Ethics & Economics: Reinserting Moral Judgment into Economic Analysis

This podcast episode critically examines the historical expulsion of ethics from the field of economics, arguing that economics, in its pursuit of scientific rigor and value-free status, has progressively shunted moral questions to other disciplines. The speaker, Robert Skidelsky, traces this evolution from pre-modern thought, where economics was intertwined with questions of value and moral worth, to the modern 'arithmetic economics' championed by figures like George Stigler and Lionel Robbins. Robbins' 1932 definition of economics as the logic of choice under scarcity, while expanding analytic power, is presented as having stripped economics of its moral compass, focusing solely on efficiency and individual preferences without regard for the ethical implications of ends or means.\n\nSkidelsky outlines four key areas where this reductive process has occurred: the idea of the just price, the stewardship concept of private property, the morality of means (e.g., the cost of progress), and the morality of ends (e.g., the purpose of economic growth). He details the shift from the just price (rooted in divine/natural law and customary prices) and the labor theory of value (classical economists, Marx) to the marginalist revolution and supply-and-demand theory, which reduced value to subjective utility and scarcity, effectively removing any moral anchor from market prices. Similarly, the concept of private property as stewardship (Locke) for the general good has been replaced by arguments for efficiency and productivity, sidestepping questions of just distribution. The moral costs of progress, eloquently articulated by Marx and others, are now often relegated to 'short-run' or 'transitional' problems, with the assumption that gains can compensate losses.\n\nThe discussion on the morality of ends highlights the problematic elevation of GDP growth as the 'object of true religion,' questioning whether economic growth genuinely leads to a better quality of life beyond a certain income threshold. Skidelsky critiques GDP as a measure of well-being, noting its exclusion of non-marketed goods and inclusion of 'bad' marketed activities. While alternative indexes like the Human Development Index and Gross National Happiness exist, they struggle with incommensurability and the need for ethical choices. Mainstream economics, with its commitment to the 'sovereign' and 'rational' consumer, is seen as unable to critically scrutinize desires or address the conflict between limitless wants and physical nature.\n\nIn conclusion, Skidelsky argues that the 'value-free' program of economics was a "forlorn hope" due to the inherent impossibility of establishing empirically robust laws of human behavior. He advocates for reconnecting economics with ethics, emphasizing the need for economists to receive interdisciplinary training in moral and political philosophy, history, sociology, and anthropology. However, he raises a serious question about the capacity of contemporary ethics to provide robust moral judgments, citing the collapse of religious foundations, the diminishing importance of custom, and the pervasive individualism that has led to a convergence of economic theory and moral philosophy on individual preferences. The 'harm criterion' remains a universally accepted moral constraint, but its application is difficult without a prior consensus on what constitutes moral good, a consensus that is currently lacking in Western societies.

"the economists doesn't need ethics only arithmetic his task is to clear up social mistakes and to make sure we got the point mathematics has no symbols for confused ideas promoting its value free status"

"the science which studies human behavior as a relationship between ends and scarce means which have alternative uses"

"what everything really cost to the man who wishes to possess it is the toil and trouble of acquiring it"

"pearls don't fetch a high price because people die for them people die for them because they fetch a high price"

"everyone has a natural right to property in his own labour that is to such fruits of the earth as his own labour brings forth"

"constant revolutionising of production uninterrupted disturbance of all social conditions ever lasting uncertainty and agitation all fixed fast frozen relationships have swept away all that is solid melts into air"

"the growth of the cake became the object of true religion"

"a man can't be a good economist who's only an economist"