A bit of Good News: Economists are Having Second Thoughts, Values and Virtues Matter
- Kamran Mofid
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'After a long history of avoiding the morality factor, economists are beginning to include it in their work'
Economist- A Dismal Scientist: An emperor with no clothes
Hopefully not for much longer
"Today's neoclassical economist is an emperor with no clothes who's fooled us all long enough."
For years, budding economists have been taught to leave morality, values and virtues out of their arguments. This could hopefully be about to change
‘We don’t do God,” Tony Blair’s press secretary, Alastair Campbell, once famously remarked. Similarly, economists don’t “do” morality. They are a breed concerned with economic efficiency not spiritual uplift; human choices and incentives, not human values. They believe questions of morality can be left to philosophers and theologians.’
‘There’s an element of truth in that stereotype. Economists have indeed tended to leave aside issues of morality. In some cases that’s because they think, on ideological grounds, that it has no place in the discipline.
But even more thoughtful and less dogmatic economists have tended to shy away from the question on the grounds that moral values are tricky to pin down, much less quantify…
But things might be changing. Two economic Nobel laureates at a meeting on the German island of Lindau last week outlined a bold attempt to put morality into theoretical economical modelling.
Oliver Hart, a 2016 Nobel winner, presented a paper, co-authored with Luigi Zingales, in which he looked at how the personal morality of shareholders might affect the behaviour of the companies in which they invest, in particular whether those firms will behave in a way that will maximise profits or whether they sacrifice some profit for the sake of behaving in a socially responsible manner.’...
Today I am happy. Please allow me to share my happiness with you
I was pleased to read the article above by Ben Chu in the Independent on Sunday 27 August 2017. Whilst reading the article, I began a nostalgic journey in my head, my mind and my heart, which took me back to the early 1990s.
I paid a heavy price for a small personal revolution in economic thinking that I had started. I was accused of being a troublemaker, ridiculing my honoured profession. How dare I was calling for inclusion of morality, spirituality, God and humanity, and such likes, in the study of and the teaching of economics.
Wherever I went, whichever economics conferences I went to, whoever economists (bar a few) I mentioned these thoughts to, I was taken not seriously, I was treated like a heretic and advised to change my profession: to go and study theology and become a vicar!
Well, I did not become a vicar, but, I went on and studied Pastoral Theology at Plater College in Oxford. Today when I read that many economists are having second thoughts about the inclusion of values in their subject, I feel very happy, I feel exonerated, I feel grateful, and I am thankful for the journey that I started in early 1990s.
Let me explain, as I strongly believe that unless you know the messenger well, first and foremost, then, his message would not make any sense at all.
To do this, the best I can do, is to quote you a passage from a book I wrote in 2005, well before the crash of September 2008 and very relevant to what I am trying to say today:
“From 1980 onwards, for the next twenty years, I taught economics in universities, enthusiastically demonstrating how economic theories provided answers to problems of all sorts. I got quite carried away by the beauty, the sophisticated elegance, of complicated mathematical models and theories. But gradually I started to have an empty feeling.
‘I began to ask fundamental questions of myself. Why did I never talk to my students about compassion, dignity, comradeship, solidarity, happiness, spirituality – about the meaning of life? We never debated the biggest questions. Who are we? Where have we come from? Where are we going to?
‘I told them to create wealth, but I did not tell them for what reason. I told them about scarcity and competition, but not about abundance and co-operation. I told them about free trade, but not about fair trade; about GNP – Gross National Product – but not about GNH – Gross National Happiness. I told them about profit maximisation and cost minimisation, about the highest returns to the shareholders, but not about social consciousness, accountability to the community, sustainability and respect for creation and the creator. I did not tell them that, without humanity, economics is a house of cards built on shifting sands.
‘These conflicts caused me much frustration and alienation, leading to heartache and despair. I needed to rediscover myself and real-life economics. After a proud twenty-year or so academic career, I became a student all over again. I would study theology, philosophy and ethics, disciplines nobody had taught me when I was a student of economics and I did not teach my own students when I became a teacher of economics.
‘It was at this difficult time that I came to understand that I needed to bring spirituality, compassion, ethics and morality back into economics itself, to make this dismal science once again relevant to and concerned with the common good.’
As an economist with a wide range of experience, I do appreciate the significance of economics, politics, trade, banking, insurance and commerce, and of globalisation. I understand the importance of wealth creation. But wealth must be created for the right reasons.
Value-led wealth creation for the purpose of value-led expenditure and investment is to be encouraged and valued. Blessed are those wealth creators who know “Why” and “How” wealth is produced and, more importantly, when wealth is created “What” it is going to be used for.
Today’s business leaders are in a unique position to influence what happens in society for years to come. With this power comes monumental responsibility. They can choose to ignore this responsibility, and thereby exacerbate problems such as economic inequality, environmental degradation and social deprivation, but this will compromise their ability to do business in the long run. The world of good business needs a peaceful and just world in which to operate and prosper: A world that is truly for the common good.
