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Written by: Kamran Mofid

Published: 03 May 2012

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Lest We Forget

Ethics boys

Sir, Around 1991 I offered the London School of Economics a grant of £1 million to set up a Chair in Business Ethics. John Ashworth, at that time the Director of the LSE, encouraged the idea but had to write to me to say, regretfully, that the faculty had rejected the offer as it saw no correlation between ethics and economics. Quite. Lord Kalms, House of Lords, letter to the Times (08/03/2011)

I was very pleased to watch the video of a recent lecture by the Nobel Prize-winning economist Amartyn Sen (see below). The lecture and the follow-up discussions and debate, focused on the “ethos of inclusion”, a timely theme, as the global economy is going through a very serious and consequential crises.

Sen, time and again, noted that a key underlying failure in recent decades has been the almost complete decoupling of economics and policy-making from moral and conscientious reflection.

This, in my view, is a hugely important observation, which needs some further reflection.

The framing of economics and economic policy as instruments to achieve broader and more meaningful human and social ends had always been at the heart of the thinking and the subject of intense study by classical economists. What a pity that the modern economists divorced economics from its original roots of ethics, morality, philosophy and theology.

As observed by many, the modern economists tragically forgot that “unless most men and women recognize some sort of moral principles, an economy cannot function except in a small and precarious way. Moral beliefs, sometimes called moral values, make possible production, trading, saving, and the whole economic apparatus. Concepts of right and wrong haunt us in everything we do—whether or not we wish to be concerned with moral questions. All human creations and institutions have some connection with moral ideas and moral habits, for human beings are moral creatures. Concepts of right and wrong haunt us in everything we do—whether or not we wish to be concerned with moral questions.”

In short, the exclusion of the moral quality of economic phenomena in the name of scientific objectivity has produced a reductionist and determinist discipline whose protagonist, the utility maximizing agent, bears little resemblance to the ontological composition of the human being. It eliminates from consideration the apparently ineradicable human need for transcendence together with the virtues with the aid of which humans struggle to respond to this need.

With this in mind, it is worth recalling a passage from what I had written awhile back:

*“Economics, from the time of Plato right through to Adam Smith and John Stuart Mill, was as deeply concerned with issues of social justice, ethics and morality as it was with intrinsic economic analysis and questions of price theory. Most economics students today learn that Adam Smith was the ‘father of modern economics’ but not that he was also a moral philosopher. In 1759, sixteen years before his famous Wealth of Nations, Smith published The Theory of Moral Sentiments, which explored the self-interested nature of man and his ability nevertheless to make moral decisions based on factors other than selfishness, such as empathy and the desire for approval from others.

In The Wealth of Nations, Smith laid the early groundwork for economic analysis, but he embedded it in a broader discussion of social justice and the role of government. Students today know only of his analogy of the ‘invisible hand’ and his advocacy of free markets. They ignore his insight that the pursuit of wealth should not take precedence over social and moral obligations, and his belief that a ‘Divine Being’ gives us ‘the greatest quantity of happiness’. They are taught that the free market as a ‘way of life’ appealed to Adam Smith but not that he distrusted the morality of the market as a morality for society at large. He neither envisioned nor prescribed a capitalist society, but rather a ‘capitalist economy within society, a society held together by communities of non-capitalist and non-market morality’.

As it has been noted, morality for Smith included neighbourly love, an obligation to practice justice, a norm of financial support for the government ‘in proportion to [one’s] revenue’, and a tendency in human nature to derive pleasure from the good fortune and happiness of other people.”

*“Living happily is “the desire of us all, but our mind is blinded to a clear vision of just what it is that makes life happy”. The root of happiness is ethical behaviour, and thus the ancient idea of moral education and cultivation, is essential to ideal of joyfulness.”

I rest my case.

Watch the video:
Amartyn Sen: Towards an Ethics of Inclusion

Prof. Amartya Sen - David Hume and the Demands of Ethics

Angus Deaton in Conversation with Amartya Sen, "Economics with a Moral Compass?"

Nothing short of a sea change in education and teaching values can save the world