Economics and Ethics

The area of ethics in economics is a divisive one, over which there has been considerable debate. Ethics has many interpretations in the history of philosophy as well as in economic history. Very simply, ethics refers to an understanding of certain forms of behavior as either right or wrong. â€Å"The field of ethics, also called moral philosophy, involves systematizing, defending, and recommending concepts of right and wrong behavior.† (Ethics) However, there are many complex aspects to the understanding of ethics. An early idea of ethics was put forward by the philosophers Jeremy Bentham and John Stuart Mill in the 19th Century. They suggested that ethical action was concerned with providing â€Å"†¦ the greatest balance of good over evil.† (Ethics) On the one hand, economics is fundamentally driven in a systems and practical sense by the need to acquire profit and accumulate wealth. On the other hand there is a growing debate about ethical responsibility and integrity in the business and economic world, with respect to aspects and issues that strictly fall outsider the ambit of the pure science of economics per se. Recent controversies, such as the Enron scandal have also highlighted the issue of ethics in economics and business. This leads to a vast array of issues and questions; such as the protection of future resources and the growing debate about the reality of environmental ethics as it relates to purely economic concerns. Questions are asked such as; can there ethically be a case for unconstrained economic adventurism and profiteering without paying attention to the moral and ethical dimensions of these actions? The debate and the dilemma that business faces in terms of ethical practices and views are concisely expressed in the following quotation. While â€Å"Businesses, in some parts of the world, have become integral participants in such causes as protecting the environment and alleviating poverty from economically depressed localities†, this concern with ethics is â€Å"†¦ confronted with the problem that economists have no other way to approach reality without concentrating on questions of utility.† ( Zaratiegui J. 1999) It is this focus on utilitarianism and the profit margin central to the capitalistic mode of economic production, which brings it into conflict with other issues and views and often results in a negative ethical assessment of business and economics. Therefore many critics are of the opinion that in an ethical sense the utilitarian focus of modern capitalism should be criticized. More importantly, theorists note that, â€Å"The nature of modern economics has been substantially impoverished by the distance that has grown between economics and ethics †¦ [economics] can be more productive by paying greater and more explicit attention to the ethical considerations that shape human behaviour and judgement.† (Sen, A. 1987, p 7.) It should also be noted that this debate and the alleged dissociation between economic thought and praxis and various ethical and critical stances, is a fairly recent phenomenon. In its origins modern economics was intimately connected to ethics and ethical motivations. Sen reminds us of the contrast between the â€Å"non-ethical† feature of modern economics and its genesis as an offshoot of ethics. At the time of its inception, then, the language of economics was comprised of normative elements. Nevertheless, over time, economics came to be considered an autonomous science, and its language and value judgments become increasingly more â€Å"positive.† It is this change in economic thought and praxis and the move towards a neutral or † value free† attitude towards ethical issues, with science as the motivating example, that has essentially created the present debate. However the debate about ethical involvement and responsibilities in economics continues to vacillate from one point of view to the other. On the one hand, economists argue that economic praxis and associated analytic techniques are ethically positive in that they help to predict human social and economic growth and development in a consistent way. Economists are also quick to argue and provide examples of the way that economic strategies uplift, develop and form a common basis for world interaction and harmony. â€Å".. it is regarded by some as beneficial, enabling economists to develop analytic techniques and make rational predictions of future human behavior. â€Å"(Zaratiegui J. 1999) On the other side of the argument there are many who interpret the alleged benefits of economics rather as the promotion of profit over ethical norms and principles. However in recent years there has at least ostensibly a reassessment of the ethical parameters of economics from within the economic community. As recently as a decade ago, many companies viewed business ethics only in terms of administrative compliance with legal standards and adherence to internal rules and regulations. Today the situation is different. Attention to business ethics is on the rise across the world and many companies realize that in order to succeed, they must earn the respect and confidence of their customers. This change is still based in the praxis of customer behavior and reaction but nevertheless it does show a change towards a greater awareness of ethical responsibly ion the world. Many of the ethical debates surrounding economics revolve around the complex issue of the interactions of business and commercial concerns