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Does Business Ethics Make Economic Sense?*

Published online by Cambridge University Press:  23 January 2015

Amartya Sen
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Abstract

The importance of business ethics is not contrdicted in any way by Adam Smith’s pointer to the fact that our “regards to our own interests” provide adequate motivation for exchange. There are many important economic relationships other than exchange, such as the institution of production and arrangements of distribution. Here business ethics can play a major part. Even as far as exchange is concerned, business ethics can be crucially important in terms of organization and behavior, going well beyond basic motivation.

Type
Articles
Information
Business Ethics Quarterly , Volume 3 , Issue 1 , January 1993 , pp. 45 - 54
Copyright
Copyright © Society for Business Ethics 1993

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References

Notes

1 Lamont University Professor, and Professor of Economics and Philosophy, at Harvard University.

2 Stephen, Leacock, Hellements of Hickonomics (New York: Dodd, Mead & Co., 1936), p. 75Google Scholar.

3 Adam, Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776; republished, London: Dent, 1910), vol. I, p. 13Google Scholar.

4 Adam, Smith, The Theory of Moral Sentiments (revised edition, 1790; reprinted, Oxford: Clarendon Press, 1976), p. 189Google Scholar.

5 On this and related matters, see my On Ethics and Economics (Oxford: Blackwell, 1987); Patricia, H. Werhane, Adam Smith and His Legacy for Modern Capitalism (New York: Oxford University Press, 1991)Google Scholar; Emma, Rothschild, “Adam Smith and Conservative Economics,” Economic History Review, 45 (1992)Google Scholar.

6 On this see Jean, Drèze and Amartya, Sen, Hunger and Public Action (Oxford: Clarendon Press, 1989)Google Scholar.

7 Michio, Morishima, Why Has Japan ‘Succeeded’? Western Technology and Japanese Ethos (Cambridge: Cambridge University Press, 1982)Google Scholar.

8 Ronald, Dore, “Goodwill and the Spirit of Market Capitalism,” British Journal of Sociology, 34 (1983), and Taking Japan Seriously: A Confucian Perspective on Leading Economic Issues (Stanford: Stanford University Press, 1987)Google Scholar.

9 Eiko, Ikegami, “The Logic of Cultural Change: Honor, State-Making, and the Samurai,” mimeographed, Department of Sociology, Yale University, 1991Google Scholar.

10 Karl, Marx (with Engels, F.), The German Ideology (1845-46, English translation, New York: International Publishers, 1947)Google Scholar; Richard, Henry Tawney, Religion and the Rise of Capitalism (London: Murray, 1926)Google Scholar; Max, Weber, The Protestant Ethic and the Spirit of Capitalism (London: Allen & Unwin, 1930)Google Scholar.

11 The classic treatment of public goods was provided by Paul, A. Samuelson, “The Pure Theory of Public Expenditure,” Review of Economics and Statistics, 35 (1954)Google Scholar.

12 For a classic treatment of external effects, see Pigou, A. C., The Economics of Welfare (London: Macmillan, 1920)Google Scholar. There are many different ways of defining “externalities,” with rather disparate bearings on policy issues; on this see the wide-ranging critical work of And reas Papandreou (Jr., I should add to avoid an ambiguity, though I don’t believe he uses that clarification), Ideas of Externality, to be published by Clarendon Press, Oxford, and Oxford University Press, New York.

13 A good general review of the literature can be found in Atkinson, A. B. and Stiglitz, J. E., Lectures on Public Economics (New York: McGraw-Hill, 1980)Google Scholar. On the conceptual and practical importance of the incentive problem and other sources of potential conflict between efficiency and equity, see my Inequality Reexamined (Cambridge, MA: Harvard University Press, 1992), Chapter 9.