Beyond Utilitarianism and Deontology: Ethics in Economics

Abstract

This article starts from a methodological position that fact and value are mutually related, both in the real world and in economic analysis. It then discusses deontological ethics. This approach is concerned with equality and dignity, as expressed in right and norms, and how these rights and norms constrain individual choices. Deontology is thus different from the utility maximisation of utilitarian ethics, where ethics appears in utility functions as moral preferences. The paper then argues that, although deontology does better than utilitarianism in analysing ethics in economics, it has its own weaknesses. These weaknesses require another theory of ethics for economics, virtue ethics, which emphasises the interrelatedness of agents and commitment to shared values beyond the rules that a society has institutionalised. Virtue ethics internalises morality not as a preference or a constraint, but through the practices in which agents are related in their pursuit of value added.

Acknowledgments

The author would like to express her gratefulness to four anonymous referees whose comments proved to be very helpful. She also appreciates the help of one of the editors with improving the language in the paper, an extra service that supports the inclusion of non-native English speakers in this journal.

Notes

¹There is a subtle but important difference between the concepts of ‘morality’ and ‘ethics’, which will be adhered to in this contribution. Morality is about the actual beliefs or specific actions of individuals in terms of good and bad, whereas ethics is more general and concerns a reflection on the reasons for or against certain moral beliefs or actions.

²This is a widely known failure of deontological ethics – it is one thing to know what is best to do, but quite another to act accordingly. Of course, an authority may enforce a moral rule, but without a majority vote in favour of the rule, the rule will not be followed. The frustration of many well-wishing individuals about the lack of a political will to enforce moral duties was eloquently voiced by U-2 singer Bono: ‘We have the cash, we have the drugs, we have the science, but do we have the will to make poverty history?’ (Interview with the Seattle Post-Intelligencer on http://seattlepi.nwsource.com/opinion/221105_bono22.html).

³There are several influential ethical theories that are related to virtue ethics, in particular.

⁴Uncertainty and fallibility are distinct. Whereas uncertainty refers to events (that is, the unknown future), fallibility refers to human behaviour that may fail to live up to the individual's own commitments, irrespective of uncertain events.

⁵Of course, older theories, such as institutional economics in the tradition of Veblen (1931), also acknowledge intrinsic values; but these are often closer to deontology than to virtue ethics.

⁶Kahneman (2003, p. 1450) has defined intuition as ‘thoughts [that] come spontaneously to mind, without conscious search or computation, and without effort’.

⁷Of course, transaction costs are not only reduced by trust, but may be reduced, to some extent, by the exertion of power – for example, through credible threats. But this is a different point, one which will not be elaborated here.

⁸In MacIntyre's (1987) view, stock markets are vehicles for generating external value only.