Marriage: An Economic Institution

Becker also discusses the family unit, and its importance as an economic institution. Before individuals marry, they analyze the benefits and costs to the union, according to Becker. "The point of departure of my work on the family is the assumption that when men and women decide to marry or have children or divorce, they attempt to maximize their utility by comparing benefits and costs. So they marry when they expect to be better off than if they remained single, and they divorce if that is expected to increase their welfare." Becker is stating that individuals perform a cost-benefit analysis of their union with another individual, before undergoing the union. Marriage is viewed as a joining of two people within society, it is an act of love. However, Becker believes that within this act of love is an analysis of what can be gained from the union. Individuals are viewing this union from an economic perspective, and in the end they continue with the union because they believe they are going to gain success, wealth, and power from the union. It is an investment on their behalf, done entirely in self-interest. However, just like with a bad investment, if the marriage goes poorly, you divorce, and look for other ways to increase your personal welfare, including other marriages. So my question is this, how much longer will marriage survive as an institution? Marriage itself is a costly ceremony, and it has added costs throughout life. However, two individuals simply living together, without being legally married, could become a more beneficial union. We already see it today with couples remaining together for years at a time without every marrying. So my question remains, how much longer will marriage survive as institution before it loses its value, or be replace by a non-binding union? How much longer will individuals see more benefits to marriage than costs? It is unlikely that marriage will ever disappear, but is it on a decline, and if so what effects will this decline have on the economy?

Will social behavior lead to an "savage" economic state?

In this course we have seen the development and changes in different societies. We have discussed the factors of the theory of value, impartial spectator, cost and labor, etc. In this post I mainly am going to focus on Heilbroner’s chapter of “The Savage State of Thorstein Veblen.” The behavior of society is dictated by our human dignity; this is largely influenced by the views that others have. In his description of the leisure class, he refers to the different values of goods; he states the more expensive goods are better. From this I concluded that our human dignity is based off society’s perspective of accumulation of wealth; meaning the more material wealth people have, then the “better” they will feel about themselves because that is society’s view. This relates to my topic of the development and change of societies throughout time because some societies take pride in the work that they have accomplished, not the wealth that they attain.

For example, American Indians performed hands-on work to try to out-perform one another; they would base this off their labor. Their pride came from work, whereas in society today the pride comes from how much wealth one person has or the ability to buy expensive goods. If someone in their society did not perform as expected, then they would not receive the level of respect that could be obtained.

Society today has completely changed; people heavily rely on technology and machinery rather than their own sweat and labor. Veblen would consider this to be disgraceful due to the fact that nowadays people are less willing to perform hard-working, hands-on tasks then before. This reliance on machinery disables the working class to grow due to the fact that people are more interested accumulation of wealth than taking pride in the work that they have done. If more people were interested in out-performing one another with their work, then it would lead to a high-performance, full working class which would ultimately lead to a more efficient economy.

            The major issue in society today is that people base their dignity and standing among peers by the amount of luxury goods that they have. The main contributing factor is technology; technology leads to mass production. Society is becoming more of a “savage” state because they are more interested in making themselves look better with their luxury goods and are too concerned about what other people think. People today are not so focused on the quality of work the produce due to the fact the technology enables them to produce in large quantities at a similar quality.

My question is this; do you think that people today are too focused on what other people think about their jobs, wealth, and material goods and less focused on their productivity and efficiency with work? With the view that society holds on importance of flaunting the luxury and wealth, do you think that this will lead to a savage economic state in which people care more about wealth than they do their work?

Self-Interest

There has been the discussion in the class on the principle of ‘self-interest;’ primarily dealing with the different views that Mandeville and Hutcheson held. Mandeville had the view point that people are naturally self-interest and do not consider other peoples interest. On the other hand, Hutcheson thought that people to be more “altruistic and driven by looking after oneself, feelings for others, and the desire to better ones condition.” Both had valid points in their argument. Later, Adam Smith adopted both of those viewpoints to come up with his idea that people are naturally self-interested but from their self-interest they contribute to others well-being. I tend to agree with Smith. I believe that, yes, people are naturally self-interested but they ultimately benefit society as a whole through their work. In today’s society, I think that every single person is motivated by self-interest; modern society is very selfish. In my eyes, the work force is seen as a “dog eat dog” environment. Everyone is driven by the idea that they want to prove them and be better than every competitor. This type of competition provides the incentive for economies to grow. My question is this, what do you think are the factors in society today that motivate people to become successful or to better the economy? Do you think that people are naturally self-interested?

