- Written by: Kamran Mofid
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A Reflection on Michael Sandel’s new book, 'What Money Can't Buy: The Moral Limits of Markets' and Adam Smith's old book, 'The Theory of Moral Sentiment.'
On my journey from a “Dismal” Economic Scientist to Spiritual Economist, I discovered many gems and realised fully the wrongs of my past beliefs. It was at times a very difficult journey. A journey, that now I fully understand, was very worthwhile and precious.
One of the most important discoveries I made was when I came to understand that I needed to bring spirituality, compassion, ethics and morality back into economics itself, to make this dismal science once again relevant to and concerned with the common good.
Let me, recall a couple of those gems I found, which are very relevant and complimentary to Sandel’s book.
•Living happily is “the desire of us all, but our minds 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.
•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 economic analysis. 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, he 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. 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 refer to him as defending 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.
•The focus of economics should be on the benefit and the bounty that the economy produces, on how to let this bounty increase, and how to share the benefits justly among the people for the common good, removing the evils that hinder this process. Moreover, economic investigation should be accompanied by research into subjects such as anthropology, philosophy, politics and most importantly, theology, to give insight into our own mystery, as no economic theory or no economist can say who we are, where have we come from or where we are going to. Humankind must be respected as the centre of creation and not relegated by more short term economic interests.
•‘Economic rationality’ in the shape of neo-liberal globalisation is socially and politically suicidal. Justice and democracy are sacrificed on the altar of a mythical market as forces outside society rather than creations of it. However, free markets do not exist in a vacuum. They require a set of impartiality in government, honesty, justice, and public spiritedness in business. The best safeguard against fraud, theft, and injustice in markets are the cardinal virtues of justice, temperance, fortitude, and prudence, and the theological virtues of faith, hope, and charity. (See more: http://gcgi.info/how-it-began )
Now I am delighted that Michael Sandel, Professor of political philosophy at Harvard is so eloquently addressing similar issues and concerns. He notes that, “We need to reason about how to value our bodies, human dignity, teaching and learning”. Moreover, he sheds light on why economics needs to be seen not as a science but a moral philosophy. This is music to my ears.
"We live at a time when almost everything can be bought and sold," Sandel writes. "We have drifted from having a market economy, to being a market society," in which the solution to all manner of social and civic challenges is not a moral debate but the law of the market, on the assumption that cash incentives are always the appropriate mechanism by which good choices are made. Every application of human activity is priced and commodified, and all value judgments are replaced by the simple question: "How much?"
I very much like Sandel’s praise of civic duty:
“He certainly provides some fascinating examples of the market failing to do a better job than social norms or civic values, when it comes to making us do the right thing. For example, economists carried out a survey of villagers in Switzerland to see if they would accept a nuclear waste site in their community. While the site was obviously unwelcome, the villagers recognised its importance to their country, and voted 51% in favour. The economists then asked how they would vote if the government compensated them for accepting the site with an annual payment. Support promptly dropped to 25%... Likewise, a study comparing the British practice of blood donation with the American system whereby the poor can sell their blood found the voluntary approach worked far more effectively. Once again, civic duty turned out to be more powerful than money.”
One of the most fascinating questions Sandel addresses is why the financial crisis appears to have scarcely put a dent in public faith in market solutions.
"One would have thought that this would be an occasion for critical reflection on the role of markets in our lives. I think the persistent hold of markets and market values – even in the face of the financial crisis – suggests that the source of that faith runs very deep; deeper than the conviction that markets deliver the goods. I don't think that's the most powerful allure of markets. One of the appeals of markets, as a public philosophy, is they seem to spare us the need to engage in public arguments about the meaning of goods. So markets seem to enable us to be non-judgmental about values. But I think that's a mistake."
Putting a price on a flat-screen TV or a toaster is, he says, quite sensible. "But how to value pregnancy, procreation, our bodies, human dignity, the value and meaning of teaching and learning – we do need to reason about the value of goods. The markets give us no framework for having that conversation. And we're tempted to avoid that conversation, because we know we will disagree about how to value bodies, or pregnancy, or sex, or education, or military service; we know we will disagree. So letting markets decide seems to be a non-judgmental, neutral way. And that's the deepest part of the allure; that it seems to provide a value-neutral, non-judgmental way of determining the value of all goods. But the folly of that promise is – though it may be true enough for toasters and flat-screen televisions – it's not true for kidneys."
Sandel makes the illuminating observation that what he calls the "market triumphalism" in western politics over the past 30 years has coincided with a "moral vacancy" at the heart of public discourse, which has been reduced in the media to meaningless shouting matches on cable TV – what might be called the Foxification of debate – and among elected politicians to disagreements so technocratic and timid that citizens despair of politics ever addressing the questions that matter most.
