Moral Markets: The Critical Role of Values in the Economy by Paul J. Zak (Book Review)

This volume contains the fruits of a two-year seminar on ethics and economics funded by the John Templeton Foundation and administered through the Gruter Institute for Law and Behavioral Research. Participants came from the social sciences, natural sciences, and humanities, and included Nobel Laureate Vernon Smith and other figures such as Frans de Waal, Herbert Gintis, Robert Frank, and Robert Solomon (for whom the book is dedicated in memoriam). The book’s editor, Paul Zak, is a pioneer in the emerging field of neuroeconomics, which uses medical technology to discover the physiological manifestations of cooperative and altruistic behavior. A theme of the book is that human behaviors are moderated by biological realities that have important implications for the operation of society and markets. In particular, recent laboratory findings have uncovered the psychological interconnections between people that create organic interactions that do not fit neatly within the rational choice mode

Moral Reasoning in Economics

The Teagle discussion analyzes why economics teachers have become overly narrow in their pedagogical perspectives, thus pulling back from fully supporting the liberal arts agenda. In Chapter 1, Colander and McGoldrick (p. 6) observe that the generalist approach that excites students by asking big think questions across disciplinary boundaries fails to generate new knowledge, while the narrow little think questions that can be answered often fail to develop the critical thinking skills necessary for liberal education. As one example, the authors cite the decline of moral reasoning in economics, which was once center stage in Adam Smith\u27s analysis of society. Since the rise of positivism in the late nineteenth century, moral reasoning has become an intellectual casualty

The Efficiency of Producing Alcohol for Energy in Brazil: Comment

In a 1982 issue of this journal, Michael Barzelay and Scott R. Pearson examined the social costs and benefits of producing ethanol motor fuel in Brazil. They conclude that ethanol fuel was economically infeasible in 1981 and will remain so unless petroleum prices rise dramatically in the future. We seek first to call attention to some problems in their data and second to suggest that their analysis include broader considerations. Quite different conclusions could result

Saving Adam Smith: A Tale of Wealth, Transformation, and Virtue

Every once in a while a great business novel is published. This is one of those novels. Follow an up-and-coming graduate student on a picturesque adventure involving terroristics and love, and learn, or better yet, re-learn, correctly this time, a little economics.https://scholarship.richmond.edu/bookshelf/1065/thumbnail.jp

Economics as Applied Ethics: Value Judgements in Welfare Economics by Wilfred Beckerman (Book Review)

This is a well-written textbook geared to advanced undergraduate or graduate students of economics, many of whom are largely and regrettably innocent of the ethical problems inherent in conventional economic analysis. It compares with Daniel M. Hausman and Michael S. McPherson’s Economic analysis, moral philosophy, and public policy (2006) and Johan J. Graafland’s Economics, ethics, and the market: introduction and applications (2007). The book presupposes a fair amount of knowledge in both economics and ethics (it does not intend to be a primer in either). The author is professor emeritus at Balliol College, Oxford and honorary visiting professor of economics at University College London, and this book arose from a third-year course at the latter school in which he participated

Does Free Trade Cause Hunger? Hidden Implications of the FTAA

Voluntary free trade has the potential, slowly and gradually over time, to create general opulence because it allows workers to acquire greater competency and specialization: in a word, workers become more productive. The creation of a Free Trade Area of the Americas (FTAA) would expand market areas and thereby potentially contribute to raising future living standards of workers. This paper seeks to analyze the theoretical basis for trade, provide an economic overview of FTAA countries, and analyze the winners and losers from trade

The Ethics Behind Efficiency

The normative elements underlying efficiency are more complex than generally portrayed, and rely upon ethical frameworks that are generally absent from classroom discussions. most textbooks, for example, ignore the ethical differences between Paretto efficiency (based on voluntary win-win outcomes) and the modern Kaldor-Hicks efficiency used in public policy assessments (in which winners gain more than losers lose). For the latter to be ethically palatable, society must have in place basic institutions of justice, transparency, and accountability. Normative economics thus requires a pluralist approach that includes considerations of virtue and duty, closer to Adam Smith\u27s Enlightenment conceptions. This surprising finding should embolden economics teachers to engage students with critical thinking problems that are controversial and relevant, and which better prepare students for a complex world

Public Policy, Human Instincts, and Economic Growth

Alfred Marshall famously insisted that economics is more like biology than physics. Societies are organic ecologies that evolve and produce organized but unplanned complexity (Hayek 1979). Although no public policy reliably produces economic growth across all ecosystems, a key element unites diverse institutions and policies that do seem to work: they all are reasonably compatible with human instinct. Institutions that build on the basic instinct for self-betterment (as in markets) have a much easier time in achieving success than institutions that oppose it (as in communism). Instincts, like gravity, are a force of nature. Adam Smith theorized, for example, that the natural propensity to “truck, barter, and exchange” initially arose not from the impulse for financial reward, but from the social urge to share beliefs and to persuade others. Exchange spurs growth because it is compatible with deep human intuitions. Sisyphus was the Greek king condemned to push a heavy rock up a hill but never to succeed. Such is the fate of modern-day Cubans, laboring under statist policies that limit their expression of the human experience through exchange

A Little Adam Smith is a Dangerous Thing

Adam Smith was trying to counter medieval church theology, which held that any self-interested behavior was sinful and detrimental. Smith countered that self-interest could yield valuable outcomes for society as people pursued specialization and market trade. Much later these quotes would be used to justify the greedy and grasping personae of homo economicus, illustrating how a little Adam Smith can prove to be a dangerous thing. For example, Max Lerner in 1937 would say that Adam Smith sanctified predatory impulses and gave a new dignity to greed. By the 1980s the movie Wall Street has the financial tycoon Gordon Gecco reciting the mantra, [G]reed is good...Greed works. Greed clarifies, cuts through and captures the essence of the evolutionary spirit... It\u27s all about bucks. The rest is conversation

Teaching Economics

Ethical considerations intersect with economics education on a number of planes. Nonetheless, in terms of curricula, only a handful of economics departments offer courses specifically focused on ethics. This chapter addresses the ways in which instructors can incorporate ethical components into teaching principles and field courses in order to broaden economic understanding and to enhance critical thinking. It examines three pedagogical issues: the artificial dichotomy between positive and normative analysis; the limiting scope of efficiency in outcomes analyses; and the incorporation of alternative ethical frameworks into public policy debates