Bridge over ocean
1 April 2014 CFA Institute Journal Review

The Moral Significance of Economic Life (Digest Summary)

  1. Claire Emory

The persistence of Aristotelian and Christian worldviews—in which economic production is seen as an inferior, morally questionable, and ethically suspect field of human action—affects the political regulation of economic activity and its position in the cultural consciousness of Western societies.

What’s Inside?

The author examines the history of the relationship between economic activity and moral values, which arises from the assumed distinction between self-interest as the motivating force of economic activity and others-focused behavior as the foundation of moral value. He sees this tension as being deeply rooted in the Aristotelian and Christian heritages, both of which have greatly influenced the development of European society and, therefore, US society as well. Despite recognition of the modern liberal worldview that was articulated and developed by John Locke and Adam Smith—a moral theory of economic production—the tension persists and influences the political regulation of economic life.

How Is This Research Useful to Practitioners?

Embedded cultural assumptions can have a significant influence on political discourse and the political regulation of economic life. The author argues that the underpinning of an Aristotelian viewpoint and the subsequent entrenchment of the Christian worldview in Western culture have created an ongoing tension that affects political discourse about economic activity and productive growth.

According to the author, the attitude persists in the intellectual, cultural, and political realms of Western society that a focus on economic activity is vulgar, morally empty, and spiritually impoverished and that engaging in economic production is synonymous with a lack of freedom. These ideas, whether consciously recognized or not, can affect the means by which political systems integrate economic activity into the functioning of society.

How Did the Author Conduct This Research?

The author traces the development and influence of ideas about the moral implications of economic activity. He begins with Aristotle, who posited a distinction between “unfreedom,” which includes economic production and the pursuit of technical knowledge, and free activity, which is the pursuit of true knowledge and the development of character that humans choose to engage in for their intrinsic value—not to meet the brute necessity of survival. The core of this Aristotelian mindset is embedded in the Christian–aristocratic system of values that has significantly shaped European civilization since medieval times.

Locke’s philosophy adds the concept of economic activity as the prime expression of human creativity and the central process through which humans transform the world for their own benefit. Labor allows people to free themselves from the mechanical laws of nature. Locke’s focus was on the individual and on his theory of labor as a cornerstone of human freedom, but he did not address how the freedom of one human can be compatible or complementary with that of others.

Smith’s conception of the “invisible hand” bringing together the independent, self-interested actions of many individuals provided a social theory of economic production as a moral activity. According to Smith’s philosophy, pursuing one’s self-interest is the most effective course of action through which an individual can serve others.

Similar to Aristotle, Karl Marx viewed labor as enslaving and dehumanizing; in his moral philosophy, the solution was to replace the market ordering of individual actions with the collective decisions of the state, which would result in a system in which people could express creativity and liberate themselves.

Abstractor’s Viewpoint

It is certainly worthwhile and provocative to take a closer look at the often unexamined underpinnings of our cultural assumptions and how those assumptions affect public policy. The author’s premises seem to be more applicable to some aspects of European culture than to US culture. These worldviews can influence how businesspeople think about themselves, which also affects how they go about conducting business. It would be interesting to see some specific examples of how the author’s insights could be reflected in public policy and regulation of economic activity.

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