Summary: Claus Dierksmeier describes the nature of economic philosophy through its contribution to economic thinking.
Economic philosophy is still met with resistance from conventional economics. It is in the interest of business to overcome that opposition. Part of the problematic situation of the modern corporation is how theoretical models describe them. For inasmuch as academic theory informs business, flaws in the theory translate into errors in practice. Unfortunately, conventional, that is, neoclassical economics is prone to such flaws.
Traditional economics tends, for instance, to be unwelcoming to ethically motivated self-constraints in business. Holding that deviations from short-term profit maximization sooner or later cause corporate death, standard economic teaching has forever missed the actual latitude of corporate decision-making. However, when one washes all corporate freedom away, corporate social responsibility goes down the drain too.
In this vein, neoclassical economics invites business ethics to relegate ethical considerations to the legal realm. Recourse to legislation is, however, neither always right nor always expedient. The legal route frequently offers only second-rate solutions, and on the global level, enforcement problems block this option more often than not. As a consequence, conventional economics leads, if not encourages, business to shirk moral responsibility.
Ironically enough, the theoretical assumptions upon which such sorry advice is grounded, i.e. that all CSR efforts beyond what the law requires amount to economic suicide, manifestly collides with empirical evidence. Quite to the contrary of conventional economic wisdom, business can do well by doing good. When, as it does here, academic theory stands in the way of practical progress, it must yield to new concepts.
Not incidentally, therefore, in publications on Corporate Social Responsibility, in corporate codes of conduct and mission statements, in academic writing, and in the media at large, we increasingly find a call for economic philosophy and/or the philosophy of economics as choice instruments of change. Many hope that economic philosophy could provide alternative thought models so as to enable the business ethics of the 21st century to be on par with the problems it faces. – What then is economic philosophy?
Historically, economic philosophy goes back to Plato and Aristotle. However, after economics separated itself from moral philosophy in the 18th century as well as from political economics in the late 19th century, economic philosophy was largely abandoned in Western countries. In the East, it continued, but solely along the lines of Marxism-Leninism. Since the 1930s, the West has again seen some treatises on economic philosophy, but intensive debates did not surface before the 1970s (e.g. in the dispute over the “creation of wants” through consumer manipulation).
Institutionally, economic philosophy is at home in many academic realms. The critical theory of the early 1970s gave it shelter, and from the ‘80s onwards, cultural studies, inspired by French postmodernism, grew hospitable toward it. Beginning in the early ‘90s, economic philosophy made headway into the social and political sciences, mostly on the wings of public choice theory. At last, economic philosophy was re-introduced into the departments of economics, as an appendix to meta-economics. All in all, economic philosophy is still a relatively young scientific discipline, with a lot of unknown territory to be chartered.
Systematically, economic philosophy is comprised of a philosophy of economics that serves as a meta-theory of conventional economics, preparing the grounds for its philosophical critique. Also, economic philosophy encompasses topics and methods neglected by but relevant to traditional economics. Through its unconventional approaches, methods and interests, economic philosophy generates novel insights into economic life. Besides time-honored approaches (metaphysics, ethics, and esthetics) to socio-economic questions (e.g., on the symbolisms of organizational communication, on theories of trust, social compact and institutional justice, etc.), economic philosophy incorporates ideas from postmodern linguistics, semiotics, system theory, and cybernetics.
The general interests of economic philosophy rove “below” and “above” conventional economics: “below”, as economic philosophy scrutinizes the legal frameworks and cultural preconditions of markets (regarding maximizing versus satisfizing principles, for instance), and “above”, in that it examines what lies beyond the scope of standard economic theory, such as the cultural, moral, and environmental impacts of business.
In broadening the scope of economic investigation, the main objective of economic philosophy is to address questions about how the economy best contributes to a sustainable and humane way of life. Only if such “qualitative” standards are re-introduced into economic thinking, the harmful “quantitative” tendency of the present economy to pursue infinite growth at any cost can ultimately be overcome. For this reason, economic philosophy again takes up the long shelved issues of the moral significance of wealth, the societal value of welfare and distributive justice.
Claus Dierksmeier is professor for political and economic philosophy at Stonehill College, in Easton (Boston), Mass., USA. He adds: “I wish to thank my research assistant Amanda Bosson for helping me smooth out my Teutonic English”. (cdierksmeier(at)stonehill.edu)
