Principles of economic justice: Marketplace and workplace applications

Mainstream economics argues that ethical standards are essentially relative, that they differ from one person to the next, and are entirely outside the limits of legitimate inquiry for economic science. Our view is that there are certain objective ethical standards to be applied that parallel the three modes of human interaction in economic affairs: person to person, superior to subordinate, and member to group. Those standards are given by the principle of equivalence, principle of distributive justice, and principle of contributive justice. The key to integrating those standards into mainstream economic thinking is to begin with what happens in every exchange involving economic agents who are well-informed and free to act. What is gotten in the exchange is more highly valued than what is given up. However, there must be limits to that gain—identified in mainstream economics as profits, consumer surplus, and economic rent—in order to prevent one party from taking advantage of another and to assure that market exchange serves all economic agents fairly and effectively and not just those with the power and will to turn gain into excess. Mainstream economists argue that sufficient limits are imposed by the “invisible hand.” We argue instead that limits must be imposed more deliberately and directly by human economic agents and that those limits are supplied by the three principles of justice.     

Problems of Emergency Arbitration

This paper explores ethical burdens facing the economics profession which are associated with epistemic features of economic practice. Economists exert power over those they purport to serve by virtue of epistemic asymmetry between themselves and others, i.e., the intellectual monopoly they enjoy over a vitally important body of knowledge. But they also face the problem of epistemic insufficiency, which implies that they may do substantial harm as they try to do good. The paper explores the ethical entailments of the epistemic features of economics, and argues that managing the ethical challenges requires a new field of inquiry, the field of professional economic ethics, and not just a code of conduct.     

J.M. Keynes's Theory of the State as a Path to his Social Economics of Reform in The General Theory

This article focuses on Adam Smith's attitude toward wages as the natural price of labor. It argues that his subsistence wage had similarities with the medieval Schoolmen's notion of the just wage as being established through markets. He further agreed with them that the market wage had to be sufficient to nurture community standards of virtue. His application of the concept differed from theirsn due to his recognition of the problems caused by social distance. In a commercial society, impersonal relations added difficulties to the attainment of a just wage and could diminish virtue. As a result, sympathy from employers and from public

officials was needed as part of the Smithian standard of wages.     

Norm,virtue and information: the just price and individual behaviour in Thomas Aquinas' Summa Theologiae

This paper aims at putting forward the analytical stake of the few passages that Thomas Aquinas devotes to prices and exchange, mainly in the Summa Theologiae. His objective – to enlighten a confessor vis-à-vis his penitent, or the judge in an ecclesiastical tribunal – leads the author to a complex construction, which involves establishing a referential norm – the just price – to which the transaction price should be compared.

It is recalled here that resorting to the just price avoids any consideration of individual behaviour. However, this last comes to the forefront when the issue dealt with is to explain the reasons why such a transaction price is equal to, or on the contrary departs from the just price. Thomas Aquinas' treatment of this issue allows one to acknowledge (a) that individual behaviour is characterized by virtue or by vice in various informational contexts, and (b) that the making of a transaction price is the result of a negotiation process between buyer and seller. In a context of correct information, where the partners are both virtuous, Thomas Aquinas explains why the transaction price is equal to the just price – in the exchange in se – or could differ from it – in the exchange per accidens. But focusing on the exchange in se, both an asymmetry of information and the vice of at least one of the partners give rise to deception strategies leading to transaction prices, presented as just by the party who knows it is not, and agreed upon as just by the deceived party. Lastly, the possibility of retaining information during the negotiation process paves the way for the opportunity for the virtuous seller to protect himself against the higher power of negotiation of a possible vicious partner.

Although aiming at a different goal, Thomas Aquinas thus provides a complete theory, not only of the just price, but more generally of exchange, in which ethical considerations become decisive in determining transaction prices.     

John Stuart Mill's utilitarianism and the social ethics of sustainable development

This paper considers the writings of John Stuart Mill in political philosophy and political economy as a prototype for ideals of a 'sustainable development' grounded in a norm of justice and social solidarity. Mill's conception of a just 'stationary state* of society is examined alongside his attempts to reconcile precepts of non-interference (individual freedom) and private property, with the constraints and obligations of social, economic, and ecological coexistence. It is shown that notwithstanding vaccillations, Mill ends up espousing an ethical norm of reciprocity and solidarity that is quite different from the premise of self-interest axiomatized in most economic models of competitive market economies. These intuitions about a duty of care complementary to the non-interference principle, when systematized, are shown to find a new contemporary application to questions of economic justice and environmental sustainability.     

A Response to Mark D. White

In this response to Mark D. White, I agree with White's clear distinction between Kant and deontology but reject the suggestion that I would have implied that virtue ethics is a more appropriate ethical foundation for economics than both utilitarianism and deontology. Moreover, I argue against any attempt at creating a hierarchy in ethical foundations for economics, including one that would put deontology first or a view, apparently entertained by White, which would (almost) equate virtue with moral duty, thereby reducing virtue ethics to deontology.     

