Julie Nelson’s economic paper “Poisioning the well, or how Economic Theory Damages Moral Imagination” poses an interesting question: is there such a thing as ethical economics? Economic history and literature are embedded with an array of theories that have nothing to do with ethics or moral inclinations. For example, Adam Smith’s invisible hand insisted that the market itself would direct individual behaviour in the right direction.
“It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.” – Adam Smith
Even social economist Karl Marx asserted that specific economic conditions were required for the workers to ignite in social revolution, as opposed to any other justifiable need for change.
“The advance of industry, whose involuntary promoter is the bourgeoisie, replaces the isolation of the labourers, due to competition, by the revolutionary combination, due to association. The development of Modern Industry, therefore, cuts from under its feet the very foundation on which the bourgeoisie produces and appropriates products. What the bourgeoisie therefore produces, above all, are its own grave-diggers. Its fall and the victory of the proletariat are equally inevitable.” – Karl Marx
Nelson stresses this point throughout her article, conveying our ‘standard’ conformation to the idea of the ‘economic man’, who only deals in self-interest and individualism, is paramount to poisoning the well of moral imagination. The notion of rationality, market mechanisms, and impersonality in the market sphere are actors suppressing our inclinations to prioritise our affective moral response. Consequently, our dependence on these economic values has amounted to a ‘ubiquitous self-fulfilling prophecy’ adopted by markets, media and increasingly swaying public perception.
So, are we really stacking the deck in favour of individualism and self-interest?
During the holidays I went to watch for myself Jordan Belfort’s infamous biographical film ‘The Wolf of Wall Street’ in Xtreme Screen. Jordan Belfort, among other things, epitomises the harsh reality that economics relies on – greed, greed and greed. Was I sure that Jordan Belfort was a terrible guy whose disregard for human life was appalling? Was I sure that he was acting in an illegal manner and therefore everything he did was an affront to civilised society? Was I sure that I would never do anything like that? Yeah, I was sure of all these things. But at the same time Belfort’s life exuded an irrepressible allure, of wealth, money, drugs and power. And it turned out that all of these were things that I wanted and things that I considered skirting ethical principals and moral inclinations to get.
There are many critics of economics out there who will be quick to jump on this increasingly prevalent percepting of the market. Capitalism is seen as the harbourer of greed, brutality and immorality, an idea reinforced by the likes of Charles Ponzi, the Lehman Brothers or Jordan Belfort. But the like of Warren Buffett, Bill Gates or Melbourne’s own Simon Griffiths similarly refute this condemnation with their renowned ethical ventures.
So, maybe economics does endorse the prioritisation of profit maximisation and self-interest – or, perhaps we have lost sight of the broader social implications that economics often acknowledges but cannot address. It is true that economics has channels in which social concepts may be addressed within an economic context. Perhaps the simplest way this may be captured is through the concept of negative externalities that attempt to consider and quantify the wider social implications of economic decisions. However, ultimately even in the case of negative externalities, economic forces are the tools used to bring them to light – as highlighted by the Gillard Government’s introduction of a carbon tax in 2012. As a hugely unpopular economic policy that was swiftly disregarded by the Coalition, the carbon tax was essentially a social policy implemented using economic tools. Perhaps this was the source of its downfall; the economic framework encouraged the public to prioritise the economic ratifications rather than consider the social implications of the tax and consequently led to vehement opposition and condemnation (enough to displace a government).
Has economics disregarded social inclinations or have individuals? I don’t have the answer to this question. I readily admit that there is an abundance of ethically conscious individuals, organisations and institutions in the world. However, like Julia Nelson I agree that ethical imperatives that are not necessarily easily quantifiable or standard for the neoclassical ‘economic man’ need to become a clear part of all economic conversations. It is up to the public to make a decision that economic and ethical thought should be integrally linked.
Image by Gerd Altmann, https://pixabay.com/illustrations/face-man-money-euro-finance-76561/. Licence at https://pixabay.com/service/license/.