"There is an internal connection between the two, and the internal connection has to do with this flight from judgment in public discourse, or the aspiration to value neutrality in public discourse. And it's connected to the way economics has cast itself as a value-neutral science when, in fact, it should probably be seen – as it once was – as a branch of moral and political philosophy", which takes us back to where I started above, the very beginning of this reflection: “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 economic analysis…”
Michael Sandel: 'We need to reason about how to value our bodies, human dignity, teaching and learning'
The World would be a Better Place if Economists had Read This Book
...They have not, and thus, have set the world on fire!
This is the Book that the economists by and large have never read
And this is why, by and large, the discipline is in such a mess, discredited and is not trusted
If they had, then they would, among other issues, would have discovered ‘the appreciation of the demands of rationality, the need for recognising the plurality of human motivations, the connections between ethics and economics, and the codependent rather than free-standing role of institutions in general, and free markets in particular, in the functioning of the economy.’
And moreover, if they had, then, they would have accepted the £1000,000 Donation!!
'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, in a letter to the Times (08/03/2011)
A forgotten book by one of history’s greatest thinkers reveals the surprising connections between economics, virtues, progress, fame, fortune, happiness and joy.
‘The Theory of Moral Sentiments is a global manifesto of profound significance to the interdependent world in which we live.’- Amartya Sen
- Written by: Kamran Mofid
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Following on from my recent Blog, “Can the Media be for the Common Good?” (Sunday 27 May 2012), I now wish to shed some light on why I love the BBC, as well as my love for the Guardian that I had highlighted in that earlier Blog.
Given the values I believe in, I have always loved the BBC. However, recently this appreciation has become deeper, reflecting on what might have happened if Murdoch had won over the BBC.
I got to respect the BBC more than ever, when I heard James, son of Rupert, making the statements noted below:
"The only reliable, durable and perpetual guarantor of independence is profit."
"…a “dominant” BBC threatens independent journalism in the UK.” “The expansion of state-sponsored journalism is a threat to the plurality and independence of news provision.”
“The scope of the BBC’s activities and ambitions was “chilling, and organisations like the BBC, funded by the licence fee, as well as Channel 4 and Ofcom, made it harder for other broadcasters to survive”- James Murdoch, Edinburgh Television Festival Lecture
Now I wish to invite the young James to be good enough and listen to words of wisdom below:
As it has been noted by many, “Because of the unique way the BBC is funded by the taxpayer, the BBC is able to some extent to focus their news on what is important rather than simply what would be the most populist news…
The BBC therefore has an ethos where they are responsible to the nation, not the shareholder, and certainly not the owner or the government of the day. They see themselves as answering to the nation. Of course, like any organisation, they also have a degree of loyalty to the organisation itself, but you’re not going to get a situation where the BBC’s political reportage is slanted in favour of one particular party because the director general wants to see them elected. The BBC does not have any axe to grind in this manner. They can — and will — tear down anyone from any political party if they have the relevant information about them…
…but for me the key points are trustworthiness and quality. I trust the BBC. I presume they will get it wrong from time to time, but I trust that their intention is to lay out the facts in a plain and clear manner, and not present things with a bias that suits their own political agenda. Compare this to Fox News which has been accused of bias. I don’t want to hear the news that News Corporation wants me to hear.”
In short, the BBC is brilliant and I love it. It’s not perfect, but it is far better than any of the alternatives, especially Fox News. And whilst at it, James should also read the following and then compare it to the profit- only-driven mumbo jumbo:
“The only reliable, durable and perpetual guarantor of independence is not profit, nor who you know. It is integrity.”— Mark Thompson, Director General, the BBC
20 reasons why I love the BBC
- Written by: Kamran Mofid
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"There is precisely zero chance of austerity working. It is the same as thinking you can escape from gravity by waving your arms up and down."
“Last week was an awesome warning of where go-it-alone austerity can lead. It produced some brutal evidence of where we end up when we place finance above economy and society. The markets are now betting not just on the break-up of the euro but on the arrival of a new economic dark age. The world economy is edging nearer to the abyss, and policymakers, none more than in Britain, are paralysed by the stupidities of their home-spun economics…
It could hardly be more sobering. Money has flooded out of Spain, Greece and the peripheral European economies. Signs of the crisis range from Athen's soup kitchens to Spain's crowds of indignados protesting in the streets against austerity and a broken capitalism. Youth unemployment is sky-high. Less visible is the avalanche of money flowing into hoped-for safe havens in the US, Germany and even Britain.
We live in the aftermath of one of the biggest financial and intellectual mistakes ever made. For a generation the world, with the London/New York financial axis at its heart, surrendered to the specious theory that lending and financial contracts could grow many times faster than the underlying economy. There was a blind belief that in a free market banks could not make mistakes. Free markets didn't make mistakes – only clumsy bureaucratic states made economic mistakes. Or so they said. Financial alchemists, guided by the maxims of free market fundamentalism, could make no such errors.”…