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The Moral Foundations of the Marketplace: What Is to Be Done?
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17184 |
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Section : |
MODERN THOUGHT
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| Issue
Date : |
12 / 1990 |
2,984 Words |
| Author
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Amitai Etzioni
Amitai Etzioni is the author of The Moral Dimension (Free
Press, 1988), editor of The Responsive Community, and
University Professor at George Washington University. |
A point of contention between two groups of social scientists has surprisingly significant ramifications for the moral quality of our economic life. The issue is how to preserve the integrity of the market, a matter of growing concern since the advent of the savings and loan (S&L) crisis, the recent round of defense contract scandals, discovery of shenanigans in the commodity exchanges and numerous other incidents of corporate criminal conduct - labs that make money by reporting test results without conducting them; adulteration of baby food; falsification of maintenance records by airlines, and so on, ad nauseam.
Neoclassical economists argue, following Adam Smith, the author of The Wealth of Nations, that markets are self regulating. Because each person participates in exchanges to advance his own self -interest, there is no need for external regulation. Manufacturers who fail to honor their word to deliver goods will lose future orders. Customers who find that products do not work as promised will cease to buy them, and so on. Indeed, neoclassical economists expect that greedy people will not try dishonest business practices for fear of being put out of business by those who keep their word.
As a result of this belief in the ability of the invisible hand not only to facilitate economic exchanges but also to ensure their ethical quality, lists of the prerequisites of a free market, provided by neoclassical economists such as George Stigler and Gerard Debreu, do not include any reference to ethical sustaining mechanisms, or even externally generated rules of the game. The lists of prerequisites mention only that buyers and sellers must be small relative to the market; that firms act independently of one another; that complete information about offers to buy or sell be freely available; and that resources be transferable among users.
Those neoclassical economists who do concern themselves with the rules of the market assume that they are somehow naturally provided, and hence do not require any special effort or attention. Or they may assume that the ethics-sustaining measures will arise out of the give-and-take within free markets, as participants, recognizing the efficiency of having such rules, formulate them and abide by them out of sheer self-interest.
Socioeconomists (who draw heavily on social sciences other than economics in studying economic behavior) include in their analysis the "other" Adam Smith, the author of The Theory of Moral Sentiments. They maintain that all markets are encapsulated in societies, which
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