Posts Tagged ‘ethics’

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During last night’s discussion of capitalism verusus Catholicism, I made the point that everyone—rich and poor—is negatively affected by capitalist inequality.

My argument was that poor people are put at a distinct disadvantage within an “economy of exclusion,” because they are denied the basic material conditions necessary to sustain not only their individual lives, but also their participation in the wider society. But, I went on, rich people are also hurt by inequality, in the sense that are forced to act in selfish and unethical ways in order to maintain their positions of privilege.

I then referred to the psychological literature on the behavioral effects of inequality, about which I’ve written before (here and here). The latest contribution to this literature was just published in the Journal of Personality and Social Psychology: “Social Class, Power, and Selfishness: When and Why Upper and Lower Class Individuals Behave Unethically,” by David Dubois, Derek D. Rucker, and Adam D. Galinsky. The authors set out to disentangle the differences between unethical and self-serving behavior in relation to social class. Here’s what they found:

Both higher and lower social class individuals can engage in unethical behavior, but the target of that behavior might often differ: The unethical behavior of upper class individuals is more likely to be self-beneficial, whereas the unethical behavior of lower class individuals is more likely to be other-beneficial. This parsimonious account complements and qualifies recent work on social class and unethical behavior (Piff et al., 2012) by advancing the argument that the link between upper social class and unethical behavior occurs primarily for self-beneficial reasons.

As I’ve argued before, the point is not that rich people per se display behavioral pathologies—or, for that matter, that poor people are noble. It is fascinating that there are systematic differences in the target of their unethical behavior. But I’m more interested in the idea that both groups, within a highly unequal society, are forced to behave in ways many of us would consider unethical, whether self-serving or altruistic.

What I had in mind when I made my remarks was, of course, Marx’s statement “that the capitalist is just as enslaved by the relationships of capitalism as is his opposite pole, the worker, albeit in a quite different manner.”

But after the fact, as I was driving home from the discussion, I had another thought: what if that is the true content of the preferential option for the poor? We often think of the preferential option as a kind of basic moral test, in the sense of judging the adequacy of current economic arrangements in terms of how the most vulnerable members of society are faring. But what if there is a somewhat different interpretation—that changing society to eliminate poverty will benefit not only the formerly poor but also everyone else? In other words, creating institutions that eliminate the kinds of grotesque inequalities that characterize contemporary capitalism will benefit even those who are not poor, since they will no longer be forced to lose or undermine or otherwise forsake their humanity by engaging in unethical self-serving behaviors. Thus, eliminating capitalist inequality can be seeing as restoring humanity to everyone, both poor and rich.

In that sense, the poor and vulnerable represent a universal class—not because of some kind of inherent nobility, but because eliminating the conditions of poverty and vulnerability will benefit not only themselves, but all others in a capitalist society.

That—and not pity or charity or individual instances of social mobility—may be the truly radical content of the preferential option for the poor.

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I know. I wrote I wouldn’t be able to comment on Thomas Piketty’s book, Capital in the Twenty-First Century, until I found the time to read it, which won’t happen until the semester is over.

But the debate about the book is taking off and I simply don’t have the patience to wait until my lectures are over and final grades turned in. So, permit me, for the time being, to comment on the commentary.

Thomas Palley has observed that “Neoclassical economists have always talked of capital (K). The forbidden subject is capitalism.” Yes, but, even in talking of capital, they have a problem, one that was addressed during the 1960s in the Cambridge capital controversy. As Joan Robinson argued (and as my students used to learn in Principles of Microeconomics), capitalist income (total profit as the return on capital) is defined as the rate of profit multiplied by the amount of capital. But the measurement of the “amount of capital” involves adding up quite incomparable physical objects – adding the number of assembly-lines to the number of shovels, for example. That is, just as one cannot add heterogeneous “apples and oranges,” we cannot simply add up simple units of “capital,” unless one knows the price of capital, which is the rate of profit. Thus, you can’t use the amount of capital (as in the neoclassical aggregate production function) to determine the rate of return on capital—unless you already know the rate of profit.

That’s the thorny problem Paul Krugman simply sidesteps in defending Piketty’s use of the aggregate production function. Even Paul Samuelson had to concede the validity of Robinson’s critique.

But Krugman is right in arguing “you really don’t need to reject standard economics either to explain high inequality or to consider it a bad thing.” I agree. What’s interesting is that, as Piketty shows, it’s possible to analyze and criticize inequality using some of the tools of neoclassical economics. Not easy but it’s possible. Which means that neoclassical economists, for the most part, choose not to try to analyze and criticize inequality. In other words, the fact that they don’t spend much of their time—in teaching, research, and offering policy advice—in analyzing and criticizing the grotesque levels of inequality we’ve seen in recent decades is, in part, an ethical question. They could but they don’t.

