in economic activity. Therefore, mutual respect, reasonable coordination of interests, and the will to conciliate and to show consideration must prevail. Articles 9 of the document states: “A major goal of every social and economic system that aims at equal opportunity, distributive justice, and solidarity is to overcome hunger and ignorance, poverty and inequality, throughout the world. Self-help and outside help, subsidiarity and solidarity, private and public engagement – all these are two sides of the same coin: they become concrete in private and public economic investments, but also in private and public initiatives to create institutions that serve to educate all segments of the population and to erect a comprehensive system of social security.” All of the above examples of world Ethics in Economy prove the importance of the matter in all relations between human beings and cultures in the nowadays world. The diversity of cultural and political convictions, as well as the diverse abilities of individuals and the diverse competencies of organizations, represents a potential source of global prosperity. Mutual esteem and partnership between all those involved – in particular, between men and women – is at once the prerequisite and the result of economic cooperation. Partnership is the main principle of Ethics in the economic decisions in the world. As a conclusion of this part we can state that all economic actors should respect the international rules in economic life. More business, mean more relations, more communication – more rules of economic culture = Ethics in Economy In this framework of the world Economy and Ethics – let’s see what the EU and its member states think on the topic? 2. EU economic ethics When the financial crisis made clear the extent of western banks' involvement in Eastern Europe, concerns surfaced about the effects on western economies, re- awakening perceptions of the East as unruly and unpredictable. In the East, meanwhile, suspicions were reinforced that the West was interested in the new EU member states only insofar as they provided an opportunity to expand existing markets. What are the ethical and political implications of a globalized economy in general, and of western companies' expansion in Eastern Europe in particular? What does the European integration project really mean, not only economically but also at a social and cultural level? In an interview: French president Emmanuel Macron did not mince words when speaking to technology magazine Wired about the upcoming disruption by artificial intelligence (AI): "In the US, it is entirely driven by the private sector, large
Load more

Recommended publications
  • Microeconomics Exam Review Chapters 8 Through 12, 16, 17 and 19
    MICROECONOMICS EXAM REVIEW CHAPTERS 8 THROUGH 12, 16, 17 AND 19 Key Terms and Concepts to Know CHAPTER 8 - PERFECT COMPETITION I. An Introduction to Perfect Competition A. Perfectly Competitive Market Structure: • Has many buyers and sellers. • Sells a commodity or standardized product. • Has buyers and sellers who are fully informed. • Has firms and resources that are freely mobile. • Perfectly competitive firm is a price taker; one firm has no control over price. B. Demand Under Perfect Competition: Horizontal line at the market price II. Short-Run Profit Maximization A. Total Revenue Minus Total Cost: The firm maximizes economic profit by finding the quantity at which total revenue exceeds total cost by the greatest amount. B. Marginal Revenue Equals Marginal Cost in Equilibrium • Marginal Revenue: The change in total revenue from selling another unit of output: • MR = ΔTR/Δq • In perfect competition, marginal revenue equals market price. • Market price = Marginal revenue = Average revenue • The firm increases output as long as marginal revenue exceeds marginal cost. • Golden rule of profit maximization. The firm maximizes profit by producing where marginal cost equals marginal revenue. C. Economic Profit in Short-Run: Because the marginal revenue curve is horizontal at the market price, it is also the firm’s demand curve. The firm can sell any quantity at this price. III. Minimizing Short-Run Losses The short run is defined as a period too short to allow existing firms to leave the industry. The following is a summary of short-run behavior: A. Fixed Costs and Minimizing Losses: If a firm shuts down, it must still pay fixed costs.
