Markets

Oisin Suttle on "The Puzzle of Competitive Fairness"

Ppe coverBy Mark D. White

Forthcoming in Politics, Philosophy & Economics but currently available online (and open access) is "The Puzzle of Competitive Fairness" by Oisin Suttle (Maynooth University), exploring common intuitions about the concept of fairness as it applies to markets. (I find this very welcome, as the vague use of this concept in economics was one of the frustrations that drew me into economics-and-ethics in the first place.)

From the abstract:

There is a sense of fairness that is distinctive of markets. This is fairness among economic competitors, competitive fairness. We regularly make judgments of competitive fairness about market participants, public policies and institutions. However, it is not clear to what these judgments refer, or what moral significance they have. This paper offers a rational reconstruction of competitive fairness in terms of non-domination. It first identifies competitive fairness as a distinctive claim, advanced within markets in turn characterized as antagonistic, instrumental and procedural. It distinguishes competitive fairness from a number of familiar ideals with which it might be confused: legitimate expectation, equality of opportunity, sporting fairness and economic efficiency. While many exponents likely assume competitive fairness can be explained in terms of one of these ideals, in each case there are significant objections to doing so. Instead, the paper argues that the most promising justification of competitive fairness is under the republican ideal of non-domination, which can reconstruct many of the intuitive judgments of competitive fairness that we make in particular cases. However, it concludes, this explanation makes it difficult for exponents to continue to emphasize competitive fairness, given diverse other risks of domination, and to other values, in markets.

Extra points for using Ronald Dworkin's methodology of fit and justification. From Suttle's introduction:

My method throughout is interpretive, in the sense advanced by Ronald Dworkin (Law's Empire: Ch. 2). We begin with a pre-theoretical account of a practice, identifying this inter alia through a number of paradigm instances. We next ask whether there is a principle or set of principles that could both explain and justify the practice, so conceived. To be successful, the required principles must both account for prominent features of the practice, and explain the value realized thereby. We can then return to our paradigm instances, and to any unclear or marginal cases, reassessing these based on our new, principled, understanding of the nature and function of the practice under examination.


New book: Hossein and Christabell, eds., Community Economies in the Global South

Hossein Christabell bookBy Mark D. White

Coming in April 2022 from Oxford University Press is Community Economies in the Global South, edited by Caroline Shenaz Hossein (University of Toronto Scarborough) and Christabell P.J. (Kerala University).

From the publisher's website:

People across the globe engage in social and solidarity economics to help themselves, their community, and society on their own terms.

Community Economies in the Global South examines how people who conscientiously organize rotating savings and credit associations (ROSCAs) bring positive changes to their own lives as well as others. ROSCAs are a long-established and well documented practice, especially those organized by women of colour. Members make regular deposits to a fund as a savings that is then given in whole or in part to each member in turn based on group economics. This book spotlights women in Latin America, the Caribbean, Africa, and Asia who organize and use these associations, composed of ordinary people belonging to similar class origins who decide jointly on the rules to suit the interests of their members. The case studies show how they vary greatly across countries in the Global South, demonstrating that ROSCAs are living proof that diverse community economies do exist and have been around for a very long time. The contributors recount stories of the self-help, activism, and perseverance of racialized people in order to push for ethical, community-focused business, and to hold onto local knowledge, grounded theory, and lived experience, reducing the need to rely on external funding as people find ways to finance sustainable, debt-free business ventures. The first collection on this topic edited by two women of colour with roots in the Global South, this volume is a rallying call to other scholar-activists to study and report on how racialized people come together, pool goods, and diversify business in the Global South.

I'm a little biased toward this one: Caroline is a dear friend of mine, and she edited a magnificent book for my social economics series at Palgrave, The Black Social Economy in the Americas: Exploring Diverse Community-Based Markets. (I also hope she will contribute to this blog before long, hint hint.)


Survey on the Ethics of "Environmental Markets" in Journal of Political Philosophy

J pol philBy Mark D. White

In the latest issue of the Journal of Political Philosophy (30/1, March  2022) is an open-access survey article by Stijn Neuteleers (Open University, The Netherlands) titled "Trading Nature: When Are Environmental Markets (Un)desirable?"

From the introduction:

This article will discuss two new environmental markets in particular: carbon markets and biodiversity offsetting. It has an applied and a general goal. The applied goal is straightforward: examining the respective moral desirability of these two markets. The broader goal is to use these two cases to review the main arguments for and against environmental markets and to offer more nuance in the debate. The cases are chosen in order to show that the positions at each end of the spectrum—that all new environmental markets are morally acceptable and that none of them is—are untenable. (p. 118)

In the conclusion, Neuteleers making an excellent point that applies to much more than environmental justice:

Sometimes nature has a value that cannot or should not be captured by market instruments. This special value can be either moral—for instance, the extreme rarity of certain species or ecosystems—or more socio-cultural—people can attach strong meanings to such nature (relational values). For instance, if families have worked in a certain natural environment for decades, these surroundings become part of their identity. Losing such a place can be a significant loss, at both an individual and a community level. In such cases, impersonal market norms conflict with the ‘personal’ nature of the goods at stake—here, nature becomes, in a sense, a ‘personal good’.

How should we deal with such special value? If nature is extremely valuable, either for ecological or socio-cultural reasons, it should be left untouched and not open for compensation. Regulations can take care of this, markets cannot. Nonetheless, sometimes destruction of nature can be unavoidable or acceptable. If so, the policy instrument should still recognize the special value nature has; the loss should be framed as a wrong rather than as a transaction. Such framing cannot be provided by the market. (p. 136)

Or by mainstream economics, for that matter (as seen as the discussion of crime in law and economics, for instance).


Lisa Herzog on "The Epistemic Seduction of Markets" (in The Raven)

RavenBy Mark D. White

In the inaugural issue of The Raven, a literary philosophy magazine*, Lisa Herzog (University of Groningen) combines academic expertise and personal history to scrutinize knowledge-based arguments for the market in "The Epistemic Seduction of Markets." From the end of her introduction:

I have concluded that the epistemic argument for markets needs to be heavily qualified, if not put on its head: it is not an argument for “free” markets but for the careful regulation of markets. The “invisible hand” can only, if ever, do its work on material that has been diligently prepared, and continues to be monitored, by many visible hands. Otherwise, the result may be a mere chimera of the epistemic mechanism that I learned about when studying economics: it may seem to work fine on the surface but fail to realize the goals it is supposed to achieve, such as genuine preference satisfaction and the avoidance of inefficient economic behavior. This misleading image of the market can keep us trapped when we think about institutional design, inserting a pro-market bias instead of allowing for an objective evaluation of alternatives. And given the need to redesign many economic institutions in the face of climate change and massive socio-economic inequality, we cannot afford to be held captive by a picture, as Wittgenstein had once put it.

An intriguing read, and just one part of an encouraging start for a unique new publication.

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* From the "About" page on their website:

The Raven is a magazine of original philosophy written for intellectually curious readers with or without academic training in the discipline. It aims to revive an essayistic style of philosophy that was more common in academic venues as recently as thirty years ago but has gradually disappeared — that is, to publish contributions to the “literature” that deserve to be called literature.


Conference announcement: Markets and Society (October 21-24, 2022)

Markets and societyBy Mark D. White

The F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics (Mercatus Center, George Mason University) has announced an intriguing conference for next October. From the announcement:

The Markets & Society Conference aims to bring together scholars, students, and practitioners from various disciplines, ideological perspectives, and backgrounds who seek to advance inquiry, contestation, and research of consequence that are grounded in mainline political economy. This tradition posits that through emergent orders, formal and informal institutions, and the ability to learn from errors, humans can and often do find ways to live better together. Research in this tradition examines governance, resilience, and cooperation as well as the burdens, biases, and injustices that result from human interaction and institutions. Multiple disciplines, methods, and strategies are needed to examine the complexities of social life, ranging from analyzing the economic, political, and social consequences of institutions; understanding and reexamining history; assessing policies that attempt to stymie or encourage particular outcomes; and examining issues of morality and justice.