Freedom Within a Market System?

On this post I wanted to focus more on a lesser known economist, John R. Commons. He had some radical views on some topics of economics. One topic that he focused on was the idea that economic activity depends on the underlying legal and institutional relationships and how they develop over time. He analyzed these legal and institutional foundations of capitalism by looking at transactions as the basic unit of analysis. He saw these transactions as involving the transfer of property rights, but the transactions did not have to take place through the market. Bargaining transactions take place through the markets while managerial and rationing transactions do not. Bargaining transactions take place between legal equals and there is a double transfer of ownership. Each side can decide whether or not to participate and each side gives something to the other. This essentially led to his view that collective action was necessary to maintain order within a society. Without other parties involved in a transaction, individuals would not respect the institutions that society relied on.
This leads me to my question on this topic. Does the freedom of individuals have to be controlled in order to keep order in a society? Collective action can prevent people from interfering with the freedom of others and also gives a framework where people can act as well. For example, there can only be freedom within a market system if it is possible to make contracts that will be honored, which does limit the freedom of individuals based on the contract. I do believe that individuals have to be controlled in order to keep order in society because without having some sort of control over people, they will act in a selfish way in order to increase their personal gains.

Non-additivity in Consumers' Demand Theory

There can be many relationships drawn between individual demand curves and collective market demand curves, but Professor Oskar Morgenstern says that in some cases the market demand curve is not the lateral summation of the individual demand curves. This is because an individual's demand is so variable based on several different factors and effects: the bandwagon effect, snob effect, veblen effect, speculative demand, and irrational demand.
The bandwagon effect is when people are buying things because they see other people buying them. For example, with Johnny Manziel going to the Cleveland Browns in the NFL draft, people will buy Manziel jerseys just to jump on his bandwagon. The snob effect is when the demand for a consumers' good is decreased because others are also consuming that good. It represents the desire of people to be different. So, given the same Manziel scenario, people would buy someone else's jersey instead of Manziel's because of the snob effect. The veblen effect is when the desire for a good is increased because of the price of that good. A real Manziel jersey would be preferable to a fake Manziel jersey in this case. Speculative demand is when people invest in a commodity because they expect the price to rise. Irrational demand is when people buy things off of sudden urges and its neither planned or calculated.
My question in all of this is, which effect do you think effects consumers' demand the most? Also, which of these curves can be added together in order to produce a market demand curve and which ones aren't able to do that?

The Value of Human Capital

In his lecture, Becker discusses the value of human capital and how it can be changed, or augmented, through investments in training and education. Becker believes that individuals can raise the value of their labor power through these investments. These investments, in training and education, give individuals increased specific and general knowledge and it is this knowledge that gives them the skills they need to keep their jobs or current positions within their companies. However, the need for manual labor in modern society is not as great as it once was. Even with the improvements from the investments in training and education, machines are replacing many of the jobs that used to be performed by humans. With the continued advances in technology, and companies turning towards machines for production, there has been an overall decline in the value of human capital. The specific knowledge and training needed by individuals today is simply an understanding of how to operate, maintain, and repair the machines that have replaced the jobs they once performed. Companies do not mind that they no longer need many individuals for production, the use of machines is increasing production and decreasing costs which in turn greatly raises profits. My question is this, will there ever come a time when human capital no longer has any value? The rise of machines, for lack of a better term, is removing the need for human capital in the market place, and it is unlikely that human capital will make any sort of comeback. So the question remains, will the value of human capital disappear entirely, or will there remain a percentage of jobs for which manual labor remains necessary? Is there a solution or must we accept the elimination of human capital?

Becker and Posner Doping Athletes

Going along the lines of Gary Becker and Richard Posner, I would like to point out another blog opinion that both of these economists discussed. The issue is doping athletes in professional athletes. Why do athletes turn to performance enhancing drugs in their professions? One reason might the gains they will make if they are number one. In terms of competitiveness, professional sports are not lacking in any way so each team or athlete are equal roughly in terms of talent level (except for the super stars). One of the defining factors would be the monetary gains of doping. Consider the Yankees success in baseball, the Miami Heat and Los Angeles Lakers in basketball, or Lance Armstrong in Biking. What separates them from the rest of the pack? Mainly their monetary gains from winning. Consider the issue of Lance Armstrong winning seven Tour De France back to back to (you get the picture) and making sponsor deals and having millions of Americans wearing your yellow bracelets. Not only did Lance Armstrong make multiples times what the guy in second place made but also made him a household name. The same goes for A-Rod and Barry Bonds. So it pays to be first in terms of money and fame. No one remembers second place or likes to pay second place like the first place.
So what is legislation trying to accomplish. It is trying to reduce the side effects of the performance enhancing drugs on the quality of life of the athlete competing. PEDs might help that sprinter win the race by a slim margins but if the whole pack is taking the drugs the marginal benefit to taking the drugs will be reduced until the point it will have to be a necessary step in competition.
My question is why doping athletes such a huge problem in sports? Should it be such a big deal and how would legislation help stop this type of activity?

