DP#2. The forgotten ethics

Why is it that when we work for the poor, we paradoxically become richer? This contradictory question reflects today’s economic non-sense. Despite the critiques and complex analysis that heterodox approaches bring, a strong and obstinate inclination to reduce all social problems to technical solutions remains. Development issues (including poverty reduction) cannot escape this modern movement.

Neoliberal economic policies results, funded on the neoclassical economic theory, are a good example of our lack of ethical concern. For example, poor people in poor countries are facing an increase on food inflation. According to the World Bank, since June 2010, an additional 44 million people fell below the poverty line as a result of higher food prices.

This situation goes beyond the economic or social matter. The tipping point belongs the sphere of ethics. It is quite palpable that the gap between economy (as a science and political mechanism) and ethics is increasing.

We find three different explanations for this tearing apart. First, economists suffer from an extreme fascination towards mathematical formulation and the modeling of problems traditionally considered among the political- economic or philosophical- ones. The desire of Leon Walras (founder of the neoclassical school of thought) was to turn economy into a pure science, such as physics. Welfare economy has proved its lack of interest for any complex ethical concerns. In fact, economists (or policy makers) avoid what models are unable to explain.

Secondly, due to this fascination and in order to make it real it becomes necessary to make everything measurable and predictable, including human action. Neoclassical economy was built on the basis of individualism and understands self-interest as the only possible human reason.  The homo economicus was born.

I believe our behavior can be conducted differently, by generosity, love or just unconscious impulses. To me, a mother risking her own life to save her child shows the most rational and human behavior. Well, the conceptual basis of modern economy is too simple and limited to understand, influence or transform the social reality.

Third, the former statement is just focused on exchange. However, there are many other important economic relationships, such as production and distribution. Here ethics must play a major role. Economic productivity depends on cooperative spirit, credibility and self-discipline, as well as on compromise with efficiency at work. Regarding distribution, the ethical values of sustainability and preservation of the environment are extremely important.

Japan is a great example of a society that achieved success by modifying the guidelines of economic atmosphere. Japan created a set of moral values for economic activity that emphasized group responsibility, interpersonal trust, mutual support and the implicit contracts that guide individual behavior, which had important a great incidence on development (Sen, 2003).

Ethics, and specifically, ethics on business could be one of the most important productive assets that an economy or society could have; it is one element of our social capital. However, consider it requires re thinking and re –building the foundations of our society. As I said before, as development stills remain as a technician problem that requires technical solutions, the world will still be looking to the wrong direction.

References

Sen, Amartya: “Does business ethics makes economics sense” in: Business ethics quarterly, volume 3, 1993.

Sen, Amartya: “Ética de la empresa y desarrollo económico” in Cortina, Adela (editor): Construir confianza. Ética de la empresa en la sociedad de la información y las comunicaciones.  Trota S.A. Madrid, 2003.

Food price watch. Report April 2011. World Bank, poverty reduction and equity group.  http://www.worldbank.org/foodcrisis/foodpricewatch/april_2011.html

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