    [Show full text]
  • Adam Smith on Morality and Self- Interest*
    Adam Smith on Morality and Self- Interest* Affiliation Erasmus Institute for Philosophy and Economics, Erasmus University Rotterdam Keywords Virtue Ethics, Capitalism, Sympathy, Impartial Spectator, Prudence, Justice, Benevolence, Self-Command, Invisible Hand Abstract Adam Smith is respected as the father of contemporary economics for his work on systemizing classical economics as an independent field of study in The Wealth of Nations. But he was also a significant moral philosopher of the Scottish Enlightenment, with its characteristic concern for integrating sentiments and rationality. This article considers Adam Smith as a key moral philosopher of commercial society whose critical reflection upon the particular ethical challenges posed by the new pressures and possibilities of commercial society remains relevant today. The discussion has three parts. First I address the artificial separation between self-interest and morality often attributed to Smith, in which his work on economics is stripped of its ethical context. Second I outline Smith’s ethical approach to economics, focusing on his vigorous but qualified defence of commercial society for its contributions to prosperity, justice, and freedom. Third I outline Smith’s moral philosophy proper as combining a naturalistic account of moral psychology with a virtue ethics based on propriety in commercial society. Introduction These days Adam Smith is most familiar to us as an economist, and specifically as the defender of the famous Invisible Hand of free-market economics, wherein the private self- interested actions of private individuals, mediated through free markets, generate results that are good for all. The market-system comprehends the true level of demand for any good and provides the appropriate incentives – profits – for producers to adjust their output to match.
    [Show full text]
  • Utility, Ethics and Behavior
    Journal of Academic and Business Ethics Utility, ethics and behavior Marcela Parada-Contzen Universidad de Concepcion-Chile Jose R. Parada-Daza Universidad de Concepcion-Chile ABSTRACT This essay has the following hypothesis as its foundation: a new function taking a more global perspective can be developed based on the analytical economic conception of utility. However, this new hypothesis/perspective considers that individuals are driven to act by economic as well as social, religious, ethical, and other reasons. Thus, the crux of this exposition is an analysis of the concept of utility and its application towards daily acts. The essay also deals with the philosophical aspects of utility and its paradoxes and analyzes utility from the perspective of a biological being. This analysis is broader and includes the simultaneous actions of an economic human and a complex human. Keyword: Utility function, Emotional well-being, wealth, ethics, “homo economicus”, weights. Utility, ethics and behavior, Page 1 Journal of Academic and Business Ethics INTRODUCTION The study of what motivates individual acts, especially regarding economic decisions, offers an intellectual challenge for the human sciences. In economics, this matter has been studied using a methodology of normative analysis known as the utility function, in which people seek to obtain the maximum degree of satisfaction. Herein, utility is what each person obtains from a certain level of wealth or consumption. For those not instructed in economics, this idea creates distrust and is blamed for generating a society of individualistic and insatiable beings. Grounds for both supporting and distrusting this approach have been given. The utility function is an intellectual device for explaining personal economic behavior.
    [Show full text]
  • Marxist Economics: How Capitalism Works, and How It Doesn't
    MARXIST ECONOMICS: HOW CAPITALISM WORKS, ANO HOW IT DOESN'T 49 Another reason, however, was that he wanted to show how the appear- ance of "equal exchange" of commodities in the market camouflaged ~ , inequality and exploitation. At its most superficial level, capitalism can ' V be described as a system in which production of commodities for the market becomes the dominant form. The problem for most economic analyses is that they don't get beyond th?s level. C~apter Four Commodities, Marx argued, have a dual character, having both "use value" and "exchange value." Like all products of human labor, they have Marxist Economics: use values, that is, they possess some useful quality for the individual or society in question. The commodity could be something that could be directly consumed, like food, or it could be a tool, like a spear or a ham­ How Capitalism Works, mer. A commodity must be useful to some potential buyer-it must have use value-or it cannot be sold. Yet it also has an exchange value, that is, and How It Doesn't it can exchange for other commodities in particular proportions. Com­ modities, however, are clearly not exchanged according to their degree of usefulness. On a scale of survival, food is more important than cars, but or most people, economics is a mystery better left unsolved. Econo­ that's not how their relative prices are set. Nor is weight a measure. I can't mists are viewed alternatively as geniuses or snake oil salesmen. exchange a pound of wheat for a pound of silver.
