Book Review On Ethics And Economics Philosophy Essay
|✅ Paper Type: Free Essay||✅ Subject: Philosophy|
|✅ Wordcount: 1763 words||✅ Published: 1st Jan 2015|
The Book “On Ethics and Economics” is an edited version of the Royer Lecture Series given by Dr. Amartya Sen at the University of California, Berkeley in the year 1986. The basic idea that has been put forth in this book is that the distancing of ethics from economics has impoverished the contemporary economic theory to a great extent. He points out the potential contribution that these two fields can make to each other such that the logistic and technique based approach from the insights of modern economics theory would be of great help in tackling problems of interdependence in complex ethical problems even when economic variables are not involved and, on the other hand, economics can be made more productive by paying more attention to the ethical considerations that influence human judgment and behavior. Sen, in this entire piece of work, has tried to explain this with a logical sequence followed in the three lectures which constitute the three chapters of this book.
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In the first lecture, “Economic Behaviour and Moral Sentiments”, Sen argues about the linkage between human behaviour and the moral and ethical sentiments. He discusses both the ‘ethics’ related approach and ‘engineering’ related approach to the origin of economics and their views about motivation and social achievement. He further improvises on the growing importance of engineering approach and the so called ‘positive analysis’ approach that avoids ethical considerations and moral values leading towards widening the gap between ethics and economics.
He condemns the overtly narrow approach taken by the modern economics analysis in describing the idea of a ‘rational behaviour of a consumer’ and ‘rationality’ as a whole in economic sense. The idea mainly rests on two basic considerations viz. ‘internal consistency of choices’ and ‘maximization of self-interest’. Further, self interest maximization is taken to be the characterization of actual behavior. Sen argues that the internal consistency of choices is not the adequate condition for rationality since rational choice must demand the correspondence between what one tries to achieve and how one goes about it which is not completely reflected in consistency of choices. Also, the consistency of those choices is dependent upon the interpretation of those choices and some factors like aims, values motivations etc. which are external to those choices. For the consideration of ‘self interest maximization’ Sen says, ” It may not be all absurd to claim that maximization of self-interest is irrational but to argue that anything other than maximizing of self interest must be irrational seems altogether extra-ordinaryâ€¦.Universal selfishness as as a requirement of rationality is patently absurd.” He gives the example of Japan to refute the argument that self-interested actions would lead to efficient outcomes and shows that the systematic departures from self-interested behaviour in the direction of moral values that include duty, loyalty and goodwill have played substantial part in industrial success. Thus, it is not self-interest alone, but a plurality of motivations drives the actions or behaviour of human beings.
In the last part of the lecture, Sen defends the case of Adam Smith and his interpretation of self-interest maximizing behavior which is often misinterpreted by the so called proponents of leissez-faire economy. Smith did not assign a generally superior role to the pursuit of self-interest in any of his writings but describing the general behavior in specific context such as bureaucratic barriers and restrictions to economics transactions etc. Smith had recognized in his literature the failure of markets and role of public policy. Other parts of his literature dealt with role of ethical considerations in human behavior and particularly the use of behavior norms, but they have been neglected as these considerations became unfashionable in economics and the narrowing of broad smithian view in modern economies has had a weakening effect on the reach and relevance of welfare economics itself.
