«ECON 201 – Ethical Theories» - Free Essay Paper
Utilitarianism, deontology and virtue ethics are the theories of ethics that aim to determine morality or uprightness of actions. Utilitarianism basically states that an act is morally right if it maximizes the good of all the stakeholders. Deontology, on the other hand, postulates that morality is determined by the observance of set rules and/or laws. In contrast to deontology, virtue ethics holds the view that the rightness of an act lays in its being, in its concrete manifestation, but not in its result (i.e. the motive of an act defines it the act itself is moral or immoral. The above listed theories were initially philosophical concepts that later became adopted for economics.
John Stuart Mill and Jeremy Bentham are the most significant exponents of utilitarianism.. The philosophers consider that appropriate course of action is the one that maximizes total benefit of all the stakeholders. Stakeholders in this case are referred to all the individuals affected by an act or decision. According to Bentham, this theory is the ultimate measure for the best course of action directing at the achievement of the public good. Utilitarianism is one of the key components of welfare economics. It differs from traditional consequentialism which presumes that maximizing the personal good is the true measure of morality. Community and social justice are basic utilitarianistic ideas.
Deontology is the ethical theory commonly associated with Immanuel Kant. It is also known as duty ethics. It reckons that morality includes the observance of set rules. As such, an act is moral if it complies with the regulations set by legal jurisdiction. Therefore, a person expresses good motive or goodwill when he/she acts out of respect for a moral law. In the contemporary world, observance of constitution, trade agreements and contracts would be the measure of morality or the rightness of an act.
Virtue ethics estimates highly the motive of the actor as opposed to the consequences of the act. Substantially, an action is good if the intention of the doer is good. All virtuous people should have positive motivations for the things they do. In economics, virtue ethics is one of the hardest things to address, because there are no clear economic structures which determine the motive of the actor.
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Utilitarianism focuses on the consequences of an act, deontology - on the moral law and virtue ethics - on the motive of an act. All the theories under consideration concentrate on determining the best possible mode of behavior for humanity. Economy is driven by the decisions of governments, institutions and individuals. In utilitarian economy, the highest public good is upheld. This means that the performance of the government and corporations is measured on the basis of their impact on the society and environment. In deontological economy, observance of the constitution and trade regulations is upheld in the first place. Basically, economic players are required to act in accordance to the rules. Most of the business and trade practices are regulated by written principles and procedures. In economy of virtue ethics, institutions are judged on the basis of the motive of their decisions. This means that the same act may be right due to the good motive and wrong due to the bad motive. Determining the motive of the doer is the core objective of a judge in case of dispute.
In my view, the three theories are interdependent in any given economy. A purely utilitarian economy would lack the regulations to control economic behavior and the motive of the government. In such a system institutions would not matter in determining appropriate economic patterns. By contrast, purely deontological economy would only observe rules without determining whether those rules serve the highest good of the citizens or country. Ultimately, economy that is based upon the virtues only would fail due to porous legislation and laxity of economic actors as they may not maximize their potential (Gregg, & Stoner, 2009).
As such, the utilitarian and deontological theories should govern the economy. The utilitarian theory is a complex one, since it seeks the total benefit for all the stakeholders. In this regard, performance of governments and institutions is based on the balanced score card or triple bottom line reporting model. This model implicates that all the institutions should introduce three measures of performance: financial, social and environmental. It therefore encompasses all the stakeholders of the institution. Today, corporate social responsibility (CSR) has become a core part of the activities of a company. By means of CSR, institutions ensure that they benefit the society around them as well as protect the natural environment. The reason for that is that the institution is sustained and legitimized by both passive society and natural environment within which it operates. The society comprises the customers and employees of the institution while the natural environment produces the raw materials that are necessary for production. Generally, all the stakeholders of the business, including the shareholders benefit from the proceeds of the enterprise.
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In addition, a utilitarian government would seek to be conducive to the public good. Virtually, enacted economic legislations foster equality and social justice in the country. This includes national health care policy, food assistance programs for disadvantaged population as well as compensation program for the aged. This ensures that all the citizens benefit from GDP of their country.