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Putting Moral Philosophy Back into Economics

In his Encyclical about the environment and climate change Pope Francis writes of the need to find other ways “to understand the economy and progress”. A worthy aim indeed – but to do this properly will require a challenge to the more powerful religion of the contemporary world – fundamentalist economics. This is a belief system that equates technological achievement with progress and it is a faith that is set to fail now that the economic system is crashing against ecological limits. Unfortunately the many crises that this is likely to produce will be seen as new opportunities for those sociopathic types of “rational economic man” who inhabit many senior positions in corporations (and government) who are quick to exploit the vulnerabilities of others.

In my recently published book Credo: Economics Beliefs in a World in Crisis I show that it is possible to go back hundreds of years and trace the rise of this quasi religion of economics as the world view of a particular kind of person – the business man with money to invest. When the problem facing humanity is described as “scarcity”, it follows that a sort of “salvation” is to be found in production increase. If production increase is achieved by entrepreneurs being prepared to risk their money investing in their businesses it follows that everything should be done to ensure that nothing gets in the way of these very important people pursuing their “self love” guided by markets. It seems obvious.

A branch of moral philosophy that went astray

But let us retrace our steps to consider what a lot of people are unaware of – economics was originally considered to be a branch of moral philosophy. The famous Adam Smith was a professor of moral philosophy. Thomas Malthus was the Reverend Thomas Malthus. The ideas underpinning mainstream micro-economics are those of a moral philosophy called utilitarianism worked out by Jeremy Bentham and then adapted by later thinkers. If we go back even earlier then we find that Saint Thomas Aquinas and St Augustine also thought and wrote about economics as a part of moral philosophy and partly derived their ideas from Aristotle.

Today if you read most of the textbooks of “Positive Economics” you will read in them a little homily that it is not the job of economists to describe the world as it should be but rather to describe it as it is. A distinction is made between facts and values – a distinction taken from the philosopher David Hume. Because of this little homily in the textbooks it looks as if all the moral philosophy has been taken out of the subject. All the neutral economist can do is to say that individuals have preferences – including ethical preferences – and these guide what people do. What people do is essentially to calculate what will maximise their sense of satisfaction and/or minimise their experience of pain in the light of their preferences. However it is not the job of the economist to pass ethical judgement on these preferences and these choices. The economist is there to describe what rational individuals do – which is to calculate how to maximise their individual level of satisfaction given the strength of their preferences, including their ethical preferences. In this regard the strength of people’s preferences, including their ethical ones, are indicated by how much they will pay for them, or how much they must be paid to relinquish them.

Racism as a ‘preference choice’

You can see this point of view at its most pronounced with economists like Gary Becker. For Becker racism is a preference choice about which people you want to live near or whom an employer might want to employ. Becker does not endorse or condemn he merely draws out the consequences.

However economics does not stop being a moral philosophy by this conceptual sleight of hand. Describing things as “preferences” does not stop them being moral choices – indeed describing them as ‘preferences’ reflects a particular point of view in moral philosophy. So economics never stopped being a moral philosophy – or an immoral philosophy – even if it is not recognised as such.

Example – external costs imposed on communities are (un)ethical choices

To illustrate what I mean take the idea of what economists call “externalities”. When a company takes decisions that affect the environment and the wider society negatively, which are called in the jargon ‘external costs’ like pollution, then the owners and managers of that company are taking what are essentially ethical decisions. If they are damaging the community and/or the environment then that is an inherently ethical matter. Now you can argue that there will be circumstances where the ‘external costs’ are justified because they are outweighed by private benefits (or by external benefits). You can argue too that compensation can be paid to make up for any harms. However my point here is that the use of words like “externalities”, “costs” and “benefits” , as well as calculating them using money as a measure, are a particular way of thinking and dealing with ethical decisions.

These occur in situations where harms are done to some people (and species) while benefits accrue to others. In a market society ethical decisions are thought of as calculations in which economists claim a special expertise because they are supposed to know how to frame the data gathering exercise which leads to the calculations being made possible: the cost and benefit comparisons.

