Ethics, Economics and Social Institutions

181 Pages·2016·2.079 MB·English

by  Vishwanath Pandit (auth.)

Vishwanath Pandit
Ethics,
Economics
and Social
Institutions
Ethics, Economics and Social Institutions
Vishwanath Pandit
Ethics, Economics
and Social Institutions
1 3
Vishwanath Pandit
Sri Sathya Sai Institute of Higher
Learning (SSSIHL)
Puttaparthi, Andhra Pradesh
India
ISBN 978-981-10-0897-9 ISBN 978-981-10-0899-3 (eBook)
DOI 10.1007/978-981-10-0899-3
Library of Congress Control Number: 2016935605
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Offered in Gratitude to
LORD
Sri Sathya Sai Baba
With
LOVE and Humility
These days virtue is becoming rare at all
levels—in the individual, family, society
and community, and also in fields of
life—economic, political and even
“spiritual”. Life must be spent in
accumulating and safeguarding virtue,
not riches. …… develop sympathy and the
anxiety to serve and be useful to everyone.
—BABA
Foreword
It is a great pleasure for me to write the foreword to this book by Prof. Vishwanath
Pandit, especially since I have known Prof. Pandit as a colleague and a friend for
nearly 45 years.
The title of Prof. Pandit’s book, Ethics, Economics and Social Institutions, gives
an indication of its very broad scope: the book encompasses a wide range of issues
which have ethical as well as economic dimensions. While the interaction between
economics and ethics has a long history, there have been phases in the develop-
ment of economics, when economics moved sharply away from several disciplines,
including ethics, with much consequent loss for economics. Over the last several
decades, however, there has been a growing realization of this loss. Increasingly, one
sees economists working on issues which are on the interface between economics
and several other disciplines, such as ethics, political philosophy, and psychology.
There is now a substantial recent literature arising from the interaction of these dif-
ferent disciplines. Professor Pandit’s book is a valuable contribution to this literature.
In Chap. 2, Prof. Pandit gives a general outline of the role of ethics in econom-
ics, as economics evolved over several centuries. This historical account in Chap. 2,
which includes, among other things, observations on ethical dimensions of Marxist
and Keynesian thinking, is a valuable feature of the book and provides a historical
background for the chapters that follow. Chapters 3 and 4 of the book are devoted
to detailed discussion of various issues in economics, which have something to do
with ethics and which have received much attention from economists in recent dec-
ades. Ethics matters for economics in at least two important ways. First, given that,
economists study, among other things, the choices or decisions made by individu-
als, it is important for them to study what motivates the individuals in their choices.
Economists have often assumed that the promotion of self-interest is the sole moti-
vation guiding people’s choices. In fact, in less careful economic writings, rational
choice is sometimes taken to be choice that best promotes the agent’s self-interest.
While individual choices are often guided by self-interest, how reasonable or real-
istic is the assumption that ethical considerations never influence people’s choices?
Further, how reasonable is it to identify rational choice with choice that exclusively
promotes the individual’s self-interest as distinct from her ethical objectives? These
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viii Foreword
are some of the problems relating to the choices of an individual, where ethics fig-
ures in the picture. Ethics also enters economics in a very different fashion. Stated
in very general terms, the goal of public policies, including those public policies
which deal specifically with economic matters, is to promote social welfare. But
what does one mean by social welfare and what can be the ethical bases for judging
whether some policy will increase or decrease social welfare? Since the question
of what is good or bad for the society is inevitably linked to the notion of the well-
being of individuals constituting the society, the question of what constitutes an
individual’s well-being inevitably comes up in this context. Should one identify an
individual’s well-being with the satisfaction of her preferences, as economists have
often done in the past? Also, if individuals in a society differ in their opinions about
alternative public policies, how should the society take its decision on the basis of
such conflicting opinions? These are just a few examples of issues which have been
discussed in welfare economics, the normative branch of economics. These two
categories of problems involving ethics are discussed in some detail in Chaps. 3
and 4. This is followed by a discussion of the interrelationship between prosper-
ity, happiness, and ethics in Chap. 5. However one may conceive an individual’s
well-being and happiness as likely to be one of its important components. It is not,
therefore, surprising that, in a flourishing recent literature, economists, psycholo-
gists, and philosophers have explored the notion of happiness and what contributes
to human happiness. Professor Pandit’s Chap. 5 continues this exploration.
