Environment, Ethics and Economics

Abstract

Though the price mechanism is powerful and effective in allocation of exchangeable goods and services, it is not so in dealing environmental problems. The high transaction cost of economic instruments limits its scope of application. People's behavior is conducted by self-interest and moral obligation. The former is the driving force of market exchange; the latter is the guard of social order, specially the market rule. Moral obligation is necessary because people are not always in symmetrical status and also because “Prisoner's dilemma” may arise. The author argues that moral obligation is as efficient as price mechanism, as the latter ignores income difference. The moral level depends upon education, mutual influence, knowledge and criticism. Although the change of criteria of right or wrong proceeds very slowly, the attitude towards morality or the willingness to observe moral rules can be changed overnight. Finally the author expects a new era in which morality plays a more important role and the environment can be saved.

Key words:

• environment
• ethics
• economics