Do Ethics have a Place in Capitalism?
Is capitalism the best ideology for society? As the income gap between the rich and poor grows nationally and global inequality persists, it would be beneficial to reflect on what values drive the system.
Both critiques and advocates of the capitalist system—an economic model driven by the free market and operates outside of state control— rely on the field of economics to shape their arguments. This field of study has always played an important role in understanding human behavior and specifically the interaction between humans and their society.
What is the Study of Economics?
The term economics is well-known: a major offered at universities across the globe, a term used by media, and one heard casually over family reunions. Yet, as a recent graduate in economics, I have discovered that an institutionalized definition of economics is far from established. The definition that is often provided, like ethics, depends on the context.
For example, those from STEM backgrounds define economics as the study of mathematical models intended to predict human behavior. Alternatively, those with a business background instantly refer to the primary role of the financial sector in shaping interactions. Fellow social science peers comment on its multi-faceted nature before narrowing it to a more technical definition, as the study of the market and its exchange of goods and services.
This should not be surprising as even the most renowned economists disagree in their definition of this science. Although economists take into consideration factors as mathematical models, the financial sector, and the nature of a market, they diverge from one another on the role of morality in economics.
Morality on the Sidelines?
Nobel Prize winning economist J. M. Keynes, defined economics as a, ‘moral science’, that is to say, a science which…is in the final analysis concerned with an explanation of actual human problems.” (Gruchy, 1949) This definition follows closely to the one proposed by Alfred Marshall, one of the most influential economists of his time and a teacher of Keynes, who was especially careful to not overshadow the science of economics with its mathematical technicality. Marshall instead emphasized the role of human thought in his definition. He viewed economics as a study concerning ordinary people who are influenced by common emotions and feelings—not simply driven by a promise of monetary gain. (Gruchy, 1949)
Undoubtedly, there are a number of esteemed economists that prefer to include human complexities and emotion into their consideration of the science. However, others prefer to separate the moral framework from the science and offer a different perspective on the role of economics.
Economist Milton Friedman, arguably one of the most influential in shaping the capitalist system today, postulated that, “the social responsibility of a business is to increase its profits.” Although Friedman’s stakeholder theory condemns fraud and deceit, he omits human morality in his definition. Unfortunately, it is the theory’s critical emphasis on profit that is credited as the loophole allowing for corrupt behavior in capitalism to go unnoticed.
Do Ethics Have a Place in Capitalism?
If we can identify the values that exist and those that are lacking in the capitalist system, perhaps we can begin to discuss solutions for a world with more equitable opportunity for all. Across multiple disciplines, codes of ethics are established to best fit the given field of specialization. In a simplified sense, ethics strive to define the best way for people to live based on ideas of what is found to be socially right and wrong.
In this globalized world where peoples and systems are more interconnected than ever before, it is important to reflect on the code of ethics that exist in the context of the capitalist system. Capitalism today is often defined by the political and ideological influence exerted by private industries that operate for profit.
For example, funding for institutions that are influential in both domestic and international state politics can be traced back to giants of the private sector. The United Nations, the CIA, and policy think tanks, like the Council of Foreign Relations, all undoubtedly powerful advisors to governments. All of these powerful institutions began with the funding granted by Ford and Rockefeller and their foundations. Many argue that it is by providing funding to an assortment of industries that magnates assert political influence (Roy, 2014).
As the international capitalist system touches virtually every nation-state, many consider capitalism as a righteous system, lifting millions from poverty and transforming opportunity through job creation and more widespread political freedom. However, in the process of changing our world has capitalism too often pushed the limits of ethical boundaries? As multi-national corporations expand, controversy surrounding social wealth distribution, labor exploitation, and environmental degradation seem to follow. Thus, some blame the capitalist system for inducing wealth inequality and worsening poverty conditions.
In the 1970s, human rights advocates worked to highlight unethical behavior of multi-national organizations. War on Want was one such agency, aiming to bring attention to the crisis of world poverty. It uncovered that Nestlé was discouraging mothers in developing countries from breastfeeding and instead promoting and selling their powdered milk product. Although this may have been harmless in developed countries, due to the poor living conditions for these mothers, this tactic resulted in the death of thousands of infant children. Nestlé refused to acknowledge that many of its consumers were illiterate and unable to read the label instructions on their products or that most of their consumers did not have access to clean water, which further tarnished the product (Muller, 1974).
The War on Want’s investigation drew widespread publicity, lead eventually to a new set of marketing regulations to be released by both the U.S Senate and the World Health Organization (Krasny, 2012). Although media attention curbed the negative impact of the for-profit company, this type of behavior still persists. One example this type of crony capitalism can be seen with the recent EpiPen scandal of 2016 that discriminated against the poor with exuberant medical prices. This is a recent example that highlights the damaging impact of unethical behavior in capitalism.
Can we Amplify Morality?
As capitalism continues to create more opportunities and shape a world that is more global, does it also mask unethical behavior in the process? If ethics serve to guide a society in right and wrong, perhaps it should be better amplified in a system that dictates our interactions with one another.
Communication platforms connect us in ways like never before, but they also isolate us from face-to-face interactions. Are these distant interactions reshaping our ethical standards? Is there not enough transparency within the multi-national corporations for a company to value accountability for unethical actions? Is our education system not placing enough emphasis on the role of ethics in the social sciences?
Why unethical behavior is muted does not hold a simple answer, but perhaps in demanding accountability, society may drive itself to become a more altruistic one.
Gruchy, Allan G. “J. M. Keynes’ Concept of Economic Science.” Southern Economic Journal15.3 (1949): 249. Web.
Krasny, Jill. “Every Parent Should Know The Scandalous History Of Infant Formula.” Business Insider. Business Insider, 25 June 2012.
Muller, Mike. The Baby Killer : A War on Want Investigation into the Promotion and Sale of Powdered Baby Milks in the Third World. London: War on Want, 1974. Pdf.
Roy, Arundhati. Capitalism: A Ghost Story. Chicago, Ill: Haymarket Books, 2014. Print.
About the Author:
Esther Kaufman is recent Economics graduate from the University of Maryland with a minor in Global Terrorism Studies. She is interested in the effects of economic policy on issues such as equality, welfare and radicalization of individuals in society.