And that’s perhaps an even more damaging critique of mainstream economics than the capital controversy itself.

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Special mention

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I haven’t yet seen a copy of Take Back the Economy: An Ethical Guide for Transforming Our Communities, by J. K. Gibson-Graham, Jenny Cameron, and Stephen Healy. But here’s what a trusted friend wrote:

The book reframes the economy as a site of ethical action, not expert intervention. Not only does it provide a new way of thinking about the economy and our actions within it, it also explores what people are already doing to build ethical economies. The book is accessible and suitable for activists and academics alike.

That’s good enough for me!

These days, political discourse in the United States is governed by what Benjamin Hale calls the “veil of opulence.”

Those who don the veil of opulence may imagine themselves to be fantastically wealthy movie stars or extremely successful business entrepreneurs. They vote and set policies according to this fantasy. “If I were such and such a wealthy person,” they ask, “how would I feel about giving X percentage of my income, or Y real dollars per year, to pay for services that I will never see nor use?” We see this repeatedly in our tax policy discussions. . .

Of course, the veil of opulence is not limited to tax policy. Supreme Court Justices Samuel Alito and Antonin Scalia advanced related logic in their  oral arguments on the Affordable Care Act in March.  “[T]he mandate is forcing these [young] people,” Justice Alito said, “to provide a huge subsidy to the insurance companies … to subsidize services that will be received by somebody else.” By suggesting in this way that the policy was unfair, Alito encouraged the court to assess the injustice themselves. “If you were healthy and young,” Justice Alito implied, “why should you be made to bear the burden of the sick and old?”

The answer to these questions, when posed in this way, is clear. It seems unfair, unjust, to be forced to pay so much more than someone of lesser means. We should all be free to use our money and our resources however we see fit. And so, the opulence argument for fairness gets off the ground.

But, contra Hale, John Rawls’s veil of ignorance is not the only alternative to the veil of opulence. In fact, if we admit we live in a society with different economic classes, the best Rawls’s approach gives us is a somewhat more equal distribution of income. What if, instead, we cast off all veils—of both opulence and ignorance—and started instead with the situation of people where they are within the class structure. Then, we would be able to see that there is a large class of people who work and get insulted and injured and live in poverty or risk falling into poverty and who have little say over what goes on in their places of work or in the political system—in short, who suffer the conditions and consequences of exploitation on a daily basis.

In liberation theology, it’s called the preferential option for the poor. In class terms, it’s the injustice of exploitation. Either way, it’s decidedly neither the veil of opulence nor the veil of ignorance.

The task, it seems to me, is to start from where people are, out in front of any and all veils, and then make that the basis of a universal claim: the idea that ending exploitation will benefit everyone, both those who are currently exploited and those who seem to benefit from the exploitation of others. Just as bourgeois ideology makes a universalizing claim—that everyone is or can become bourgeois—so the claim of working people can be a different universalizing claim, that a new kind of fairness is possible: from each according to ability, to each according to need.

What is the case for taking ethics in economics seriously?

I have argued that the ethical moment of the gift is a product of the uncertainty of gift-giving.

George DeMartino [pdf] makes a similar argument concerning the relationship between ethics and economics: ethics is born out of the uncertainty both of economic knowledge and of the consequences of economic policies.

Economists operate in a context of epistemic insufficiency. We cannot know in advance what will be the full effects of our interventions. There are always unintended and unforeseeable consequences, and sometimes these are more substantial than the intended and foreseen consequences. Moreover, economists exert influence in the world without control over that world. And so they cannot ever be sure that even the best designed economic interventions will achieve their purposes.

I have only one quibble with DeMartino: he presumes that economists “enjoy an intellectual monopoly over a body of knowledge that is vital to social welfare.” I’d put it differently: economists behave as if they had an intellectual monopoly over economic knowledge. But they don’t have such a monopoly. There are plenty of other kinds and forms of economic knowledge, among academic economists (e.g., the differences between mainstream and heterodox economists), among academic noneconomists (from anthropologists to literary critics), and nonacademics (the proverbial person in the street). And it’s precisely because academic economists don’t have a monopoly of knowledge, they spend no small of amount of time both asserting epistemic authority and bashing other economic knowledges.

That epistemic violence is another reason for taking up the issue of ethics in economics.

A year ago, I noted that economists had no ethics and failed to get any in the Denver meetings.

Well, they still don’t have any ethics but, after spending a year studying “the association’s existing disclosure and other ethical standards and potential extensions to those standards,” now they’ve adopted a “statement of principles” regarding publications in the journals of American Economic Association.

Note that the AEA adopted some guidelines, without any penalties or means of enforcement. And, even more important, there was no attempt to think seriously about or adopt any standards concerning the implications of their work for the people who are affected by their teaching or advice and policy analyses.

Economists still don’t have any ethics.