Ethics and economics: A comment on Narvaez‘s “Revitalizing human virtue by restoring organic morality”

Abstract

This paper comments on Darcia Narvaez's Kohlberg Memorial Lecture, published in this issue, with respect to her contrasting ethics and economics, or morality and market. My basic claim is that ethics and economics, properly understood, are just two sides of the same coin. One main point is that all morality solves cooperation problems and includes positive and negative sanctions to uphold it. The second claim is that competition in market economies is, in principle, ethically justified, and where it creates a problem, it is not just an ethical problem, but by the same token an economic one with which economists are concerned.

Keywords:

• Ethics and economics
• morality
• moral psychology

Notes

1. These games are called dictator games because one person, the “dictator” has to decide how an endowment (often $10) is to be divided between the dictator and a second person, the recipient. The dicator game was invented by Kahneman, Knetsch, and Thaler (1986) and since then has been widely used and modified in many ways. The main insight from dictator games is that only a small number of dictators (20% in the standard condition) behave entirely self-interestedly and keep all the money, whereas a roughly equal number of people give the fair share and allocate half of the endowment to the recipient.

2. The above-mentioned Joseph E. Stiglitz is also among them.

3. There is a modern and a medieval version of ‘natural law’. The medieval notion of natural law relates to notion of nature that includes normativity (as built into nature by God). Modern natural law tries to avoid all metaphysically preset norms and aims at deriving moral norms from human rationality and human experience alone.

4. Apart form property in the narrow sense, there might also be other kinds of entitlement, e.g. having been the first on swing and therefore being entitled to use it instead of the other. Instead of sharing, the respective moral principle in this case is turn-taking. However, sharing and turn-taking both express one and the same reciprocity principle that if one agent disposes of something the other does not have (but equally desires), you have to allow the other also to dispose of that thing.

5. See Andreoni (1990)—another economist—for the notion of ‘warm-glow’.

6. Note that Adam Smith, the author of The Wealth of Nations took over from the Stoics the view that a proper moral perspective encompasses nature as whole. He wrote: ‘Man, according to the Stoics, ought to regard himself, not as something separated or detached, but as a citizen of the world, a member of the vast commonwealth of nature’ ( 1759/1976, p. 140 [III.3.11]).

7. Such behaviour can also create incentives for other agents to re-establish moral regimes when they realise that defection is countered by counter-defection. It signals, for example, that others’ selfish behaviour will be countered by selfishness, so that they have to choice to either leave it at that or re-establish cooperation to the common benefit (whether it is about sharing, trust, or whatever).