Ethical Economy or Ethics and Economics: The need for a global and cosmopolitan Ethics of The Economy
The millennium project of the UN lists some of the serious problems of today’s world: environmental degradation, climate change, global poverty and inequality, mal-functioning economic systems and greater differences between the developed and developing world. All the problems are indeed problems of justice and political ethics, but they are also problems of political economy and about how we organize our economic systems of market and capital. Some people see the global crisis as a problem of neoliberalism where beliefs in free markets without state intervention have destroyed social cohesion at the global level. Others argue that we need global cosmopolitan governance to solve our present problems of the lack of economic ethics and political governance of global economic institutions.
I believe that this discussion about ethics and economics and the focus on the idea of economic ethics or ethical economy can be clarified by looking at the work by Peter Koslowski (1952-2012) who, over many years, worked on the relation between ethics and economics. In particular, he was interested in the principles of ethical economy, and later he also applied this discussion to the foundations of philosophy of management and corporations. Koslowski wanted to develop a philosophy of ethics and economics or ethical economy. In Peter Koslowski’s book Principles of Ethical Economy (2008) we find the basis for such an approach to philosophy of economics, management and business. Koslowski argued that ethics and economics must accept one another and unite themselves in a comprehensive theory of rational action. With the idea of ethical economy, Koslowski contributed to define the outline of the discussion of the relation between ethics and economy in German political economy, law and business ethics.
According to Koslowski, a comprehensive theory of economics cannot be based only on self- interest, but must include a broader theory of the good. However, ethics must also have a realistic economic dimension, being aware of the rationality of economic self- interested maximization. Accordingly, as a general concept of political economy, ethical economy unites economic and ethical judgments in a unity. It is important to emphasize that this theory benefits from the general instruments of economic theory (micro-economics, macro-economics, economic analysis) while at the same time also using insights from ethical theory to analyze the goodness of norms and institutional arrangements.
Accordingly, ethical economy can basically be defined as the theory of the ethical presuppositions of the economy and of economic ethics. This is acknowledged by the new institutional economics that states that market actors and economic markets are not independent of social, institutional and cultural arrangements in society. Political economy examines the social, legal and institutional foundations of the market economy (price mechanism, market interaction, supply & demand, profits, ownership, contracts, rights, justice), while ethical economy investigates the ethical norms and principles of these foundations based on implied ethical understanding (e.g. trust) and ethical norms of justice of the institutions of the economic system.
So, accordingly, the reflections on the ethical economy or ethics and economics are essential for developing a global system of ethics.
Dr Rendtorff is the co-editor of the Series Ethical Economy.