1 Introduction
This is a book about economics. It is also a book about ethics. The combination of economics and ethics may seem a bit strange to some readers. After all, economics is a social science and science is about what is. Ethics, on the other hand, is about what should be. How can we reconcile the two? We might start by recognizing that in the beginning economics was considered to be a part of the study of moral philosophy. The beginning of economics, at least modern economics, occurred with the publication of The Wealth of Nations by Adam Smith. As most students of Smith are aware, however, the original modern economist was originally a moral philosopher. Before he published The Wealth of Nations he published A Theory of Moral Sentiments.
We can go back much further than Smith to find that perhaps the very first thinker on economics questions was the ancient Greek philosopher, Aristotle. To find Aristotleâs thoughts on such matters as exchange, price and currency, however, we would have to dig fairly deep into Book 5 of his Nicomachean Ethics. For Aristotle these seemingly objective scientific economic concepts were inseparable from a consideration of justice. If we move a few decades forward in time from Smith we encounter John Stuart Mill. Mill was also both a moral philosopher as well as an economist. The basis for Millâs moral philosophy was utilitarianism, an approach he literally learned at the knee of his father James Mill and family friend Jeremy Bentham. Utilitarianism is the philosophic belief that the best decision is the one that creates the greatest amount of happiness, or utility, for the greatest number of people. In a revised form this remains an important normative principle underpinning contemporary economic theory.
These three figures by no means exhaust the list of important thinkers who developed important economic theories as well as moral systems. Thomas Aquinas and Karl Marx provide additional examples. So the question arises as to how, when, and why did the discipline of economics become separated from its close relationship with moral philosophy? The answer that most historians of economic doctrine give to the âhowâ and âwhenâ questions cite a movement termed the Marginalist Revolution during the 1870s. The Marginalist Revolution consisted of the simultaneous development among a variety of economists of an approach to the discipline that impressed it with a firm scientific stamp. The leading figures of this movement were Stanley Jevons, Leon Walras, and Carl Menger. These economists along with some others made economics âscientificâ by making it mathematical. Jevons and Walras in particular expressed economic relationships in such a way as to make analysis amenable to differentiable calculus. The emphasis in the kinds of questions asked was less concerned with the causes and consequences of economic growth and distribution, but rather with the conditions for equilibrium.
So, what happened to the normative/ethical content of economics that seemed to preoccupy so many over the preceding hundreds of years? The answer is the Marginal Revolutionists believed that utilitarianism had provided all the answers needed to these sorts of questions and concerns. That is, they shared the view of Bentham and his followers that the âgoodâ is best understood as that which delivers maximum utility. For the Revolutionists the important remaining task was to describe in rigorous, mathematical terms the conditions, or assumptions, under which this goal could be achieved and the equilibrium rules that assure its realization. The assumptions that drove their models are ones familiar to anyone who has ever taken a basic economics course that appoints pride of place to the notion of perfect competition. The theory or model of perfect competition makes a number of assumptions including:
1 There are a large number of buyers and producer-sellers of a good or service.
2 No market participant (buyer or seller) is large enough to unilaterally affect the market outcome.
3 Producer-sellers sell a homogeneous output.
4 Market participants possess perfect information.
5 There are no obstacles to market entry or exit.
6 There are no side effects, or externalities, of consumption or production activities that befall third parties.
7 Market participants are rational, self-interested utility (or profit) maximizers.
Under this set of assumptions the Revolutionistsâ models demonstrated that unfettered market prices were able to allocate scarce resources to their most highly valued uses. Moreover, these same market prices ensured that the welfare of any particular individual could not be improved without reducing that of some other individual. In other words, the system of market prices guaranteed efficiency in the allocation of goods and resources, and at the same time it maximized welfare understood in utility terms. Furthermore, the models demonstrated that perfectly competitive factor markets also worked efficiently so that factor market prices reflect the (marginal) productivity of their corresponding productive factors including capital, land, and various skill grades of labor, thus guaranteeing an efficient distribution of income. In the minds of the Revolutionists this was tantamount to distributive justice. And there wasnât much more that needed to be said about ethics where economic matters were concerned.
As Iâve already noted, the result of the Marginal Revolution was that economics was transformed into a much more âscientificâ discipline. This is true at least to the extent that one equates the term âscientificâ with a tendency to express theories in terms of formal, quantitative models. This scientific transformation came at the cost of the disciplineâs development on the basis of a highly truncated set of normative presuppositions. In particular, the assumption that human behavior can be adequately described in terms of utility maximization has in recent years come under increasing scrutiny and criticism. Additionally, the implicit assumption that the value of any and all economic choices can be perfectly encapsulated in terms of the relative price attached to any choice(s) has also been subject to critical examination.
