Lowell Look-lookup The role of Justice in the History and Development of Economic Thought: A Precursor to Classical Economics Economic thought, here regarded as the approach, methods, and principles by which economic considerations and decisions are viewed and made, has developed over centuries into what it is today. Although there is not one central and unified approach to the application of economic thought in making considerations and decisions, there are various individuals who over time have shaped the overall development and history of economic thought.
The development of economic Hough by these historic figures, as is the case today, was shaped by other individuals preceding them, as well as the social, economic, and political conditions that existed in their communities. One of such influencing conditions that shaped economic thought is the concept of Justice. This essay will examine the role that Justice played in the development and history of economic thought. Justice as a concept will be explored so as to provide a framework for which to determine if, when, and how it did play a role in the development of economic thought.
Various significant historic figures will be briefly examined, outlining how the concept of Justice pertained to their contribution in the development of economic thought. Although Justice continued (and continues) to play a role in economic considerations subsequent to the development of classical economics, this paper Journeys only as far as the development of classical economic thought, considering the development of the role and acknowledgment of Justice in the development of economic thought to be most relevant up until this point in time.
The examination will be done through a dated progression over centuries, beginning tit Early Economic Thought; passing through the precursors that represent Pre- classical thought; and Page | 1 finally, discussing how Justice influenced the development of Classical Economics. Emphasis will be placed on Bernard Mandible’s analysis of moral considerations pertaining to economics, as he described what (should) motivates and drives an economic system and its participants.
Ultimately, this paper will show that considerations of morality and Justice were such relevant issues in the development of economic thought that it shouldn’t be surprising that they played and will continue The Role of Justice in the Development of Economic Thought – A Precursor to Classical Economics By walkout Justice Before delving into the role Justice plays in the development of economic thought, justice as a concept will be discussed. This discussion will be based on two approaches to describing Justice as identified by the Stanford Encyclopedia of Philosophy (SEEP).
Firstly, Justice as a virtue will be explored, identifying the various ways in which Justice as a virtue may be represented and what each representation implies on an individual and societal level. Secondly, distributive Justice as a guide to he allocation of resources will be examined. Contributions by economists in developing these views on Justice will also be highlighted in describing them as this will further buffer evidence of the existence of a relationship between Justice and the development of economic thought.
The Jeep’s exploration of Justice as a virtue has a wide scope, both historically and in present day. The JEEP’S description of Justice as a virtue finds Plat’s view on Justice as “virtue ethical because it ties Justice (acting Justly) to an internal state of the person rather than to (adherence to) social norms or to good consequences” (Slots, 2010). Whereas, more modern considerations of Justice, like that by John Rails in A Theory of Justice, embrace the role that society plays, going as far as to define “Justice (as) is the first virtue of social institutions”.
An Page | 2 example of this extension to society is in the fact that psychologist, Lawrence Kohlrabi’s famous six stages of moral development often taught in psychology courses, Goldberg believes that the highest stage is a “concern for Justice and human rights based on universal principles”. Also vital in the development of Justice as virtue was the clash between sentimentalism and rationalism. Sentimentalists believed that sensitivity, rather than reasoning as proposed by rationalists were more important when making virtuous Judgments.
David Home and Adam Smith’s teacher, Francis Hutchison were two precursors of classical economics who strongly advocated moral sentimentalism. “Hutchison and Home treated morality as grounded in something other than reason… For Hutchison, universal (I. E. , impartial) benevolence is the highest and best of human motives, but we know this, not through reason, but through a moral sense (or sensitivity). Also, according to Hutchison, the individual virtue of Justice ultimately) consists in being motivated by universal benevolence, and he explicitly denies that benevolence can ever conflict with true Justice. (Slots, 2010) Although Home did not believe benevolence played as important a role as Hutchison did, rather, stressing the role of sympathy, they are both examples of precursors to the development of classical economics who discussed in depth, moral issues. Advocates of rationalism, like Rails, disagreed with sentimentalism, believing that moral sentiment didn’t provide enough of a Justification or description for Just behavior. Distributive Justice, which can be defined as “normative principles to guide the perhaps more directly applicable to economics than the concept of Justice as a virtue.
The Page | 3 principles included in distributive Justice that pertain to our discussion within the subsequent sections include, Strict Egalitarianism; Resource-Based Principle; Welfare’s Principle; and Libertarian Principle. Strict Egalitarianism advocates that everyone should have an equal (the same) level of material goods and services. Resource-based principles propose the allocation of resources to people based on their contribution and work. Welfare-based principles believe that when considering the distribution of resources, material goods and services shouldn’t be emphasized, but rather, an emphasis should be on welfare.
