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Prices, Self-Interests, and the "Invisible Hand" : Reviewing Ethical Foundations of Economic Concepts in Times of Crisis

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abstract In light of the recent crisis in 2008-09 the essay researches into the relationship between ethics and economics by investigating into the history of economic thought. The goal of the essay is to challenge separationist views of economics and society by demonstrating that classical economists did not regard economics as value free system that excluded guide-lines of ethical behavior.
As far as it concerned the development of economics as own branch of thought, none of the Authors who will be quoted in this essay – from Thomas Aquinas in the 13th century to John Locke, Bernard Mandeville, Jeremy Bentham and Adam Smith in the 17th and 18th centuries – explicitly denied the existence of a given set of social, moral (and very often religious) values as precondition for the functioning of the economy. Their belief in the necessity of moral values may help to understand why scholars like Smith and Bentham could have faith in the stability of the liberal systems they promoted. Since both scholars had witnessed a number of crises in the 18th century such as the “South Sea Bubble” in England (1720), the “Mississippi Bubble” in France (1720), the “Wissel-ruiterji-Crisis” in the Netherlands (1763-1773) and the “Canal Mania” again in England (1772-1797) , their conclusions concerning the self-organizational power of markets could well have been different.
The fact that in light of these crisis former scholars did not reject but rather promoted liberal economic concepts demonstrates their trust in the social abilities of men. This essay argues that this trust was not solely based on economic but also on ethical dimensions of individual behavior.
   
type book chapter (English)
   
keywords Thomas Aquinas, Augustine, Clemence Ayres, Jeremy Bentham, Albert Hirschman, John Locke, Bernard Mandeville, Karl Pribram, Adam Smith, Max Weber, Iustum Pretium, invisible hand, natural harmony, providence, value theory, scholastic thought, Adam Smith Problem, Doux Commerce Hypothesis
   
book title Auswirkungen von Krisen auf Wirtschaft, Recht und Gesellschaft
date of appearance 2009
publisher Stämpfli (Bern)
page(s) 317-344
citation von Müller, C. (2009). Prices, Self-Interests, and the "Invisible Hand": Reviewing Ethical Foundations of Economic Concepts in Times of Crisis. In Auswirkungen von Krisen auf Wirtschaft, Recht und Gesellschaft (pp. 317-344). Bern: Stämpfli.