This book makes a contribution to this critical literature. Its main contention is that there is an important class of public policy concerns for which the standard model of economic behavior, typically referred to as neoclassical economics, fails to provide adequate guidance due to the inadequacy of its guiding normative presuppositions as well as its assumptions respecting human motivations and behavior. The question which I pose is this: Where shall we look to find replacement, or at least supplemental, normative presuppositions? The answer I give is that we should look back to ancient thought. This is not a very original suggestion. After all, the source of much of our moral philosophy derives from ancient sources. In fact, as I shall argue in the next chapter, the source of the normative presuppositions that have guided modern economic thought is inspired by ancient thought, and in particular by ancient Greek philosophy.
In particular, I wish to focus on the ethical thought of an epoch of the ancient Greek world called the Hellenistic period. Historians of economic thought often cite Aristotle as the ancient thinker who had most to say about economics. In fact the origins of the word economics are traced to the ancient Greek term oikonomikè, which is translated as household management. In this book, however, the focus is not on Classical Greek thought, a period that would include Plato as well as Aristotle, but rather the philosophy of a later period called the Hellenistic age. The Hellenistic age is said to commence around the time of death of Alexander the Great in 323 BCE and end around the time of the defeat of Marc Antony in 31 BCE. The period includes the ideas of both Greek philosophers and Roman philosopher/statesmen. I hope to show that the ideas of several of the important thinkers of this period have direct relevance to the ethical-normative basis of modern economics and that they were an important source of inspiration for several important modern economic thinkers.
Why should we believe that the ancient Hellenistic period might have some relevance for contemporary political economy? This is not the first time this question has been posed. Consider the opening words of Michael I. Rostovtzeff in his 1935 (p231) address to the American Historical Association:
In these days of unsettled and chaotic economic conditions, of an acute economic crisis which prevails over all the civilized world, when all sorts of remedies are suggested for healing the wounds, and among them, under the label of the last word in economic science, some old-age and many times tried devices, it is perhaps not inappropriate for a student of ancient economic history to recall to mind the remote past of Greece and Rome where similar crises were not infrequent and where many devices were tried in the hope of solving them.
It is clear that Rostovtzeff sees a certain parallelism in the economic trauma of the Great Depression and the political economic upheaval of the Hellenistic age. There are good reasons for this. The spread of Alexanderâs empire had profound consequences for the global economy of the time just as did the spread of international economic relations and imperialist adventures in the decades leading to World War I. These expanding political and economic entanglements reverberated on the established centers of power and control. Thus, for example, the prevailing mode of political, social, and economic organization of ancient Greece, the city-state, fell into decline. Economic self-sufficiency was replaced by a growing dependence on foreign sources of new goods and on foreign markets for domestic output. Overall the Greek economies found themselves in a position of trade deficit relative to the oriental regions of the new empire compounded by rising prices, and dramatic shifts in land-ownership that accompanied the rise of new prosperous elites, (Sibley 1970: 107). An overall result of this globalization process was a much more unequal distribution of income and a tendency to economic stagnation. Moreover, money wages were stagnant and, in the face of rising prices, this meant a decline in real wages. The condition of the masses had declined to such a great extent that calls for debt forgiveness and land redistribution increased. The propertied classes were in turn alarmed by this as well as by a growing fear of revolution (Erskine 1990: 35â36).
Politically, Greek democratic institutions of governance found themselves displaced by âkingshipâ rule. As a Macedonian, Alexander was predisposed to concentrating political power in his own imperial hands and he took encouragement from the oriental despotism he encountered in his travels. After his death the empire was divided up into a variety of kingdoms. The Greek city-states sought greater autonomy by forming alliances to oppose foreign domination and were often successful but at the cost of entering into a state of almost perpetual war against non-Greeks and with one another. A long period of military and political turbulence lasted until the Greek city-states were subdued by the Roman Empire in 146 BCE, (Sibley 1970: 109). Hellenistic philosophy quite naturally reflects the political economic instability of its era. The various schools of thought that emerge might be said to express a âsiege mentalityâ in the face of tremendous turbulence and change.