Principles of economic justice: Marketplace and workplace applications

Mainstream economics argues that ethical standards are essentially relative, that they differ from one person to the next, and are entirely outside the limits of legitimate inquiry for economic science. Our view is that there are certain objective ethical standards to be applied that parallel the three modes of human interaction in economic affairs: person to person, superior to subordinate, and member to group. Those standards are given by the principle of equivalence, principle of distributive justice, and principle of contributive justice.     

Pigou on philosophy and religion

Abstract

This article discusses a group of essays on ethical issues written by Pigou between 1900 and 1908. It is argued that they contain the foundations of his economic philosophy. Pigou's research on the meaning and content of the good merged into his definition of welfare, and his interest in religion as a subjective experience resurfaced in the subjective framework of his economics. A methodological pragmatism informed his economics as well as his ethics; moreover, the endorsement of interpersonal comparisons of the good in the ethical texts was consistent with Pigou's adoption of utility comparisons in welfare economics. Pigou's philosophical pessimism was reflected in his analysis of the economic evils of society, eventually leading to his advocacy of governmental intervention to foster economic welfare. The article contends that Pigou's philosophy derived not only from Sidgwick, as commonly believed, but also from G.E. Moore's Principia Ethica.     

Class Debates in Intermediate Microeconomics: Social Economics and Pluralist Perspectives

Abstract

This paper proposes the use of class debates in an intermediate-level microeconomics course to introduce early to mid-career undergraduate students to socially embedded and pluralist perspectives, political-economic processes, and policy analyses. Using data from three semesters of class debates in an intermediate microeconomics course, we argue that this activity is a beneficial way to stimulate student interest in social economics, especially in the ethical, political economy, and economic justice aspects of economics and policy. We carried out three allied activities: participation in the debate, a learning self-assessment survey, and a five-page memo providing a balanced analysis of the policy conundrums surrounding the issue under discussion. We discuss three aspects of these class debates relevant to social economists: student attention to processes of knowledge construction, cognizance of power in socioeconomic life, and engagement with economic justice and ethics.     

The duty of the firm in selling to the poor: A question of the person,justice, and subsidiarity

Mainstream economists do not address the question of the duty of the firm in selling to the poor. To them the issue is normative, and they have taken pains to delimit economics as a positive discipline. They separate value and fact, and engage themselves in questions relating to what is and not what should be. Forensic economists hold a different view. Firms are liable for damages due not just to deception and fraud but to negligence as well, and governments have consumer protection agencies to examine cases involving the duty of the firm well beyond deception and fraud. Social economists reject the argument based on libertarianism and individualism that the firm has only one purpose: increasing shareholder value. Social economists view the firm as having several constituencies — shareholders, managers, workers, customers, suppliers, neighbors, partners — and duties associated with each one. Those duties are grounded in the virtue of justice: to render to another that which is owed. The firm has a duty to its customers, its suppliers, and its employees deriving from the principle of equivalence; to its shareholders and employees from the principle of distributive justice; to its competitors and neighbors from the principle of contributive justice. This article argues that the firm has a special duty in selling to the poor which is grounded in the person of the one who is poor, the three principles of economic justice, and the principle of subsidiarity. Mainstream economists address poverty apart from consumer behavior as if the two were unrelated. This article brings the two together and in so doing helps throw light on the question of the duty of the firm in selling to the poor.     

The Economics and Ethics of Minimum Wage Legislation

Recent empirical studies have led the economics profession to question the proposition that minimum wage legislation necessarily leads to greater unemployment. This paper extends the analysis of these studies by providing several theoretical reasons why these empirical results may reflect a larger truth. Moreover, it addresses a relatively neglected aspect of the minimum wage debate - its ethical dimensions. Specifically, do the elementary principles of economic justice mandate that employees who “play by the rules”, should earn a “living wage”? This paper argues that the minimum wage is a successful economic policy that is consistent with economic justice.     

Islamic Economics in the Late Ottoman Empire: Menâpirzâde Nuri Bey's Mebâhis-i İlm-i Servet

The existing literature on Islamic economics suggests that Islamic economics is a twentieth-century phenomenon with its roots in medieval Islamic intellectual and theological history, thereby leaving a centuries-long gap in the history of Islamic economic thinking. This study aims at taking a first step towards filling this gap by examining a nineteenth-century example of Islamic economics in late Ottoman economic literature. Suggesting a broader definition of Islamic economics, this article investigates a prominent Ottoman intellectual's efforts to define, reveal, and revive a tradition of Islamic economics in historical and intellectual context.     

The duty of the firm in selling to the poor: A question of the person, justice, and subsidiarity

Mainstream economists do not address the question of the duty of the firm in selling to the poor. To them the issue is normative, and they have taken pains to delimit economics as a positive discipline. They separate value and fact, and engage themselves in questions relating to what is and not what should be. Forensic economists hold a different view. Firms are liable for damages due not just to deception and fraud but to negligence as well, and governments have consumer protection agencies to examine cases involving the duty of the firm well beyond deception and fraud. Social economists reject the argument based on libertarianism and individualism that the firm has only one purpose: increasing shareholder value. Social economists view the firm as having several constituencies — shareholders, managers, workers, customers, suppliers, neighbors, partners — and duties associated with each one. Those duties are grounded in the virtue of justice: to render to another that which is owed. The firm has a duty to its customers, its suppliers, and its employees deriving from the principle of equivalence; to its shareholders and employees from the principle of distributive justice; to its competitors and neighbors from the principle of contributive justice. This article argues that the firm has a special duty in selling to the poor which is grounded in the person of the one who is poor, the three principles of economic justice, and the principle of subsidiarity. Mainstream economists address poverty apart from consumer behavior as if the two were unrelated. This article brings the two together and in so doing helps throw light on the question of the duty of the firm in selling to the poor. An earlier version was presented as a paper at the midwest Economics Association annual meetings in Kansas City in March 1997.     

