Some thoughts on economics and morality

 

Summary

 

I’ve been thinking a lot recently about the role that morality plays in economics. Specifically, I’ve been thinking of this from a Baha’i framework, and some of the teachings of the Baha’i Writings on economic topics.  Keep in mind that these ideas are as yet underdeveloped, and that the subject matter written about here is intentionally broad.  It should also be noted that the Baha’i teachings do not introduce a radically different set of moral principles as compared with other major religions.  Certain injunctions are unique; backbiting is absolutely taboo in the Baha’i faith, for instance.  But by and large, principles such as honesty can be found in every legitimate moral system.

 

There are two basic ways that an increase in morality is bound to change certain characteristics of a macroeconomy.  The first deals with the institutions and laws that govern economic transactions.  The second has to do with individual behavior.  The first discussion is an extremely sticky one, especially because the Baha’i writings promote certain principles like, for instance, the eradication of extreme poverty and extreme wealth, without prescribing (with the exception of the laws of Huquq’u’llah) any single economic system. For that reason I decided to focus on the second discussion, dealing with behavior and values.

 

How does an increase in people’s morality contribute to the economy? I’ve thought of five (5) ways that this might be the case. They are:

 

  1. Greater honesty results in more symmetric and more perfect information, a requirement for perfect competition.
  2. An attitude of detachment yields a more rational balance between spiritual and material goods
  3. Charity might be an efficient substitute, or at least substitute, for legal ways of redistributing wealth.
  4. Less corruption means that systems designed to correct market failures are abused less frequently. (eg. faking an injury to earn disability insurance payments).
  5. A decline in corruption also means policymakers represent more closely the interests of their people.
  6. The reduction in crime acts like the reduction of a tax on transactions.

 

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