Archive for the ‘ethics’ Category

The Larry Summers’ Memo

March 13, 2015 5 comments

from Lars Syll

The Memo

DATE: December 12, 1991
TO: Distribution
FR: Lawrence H. Summers
Subject: GEP

larry-summers-is-sleepy-three-thumb-480x350‘Dirty’ Industries: Just between you and me, shouldn’t the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]? I can think of three reasons:

1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.  Read more…

Categories: ethics

A case study of Harvard Business School ethics

December 12, 2014 Leave a comment

from David Ruccio


Or, in this case, only at Harvard. . .  Read more…

Categories: ethics

Ethics, goals, and well-being

November 1, 2014 5 comments

from Neva Goodwin

Twentieth century economics supported, implicitly when not explicitly, the idea that neither ethics nor history nor the institutions of law or culture were of much economic importance – as long as these things did not get in the way of “free” market functioning. This case was pressed with special vigor from about 1970 to the end of the 20th century by economists from what was known as the Chicago School.

Even early on in this period there began to be concern that individuals acting solely to achieve their personal goals could not be counted on to operate a business in ways that would be good for the business itself. This real-world concern, combined with the dogma that people only act on the basis of self-interest, resulted in various efforts to motivate business leaders by offering rewards for specific markers of success (such as the price of the company’s stock). These efforts had the unintended consequence of escalating compensation of top management in the United States to levels that were many times greater than anything that had previously been considered normal (or were normal in other countries). They also resulted in an increasingly short-term vision on the part of business leaders. Very large scale frauds, Ponzi schemes, tax evasions, and environmental and human costs that businesses externalized during this period have made it increasingly evident that society cannot afford to encourage a culture of economic activity that ignores all normal human motivations except the selfish pursuit of personal gain.  Read more…

Clockwork Justice?

July 4, 2014 6 comments

from Peter Radford

One of the central beliefs held by people who advocate a market based worldview is that, somehow, markets are apolitical, they are antiseptic, they are objective. This is nonsense. It is dangerous nonsense.

That markets work according to rules does not make them objective or even impersonal. Rules are human constructs. Ergo markets are simple extensions of base human attitudes and are thus fraught with all the frailties that encumber all human activity.

The sanitization of markets, by which I mean the constant effort to make them appear “natural” or “neutral” and thus “fair”, is an ideological cover that market ideologues desperately, and successfully, propagate. It is a cover to mask the consequences of this supposed naturalness and to give it the imprint of ethical cleanliness. After all if the outcomes of a market are simply those of nature working her course, who are we too argue?

Economists, or at least orthodox economists, are the great cheerleaders of this ruse to get us all to accept our fate. Over the course of the development of economics much work has been put in to the elucidation of the mechanics of markets. There is an overpowering sense of determinism in the result. Start here, crank the machinery, and let the outcomes just flop out. The market is such that any outcome is “correct”, because left untouched market machinery always hones in on the superior outcome. Thus the current distribution of income “must” be the correct one: the market created it and the market is always, unerringly, right. Read more…


May 21, 2014 21 comments

from Peter Radford

All the justified fuss over inequality in recent months begs a rather significant question doesn’t it? If we are all so vexed over inequality we must have some yardstick or some more ideal state we could call equality. What is it?

The problem I have is that equality almost immediately disappears into a fog.

There are very few of us who would argue for the blandness of total equality. That seems to be as inhuman as extreme inequality. After all we are all very different and thus there is an inherent tendency towards lumpiness in society. Some people will always outperform others whilst some will underperform. Some will be richer and others poorer. This much is so simple we can move on quickly. After all we don’t want to fall into the trap that has ensnared orthodox economists: they cannot do their work without expunging humanity from their equations. Else all that lumpiness gets in the way of the smooth operation of maximization, efficiency, and rationality. So they sweep it away peremptorily by making absurd assumptions and then pretend to have discovered something of extreme value about humanity. Ridiculous, I know, but they plod on stupidly despite it.

So what is equality in the context of our discussion of inequality?  Read more…

Is medicine a model for ethics in economics?

February 24, 2014 7 comments

from Peter Radford

A recent correspondent asks whether medicine could act as a template for the importation of ethical standards into economics. On balance I don’t think it can. Here’s why:

Medicine consists of a practical part that faces outward towards its customers. We call those customers patients. From the earliest times medicine has adopted the credo ‘first do no harm’ which forms the ethical bedrock for all subsequent standards. This is relatively easy to do since ‘doing harm’ is quite quickly identified. Even then such an ethical background failed to stop the development and implementation of some outrageous and harmful medical techniques. In the modern era the ‘doing no harm’ ethic has allowed the creation of a number of rules that govern doctor activity and provide a measure of protection to patients. Those rules are enforced by various governing bodies that not only establish and monitor the rules, but also govern the very process that allows someone to call themselves a doctor in the first place. This governance structure gives practical medicine a coherence and shape that are identifiable by the public, and ensures that the profession recognizes it relationship with society at large. Read more…

Skill or dumb luck?

January 9, 2014 19 comments

from Peter Radford


Be very wary of anyone who claims that their wealth is the result of great skill. Or even hard work. Luck had to play a part. Usually a very significant part. And dumb luck ought not be the basis upon which we build intelligent, caring, or stable societies.

Be wary, also, of arguments against popular policies that include references to envy or jealousy. Being opposed to plutocracy does not necessarily imply either. Those arguments are old and have been used to undermine the moral authority of populism since democracy first reared its ugly head and disrupted the ease with which our leaders could syphon off wealth for their own enjoyment.

The two go hand in hand.

Populists will be accused of devaluing hard work and skill, and of stirring up the evil sentiment of envy that is presumed to lie close to the surface in the squalid and uneducated minds of the masses. By being both an advocate of sloth and jealousy a populist is easily and summarily dismissed as being irrelevant to policy discussions and properly ignored by serious analysts everywhere,

Where being serious means combining allegiance to the economic status quo with a suitable level of puritanical moral self-abuse.  Read more…

Categories: ethics

“Such an economy kills”

December 3, 2013 79 comments

from David Ruccio

The other day, I posted a few paragraphs from the new Roman Catholic Pope Francis’s apostolic exhortation Evangelii Gaudium (which translates as “The Joy of the Gospel”).

I’ve now had a chance to read the entire text (available here), which seems to have gotten some notice around the world (although, best I can tell, there’s still no comment from the likes of Paul Ryan, who would steal bread from the mouths of the poor in the name of saving them from anything but the market).

The document as a whole is a call to a new kind of evangelization on the part of Catholics, both clerical and lay. (On Michael Sean Winters’s interpretation, “The Pope is calling the Church to be a missionary Church, an evangelizing Church, and the privileged path of fidelity to the Gospel is service to the poor.”) The main sections on economics are located in chapter 2 (“Amid the Crisis of Communal Commitment”) and chapter 4 (“The Social Dimension of Evangelization”).

The paragraphs I posted before are from chapter 2, in which Francis identifies the nature of the world in which he is making his call for a new missionary church. Permit me to repeat them here: Read more…

Categories: ethics

Ethics and Economics

November 11, 2013 Comments off

from Maria Alejandra Madi and the WEA Pedagogy Blog

After the Second World War,  the idea of  development was associated with the active role of the national state that would support the sustainability of economic growth with social inclusion. After the Bretton Woods crisis, in the seventies, and with the advance of financial globalization, the institutional arrangement of the Welfare State has been shaken. As a result, both the  instruments of economic policy and the attendance of social demands were put in question in a context of the redefinition of  the scope of public policies.

After some decades, it is a reality that global economic  integration, guided by market credibility and financial rules, has broadened social exclusion. As a matter of fact, the new interconnections between wealth, production, labor and consumption have strengthened inequalities. Indeed, the apprehension of the current global inequality issues involves the understanding  of the deep tensions between the hypertrophy of finance in economic dynamics and the expectations of society about citizenship, labor and income.   read more here

How free markets corrode your character

July 16, 2013 2 comments

from Lars Syll

For centuries, economists have argued that nothing beats a free market for efficiency. Unfettered competition leads to lower prices and better products, more innovation and greater choice. But market forces may also make people less ethical and more selfish.

There is no shortage of speculation on the topic by philosophers and social scientists. But the supply of empirical evidence on the topic has not kept up with the demand. Armin Falk and Nora Szech, two behavioural economists from Germany, have made a contribution.

