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Jonathan B. Wight, Ethics in Economics, An Introduction to Moral Frameworks

Jean-Sébastien Gharbi
p. 461-465
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Jonathan B. Wight, Ethics in Economics, An Introduction to Moral Frameworks, Stanford: Stanford University Press, 2015, 276 pages, ISBN 978-080479453-4

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Crédits : Stanford University Press

1After a long period of relative neglect, the issue of the relationship between ethics and economics has again become a trendy topic over the last two decades. Clearly, this revival of interest is not just a flavor-of-the-week: this issue (or rather this cluster of issues) directly refers to the question of how to articulate positive and normative aspects in economics, and about the status of economics as a science (the latter problem including the meaning of the term “science”). In other words, these questions encompass some crucial dimensions of economic analysis, rubbing against the core of the discipline. Given this background, one can imagine the interest with which economists, and especially specialists of economic philosophy, can open Jonathan. B. Wight’s most recent book Ethics in Economics, An introduction to Moral Frameworks.

2In approaching the breadth of fundamental aspects of what is at stake in the relationship between ethics and economics, the aim of Wight’s book is quite modest. It does not intend to exhaust the subject, but to be an introduction (as the subtitle explicitly claims) providing non-specialist readers with some basic concepts and analytical tools. The book starts with an indisputable point that “public policy problems cross disciplinary boundaries and raise substantial normative questions. Indeed, if economists maintain that they do not rely on ethics at all, this is troublesome. If efficiency is viewed simply as a ‘fact,’ instead of as an evaluative construct, for which alternatives exist, it creates intellectual blinders for anyone doing public policy work. Implicit moral judgments in economics should be subject to scrutiny” (xvi).

3Wight takes firmly and explicitly a stance in line with Sen’s On Ethics and Economics (1987) and Hausman & MacPherson’s Economic Analysis, Moral Philosophy and, Public Policy (2006).

4Ethics in Economics, An Introduction to Moral Frameworks is divided into three parts. The first part, entitled “Moral Frameworks”, treats on different ways of dealing with moral issues in philosophy. Specifically, chapter 1 sketches the distinction between positive and normative issues in moral philosophy and economics, and provides a brief presentation of three main moral frameworks used in the book: outcome-based ethics (consequentialism), duty- or rule-based ethics (deontologism), and virtue-based ethics. Chapter 2 focuses on the outcome-based ethics and develops the stance according to which the best action is the one that causes the best outcome. Notably, it distinguishes between classical (act-) utilitarianism and rule-utilitarianism, and presents the classical criticisms these two positions have to face. Chapter 3 discusses more broadly non-consequentialist approaches in moral philosophy. This chapter presents Kantian categorical imperative along with the classical criticism of Kantian deontologism. Further, there is a quick mention of the distinction between negative and positive rights. Finally, the discussion turns to Aristotelian ethics of virtue, its modern revival, and its criticism.

5The second part of the book, entitled “Evaluating the Economy”, intends to portray the principles of economic analysis. Chapter 4 is about the concepts of welfare and efficiency. It explains what “demand” and “supply” mean in microeconomics, and presents the concepts of consumer and producer surpluses, concluding with the idea that under certain ideal circumstances there is a market equilibrium that is efficient. Chapter 5 develops a bit more the concept of Pareto efficiency and cost-benefit analysis. It sketches the two fundamental welfare theorems, the idea of social welfare function and Arrow’s impossibility theorem. This chapter ends by emphasizing that economic analysis takes efficiency as an ethical concept and is, consequently, deeply embedded in consequentialism. Chapter 6 tackles the question whether welfare can be defined in a satisfactory way as preference satisfaction.

6The third and at the same time the largest part of the book, entitled “Topics in ethics and economics”, is dedicated to specific issues lying at the nexus between ethics and economics. Chapter 7 focuses on the question of moral limits of markets, mentioning notably the possibility of a foreclosure effect on some “repugnant markets”. Chapter 8 is about the fact that experimental and neuro-economics deal with some phenomena that seem similar to what Adam Smith called “moral sentiments”. Chapter 9 discusses the 2008 financial crisis by referring to Adam Smith invisible hand, to the advocacy of market efficiency, and to the question whether private vices necessarily provide public benefits. Chapter 10 deals with different conceptions of economic justice, focusing on the procedural versus consequential notions of justice. Chapter 11 is also about economic justice, but deals specifically with the question of opportunities, evoking quickly the debate between Rawls, Sen and Nussbaum on that matter.

7Chapter 12 concludes the book by insisting on the importance to take account of moral pluralism (i.e., of the multiple frames of ethical analysis) when dealing with economic and public policy issues. It emphasizes that classical economic methodology amounts to taking account only of consequentialist perspectives, and that it can be both intellectually and morally an impoverishment.

8The presentation of basic concepts of economic analysis is very brief and a non-specialist may not easily understand why these concepts have actually a great explanatory power and how they can be a part of a more than one century long tradition of analysis. In other words, truly understanding what is at stake in the discussions, which are here only sketched, requires having a preexisting knowledge of economic theory. The presentation of Kaldor-Hicks criterion (82) is a good example: Wight’s explanation does a disservice for understanding that this criterion does not involve using utility comparisons. Consequently, non-specialists cannot see why historically this criterion provided an only theoretical solution (not a practical one) to an only theoretical problem, and why this criterion cannot give a satisfying basis for cost-benefit analysis (Adler and Posner, 1999).