Libertarian principles are those that stress issues such as liberty or respecting schoolfellows as being more vital than distributive patterns. Although the few principles highlighted above provide a general and broad scope to consider distributive Justice as it applied to the development of economic thought, there may be cases where the particular principle applicable is not obvious. A modern example of this is John Rail’s Difference Principle, which takes elements of egalitarianism (equality) and combines them with his idea of what is fair.
Rail’s Difference Principle is one that he believes that distribution is fair as long as the worst off individual ends up in a better position after allocation. “In a basic structure with n relevant representatives, first maximize the welfare of the worst-off representative man; second, for equal welfare of the worst-off representative, maximize the welfare of the second worst-off representative man, and so on until the last case which is, for equal welfare of all the preceding l representatives, maximize the welfare of the best-off representative man. (Rails, 1971, 1999) Page | 4 The brief discussion of Justice in this section provides a foundation for which to consider how economic considerations in the development of economic thought discussed in subsequent sections are relevant to the topic at hand.
Early Economic Thought The role that Justice played in the development of early economic thought was probably even more prominent because influential writers of this era were not primarily focused on developing or providing economic thought and analysis to solve robbers of scarcity, but rather addressed in general, the religious, social, political, and consequently, economic conditions of their time. This gives room to consider the social, moral, religious, and ethical implications of the economic thought they were ‘developing’.
Examining Greek writers, Plato and Aristotle will show how a their (proposed) roles in society as concepts of exchange, private property, and monetary gain were beginning to be addressed as economic issues. The way influential writers of Arab-Islamic thought and Scholasticism applied Justice in cussing the economic issues they did, will further show the role Justice played in the development of early economic thought. A summary of the key economic issues addressed during this period and the role of Justice in their discussion will follow to reemphasize the relevance of this excursion.
The JEEP’S description of virtue ethics is based on an understanding of Plat’s view on justice as identified in the Republic (BBC). This interpretation argues that Plat’s conclusion is that Just acts are performed by people based on their personal internal convictions rather than society’s standards. This argument is buffered in Plat’s life that it is essential for individuals to be in spiritual harmony and that this harmony will allow them to make the proper (good) Page | 5 decisions.
Aristotle extends Plat’s take on individuals making Just’ decisions based on standards other than basic principles or law’s that can be understood as society’s overall standards. However, Aristotle doesn’t stress on individuals making Just decisions based on their inner harmony (or goodness), but rather considers Justice as pertaining to the allocation and distribution of resources. Aristotle believes that individuals should take only their fair share of things, with fairness (and abstinently the receipt of benefits) being determined based on how virtuous each person is and what they contribute in turn.
Aristotle proposal embraces resource-based distributive Justice where there is no “prescribed patterned outcome ? the idea being that the outcomes are determined by people’s free use of their resources” (SEEP, Distributive Justice). Furthermore, Aristotle notion of taking one’s fair share and not an excess of it, backed his belief that “the production of commodities to satisfy needs was right and natural, whereas, the production of goods in an attempt to satisfy unlimited desires was unnatural” (Colander, 32).
Thus, Aristotle frowned on trading for the purpose of monetary gain, rather than the ‘pure’ objective of exchange. He especially condemned using money to yield interest through loans (or usury) in what he considered a perverse way of demanding growth on something that isn’t natural or ‘fruitful’. Although one may cite Aristotle views (opposing Plat’s) that individuals should be able to amass private property as much as they can, as being contradictory to his opposition of monetary gain, it is consistent with resource’s distributive justice, finding a middle ground in that he also accounted for virtue.
In addition to highlighting distributive Justice, Aristotle view also represents Justice as a virtue, specifically, ‘situational virtue’, where according to Aristotle, “situations and communities are Just, when individuals receive benefits according to their merits or virtue (Slots, 2010) Aristotle took a rationalist approach to moral and other issues, with deductive and intellectual reasoning being emphasized as the major underlying factor in decision making.
The implications of rationalism in societies and religion was evident and often addressed (sometimes rejected) by leaders and writers for many centuries into he Middle-Ages. This included the eleventh through the thirteenth centuries when Arab-Islamic and Scholastic writings, while dealing with a wide range of issues including the threat of rationalism, were also the significant influences of economic thought in that period. The Arab-Islamic and Scholastic writers who extended economic thought, did so, not solely for the sake of economic analysis, but also provided guidelines for economic conduct acceptable with religious doctrine.
