Ethics in Economics, Business, and Economic Policy

The role which ethics plays in the economy, in economics and management science is disputed with particular vehemence. Some economists and business persons see in ethics the great softener of the hard science of economics, of an economic theory that seems just to have reached the point at which it became a mathematical science. Others, like the author, think that ethics is the means to bring economics closer to the actual decision-making situation of the market place.

Economic theory deals with the allocation of scarce resources for given ends. Ethical theory tries to define what are justifiable individual and social ends, and how these ends can be distinguished from others. This explanation of the function of both, ethical and economic theory, makes it evident that ethics and economics are distinct, but not completely separate. Economics determines the decision over the allocation of resources for given ends and preferences. Ethics judges the decision over the goodness of ends and the concomitant decisions over values and standards. Analytically, it is possible to distinguish the decisions over allocating resources from those over one’s preferences. In the process of acting, however, these decisions merge. In the concrete situation of action, the acting person has to decide simultaneously on his preferences and on the allocation of his resources for the realization of his preferences. A normative and descriptive theory of human actions thus has to apply, simultaneously, both ethical and economic concepts to the analysis of human behaviour.

Regarding the economics of public finance and the “new institutional economy”, there is a close connection of ethical problems with the problem of institutions and, nowadays, with institutional choice (see: Arrow 1970, p. 79; Buchanan 1984; Brennan/Buchanan 1985, p. 47; Van-berg/Buchanan 1988). Institutions are characterized by a certain kind of rules directing individual choices in a normative way. The tax-taking and public goods producing state is a representative example for such an institution. It is only the individuals that have restricted influences on the tax dimension by political elections (on the tax rates and the supply of public goods), and, by definition, no influences on the supply of merit goods. The state is not only able to increase the supply of public good, but also to choose between two modes of financing it: by taxes or by budget deficit spending. However, these decisions are ambiguous.

In the discussion, three main questions arose:

Ethics is in. Consideration may well be given as to how and why this has happened. Possibly it is still merely something superficial, a phenomenon that we use in the struggle for attention on the market. Or possibly it is more serious. Could it be the case that for a variety of reasons our society has ended up in a situation where we must formulate new moral rules and examine whether traditional ethics are of any use in today’s situation? We are facing a watershed like the one faced a hundred years ago when people had to handle the transformation from an agricultural to an industrial society. The growing interest in matters relating to values and morals is associated with changes in working conditions.

In addition to the written version of their paper, the authors emphasized as starting points of the empirical side of their research firstly, how people go about individual norms, and secondly, with respect to their conception of “moral dilemmas”, a greater interest in the process than in the outcome. Therefore, they pointed out three main questions conducting their current investigations:

The aim of this paper is to show the relevance of implementing the concept of person into economic theory and practice as a basic principle with regard to business ethics in general, and corporate and management ethics in particular. The first argument for this is the close connection between ethics and anthropology which means that business ethics requires an apt anthropological basis. The interpretations of human economic existence made up by economics until now do not fulfill this claim for two reasons: They comprehend human beings neither in their ability to act ethically nor in their specific dignity, the one being the result of the other. Reflections on the human being as a person try to make clear that both these aspects of human existence are personal aspects. Thus, the introduction of the concept of person into economic theory and practice is the necessary extension of the insufficient economic interpretations of the human being and the concepts of action resulting from this insufficiency.

Annette Kleinfeld-Wernicke’s account of the personalistic tradition in ethics and its attractiveness as a conceptual framework for linking ethics and economics was generally agreed upon. Though, one Une of personalistic thought, represented by Jacques Maritain, was seen as missing. A crucial forgetfulness because the second characteristic of a person, its being-in-relationship with others — perhaps the central characteristic for developing an attitude of treating the other as a person — could easily lead towards a sociological account of man. The personalistic tradition in the sense of Maritain reacts fearely to this sociological explanation of man because it neglects the transcendental capacity of man which is seen as the essence of man (Mahoney).

Political changes at the end of 1989 meant not only the collapse of communist power in the CSFR, but at the same time the fall of ideological barriers on the way to the market economy The course was approved by the new parliament at the programme of government and the scenario of the economic reform on July 1990. It is obviously an extremely difficult manoeuvre which has never been done before.

In her oral presentation, Marie Bohatâ gave a general idea of the difficulties in her country concerning the realization of two related processes:

Imagine yourself on an international train. Just before leaving the station, a chemical company delivered a package containing a very poisonous and explosive gas. The package itself seems to be not very secure so that you stand a fair chance of explosion and catastrophe. Still the industrial firm sees no problem in this, since the explosion will probably take place a long way from home. I suppose we would all condemn the conduct of the firm on moral grounds. Even if the explosion is uncertain or the technology to destroy the gas on the spot is not present, even then the firm’s conduct would be seen as irresponsible and in the event of an explosion they would be held responsible.