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Reframing Economic Ethics: The Philosophical Foundations of Humanistic Management, by Claus Dierksmeier. New York: Palgrave Macmillan, 2016. 127 pp. ISBN: 978-3-3193-2299-5

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Reframing Economic Ethics: The Philosophical Foundations of Humanistic Management, by Claus Dierksmeier. New York: Palgrave Macmillan, 2016. 127 pp. ISBN: 978-3-3193-2299-5

Published online by Cambridge University Press:  13 June 2017

Daryl Koehn*
Affiliation:
DePaul University
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Abstract

Type
Book Reviews
Copyright
Copyright © Society for Business Ethics 2017 

The mechanistic ethics that dominated the late nineteenth and much of the twentieth century has been under attack for some time. Behavioral economists have devised clever ways of showing that we frequently are not rational decision makers presupposed in modern micro-economic theory. Postmodern critiques have revealed the value assumptions embedded in supposedly value-neutral, scientific economic theorizing. Managerial economists, such as Michael Jensen, have begun to question basic principles regarding the responsibility to maximize shareholder value.

Where does this assault leave economic thinking? In particular, how should we understand the relationship among ethics, economic theorizing, and managerial practice if recent ideas have been misguided? Coming as it does at this fraught moment, Claus Dierksmeier’s book, Reframing Economic Ethics: The Philosophical Foundations of Humanistic Management, is especially welcome. Dierksmeier’s project is both ambitious and timely: he seeks to discover in philosophers as diverse as Aristotle, St. Thomas Aquinas, and Adam Smith some useful guideposts for placing economics, business, and managerial ethics on sounder footing. In particular, Dierksmeier seeks to show that classical economic thought had an intrinsically ethical dimension, a dimension that disappeared when scholars reconceived economics along purely mechanistic lines. This dimension can and should be reclaimed and be introduced into economics and management studies at the university level.

The Introduction sketches this project. Section two, “The Mechanistic Paradigm,” carefully documents how the notion of “value-free” economics arose and concludes with some key lessons we have learned. While this topic has been explored by other scholars, Dierksmeier does a nice job of laying out the history of the rise of “scientific” economic theorizing and of identifying some dangers associated with the relentless naturalism and mathematized physicalism of mechanistic neoclassical economics. These dangers include: 1) an ever-increasing specialization by economists to model their epistemic progress on the field of physics (19), thereby insulating themselves from important discoveries made by others in disciplines related to economics; 2) an inability to spot causes that would be evident with a more holistic approach (20); 3) a failure to discern and understand changes within the societies in which economies are embedded (20) and to take into account the key role played by human freedom in the shaping of the economy (21); 4) an overly sanguine believe that “natural forces” will somehow restore the economy in the event of major disruptions (21); and 5) a propensity to monetize in crude ways values and aesthetic phenomena that need to be treated in subtler and often qualitative rather than quantitative ways (23). The “ideal of a ‘value-free’ science has thus [paradoxically and ironically]…brought economics under the sway of certain (materialistic) values” (23).

The mechanization of economics has proven, Dierksmeier thinks, especially dangerous to human freedom. For “according to neoclassical economics, such freedom hardly exists; at least not for strictly rational economic actors, since they are viewed as tied to a calculus of utility maximization that leaves no wiggle-room for alternative decision making” (24). Section three attempts to counter this threat by showing how older forms of economic thinking carved out space for genuinely ethical thinking and for the responsible use of human freedom. Dierksmeier does a fine job of making his case, drawing extensively upon primary sources. He correctly observes that Aristotle distinguishes between two types of wealth-getting, one of which is the unnatural pursuit of boundless wealth, the other of which serves the legitimate goals of the household. It falls to us to use our freedom responsibly, regulating our wealth-getting pursuits (43). St. Thomas Aquinas similarly emphasizes human freedom. We are morally obligated to adhere to the universal and objective demands of justice (46-47) and not to enrich ourselves at the individual or corporate level at the expense of the common good (48). Aquinas recognizes a distinctive business sphere wherein businesspeople can choose to do more than what the law requires of them: “With this move, Thomas opens a space for the voluntary assumption of social responsibilities on the part of businesspeople” (53). This section closes with a discussion of Adam Smith. Siding with many modern interpreters of Smith who reject the idea that Smith is a laissez-faire thinker (58), Dierksmeier contends that Smith enjoins us to show empathy towards others. Smith also defends legal strictures against morally problematic contracts and the need for both vigilant government regulation and sound social mores (54). Again we find that ethics lies at the heart of economics and that we need to respect the dignity of all through responsible use of our freedom.