9Given Wight’s claim that orthodox economics misses a fundamental dimension of economic issues by being blind to what I could call its “own ethical commitment”, it is quite problematic that he never makes clear what he refers to when talking about the “orthodox approach”. Wight quotes free-market apologists (Milton Friedman, Hayek) or libertarian authors (Nozick, David Friedman) in order to illustrate this “orthodox approach”. However, one may note that what is usually called “mainstream” or “orthodox economics” is the welfarist approach (Sen, 1979) that does not share the same philosophical foundations with “liberalism”. Today in economics and in philosophy (quite differently than in the 19th century) the term “liberalism” refers to a stance that gives to individual freedom the status of a principle, of a value, or—to express the same idea differently—which provides to individual freedom the strength of a requirement. In other words, “liberalism” refers to a very broad set of stances encompassing libertarian views (Nozick, David Friedman), free-market apologists (Milton Friedman, Hayek), but also liberal egalitarians such as John Rawls or Amartya Sen. On the other hand, welfarism relates to individual freedom in a way that values freedom only relatively: Welfarism would support more freedom if, and only if, respect for individual freedom leads to an increase in individual and social welfare. In other words, individual freedom is the core value of liberalism whereas efficiency is the core value of welfarism. Liberalism and welfarism share the same conclusion—the idea that market is the best way of allocating resources—but do not share the same principles; liberalism claims so because market is seen as the space of free exchanges, while welfarism because market is considered as the space of efficient exchanges. Even though this difference is mentioned in passing, making it almost subliminal (e.g. 50 and 109), the “orthodox approach of economics” seems sometimes to be identified as the position in favor of market economy, surprisingly neglecting all the philosophical (notably ethical) oppositions between proponents of liberalism and welfarism. The question of what the phrase “orthodox approach” refers to becomes even more puzzling given that Wight frequently quotes economists considered as eminent representatives of the so-called “mainstream” to support his own view on economic blindness of “orthodox economics” (e.g., Arrow, Samuelson, Bergson).

10Besides, Wight often describes the “homo œconomicus” (an economic agent with stable preferences behaving rationally; in short maximizing utility) as the core concept of the “orthodox approach of economics”. Yet this description excludes some proponents of liberalism (such as Hayek, Rothbard, Nozick, but also Rawls with whom Wight seems generally to agree), who are usually very critical of “mainstream” way of modeling human behavior, from the “orthodox approach of economics”. Moreover, it amounts to attacking a straw man. The idea that real economic agents act as if they were homo œconomicus is not a claim of economics textbooks. A very simple representation of the economic agent is often used in microeconomics textbooks, but it does not mean that this representation is more than a tool of analysis (a useful one once the aim of the model is clarified). Furthermore, it is widely agreed that for the purposes of modeling an actual, real human behavior, as contemporary behavioral economics tries to do, the very sketchy concept of homo œconomicus is not satisfactory.

11It needs to be emphasized that despite some possible criticisms, Ethics in Economics fulfills its intended objectives, namely to provide an introduction to a very large panel of issues lying at the intersection of ethics and economics. Nevertheless, it is not easy to identify which readers this book targets. Trained economists may not benefit from this reading due to the fact that most issues are tackled a bit superficially. Students in philosophy will probably not be able to figure out how to use the economic tools so quickly sketched without using another textbook and, moreover, could easily be misled by the numerous shortcuts. Finally, students in economics are the most suitable audience. Indeed, they will find in this book a first opportunity to question from another perspective plenty of crucial economic and societal topics.

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Bibliographie

Adler, Mattew D. and Erich Posner. 1999. Rethinking Cost-Benefit Analysis. Yale Law Journal, 109: 165‑247.

Hausman, Daniel M. and Michael S. MacPherson. 2006. Economic Analysis, Moral Philosophy and Public Policy, 2nd edition. Cambridge (UK): Cambridge University Press.

Sen, Amartya K. 1979. Utilitarianism and Welfarism. Journal of Philosophy, 76(9): 463-489.

Sen, Amartya K. 1987. On Ethics and Economics. Oxford: Blackwell-Publishing.

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Jean-Sébastien Gharbi, « Jonathan B. Wight, Ethics in Economics, An Introduction to Moral Frameworks », Œconomia, 6-3 | 2016, 461-465.

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Jean-Sébastien Gharbi, « Jonathan B. Wight, Ethics in Economics, An Introduction to Moral Frameworks », Œconomia [En ligne], 6-3 | 2016, mis en ligne le 01 septembre 2016, consulté le 18 décembre 2017. URL : http://journals.openedition.org/oeconomia/2409

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Auteur

Jean-Sébastien Gharbi

Université de Reims Champagne-Ardenne. jean-sebastien.gharbi@univ-reims.fr

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Les contenus d’Œconomia sont mis à disposition selon les termes de la Licence Creative Commons Attribution - Pas d'Utilisation Commerciale - Pas de Modification 4.0 International.

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