It is, in fact, arguable that economics has had two rather different origins, both related to politics, but related in rather different ways, concerned respectively with ‘ethics’, on the one hand, and with what may be called ‘engineering’, on the other.
On Ethics and Economics
by Amartya Sen
Two Origins Of Economics
It is, in fact, arguable that economics has had two rather different origins, both related to politics, but related in rather different ways, concerned respectively with ‘ethics’, on the one hand, and with what may be called ‘engineering’, on the other. The ethics-related tradition goes back at least to Aristotle. At the very beginning of The Nicomachean Ethics, Aristotle relates the subject of economics to human ends, referring to its concern with wealth. He sees politics as ‘the master art’. Politics must use ‘the rest of the sciences’, including economics, and ‘since, again, it legislates as to what we are to do and what we are to abstain from, the end of this science must include those of the others, so that this end must be the good for man’. The study of economics, though related immediately to the pursuit of wealth, is at a deeper level linked up with other studies, involving the assessment and enhancement of more basic goals. “The life of money-making is one undertaken under compulsion, and wealth is evidently not the good we are seeking; for its is merely useful and for the sake of something else. Economics relates ultimately to the study of ethics and that of politics, and this point of view is further developed in Aristotle’s Politics.
There is no scope in all this for dissociating the study of economics from that of ethics and political philosophy. In particular, it is worth noting here that in this approach there are two central issues that are particularly foundational for economics. First, there is the problem of human motivation related to the broadly ethical question ‘How should one live?’ To emphasize this connection is not the same as asserting that people will always act in ways they will themselves morally defend, but only to recognize that ethical deliberations cannot be totally inconsequential to actual human behavior. I shall call this ‘the ethics-related view of motivation’.
The second issue concern the judgment of social achievement. Aristotle related this to the end of achieving ‘the good for man’, but noted some specially aggregative features in the exercise: ‘though it is worthwhile to attain the end merely for on e man, it is finer and more godlike to attain it for a nation or for city-states’ (Nicomachean Ethics, 1.2; Ross 1980, p. 2). This ‘ethics-related view of social achievement’ cannot stop the evaluation short at some arbitrary point like satisfying ‘efficiency’. The assessment has to be more fully ethical, and take a broader view of ‘the good’. This is a point of some importance again in the context of modern economics, especially modern welfare economics.
The first of the two origins of economics, related to ethics and to an ethical view of politics, does in this waypoint towards certain irreducible tasks of economics. I shall have to take on presently the question as to how well modern economics has been able to perform these tasks. But before that, I turn to the other origin of economics related to the ‘engineering’ approach. This approach is characterized by being concerned with primarily logistic issues rather than with ultimate ends and such questions as what may foster ‘the good of man’ or ‘how should one live’. The ends are taken fairly straightforwardly given, and the object of the exercise is to find the appropriate means to serve them. Human behavior is typically seen as being based on simple and easily characterized motives.
This ‘engineering’approach to economics has come from several different directions, including – as it happens – being developed by some actual engineers, such as Leon Walras, a nineteenth century French economist who do did much to sort out many hard technical problems in economic relations, especially those connected with the functioning of the markets. There were many earlier contributors in this tradition to economics. Even the contributions in the seventeenth century of Sir William Petty, who justly regarded as a pioneer of numerical economics, clearly had a logistic focus, which was not unrelated to Petty’s own interests in the natural and mechanical sciences.
The ‘engineering’ approach also connects with those studies of eco nomics, which developed from the technique oriented analyses of statecraft. Indeed, in what was almost certainly the first book ever written with anything like the title ‘Economics’, namely, Kautilya’s Arthasastra (translated from Sanskrit, this would stand for something like ‘instructions on material prosperity’), the logistic approach to statecraft, including economic policy, is prominent. Kautilya, who wrote in the fourth century BC, was an advisor and Minister of the Indian emperor Chandragupta, the founder of the Mauryan dynasty (and the grandfather of the more famous Asoka). The treatise begins in the first chapter with the distinction between ‘four field s of knowledge ‘ including (1) metaphysics, ad (2) knowledge of ‘the right and the wrong’, but then it settles down to discussing more practical types of knowledge dealing with (3) ‘the science of government’, and (4) the ‘science of wealth’.
In discussing a great range of practical problems, varying from ‘building of villages’, ‘land classification’, ‘collection of revenue’, maintenance of accounts’, ‘tariff regulations’ etc., ‘diplomatic maneuvers’, ‘strategy for vulnerable states’, ‘pact for colonization’, influencing parties in an enemy state’, ‘employing spied’, ‘controlling embezzlement by officers’, and so on, the attention is very firmly on ‘engineering’ problems. The motivations of human beings are specified by and large in fairly simple terms, involving inter alia the same lack of bonhomie, which characterizes modern economics. Ethical considerations in any deep sense are not given much role in the analysis of human behaviour. Neither the Socratic question nor the Aristotelian ones figure in this other ancient document of early economics, by a contemporary of Aristotle.
Given the nature of economics, it is not surprising that both the ethics-related origin and the engineering-based origin of economics have some cogency of their own. I would like to argue of motivation and of social achievement must find an important place in modern economics, but at the same time it is impossible to deny that the engineering approach has much to offer to economics as well. In fact, in the writings of the great economists both the features are noticeable in varying proportions. The ethical questions are obviously taken more seriously by some than by others. For example, it has a greater hold on the writings of, say, Adam Smith, John Stuart Mill (despite what Bentley says), Karl Marx, or Francis Edgeworth, than on the contributions of, say, William Petty, Francois Quesnay, David Ricardo, Augustine Cournot, or Leon Walras, who were more concerned with the logistic and engineering problems within economics.
Neither kind is, of course, pure in any sense, and it is a question of balance of the two approaches to economics. In fact, many exponents of the ethical approach, from Aristotle to Adam Smith, were deeply concerned with engineering issues as well, within the directional focus of ethical reasoning.
It is arguable that the importance of the ethical approach has rather substantially weakened as modern economics has evolved. The methodology of so called ‘positive economics’ has not only shunned normative analysis in economics, it has also had the effect of ignoring a variety of complex ethical considerations which affect actual human behavior and which, from the point of view of the economists studying such behavior, are primarily matters of fact rather than of normative judgment. If one examines the balance of emphases in the publications in modern economics, it is hard not to notice the eschewal of deep normative analysis, and the neglect of the influence of ethical considerations in the characterization of actual human behavior.
On Ethics and Economics
by Amartya Sen