Gary Becker- Organ Sales

Many have been focusing on Gary Becker and his works on explaining social issues with the economic approach. Often Becker comes up with a answer counterintuitive to what the social norm of the activity. I'd like to present a subject that might have a spur an interesting debate: organ sales. Becker first presents data from the year 2000 in which fifty thousand persons are on the waiting list for a kidney and only fifteen thousand kidney transplant operations were performed. The average time to wait on this operation is about four years. Liver transplant wait time is even worse. Almost three thousand people died on the waiting list for kidney transplant and add around thousand more for deaths while waiting on livers. Becker looks at other options to maximize this market. The first option would be opt in and opt out programs in developed countries that can utilize cadaveric organ donor to attempt to lessen the deadweight loss of transplants. The more interesting approach would be to legalize the sale of organs in a free market system. In a free market system, prices would settle at levels that would eliminate excess demand for any type of organ. Becker predicts that the going rate of a kidney probably would be around $15,000 and about $35,000 for a liver. This seems like a high price level for an organ but considering that the going rate currently for a kidney is $100,000 and a liver is $175,000 it would seem like the equilibrium price would decrease drastically. The black market of organs sales could take the route of drug sales in colorado. In which although there is a black market for the product it would be easier to go through legal channels because of the lowered risk of legal consequences.
An interesting consequence of legalizing the sale of organs would be would people give up their organs  because of altruism.
My question to this blog is would you give up your organs to benefit someone in need or to gain financially as you have two kidneys and $15,000 for a kidney might be great paycheck. Who would benefit in the market of organs and what would the cost be on society?

How Far is Too Far

The 1930’s saw the emergence of Keynesian theory along with the opposing views of Friedrich Hayek. Of particular relevance was their differing view on the involvement of government in economic affairs/markets, especially in times of economic depression. Keynes examined the issue and insisted that monetary expansion and government deficit spending were needed in a great depression, or else one ran the risk of a great degeneration. If there was no intervention on the part of the government, then the economy may fall into a cycle of reduced spending and high unemployment from which it could not recover. In the opinion of John Maynard Keynes, there was a direct relationship between aggregate demand and employment. By infusing the economy with money, there would be an increase in demand for goods, and subsequently spending. This increase would be reflected in a rise in employment to meet new demand. What Keynes would later acknowledge as a side effect to this theory would be a rise in inflation that resulted from the introduction of new money into the economy.

            Friedrich Hayek argued the complete opposite of Keynes. The involvement of government in markets disrupted the ability to communicate signals clearly. The introduction of new monies brought inflation that made the value of the dollar unstable. This instability hindered the ability for prices to properly communicate signals in markets since their value was under constant speculation. The regulation of markets hindered the ability for markets to communicate the signals of both the supply and demand side of the economy. Hayek believed that the hindrance of the markets ability to communicate signals properly would lead to capital and labor being allocated in places that they normally would not, and subsequent bubbles of disequilibrium being created. This disequilibrium could only be fixed by allowing the market to correct itself (which would require a phase of decline and depression) or put off by the government further intervening to give short-term stability. This cycle of government intervention would only prolong and augment the disequilibrium with each subsequent intervention that was necessary to reconcile the last.

             This issue that Keynes and Hayek argued on was one of great importance back in the 1930’s, but even more so now. Back then it was much harder for governments to create money because of the gold standard. Today, governments have ability to print money and borrow debt in masses. With each intervention, the scale of each subsequent one grows in order to resolve the last one; with this comes massive governments that stand to regulate and intervene in so many facets of a country. The role of government’s influence on the economy is debated around the world. There is no doubt that government and rule of law is necessary to protect the rights of the people, but how far should this power extend. To allow economies and markets to correct themselves from the centuries of intervention would mean a time of depression of unemployment for the people. Is it the government’s role to ensure that this doesn’t happen by continuing to intervene in order to protect the economic well being of those it serves? Even if it means more and more to fix the very problems it may be causing? Or is it necessary for the government to take its hands off of the economy and markets while some suffer during the correction phase. Do we trust the concept of competition or continue to intervene seeing how deep we’ve gotten ourselves now? I believe there is a middle ground that must be reached but will admit that I am not sure where it falls.