See the announcement for more details—the deadline for abstracts is March 1, 2022.


Elizabeth Pollman on the Supreme Court and the complexity of business interests (at Harvard Law Review)

Hlr pollmanBy Mark D. White

In her article "The Supreme Court and the Pro-Business Paradox" in the Harvard Law Review, Elizabeth Pollman (Penn Law) reconsiders the Roberts Court's reputation as pro-business in light of the heterogeneity of interests across firms, as well as the conflicting interests of different parties within firms, both often neglected in both economic and legal commentary and analysis. (For earlier work on this general topic, see Jonathan H. Adler's edited volume Business and the Roberts Court.)

From her introduction:

This Comment makes two primary contributions. It first observes that cases from the recent Term reflect an important way in which the Roberts Court has earned its reputation: over the beginning of the twenty-first century, the Court has often expanded corporate rights while narrowing corporate liability or access to justice against corporate defendants. Part I of this Comment sets forth this argument, using Americans for Prosperity, Ford, and Nestlé as case studies to show how the Court uses ill-fitting conceptions or overbroad generalizations to empower corporations and limit their accountability.

This trend gives rise to a paradox that Part II subsequently explores: the “pro-business” Court is often at odds with internal activity in corporate law and governance. Quite remarkably, as the Roberts Court has expanded corporate rights and narrowed pathways to liability, many shareholders and stakeholders have become vocal participants, putting pressure on corporations to rein in the use of their rights, to mitigate risks generated by their externalities, and to take account of environmental, social, and governance (ESG) concerns. The Court’s expansion of corporate rights not only disserves many corporate participants and spurs them to action but also might fuel challenges to new disclosure rules about corporate political activity or other ESG-related concerns that investors and others seek for effective participation in corporate governance. Further, as the Court has downplayed or ignored corporate decisionmaking structures in its jurisprudence expanding rights and narrowing liability, by contrast, in the world of corporate law and governance, we see that board oversight, monitoring, and compliance functions have grown in importance. State corporate law cases have heightened attention on the board’s role in providing oversight to ensure legal compliance throughout the corporation’s operations and to mitigate litigation and reputational risks that can arise from corporate abuses around the world. Corporate compliance programs and voluntary ESG initiatives have proliferated amid widespread debate about the purpose of the corporation and a broadened role for stakeholders.

Looking at these diverging developments together suggests that, at least in some important circumstances, the Supreme Court’s approach may not capture the reality of modern business corporations, and it might not be what many shareholders and corporate participants actually want. It may instead create new tensions in corporations that are not fully and easily resolved through private ordering and that undermine the conceptual foundation for the existing arrangements in corporate law and governance. It may also ultimately serve only a limited set of business interests — not the great number of workers who are often framed as stakeholders on the other side of “pro-business” jurisprudence, nor the majority of public corporation shareholders, who are increasingly diversified through institutions that rely on external regulation to constrain corporations and minimize systematic risk. And so, in sum, corporations might bear little resemblance to the Court’s characterizations, and the business world, on the whole, might often be better off without “pro-business” jurisprudence that empowers corporations and erodes their external constraints.


Elizabeth Brake on price gouging (in Economics and Philosophy)

Economics and philosophyBy Mark D. White

In the latest issue of Economics and Philosophy (37/3, November 2021), Elizabeth Brake (Rice University) examines one of the most controversial topics in the ethical analysis of market behavior. In her article "Price Gouging and the Duty of Easy Rescue," Brake surveys the standard economic and ethical arguments for and against the practice, and suggests a novel ethical argument against it: that it violates our obligation to help people in emergency situations when it is of little cost to us. This position is usually associated with utilitarianism, thanks to Peter Singer, but can also be derived from various forms of deontology (although the positive nature of the duty may demand an extra step) as well as virtue ethics.

Brake makes a legal case as well as an ethical one, arguing that there is a basis in law for enforcement of a duty of easy rescue in such cases where price gouging arises. As she acknowledges, this is a more difficult case to make, because a legal duty normally implies a right that is violated, and a legal right to assistance is not generally recognized, however dire one's circumstances. She suggests several alternative ways of justifying a limited prohibition of price gouging based on legal duty of easy rescue, such as considering it as part of the regulation of market activity in the public interest, in which businesses are prohibited from harmful practices.