Now, for economists, this is the rational and only way to take decisions like this – and if people don’t think like this then they are not rational. Thus there have been experiments when a sample of people have been asked by economists to indicate the strength of their preferences by saying how much they are prepared to pay – for example to keep a threatened species alive in the face of economic activity. In such experiments people who objected to this way of thinking about the ethical issues and who refused to give a figure of how much they would pay were judged not to be rational. This actually said as much about the economists conducting the experiment as about the people in their sample. In order to qualify as “rational” some economists appear to believe that you must have the philosophical outlook of a “preference utilitarian”.

When one group become the experts in how to make ethical decisions they have become a quasi-priesthood. According to these priests it is a fundamental belief that costs and benefits tha can be expressed by what people are prepared to pay or to accept in compensation for harms and money can be used as a measuring rod. Economics never stopped being about moral philosophy. It is long overdue for a critique.

The changing attitude to “duress” in economics

This is especially noteworthy when you take into account that the foundational ideas of medieval economics included an element of social justice – for example the idea of a “just price”. The key idea of a “just price” was that market exchange should be organised so that people could get their essential needs without being put under duress. Thus it was morally wrong to exploit the desperation of starving people by speculating with food stocks in a time of poor harvests. So markets should be operated according to criteria of social justice.

However what happened over a number of centuries leading up to what Adam Smith called the “Age of Commerce” was “duress” on a massive scale, particularly in Europe and in Britain. For example in the British Isles the elite used the power of the state to rob communities of their access to the land and its resources in the process called the “enclosure of the commons” while abroad colonialism, slavery and genocide occurred – and economics became the ideological doctrine to justify this murder and theft. According to John Locke God had given the land to humanity in common but he reasoned that God must have intended that the land would be used by those who were “rational and industrious” because their rational industry would improve it. This idea that certain people were entitled to take the land for themselves because they were rational and industrious is the same idea that has now been around for centuries to justify land theft and expropriation. (Locke was also a major investor in the slave trade through the Royal African Company).

The Physiocrats who wrote about the economy of France and gave a central place to its agricultural production were also concerned to downplay the social justice agenda. They did not want the state interfering in markets to protect the poor by keeping food prices down– that would get in the way of the process of agricultural improvement.

Adam Smith too was quite explicit on such matters. It was true that ‘primitive societies’ were more egalitarian than societies back home in Britain. However the potential for production increase and technological change was far more important and would be the way that all would eventually become better off. Greater equality and security had to be sacrificed to open up the way for markets to stimulate production.

It was not until world war two and after that governments began national income accounting and became focused on measures of growth. However for several centuries the idea of improvement – meaning production increase – has been the core narrative, the ultimate rationale for national and imperial policy and has justified all sorts of injustice and “duress”.

“Improvement” = technological efficiency and production increase and trumps security

At the core of economics is the idea that production increase equals improvement and is more important than economic security for the poor. Insecurity for the poor is what you need to discipline them. Not only were the poor to be separated from the commons so that they had to enter the labour market – a certain number of the poor were ideally kept unemployed. Hayek explained why – because unemployment was an alternative to corporal punishment and necessary for disciplining the labour force.

This exercise in keeping people deliberately insecure is particularly significant when you consider the findings of psychologists Daniel Kahneman and the late Amos Tversky – which they summed up in what they called “Prospect Theory”. They found that most people are “loss averse”. In weighing up their options when they make economic decisions the prospect of loss weighs more heavily in the way people act than the prospect of gains. Most people do not like taking gambles most of the time – although they may gamble when all their options seem bad – which helps to explain why betting shops do well in areas of poverty. These are things that will surprise no poor person.