In the development of early economic thought, one noteworthy Arab-Islamic scholar is ABA table for his description of the evolution of markets through voluntary exchange and division of labor, as well as for his analysis of the need and implications of currency and taxation in a community. In his major work, lay Alum al-Eden (The revival of religious sciences) (1 110) and its abbreviated Urdu-language translation, Skimpy-e-Stated, AH-Galahad covered a wide range of issues within four volumes titled; (1) Acts of worship, (2) Norms of daily life, (3) the ways to perdition, and (4) the ways to salvation.
Within chapter 3 of volume 2, titled ‘On the Etiquette of Acquisition ND Earning a Livelihood’, he discusses economic issues including work and effort; fair wages and compensation; fraud and cheating; and benevolence in trading activities. Although the ethics proposed in AH Khalid’s writing is primarily based on religion, with the sinful implications of unethical actions often being brought up, there is a fair amount of the ethics he proposes in economic dealings that lays its foundation on simply doing what is right Oust).
AH-Galahad discusses that “it is cruel and sinful to sell a good deceitfully at other than the Page | 7 ‘prevailing’ or ‘conventional’ price. One must not do to others what one would not want done to oneself”. (Galahad & Hazing, 1973) In line with this notion that taking advantage of others is wrong since no one wants to be taken advantage of, he provides other instructions related to ensuring fairness in exchange through Just prices and non-deceitful practices.
Furthermore, Legalize is also opposed to usury, stating a point similar to Aristotle argument that “One who practices usury on dirham and diners is denying the bounty of God and is a transgressor, for these coins are created for other purposes and are not needed for themselves” (lay, 4:192). Aside from the sinful implications of being deceitful, Galahad also stresses the importance of benevolence and generosity, rather than mere obligation as the rationale for doing what is right. AH-Galahad suggests that even if a buyer offers a the profit will be excessive? although accepting the higher price would not be an injustice if there is no fraud. Further, he insists, the behavior of the market participants should always reflect benevolence (Asians)?meaning “doing something extra for another beyond the material benefits, though that extra is not an obligation, but merely an act of generosity (lay, 2:79). ” – (Ghanaian, 2000) Here, we see similarities to Plat’s virtue ethics, where people should do what is right, not merely because of society’s standards, but rather because on a personal level, they know it is right.
Scholasticism, a movement generally prominent around 100-1500, attempted to resolve the conflicts that existed between religious (Christian) beliefs and the social and economic changes that represented the evolution of feudalism and the influences of Ancient Greek Thought. SST. Thomas Aquinas (1225-1274) is thought to be the most influential Scholastic with Page | 8 his work Summary Theological (1273), touching on a wide range of economic issues including Just price, usury, and the institution of private property.
He is mostly significant because of his “fusion of religious teaching with the writings of Aristotle, which provided scholastic economic doctrine” (Colander, 36). While studying at the University of Naples, Aquinas was able to gain an exposure to Muslim work, drawing from writers of Arab-Islamic thought in the development of his own ideas. He addressed some issues previously addressed by Galahad, including fair prices, cheating, and fraud, while also discussing private property and usury in a reconciliation of his beliefs with that of Aristotle.
When addressing the issue of cheating in section 1 of question 77, within Part II of Summary, Aquinas cites Mathew 7:12 as saying “All things … Whatsoever you would that men should do to you, do you also to them. ” In this section, Aquinas goes on to explain, similar to Galahad, the religious and ethical implications of unfair dealings. He says that since “no man wishes to buy a thing for more than its worth. Therefore no man should sell a thing to another man for more than its worth. Aquinas also addresses the sinful implications of deceit, saying that “It is altogether sinful to have course to deceit in order to sell a thing for more than its Just price, because this is to deceive one’s neighbor so as to injure him”. Furthermore, he addresses usury from a similar perspective as Aristotle and Galahad, condemning the demand for money in excess (interest) of the amount initially lent. The major issues in the development of early economic thought that pertain to this discussion on the relevance of Justice can be summarized into 3. ) Fair/Just prices and ethical exchanges, 2) Usury, and 3) the allocation and distribution of property. Ethical exchanges were encouraged based on the notion that those partaking in orientations should engage in them without the objective of gaining more on a commodity than it is actually worth. Aristotle view Page | 9 was that barter should be favorable to any type of monetary transaction which tempts monetary (unnatural) gain. Arab-Islamic thought by Galahad and Scholastic thought by Aquinas advocate avoiding excessive gain by only charging what is fair and Just and not more when entering into a transaction.
