MasterResource is about energy (the master resource). But our ‘free market energy blog‘ is also about the economic system of market capitalism versus political capitalism. In fact, under the category Corporate Governance, entries can be found for
And so it was with great interest that I found out that Stephen Hicks, a Ph.D. philosopher in the Objectivist tradition, is teaching a course on business ethics to MBA students at Loyola University Chicago. Loyola’s business ethics program is considered one of the finest in the country, and, in fact, was ranked first in the country last year by BusinessWeek.
Professor Hicks is not your average philosophy professor. His thought is firmly planted in the real world, being a student of business practices, the dynamics of capitalist progress, and the dynamics of government intervention (how one regulation leads to another). Hicks is expert in both Austrian-school and public-choice economics to these ends.
Professor Hicks’s Syllabus description follows.
Of all the endeavors that have contributed to the quality of human life, business ranks with science, art, and education. Yet like all human endeavors, business raises its share of difficult ethical
questions and problems. Our task this semester will be to explore those questions and problems.
We will divide our time equally between theory and practice. We will discuss competing accounts of morality, rights, justice, profits, competition, the nature of employer-employee and business/consumer relations, and we will discuss the practical implications of those debates through several real-life case studies.
Al Gini and Alexei Marcoux. The Ethics of Business: A Concise Introduction. ISBN-13: 978-0742561625.
David R. Henderson, editor. The Concise Encyclopedia of Economics.
The eight-section course is as follows:
1. Introduction: business, wealth, and modern ethics
Ethics: predation, egoism, or altruism?
John V. C. Nye, “Standards of Living and Modern
Economic Growth” [CEE]; Stephen Hicks, “What Business Ethics Can Learn from Entrepreneurship” [PDF at SH]
Tara Smith, “Money Can Buy Happiness” [PDF at Reason Papers]
“Quotations on Money” [pdf at SH]
3. Political economy: free markets or socialism—or somewhere in between?
Robert Hessen, “Capitalism” [CEE]; Robert Heilbroner, “Socialism” [CEE]; Garrett Hardin, “The Tragedy of the Commons” [CEE]
4. Buyers and sellers: prices
Walter Block, “Rent Control” [CEE]
5. Employment: wages
Linda Gorman, “Minimum Wages” [CEE]
6. Employment: discrimination
Tom Beauchamp, McAleer v AT&T [pdf at SH]; Linda Gorman, “Discrimination” [CEE]
7. Buyers and sellers: liberty versus paternalism
Tom Beauchamp, “Regulation and Manufacture of
Laetrile” [pdf at SH]; Daniel Henninger, “Drug Lag” [CEE]
8. Buyers and sellers: competition and two competing concepts of fairness
Tom Beauchamp, “The FCC’s Fairness Doctrine?” [pdf
at SH]; Wolfgang Kasper, “Competition” [CEE]
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I’d like to assay his blend between the descriptive, the prescriptive, and the proscriptive as they influence theory and practice. As Adam Smith realized free markets can only be effective when the dynamic playing field is essentially level and values are widely shared–and enforced.
A free market ‘fair field no favor’ to me means consumer demand rather than political push or pull. I do not quite understand your statement: “As Adam Smith realized free markets can only be effective when the dynamic playing field is essentially level and values are widely shared–and enforced.”
Smith believed that producers/suppliers, because of human nature, sought to avoid competition by tending toward monopoly, in the process considerably tilting the field in ways that made the market less “free,” with consequences we understand and decry. The irony in this context is that Smith also believed that one of the functions of government was to check that tendency. Smith doubtless would have been appalled by today’s political capitalism, so arrant and profligate, doubling down on the bend of the playing field and contorting it so badly that few see the “free play” of consumer demand, as you evidently do.
Smith, whose main work was as a moral philosopher (in this he worked closely with his friend, David Hume), understood that unless people widely understood the terms of any transaction in terms of fairness and consequence, the market would revert either to a cops or robbers state, with the former setting the terms of any transaction (state control) and the latter, a market dominated by criminals.
In my view, we are close to a weird combination of both today.
On page 33 of my Capitalism at Work, I provide another interpretation of what I believe you are referring to. Here goes:
“Smith famously warned that a meeting of ‘people of the same trade’ would invariably inspire a ‘conversation end[ing] in a conspiracy against the publick, or in some contrivance to raise prices.’ This statement has been invoked time and again by capitalism’s critics to warn about monopoly practices in unregulated markets. But a close reading of Smith offers another interpretation. Such meetings were described as infrequent. Any laws against them would sacrifice ‘liberty and justice’—and might fail anyway. Smith went on to explain the real threat: exclusive privileges, arising out of government-facilitated or government-sponsored business meetings.” [I go on to document this.]
I know this passage, Rob, and I’ve read Smith closely. I agree that Smith was opposed to laws prohibiting producers/distributors from meeting, as we all should oppose, because, as he says, such actions would indeed “sacrifice liberty and justice”–and likely come to naught. However, he was concerned about the protectionism involved with the “regulated”markets with which he was familiar –the various guilds–and the way they tilted the market fields.
Aside from the influence of the guilds, all Smith knew was an “unregulated market.” But he also knew human nature–and the truth of what Madison later described as the reason for government: that men are not angels (which rationale was largely derived from Smith). If I recall, there were oblique references in the Wealth of Nation’s about Smith’s concerns for government-facilitated businesses but I don’t remember these being overweening cause for alarm.
Much of Smith’s sensibility was cannily captured in his 1759 work, The Theory of Moral Sentiments, abridged versions of which I highly recommend.
Okay, but my reading of Smith may see him as less free-market ‘alarmist’ than you on this particular.
In any case, Smith saw some roles for government (including setting interest rate ceilings!) , which I try to capture here: http://politicalcapitalism.org/book1/appendix-b1c1.shtml#b1_c1_1.4.
I never said, and don’t think, Smith was a free market alarmist. Quite the contrary. He believed in it rather thoroughly, enough even to sanction government as one of its guarantors. Particularly when it became clear that the market was becoming less free by hoggish actions.