Chapter 2 provides an overview of the Hellenistic schools paying particular attention to their views on ethics. Notable is the contrast between the Hellenistic philosophers and their classical era predecessors, Aristotle and Plato. By and large the latter two were systems builders. Their ethics had definite implications for the way they believed political and social institutions should be structured. As far as that is concerned, Aristotle and Plato probably had more to say about topics that we would today identify as âeconomicsâ in their substance. The Hellenistic philosophers might be said to lay greater stress on how âthe good lifeâ should be pursued as a personal matter. But there are good reasons to focus on the implications of Hellenistic ethics for the meaning of âthe good societyâ as well. The first is that at least one school of Hellenistic thought, the Stoics, believed that a well-lived life could not be separated from a concern with how the individual related to society as a whole. That is, the individual had a eudaimonistic concern that led her to be engaged with society and this concern could extend itself to mean an engagement with political life. Second there are good reasons to believe that a belief in equality was a value that attaches itself more to Hellenistic ethics than it does to the classical Greek ethical outlooks. Hellenistic thought is for this reason more likely to suggest the democratic norms and values and provide the context for contemporary public policy questions and challenges. A third reason to focus on Hellenistic ethics is its greater cosmopolitanism as compared to their Aristotelian and Platonic predecessors. This tendency may be a reflection of the âglobalizationâ process at work during the period of Alexander and, later, the Roman Empire. Certainly there was an acceleration in the spread of ideas and cross-cultural influence that caused the Greeks to reconsider their localism and associated chauvinism. Once having been exposed to the wider world, it was much harder to dismiss its inhabitants as âbarbarians.â Just as the comparative egalitarianism of the Hellenistic philosophers renders them more relevant to contemporary concerns, so does their relative cosmopolitanism.
The classical Greek philosophers, of course, bequeathed to the Hellenistic schools many important elements of their own thought that persisted in the ideas of the latter. First among these is the central organizing concept for this book, eudaimonia. It could be said that much of our present-day economic and social policy is driven by a concern with utility, or pleasure. It is hedonic in its orientation.1 Utilitarian social policy is that which is concerned with increasing, even maximizing, societyâs welfare, where âwelfareâ is understood in hedonic terms. Now, there is nothing necessarily wrong with this as an object of policy and it seems entirely appropriate that policy ought to aim to increase our hedonic welfare. But the ancient Greeks going back to Socrates knew that there is more to the well-lived life than just pleasure.
This brings us to a second ethical notion held in common by the classical and Hellenistic thinkers, virtue. Virtually all the ancient Greek philosophers considered that virtue was a necessary component to eudaimonia. Where they differed among themselves was in their understandings of the specific content of virtue. Notwithstanding these differences, nearly all schools of Greek ethics cite Socrates as the paradigmatic virtuous man. What made Socrates a model of virtue? Primary was his unceasing commitment to the search for truth via the application of reasoned debate and the critical examination of assumptions. The âSocratic methodâ is today a widely employed pedagogical approach that encourages interlocutors to examine their assumptions and define their terms in rigorous dialog. Socrates was also well known for his humility. Famously, he claimed that the only thing that he knew was that he knew nothing. His personal lifestyle was equally humble as he was said to own few possessions and to walk about shoeless even in the dead of winter. Perhaps, however, Socrates is most revered in the history of philosophy for his physical, intellectual and moral courage. In terms of the first of these he was an acclaimed soldier who was fearless in battle. In terms of the latter two his lasting legacy was a refusal to flee in the face of imminent death by execution despite the urgings of his followers who loved him. Each of these virtues is reflected in the outlooks of one or the other of the main schools of Hellenistic ethics, and it isnât surprising that they each attempt to claim Socrates as a source and a model. The model of Socrates is also an appropriate one in relation to the comparatively more democratic outlook of the Hellenistic philosophy as compared to the class-based views of Plato and Aristotle. As Gottlieb (1999) notes, for example, for Socrates the search for truth was open to anyone who was willing to engage in a critical examination of their own life and assumptions. It was not, as it was for Plato, an activity reserved for an intellectual elite.
It is important to understand that the various schools of Hellenistic philosophy competed with one another for disciples and influence. While they have some commonalities they also oppose one another on points of particular doctrine and emphasis. No attempt is made in this book to reconcile them where they differ. Rather, I shall choose a more eclectic path and select those teachings that are especially useful in support of examining particular contemporary social and economic problems and their possible policy solutions. There is plenty of precedent in modern thought for this appro...
