Socio-Economics - An Interdisciplinary Approach : Ethics, Institutions, and Markets

This book calls attention to the social dimension of economics and stresses the need for an ethical yardstick which can only be provided by an interdisciplinary approach to the economy -- socio-economics. Current thought claims to account for ethics by portraying economics as both positive and normative. The positive aspect of economics is based on observable fact. This is typified by the neoclassical school, which takes as its main premise the hypothesis of individual economic rationality resulting in economic decisions based on efficient market processes. The normative aspect of economics involves value judgements. Economic theory acknowledges that economic agents are free to express value judgements, and if one point of view is to prevail, it can only be the majority view based on an equitable democratic process. Accordingly, strict application of the principles of the market economy and political democracy should eliminate the need for a separate ethical approach to economics. Despite this conclusion, recent years have witnessed the need to introduce ethical considerations into economics. For one, the distinction between the normative and positive aspects of economics and their linking with politics and economics, respectively, are gross oversimplifications. In addition, numerous market failures make it difficult to accept efficient markets as the determinant of all economic decisions. Finally, democratic processes are hard to maintain due to society's inability to develop a sense of solidarity. This book provides the 'ethical yardstick' necessary in analyzing economic decisions, institutions and policies discussed in relation with environment protection.