------ EH.NET BOOK REVIEW ------
Title: The Economist’s Oath: On the Need for and Content of Professional
Economic Ethics
Published by EH.Net (September 2011)
George F. DeMartino, /The Economist’s Oath: On the Need for and Content of
Professional Economic Ethics/. Oxford: Oxford University Press, 2011. xiii +
257 pp. $35 (hardcover), ISBN: 978-0-19-973056-8.
Reviewed for EH.Net by Peter J. Hill, Department of Economics, Wheaton
College (emeritus).
George DeMartino’s basic premise is “... the ethical universe that the
economist confronts is irreducibly complex” (p. 176). While many
economists would agree with that statement, it usually serves as a
justification for relative inattention to ethical issues in their
professional lives. DeMartino turns the complexity of the relationship
between ethics and economics on its head, however, and argues that instead of
ignoring ethics, economists need to take ethical issues seriously. In fact he
is bold enough to propose an Economist’s Oath, a pledge that every
economist would recite upon receiving a Ph.D.
DeMartino makes it clear that he is not concerned primarily with willful
misconduct, things such as plagiarism, dishonesty, or the fudging of data.
Those issues would be ruled out by the Oath but his main focus is on the
actual way in which economists do their work, particularly the policy advice
they give. His principle argument is that there is too much hubris in
economics; the practitioners offer advice without enough consideration of the
potential harm of their policies and enough involvement of the community
affected by those policies.
The author prefaces his case for an Economist’s Oath with a discussion of
what economics is about, how the pedagogy of economics forces concentration
on technique rather than larger ethical issues, and the relative lack of
philosophical sophistication of economists. These topics are thoughtfully
treated, but are not the controversial part of the book.
The lack of ethical sophistication is surely a problem in the discipline and
we would be well served to take ethical and moral issues seriously in our
work. Of course not all economists have ignored ethical issues. Among
others, Robert Nelson (2001), Deirdre McCloskey (2006) and Paul Heyne (2008)
have given thoughtful critiques of theological and ethical issues in the
practice of economics. DeMartino takes those arguments a large step forward,
however, arguing that economists, in their everyday practice of doing
economics are not ethical. He uses two ethical standards, prudence, being
aware of the down-side risks of a policy prescription, and autonomy,
respecting the rights of those affected by the policy advocated.
DeMartino illustrates his argument that much of economics is unethical with
several historical cases studies: the advice economists gave to the
transition societies after the fall of central planning, the counsel given to
the global South, particularly Latin America through adherence to the
Washington consensus, and the failure of economists to predict and/or
understand the economic crisis that started in 2008.
It is here that DeMartino becomes less persuasive. The second paragraph of
his Oath states, “That into whatever community I shall enter, it shall be
for the good of the community to the utmost of my power ...” (p. 232). And
he believes that this principle was ignored in each of the three cases. But
an alternative hypothesis to his charge of unethical behavior looms large;
the policy advocates in each case had a different view of the distributional
impacts and the efficacy of the proposals and analysis than DeMartino. It is
doubtful, even two decades after the fall of the Berlin Wall, that the
advocates of shock therapy would agree that they gave their advice with
complete unawareness of the risks of their policies.
Did those who pushed the Washington Consensus fail to include in their
analysis any consideration of short-term harm to certain groups? Perhaps
their estimate of the harm was incorrect, but in all likelihood they thought
their policies would be “for the good of the community.” And perhaps
those policy advocates were motivated by the failure of alternative policies
that had been pursued for several decades in the global South. That
possibility is not discussed as one of the reasons for the arguments for
liberalization of markets.
Was the boom and bust of the early twenty-first century because economists
were so unaware of ethical considerations that they unabashedly favored
deregulated financial markets? An alternative explanation for the rapid rise
in housing prices, along with the consequent collapse of financial
institutions, namely inappropriate government intervention in the housing
market, is not even mentioned.
Thus DeMartino’s basic thesis, that a code of ethics would serve the
profession well is not convincing, particularly when this code is not
directed at generally agreed upon principles of dishonesty, but rather at
appropriately assessing risks of policy prescriptions and making sure all
distributional aspects of those prescriptions are accounted for.
The economics profession is noted for strong disagreements about
interpretation of data, the weighing of costs and benefits, and the
appropriate theoretical framework to use for any analysis. Introducing the
charge of “unethical” to these discussions would seem to bring more heat
than light. It is also not clear who would judge which pieces of economics
work are unethical, i.e., not prudential nor respecting the principle of
autonomy. And would there be an enforcement mechanism? Would charges that an
economist acted unethically be investigated? By whom and using what standard?
Prudence and autonomy are not simple rules that can easily be applied to
economic work.
It is true that hindsight is very helpful. Not all policy advice has given
the results the advocates desired. But it is too easy to charge those who
gave that advice as ethically uniformed. Greater ethical awareness on the
part of economists would be a good thing, and a better understanding of the
ethical foundations of our economic reasoning would undoubtedly improve our
work, but it is doubtful if a pledge such as that suggested by DeMartino
would resolve many of the issues surrounding the efficacy and ethical
implications of policy prescriptions.
References:
Paul Heyne (2008), /“Are Economists Basically Immoral?” and Other Essays
on Economics, Ethics, and Religion/ [edited by Geoffrey Brennan and A.M.C.
Waterman], Indianapolis: Liberty Fund.
Deirdre N. McCloskey (2007), /The Bourgeois Virtues: Ethics for an Age of
Commerce/, Chicago: University of Chicago Press.
Robert Nelson (2001), /Economics as Religion: From Samuelson to Chicago and
Beyond/, University Park, PA: Penn State Press.
Peter J. Hill is Professor Emeritus at Wheaton College and a Senior Fellow at
the Property and Environment Research Center (PERC), Bozeman, MT. He is the
co-author, with Terry L. Anderson, of /The Not So Wild, Wild West: Property
Rights on the Frontier/, Stanford Press, 2004.
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reviews are archived at http://www.eh.net/BookReview.
Geographic Location: General, International, or Comparative
Subject: History of Economic Thought; Methodology
Time: 20th Century: WWII and post-WWII
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