So what kind of people are they that recommend the imposition of insecurity on whole classes of people? At the time the new ideas of economics were being formulated by people like Adam Smith, Immanuel Kant in Koenigsburg was arguing that, for people to be treated with respect, they should never be treated as merely means to other peoples ends. People were ends to themselves. However the slave traders, the slave masters in the plantations and the new industrial masters saw ordinary people as no better than work animals, or fragments of human beings – as factory “hands”.

Implicit in mainstream economics is a model of what humans are like – and they are like sociopaths

The implicit assumption of economic textbooks is that there is one kind of person, “rational economic man”, a calculating, competitive individualist who is first and foremost concerned to look after him or herself. Perhaps one can say that this is a reasonable description of the people who have ruled for centuries – like the well connected families that used their influence in the state to steal the common lands from ordinary people. However a single kind of “economic man” is a myth. There have always been more than one kind of person. There have been many different kinds of people, multiple kinds of personalities and multiple kinds of complex patterns of motivation.

 

It makes economics much closer to life to describe decision making in the light of different kinds of people and the different kinds of circumstances that they live in. I have sought to do this in my book. I have sought to describe different kinds of relationships between people in society and different sustaining ecological systems. I have also sought to describe different personalities and motivations for entrepreneurial activity in market societies. For example I distinguish between entrepreneurs who are motivated by social and environmental goals and people who are principally concerned to look after themselves, indeed people who are too often criminals. Similarly in my chapter on employment I try to describe what happens in many employment circumstances in terms of psycho-dynamics and interpersonal relations. There never is and never was one type of economic actor – there are many.

If you think about it, if you lived and worked in a commons community and your everyday relationships were based on commoning, on collective decisions about common resources, then you would have a very different kind of personality from if you were the Mr Big in a Gangster hierarchy engaged in periodic deadly struggles with other gangster bosses. (A monarch in the medieval political system).

Another kind of economic actor are all those people who have wanted to organise economic activity through explicitly co-operative arrangements. They have sometimes had a hard time of it. In the interwar period in Italy, Mussolini seized the assets of 8000 Italian co-ops, killed leaders and burned shops. In Russia, Lenin repressed them but allowed them to revive before Stalin destroyed agricultural cooperatives (providing 65% of food provisions) in favour of forced collectivisation. Urban co-ops were then closed in 1935. In Germany, Hitler seized their assets and nationalised 1100 consumer co-ops, 21,000 credit unions, 4000 co-op savings banks and 7000 agricultural co-ops. In Austria, where one out of every 3 three households had been members of consumer co-operatives, Hitler’s invasion led to the leaders of the co-ops being replaced by fascists while their assets were seized and handed over to private business owners. In Spain, Franco arrested and killed many co-op leaders while many others took exile in Latin America.

At the present time, at least one billion people on the planet are members of co-operatives, though you would never know that from mainstream economic textbooks. In over 800 pages, Mankiw and Taylor’s economic textbooks never discuss co-operatives at all. What Mankiw and Taylor describe is the economy of the sociopaths.

Sociopaths in business and their allies in government

This is a definition of “high functioning sociopaths” from a medical website:

“High functioning sociopath is a term used to describe people with sociopath traits that also happen to have a very high intelligence quotient. They are likely to be highly successful in the field they endeavor (politics, business, etc.). They plan very meticulously and the presence of sociopathic traits like lack of empathy, lack of remorse, deceptiveness, shallow emotions, etc. makes it very difficult for “normal” people to compete with them.”

Whereas Kahneman describes most people as loss averse and not inclined to take risks there are people who are the very opposite. Indeed the personality of sociopaths and psychopaths does rather fit the textbook descriptions of “economic man”. Not only do they calculate their self interest and lack empathy for others but they are much more focused on personal reward and this attention for rewards blots out considerations of caution and of how others might get hurt.

As already suggested psychopaths tend to be regarded as people who are characterised by lack of fear, empathy and interpersonal skills. However, research at Vanderbilt University changes the way of interpreting this:

“Previous research on psychopathy has focused on what these individuals lack—fear, empathy and interpersonal skills. The new research, however, examines what they have in abundance—impulsivity, heightened attraction to rewards and risk taking. Importantly, it is these latter traits that are most closely linked with the violent and criminal aspects of psychopathology.”