    [Show full text]
  • Adam Smith's Contribution to Business Ethics, Then And
    1 Running head: Smith's contribution to business ethics, then and now Adam Smith’s Contribution to Business Ethics, Then and Now Michael Gonin University of Lausanne Geopolis - 5132 Quartier Dorigny 1015 Lausanne Switzerland [email protected] +41 21 692 36 79 accepted for publication in Journal of Business Ethics Acknowledgement: This paper has been developed while the author had a PostDoc position within the University Research Priority Program Ethics at the University of Zurich. The feedbacks provided in the business ethics brownbags led by Markus Huppenbauer, as well as the insightful remarks from Guido Palzzo at the University of Lausanne, were precious contributions toward the final version of this article. 2 ABSTRACT Smith defines the business enterprise primarily as the endeavor of an individual who remains fully embedded in the broader society and subject to its moral demands. For him, the conceptions of the local community and its normative framework, of the enterprise, and of the individuals within it need to be aligned with each other and developed together. Over time, four processes have however led to a widening gap between the business world and the local community. These are (1) the dissemination of the corporate model, (2) the transformation of the entrepreneurial role toward an agency role, (3) changes in the ownership structure, and (4) changes in the relation to the local community. This article presents Smith's integrative conception of business and its contributions to the development of integrative theories of organizations and of business-society relations in the 21st century. Among others, it discusses the necessity to develop a normative-relational dimension of organizations that addresses the relations between the organization, its members (e.g., owners and managers), and the normative framework of the local community.
    [Show full text]
  • Last of the Schoolmen Natural Law and Social Justice in Karl Marx
    chapter 8 Last of the Schoolmen Natural Law and Social Justice in Karl Marx George E. McCarthy In this essay, we will examine the influence of natural law theory on the early and later writings of Karl Marx in order to show the continuity between his nineteenth-century critical social theory and the classical and medieval tradi- tions. In his 1926 work, Religion and the Rise of Capitalism, Richard Tawney wrote in a relatively obscure and largely forgotten comment that Marx was the “last of the Schoolmen,”1 that is, last of the medieval natural law theorists fol- lowing in the footsteps from the twelfth to the fourteenth century of Pierre 1 Richard Tawney, Religion and the Rise of Capitalism (London: J. Murray, 1927). By character- izing Marx as the “last of the Schoolmen,” Tawney was referring to Thomas Aquinas’ labor theory of value and the continuity of traditions between Marx and neo-Aristotelian medieval Scholasticism. Tawney argued that Marx was the end of a long tradition of theorists that included the 13th-century theologian Thomas Aquinas, the 14th-century scholastic Henry of Langenstein, and the 16th-century Protestant reformer Martin Luther who made the point that the appropriate and “reasonable remuneration” of wages for a worker or merchant should be based on their labor and contribution to the common good. “The medieval theorist condemned as a sin precisely that effort to achieve a continuous and unlimited increase in material wealth which modern societies applaud as a quality, and the vices for which he reserved his most merciless denunciations were the more refined and subtle of the economic virtues” (pp.
    [Show full text]
  • Demand Composition and the Strength of Recoveries†
    Demand Composition and the Strength of Recoveriesy Martin Beraja Christian K. Wolf MIT & NBER MIT & NBER September 17, 2021 Abstract: We argue that recoveries from demand-driven recessions with ex- penditure cuts concentrated in services or non-durables will tend to be weaker than recoveries from recessions more biased towards durables. Intuitively, the smaller the bias towards more durable goods, the less the recovery is buffeted by pent-up demand. We show that, in a standard multi-sector business-cycle model, this prediction holds if and only if, following an aggregate demand shock to all categories of spending (e.g., a monetary shock), expenditure on more durable goods reverts back faster. This testable condition receives ample support in U.S. data. We then use (i) a semi-structural shift-share and (ii) a structural model to quantify this effect of varying demand composition on recovery dynamics, and find it to be large. We also discuss implications for optimal stabilization policy. Keywords: durables, services, demand recessions, pent-up demand, shift-share design, recov- ery dynamics, COVID-19. JEL codes: E32, E52 yEmail: [email protected] and [email protected]. We received helpful comments from George-Marios Angeletos, Gadi Barlevy, Florin Bilbiie, Ricardo Caballero, Lawrence Christiano, Martin Eichenbaum, Fran¸coisGourio, Basile Grassi, Erik Hurst, Greg Kaplan, Andrea Lanteri, Jennifer La'O, Alisdair McKay, Simon Mongey, Ernesto Pasten, Matt Rognlie, Alp Simsek, Ludwig Straub, Silvana Tenreyro, Nicholas Tra- chter, Gianluca Violante, Iv´anWerning, Johannes Wieland (our discussant), Tom Winberry, Nathan Zorzi and seminar participants at various venues, and we thank Isabel Di Tella for outstanding research assistance.