Crime and Government - Becker

In the last article we read by Gary Becker, “The Economic Way of Looking at Life”, Becker addresses his perspective on crime and punishment and how they tie into the economy.  Becker believes that “the amount of crime is determined not only by the rationality and preferences of would-be criminals, but also by the economic and social environment created by public policies.”  His statement raises the question for me whether the social norms and laws bring people to commit criminal acts or is it a person’s rationality or preference that cause them to commit crimes?  I also found Becker’s statements that “fines are preferable to imprisonment and other types of punishment because they are more efficient.  With a fine, the punishment to offenders is also revenue to the State,” to stand out as something significant for discussion.   I believe that statement makes sense to create revenue for the government but as economists, how is the line drawn for what is beneficial for the state and what is not in regards to crime?  If people commit criminal acts and the state can simply fine them (resulting in a more efficient benefit for the economy), then what criminal act goes from a fine to imprisonment?  Particularly, because when people are imprisoned, part of the state’s revenue is used to keep prisons and jails functioning.  Does this cause controversy for the government to balance the State’s need for revenue as well as for the safety of society? 

"The End Of Worldly Philosophy?"

In Heilbroner's book The Worldy Philosophers he ends his book with the chapter called "The End of Worldly Philosophy" and in this chapter he elaborates on the idea the end of theoretical economic thinking has finally approached an end and mathematics has taken over. Although Heilbroner believes this is not the crucial change in economics of our time. "Numbers abound in any social order that relies on modern technology. All industrial systems generate and require a mass of quantitative information that would have been unimaginable before the advent of high speed production and near instantaneous communication. Today's economics are more interdependent than were the workers in Adam Smith's pin factory, and as this interdependency grows, so do both the quantity of, and the demand for, information on a wholly new scale. Here is where statistics and mathematics enter modern economics (314)". I believe what Heilbroner is trying to say is that due to the mathematical shift in economics it has produced large amounts of information. This large amount of information has only been possible by the development of technology and peoples ability to communicate at a faster speed.

This leads me to question where economics will be in years to come? What other factors could influence economics in the future?

The Road to Development

At the end of chapter 13 in Backhouse’s The Ordinary Business Life, the topic changes to that of development economics. What really drives development in underdeveloped countries? Is primarily based out of the development of the private sector, or is the public sector’s presence needed. On page 303 of Backhouse Arthur Lewis “distinguish[es] between a modern sector in which firms maximize profits and use mechanized production methods and a ‘traditional’ sector in which family relationship ensured that everyone was employed on the land, even if their presence did not raise output….Economic development involve[s] the growth of the modern sector. Labour move[s] out of a sector in which its productivity was zero into one where it was productive”. From studies in my development economics course, I have found this movement from a traditional sector to a modern one to be one of the most essential parts of undeveloped countries catching up. My only question to this remains, what is the best way of going about this transformation?

Many times developing countries lack the resources and education to simply start up private sector growth. If this is the case, then countries may be stuck in the realm of poverty and unemployment that Keynes touched on. However, what effects does the mobilization of the public sector have? Bringing in foreign investors to utilize what resources third world countries have often results in those outside of the country getting richer, while those within stay poor. Government spending may do the trick in a sense, however, there can be grave consequences. Mass borrowing on the part of the government is often necessary for this to happen, which may cause colossal inflation and the further loss of purchase power in the already poor countries. Government intervention may also disrupt the communication that prices and things related have. This disruption of communication amongst the markets may lead to the misallocation of capital and labor, and set up the chance for economic bubble bound to burst. The final problem with government interaction, which I have seen the grave effects of in my development economics course, is the amount of power that is placed in the hands of the government when they are the ones spearheading development. Often times, because they are the ones receiving the massive amount of funds they are able to use the money to increase their power by, allocating resources in a way that makes themselves richer and forces the citizens of the developing countries to obey their rule in order to receive enough to just survive. Even if the country is seeing some form of economic growth because none of it is being passed down to the people, they can remain poor.