Read more at http://phys.org/news/2010-03-psychopaths-brains-wired-rewards-consequences.html#jCp.

Celebrating sociopaths – ‘Creative Destruction’

Now risk taking focused on rewards is exactly what is celebrated by economists as a crucial aspect of the heroic entrepreneur and what some economists like Schumpeter lauded as “creative destruction”. The fact that this “creative destruction” imposes loss on others whose lives are destabilised brings forth little sympathy from most economists. The profit makers are celebrities but too bad for the losers.

Competition, technological change, innovation are the hurrah concepts that are self-evidently good. The entrepreneurial genius is the hero whose championing of technological change impels society on the path of progress. Indeed it is these supermen whose innovations are needed as the solutions for the ecological and climate crisis. (In fact technology can sometimes be developed co-operatively and be what Ivan Illich referred to as “convivial”. I will not dwell on these questions here. I want instead to return to the ethical issues and those of the personality types that drive the ceaseless process of destabilisation and insecurity that typifies our society.)

Indigenous people, non indigenous people and genocide

In particular I want to contrast this process with the ethics of the Australian aboriginal people before the colonialists arrived in Australia. Their belief system and ethics was 180 degrees opposite to our own. They saw it as their responsibility to maintain the ecological system from which they lived as unchanging. They did not celebrate ceaseless innovation but exactly the opposite and in fact they had successfully managed the ecological system in Australia essentially unchanged for at least 8,000 years and perhaps 15,000 years. This landscape and species management – through the controlled use of fire and water – was based on a deep knowledge of their ecological system and an intimate identification of the plant and animals that lived in it. Totem animals and more generally nature were regarded as kin. The detailed knowledge and respect for nature, species and landscape is what allowed them to live so well – working perhaps 3 hours a day.

In the terms of John Locke the Aboriginal people ought to have qualified as industrious and rational but were not recognised as such by settlers convinced of their own superiority. In Australia the colonialists found an ideal environment for grazing animals because the aboriginal people had created the landscape for this purpose with controlled burning. The eco-system that they managed allowed them to take animals and the foods when they wanted with ease. After the colonial take over and genocide the eco-system that they had managed was degraded. Between 1824 and 1908 in Australia as many as 10,000 Aboriginal people were murdered in Queensland alone. The original inhabitants were regarded as vermin and in some cases hunted for sport.

What happened in Australia happened repeatedly all over the world – economic development was a process in which the colonising developers acted as criminal psychopaths with the support of colonial states…. and degraded the eco-systems even while they imagined that they were “improving” it.

Indigenous and non indigenous economics

An indigenous community is one where people belong to a place – a non-indigenous community is one where places can be bought and sold on the land market so that places belong to people (and corporations). This has a fundamental effect on motivations, cultures and ways of life. When people belong to places they are members of communities who have had a long term relationship to each other and to a specific landscape and its eco-system. The experience of commoning is pro-social and pre-ecological and brings ecological knowledge with it. The people understand and identify themselves with the local ecological features. They work to protect those features and take a long term view. This gives rise to a particular kind of personality too –and unlike the psychopathic personality it is one that cautiously takes a long term perspective. It is common for such societies to regard themselves as having responsibilities both to preserve what they inherited intact from ancestors who are held in great respect in order that that can hand over their landscape as an intact inheritance to future generations. Fundamental decisions should take into account the effects on 7 generations in the future.

Land grabbing and the development of a land market broke this up. It involved the quite literally “dis-located” and “dis-placed” people. It ripped apart the relationship of communities to each other and to places. The enclosure of commons broke up communities with shared relationships and shared responsibilities to a place and degraded both the people and the places which became objects to be bought and sold in markets and made available for limited ends.

