Journal of Business Ethics

, Volume 159, Issue 1, pp 75–88 | Cite as

The Implicit Morality of the Market and Joseph Heath’s Market Failures Approach to Business Ethics

  • Marc A. CohenEmail author
  • Dean Peterson
Original Paper


Joseph Heath defends competitive markets and conceptualizes business ethics with reference to Pareto efficiency, which he takes to be the “implicit morality of the market.” His justification for markets is that they generate Pareto efficient outcomes, meaning that markets optimally satisfy consumer preferences. And, for Heath, business ethics is the set of normative constraints—regulation and beyond-compliance norms—needed to preserve that outcome. The present paper accepts Heath’s claim that the economic justification for markets is ethical, in that satisfying consumer preferences is a good. But, contra Heath, the ethical consideration at work is a consequentialist one; and acknowledging this consequentialism exposes limitations of Heath’s “market failures” approach to business ethics. We suggest two limitations, and we expect many will accept our argument that Heath’s conception of business ethics is too narrow. The present paper outlines two broader implications. First, acknowledging that the justification for markets is ethical eliminates the apparent—and false—conflict between purportedly amoral economic activity on one hand and ethical considerations on the other; instead, business ethics is a matter of weighing the consequentialist ethical benefit of economic activity and markets against other moral arguments/other ethical considerations. Second, Heath restricts business ethics to the constraints needed to protect the market’s ability to efficiently satisfy consumer preferences, constraints he calls “efficiency imperatives”; this restriction (inadvertently, perhaps) supports the widespread tendency to think that all social problems are economic; and, a business ethics so-conceived diminishes the perceived importance of noneconomic values—this attitude is dangerous.


Implicit morality of the market Market failures approach Consequentialism 



The authors thank the editor and two anonymous referees for very helpful questions, comments, and suggestions. And we are grateful to our colleague Brian Kelly for many discussions of economic theory.

Compliance with Ethical Standards

Conflict of interest

The authors declare that they have no conflict of interest.


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Copyright information

© Springer Science+Business Media B.V., part of Springer Nature 2017

Authors and Affiliations

  1. 1.Department of ManagementSeattle UniversitySeattleUSA
  2. 2.Department of EconomicsSeattle UniversitySeattleUSA
  3. 3.Department of PhilosophySeattle UniversitySeattleUSA

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