Despite all that was said about the negative consequences that can come from the public sector’s initiation of development, I believe this to be the most viable option as long as those in charge have the people’s best interest in mind. While the initiation of development from this angle will initially leave the people of the country excluded and remaining poor, the effects of economic development along with increased opportunities in growing markets will trickle wealth down to the at the bottom. With the increase in production within a country, standards will rise as competition breeds innovation into the lands. Even if in the short term there is massive poverty and inequality, over time the bottom lines of developing countries will be pulled up with the growing economy and private sector will begin to see improvements. The only prerequisite to this is a competent government, which in many of these countries is not the case. This trickle down growth is better than the rut a developing country may find itself in waiting for the private sector to kick start itself. What is your take on the development of the third world? Which way do you think is the route to take for developing countries? Are there other viable options not touched on or given enough attention? 

Social Justice and Inequality

Today's issue of The Wall Street Journal included this small quote by Friedrich Hayek on the topic of Social Justice and Inequality.

From economist Friedrich Hayek's "Law, Legislation and Liberty, Vol. 2: The Mirage of Social Justice" (1976):

Nobody capable of useful work need today lack food and shelter in the advanced countries, and for those incapable of themselves earning enough these necessities are generally provided outside the market. Poverty in the relative sense must of course continue to exist outside of any completely egalitarian society: so long as there exists inequality, somebody must be at the bottom of the scale. But the abolition of absolute poverty is not helped by the endeavour to achieve 'social justice'; in fact, in many of the countries in which absolute poverty is still an acute problem, the concern for 'social justice' has become one of the greatest obstacles in the elimination of poverty. In the West the rise of the great masses to tolerable comfort has been the effect of the general growth of wealth and has been merely slowed down by measures interfering with the market mechanism. It has been this market mechanism which has created the increase of aggregate income, which also has made it possible to provide outside the market for the support of those unable to earn enough. But the attempts to 'correct' the results of the market in the direction of 'social justice' have probably produced more injustice in the form of new privileges, obstacles to mobility and frustration of efforts than they have contributed to the alleviation of the lot of the poor.

What do you think Hayek is referring to and do you agree or disagree with him and why? Are there other economists we have studied that would support his view or disagree with him? And what was the basis for their view?

The mathematical shift in Economics

The idea that economics is more mathematically based and driven is a modern view many economists take today. Jevons was a major proponent of this movement, "as he started the Theory of Political economy by arguing that economics was inherently mathematical because it dealt with quantities" (Backhouse 168). He believed that you could measure the value of economic quantities, and all numerical data that we work with in government and the economy today. This was an interesting perspective to take back in Jevon's time considering the political economy is what many people recognized as the foundation of economics. Now Jevons did have a scientific background which heavily influenced his approach on economics, and led to his belief that you could quantify economics. Jevons placed serious importance on the link between value depending directly on utility. I personally agree with this perspective because I think the amount of consumer's utility attained by a single product or service is what decides the value of it.
Jevons went on to use different algebraic and calculus based formulas to drive utility maximization. "For example he derived the condition that utility would be maximized when the ratio of the marginal utility of two goods was equal to the relative price of two goods" (Backhouse 169). Now approaching this mathematical shift in economics from a larger perspective. Do you think the way of the future in resolving difficult economics decisions should be based off formulas and derivations, or primarily worked on through politics?

Distribution in Society

             Throughout the course, the topic of the distribution and redistribution of goods has frequently been referenced.  Adam Smith believed in three types of justice which included distributive justice, whereby “goods are distributed to people in proportion to their merit” (Backhouse 20).  Marshall supported a progressive tax system in which the rich paid more in taxes than the poor (270).  In the 1790s, the “‘Speenhamland System’” was introduced in Europe that used taxation to fund payments to low-wage workers who worked but had trouble supporting themselves (132-133).  Henry Sidgwick developed the idea of a system where the wealth of society, measured by utility, could be increased by redistributing goods in a way that items were taken from those who received less utility and given to those who received more utility from those goods (271).  The example of a loaf of bread is given where “the value of an additional loaf of bread to a poor person may be higher than its value to a rich person; it may therefore be possible to increase welfare by taking a loaf from the rich person and giving it to the poor person” (271).  Backhouse goes on to further say that this system was proposing the idea that “a community’s welfare depends on how goods are distributed, not simply on the value of goods being consumed” (271).

             Is taking or giving to someone because they are in a certain position just?  Similarly, is it ethical to take from people who are in a better economic position to support those who are less fortunate?  Or would it be unethical to allow some to live in great economic health while so many suffer and live in poverty?  Do we have an ethical duty to one another?  Does the government have the right/obligation to help those in need at the expense of the more fortunate?  When the government does get involved, are they doing so because they truly want to help those in need or are they doing so because they are seeking their own self-interests and attempting to gain votes, as described by Buchanan (on page 284 of Backhouse)?

Profit:Who should reap the benefits of the gain?

Looking into the discussion from Schumpeter in The Worldly Philosophers beginning on page 294, one sees the discussion of profit origin in the form of adding innovations from the entrepreneur.  Forcing the model of capitalism into a static model, that it was never meant to occupy, as the very nature of a capital is dynamic, Schumpeter tries his utmost to determine where profits originate from.

Suggesting that profits come from neither the workers nor the earnings of capital, Schumpeter uses the static model to show that profits appear when the economy does not follow its regular tracks.   This derailment comes through the addition of technology and is attributable to neither the worker or the company owners, both of whom are the traditionally chosen producers of capital.  This technology, according to Schumpeter, then allows the innovating capitalist to compete at lower costs.  This allows for a higher difference between the cost of production and profits, thereby allowing "rent" to be received by the capitalist.  This gain can be attributed to the actions and thoughts of the innovator, but will disappear according to Schumpeter as soon as other capitalists catch up.  Therefore, instead of rent, Schumpeter labels the origin of this increase as profit, because it is not permanent and is a one time occurrence.

 Naming entrepreneurs as the source of profit within the capitalist system, Schumpeter notes that though the entrepreneur is not necessarily the profit receiver, even though they are the profit generator.  In this situation the system itself Schumpeter indicates as taking the gains provided from the innovation of the individual.

Observing this loss of gain by the entrepreneur, I again put forth the question that has been asked multiple times over the years.  Is it ethical to take from one individual to give to the many?  A utilitarian view might consider that the system under which Schumpeter's entrepreneurs operate is ethical and just because it allows for the greater good of all by taking from the innovations that are created.  However, this action could impede upon the rights of the entrepreneur because they would not benefit at all from their contributions to society.  Is the system ethical in its use of the entrepreneurs, or should it be changed?

Gary Becker

Some of you are probably already aware of this. Gary Becker, an economist at the University of Chicago and a winner of the Nobel Prize in Economics died over the past weekend. I know I've mentioned him in class prior to this and I believe he is mentioned in the Backhouse text. He is a significant figure in late 20th century economics. He felt that economics and economic thinking played a significant role in decisions people make that most consider outside economics (discrimination, relationships, children, crime, etc.). At the same time, he chastised the profession for thinking too narrowly about what incentives people react to when making choices.

He also was a strong believer in the power of human capital to change economic circumstances on both a micro and macro level.

There are numerous obituaries in major newspapers and numerous tributes on various economics blogs. You might want to consider looking them over, either in preparation for our discussions on Dr. Becker or just as a response to this blog.

Hutcheson's view of human nature: Are people naturally selfish?

To fully understand Francis Hutcheson's views on human nature we first need to explore the criticism he has of Mandeville. Bernard Mandeville challenged the notion that Christian morality was what  held society together. His views and moral of his tale reflected that "people are naturally selfish, but in a well-ordered society they will be induced voluntarily to do what is best" (Backhouse 113). He believed private vices could potentially produce public benefits. 

Hutcheson's criticism came into play when he challenged the idea that people were purely self interested. He argued that men were indeed not selfish, and had true concern for others. Hutcheson felt that people were motivated by more then just their own self interest. He thought that feelings for others and the desire to better one's condition were the real motivational factors. Tying this in with Adam Smith, Hutcheson also expressed the importance of the need for division of labour. Overall I find these opposing views on people self interest and motivation very compelling. Considering the society and economy we live in today do you think Hutcheson's or Mandeville's perspective better fits the bill of how people behave and act? 

Is Economics Ethical?

After studying different aspects of economics, I’ve come to question the relationship between both economics and ethics.  Do they work in a converging way, where they coincide and work together, or in a contrasting way, where they are simply completely separate entities?  A lot of economic ideas imply there is a lack of ethics.  For example, one main economic idea that Adam Smith discussed in his Wealth of Nations is that people work and make decisions based on their self-interest.  Another example of a lack of ethics within economics is that there is so much focus on markets, profits, efficiency, prices, and equilibriums that there leaves little room for a focus on a moral code or ethical behavior for a society or an individual.  Also, some economists have developed theories based on the mechanical view of human beings rather than considering the side of human beings as simply human beings with emotions and sentiments. 

From a business perspective, is it good or bad for a business to act ethically?  What is the opportunity cost for a business that decides to act ethically?

Do you think economics incorporates ethics?  Is it even possible for economics to consist of a moral code foundation?