近代西方价格思想演变研究

价格是经济学的核心概念,近代西方经济学知识体系的建立环绕价格轴心展开。从农业村社占主导地位的生产关系到资本主义生产方式的确立,西方学者关于价格的认识由狭隘地关心经济公平,转变为追求经济利益和经济增长。笔者试图从经济哲学的角度,对古典经济学创立过程中价格思想的演变进行初步探讨,以期揭示经济学真正具有的历史的科学意义。     

Further reflections on the 'Hidden Theology' of Adam Smith

Abstract

A re-reading of the Thousand and One Nights in light of economic thought is attempted here. These stories characterize a bazaar economy as the dark side of medieval economics. The process-view of the bazaar is discussed in relation to Smith, Walras and the Austrian School. The tacit notions of ‘market price’ and ‘natural price’ are touched upon. Auctions are then elaborated with reference to Böhm-Bawerk. Moreover, the role of asymmetric information as a recurrent theme is interpreted in relation with Akerlof's approach. Finally, the collective function of the tales in fostering confidence in a less-than-well instituted bazaar economy is emphasized.     

Space for virtue in the economics of Kenneth J. Arrow,Amartya Sen and Elinor Ostrom

Virtue ethics interprets human action as pursuing good ends through practices that develop qualities internal to those final goals. The philosophical approach has been identified as critical of economics, leading in turn to the innovative response that by viewing the market as mutually beneficial exchange, economic practice is in fact defendable on virtue ethics grounds. This defends economics using arguments drawn from virtue ethics, but there is a need also to explore space for virtue ethics within economic theory. Examining key contributions of Kenneth J. Arrow, Amartya Sen and Elinor Ostrom, the article notes that virtue ethics’ appreciation of persons’ communicability of ends is increasingly being relied upon within economics, though sometimes under different names. Its strength to interdisciplinary work between economics and philosophy lies in presenting a methodology able to capture how human beings are capable of, though not fixated on, cooperation.     

房地产价格变动中的汇率因素分析

在构建了适合中国国情的房地产价格与汇率关系模型的基础上,利用该模型并结合2000年第三季度至2008年第二季度的最新数据,对中国35个城市房地产价格与汇率的关系进行实证研究。研究结果显示,汇率对房地产价格有负影响,这与理论和当前实际情况都比较相符,说明人民币汇率已能发挥一定经济调节的功能。     

企业降价与总收益关系的新认识

随着环境的变化,企业有时候要调低产品价格。本文针对一些企业错误地应用关于降价与总收益关系的传统结论的现象,结合数学和经济学,提出了很多命题,对降价与总收益之间的关系揭示得很清楚,对于传统的需求价格弹性理论关于降价与总收益之间关系的不完全准确认识的一种修正,也是对需求价格弹性理论应用的拓展;且本文分别用图形形象地表示出降价与总收益之间的关系,结合企业在调低价格后给予一定的指导——企业降价后还要进行跟踪调查、还要根据效果采取相应措施、要关注客户需求量的变化、降价不是拍脑袋的事情,这具有一定的现实意义。     

What If There Are No Conventional Price Mechanisms?

Inspired by Frederic (“Fred”) S. Lee’s theoretical contribution to institutional-heterodox economics, I make the case that the neoclassical price mechanism is not only flawed, but also irrelevant for the study of actual coordination mechanisms, hence the price mechanism — as a theory as well as a way of thinking — should be discarded. While this position was addressed by early institutionalists, starting with Thorstein Veblen, later institutionalists have not completely rejected the price mechanism. The sympathy for the price mechanism has prevented institutionalists (and other heterodox economists) from fully developing an alternative theoretical framework concerning how actual economic activities are organized. I, therefore, provide an institutionalist-heterodox framework of the provisioning process focusing on business enterprise activities. This framework shows how institutional economics becomes more refined and useful when it is married to other traditions in heterodox economics, in particular, Marxian, social, and post-Keynesian economics. Such an integrative approach is what Fred Lee showed through his work toward producing a better theory and policy for the underlying population.     

生态失衡的经济分析

人类经济发展的同时使生态失衡越来越严重。其主要原因在于现有经济法则的缺陷。现代经济学以价格体系为中心来调整人们的经济行为,但生态资源和生态环境却没有被恰当地包含在价格体系中,导致无代价地滥用资源和污染环境。人们从两个方面对现有经济法则进行修正。问题的根本解决有待于对经济学的变革,即将生态价值恰当地融入经济学体系。