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Everyone has some sort of moral philosophy whether they realize it or not. The three major schools of ethics in Western philosophy are deontology, consequentialism, and virtue ethics. Deontology is an ethical system based on legalistic rules that impose a duty on everyone’s actions. Consequentialism or teleological ethics judges actions based on whether they produce good outcomes. The most influential school of consequentialism is utilitarianism which aims to maximize the utility (happiness or wellbeing) of all people. Utilitarianism is associated with Jeremy Bentham who popularized the idea that we should try to achieve “the greatest happiness of the greatest number” of people. Virtue ethics says that people should act in ways that demonstrate virtues and/or improve their character. Christian ethicists have tended to favor deontology and virtue ethics, but all three systems are sometimes used by nearly everyone in different kinds of contexts.
One of the challenges of ethics is that people want a simple ethical system to guide what is righteous, but any simple ethical system leads to actions that intuitively seem far from optimal, so people tend to use different systems of ethical reasoning in different contexts. Furthermore, when people are faced with an immediate decision that requires action they often throw out these systems of moral reasoning and just act according to how their emotions are pushing them at the time. They go with their feelings or gut instinct. Because people’s emotions are inconsistent, we often act inconsistently and that makes us look like moral relativists.
Moral relativism isn’t a moral philosophy that can guide anyone’s actions because it is the negation of moral systems (such as those listed above). It is the idea that there is no ethical system that applies in all circumstances to decide right from wrong so there is no way to judge what is universally moral. Ethicists criticize moral relativism as nhilism, but even if it isn’t an attractive goal, it is a pretty good way of describing how people behave when they decide what is right and wrong based on their contemporary feelings, personal circumstances and social pressures.
For one dramatic example, the official position of the Southern Baptist Church was markedly pro-choice for years after the landmark 1973 Roe v. Wade ruling. The contemporary Baptist church press praised the ruling at the time, but it changed its stance and is now staunchly anti-abortion. In 2003, the church officially apologized for their earlier position. This might look a lot like moral relativism to a critic, but the Southern Baptists have always been trying to follow the word of God and as context changes, all humans are prone to be influenced and change our moral judgements. The Southern Baptists reversed their policy because they are humans and everyone takes self-contradictory ethical stances at different points in their lives so it shouldn’t be surprising. Many other Christians have gone the other direction in their moral reasoning.
In my experience, most Americans are inconsistent in their moral reasoning regarding choices like abortion from time to time depending on how circumstances are described. Furthermore, most Americans seem to prefer moral ambiguity in matters like abortion and are actually uncomfortable with the moral absolutists on both sides who are always consistent and don’t nuance their moral judgements from situation to situation.
Most people simply go with whatever their gut tells them is right or wrong. People’s guts often lead them to make morally relativistic judgments that are bigger than the various flip flops on abortion. The Bible teaches that we are all sinners and cognitive dissonance theory teaches that we tend to go to great lengths to try to justify our moral sentiments and feel good about ourselves.
Because ethics is necessarily messy, many scientists, economists, and business professors have tried to adopt logical positivism as their ethical stance. The logical positivists simply rejected all ethics as unscientific. They suggested that economics should be split between normative economics and positive economics. And then they argued that normative economics is unscientific because it has to do with ethical goals and that academics should focus on positive economics which is true science because it only describes how the world actually works and not how it should work.
This false dichotomy between positive and normative economics is a mistake known as the positivist fallacy. Humans never say or do anything that is purely positive because of one of the most fundamental concepts of economics: the opportunity cost. That is defined as the next BEST thing that you lose when you make any choice. Notice that “best” is part of the definition. Best is a normative judgement. Economics teaches that every choice we make has an opportunity cost and that means every choice we make a normative judgement. We decide to do what is best and give up the opportunity cost. For example, every minute I unconsciously make the seemingly trivial choice to keep breathing. That is a normative choice and now that you are thinking about it, you are consciously deciding to continue breathing too. You could stop at any time and that would also be a normative decision. I hope you do the right thing.