In the second lecture, “Economic Judgments and Moral Philosophy”, Sen comes to discuss the modern theory of welfare economics is narrowed by certain oversimplified ideas of pareto optimality and economic efficiency, utility and welfarism and utility-maximisation without taking into consideration the agency aspect of human beings. Sen talks about the problems in the framework of modern economic theory of welfare economics such as the interpersonal comparisons of utility and the disregard of distributive aspect under the pareto-optimality conditions etc. There are certain application problems also such as no adequate information about initial endowment and the political problem of distribution for social optimality. He criticizes the theory for developing anti-ethicalism and making pareto optimality that confines economic efficiency in the space of utilities without paying attention to the distributional considerations as basic criterion of welfare economics. He condemns this criterion due to its limitations in assessing social achievements and regarding utility as the only thing of intrinsic value. This utilitarianism mainly consisting of welfarism, sum-ranking and consequentialism suffers from the major drawback when the well-being of a person defined in terms of utility is judged exclusively on the basis of the metric of happiness or desire-fulfillment. Sen argues that this approach distorts the extent of deprivation since in his words, “the hopelessly deprived lack the courage to desire much and their deprivations are muted and deadened in the scale of desire fulfillment.” Thus, the identifying utility with well-being is criticized both on the ground that well-being is not the only thing that is valuable and utility does not adequately represents well-being. Another most important point on which Sen draws attention is that the economic theory ignores the agency aspect of human beings. This agency aspect is widely criticized on the point that it cannot be evaluated and appraised objectively. To this view, Sen argues by saying that agency aspect can be included in the objectivist function since it reflects the ability to get what one values and getting what one values cannot be different from other things that might be valued, e.g. happiness, liberty and well-being. Thus, recognizing and accounting for agency aspect in theory of consumer behaviour may call for departures from the self-interested behaviour.
In the last lecture on “Freedom and Consequences”, Sen describes the bearing that the ethical considerations can have on actual behaviour and thereby on predictive economics. The lecture focuses on the limiting aspects of utilitarian view starting with the distinction between the ‘well-being aspect’ and ‘agency aspect’ to which the utilitarian view provides a defective view. Also, a person’s ‘freedom’ which can be seen as valuable to one’s achievements which is not incorporated in the utilitarian view. According to Sen, “Freedom may be valued not merely because it assists achievements but also because of its own importance going beyond the state of existence actually achieved.” Thus, there are four distinct categories of relevant information regarding a person involving ‘well-being achievement’, ‘well-being freedom’, ‘agency achievements’, ‘agency freedom’. But this plurality is reduced to a single category in the mainstream economics which makes the structure inadequate for assessing human behavior as discussed by Sen in the previous lecture. He further talks about this plurality and its evaluation. He also focuses on the impasse resulting from conflicts of decision making and the consequences of this impasse which are not taken into account in the modern theory of economics.
On discussing the importance of ethics in economics in the last bit of this lecture, he says that if consequential reasoning is used without the additional limitations imposed by the requirements of welfarism, position independence, and the overlooking of possible intrinsic value of instrumentally important behavior, then the consequential approach can provide a robust structure for prescriptive thinking on matters such as rights and freedom. Sen recognizes the fact that although this kind of an exercise can bring out results of substantial value to the theory of economics it is certainly not an easy exercise to do but, as he clarifies, it is not the ease of the exercise but the potential fruits from the exercise should be taken into account to broaden scope and sphere of theory of economics by bringing in the ethical consideration. The results out of this, according to Sen, are certainly going to be larger and enriching to the humanity as a whole.
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In his book, Sen mentions that the growing distance between ethics and economics has impoverished the contemporary economic theory to a great extent. But he does not analyze the reasons behind this (e.g. limitations of mathematical tools) and why engineering approach still dominates most of economists’ thinking. He talks about the gap between economics and ethics but does not address the problem of how to fill this gap or the methodology to fill this gap. And merely stating that this exercise will not be an easy task does not absolve him from the responsibility of starting that exercise.
Sen mentions moral values that include duty, loyalty and goodwill have played substantial role in industrial success of Japan. But he does not analyze how these factors led to the outcome and how this outcome is different from the expected outcome by modern economics.
Also, though he mentions that both ethics and economics can contribute to each other, he mentions very little of how economics can contribute to ethics. So the title “On ethics and economics” is little misguiding in this sense.
Sen does a remarkable job of bringing to our attention, the important contribution ethics can make to the field of economics and he does it very convincingly. He makes a substantial contribution to the field with this book but we hope that he would address the mentioned gaps in his upcoming analysis.
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