It should be noted that as there was no emphasis on market-oriented means of determining fair prices, the notion of charging fair prices was based on those partaking in transactions ‘doing the eight thing’. Plato introduced what is today considered to be virtue ethics, where he believed people would do what is right based on the harmony within them. Galahad and Aquinas both cited religion and benevolence as the motivation for doing the right thing, emphasizing that it is both ‘sinful’ and ‘cruel’ to do otherwise.
On the topic of usury, the concept of what is ‘natural’ is used to prescribe Justice as Aristotle, Galahad, and Aquinas rebuke gaining interest on money lent to others on the notion that it is unnatural for money to grow/yield as fruit and other natural things do. Finally, on the allocation and distribution of property, Plato advocates that certain individuals (such as army officials) shouldn’t hold private property but should rather possess communal property. Aristotle opposes this view and advocates instead that private property shouldn’t be restricted but should be allocated based on the merits and virtue of individuals.
Aquinas supports Aristotle view of not restricting the distribution of private property, although he didn’t cite distributive Justice as the primary reason why but rather that he feels possessions are an addition, not exemption from natural law and so aren’t damaging. The issue of the fair allocation/ distributions of resources and property, as well as, the determination of the Just price and value of a commodity, continued to resurface in pre-classical and classical economics after the middle ages.
Although, unlike Richard, Mill, or Marx who also considered the valuation of commodities, Galahad and Aquinas didn’t have a solid foundation or Page | 10 explanation for market forces, this is perhaps further evidence that their consideration of the allocation of resources and the valuation of commodities, were done more to provide moral guidelines for economic issues as opposed to attempting o further understand the intricacies of a functioning economic or political system.
Mercantilism and Bernard Madeleine Following Early Economic Thought, and beginning with the development of Pre- classical thought that transitioned and inspired classical economic thought, societies and markets became larger and more complicated, as did the scope of economic thought.
With the significant growth in scale of manufacturing and agriculture, the onset of industrialization, and the advancement of international trade, writers that contributed to economic thought in the two centuries after 1 500 were more unconcerned with providing analyses and recommendation for political and economic strategies than addressing economics as one of the many issues pertinent in discussing an ‘ideal society’. Despite this, the role that Justice played in economic relevant.
Justice was no longer as relevant in discussing the morality of individual dealings and exchanges (as this was also no longer the major topic for the economics of that era), but was now more relevant when exploring the economic thought developed at the state and societal level. This however, does not mean that the role of individuals in either Justice or economics was irrelevant or ignored. A discussion of Mercantilism, particularly Bernard Madeleine, will provide insight into a major movement that influenced the development of economic thought in the centuries between scholasticism and classical economic thought.
Page | 11 Mercantilism includes the ideas promoted through the writings of business merchants between 1500 and 1750. These merchants provided recommendations for what they felt should be the economic policies of a thriving nation. “The mercantilism proceeded on the assumption that the total wealth of the world was fixed. Using the same assumption, the scholastics had reasoned that when trade kook place between individuals, the gain of one was necessarily the loss of another.
The mercantilism applied this reasoning to trade between nations, concluding that any increase in the wealth and economic power of one nation occurred at the expense of other nations. ” – Colander, 45 Where scholastics like Aquinas had discussed the implications of trade and other economic affairs between individuals, mercantilism were more concerned with economic policy at the national level. Mercantilism advocated for increased exports and reduced imports, arguing that through a manipulation of the balance of trade ND the use of raw materials, a nation will be better off.
There were many variations of the mercantilism argument for using balance of trade to increase a nation’s welfare that will not be discussed here for the sake of brevity. A key point to be highlighted is that the mercantilism movement characterized a period where causality as a concept had become relevant in the development of economic thought. Causality meant acknowledging the interrelatedness of various components at both the individual and state level. This meant that the economic thought being developed and the role justice played in it could now be extended from the individual to society (the nation) and vice-versa. Age | 12 Bernard Mandible’s Beehive Bernard Madeleine is one of the mercantilism considered to be major precursors of classical economics, providing insight and ideas that although not popularly attributed to him today, were included in some of the issues he covered Mandible’s work provides one of the most significant examples of how moral considerations played a role in the analysis of economic affairs and proposal of economic policies in the 17th andante century.
Bernard Mandible’s most significant ark as it pertains to this discussion is found in his book, The Fable of the Bees; Or, Private Vices, Publics Benefits (1714) which contained the popular satirical poem, The Grumbling Hive. In The Fable, Madeleine addresses what may be considered, the ‘irony’ that exists in that the success of centralization is dependent on and inevitably gives rise to immoral vices.