    [Show full text]
  • Chapter 9 Keynesian Models of Aggregate Demand
    Economics 314 Coursebook, 2010 Jeffrey Parker 9 KEYNESIAN MODELS OF AGGREGATE DEMAND Chapter 9 Contents A. Topics and Tools ............................................................................ 2 B. Comparative-Static Analysis of the Closed-Economy Basic Keynesian Model 3 Expenditure equilibrium and the IS curve ....................................................................... 4 Expenditures and the IS curve ....................................................................................... 5 Money demand and monetary policy.............................................................................. 7 The LM curve .............................................................................................................. 8 The MP curve .............................................................................................................. 9 Aggregate demand and aggregate supply ......................................................................... 9 C. Some Simple Aggregate-Supply Models ............................................... 10 Case 1: Nominal-wage stickiness .................................................................................. 11 Case 2: Inflation stickiness with competitive labor market ............................................... 12 Case 3: Inflation stickiness with labor-market imperfections ............................................ 13 Case 4: Sticky wages with imperfect competition ............................................................ 13 D. The Open Economy .......................................................................
    [Show full text]
  • 'Informed Consent'? Household Survey Ethics in Development Research
    What do you mean by ‘informed consent’? Household survey ethics in development research Anna Josephson Melinda Smale Assistant Professor Faculty Member Dept. of Agricultural and Resource Economics Dept. of Ag., Food, and Resource Economics University of Arizona Michigan State University [email protected] [email protected] The ethical conduct of research depends on the informed consent of research participants. Across North America, Institutional Review Boards (IRBs) attempt to guarantee that ethical standards are met and that researchers are familiar with the process of obtaining informed consent. However, incongruities exist across regions, particularly in the developing world. In this paper, we consider informed consent, as practiced by agricultural and applied economists. We examine informed consent material on IRB websites of land grant universities in the United States, as well as at the centers of the CGIAR. We also undertake a survey of researchers at universities to evaluate actual practice of informed consent practices. IRB regulations are clear but heterogeneous, with some universities and CGIAR centers without any ethical review process. Standards often emphasize process, rather than outcome. The lack of IRBs in some contexts and the particulars of the principles employed may fail to protect research participants. JEL Codes: A11, B41, C83, Q10 Keywords: ethics, informed consent, institutional review board, household survey, role of economists Thanks to Doug Gollin, William Masters, Jeffrey Michler, and Frank Place. 1 1. Introduction The ethical conduct of research relies on the informed consent of research participants. As such, much effort goes to ensure informed consent is practiced in survey work. Across North America, Institutional Review Boards (IRB)1 guarantee that relevant expectations are followed and that researchers are familiar with the process of obtaining informed consent.