In a series of experiments, a group of German volunteers were offered a choice between Read more…

Creating an Economics for the 21st Century

May 15, 2013 22 comments

guest post from Rob Johnson

In the wake of the 2008 financial crisis, many of our policy makers and top economists are still stumbling in the dark.

One needn’t look far for proof. The symptoms of their failure are everywhere. Financial markets remain too volatile and crises too common. Inequality is raging and increasing around the globe. And environmental damage continues unabated, with rising climate volatility belying claims that we can experience sustained and broad based prosperity without major changes in the global economy.

A key part of this problem – and one that hasn’t been adequately explored – is the economics profession.  Read more…

Destroying the lair of the budget-balancing cretins

May 13, 2013 2 comments

from Dean Baker

By now almost everyone knows of the famous Excel spreadsheet error by Harvard professors Carmen Reinhart and Ken Rogoff. It turns out that the main conclusions from their paper warning of the risks of high public sector debt were driven by miscalculations.

When the data are entered correctly, this hugely influential paper can no longer be used to argue that the United States or other wealthy countries need fear a large growth penalty by running deficits now. There is no obvious reason that governments can’t increase spending on infrastructure, research, education and other services that will both directly improve people’s lives and foster future growth.

With the advocates of austerity on the run this is a great time to pursue the attack. The public should understand that the often expressed concerns about long-term growth, the future, and the well-being of our children are simple fig-leafs for inhumane policies that deny people (a.k.a. the parents of our children) work and redistribute income upward. Read more…

Economic Thought: Special Issue on Ethics and Economics

Economic Thought - History, Philosophy, and Methodology
An open access, open peer review journal from the World Economics Association
Vol 2, No.1, 2013 – Special Issue on Ethics and Economics

Download issue in full (PDF)

Ontological   Commitments of Ethics and Economics

Karey Harrison

Abstract Download   PDF
Codes of Ethics   for Economists: A Pluralist View

Sheila C Dow

Abstract Download   PDF
No Ethical Issues   in Economics?

Stuart Birks

Abstract Download   PDF
Professional   Economic Ethics: Why Heterodox Economists Should Care

George   DeMartino

Abstract Download   PDF
And the Real   Butchers, Brewers and Bakers? Towards the Integration of Ethics and Economics

Riccardo   Baldissone

Abstract Download   PDF

Volunteers needed to start WEA national chapters. If interested, email

WEA Young Economists (Facebook Group – 8 days old – 260 members – join today)

Error Correction and Ethics

April 23, 2013 15 comments

from Peter Radford

You probably have missed it, but there is a major furor within the economics profession concerning the findings of an academic paper written by Carmen Reinhart and Kenneth Rogoff in 2010. The profession issues a torrent of papers annually, most of which remain scarcely read and massively under-appreciated. Probably deservedly so since the sole objective of most is to meet the check-box requirement of publication that dominates academia. This desperation to publish to build reputation and to demonstrate mastery of the subject to a determinedly self-referential peer group is one of the causes of the rapid decline within economics: it encourages ever more fragmentation of the subject into ever less relevant sub-disciplines, and has resulted in a near total elimination of a common understanding – or common memory – of its development.

It has also produced sloppiness.

The R-R paper has now become a cause-celebre of such sloppiness.

This would not normally be worthy of passing along to a broader audience – who cares what academic economists write after all? – were it not for the particular topic that R-R covered.  Read more…

Standard & Poor’s

February 6, 2013 Leave a comment

from Peter Radford

It is good news that Standard & Poor’s is being sued by the government. S&P was complicit in the market rigging that led us to the bubble and the destruction of a boatload of wealth. It has escaped, thus far, any serious damage from its involvement in the creation of crisis and deserves to be taken down a peg or two. The amount of damages being sought is roughly equivalent to one year’s income of S&P’s parent company McGraw-Hill. That’s not enough to put the company out of business, but it is noticeable.

