The Role of Ethics in Economics
Several schools of thought have become connected to "ethical economics." It refers to what is often referred to as the political economy in the most broad sense. The allocation of resources by individuals and communities to satisfy their wants and needs is the primary objective of the political economy. This concerns commerce, distribution, manufacturing, consumption, and economic expansion. Furthermore, it covers matters of governmental policy (taxation), foreign trade and finance (exchange rates), poverty (welfare), and other subjects.
As a result, ethics holds significance in economics since it influences the theoretical basis of economic systems and the actual decisions made by individuals, businesses, and policymakers. Following are some examples of how ethics and economics work together:
Behavioral economics, which explores how individuals make economic decisions, contains ethical issues. It is crucial to fully understand human behavior and welfare while formulating policies that maintain moral standards
Corporate Social Responsibility (CSR) - an increasing number of businesses have recognized the importance of ethical behavior, such as community involvement, sustainable environmental standards, and fair labor practices. The consideration of corporate social responsibility, also known as CSR, has risen in value when making financial decisions
Ethical factors influence the distribution of resources in society - In talks about ethics in economics, issues of fairness, equity, and the welfare of individuals and communities are essential. One of the most important ethical issues in economics regarding society is addressing inequalities and poverty. Initiatives and policies that aim to reduce inequality while improving the welfare of disadvantaged groups must be guided by ethical principles
Fair Market Competition - Moral norms regulate market activity for people and businesses. Fair competition, honesty, and accessibility are some of the concepts that advocate the moral functioning of markets
Sustainable Development - Ethical considerations must guide sustainable development methods in addition to the impact on the environment from economic activity. Preserving the welfare of both present and future generations calls for finding an equilibrium between the preservation of the environment and economic growth
Global Economics - Ethical worries regarding trade practices, debt forgiveness, and the impact of economic policies on economically disadvantaged nations arise in the context of a global economy. Global economic inequality has to be addressed because of moral concerns
Ethical Consumerism - Ethical variables, such as promoting businesses that practice ethical business practices or produce environmentally friendly goods, frequently serve as the basis for consumer choice-making. The dynamics of the marketplace could be affected by this customer behavior
Application of Ethics In Economics
Taking in the consumerism aspect, let us discuss some popular theories in ethics to understand their application in economics, particularly:
Deontology - Based on the deontological perspective, individuals ought to uphold their commitments and duties when considering a moral dilemma. This suggests that because upholding one's responsibility seems ethically correct, one will honor his or her obligations to another person or society. It also provides a basis for specific responsibilities and duties towards specific people, such as family members.
Utilitarianism - The ability to anticipate the results of a decision is the core of utilitarian ethical philosophy. The utilitarian viewpoint considers that the righteous decision is the one that helps the greatest amount of people. The concept of ethics has the advantage of letting the utilitarian assess similar expected solutions and use a point system to decide which choice will benefit the greatest number of people. This point system allows use on individual cases and presents a rational and persuasive argument for every decision.
Virtue Ethics - The theory of virtue ethics examines a person based on his or her character. When considering unethical activity, it evaluates an individual's morality, credibility, and motive.
Applying these theories can help us in behavioral economics through analysis, evaluation, and predictions of how customers might behave/engage with certain products or marketing campaigns.
Conclusion
To put it simply, ethics in economics is the implementation of ethical principles to economic decision-making processes, policy development, and distribution of resources to establish a fair, legitimate, and long-lasting economic system. We must find a balance between ethical and economic variables to advance the well-being of people and society.
Bibliography
https://www.geeksforgeeks.org/ethics-in-economic-life/
https://www.sup.org/books/title/?id=24196
https://www.jstor.org/stable/2376095?seq=2
https://www.bio.davidson.edu/people/kabernd/indep/carainbow/theories.htm
Written by Arushi Gupta | Proofread by Yasmin Uzykanova