    [Show full text]
  • Governmental Intervention and Its Impact on Growth, Economic Development, and Technology in OECD Countries
    sustainability Article Governmental Intervention and Its Impact on Growth, Economic Development, and Technology in OECD Countries Arik Sadeh 1 , Claudia Florina Radu 2, Cristina Feniser 3 and Andrei Bor¸sa 4,* 1 HIT, Holon Institute of Technology, Faculty of Technology Management, Holon 5810201, Israel; [email protected] 2 Faculty of Economic Sciences, Informatics and Engineering, Vasile Goldi¸sWestern University of Arad, 310025 Arad, Romania; [email protected] 3 Department of Management and Economic Engineering, Technical University of Cluj Napoca, 28 Memorandumului St., 400114 Cluj-Napoca, Romania; [email protected] 4 Department of Engineering, Faculty of Food Science and Technology, University of Agricultural Sciences and Veterinary Medicine Cluj-Napoca, 400372 Cluj-Napoca, Romania * Correspondence: [email protected]; Tel.: +04-0740166493 Abstract: The governments’ intervention in the economy impacts technological performance and sustainability. This role has become even more critical due to the COVID-19 situation and in the context of the continuous increase in resource consumption, which requires finding alternative solutions. We provide a comprehensive literature review about the state’s economic functions, redistribution of resources in society, and the role of state intervention in sustainability-related issues, giving a full description of the opinions and concepts primarily of economists. We propose to study governments’ interventions in their economy using budgetary resources on public expenditure, highlighting the leading factors in government policies using a suggested intervention index. The state’s intervention policy’s stability is measured via the intervention index’s partial autocorrelation function over the years. We collected data from OECD data sets and conducted a descriptive statistical analysis followed by panel data analysis.
    [Show full text]
  • Why Economics Needs Ethical Theory
    Why economics needs ethical theory by John Broome, University of Oxford In Arguments for a Better World: Essays in Honour of Amartya Sen. Volume 1 edited by Kaushik Basu and Ravi Kanbur, Oxford University Press, 2009, pp. 7-14 I Economics is a branch of ethics. At least, much of it is. Part of economics is pure science; it aims to account for the behavior of people and institutions in the economic arena. But more than most scientists, economists have their eye on practical applications. Most of them are interested in economic science because they are interested in finding better ways of running the economy, or of structuring the economic system, or of intervening or not intervening in the economy. All of that practical part of economics is a branch of ethics. Why? First, it is about how things ought to be done, which means it is normative. (By ‘normative’ I mean concerned with what ought to be done.) But merely being normative is not necessarily being ethical. You ought to clean your car occasionally. That is a normative requirement on you, but it is not an ethical requirement. It is not universally agreed just how the ethical is to be distinguished from the rest of the normative. But in contexts that involve conflicts between the interests of different people, normative claims are certainly ethical, and this includes virtually all normative claims that are made in economics. For example, to claim that the interest rate ought to go up raises a conflict of interest between lenders, who stand to gain by an increase, and borrowers, who stand to lose.
    [Show full text]
  • Introduction to Macroeconomics TOPIC 2: the Goods Market
    Introduction to Macroeconomics TOPIC 2: The Goods Market Anna¨ıgMorin CBS - Department of Economics August 2013 Introduction to Macroeconomics TOPIC 2: Goods market, IS curve Goods market Road map: 1. Demand for goods 1.1. Components 1.1.1. Consumption 1.1.2. Investment 1.1.3. Government spending 2. Equilibrium in the goods market 3. Changes of the equilibrium Introduction to Macroeconomics TOPIC 2: Goods market, IS curve 1.1. Demand for goods - Components What are the main component of the demand for domestically produced goods? Consumption C: all goods and services purchased by consumers Investment I: purchase of new capital goods by firms or households (machines, buildings, houses..) (6= financial investment) Government spending G: all goods and services purchased by federal, state and local governments Exports X: all goods and services purchased by foreign agents - Imports M: demand for foreign goods and services should be subtracted from the 3 first elements Introduction to Macroeconomics TOPIC 2: Goods market, IS curve 1.1. Demand for goods - Components Demand for goods = Z ≡ C + I + G + X − M This equation is an identity. We have this relation by definition. Introduction to Macroeconomics TOPIC 2: Goods market, IS curve 1.1. Demand for goods - Components Assumption 1: we are in closed economy: X=M=0 (we will relax it later on) Demand for goods = Z ≡ C + I + G Introduction to Macroeconomics TOPIC 2: Goods market, IS curve 1.1.1. Demand for goods - Consumption Consumption: Consumption increases with the disposable income YD = Y − T Reasonable assumption: C = c0 + c1YD the parameter c0 represents what people would consume if their disposable income were equal to zero.
    [Show full text]