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NINTH MESSAGE 9-8-00 Moral Economics - Essays On The Relation of Economic Theory to the Moral Perspective in POVERTY AND DEVELOPMENT: AN INTER-FAITH PERSPECTIVE. [www.wfdd.org.uk/] This is the ninth of an occasional series of short essays about how economic theory interacts with a moral perspective. Readers are invited to discuss and to re-post widely, but please quote the source. [Note: This message adds several people to the distribution list. If you wish your name removed from the list, contact me privately and I will remove you. Alternatively, if you wish to obtain the previous essays I will send you a file.] THREE APPROACHES TO POVERTY: The previous, seventh and eighth essays discussed two approaches to poverty, namely immediate alleviation and self-reliance and "empowerment. This essay discusses a third approach to poverty. THIRD APPROACH: LINKS BETWEEN WEALTH AND POVERTY "All religions would see the extreme material poverty in the world today as a moral indictment to contemporary humanity and a breach of trust within the human family...There is no religion in the world which does not condemn the hoarding of riches by some, while others live in misery, particularly because of the causal relationship between the two conditions." [POVERTY AND DEVELOPMENT: AN INTER-FAITH PERSPECTIVE, para 3.3.1] ECONOMIC THEORY SUPPORTS INEQUALITY Modern economic theory counterpoises to this clear statement a theory that accumulating wealth is not sinful because wealth accumulation creates capital, which is then used to create jobs. Since jobs and wealth can be created and are therefore expandable, it is not the case necessarily that one person's riches come at the expense of another person. Further, economic theory teaches that a society's material well-being will be maximized when the marginal monetary value of all goods and services is equalized. This construction ignores personal or societal values with no monetary component and it places undue influence in the hands of people with disposable income. VALIDITY OF ECONOMIC THEORY VS. FAITH BELIEFS This conflict is at the heart of the difficulty in reconciling economic theory with a moral perspective. History argues in favor of the faith position - religious beliefs have been in existence far longer than economic theory. Also, economists recognize market failures as a part of economic practice; the biggest market failure today is the market's predilection to create or exacerbate income and wealth inequalities. This can be seen in the results of globalization wherein many of the world's poor live in material misery while a relatively few amass vast wealth. Further, the moral perspective states that amassing riches "while others live in misery' is immoral. If it were possible to amass wealth while others lived in relative ease, perhaps it would be moral to do so; however, history to date does not encourage this position. INCOME REDISTRIBUTION REQUIRED - STATUS QUO MUST CHANGE "The faith communities are convinced that a more equitable distribution of the world's wealth is needed for an effective reduction of poverty." [POVERTY AND DEVELOPMENT: AN INTER-FAITH PERSPECTIVE, para 3.3.1] "Much poverty exists because current development processes often bypass the poorest people...The Roman Catholic Church, for example, teaches that private ownership of property is subject to social responsibility. This means there must be a change of lifestyle among the rich, and changes in the models of production and consumption, as well as in the established power structures that govern society today." [POVERTY AND DEVELOPMENT: AN INTER-FAITH PERSPECTIVE, para 3.3.3] ECONOMIC THEORY SUPPORTS STATUS QUO Much of current economic theory supports the established institutions in today's world. In order for an alleviation of poverty, alternative economic theories must be examined and taught. Economic teaching today is in turmoil as proponents of the established power structure seek to eliminate alternative viewpoints; in some cases, going so far as to purge history of economic thought from universities lest students learn of alternatives. A moral economist will search for viable alternative theories, which can include a moral component. INTERNATIONAL AID "Only when those with most power are able to view the whole of humankind as a family will the full horror of allowing so many to perish while others are overwhelmed by a surfeit become clear. However, it is not only a question of morality, but of practical interdependence. Globalization is surely teaching us that none will survive unless peace, based on international, as well as national, social justice becomes the aim of development" [POVERTY AND DEVELOPMENT: AN INTER-FAITH PERSPECTIVE, par 3.3.3] Morally effective international aid will address the issues of top-down structures, invalid priorities and corruption. At the very least, complete debt relief will enable governments to spend hard earned foreign currencies on medicines and education instead of repaying old debts to international bankers. Michael Pierce McKeever, Sr. Economics Instructor, Vista Community College, Berkeley, CA MIEPA URL: http://www.mkeever.com/ Corp Ethics List: http://www.egroups.com/group/corp-ethics/ %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%