ii) Uniting Ethics with Economics
However, notwithstanding the above-mentioned arguments, a strong sentiment for reuniting ethics with economics has now become mainstream. Firstly, there is the plain question of human survival in a society devoid of social and personal morality. As Russell (1954) states: “Without civic morality communities perish; without personal morality life has no value” (p. 28). Secondly, treating self-interest and “rational” behaviour as synonymous is hard to defend, even logically. Thirdly, there are two major problems with the view that individuals acting in their self-interest also maximise social welfare. (a) In a large number of real-life cases, e.g., public goods must be provided, or markets are missing or collapse completely [Naqvi (2002)]. (b) This view does not hold in the context of large groups within a society. Thus, “even if all members in a large group are rational and self-interested, and would gain if, as a group, they acted to achieve their common interest or objective, they will still not voluntarily act to achieve that common or group interest” [Olson (1971); p. 2].
Fourthly, the superiority (indeed, invincibility) of the selfinterest principle cannot be established just by the demonstration that observing moral principles does not maximise individual welfare. For instance, even though it may be in somebody’s interest to break one’s promises, keeping one’s promises will still be regarded by most reasonable people as both moral and rational. Whence follows that while it may not “be at all absurd that maximization of self-interest is not irrational, at least not necessarily so, but to argue that anything other than maximizing self-interest must be irrational seems altogether extra-ordinary” [Sen (1987); p. 15]. In particular, it is illegitimate to dismiss a moral concern for others as irrational behaviour on the ground that only universal selfishness is a sure sign of rationality. In the real world, “the plurality of motivations is the rule rather than the exception, and one would be hard put to prove that either mere self-interest or pure altruism explains a large enough segment of social or individual action” [Naqvi (2002); p. 180]. Indeed, even historically, linking the spectacular success of capitalism in modern times only to the unrestrained working of the self-interest principle would be a vast underestimation of the role of the so-called capitalistic ethic. The fact is that it has always been a symbiosis of self-interest and morality that moved the world. Many empirical studies show that, for instance, in the case of Japan – the most illustrious example of economic success in the post-War era based on a freeenterprise system – qualities like group loyalty, good will, sympathy, respect for others have played at least as much a decisive role as self-interest maximisation may have done [Morishima (1982)].
Fifthly, beyond the libertarian’s ubiquitous selfishness, there is a whole world of sane people who recognise that ethical influences do shape human behaviour. Thus, for instance, Harsanyi’s (1977) “equiprobability model for moral value judgment”, requires individuals to possess not only personal preferences but moral preferences as well. These moral preferences “guide his thinking in those – possibly very rare – moments when he forces a special impersonal and impartial attitude, that is, a moral attitude, upon himself” (p. 635). Rawls (1971; 1999) argues for a wider informational base to measure human happiness than the self-interest principle would demand. The Justice-as-Fairness and the Difference principles emphasise the need to select those institutions which maximise the supply of “social primary goods” which every individual wants whatever else he/she may want (i.e., “rights and liberties, and opportunities, income and wealth, and bases of self respect”) to carry out his/her plans in life, subject to the principle that the needs of the least-privileged in the society are met first” (pp. 78-81). Sen (1992) regards Rawlsian social primary goods as instruments of achieving economic well-being. The real aim is to attain valuable “functionings” (being educated, being healthy, being free, etc.) and the “capability” to achieve them freely. The latter relates to the individual’s freedom to convert primary goods and resources into personal happiness, which is the proper “end” of economic activity. The capability approach is capacious enough “to take note of, inter alia, utilitarianism’s interest in human wellbeing, the libertarianism’s involvement with the processes of choice and the freedom to act and the Rawlsian theory’s focus on the individual liberty and on resources needed for substantive freedoms” [Sen (1999b); p. 86]. Sen’s approach forms the basis of the UNDP’s Human Development Research Programme. The basic moral insight here is that material plenitude need not always translate into human happiness, certainly not to the same extent. To this end, the search for human happiness does not stop when incomes have risen enough; rather, it takes reorganising the structure of property rights on the basis of justice, and making adequate provisions for greater education, healthcare and public goods of various kinds. In a more fundamental sense, the UNDP’s research programme goes beyond Pareto-optimality rule’s insistence on only distributionally-neutral efficient solutions and the Nozickian exclusive focus on the individual’s (unlimited) moral right to private property etc. [see Naqvi (2002)]. It does not need extended ethical lecturing to convince normal people that only a society in which the major social institutions are based on justice and where the needs of the poor and the needy are adequately met is worth supporting. A state of bliss is not reached without sympathy for others (which may be referred to as enlightened self-interest) as well as a moral commitment to help others (which is beyond the reach of self-interest) even if that means accepting a cut in one’s own welfare.
Finally, an unyielding insistence on self-interest (which implies an unbounded admiration for unfettered markets) is an extraordinary limitation on the economists’ moral vision because that means excluding from it a whole range of ethical values – i.e., justice, fair play, and the quest for equality – that have, historically, moved people to action. Also, it prevents the government from doing anything about inequality, poverty and an undersupply of ‘public goods’, within nations and between nations and all that makes social progress illusory. Ill-rooted in facts, such insistence also defies common sense. It is, therefore, best to brush aside libertarianism and accept that an active public policy is necessary (though not sufficient) to create the right conditions to maximise the happiness and well-being of a diverse humanity. What is certain is that amoral market solutions produced by self-interest maximisation do not play a central role in a comprehensive agenda for enhancing human well-being.
III. Religion, Ethics, and Economics
Given, then, the ethical underpinnings of economic motivation, the next issues to consider are where to find the ethical principles – e.g., impartiality, justice, a deeply felt sense of commitment and social responsibility, especially to the least-privileged in society (or the “underclass”, as Gunnar Myrdal put it) – that command widespread and universal (voluntary) support; and how to operationalise them as major regulators of economic activity? There have been influential economists [e.g., Weber (1905); Tawney (1937); Viner (1978)] who regard Christian ethics to be the driving force of capitalism; and some others [Tinbergen (1985)] who consider it an important force in the development of (Western) socialism. Earlier, Adam Smith’s (1776) individualism clearly presumed that the socially beneficial working of selfinterest was “subject to built-in restraints derived from morals, religion, custom, and education” [Coats (1971); p. 9]; and John Stuart Mill (1874) regarded religion as “a more cunning sort of police” (p. 415). It has been stressed that religion has, historically, performed a useful (secular) function, whose ‘utility’ has increased, not diminished, with the passage of time. The fact is that, with the recognition of the ethical connection of economics, it becomes difficult to deny a positive (functional) role to religion – e.g., to improve the working of an individualist economic system like capitalism.
i) The Functional and Constitutive Roles of Religion
However, on balance, the economic role of religion has been devalued in the West. The general attitude is that religion, though privately vital, is indifferent, if not altogether irrelevant, when it comes to devising rules for the conduct of economic