It is true that some statements can be positive (descriptions of observations) and others are normative (ethical), but that only describes the statement and not the person’s choice about what statements to make and what to observe. All positive observations are based on normative choices about what to observe and what to describe about the observations. Those choices are ethical judgements about what is best.
The scientific method itself (in all its many variations) is a normative value judgement. Scientists think that objective truth is BETTER than falsehoods and that the scientific method is a BETTER guide towards truth than astrology or pure intuition. Scientists who think science should be free of ethics are making a ethical judgement about science and one that is impossible. First of all, the idea that values are bad is an ethical judgement and secondly, the discernment of what science is ethics-free is a subjective judgement imbued with normative meaning.
It is impossible for scientists to avoid ethics. When economists tried to avoid ethics, they ended up developing an accidental ethical system: mmutilitarianism. Mmutilitarianism is an abbreviation for “money-metric utilitarianism” and it is just like utilitarianism except that it is simpler because instead of trying to maximizing utility, mmutilitarians try to maximize the monetary value of income=output. The goal of maximizing GDP is an example of mmutilitarianism as is cost-benefit analysis.
One of the problems of utilitarianism is that nobody (except God) can really measure how much utility different people are getting, so all we can do is guess about what would maximize utility for a population. Mmutilitarianism simplifies things by assuming that utility can be measured in dollars which everyone can observe.
Another problem of utilitarianism that mmutilitarianism ignores is the law of diminishing marginal utility of money. This is the idea that an additional dollar gives more bang for the buck for poor people than for rich people. For example, if a twenty-dollar bill was blowing down a street where both a homeless guy and Bill Gates were walking, who would be more excited to run after it? To most people, it is obvious that the homeless guy would value the money more because it could alleviate his hunger pangs for days whereas it would just add an unnoticeably small amount to what Bill Gates is already giving away to philanthropies every day. Bill Gates has so many billions of dollars that he would hardly notice any marginal benefit from yet another $20, and it probably would not even be worth his time to chase it down in the wind. That demonstrates diminishing marginal utility because the amount of utility (or value) that an additional dollar produces diminishes the more dollars of wealth that the person already has.
The sum of global utility would thereby increase if Bill Gates lost a $20-bill and the homeless guy found it. This is why diminishing marginal utility has always been such a politically controversial idea. Some elites consider the discussion of the concept to be tantamount to class warfare because it gives a clear justification for progressive taxation and safety-net social programs to help the less fortunate. Diminishing marginal utility is so controversial that the few people who still identify as utilitarians mostly seem shy about discussing the political implications of diminishing marginal utility.
Under mmutilitarianism, it doesn’t matter if Bill Gates or the homeless guy gets the dollar. All that matters is that somebody gets it and so mmutilitarianism is more biased towards the interests of the wealthy than ordinary utilitarianism. Under mmutilitarianism, your ethical worth is literally how much money you have. If you don’t spend money, you don’t count at all.
Utilitarianism had been the dominant ethical system in economics until the logical positivist movement of the 1920s rejected normative (ethical) concerns as metaphysical and unscientific. That led economists to try to eliminate ethics from economics and the result illustrates the impossibility of eliminating ethics from human endeavors. Instead of eliminating ethics from economics, the positivists unwittingly turned economists into disciples of mmutilitarianism, which filled the ethical vacuum. All communities need some kind of ethical basis to be able to organize around and build common agreements, and mmutilitarianism filled this niche in economics.
Mmutilitarianism is the moral philosophy which gives GDP so much heft and GDP became by far the most important measure of economic welfare in the world. But nobody likes the name mmutilitarianism. Even though it is a mutation of utilitarianism, self-described utilitarians completely reject mmutilitarianism because they reject the idea that all utility can be measured by market spending and that every dollar gives the same amount of utility to everyone. Economists who are unwitting devotees of mmutilitarianism also reject the term because don’t realize that they using any ethical system when they make judgements based on “efficiency”.
Instead of using the term mmutilitarianism, economists talk a lot about “efficiency”. When economists talk about efficiency, they are usually talking about maximizing money-metric utility (or mmutility). I call it mmutilitarianism to honor its roots in utilitarianism, and because that is exactly what utilitarians would believe if they thought that money is the best measure of utility with constant marginal utility of money. That is really the principal difference between the two schools of ethics.