and bio-ethics. Bio-ethics refers to the ethical demands and requisites in the interaction between the human and the non-human environment. As such, bio-ethics is difficult to relate to or argue in purely subjective or human terms; which make it all the more difficult to understand and react to from an economic perspective. A case in point which is still under discussion is the intended use of the oil reserves in the Arctic Wildlife Refuge. At present the debate about the exploitation of the Arctic National or ANWR has been in process for 20 years. (Endless debate drains political energy) The debate has tended to centre mainly on the exploitation of a sensitive ecological area as opposed to the economic and political value for the country from a potentially rich oil supply. The divergent viewpoints are expressed in the following assessment of the situation. To generalize, people who care most about the wildlife and wilderness don't give a hoot about the oil; folks fixated on the oil think its value outweighs the wildlife and wildland concerns. The two sides are every bit as polarized and only a little less passionate than those battling over abortion rights† The National Petroleum Reserve of Alaska (NPR-A), is situated between the foothills of the Brooks Range and the Arctic coastline, and is about 120 miles from the Arctic National Wildlife Refuge (ANWR). (Rosen, Y. 2003. ) The Bureau of Land Management ( BLM) estimates the area will†Ã¢â‚¬ ¦ supplement production from the Alpine fields, which hold 429 million barrels and have a daily oil output of about 100,000 barrels.† (US OKs Commercial Drilling in Alaska Oil Reserve) From an economic point of view, the use of this oil reserve will have many positive aspects. Besides the money that would be brought into the economy instead of flowing out in oil purchases, it would have positive internal and political implication as it would obviously mean less reliance on outside oil sources. The Energy Information Agency of the Department of Energy estimates that Alaska oil production averaged 902,000 barrels of oil per day from January through August 2004, about 16 percent of total U.S. oil production during that period, most of which comes from Prudhoe Bay. Opening up even a limited area of ANWR for drilling would offer the prospect of producing from Alaska possibly 40 percent or more of the oil consumed in America. This view can be seen as supporting the idea of an ethical position in the economic exploitation of the region in that it will be for the â€Å"greater good† of the international community to reduce America's oil dependencies. The other side of the argument is that the exploitation of this region for profit will upset the delicate ecological balance and will further have a larger ecological impact. From this point of view the proposed economic actions are unethical. In essence the debate is centered on two very different world views which need an understanding of their underlying biases to be fully comprehended. Many similar points of dissention and lines of argument are formed in the ethical debate that has raged for years about animal experimentation for research. One has the argument for experimentation on the basis of ensuring human safety; while those opposed point out that this view still contravenes basic bio-ethics and the respect for life on this planet. On the one hand business and commerce stress the need to test products before public consumption and on the other hand activists state that many of these tests are simply attempts to placate the public and have no intrinsic scientific worth. Animal rights groups point out that animal experimentation is an extremely cruel endeavor. Among the many different types of animal extermination are the†Ã¢â‚¬ ¦ the toxicity and irritation testing of various consumer products, such as foodstuffs and cosmetics†¦extraction of products, and the development of drugs.† (Rollin, 1992, p. 136) One of the most criticized tests in this regard is the Draize eye irritant test. This test involves â€Å"†¦ placing a substance in the eyes of four to six rabbits and evaluating the effect.† (Thompson 1988, p15.) The results for these extremely cruel experiments are used for cautionary labels on various products such as soaps and cosmetics. One of the main arguments against commercial vivisection is that many scientists claim that there is no real scientific purpose to animal experimentation. This is a particularly the case with regard to animals which are used by pharmaceutical and chemical companies to test the toxicity of drugs and other substances, including cosmetics and household cleaners. This practice has been regularly criticized by doctors and scientists who are of the opinion that these experiments are not only unscientific but also flawed in many respects and even dangerous to human health. Countering these assertions the economists point to the many successful trials that have resulted in positive results and benefits for human beings and human health. The economic world is, as has been stated, becoming more aware of its ethical responsibilities. Some critics still see this new found ethical responsiveness in the scientific and economic communities as a reaction only to pubic opinion and customer perception. However there are also those who are more positive and who think that the economic community is becoming more aware and reacting more positively to the important ethical dimensions of their activities.