Section four is the lynchpin of Dierksmeier’s project. Although he recuperates insights from Aristotle, Aquinas, and Smith, he thinks these insights have limited applicability. For they all presuppose certain metaphysical-laden notions of the common good. We should instead base economics ethics in the thinking of Immanuel Kant, for Kant’s approach does not presuppose a univocal notion of the common good while still grounding human freedom. Dierksmeier is a first-rate Kant scholar. This chapter is densely and carefully argued. The thrust of his thinking (in basic terms) is that Kant’s approach is not only philosophically relevant in today’s pluralistic environment but also economically relevant. For, after all, we celebrate emancipated individuals, the free market, and corporations constructed around voluntary cooperation and work contracts (68). We must, therefore, come to terms with the principle of liberty (69).

Dierksmeier maintains that, for Kant, our freedom consists in our ability to realize moral commands, not the reverse. “[I]n short, through our ability to be moral, we gain freedom—both to be moral, and also, derivatively, to be immoral” (71, italics in original). Our dignity consists in our ability to obey the law, regardless of whether this ability in fact manifests in moral actions. In Dierksmeier’s view, this ability is universal. We are moral only when we seek to bring about a “kingdom of ends” and treat all individuals as “ends-in-themselves” (72). The way to an ethical life lies in seeking our own happiness but “only through forms of morally worthy behavior” (72). Dierksmeier proceeds carefully here, rightly noting that the marker of a good will is whether agents “have done everything within their power to accomplish a certain moral goal, because this, says Kant, is a marker of the ‘good will’” (74). So when we turn to corporate social responsibility, we should not try to plumb managerial motives but rather focus on the actions of the firm and whether their deliberations have been appropriately public. From this notion of the need for public discourse, Dierksmeier derives a Kantian approach to management ethics, broadly embracing elements such as a stakeholder model of governance (75), respect for human rights, social change predicated on freedom, and forms of business, such as social enterprise, which promote human dignity.

Although I find much to admire in Dierksmeier’s project, I have four reservations. The first problem I see concerns the incompatibility of the various ethical theories upon which he draws in making the case for humanistic management. Yes, similarities among theorists abound, but so do highly significant differences. It is true, for example, that St. Thomas can be read as accepting and extending Aristotle’s distinction between what could be thought of as merely acquisitive versus socially productive wealth. However, it is equally true that they do not understand the common good in the way. For Aquinas, the common good consists in the thriving of all individuals, each of whom possesses a kind of inalienable dignity. Each human being is, for Aquinas, capable of moral reform and self-improvement. For Aristotle, by contrast, dignity (to the extent one wants to use that anachronism) is alienable. Virtues are habits of choice lying in a mean. Put differently, vice is a habit, and habits by definition are, for Aristotle, stable and not susceptible to change. Thus, for Aristotle, the common good, in its most desirable form, means something like the well functioning of citizens supported by educational systems that foster sound habits. He certainly does not think that the polis needs to respect the vicious because they have an inalienable dignity.

My second reservation centers on the issue of perspective. Unlike Aristotle, Dierksmeier thinks that we can have a political economy rooted in a just respect for the inalienable dignity of each individual and structured around norms that are grounded in reason. On his view, Aquinas was right to excoriate the Germans for being “thieves” because stealing violates universal moral norms. But did the Germans view themselves as “thieves”? I suspect that even the Germans likely had some prohibitions against stealing which they enforced within their tribes. The point I want to stress is that there is no ethical view from nowhere, not even a view rooted in the demands reason may impose upon rational, free human beings. Reason is a faculty that may or may not be fully realized; it can be deformed without the agent necessarily realizing or even admitting to this deformation. In addition, moral expressions gain much of their meaning and nuance within specific cultural contexts. So we may not be justified in expecting or relying upon all individuals to acknowledge, much less to obey, some universal demands of reason. Yet we all still need to live and work together. If so, then we may need some form of “satisficing.” I am not clear from Dierksmeier’s account what that might look like nor how we might achieve it. Nor even whether he would permit it.

Third, while I am immensely sympathetic to Dierksmeier’s basing his global ethic on procedural, rather than on substantive, norms (a direction I myself have explored in several books), the approach does raise the question of whether the procedural norms are doing that much of the ethical heavy lifting. Moreover, if we are going to rely, as Dierksmeier suggests, upon local democratic participation to interpret the humanistic demands of the reframed economy, then we need citizens to be informed, capable of sustained attention, leery of civil war, and so forth. It would seem that a critical mass of citizens will need politically prudent discernment, in which case it would seem to be this appropriately cultivated discernment that will have the real practical force here. So is the theoretical overlay provided by Kantian human dignity (a notion that has as many interpretations as the “common good” or “human nature”) all that necessary?

Finally, Dierksmeier’s approach works best at the managerial level. Indeed, Dierksmeier repeatedly refers to the ethic as one of humanistic management. However, it would be interesting to see what concrete guidance this ethic might offer us in a world in which white collar and blue collar jobs are disappearing at an accelerating rate due to automation. Would this Kantian ethic stipulate that everyone has a right to a life-sustaining job? If so, do existing managers then have a duty not to automate jobs? The transforming power of capitalism itself seems to be at the root of this troublesome development. Perhaps economic ethics needs to be reframed not just at the managerial level but at the policy-making level as well.