Prices, Self-Interests, and the "Invisible Hand" : Reviewing Ethical Foundations of Economic Concepts in Times of Crisis
Series
Schriften der Assistierenden der Universität St. Gallen (HSG)
ISBN
978-3-7272-2283-2
Type
book section
Date Issued
2009
Author(s)
Editor(s)
Haunreiter, Diego
Abstract
In light of the recent crisis in 2008-09 the essay researches into the relationship between ethics and economics by investigating into the history of economic thought. The goal of the essay is to challenge separationist views of economics and society by demonstrating that classical economists did not regard economics as value free system that excluded guide-lines of ethical behavior.
As far as it concerned the development of economics as own branch of thought, none of the Authors who will be quoted in this essay - from Thomas Aquinas in the 13th century to John Locke, Bernard Mandeville, Jeremy Bentham and Adam Smith in the 17th and 18th centuries - explicitly denied the existence of a given set of social, moral (and very often religious) values as precondition for the functioning of the economy. Their belief in the necessity of moral values may help to understand why scholars like Smith and Bentham could have faith in the stability of the liberal systems they promoted. Since both scholars had witnessed a number of crises in the 18th century such as the "South Sea Bubble" in England (1720), the "Mississippi Bubble" in France (1720), the "Wissel-ruiterji-Crisis" in the Netherlands (1763-1773) and the "Canal Mania" again in England (1772-1797) , their conclusions concerning the self-organizational power of markets could well have been different.
The fact that in light of these crisis former scholars did not reject but rather promoted liberal economic concepts demonstrates their trust in the social abilities of men. This essay argues that this trust was not solely based on economic but also on ethical dimensions of individual behavior.
As far as it concerned the development of economics as own branch of thought, none of the Authors who will be quoted in this essay - from Thomas Aquinas in the 13th century to John Locke, Bernard Mandeville, Jeremy Bentham and Adam Smith in the 17th and 18th centuries - explicitly denied the existence of a given set of social, moral (and very often religious) values as precondition for the functioning of the economy. Their belief in the necessity of moral values may help to understand why scholars like Smith and Bentham could have faith in the stability of the liberal systems they promoted. Since both scholars had witnessed a number of crises in the 18th century such as the "South Sea Bubble" in England (1720), the "Mississippi Bubble" in France (1720), the "Wissel-ruiterji-Crisis" in the Netherlands (1763-1773) and the "Canal Mania" again in England (1772-1797) , their conclusions concerning the self-organizational power of markets could well have been different.
The fact that in light of these crisis former scholars did not reject but rather promoted liberal economic concepts demonstrates their trust in the social abilities of men. This essay argues that this trust was not solely based on economic but also on ethical dimensions of individual behavior.
Language
English
Keywords
Thomas Aquinas
Augustine
Clemence Ayres
Jeremy Bentham
Albert Hirschman
John Locke
Bernard Mandeville
Karl Pribram
Adam Smith
Max Weber
Iustum Pretium
invisible hand
natural harmony
providence
value theory
scholastic thought
Adam Smith Problem
Doux Commerce Hypothesis
HSG Classification
contribution to scientific community
Refereed
No
Book title
Auswirkungen von Krisen auf Wirtschaft, Recht und Gesellschaft
Publisher
Stämpfli
Publisher place
Bern
Number
Bd. 4
Start page
317
End page
344
Pages
28
Subject(s)
Division(s)
Eprints ID
55907