I mentioned "ethics" in question #3 in referring to Keynes (specifically he raises the issue in the last chapter of his General Theory of Employment, Interest, and Money) but I will try to show that much of economics relates to ethics, since (1) all our actions, including our economic actions, have ethical components; (2) economists, when they are doing economic philosophy, as opposed to economic science or psychology, tend to give ethical kinds of arguments⁽¹⁾ -- as do businesses and unions, labor and management, and politicians or government officials when they are arguing for particular laws or policies or debating wage/benefit proposals; (3) many economic principles and policies become much clearer, and their benefits and limitations less obscured, when examined in the light of ethical ideas and theories instead of in purely financial and scientific terms or objectives; and (4) social/economic systems function within ethical, social, and cultural contexts, often prospering or working harmoniously only insofar as values and behaviors are commonly accepted, expected, assured, and reasonably able to be relied upon or taken for granted⁽²⁾. 

Economic policies deal ultimately with values and choices about labor and lifestyles; and ethics is the attempt to understand values, and to understand better and worse choices and actions. There is no way to eliminate ethical considerations from economic policy without risking developing simply a consistent and self-regulating economic system whose ends may have no relevance to human needs and goals -- an economic system that makes humans mechanically adapt to it rather than one that recognizes and reflects, and tries to realize and respond to, human needs and humane values. Efficiency toward a wrong goal is not the sort of efficiency to be prized. 

Economics is both a matter of science and of ethics. It is a matter of science insofar as it studies and understands the mechanisms (causes and consequences, and their effectiveness) of production and distribution of goods and services. It is a matter of ethics insofar as it studies and understands the fairness and overall (not just monetary or financial) justification of the (methods of) production and distribution of the benefits and burdens of a group, society, community, culture, country, region, or the world at large. 

Presently economics is considered primarily a science, and its ethical component is dealt with as "political economy" or "political philosophy", but I think this is an error because I think (1) political decisions themselves are subject to moral scrutiny, and (2) political decisions are often made without particularly deep or philosophical understanding of the implications and principles that are really involved. In some democracies, for example, a majority may vote for its own self-interest on economic matters, though that may not be the fairest or most justifiable decision that could have been reached; hence, the phrase "the tyranny of the majority". 

Or legislative mutual back-scratching, or intimidating political power plays by influential legislators, may bring about policy that is not even in the best interest of the majority, but only of certain legislators. And, further, at the shallow level that political debate and news media reporting tend to float, important decisions, when not based on sheer self-interest and greed, are often based on unreasonable, unreliable, unexamined, and, often, erroneous ideas of what policy or law is to the greatest benefit, or what has the greatest justification or fairness. I think it would be difficult to argue that every majority political decision in some country is the most reasonably virtuous or ethically justified decision for everyone, or even the wisest or most advantageous pragmatic one for those who voted for it. One needs to be able to say more about an economic policy than that it had particular financial consequences and that it was politically popular. One needs also to be able to talk about its fairness and about its non-monetary consequences and about its overall justification or lack of justification. All this will be clearer as I discuss particular issues. However, I do want to make a few general comments about ethics here.

First, just some verbal distinctions: I tend to use the words "ethical" and "moral" interchangeably without meaning to imply any particular distinction between them. I take one sense of "ethics" to be synonymous with "moral philosophy" -- the attempt to rationally and reflectively understand all the issues involved with right and wrong, good and bad, value, etc. And, unless the context were to clearly imply otherwise, I do not mean by either "ethics" or "morality" conventional or social morality, or religious morality, but rational, reflective morality. Nor do I mean by saying that something is right or that it is ethical that it simply meets the standards or prescribed practices of any particular group, religious or otherwise. 

Also unless the context were clearly to imply otherwise, I do not mean by either "ethical" or "moral" that something is "right" but merely that it involves issues of right and wrong or good and bad. For example, if I want to give "ethical arguments" for a particular position, that means I will be giving arguments involving issues of ethics, not necessarily giving saintly arguments. In this usage, to say something is a matter of ethics is not to claim it is right, but to claim it involves issues of right and wrong. 

These are important points, because what happens all too often is that a particular ethical argument against some particular economic or business philosophy, practice, or policy will be refuted, or there will not be agreement about what the correct ethical position ought to be regarding it, and the mistaken conclusion is then drawn that ethics has no place in the matter or that the issue is better considered apart from any considerations of ethics. However, it does not follow from there being ethical disagreements or arguably mistaken ethical proposals about particular issues that those issues are not a matter of ethics at all nor that ethics need not be taken into account in evaluating them.