However, in order to arrive at this peaceful and prosperous destination, we need to change the house of neoclassical economics, to make a fit home for the common good. After all, many of the issues that people struggle over, or their governments put forward, have ultimately economics at their core. As I mentioned before, the creation of a stable society in today’s global world is largely ignored in favour of economic considerations of minimising costs and maximising profits, while other equally important values are put aside and ignored.
Economics once again must find its heart, soul and spirit. Moreover, it should also reconnect itself with its original source, rooted in ethics and morality. Today’s huge controversy which surrounds much of the economic activity and the business world is because they do not adequately and appropriately address the needs of the global collective and the powerless, marginalised and excluded. This, surely, in the interest of all, has to change. The need for an explicit acknowledgement of true global values is the essential requirement in making economics work for the common good. Economics, as practiced today cannot claim to be for the common good. In short, a revolution in values is needed, which demands that economics and business must embrace both material and spiritual values.”
And now please allow me to further share my happiness with you, by sharing a passage or two from a lecture I gave at a recent meeting of the Oxford Theology Society, which was held at Keble College, University of Oxford:
"Values to Make the World Great Again: Theology, Economics and Spirituality in Dialogue Again"
...But now, there was another story in making, one that was not under my control: Life is so full of unpredictable beauty and strange surprises
As many people, wiser than me have noted, our lives and the world in which we all live, are so unpredictable. Things happen suddenly, unexpectedly. We want to feel we are in control of our own existence. In some ways we are, in some ways we're not ... Life, it can bring you so much joy and yet at the same time cause so much pain.
I was so devastated that after this wonderful journey, full of joy and happiness, achievements and success, due to some reasons beyond my control, I started to feel unwell, unhappy, depressed, not enjoying what I was doing and teaching, especially when I lost all confidence in the value of moral-free economics that I was teaching my students, and more.
In 1999 I voluntarily resigned from my post at Coventry University. It goes without saying that, I was heartbroken and extremely hurt that I was unable to nurture and develop further what I had envisioned and built.
Looking back, reflecting on what has happened, I think, somehow, somebody, somewhere, had planned it so that I, too, should have a life, similar to the life of Coventry itself: fall and rise again, the story that I very much wish to continue sharing with you tonight.
Oh, my God, there is so much to tell, so much to share. But, one is very relevant to my talk tonight, and that is my return back to Oxford in 2001.
After leaving my post at Coventry University, I went through two years of hell, hardship and struggle with everything. I had to rediscover myself again. I had to find a new path to explain who I am, what I am, and why I am.
Thus, I came back to Oxford again. This time to a small Catholic adult education college there in Pullens Lane, Headington, called Plater College. After decades of being a university lecturer, I became student again, when I register for the Pastoral Theology course.
I enjoyed my time and studies at Plater very much. It was truly a path to my personal healing. There I also discovered the beauty of wisdom, ethics, morality, spirituality, solidarity, comradeship and more.
It was there that I also discovered that I must begin to work hard to ensure that these values must become the values of economics, business, education and globalisation too. I wrote a few books, booklets and articles about these new discoveries. Too much to mention now, but let me quote you a few selected passages, relevant to my discussion tonight:
“Why should we try to combine religion and economics? Because they have a common end: that all may live happily; it is just that they employ different methods in order to achieve this end. One uses the production and exchange of goods and services, the other selfless service, love and compassion.
Religions could – if they will speak with their original source of inspiration – greatly contribute towards restoring the balance between the material and the spiritual elements and thus show the way to live fully human lives in a peaceful, just and sustainable society. The ethical and spiritual teachings of all religions and their striving for the common good can provide us with a clear and focused model of moral behaviour in what we term ‘the marketplace’. An overall ethical orientation to the challenges of daily economic activity can be related to each of our faith traditions. In the Jewish tradition we see the effort to balance pragmatic considerations of economic efficiency with ideals of interpersonal equity and social justice. The key themes of Christian and Islamic thoughts are respectively a concern for human dignity and a concern for communal solidarity. These three themes are not separate: they overlap and interlock; and they are shared by all three traditions. Together they form an inspiring mosaic of Western religious ethics.
The traditions of the East have somewhat different themes from those of the Abrahamic religions; nonetheless, there is much that is similar. The importance of humility and patience characterises the Hindu view of economic life. In Buddhism, the theme that resonates most strongly is compassion; in Confucian thought it is reciprocity. These, also, are not separate themes, but overlapping and interlocked. The mosaic they form is not sharply distinct from that of the Western traditions. Related to the marketplace, it would inspire businessmen to exhibit mutual compassion, while individual achievement would not be at the expense of communal solidarity. Steady economic and moral improvement would be pursued with humility and patience. These must become the guiding principles, the vision behind the teachings of a new economics: the marketplace is not just an economic sphere, ‘it is a region of the human spirit’...
If you wish to read more, see below for further reading: