In order to understand the public discontent with professional economics and the notable search for alternatives to or within the neoclassical framework—“new economic thinking,” “postautistic economics,” “heterodox economics,” “pluralist economics ,” to name but a few of the most prevalent movements—we need to dwell on the relationship between business practice and management education. At present, business schools are being blamed for having equipped students with a worldview that makes them skeptical at best and hostile at worst toward a morally responsible and environmentally sustainable conduct of business (Gioia 2002, 2003; Goshal 2003, 2005; Elegido 2009). In the recent past, the very ethics that our economic system de facto relies upon has been taught merely alongside—often at the very margins of—the standard offerings in business and economics (Matten and Moon 2004). This setup is more than unfortunate, as it confronts students with two wholly contrary approaches to the business world: freedom versus necessity (Dierksmeier 2009).

In traditional classes, students are being instructed along the lines of the neoclassical economics, that is, within a paradigm that prescribes profit-maximization in such a manner as to offer little-to-no leeway for alternatively oriented decision-making, for example, in favor of morals. Iron laws of structural necessity— students are being told—rule the economy to the effect that the market dictates managerial behavior. In their business ethics classes and in courses on sustainability or humanistic management, however, students then encounter, as a no-less fundamental but obverse premise, the doctrine of human freedom, now being introduced as the indispensable foundation of any and all managerial responsibility. In unmediated confrontation, these contrary viewpoints lead to a schizophrenic worldview (Dierksmeier 2011a).

Students often resolve this cognitive double bind in a turn against ethics (Hühn 2014). Against moral theories they object, for instance, the “dog-eat-dog” reality of business would not allow for any or much decent behavior. Practitioners in their majority, however, value investments in Corporate Social Responsibility (CSR) and sustainability programs as not only reducing costs (building reputation, avoiding litigation, etc.) but also as generating otherwise precluded profits (through the quest for novel channels of productivity and innovation as well as through access to more goodwill on the part of employees and customers). And they express this view the stronger, the more and the longer they have garnered practical experience with sustainability programs, as a study of more than 1400 CEOs worldwide by The Boston Consulting Group documented (BCG 2009). So, when students dismiss the feasibility of ethically responsible management, they react apparently less to the reality of business than to its portrayal in economic textbooks. Consequently, when—as ever more studies show—graduates leave business schools with weaker ethical standards than they had upon entry (for a good survey see Elegido 2009), it shows that management education does indeed have a marked impact on students, albeit a negative one (Net Impact 2007a, b, 2008). This is the regrettable outcome of a pedagogy which undermines the very premises upon which ethical and humanistic management rests (Pfeffer 2005).

This dismal situation will persist as long as management education fails to engage in deeper-reaching reflections on the true nature of economic theory and practice. As discussion in management theory and in business ethics is both framed and influenced by the teachings of economics, we need to investigate how the conceptual basis for any form of corporate responsibility, that is, managerial freedom, is described in economic theory (Dierksmeier 2011a). In economics, however, managerial freedom often tends to be neglected (as inessential and powerless against market forces) or depreciated (as a source of deviations from rational efficiency rules). Exceptions to this trend, such as the works of Amartya Sen, still prove the rule (Sen 2002). The same can be said, a few exceptions apart (Drascek and Maticic 2008), for management literature. As long as this state of affairs persists, the very premises of all corporate responsibility remain in question and, consequently, corporate investments in business ethics are bound to appear to students as futile: as naïve efforts at best and as an irresponsible waste of corporate resources at worst (Friedman 1970; Jensen 2002).

In order to change this situation, we have to unearth the foundations for moral action within economic theory, making ourselves aware of how past philosophical positions and methodological assumptions (namely epistemological materialism and quantitative reductionism) have framed the economic mind such that the dimension of moral freedom and responsibility was all but obliterated. Especially, we have to examine how and why economic theory began construing human agency within the narrow confines of the homo economicus-model, devising the corporation as a mechanistic clockwork in a freedom-averse pursuit of profits. Against these traditions and through a deconstruction of their axioms, the real leeway of managerial discretion and the immanent responsibilities of corporate decision-making deserve to be emphasized (Brodbeck 2000).

Over the last years, ever more economists have begun to inch away from the long cherished homo economicus-model and from management models that directly rely on it, such as principal/agent-theory, which, incidentally, has been given up by its very author, Michael Jensen (Erhard and Jensen 2011, 2014). Against former depictions of human behavior as merely a rational pursuit of utility-maximization, more and more economists—especially institutional economists, behavioral economists, and neuro-economists—and a host of management scholars today advocate for a broader set of objectives, including normative ones, and vie to present their theories as amenable to demands for social, ecological, and moral sustainability. Eventually, it stands to argue, economics as a whole might cut itself loose from its old positivist moorings (Walsh 2003). We are observing, in short, a return of ethics to economics (Hausman and McPherson 1993; Dutt and Wilber 2010).

There is much to be said in favor of these developments. Economic action, after all, stems from human agents acting from human concerns. And descriptions of economic behavior match reality only when being observant of the moral prescriptions that inform such behavior at the individual level (Dierksmeier 2011a). As economists have also long since admitted, the subjects that drive the economy are not animated maximization-algorithms but beings in deep and manifold relations with their sociocultural contexts (Veblen 1898; Pigou 1962). And these contexts, surely, are replete with moral meaning. It is high time, therefore, that the ethical dimension of economic life also be reflected in the research agenda, theory, and pedagogics of economics and business studies.

Why indeed would economics, as a discipline dealing with human behavior, prefer to work with models emulating the study of inanimate objects? Why not rather orient its methods toward interpreting the lively interactions of free subjects? Recent advances in behavioral economics, empirical game theory, and neuro-economics as well as in various fields of psychological and sociological research on economic agency suggest that economics does indeed need a new anthropology (Etzioni 2010; Chibnik 2011; Fehr and Rangel 2011; Glimcher and Fehr 2013). In order to cease being the proverbial “dismal discipline,” economics should pay heed also to the findings of the social sciences and the humanities (Melé and Dierksmeier 2012). The mechanistic anthropology of neoclassical economics will arguably have to yield to a renewed concern for the interconnected dimensions of human life in relation with nature, society, and culture. Economists cannot on one hand emphasize the uncertainty or the fluidity of human knowledge, while on the other shielding their discipline from the historicity and culture-dependency of human existence that are the origin of those vicissitudes. A richer, more contextualized depiction of economic agency is necessary because only realism brings relevance and enables responsibility (Dierksmeier 2011a).

In this book, I draw as a conclusion from these observations that since values and virtues are not marginal to economic practice, they no longer ought to be relegated to the role of mere side constraints to the logic of maximization in economic theory. Instead, I contend, ethics proffers an important orientation for questions of economic strategy. Indeed, for most of the rec...