Introduction
Ethics can be said to be our understanding of what is morally wrong/bad or morally right/bad as shaped by our cultural, religious, and social backgrounds. There exist various categories of ethics probably in discipline or profession. Common ones are in professions where we hear of business ethics, medical ethics, teaching ethics, etc. on rare occasions do we hear on economic ethics or rather the application of ethics in economic activities. Though it is not much discussed as professional ethics it plays a great role in shaping our economic lives and most relevant during this period where the world is facing an economic slowdown. This paper thus attempts to show the place of ethics in the modern economy.
Discussion
Many factors have been attributed to the current situation where the economic hardships have trickled down from big corporations to the ordinary man who has to contend with the high prices and the general upsurge in the cost of living. Are these results of moral misconduct by one or a number of stakeholders in the economy? While many economic minds will have ready-at-hand formulas and cyclical explanations of such trends like this one, the commoner may fail to see the link. To help us in understanding the link between economics and ethics, Wilber (1998) introduces us to three ways in which ethics and economics interact.
The first way is through economists themselves who have to make particular ethical considerations affecting economic policies that apply to everyone. The other way is through economic actors which the author identifies as consumers, workers, and business owners who have to comply with certain ethical values that influence their behavior. The last but not the least way is through economic institutions and policies.
Ethics by economists was first introduced by one of the greatest economists John Keynes who divided economics into three general categories. These categories are normative, positive, and practical. Normative economics deal with what the economic situation as it ought to be in order to improve the welfare of the people. It is therefore guided by ethics in considering what the society considers good or morally right for the society. Unfortunately, society rarely achieves this. Instead of having the wish for the economic situation which in our modern society we wish to have through equal distribution of wealth and resources we have a case of positive economics which is simply the real situation on the ground. In our modern economy in the US and the world, we have a very unequal distribution of resources and opportunities. With ethical ideas in mind to bring into reality, economists take precautionary or put in place conducive measures or policies to facilitate it which is what Keynes identified as the third branch of economics (Jameson and Dutt, 2001).
Economic actors on the other hand have also an important role to play in ensuring ethical values in economics. With the players in this being business owners and consumers, the modern economy draws a lot of insight when looked at in this light. This is because there economic and wealth imbalances between business owners and consumers magnify the presence or lack of ethics in economics. According to Adam Smith, another great economist, “self-interest leads to common good if there is enough competition and if most people in the society have internalized a general moral law as a guide for their behavior.” This has been proved through various studies in and out of the US that confirm the commitment by individuals to societal ethical and moral obligations in denial of egoistic behaviors and selfish personal achievements (Wilber, 1998).
But the question of whether persons abandon selfish ambitions in pursuit of societal values due to their moral obligation or due to fear of economic consequences seems to trouble researchers in this subject. This is because pursuing self-interest in a competitive environment as facilitated by capitalism has not yielded the desired results. Therefore there needs to be more ethical consideration in putting in place welfare economics as the economic status of the society as desired. Again it is easy to note the modern economy thriving on capitalism has developed into a situation whereby there is a tendency by individuals desiring and actually increasing their material wealth and welfare at the expense of others. This has not happened on a personal level only. Wealthy nations in the western world are blamed for the economic and social problems afflicting poorer regions of the world such as Africa some parts of Southern Asia.
The disparity between the desired economic status of an individual or nation has given rise to the formulation of policies to convert the actual situation into the desired. These policies are meant to strike a balance in what is called Pareto efficiency which Kolowski (2000) describes as the economic ability to improve the welfare of another without making another worse off. This has been the ultimate goal in technology and other common behaviors in the modern economy. Again one of the very major indicators of this has been international donations and aid to poor nations. While the donations are meant to improve the welfare situations of the recipient countries, care must be taken in that the donor country does not degrade her status. As such, this has led to what we call “string attached aid” simply implying that aid is offered with a lot of conditions to be met by the recipients. Consequently, the ethical bearing of such aid has again drawn many questions with some insisting that such donations are meant for public relations with no moral and ethical drive in doing so. This can be said of also of charity and corporate social responsibility initiatives by multibillion-dollar corporations (Kolowski, 2000).
Conclusion
Society has a limited understanding of economic principles and factors other than socio-economic welfare. Therefore, it is the role of the society to familiarize itself with economic principles and values in order to articulate its moral and ethical requirements to economic realities in the modern economy. Though the arguments show it is economists to comply with societal values, it comes out that society also needs to adopt an economic sense.
References
Wilber, Charles, Economics ethics and public policy London: Rowman, 1998.
Koslowski, P. Contemporary economics ethics and business ethics, New York: Springer, 2000.
Dutt, A. and Jameson, K., Crossing the Mainstream: Ethical and Methodological Issues in Economics, Notre Damne: Notre Damne University Press, 2001.
Ramage, D., Johson, J., Bean, J., Writing Arguments: A Rhetoric with Readings 6th ed. New York: Longman, 2006.