There is another usage of "ethical" and "unethical" that one needs to be very careful about. To say "Jones is unethical" can mean either that "Jones does the wrong thing" or that "Jones never takes ethics into consideration." Those are two very different kinds of claims made by using the same words. To imply or infer that someone is totally unprincipled just because they make what you believe to be wrong choices or because they believe in principles or ideas that you think are mistaken, is unreasonable and unfair. People may, of course, be unprincipled and do wrong things, but doing the wrong thing, or the thing someone else believes is wrong, does not by itself indicate it was done with lack of scruple or without careful consideration and concern for doing what is right. I find it is far more helpful in most discussion about matters of policy and law to keep the topic to what is right or wrong and to what ought to be done or ought not to be done then to try to infer people's moral character from their moral positions and to castigate their character perhaps simply because you disagree with their moral views. Determining someone's moral character has to take into consideration more than just their conclusions about what is right or wrong.

Many people incorrectly believe that ethics involves only choices that are difficult to decide or actions that are difficult to do; that is, (1) decisions about controversial issues -- such as questions about abortion, capital punishment, war, freedom, euthanasia, civil disobedience, sex, etc. -- or (2) decisions that require sacrifice, where one feels obligated to do something one does not want to do or that goes against one's own self interest, such as when one turns in a large sum of cash he has found, decides against sex for humane or ethical reasons, though in the heat of passion with a desirable and willing partner, reports his rather high golf score accurately, behaves graciously in a disheartening losing effort, etc.

Ethics is much broader than this though, since many right things to do are also rewarding, fulfilling, fun, or simply painless (attributes which actually contribute to their being right, barring significant contrary attributes), and since many ethical actions are not difficult to decide at all. Most people most of the time have no desire to murder anyone or burglarize homes, so though it is right that they do not go around murdering people and burglarizing homes, it is not a difficult question to decide (or one that is even pondered). Nor is it difficult to refrain from these actions. Similarly it is not generally difficult to hug your children or your spouse affectionately even though that is a good thing. Nor is it difficult normally to eat good tasting food that is also nutritious when you are hungry and the food is available to you. Or consider paid vacations. These are times that companies pay their employees not to come to work, often insisting that overzealous workers ought to take the time off and go have a good time. (And often not just so that they can come back and work even harder, but because they have "earned" the right to have a good time and not worry about work.) Learning good "manners" as a child is often hard work; but once acquired, those manners may be second nature. That does not make them any less right. Many "right" or ethical practices become institutionalized or are so normal a part of society that little thought, and no agony, is accorded them. 

Or consider the following case of simple kindness: suppose a pleasant stranger comes across town to your office because he has mistakenly been referred to you for services. You know that he needs to go back across town to a different office, but instead of just telling him that, you also call that office to make certain that is where he needs to go and that they will be able to help him if he goes there shortly, asking them to look for him. Doing that may make you feel very good, and it certainly was not difficult to decide or to do; yet it is a very good thing to do, better than simply sending the person futilely back across town or even just making him go find a pay phone somewhere to verify the information for himself. 

Being good or doing right does not always demand difficult deliberation or self-sacrifice. A person who enjoys doing good things is not somehow, because of his joy, being less ethical than someone who does those same good things only with long contemplation and sheer will-power. Both are doing the right thing; one is simply to be commended in addition for his efforts and determination; the other for his natural kindness.

I view all our actions as being ethical in one way or another; any action is either right or wrong, obligatory or not, over-and-above the call of duty or not. It is simply that many actions are so obviously right that it might seem strange to speak of them that way, since no one would have questioned otherwise. For example, an adult at home about to pour himself a glass of juice from the refrigerator might reach up to the cupboard for any of a number of glasses. Choosing a glass may be a matter of whim, personal preference, or pure chance; and none of the choices would in general be wrong. Any choice is an o.k. or right choice, but it would be strange for someone to tell him that, making it sound as if there were some question or as if he needed praise for picking that glass. (With children, of course, there may be some glasses they should not reach for or use because they are likely to break them or spill juice using them or get too much juice, etc. So saying something to them about which glass they chose or ought to choose may be appropriate.) Similarly which shoe one ought to tie first is not an issue; either one is right to tie first. Any of a number of options in many cases is (equally) right; and that is so obvious that one need not agonize over it, think about it, or comment on it. For example, it might be wrong to eat your dessert first at dinner (because it ruins your appetite on less valuable calories than the food it keeps you from eating), but there is no wrong choice in deciding from which part of your main course to take the first bite. One person may begin with his fish, another might take the first bite from his potatoes, a third might begin with the vegetable, or the jello, or whatever. Any of these foods is right to begin with, though adults don't generally think about it that way (because it is so obvious), and it would be strange to commend anyone for his choice of first bites.