By definition people who come as conquerors are not locals and when merchants become not only traders in goods but in people, in slaves and in plunder, then huge damage was done. A stabilised land market did not improve things when it developed extractive and plantation economies. From Ricardo onwards economists have celebrated the idea of an international division of labour with trade relationships as a way of increasing production. However an international division of labour meant dislocated communities in more specialised landscapes – monocultures which destroyed the pre-existing eco-systems, a break-down of community and ecological resilience and biodiversity collapse.

Ricardian development

David Ricardo’s international division of labour so beloved by economists was imposed by imperialism and had an ecological dimension. The European colonialists transformed territories into images of what they had left behind – importing plants, animals, crops and building methods, turning colonies into new places with new diseases, new environmental imbalances and trauma for dislocated populations. Political economy, taught by people like Malthus in places like the East India Companies staff training college at Hailsbury on Hertford Heath, then termed this destructive process “development” and proclaimed it to be an improvement. They celebrated themselves for imposing it – this was the white man’s burden, his civilising mission. The unrestrained market and the iron laws of political economy were inevitable and the elite with an economics education were doing a favour by bringing them about. During the Irish famine in 1846 Treasury head Sir Charles Trevelyan – a true predecessor for George Osbourne – wrote

“The only way to prevent people from becoming habitually dependent on government, is to bring
[relief] operations to a close. The uncertainty about the new crop only makes it more necessary…
These things should be stopped now, or you run the risk of paralyzing all private enterprise and having this country on you for an indefinite number of years.”

As the population fell by 2 million in Ireland, exports of food from Cork in a single day in November 1848 were 147 bales of bacon, 255 barrels of pork, 5 casks of hams, 3,000 sacks and barrels of oats, 300 bags of flour, 300 head of cattle, 239 sheep, 542 boxes of eggs, 9,300 firkins [about one-fourth of a barrel] of butter, and 150 casks of miscellaneous foodstuffs.

Accompanying Queen Victoria in Ireland, historian Charles Kingsley commented:

“I am daunted by the human chimpanzees I saw along that 100 miles of horrible country. I don’t believe they are our fault. I believe that there are not only many more of them than of old, but that they are happier, better and more comfortably fed and lodged under our rule than they ever were. But to see white chimpanzees is dreadful; if they were black, one would not feel it so much.”

Elite Moral Sentiments

What we are looking at here are the “moral sentiments” of the elite after a schooling in political economy. In his other book, “The Theory of Moral Sentiments”, Adam Smith argued that ethics is based on empathy and identification. Action in support of others is easier with people that one knows well, living in circumstances that one can understand. Action in support of one’s neighbours occurs when one sees things happening to people that one could imagine happening to oneself. But how do you identify what people feel when they use a different language, live in radically different circumstances, in a different kind of environment, in a different society with different customs? To develop a full empathy and sympathy one would have to take the uncertain and apparently risky path of “going native” and while a few people did that most took the easier and apparently safer option – they pre-judged these strange people who were living strange lives and judged them as self-evidently inferior. Either they were in need of new rulers or better still wiped out or driven away. Political economy provided the justification for this attitude because the civilisers had already arrived in what Adam Smith called the “Age of Commerce” which was the highest stage of historical development. History progressed like this – societies of hunter gatherers, followed by pastoralists, agriculturists and then came the Age of Commerce. It followed that the natives must therefore be primitives who were to be dragged into the modern world – perhaps by being set to work in the slave plantations.

The wealth of nations was provided far more in these plantations and the mines supported by the slave trade than in the small town exchanges between butchers, bakers and brewers. This attitude still prevails today – development in Africa and elsewhere will be helped by global corporations if they can access the land and resources of Africa. The flood of people trying to get into Europe is then not seen for what it is – the result of the actions of these corporations continuing the process of expropriation in their own interest.

The Invisible Hand and the Invisible Elbow

Of course at the heart of market fundamentalism is the core idea, that Adam Smith developed from Bernard Mandeville. This is that the pursuit of private interest (or self love) is transformed into a public good for the benefit of others through the market. The prospect of a reward drives the provision of what other people want (if they can pay). Price signals steer self interested activity and a social good occurs when others can buy what they want from the market.