In Chaps. 6, 7, and 8, Prof. Pandit goes on to study issues relating to social
institutions, social norms, spirituality, and religion; he also studies three specific
spiritual movements originating in India. I am not sure that most economists will
regard religion and spiritual movements as appropriate subjects of study in eco-
nomics. But, if economists want to study the well-being of individuals and socie-
ties, then, given the profound impact, positive and negative, that religion often has
on the well-being of individuals and societies, it is not clear that the study of such
impacts can be kept strictly outside the boundaries of economics. One can also take
the position that the issue of how religion affects human well-being needs to be
carefully studied irrespective of whether one decides to put such studies within the
domain of economics or within the domain of some other academic discipline. Like
all interesting scholarly contributions, Prof. Pandit’s book raises a host of important
questions. It is possible that, given the nature of the questions investigated in the
book, we may not ever reach conclusive answers for many of them. But, in an area
such as this, the value of scholarly contributions often lies in asking important ques-
tions and exploring them systematically rather than in providing definitive answers.
I am grateful to Prof. Pandit for the opportunity to read his book: his book has
compelled me to think again about many issues in normative economics, and it has
also made me aware of several issues, about which I had not thought earlier.
Prasanta K. Pattanaik
Emeritus Professor
University of California
USA
Preface
The present monograph was written mainly during 2013 and 2014 when I held a
National Fellowship awarded by the Indian Council for Social Science Research.
The basic motivation has been to relate ethics and moral ethos to society in its vari-
ous facets with a somewhat sharper focus on economics and related subjects. While
this body of thought has, in recent decades, received considerable attention from
many eminent economists, including several Nobel Laureates like Amartya Sen
and Kenneth Arrow, it has not yet come to be a part of the mainstream discipline
so as to enjoy the status one associates with topics such as microeconomic theory,
macroeconomic policy, finance, economic development, econometrics, trade theory
and industrial economics. Yet, it is not obvious why this class of issues should have
been important to me, who had spent most of his earlier academic career teaching
and researching on topics such as macroeconomic theory and policy, econometric
modeling and financial markets at the Delhi School of Economics, University of
Delhi and other universities in the United States and the United Kingdom.
Looking back it must very well have been so because I have had the privilege
to spend the last fifteen years associated, in different capacities, with Sri Sathya
Sai Institute of Higher Learning (Puttaparthi, India) where the system of educa-
tion is fully saturated with the promotion of human values under the guidance of
Sri Sathya Sai Baba with no compromises on either side. The meticulous objective
has been to turn out students who are not only competent to undertake challenging
assignments in the world outside as it exists today but also be inclined to serve the
society to promote welfare in whichever way they can best do it. No wonder that,
the Master’s program in Economics was drafted so as to include a compulsory
course in “Ethics and Economics” which I taught for several years. All this might
very well have also been the germination of my intrinsic, though dormant, interest
in ethical issues. I recall having agreed even at the University of Delhi to have an
active involvement in different programs organized by World University Service
and Gandhi Bhavan for nearly fifteen years before moving out here.
The foregoing account may look, rather oddly, self-centric but is, in fact,
intended only to explain how the subject chosen for this monograph turned out
to be what it is. One hardly needs to say that the basic motivation for looking at
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x Preface
life in a certain way comes from what one sees all round. This is manifested by
increasing inequality across as well as within societies; the new dormant ways
in which crime is taking place; blatant gender bias; growth of violence within as
well as across religious and other affiliations; demoralization of state as an activ-
ist social institution; lack of a deep social commitment in corporate strategies for
growth; and, unidentifiable tendency for corruption in all social agencies. All these
seem to have deep economic roots. With all this one should not be surprised if
economic prosperity does not lead to human happiness.
Fortunately, the awareness of the problems mentioned above is considerably
increasing in all types of social deliberations. It is encouraging to see that the new
thinking is exemplified by many leading academics. In particular, it is heartening
that there are many thinkers who have argued not only for a well-motivated analy-
sis to understand the realities of life but also to revise our basic theories so as to
reorient these towards actual behavior with underpinnings of idealism. The prob-
lem is, by no means simple as it involves tying together a framework which can
explain not only what is happening but also what ought to happen. The task is,
indeed challenging, and we may have to wait considerably more, searching for an
appropriate academically acceptable way out.
