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Original Articles

THE ETHICS OF ECONOMIC INTERACTIONS IN THE NETWORK ECONOMY

Pages 737-760 | Published online: 22 Dec 2006
 

Abstract

The rise of the network economy brought about the strong conviction that economic interactions in the network economy could be based on cooperative, informed and transparent communication, which would counteract the negative welfare effects of unequal bargaining power, the opacity of the intentions of the parties, opportunistic behaviors, monopolies and market failures. So the contracts of the network economy nowadays do not at all remind us of agreements based on the cooperation of free, equal individuals who follow their values and self-interest, during which they take into consideration the increase of each other's well-being as well as the mutual sharing of benefits and risks. The network economy reached the limits set by the segmentation of network architecture, the restrictive regimes of copyrights, the digital privatizations of the public domains, the right holder's control over digitalized contents, the regulatory furors of the different states and international organizations, the ‘private legislation’ of the corporations, and so forth. The commoditization of knowledge, information and communication and the monopolies have had negative welfare effects. Of course, this in itself does not overthrow the validity of the philosophical, moral-philosophical and economic arguments brought up to support the contractual coordination of economic interactions. On the contrary: On the basis of the current setback of the development of the network economy, we could, rather, conclude that the business model, which is trying to expropriate the positive externalities of the network effect with legal and technical means, leads to a general decrease of social profit. So, not only does this model of the new economy violate rights and is also contrary to moral principles but it cannot, either, be maintained in the long run from the point of view of the market.

Additional information

Notes on contributors

László Fekete

László Fekete studied history, economic history and sociology at Eötvös Loránd University of Budapest, the Friedrich-Schiller-Universität zu Jena (Germany), and State University of New York at Binghamton (USA). He has a PhD in philosophy. He was elected to the MOL Chair of Business Ethics at the Corvinus University of Budapest in 2001. His research interests include the philosophical and ethical problems of business transactions, digital culture and the information society.

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