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The Natural Link Between Virtue Ethics and Political Virtue: The Morality of the Market

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Abstract

Against the idea that market economy is something greedy and immoral, we will set out the idea that market economy based on firms has a very positive moral content: the possibility of excellence of human action. Firms based on people acting together, sharing the culture of the organization, toward virtue-based ethics, create and distribute most of the economy’s wealth, innovate, trade and raise living standards. We will present a criterion which states that social coordination improves if the process of creation of individual possibilities of action, which is carried out in the social institutions—in our case, the firm—is extended. There is a retention of possibilities that is formed in the institutions and transmitted culturally. In that moment entrepreneurship emerges, the creative tension that expands, maintains, or diminishes the possibilities of action. Hence, the firm is the institution that carries out a very important practice: fostering new possibilities of individual action. In this paper, we will adopt the point of the view of the acting person. The reality we observe is personal action within its cultural and institutional dimensions. A theory of personal action in societal institutions bridges the way from virtue-based ethics toward ethics of institutions.

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Notes

  1. As the Spanish philosopher Zubiri points out: “This with (with things, with other men, with-me myself) is not something extra, an extrinsic relation, added to man in the exercise of his life. This would be absolutely chimerical. It is something much more radical. The with is a formal structural stage of life itself and therefore of human substantiveness in its vital dynamism.” (2003, p. 255).

  2. Statman (1997) speculating about the relationship between virtue ethics and political philosophy suggests that communitarianism might turn out to be the political aspect of virtue ethics (Statman 1997, p. 18). In this article, I defend another possibility. For me, the political aspect of virtue ethics is liberalism. But liberalism not based on mainstream economics homo economicus. My account of liberalism is based on human action and institutional processes following Mises and the Austrian School of economics. On the differences within liberalism between the so-called scientific reductionism of the liberals of Chicago School (M. Friedman, G. Becker), and the humanistic approach of the Austrian School (Mises, Hayek); see Aranzadi (2006).

  3. The ideas presented in this section have been developed in depth in Aranzadi (2006, 2011).

  4. An anonymous referee has pointed out this possible outcome of the market process. I thank his or her comment on this point.

  5. Obviously, the opposite outcome is possible. An anonymous referee rightly says that there are many situations in which the games are zero sum. There are winners and losers. And he or she argues that it is the case “when self-interest overrides social interest”. As I have argued in note 2, I consider that we need theories of the market not based in the homo economicus. The idea perfectly expressed by Friedman (1970) dictum “the firm’s social responsibility is to maximize profits” has terrible consequences when it has been applied to real firms (Ghoshal 2005). In this article, I defend another approach in which the social role of the firm presented in “The Social Role of the Firm” section is to unify the individual interest (“liberty from”) with the social interest (“liberty for”). So I agree with Freeman et al. (2007) when they defend the idea that firms and theirs stakeholders can generate positive sum situations.

  6. On the relationship between entrepreneurship and ethics, see among others (Brenkert 2009; Etzioni 1987; Hannafey 2003; Harmeling et al. 2009; Machan 1999).

  7. It is impossible here to deal with the capabilities approach developed by Nussbaum and Sen (1993). The first point should mark the differences—remarkably I would say—between Sen and Nussbaum approaches. For instance, Sen (2009) presents what he considers to be distinctive of his approach, and Nussbaum (2011) does the same. For a general and critical assessment of both approaches see Richardson (2000, 2007).

  8. As Ratzinger wrote: “A scientific approach that believes itself capable of managing without an ethos misunderstands the reality of man. Therefore it is not scientific. Today we need a maximum of specialized economic understanding but also a maximum of ethos” (1986, p. 204).

  9. As has been noticed Grassl and Habitsh (2011) the Encyclical-Letter Caritas in Veritate emphasizes the same two basic ideas. First, business activity must be understood as personal action, and second management should foster the creativity of employees.

  10. And the development of the humanistic management approach (Argandoña 2007, 2010; Melé 2003, 2009; Spitzeck et al. 2009; Hartman 2011) among others.

  11. Koslowski (1996, p. 53) states emphatically that the market allows not only freedom of consumption but also of action and production.

  12. This efficiency criterion requires the two formulations in order to correspond to the two views of human freedom. Our first formulation refers to the conception of freedom as “freedom from.” In this view, the person is free from institutions to do what he or she likes. It represents the freedom of indifference. One may do this or that. In this view a person who chooses to be a thief is as free as one who chooses to undertake a great enterprise. This first view presents the freedom of indifference. To distinguish between such behaviors, I have introduced the second view corresponding to the concept of freedom as “freedom for.” This view presents the person as a generator of positive actions. It presents human’s freedom in the search for excellence in action. See Pinckaers (1985).

  13. Hartman (2011) makes a pertinent defense of profits from an Aristotelian point of view.

  14. The same idea was masterfully expressed by Professor Marías in the following words: “My life is not a thing, but rather a doing, a reality projected into the future, that is argumentative and dramatic, and that is not exactly being but happening” (1996, p. 126). More bluntly, Drucker says: “the best way to predict the future is to create it” (1998, p. 197).

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    Javier Aranzadi

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Aranzadi, J. The Natural Link Between Virtue Ethics and Political Virtue: The Morality of the Market. J Bus Ethics 118, 487–496 (2013). https://doi.org/10.1007/s10551-012-1602-1

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