Madeleine also addressed various issues of ethics, virtue, and morality as they pertained to the economy in letters he wrote to other writers, often expressing within his letters, views of what he felt would be adequate economic policies. Similar to other Mercantilism, Mandible’s primary concern wasn’t the implications of morality as it affected personal relationships or even economics among individuals.
Although acknowledging, and extensively discussing the role individual behavior, motivation, and virtues played when people dealt with one another, Madeleine was more concerned about the overarching significance of these factors as they affected the interrelated economy, and subsequently the state. This encompassing view, when broken down, shows the inevitable role Justice played as Madeleine made his contributions to economic thought.
In his analysis, Madeleine begins by identifying what motivates individuals, then discusses what determines virtue as societies identified it, going on to propose the Page | 13 implications of virtue (or lack of) to his proposed demand-driven economics, and finally, providing insight into how he feels the government may (should) react to the natural tendencies of individuals in society to bring about an optimal outcome.
Madeleine believes that the ultimate underlying factor that determines human behavior is regard for oneself. He states that “Every individual is a little world by itself, and all creatures, as far as their understanding and abilities will let them, endeavor to make that Self happy. ” (Madeleine, 1988) Specifically, Madeleine cites self-love and self-esteem (pride) as the two primary factors that motivate human beings to behave the way they do and determines their ethical considerations.
Self- love exists in that we all seek pleasure, while avoiding pain, so that even when an individual performs an act to help others, it is either to gain gratification from assisting someone they care about, or in the case of helping those you don’t know, to main gratification in knowing you have expressed compassion, or avoid the pain of not having done so. Self-esteem, which Madeleine describes as “that great value which all individuals set upon their own persons” (Madeleine, 1732) is interchangeably called pride.
Madeleine believes that although, like self-love it also makes individuals feel secure, self-esteem also requires the approval of others and so people tend to put more work into building their pride. Furthermore, Madeleine advocates that pride became more valuable as society was formed and those who can demonstrate greater amounts of it, are regarded as being in a higher class. According to since men are so tenacious of their Possessions, and Selfishness is so riveted in our nature, that whoever in any ways can conquer it shall have the Applause of the Publics. (Madeleine, 1988) The demonstration of pride, exists in self-denial, where by restraining oneself from certain natural impulses and desires, an individual may become part of an elite class of the few who can (or are Page | 14 willing to) do so. Thus, virtue and morality exist in this same ability to restrain from natural impulses, with the reward being that one doesn’t only feel good inside, but also gets rewarded by society.
Brogues, 2005) Although Madeleine says that self- denial is necessary for virtue, he does distinguish that it is in fact only actually virtue if one honestly helps others for the right reasons and not merely for the sake of selfish advancement: “Men are not to be Judged by the Consequences that may succeed their Actions, but the Facts themselves, and the Motives which it shall appear they acted from. (Madeleine, 1988) Among the major contributions Madeleine made to economics are his early proposals for demand-driven economics and an indication of what Adam Smith later identified as the “invisible hand” that reconciles markets. Madeleine advocated that for a commercial system to function (grow), people must continue to ‘want’, and even more so, exercise this desire by buying goods, while also being willing to play their role by participating in the production of the desired goods.
Furthermore, he encouraged stimulating demand through any means necessary, where acts that may initially be considered to be vices based on society’s understanding of virtue are acceptable as long as they achieve the objective of increasing demand. In his system, Madeleine is signifying that pride, should be encouraged as it also breeds a social lass that in wanting to further distinguish itself encourages commercial activities. Moreover, he says that virtue cannot be practiced by all as it is characterized by self- denial, which would be harmful to certain commercial activities and in turn the economic system as a whole.
Ultimately, Madeleine is taking a utilitarian perspective, where the net effect is more important than the minor components. Although Madeleine pointed out the role that externalities and vices played in the commercial system, he wasn’t fighting to exclude them, but was rather merely pointing them out. He believed, from a utilitarian perspective, that the vices Page | 15 that accompanied commercial activities were simply essential for the economic system to function. They are silly People who imagine, that the Good of the Whole is consistent with the Good of every individual. ” (Madeleine, 1953) While encouraging (or rather not discouraging) vices as long as they spurred commercial activity, Madeleine also preached restraint, saying that without some degree of it, people would focus more on short-term goods and rent-seeking behavior, rather than making optimal decisions. His middle ground was found in the role he expected the