There is much more in Brake's paper than I can discuss here and it rewards a careful reading. For instance, she does address the economic benefits of price gouging, such as increasing supply of much-needed goods to disaster-stricken areas, and her ethical and legal analysis does allow for price increases to cover legitimate costs and risk. Her argument is against "pure" profiteering only, claiming that the seller's interest in higher profit does not justify holding disaster victim's interest in survival hostage to negotiations over price. Related to this, Brake also notes that market conditions are far from ideal in disasters, so we should not assume the same quality of consent, or use the same standards of coercion or duress, when evaluating transactions offered or made in such a context.

(For more of Brake's work on disaster ethics, see the dedicated page at her website.)


Virtual Conference on "Teaching Ethics to Economists: Challenges & Benefits"

By Jonathan B. Wight

Conference Dates: October 21-22, 2021

Virtual Conference

LSBU Business School
&
London Centre for Business and Entrepreneurship Research

During the last 30 years, the conversation between economic theory and ethics has been restarted, after a period of interruption, generated by the positivist era in economics. We cannot ignore, in this revival, the role of the financial crisis, gender and racial inequality and now the divisions revealed by the unequal impacts of the pandemic. An important contribution has been the call for a professional economic ethics led by DeMartino (2011) and DeMartino and McCloskey (2016).

More recently, Dolfsma and Negru (2019) challenge the idea that ethics has no place in economics. Building on their ideas we ask: Is ethics important for the study of the economy and, if so, how should it be taught?

This two day conference will be of interest to lecturers and students in economics and business - and anyone with an interest in the future of the economics curriculum.

Link for the event & registration: 
https://www.eventbrite.co.uk/e/teaching-ethics-to-economists-challenges-benefits-tickets-170298187463 


Programme

Day One: Thursday 21 October

9.45am - Virtual housekeeping & Zoom functionality - Neil Hudson-Basing, Corporate Events Manager, LSBU

9.55am - Welcome Craig Duckworth, LSBU Business School, UK

10am - Introduction to the day. Economics and Ethics - what is the agenda?

10.30am - Revisiting the analytical relationship of Ethics and Economics María Isabel Encinar & Félix-Fernando Muñoz, Universidad Autónoma de Madrid, Spain

11.15am - Theoretical and ethical reductionism and the neglect of subjectivity in economics and economic education - Giancarlo Ianulardo, University of Exeter, UK

12pm - Lunch break

12.30pm - Keeping alive non-individualistic ethics in political economy: a review of concepts from Aquinas to Habermas Stefano Solari, University of Padua, Italy

1.15pm - Racism, the economy and ethics: where does it all begin? - Paolo Ramazzotti, University of Macerata, Italy

2pm - Teaching economic harm to economists - George DeMartino, University of Denver, USA

2.45pm - Comfort break

3pm - The fate of moral philosophy in the age of economic scientism: ethics and welfare economics in mainline economics - Peter Boettke, George Mason University, USA

3.45pm - Plenary: Reflections

4pm - End of Day One

______________________________________________________________________

Day Two: Friday 22 October

9.45am - Virtual housekeeping & Zoom functionality - Neil Hudson-Basing, Corporate Events Manager, LSBU

9.55am - Welcome and intro to Day Two Craig Duckworth, LSBU Business School, UK

10am - Managerial decision making: consequences and Consequentialism - Malcolm Brady & Marta Rocchi, Dublin City University, Ireland

10.45am - Economic curricular, pluralism and the Global South Michelle Groenewald, North- West University, South Africa

11.30am - Accounting as applied ethics: teaching a discipline - Wilfred Dolfsma, Wageningen University, Netherlands

12.15pm - Lunch break

12.45pm - Purusharthas: the human pursuit of wealth and welfare. The Indian approach to ethics and economics - V P Raghavan, Indira Gandhi National Centre for the Arts, India

