In the 1980s, American author Kenneth Lux published a book with a title as intriguing as it is misleading: “Adam Smith’s Mistake: How A Moral Philosopher Invented Economics and Ended Morality.” Lux’s mistake was twofold; Adam Smith neither invented Economics as an autonomous science from Philosophy, nor did he end morality: what he suggested was that acting according to personal interest could be a way to produce good for society. However, it must be acknowledged that invoking Smith was a hit, as for decades there has been discussion on how the same person could write both “The Theory of Moral Sentiments” and “An Inquiry into the Nature and Causes of the Wealth of Nations”; one only needed to read the first book carefully to see that there was no paradox in relation to the second.
Smith may not have invented economic science, but he was largely responsible for its popularization in the 18th century. The message of his book revolved around a problem that was simultaneously economic, social, political, and moral: how can a nation generate wealth? Over nearly 250 years (not to mention that this same issue concerned most authors prior to Adam Smith), multiple answers have been given to this question, emphasizing different elements as responsible for generating wealth, answers that garnered supporters while also producing critics. Summarizing these contributions is nearly impossible; thus, this brief text aims to highlight two aspects.
First, wealth is understood in the same way as in the Austrian School of Economics, namely, the set of things that are useful to people in satisfying their needs. In other words, wealth is not something objective; rather, it is a characteristic that people confer upon things. The second aspect to clarify is that development is both a qualitative and quantitative phenomenon, while the growth of wealth is purely quantitative. Development involves the growth of wealth but is characterized primarily by a qualitative difference: the basic needs of life have been met for the majority of people in society, and goods and services that contribute to enhancing well-being are being made available to larger segments of the population. Furthermore, people perceive improvements in their well-being, meaning they live better and enjoy a higher quality of life.
If development is a qualitative phenomenon rather than purely quantitative, human values need to be incorporated into its analysis and definition, which means that the intersection of economics and ethics materializes, among other domains of economic science, in development studies. This connection has been highlighted by a significant number of social scientists, not only economists. Without pretending to exhaust this discussion, we wish to point out some authors who have developed interesting analyses that reflect this relationship, even when it is not directly mentioned.
For example, we can cite Caribbean economist W. Arthur Lewis (1915-90), who won the Nobel Prize in 1979, for whom poor nations are characterized by agriculture-based economies and an almost infinite supply of unskilled workers. Thus, for Lewis, economic development should begin with simpler industries that process agricultural products and employ a large number of workers, while making significant investments in education and training for the population, which, in his view, would raise per capita income and prepare people for more capital- and technology-intensive enterprises. Lewis’s ethical concern was clear: there is no economic development if a significant portion of the population does not benefit from it.
From a completely different perspective, Austrian Friedrich Hayek (1899-1992), who received the Nobel Prize in 1974, advocated that economic development required minimal state intervention and maximum individual freedom to undertake. His ethical concern lay in defending personal interest as a promoter of social well-being, understanding that this latter concept would be the aggregation of individual goods, and in seeking to demonstrate that the moral values of a market society are the basis for an ethics that promotes economic development, values that are entirely incompatible with those prevailing in a centrally planned society. Without ethics, a society cannot develop.
Finally, we highlight Indian Amartya Sen (1933), another Nobel Prize-winning economist (1998), for whom economic problems such as poverty only make sense when studied through an analysis that incorporates ethics. For Sen, development necessarily involves human flourishing, as it incorporates people’s capabilities. It is essential to expand people’s education, promoting the development of their capabilities and preparing them to exercise freedom in their lives. Happiness, Sen observes, requires that people be able to apply their potential to their projects, satisfying their basic needs and progressively seeking higher goods.
Although distinct, the approaches of Sen and Hayek are compatible with an ethics that emphasizes individual responsibilities, such as virtue ethics. In both cases, ethics is essential for human action to produce desirable outcomes in terms of happiness and well-being. In Lewis, on the other hand, ethics seems more consequentialist, as development efforts must yield a result in the style of the greatest good for the greatest number (even though, in some passages of his work, references to individual actions can be found). In one respect, the three authors agree: human development is associated with the promotion of happiness in society. Since ethics is the reflection on what it means to live well, it is not an exaggeration to assert that these authors would agree that, without moral values, development is devoid of meaning.