In line with the foregoing observations this monograph deviates significantly
from the usual coverage of ethical issues relating to economics and more broadly
society. It covers in some diversity the evolution of basic economic thought
before turning to several empirical and analytical issues relating to human hap-
piness. Considerable attention is paid not only to market which has governed the
economic system for centuries but as required, also to the state as a fundamen-
tal social institution. A relatively modern and quickly realized development in the
form of the financial system, which brings together the state and the economy,
receives special attention with its ethical underpinnings.
The monograph deviates considerably from the usual understanding, as it goes
on to examine ethical issues consistent with the higher view of life. Though the
start is made with religion as the most ancient human institution in its ethical
perspective, it goes further into a considerable degree of abstraction as spiritual-
ity which is now attracting the attention of many competent and well-known sci-
entists. To bring the discussion back to the world we understand and live in, the
monograph concludes with three well-known India-based episodes as international
missions. These cover, rather briefly the ethical messages we have received from
Mahatma Gandhi, Sri Ramakrishna Vivekananda combined, and Sri Sathya Sai
Baba. The ethical relevance of these messages at both individual as well as social
levels in today’s world cannot be exaggerated.
I am considerably indebted to many of my friends, colleagues, and well wish-
ers for different ways in which they have helped me to undertake and complete this
task. I am sure many of them may not even be aware of the way they have been
helpful. First of all, I wish to express my gratitude to Professor G. Venkataraman
who is an eminent scientist and an exceptionally knowledgeable person on a wide
variety of issues that humanity is facing today. My first substantive contact and sig-
nificant interaction with him started with the two of us getting together to handle a
Preface xi
course on Awareness for all postgraduate students at the Prasanthi Nilayam campus
of the Sri Sathya Sai Institute of Higher Learning. Our exchange of views on human
values in the contemporary world has fortunately continued over the recent years.
I am also enormously grateful to Professor Prasanta K. Pattanaik, Professor
Emeritus, University of California, Riverside, USA, and an internationally reputed
scholar of economic theory, for having kindly agreed to write a foreword to this
book. I am happy to mention that Professor Pattanaik is an elected Fellow of
the Econometric Society, Public Choice Society and Human Development and
Capability Association. He has held top faculty positions at Cambridge University,
Harvard University and at Delhi School of Economics.
This study has been completed under the National Fellowship Scheme of
the Indian Council for Social Science Research, Ministry of Human Resource
Development, Government of India during the two years: February 2013 through
January 2015. The Sri Sathya Sai Institute of Higher Learning provided excellent
facilities needed for the study. I am indebted to my colleagues from different disci-
plines for helpful frequent interactions with me. Needless to add that I owe many
thanks to authorities and administrative staff at the Sri Sathya Institute of Higher
Learning for dealing with their responsibilities with much concern. My thanks also
to authorities at the Indian Council for Social Science Research for offering the
fellowship to me and later handling it with much concern. I am particularly grate-
ful to Professor R. Radhakrishna of the Centre for Economic and Social Change,
Hyderabad, India, for encouraging me to undertake the task.
I was able to benefit considerably from my frequent visits to the Delhi School
of Economics where I have had access to the wonderful Ratan Tata Library. I
also received much support, in different ways, from the Centre for Development
Economics as well as the Department of Economics at the Delhi School of
Economics. I take this opportunity to express my deep sense of gratitude to the
authorities at all these institutions. I am, in particular grateful to Professor Pami
Dua, Director, Delhi School of Economics, and Professor Aditya Bhattacharjea,
Chairman, Department of Economics, Delhi School of Economics for several facili-
ties without which my task would have been harder. Dr. Lokesh Sharma, Chief
Librarian of the Ratan Tata Library, and his many colleagues have gone out of the
way to assist me. My thanks to them. For similar help I thank all staff members at the
central library of the Prasanthi Nilayam campus of the Sathya Sai Institute of Higher
Learning. Needless to say that none mentioned above can be held responsible for the
views and assertions expressed in this work. Sagarika Ghosh and Nupoor Singh of
Springer have frequently gone out of the way to help me. I am considerably grateful
for their generous attitude.
Finally and most significantly, this work could not have been completed with-
out the enormous though invisible support I received all along from my wife
Krishna. Above all, I would like to put on record the inspiration we have received
from our beloved daughter, Kanika to pursue a life in search of enlightenment.
How far we have succeeded, we are unable to judge.
Vishwanath Pandit