1.30pm - Economics, ethics and deliberation

  • Ioana Negru, Lucian Blaga University of Sibiu, Romania
  • Imko Meyenberg, Anglia Ruskin University, Cambridge, UK
  • Craig Duckworth, LSBU Business School, UK

2.15pm - The kidney market debate: a retrospective on Becker and Elias - Jonathan Wight, University of Richmond, USA

3pm - Comfort break

3.15pm - Alfred North Whitehead on the education of the commercial class: its influence on Keynes Dennis Badeen, University of Hertfordshire, UK

4pm - Plenary: Reflections

4.15pm - End of Conference

*Times according to GMT

________________________________________________________________________________________________

This conference will be delivered virtually via Zoom. You will receive the joining instructions on the Monday before the event takes place.


New book: Jennifer A. Baker and Mark D. White (eds), Economics and the Virtues: Building a New Moral Foundation

Mark D. White

E&V coverOur readers may be interested to know about a new book coming out soon from Oxford University Press that I co-edited with Jennifer A. Baker entitled Economics and the Virtues: Building a New Moral Foundation. From the blurb:

While ethics has been an integral part of economics since the days of Adam Smith (if not Aristotle), many modern economists dismiss ethical concerns in favor of increasing formal mathematical and computational methods. But recent financial crises in the real world have reignited discussions of the importance of ethics to economics, including growing calls for a new approach to incorporating moral philosophy in economic theory, practice, and policy. Ironically, it is the ethics of virtue advocated by Aristotle and Adam Smith that may lead to the most promising way to developing an economics that emphasizes the virtues, character, and judgment of the agents it models.

In Economics and the Virtues, editors Jennifer A. Baker and Mark D. White have brought together fifteen leading scholars in economics and philosophy to offer fresh perspectives on integrating virtue into economics. The first section covers five major thinkers and schools in the virtue tradition, tracing historical connections and suggesting new areas of cooperation. The second section applies the ethics of virtue to modern economic theory, delving into its current practices and methodology to suggest areas for integration with moral philosophy. Finally, the third section addresses specific topics such as markets, profits, and justice in the context of virtue and vice, offering valuable applications of virtue to economics.

With insights that are novel as well as rooted in time-tested ethical thought, Economics and the Virtues will be of interest to economists, philosophers, and other scholars in the social sciences and humanities, as well as professionals and policymakers in the fields of economics and finance, and makes an invaluable contribution to the ongoing discussion over the role of ethics in economics.

Many if not all of the contributors will be familiar names: besides me and Jennifer, they include Christian U. Becker, Tim O'Keefe, James Otteson, Michael Baurmann and Geoffrey Brennan, Eric Schliesser, Andrew Yuengert, Christine Swanton, David C. Rose, Seung (Ginny) Choi and Virgil Storr, and Jason Brennan. (You can see the complete table of contents at Amazon, OUP, or my personal blog.)

Personally, this book has been a dream of mine for a number of years, and working with Jennifer, Adam Swallow and (the late) Terry Vaughn at OUP, and all the contributors, made that dream a reality in every possible way.

Economics and the Virtues has already been reviewed by Adam Gurri at Sweet Talk, where he calls it "a valuable source of insight, especially for economists used to operating within only one framework." Will Wilkinson of the Niskanen Center and The Economist calls it "a fascinating volume" and "an indispensable collection for anyone interested in moral psychology, economic theory, or the morality of markets," and pre-eminent philosopher and Kant scholar Onora O'Neill calls it "a rich and rewarding collection" that "explores classical accounts of the virtues, and argues that they remain essential not only to character but to culture, including the culture of markets."

(You can also see Jennifer's and my post at OUPblog discussing "The Big Short" in relation to the theme of the book.)


Cost effectiveness is not the problem — government control of health care is.

Health dataMark D. White

In today's "The Upshot" in The New York Times, economist Aaron E. Carroll bemoans the fact that health policymakers, regulators, and spokespeople are reluctant, and sometimes even forbidden, to discuss and make use of information regarding the cost effectiveness of particular treatments. The fear is that they will invoke the spectres of rationing and "death panels," or more generally, medical decisions made on the basis of money alone and not the needs or interests of patients and their loved ones.