Anyone who is committed to a free market system will applaud the suit. Market rigging is about as serious a problem as can be imagined in a free market. Read more…

Categories: ethics, financial crisis

Wall Street speculation tax: a way to address corruption

July 11, 2012 4 comments

from Dean Baker

Over the past week, the business news has been filled with stories about major British banks manipulating the LIBOR rate. While these stories are undoubtedly confusing to most of the public, which is not generally familiar with the intricacies of different interest rate indexes, the basic story is fairly simple: Big banks were caught lying about interest rates in order to make big profits.

For the most part the victims were other high-rollers who were taking the other side of bets on complex financial derivatives. However there were also pension funds and even governmental units such as school districts and park services that were persuaded by their financial advisers to get into this high-stakes game. These folks were among those who lost because of the LIBOR liars.

A Fundamental Problem  Read more…

Categories: ethics

Bain Bashing – The Folly of Modern Business Theory

July 9, 2012 5 comments

from Peter Radford

We are entering the season of Bain bashing. Rightly so too. Romney’s long association with Bain and its activities, and his reliance on his business experience as a primary quality for election as president, bring Bain into focus. Its way of doing business, and its view of the world now need scrutiny because of the Romney connection. But I would suggest, they need scrutiny anyway. For Bain is just another of the very many manifestations of the post Reagan style of capitalism that pervades our economy. So its beliefs, its methods, and its results stand as exemplars of that era. Since that era just produced an economic depression, a great gulf in incomes, inequality, and rampant banking errors we are justified at offering a critique. If we indict Bain, we indict Romney. So let the Bain bashing commence. Read more…

Categories: ethics

A Reply: Economics and Ethics

June 7, 2012 8 comments

from Peter Radford

A correspondent of mine suggests we need to define both economics and ethics better if we are to resolve my ongoing angst with the state of the two combined.

This is true.

Ethics is, I think, well defined. The literature is full of notions of ethics and its evolution. Behavior that was once ethical is no longer so. Behavior that was once unethical is now acceptable. Clearly ethics is a relative and socially determined concept with changing views altering where its boundaries are. Currently there are behaviors falling outside those boundaries that economists seem blithely to continue to accept. This I attribute to the general out of date nature of the discipline. Remember that economics has successfully sealed itself off from reality, other disciplines, and society at larger for a while now. Instead it has taken on board its own vision of society, its own view of human nature, and its own calculus of how people interact. This allows it to have its own ethical standards separate from those being developed in the outside world.

Thus economists can genuinely argue that competitive pressures will reduce the incidence of unethical behavior. After all they invoke those pressures to resolve practically every other social problem, so why not ethics? Those of us less convinced by the ubiquity and efficacy of market forces would prefer to see a more interventionist element to ethics – a set of rules perhaps – to establish boundaries of behavior.

This is problem enough. More problematic is defining what economics is at all. Read more…

Categories: ethics

Pay-to-play economists

from David Ruccio

In an excerpt from his new book, Predator Nation, Charles H. Ferguson, the director of Inside Job, describes how “significant portions of American academia have deteriorated into ‘pay to play’ activities.”

Academics on industry payrolls are now so numerous and powerful that they can often prevent universities, professional associations, and academic journals from adopting or enforcing strong conflict-of-interest policies. They also have a chilling, even dominant, effect on several areas of academic research and policy analysis.

The sale of academic “expertise” for the purpose of influencing government policy, the courts, and public opinion is now a multibillion-dollar business. Academic, legal, regulatory, and policy consulting in economics, finance, and regulation is dominated by a half dozen consulting firms, several speakers’ bureaus, and various industry lobbying groups that maintain large networks of academics for hire specifically for the purpose of advocating industry interests in policy and regulatory debates.

He illustrates his argument with two examples, both economists: one a Republican (R. Glenn Hubbard), the other a Democrat (Larry Summers). Read more…

Libertarian Chaos

May 18, 2012 56 comments

from Peter Radford

There’s not much to say. After all the brinkmanship and game playing over the debt limit last year, and after being ridiculed by pretty much everyone, the Republicans are back at it. In an election year and with last year’s plunge in the polls as evidence that voters just don’t agree with their tactics.

What am I missing?

Apparently nothing.

The Republican extremist caucus in the House is setting its eyes on another confrontation with Obama over the debt ceiling. They want another deal. This after reneging on the last deal only a few days ago.

Are they kidding?

No they’re just extremists. Read more…


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