Economics Without Ethics Is a Caricature And Ethics Without Economics Is a Fairy Tale

Presently, to immune from the Coronavirus, globally there is a widespread vaccine nationalism growing. This is because nations have limited economic capitals to donate vaccine to those nations which cannot afford vaccine on their own.

However vaccine nationalism practiced is against the ethical values and practices. Like treating all humans equally. We cannot have differential treatment depending on the economic conditions of a person. This is a perfect example of how economics and ethics can come in conflict with each other.

In the following article, we will see how economics and ethics are both important despite of their conflicting nature.

Ethics is the study of what is right or wrong in human conduct. It guides our conduct by constantly evaluating the outcomes and means of it, as good or bad. Hence we can say Ethics is imbibed in Moral Philosophy. Whereas, Economics guides our decision making through a logical approach. Instead of judging good or bad, in Economics we take a decision/ approach if it is profitable to us or minimizes our loss.

The main concept driving economics is that “Desires are many, but resources are limited!” Hence we must make judicial usage of resources to maximize the benefit. It isn’t in all case, but in most cases, both Ethics and Economics show us conflicting paths.

Ethics without Economics:

Let us consider the case of Bhutan which relies on the Happiness Index, and fares very well in it. Hence it gives utmost importance to the environment, culture, etc instead of economic development. This has minimized the opportunities available to its citizens. Even to build social capital – such as Health and Education infrastructure, we need money.

Bhutan, without due diligence to Economics, is having to suffer now due to COVID as its entire vaccination is import-dependent (from India, which itself is facing vaccine shortage presently, not able to export to other nations). In this case, it is right to say that – Ethics without Economics is a fairy tale.

Economics without Ethics:

Many companies which ran after Economics, without giving due importance to Corporate Ethics finally became a comic character – For Example, Satyam Computers, Kingfisher Airways, etc. Satyam computer by inflating the balance sheet has followed unethical practices just to keep the economics of the company in good books. Almost all the nations of the world ran after economic growth without morality regarding environmental degradation.

Now all humans are having to pay the price of global warming, climate change, increased risk of new pandemics, etc. To reverse this trend of environmental damage, developing and least developed nations are having to compromise on the same economic growth which was utilized to the full extent by developed nations. We, citizens, have become comic by bringing our destruction. Hence we can also say that Economics without ethics is a caricature.

An ethical approach that justifies this conflict is the “Utilitarian Principle” – i.e, greatest happiness of greatest number. This approach does not worry about the means as long as the ends are justified. Hence Utilitarian principle supports child labor also to maximize the present-day profits of an organization.

Same way, if a road/dam has to be built; this principle justifies re-habiting thousands of people for the future comfort of millions. This infrastructure also generates revenue, causes Economic Growth through toll collection/ selling electricity generation respectively.

When Economics and Ethics go hand in hand:

For long-term stability, both Ethics and Economics have to go hand in hand. For example, Economics might say that we should employ children in industries such as Rat hole mining in North-Eastern India and fireworks of Tamil Nadu. Because it is easy to get done the kind of job involved with children and also children need to be paid only a part of what adults ask.

However, it is only beneficial in the short run. In the long run, we will be losing the Economics of Human Capital provided by the same children if they are provided with better Education and Health facilities. Hence Economy should consider Ethics as both together can only ensure sustained growth.

Why the Conflict Between Ethics and Economic?

The conflict between Ethics and Economics comes because many of us see Human Development as means instead of end in itself. One such approach is ”Deontological Ethics”, which states that means are as important as ends.

Hence profit-making should by following ethical processes. This does not justify environmental degradation in the name of economic growth. In a way, this approach does not speak for building more hospitals, and hence hospital bills which reflect as economic growth. Instead, it speaks for building a society where the need for hospitalization is minimized.

For many decades there was a conflict between capitalist and socialist nations. Capitalist nations gave primacy to the market economy thereby achieving economic growth. However, there was also growing inequality in societies, slums, and Gated Communities standing side by side. On the other hand, socialistic nations followed the ethical policy of treating all citizens equally. But this has limited the opportunities for those citizens.

These limitations made most of the nations shift to a mixed approach gradually by the end of the 20th century. We have witnessed the enormous growth of communist nation China after it opened up its economy. Similarly, We have also seen how a capitalist nation such as the USA provided COVID-19 vaccination to all its adult citizens on its own to reduce vaccine inequality and fought COVID successfully.

All the above examples re-phrase the quote “Economics without ethics is a caricature. Ethics without economics is a fairy tale” and emphasize the need to have coherency between the two. Governments all over the world are putting a lot of effort to minimize these conflicts through methods such as – Environment Impact Assessment, Child Labor Prohibition Act, etc. But still, a lot needs to be done to keep Economics and Ethics in harmony with each other.

The present COVID -19 pandemic is the best opportunity to show such efforts. As emphasized by WHO multiple times, “no one is safe until everyone is safe”, nations should come together to adopt policies such that Economy and Ethics go hand in hand to achieve sustainable development.