I agree with Carroll that cost effectiveness is an essential and necessary topic for discussion; after all, health care has to be paid for by someone, who is responsible for making sure that scarce resources are used in the most beneficial way possible. And I think most people understand this principle as well, even if they don't want to acknowledge it at times of tragedy and impending loss.

If people are afraid of calculations of cost effectiveness, it's because they don't want some distant, faceless, bureaucracy using cold data to make decisions that affect such an intensely personal aspect of their lives. But the problem isn't the numbers themselves—it's who is using them to make the critical decisions.

If health care decisions had not been centralized under the Affordable Care Act (or a similar plan), and health care decisions were left in the hands of doctors, patients, and insurance companies unbound by government mandates regarding coverage, these parties together could use cost effectiveness numbers in a way that worked with each patients based on his or her interests, coverage, and resources. Each patient, together with his or her doctor and loved ones, could balance these various factors in a way that furthered his or her overall interests within available resources and insurance coverage. They could use cost effectiveness information as one input into a specific decision in a way that furthers that patient's interests.

I wrote about this aspect of private health care in "Markets and Dignity: The Essential Link (With an Application to Health Care)," my chapter in my edited volume Accepting the Invisible Hand: Market-Based Approaches to Social-Economic Problems (Palgrave Macmillan), on pp. 13-14:

The possibility of making private decisions regarding the benefits and costs of various treatment options, whether for minor illness or chronic disease, puts the choice in the patient’s hands (as well as with her doctor and whomever else the patient wants to join the process, such as family or friends). In consultation with her doctor, the patient can assess the value of various treatments, considering the merits compared not only to their costs, and the benefits and costs of alternative options, but also other uses towards which those resources can be devoted, which are all subjective valuations. Perhaps she will choose not to undergo the premium treatment, even if she could afford it, because she wants to leave the money for her children, or take a cruise in the final months of her life; or perhaps she will sell her house to pay for a little more time on life support and with her grandchildren. In a market setting, this choice is hers, along with its benefits, costs, and other consequences.

I am not denying that the patient may not be able to afford the premium treatment because she does not have the resources for it; this is tragic, to be sure, but unavoidable in a world of scarcity. If she is not making these decisions, someone else is; an insurance company or HMO may also refuse her the premium treatment based on costs, and a government-run health plan may do the same. But in these cases, the decision would be made for her, according to someone else’s calculation of whether the treatment was “worthwhile” in terms of costs and benefits for the hospital, insurance company, or government health program, all of whom have scarce resources that must be allocated somehow. In a market context, the decision would be hers, even if it seemed she had no decision at all because she does not possess the resources, either due to bad luck or bad planning, or other choices made through her life.

All is not lost, necessarily; just because the premium treatment is out of reach does not mean there are not lesser, more inexpensive treatments that will also be of benefit. In a market system, this is the patient’s choice, just as she can choose what size house to buy, what model car to lease, what size TV to own. Every person prioritizes the various interests on her life; some forego the large house to take frequent vacations, some do the opposite. Some may opt for the cheaper treatment option to retain more resources for another goal in life, or to give more to others rather than spend it on premium care for herself. And certainly, past choices will constrain or expand her present options; one who spends her income on lavish toys throughout life should not expect sympathy when she cannot afford top-line treatment at the end of it. But these are her choices, while in any other system, this decision may be made for her, according to calculations based on the imputed value of her life and her well-being compared to other persons. Not every person can afford to have the premium treatment, but this fact is due to scarcity of resources, not the way in which they are allocated or distributed, and it will be true under a state-controlled system as well as a market system. A state system focused on efficiency cannot allow everyone to have the premium treatment either, and the choice of who (if anybody) undergoes it will be truly arbitrary, with no role for choice on the part of the patient or her family. Choices that so closely affect a person’s life should be made by that person alone (or other persons to whom she delegates—or sells—that authority); they should not be made by another party that either presumes to know her “true interests” or serves the collective weal in the name of efficiency.