“Efficiency” is usually what economists call it when they use mmutilitarian criteria to make normative judgements. For example, more than 95% of economists (including myself) use mmutilitarian reasoning to judge that free trade, monetary stimulus during a recession and raising US gas taxes are generally good because they are efficient and rent control, monopolies, and excessive regulation are generally bad because they are inefficient.
In mmutilitarianism, the value of any government action is determined by estimating the willingness to pay of all people involved and subtracting off the dollar costs. This is called cost-benefit analysis. The wellbeing of any group of people is measured by adding up all the dollars that they get for the final goods and services that they produce and dividing by the number of people in the group. This is mean GDP, the holiest measurement of mmutilitarianism.
Ethical egoism is a philosophical justification for selfishness that some economic and business pundits ascribe to. It is one of the more extreme consequences of mmutilitarian thought. If every dollar is worth the same to everyone, then selfishness is justified because it doesn’t matter who gets the money and the only thing that matters is increasing the total money value of the economy (max GDP). Some mmutilitarians think that selfishness is an excellent motivation for maximizing the production of GDP which is one reason why they promote the morality of selfishness.
Furthermore, many mmutilitarians conflate selfishness with rationality and imply that altruism is irrational or bad. The so-called ‘rational actor paradigm’ is usually more about purely selfish behavior than rationality. Altruism is making a sacrifice for the benefit of someone else and under an ethical egoist worldview, it is impossible to improve the world by sacrificing for someone else. For example, if one person has something he values at $100 and another person values it at $200, then a selfish market transaction will make both people better off. Some mmutilitarians would even say that if the original owner gave the book to the other person, it would be bad because he would make himself worse off whereas a market transaction could make both people better off (and when nobody is made worse off, mmutilitarians call it a “Pareto efficient” change).
Economics imperialism spread mmutilitarianism to other social sciences, business schools, and even enshrined its values into our legal system. In political science, realism is akin to mmutilitarianism. Business schools teach that maximizing profits is the moral responsibility of business because maximizing profit = maximizing mmutility = morality.
This is unfortunate. Both national economies and businesses work best when people work together for mutual benefit. Pure selfishness is counterproductive when people are involved with groups that are competing. The only business where selfish behavior can sometimes be profitable is a sole-proprietorship that is dealing with suckers as customers and suppliers.
Humans evolved ethics because humans are social animals that do almost everything in groups. Ethics are important because ethics help groups work well together for mutual benefit. But ethics are not just crucial for profitability, they also make life more meaningful and worth living.
And the more power a person has, the more important their ethics are. A rock has no power to make decisions, so a rock has no ethical duty. A small child has more power than a rock and thus needs more ethical thinking. As managers gain more power, they gain more need to think ethics both because their actions will have more effects on others and because ethics are formed by cultural norms and the more powerful people are, the more influence they have on the ethics of others in their orbit.
Nobody defends mmutilitarianism as an ethical ideal either from religious nor philosophical principles because it is based upon false assumptions that systematically lead to ethical errors, but it is better than nothing. It fills a practical purpose for guiding decisions about what is good for “the economy” because it is a convenient, simple ethical system that helps avoid wasteful errors that societies would (and did) make without it. Society needs some kind ethical system to guide economic policy, and mmutilitarianism has filled this important niche in economics. In business, ethical egoism has been a common result with disastrous effect.
But mmutilitarianism and ethical egoism only became dominant because of the unwitting conveniences of past thought leaders and we can do better if we consciously think about ethics and have the humility to realize the weakness of these ethical systems.
Ethical egoism almost always fails to produce good outcomes for groups and is particularly dangerous in leadership and business. Although mmutilitarianism has often been useful in achieving more prudent uses of resources, but mmutilitarianist ideology has also helped cause the inefficient rise in inequality and the over-emphasis on market goods over non-financial resources like the environment, health, spirituality, friendship, family life, and other relationships.