Yet there is also an ‘invisible elbow’ as Michael Jacobs called it. ‘Self love’ can also be said to discourage the payment necessary in order to prevent or to clean up pollution. Where economic activity is purely self interested and ignores the wider social and environmental context it encourages taking risks at other people’s expense, it encourages fraud and various kinds of criminal activity, including, as we have seen already, genocide and land theft. As a matter of fact what makes the market work, to the extent that it does, in the allocation of resources, is only the agreement of all market players to pay according to common rules – like the laws of contract. Pure self love focused on individual reward, as the Vanderbilt University studies show can drive out consideration for other people. Greed is not good, as is claimed, because it encourages an environmentally destructive waste of resources, it encourages climate change and resource depletion. It encourages recklessness too. Indeed greed can leads to behaviours that preclude the minimum of trust and trustworthiness necessary for people to have business dealings with each other at all.

Crime epidemics, the financial sewer and the state

But isn’t all this a description more relevant to the 19th century or earlier than to the present day? Have things not improved since then? Well, let us consider what a professor of law and economics in the USA, William K. Black, calculated for the few years before the sub-prime collapse in the USA. No fewer than a half a million felonies were committed by people working in the financial sector in that country. When they were lending money to people with no assets and no income and then packaging those loans up and knowingly selling this financial “toxic trash” across the world they were involved in criminal fraud on a massive scale.It was this epidemic of criminality that largely led to the crash. (High energy prices played a part too!)It is noteworthy however that there have been almost no prosecutions and the finance sector got bailed out while its victims were ruined.

This tells us something about the ‘political’ in ‘political economy’ – the topic of political power asymmetry is not dwelt on in most textbooks even though it is central to how resources are distributed and allocated. In a supposedly democratic society we all have one vote equally. However we do not have equal amounts of influence. We do not all have an equal ability to use the state to pursue our business agendas or to rescue us if we come unstuck. This is because we do not have equal access to money to buy political influence, we do not have equal amounts of “well connectedness”, we do not have equal access to the mass media and to the services of public relations agencies, we do not have equal access to fancy lawyers, we do not have equal access to the information we need to pursue our agendas. We also have unequal access to health, education and protection. Of course if one group has access to the state and get bailed out when the economy comes unstuck because they are “too big to fail” while others are ruined then it automatically follows that inequality will increase and those who are responsible will be able to benefit from the mayhem that they create for everyone else with impunity. This process is actually called “moral hazard” but no one is doing anything of substance about it and that is why the power of the financial markets have, if anything, grown further after the 2007 crash.

The ecological crisis, climate change and the limits to growth

It is in this context that we must see official strategies to deal with the ecological crisis, climate change and the limits to economic growth. The justification of the people who govern us has always been that industrial development, technology and ecological development has delivered longer lives and greater material well being in “developed countries”. We have seen how the costs of this kind of progress have never been properly counted but can we really doubt the evidence of so much “technological progress” ?

One way of answering this question is to judge the economist’s idea of improvement against the 7 generation idea of indigenous people. It is said that when Mao Tse Tung was asked the significance of the French Revolution of 1796 he said that it was still too early to say. Well, a similar reply can be made of the significance of the Industrial Revolution – including the industrial revolution that has subsequently occurred in China itself.

If a generation is 30 years then 7 generations after the industrial revolution in Britain is round about now. Round about now we have the makings of a serious climate crisis, global biodiversity collapse, major depletion of fossil energy supplies, materials and fresh water. All of these are consequences of economic and industrial “improvement”. What “economic improvement” there has been is not only based on centuries of injustice, genocide, environmental degradation, and inequality – it now looks distinctively non-sustainable.