There are, of course, difficult ethical choices many times. (1) Some choices are difficult because we do not really know enough facts in the matter. For example, should you punish your child for a particular wrong action in order to get him to really understand and appreciate the seriousness of his deed and to make certain he does not repeat it. Or is punishment unnecessary and unwarranted. Or will punishment in the particular case be more destructive than constructive. Sometimes it is difficult to know what one ought to do, but the difficulty is not with ethical matters, but with factual ones --trying to know what the child's understanding is and whether it needs further improving, and what would best help it be improved. (2) Some cases are difficult because what we think we ought to do goes against what we want or desire to do. Having to share something you really do not want to share. Turning in money that you found or returning a check that was sent to you in error or giving back the excess change that a clerk gave you unknowingly by mistake. Refraining from some available sex that you know would be hurtful in the long run but is especially tempting at the time. Staying on a diet when you are starving and the food you want is right there in the refrigerator. Becoming a front-line soldier in a just war of self-defense. (3) Some choices are difficult because there are good reasons for doing one thing and also good reasons for doing the opposite. Some cases are complex enough that depending on which features of them you look at, the right choice seems to change. These latter cases are perhaps particularly difficult when society is badly divided in the way people view the action in question and yet has to make some sort of law or group choice about what is right. This is made even more difficult by the nature of much public debate that is more posturing than rational, more shallow than reflective, more concerned with victory than with reaching understanding and satisfactory resolution or just accommodation, more concerned with rhetoric (playing to the news media) than with substance. Such debate does not genuinely try to resolve conflicts but tries instead merely to ignore the merits of the opponents' sides. (4) Some cases also genuinely bring into conflict two different cherished ethical principles that we believe are both right. For example, issues of invasion of privacy, or restriction of certain kinds of speech or activities, in order to try to prevent public harm; or questions about civil disobedience and the morality of obeying or disobeying an arguably bad law that is hard to raise enough consciousness about to get changed.

Fortunately, a great many ethical choices are easy to make, and a great many that seem difficult, turn out, with patient examination and careful analysis, not to be. They divide into individual components that are easy to understand and weigh against each other. Even those that are difficult, often can be resolved in a way that accommodates differing views, though the accommodation may not have been one that would have been initially apparent. I use the word accommodation rather than compromise, because I believe that many times both parties (in an ethical problem that involves two parties) can be perfectly satisfied without having to surrender anything important. For example, as a photographer I sometimes take pictures of families that include teenage boys who invariably do not want to smile, but whose mothers want them to. There are a number of ways normally to resolve this problem. First, the teenager might be shown to understand that he does not need to grin like a fool in order to have a pleasant expression that will please his mother. Usually he is under the false impression that she wants him to look like the Cheshire cat, and that is not normally true. Second, because of the way I do the pictures and the kinds of packages I offer, it only costs me a dollar or two more to take a few extra pictures of them where some are the way the teenager wants it and some are the way his mother wants it -- so they can divide them up among themselves according to their own tastes. Further, once the pictures are ready, normally, the teenager will see that the really serious pictures are not as flattering to him as he thought they would be -- that they are too angry or unintelligent looking; and the mother will see any huge grins look too silly, so that the soft, pleasant looks turn out to be the favorites of both. By getting a picture everyone likes, I can, of course, sell more than if I get pictures none of them like or can agree on, so everyone comes out ahead. And even if I fail, and they argue acrimoniously about the pictures later, at least it prevents the acrimony from occurring before the pictures and thus virtually preventing any chance of getting a pleasant one, or one any of them like. Whatever the merits of emotionally heated disagreement, making people better subjects for a family photograph are not generally one of them. Accommodating parents and children in this kind of situation does not necessarily mean having them compromise, since none of them has to give up anything.

In another case, one time I took group and individual pictures of a family and gave them the roll of film, for a fee for the shooting. In this kind of circumstance I guarantee the photography as long as they use the labs I direct them to. Unfortunately in this instance, the initial lab tried to do this family an extra favor by numbering the pictures for them, but accidentally mis-numbered them. When the family had a great many enlargements made at the other lab, a significant number of them were the wrong pictures. The second lab was totally blameless; they simply enlarged the negatives according to the numbers they were given. I took the responsibility, though I felt not at all to blame. The lab that numbered them was primarily at fault, though they and I also felt the family should have noticed that some of the pictures did not line up with the proof numbers, since some of their group photos had negatives that were clearly individual portraits. But since the family did not notice that and had spent a significant amount of money at the second lab, was very nice in explaining what had gone wrong and how disappointed they were, and would probably not have liked to be told it was their tough luck, I paid the second lab to reprint the correct pictures for them, and worked out the following accommodating deal with the first lab, by which I think no one lost anything. The first lab recognized their mistake but did not want to be on the hook for the amount of money wasted on the set of enlargements. Nor did I think they should be. Since they were also a camera store, they and I agreed for them to sell me, at a price that was either a small markup or none at all, some equipment that I had wanted but never would have bought at full price. The total discount I received on the equipment was more than what I paid for the re-printed pictures. They lost no money (though they had to "work off" their mistake -- but with easy "work" --simply ordering equipment for me), the family lost no money, I got equipment I had wanted but otherwise would not have bought, or could not have purchased so inexpensively. Further, that first lab/camera store and I have had a very good relationship over the years since the incident. I believe no one lost anything in this resolution to the problem. And no one gained anything that was unfair. There was not compromise, but accommodation. 

