Economics in Search of a Moral Philosophy

Abstract

The purpose of this essay is to review the state of economics as a discipline in light of how and to what extent ethical considerations and the precepts of moral philosophy affect the theory and application of economics. In its pursuit for purely ‘objective’ analyses and, thereby, attain the status of a science, modern neo-classical economics is constrained by self-imposed limitations in making value judgments about justice and fairness in a market economy. Adam Smith’s idea of “invisible hand” of the market driven by self-interested behaviour has sometimes been interpreted, wrongly, as a kind of market fundamentalism that ignores many failures and brutalities of the modern-day capitalism. While many ethical elements do go into economic policy analyses, these are still constrained by the discipline’s neglect of non-market activities and its tendency to undervalue the aspects of well-being which cannot be easily measured in monetary terms. This essay argues that economists may do better by improving their understanding of the complexity of human behaviour and the functioning of market institutions by embracing new ideas developed in other disciplines, such as neuroscience, experimental psychology and political sociology; they also need to allow more scope for ethical judgments in their choice of topics for inquiry, in their methodological approaches and in drawing policy conclusions. Without losing the analytical rigour, which is the hallmark of the discipline, economics needs to be broader in order to be better.