Yet the economists in the United Nations Environment Programme think we can “save nature&rdquo. This can be done, they tell us, by giving nature’s attributes a market value so that they can then be traded. Then we can plug ‘nature’ as a set of tradeable assets into the ethical sewer of the financial markets!

The flaw in this line of reasoning can be demonstrated by examining what has happened to the European Emissions Trading System (ETS) and many other aspects of the Kyoto Protocol. The carbon markets have never worked in the sense of significant reductions of emissions because the players in the carbon markets have consistently gamed the system and rendered carbon markets ineffectual.

No surprise here then. This is a matter of ends and means. In a market economy, and in particular in the financial markets, the end of the exercise is to make as much money as possible. What is supposed to happen is that the carbon markets incentivise technologies that make for environmentally benign activity. You keep the sociopaths sweet by financially rewarding low carbon and ecologically friendly activity. Note here that the environmentally benign activity is the means and being rewarded with more money is the end. However, since we are dealing with sociopaths what we typically find is that the largest quantities of money can be made by fraud or gaming the not so cleverly constructed system. Thus the ETS has had to be suspended at times because it was riddled with VAT fraud. For most of the time high emitting companies involved in the ETS have gamed the system so that more permits were issued to them than they needed and the carbon price has been close to zero.

A large part of the problem has also been with the so called “Clean Development Mechanism” for so called “developing countries” to get a share of the action in carbon markets in a way that would encourage low carbon development. But the Clean Development Mechanism has also been riddled with fraud. So called “Certificates of Emissions Reduction” have been awarded repeatedly for activities that were going to happen anyway. These fraudulently acquired permits could then be sold into the ETS. In brief carbon markets have never worked. But why should this surprise us? The ETS was designed by BP when it had friends in the Labour Government and it was known not to work right from the start. The system that was devised has then been infested by crooks. The invisible hand of the carbon markets has done a lot of damage, as usual delaying real action on climate change….

The fact is that the last thing one wants to do to protect the ecological system of the planet is to marketise Nature and put it up for sale. Nature has to be taken out of the market and put under the collective protection of communities with a living knowledge of their ecological systems and with an ethic of looking after it, and each other, in a long term relationship. It must be put under the responsibility of institutions whose purpose is to protect and share in the interests of all, preferably with a historical track record – not to buy and sell among the criminal classes (by which I mean the financial and business elite).

Taking centuries of PR spin out of economics

In conclusion – if we are going to try to reclaim economics as a branch of moral philosophy and if we are really going to describe the world as it is, rather than as we would like it to be, then we have to acknowledge what happened in the historical process that paralleled the “development” of the economy and the development of economics as a subject. Put bluntly the people who were fraudsters, thieves, gangsters, thugs and murderers have had a predominant influence across much of that history and have ruled in what are now “developed” societies for centuries. They have conquered most of the rest of the world, stolen resources and terrorised it – and economists helped them by supplying a narrative that justified what was happening as a source of improvement and technological progress.

Actually it has been a history of violence, duress and crime and it still is. There is an estimated $21 trillion to $32 trillion in wealth hidden in financial secrecy jurisdictions which are places that facilitate fraud, tax evasion and aggressive tax avoidance. These places facilitate escape from financial regulations, embezzlement, insider dealing, bribery and money laundering. In Britain the continued prominence of the City of London and its network of tax havens was originally based on an Empire imposed by violence and then continued by providing a place to evade tax, regulations and the law. If economics is supposed to describe the world as it really is, how come that the analysis of these kind of facts are not what economic textbooks are about?

The first step to putting ethics back into economics is to take centuries of PR spin out of it and describe the world as it is, not the comfortable ideas that we would prefer to believe.

Featured image: A scene in South Australia, 1950. Author: Alexander Schramm Source: https://upload.wikimedia.org/wikipedia/commons/thumb/b/b2/Alexander_Schramm_-_A_scene_in_South_Australia_-_Google_Art_Project.jpg/1024px-Alexander_Schramm_-_A_scene_in_South_Australia_-_Google_Art_Project.jpg

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