I believe that economic choices, as all choices about our actions, are also ethical choices -- choices that are morally right or wrong. Some of them are easy to decide. In some cases any of the options are so obviously equally right that one knows that without having to think about it: at an amusement park, should a child spend his last ticket on one ride or another. Ethically it does not matter which ride, because there is no moral difference between the two. The options are equally (morally) right. Of course, a more obviously moral choice may be called for if one is trying to decide whether he should use the last ticket himself or give it to his little brother. But suppose the little brother says: "That's o.k., I still have a ticket left too." The older child may feel relieved and eagerly look forward to his last ride, not because he now does not have to make a moral choice, but because this moral choice is so easy to make, since it would seem irrationally self-sacrificing to give your little brother your last ticket for him to have his last ride and your last ride too. 

Obviously by the way different supposedly "special interests" groups press for their "side" on controversial economic legislation, there are some economic issues that are more difficult to decide. Many of these have to do with issues of fair treatment and of maximum overall benefit, such as which group of people it might be best or most productive and fairest to tax if taxes need to be raised, or whose taxes might most fairly and justifiably be lowered if a tax cut is workable. Similarly, issues about welfare programs, health insurance programs, or programs such as social security, which are not welfare programs but which are also not fully self-supporting by the previous contributions of those now collecting from it. Or issues about trade protection, government subsidies, fair labor practices, etc.

However, I hope to make clear in this book that many of these problems are made difficult in the first place, or are made more difficult than necessary, by our losing sight of what economics and economic policy is supposed to do. They are also made difficult by hidden assumptions that are not accurate or that do not imply what we think they do. I will argue that, if the purpose or merit of an economic system is kept clearly in mind, and assumptions and their implications are clearly understood, many problems we now have would either readily be solved or lend themselves to being much more easily solved than they now can be. I do not necessarily propose to solve these problems here, particularly in specific practical ways, but to lay some philosophical groundwork for people who are much more astute about specific business and government workings than I, and who are much more astute about implementing the practical means to attain the goals that philosophical analysis might unveil as most useful and worthy.

1. Milton and Rose Friedman point out for example in Free to Choose (pp. 95-96) the unfairness of the way benefits are paid to Social Security recipients. And on page 97, they argue that, though ostensibly it is established to benefit the poor, the Social Security system does not help the poor as much as it helps those better off because the poor tend to pay taxes into it for more years and receive benefits for fewer years than the rich. The Friedman's deem this a "perverse" effect, but that is clearly meant sarcastically, for they are essentially arguing that this is most unfair. And fairness is a moral criteria, not a scientific one. (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2. For example, because it is impossible to spell out everything in any contract or to anticipate in advance ways that people might behave inappropriately, there have to be certain assumptions that contracted services will be carried out in some reasonable way - e.g., that your minister won't show up to perform your wedding drunk or in a garish plaid suit, that s/he won't say mean things at your wedding, or tell the congregation you are unlikely to succeed in your marriage. No contract or agreement tries to spell out every possible inappropriate behavior because that would be impossible to do, and is usually justifiably considered unnecessary. But contracts only work because there exists underlying assumptions and shared understanding about appropriate behaviors. Where such understandings are not commonly shared, serious difficulties can, and do, occur.

This same idea applies to the need for laws. In a homogeneous society with common tastes and mores, fewer laws are needed because there is more common underlying acceptance about what behaviors are right or not. Legislatures and governing boards of all kinds don't tend to try to spell out every possible violation, but to make laws prohibiting those things that either have happened in the past that were offensive or that had bad consequences, or that they know are likely to happen if people are left to their own devices. In a society or culture where no one expects certain kinds of behavior ever to occur, they are not likely to (think to) outlaw it.

This will have importance later in the book, because a free market society functions better socially where there are shared values about what services and products are proper to trade and how it is proper to trade them.  (Return to text.)